The food company Juventus, that sells juices but also preserves, had agreed for this week the transport of its products in 15 containers to America. They were canceled a few days ago, with hardly any margin, because “there are not enough boats and / or equipment to load and unload in those days.” Until December 14, they will not be able to load some of them and in some cases the delay will be two months.
They export to 80 countries and now they pay four times more than a year ago for a freight, which is the price for transporting the merchandise in containers within the warehouses from one point to another.
In his case, the delay has an impact on the management of the business, because you have to improvise from one day to the next and the logistics chain is constantly stressed, but at least it is not a perishable product. If they exported mandarins, they would not be able to sustain this delay and they would lose product and sales.
If I have a container that is worth five times as much and I do not accept the price, I lose the product, and if I accept it, I have to affect the final price because if I do not lose money, explains Juan Antonio Juver, commercial export director of this company, who assures that in his sector they are the big losers of this crisis.
His example, which can be extended to thousands of agri-food companies, illustrates well the impact that the collapse of the maritime transport of goods is having (as a consequence of the bottleneck generated by the lack of ships and containers) on exports of the agri-food sector. There are supply problems with the products that we import from China, but also with those that we ship to other countries.
During 2021, food and beverage exporting companies are facing several challenges that affect their ability to expand to third markets, such as the increase in logistics costs, raw materials, supplies and energy, regrets the Spanish Federation of Food and Beverage Industries (FIAB).
The main problem is the cost of freight. Containers are in short supply due to the lack of steel to build them and, furthermore, there are not enough ships to accommodate this sudden increase in demand. stop during the Covid. That has skyrocketed prices. 80% of the merchandise is transported by sea, because by plane it is much more expensive and admits much less volumes, so it is used only for products with a lot of added value.
It is a global problem that affects several maritime routes and has multiplied prices of transport by up to four and five times the existing values before the pandemic, laments from FIAB.
It is a problem because you do not know when you will be able to load or unload, if there will be equipment for it … Those who have perishable products have it much worse, because they need refrigerated containers, which are more expensive, Juver explains.
In certain strategic markets for the food and beverage industry, the current logistics situation is affecting sales abroad. For instance, in the case of the United KingdomTo the situation derived from Brexit, we must also add the issue of the scarcity of land transport.
Exports to this country have decreased by 4.69% from January to July of this year with respect to the same period of the previous year and the country has gone from being the fourth business partner to the seventh, according to FIAB. Another relevant market affected by this situation is China, where (if we eliminate the conjunctural effect of increased demand for meat products) exports down 2.88% until July.
With respect to US market, the export figures are positive, with an increase of 17%, despite the increase in the cost of freight and the shortage of containers. This is because tariffs were suspended between the US and the European Union approved at the time by the Government of Donald Trump. This affected products such as olives, oil or wine, which have a key market in the US.
For Jos Antonio Juver, the biggest problems for his company are found precisely in America, both to export to the US and Latin America. The price problem is very serious and is especially acute towards America. A food container to Latin America could cost 1,500 euros; now they are 15,000. Our sector does not have enough margins to sustain these increases, he regrets.
oil and wine
From Dcoop, one of the large agri-food cooperatives in Spain, which mainly exports oil and wine, remember that Spain produces food, but above all exports food. According to Antonio Luque, president of this cooperative that has a turnover of more than 900 million, sending a container of table olives to the United States costs 30% more, just because of the cost of freight (transport by boat). We have very small margins, and we have raised our prices on everything from fertilizers to cardboard, he regrets.
This situation generates a lot of internal tension within companies. If, for example, you plan to load five containers tomorrow and suddenly, hours before, they tell you that you cannot. The manufactured product takes up space … You have to constantly tension the chain, says Juver.
From Ports of Spain they clarify that the problem is not in the Spanish ports, where it is far from saturation and they remember that 50% of the containers that stop in Spain are in transit, that is, they carry merchandise that goes to another country.
Although, as in any crisis, a window of opportunity opens, which some companies see in Africa, because, according to what they explain from Juver, they bought from China cheaper, but the price of transport has increased so much (and is so uncertain) that Spain has become a safer option with more competitive prices. Chinese producers pay more for transport than we do, so we are more competitive, especially in canned goods. We have to look at that positive side, declares the manager.
Upon how long it will take for this situation to stabilize, Jos Antonio Juver does not think it will happen before the second semester of next year. There will be products that we consume on a regular basis and that will not be there or will be more intermittently, he says.
The Dcoop cooperative also predicts difficult times, with a general rise in prices if the situation does not stabilize, not foreseeable until the end of the Christmas season.
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George is Digismak’s reported cum editor with 13 years of experience in Journalism