Chile SEA FREIGHT Cherries Slightly Delayed to China
2 December 2020
Opinion Piece by Kurt Huang.
Last Chilean cherry season was cut into two halves. In the first half before Chinese New Year 70-80% of all cherries were sold. In the second half, after Chinese New Year, during the Pandemic, the price halved or went even lower. Overall sales over the season were not too bad on avarage.
This season, with the impact of the Pandemic, planting, packing, shipment and sales are all facing challenges. The Chilean Government and industry bodies made a “Epidemic Prevention Operation Manual” to guide all sectors. However, the biggest challenge is how the China market can absorb all the cherries being sent from Chile?
On 23 October, the first airfreighted cherries from Chile arrived in Shanghai, 5 days later than previous years. Inevitably it sold at a 4 figure prices. After the first arrivals the prices didn’t decrease but kept going up. in week 45 some boxes hit the highest price on record at RMB2000 per box.
Industry insiders made following explanations for these prices:
Some distributors make sure they supply cherries in the beginning of the season to show their strength and gain better share to retail channels. In order to honour sales agreements, they seek the supply customers at any price. They know that their profits rely on the later large volumes of sea freighted cherries.
Community group purchases are emerging as a new channel of Wechat traders’ sales and this helps keep prices higher. Compared to individual wechat traders’ sales, where goods are sold to individual contacts, the community group purchases are more organised and systematic. They still offer personalised service but skip some distribution levels.
A more convincing reason for sustained high prices is that Chilean airfreighted cherries early arrivals almost declined in half from last year, from 1 million boxes (5kg) last year to 0.52 million boxes this year by Week 47.
The volume drop was partly caused by the slight delay of the season but in significant part is due to lack of transport capacity. Charter flights are estimated to be reduced by 20% this year. The freight cost is also increasing, however the appreciation of RMB partly offset this additional cost.
Regarding sea freight, the first fast vessel was cancelled due to the season being delayed. The second fast vessel is on the water shipping about 200 containers and will be sold at 12 December (Double 12) which is another key online sales day in China.
The success of Pandemic prevention in China will help restore consumption in China and cherries are always a hot sale item. China’s Government has taken measures of preventive disinfection and sterilization on cold chain food. This helps consumers gain confidence on imported cold chain food, however, this has temporarily decreased the efficiency of clearance, transport and warehousing.
The Pandemic has made importers and wholesalers more realistic - they sell goods when they get them and won’t stock the goods hoping for better prices as nobody knows what will happen next in this Pandemic period.
Written by Kurt Huang
Translated by Stephanie Jiang