It all started with high hopes this season, the prediction for Indian table grapes were showing very positive signs in terms of the fruit availability, fruit quality, fruit volume and fruit residue levels due to the favourable climatic conditions this year. "These hopes were short lived, as the season turned out to be one of most difficult seasons in the history of Indian grapes export," says Sagar Deore, director for Indian produce exporter Janki Freshyard Private Limited.
Red Sea crisis and delays in the shipping
There were many aspects that affected the grape season this year, but the most critical one was the Red Sea crisis and consequently extended transit time European destinations, Deore emphasizes: "As soon as the Red Sea crisis started escalating, all shipping lines routed their vessels via the Cape of Good Hope to Europe. The typical transit time of 19-22 days, via the Suez Canal, from Nhava Sheva, Mumbai to European main ports had increased to 38 to even up to 60 days. Shipping lines communicated the transit time of 30-35 days before the shipment, but the majority of the ships arrived late, by more than 10 to 25 days. Such an increased transit time impacted the fruit conditions on arrivals. It also significantly impacted the planned programs, deliveries and sales in a negative way."
Sudden surge in the sea freight
Fruit exporters were surprised when their freight costs suddenly more than doubled, when they already had obligations to send their produce overseas, Deore states. "When the grape season began in January, the freight was estimated to be around US$1400 to 1800 for a reefer container destined to European main ports, that unexpectedly increased to US$4400 to 4800 by end January. Shippers and exporters had no choice but to forcefully accept it, as they already had committed programs and delivery obligations. This sudden surge of 250% additional freight cost has put a huge strain on the exporters."
Increased fruit costs
If this year's logistical issues hadn't arisen, this season might have been excellent, Deore says: "Fruit was nice in terms of size, shape, colour, eating quality and the volume. The main volume was anticipated to be available in the months of February and March, with shortages by the end of the season. As a result, all the packers rushed to fulfil their packing obligations in February and early March. That leads to higher demand for fruit for the packing, and every packer prioritised to pack only higher quality fruit, which would sustain these longer transit times. This in itself lead to higher competition within packers, to buy the best quality fruit from the available orchards. Consistent higher demand led to the higher fruit prices."
Mixed fruit condition on arrivals
This season, despite all the best efforts in packing the fruit that should sustain the longer transit time, several Indian packers and exporters had to face challenges of the condition of the grapes on arrival at the destination, Deore explains. "This was mainly due to the longest ever transit time, and it had affected the quality and storing capacity of the fruit to a large extend. The good quality fruit, which was well in accordance of the required quality parameters, went directly into the sales. But affected fruit had to be sent for re-checking and re-packing, which put additional burdens on the shippers and exporters, requiring higher labour costs in places like Europe. It had also put a significant pressure on the sales of planned arrivals and committed deliveries and returns."
Broken supply chain
During this season, while ships were running with longer transit times already, there were some additional delays due the congestion at transit ports, Deore states: "A couple of vessels got delayed by almost a week, while simultaneously two vessels of two different schedules arrived in the same week as these delayed ships. This situation created very chaotic conditions in the market. There was a week with almost no fruit in the market available for planned deliveries, as the planned vessel did not come on schedule. The following week, the market had two vessels coming in together with double the volume, which affected the supply chain and caused market prices to fall drastically."
Incredibly erratic market and the undervalued pricing
"There was no assurance from the shipping lines on the vessel schedule. No shipments were arriving on their scheduled estimated time of arrival. All the projections and schedules were futile due to the unpredictable supply chain. Failure of timely arrivals of the vessels, quality conditions of the fruit on arrival, limited fruit storing capacity, higher number shipments than anticipated, difficulties in to getting the local shipment data in India and so forth, all of these factors contributed to an unstable and unpredictable market, which ultimately put high pressure on the selling prices," Deore says.
The pain of this catastrophic grape season will be felt for a while to come: "Several shippers and exporters are struggling financially this season, as their cost is already predetermined or paid before they shipped out the fruit. Due to all the challenging aspects mentioned above, they could not recover their costs this year. Despite their best efforts to choose the highest-quality fruit, pack it carefully, pay over 250% more for the transport, load it with the best logistics provider and leave no stone unturned, exporters were left with high negative returns, huge responsibilities and a difficult future. All that for no fault of their own, while being at the mercy of the shipping lines.," Deore concludes.
For more information:
Sagar Deore
Janki Freshyard Private Limited
Cell/WhatsApp: (+91) 913 024 1585
Email: [email protected]
www.jankiglobalexport.com