Banana exports from Ecuador expect challenges
As coronavirus creates challenges for the fruit export industry worldwide, Ecuador banana exporters prepare for difficulties in upcoming weeks.
Various Ecuadorian sea freight exporters have already lessened shipments to China in anticipation of complications at ports. Along with the fact that containers are being detained and backed-up at China's main ports, Ecuador's banana industry is facing a scarcity of containers to ship exports.
Richard Salazar of Ecuador's exporter's association Arcobanec explained how the banana industry is responding to complications and setbacks.
Directly following the Chinese New Year and throughout the holiday season for China, banana exporters expected high demand from the Asian country. However, because of health measures taken amid the coronavirus outbreak, Ecuador's shipments didn't go as planned.
"At the end of the day, what this did was create a huge backup of containers both for imports and exports. This meant that shipments, like with what happened with bananas, were and could still be three or four weeks delayed and, on top of that, China didn't pay exporters for bananas in weeks 51 and 52 in 2019," he detailed.
Speaking more on the subject of delayed payments, Salazar also said that Ecuador has asked China to abide by contractual agreements between the countries for trade. As exporters continue to face problems, the industry looks to recuperate funds and make sure producers and being compensated for their bananas.
"Up until this point, until February, you could say that we haven't made any progress. However, exporters are still having difficulties shipping their containers that are beginning to cost between US$1,200 and US$1,500 and that doesn't even include the fact that Ecuador is facing scarcity of containers," said Salazar.
"A lot of sea freights have announced that they'll be reducing available space on the sea - which basically means that, to attend to the situation in China, the frequency and concentration of ships allowed on trading routes on the sea is lower. Though, shipments haven't been suspended 100%," he added.
He went on to explain that it's becoming even more difficult to ship the same amount of containers as before since there are now regulations that require ships to pay an extra US$1,000 to US$1,200 per container.
Impacts not only for the banana industry, but for the global economy
Apart from challenges associated with coronavirus, Ecuador's banana industry is also focused on it's third most important export destination - Turkey. The middle eastern country has recently been impacted by economic turmoil in Iraq, Iran and Syria.
"So, we're already starting to feel the impacts of this, starting in March we're experiencing the effects of coronavirus not only in China but in the middle east as well."
European markets are also seeing backlash from the virus as consumer demand has been decreasing for Ecuador's bananas. It's also become a question of distribution for the industry in this region, especially in Italy, said Salazar.
He then added that if the pattern continues and China is unable to export and import at the same rate and capacity as it did before coronavirus, "the commodities that it had frequently bought in high volumes in the past - like petroleum and minerals - will fall in price and that will affect economies worldwide, like in Russia where we can already see a devaluation in currency,".
"With the banana industry in particular, we're really going to see the impacts of this situation in the upcoming months of March and April," he said.