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Global shipping stricken by coronavirus outbreak

Global shipping stricken by coronavirus outbreak, © Anthony Kwan, Getty Images

© Anthony Kwan, Getty Images

 

The coronavirus outbreak has taken a heavy toll on China’s shipping industry as a result of the lower output and trade. A report published by Danish maritime research group Sea-Intelligence highlighted the greatly reduced cargo flows between China and the rest of the world, with 50 sailings cancelled since January and 30 last week alone across the Pacific and to Europe. The Wall Street Journal reports that five European and Asian container ship operators are preparing profit warnings for the first half or the full year. This news comes as a great disappointment, especially as it had been hoped that the improved trading relationship between the US and China would result in an upsurge in business. The WSJ reports that at least one container ship with a capacity to carry over 20,000 containers left Shanghai for Northern Europe with only 2,000 full containers. “It will pick up more at ports on its way, but loading data show it will reach Europe around 35% full,” this broker said. “That’s unprecedented, and a lot of money is being lost because it doesn’t even cover the fuel cost.”

According to the report published by Sea-Intelligence, over 350,000 containers have been removed from global trade since the Chinese New Year. These woes are estimated to be costing the shipping sector around US$350 million a week.

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Chilean fruit exports to China decimated

Even though fruit is a significant snack globally, and even vegetables are popular in the Asia-Pacific region (57%), cheese is the most eaten snack in Europe (58%), bread/sandwiches in the Middle East (47%), ice cream in Latin America (63%) and potato/tortilla crisps in the US (63%).

 

Chile’s fruit exporters association (ASOEX) has estimated the losses to the country’s exports to China at close to US$100 million. This news was announced at the second meeting of the public-private table where the effects of the coronavirus on Chilean exports to China were analysed. The meeting included chaired the Minister of Foreign Relations, Rodrigo Yañez and the President of the Association of Fruit Exporters of Chile AG (ASOEX), Ronald Bown Fernández.

“After the end of the Chinese New Year celebrations, there were expectations of a revival in trade. However, on Monday, February 10, only 68 containers of cherries were sold. While in total, during the first 48 hours of operations in the wholesale markets in Shanghai, Guangzhou, Beijing and others, only 249 containers of the existing fruit stock in the chain were sold, estimated at 1,500 containers of cherries,” said the President of ASOEX. He added: “The first sales prices have been lower than expected, also in relation to the values ​​reached before the Chinese New Year. We believe that if the current trend were maintained, lower revenues could be projected for the cherry export sector of between US$70 and 80 million. But if we add other fruit species to this, we could reach losses of about US$100 million. However, this could vary depending on how the situation develops. So, we are constantly evaluating the market and conversing with our representatives in China.”

There is also concern about the fruit in transit to China, estimated at 1,600 containers, whose expected arrival dates are between now and March 15. These shipments contain about 59 containers of blueberries, 173 containers of cherries, 872 containers of plums, 387 containers of nectarines, 30 containers of avocados and 134 containers of table grapes. 

The Chilean fruit export industry has adapted its export promotion strategy in China, which includes facilitating the consumption of the basket of fruits exported by Chile, including cherries, blueberries, peas and table grapes, to highlight their nutritional benefits. The consumption of fruits will be promoted via online media and in retail chains and the sector will continue to donate fresh fruit to clinics and health centres. The first delivery will consist of 1,000 1.5 kg boxes of blueberries, donated to the lung hospital of Shanghai.

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Ele.me ensures Chilean cherries are at heart of Chinese New Year Celebrations

Ele.me ensures Chilean cherries are at heart of Chinese New Year Celebrations

Chilean cherries played a prominent part in the recent Chinese New Year celebrations, as red is the traditional colour of the festival and the peak sales period for Chilean cherries in China. The Cherry Committee of the Chilean Fruit Exporters Association (ASOEX) teamed up with food delivery service Ele.me to hold the Harvest Your Red Moment and Deliver Happiness Together 2020 Chilean Cherry x Ele.me Spring Shopping Festival Launch Ceremony. 

To satisfy the high consumer demand for Chilean cherries, Ele.me has added Cherries from Chile to the “100-Million Yuan Subsidy” programme within its 2020 Spring Shopping Festival. The programme works together with sellers on the Ele.me platform to subsidise sales of Chilean cherries. The Ele.me platform guarantees fast delivery of the fresh fruit.

Charif Christian Carvajal, ASOEX’s Europe and Asia marketing director, said, “We hope that through our cooperation with Ele.me, more consumers in China will be able to enjoy fresh, high-quality Cherries from Chile as part of their New Year celebrations and even onwards towards mid-February.”

Juan José Vidal Wood, Trade Commissioner at the Shanghai office of ProChile, said, “China is the primary market for exports of Cherries from Chile and cherries are an important component in the two countries’ flourishing economic relationship. Cooperation with Ele.me will have a positive impact on the consumption and promotion of Chilean cherries in China.”

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Benlai reaches 36 million loyal members in China

Benlai reaches 36 million loyal members in China
Credit: Benlai

 

Since it became profitable in 2018, China’s third specialist food E-platform has increased direct investments in production and new hybrid business model ‘Fresh Plus Store’.

With seven years’ experience in online sales of fresh products in China, Benlai has taken a leading role in process management and implementation in the supply chain. Among its 300+ brands, Benlai has enjoyed great success with partnerships such as with Chu orange, Hongqipo 100 apple, Liyushuang organic rice, Pujiang orange, and Yu San hairy crab.

Benlai.com supplies fruits, vegetables, meat and poultry, aquatic products, cooked foods, grains, oils and other groceries. Over the past three years, annual sales have grown by more than 300% across China. It delivers fresh products to 109 cities across the country using cold-chain solutions and to 300 cities by regular delivery. At present, there are nearly 700 offline stores in China, having entered the Shanghai market in January 2019.

New hybrid business model

The ‘Fresh Plus Store’ is the new O2O (Offline-to-Online) retail model developed by Benlai.com, in order to better target the mass markets. The concept is to integrate offline shopping with online sales. Door-to-door delivery is offered for consumers located within 300 metres. Belai.com has opened stores in China’s major cities, like Wuhan, Chengdu, Changsha, Zhengzhou, Tianjin, and Shanghai. Benlai has enjoyed great success since 2018 with its two brands, Fresh Plus, for the O2O model, and Benlai.com, for the B2C model, both of which have become competitive and attractive for investors. In October 2019, Benlai received a US$200 million investment fund to accelerate its development.

A strategic agreement with SGS

At the 2019 China Agricultural Forum, Benlai signed a strategic agreement with SGS (the world’s leading inspection, verification, testing and certification company) that will see the two parties cooperate closely in the areas of supplier management, fresh product testing, and own-product services to build a traceability quality control system for fresh products and improve product quality. During the 3rd China Fresh Produce Conference, organised by Eurofresh Distribution & the 23rd FHC CHINA expo in Shanghai (SNIEC), Bian Ning, general operating manager of Benlai.com said, “2019 is an unprecedented year for China’s fruit market because of the large planting area, good harvest and varieties.” As the Spring Festival will take place earlier in 2020, this will mean a short season of fruit demand in China, and risks causing a sharp reduction in fruit prices in the first half of 2020. Therefore, Benlai has launched a fast combat strategy to offset the upcoming risks.

 

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Chinese imports still growing, with healthier and tastier fruit

Chinese exporters and importers are increasingly looking online. Perishables set to account for 7% of online sales of agrifood products

China still continues to increase its imports of fresh produce. Total imports reached US$ 641.91 million in May 2016, 2.3% more than for the same period last year. The main retailers are online, as fresh food e-commerce is expected to reach US$ 14 billion in 2017, with a penetration rate of 7%.

Imported fruit safer and tastier

The younger generations are more educated and more concerned about their health. In China, 65% of national growth depends on the under-35s. They pay attention to brand and country of production and consider that imported produce is premium produce. As Gordon Orr wrote: “Chinese consumers associate imported fruit and vegetables with safety and quality, as they do with imported milk. This creates a willingness to pay a premium.”

Cold-chain and transport systems are so poor and demand so high that the Chinese fresh produce industry is looking to trade directly. The Chinese fresh e-market is one of the most dynamic in the world. According to the Chinese Ministry of Commerce, online fresh food sales have been increasing by more than 50% every year. In the third quarter [or: last third / final four months?] of 2015, they were worth 8 billion yuan ($5.76 billion).

Shopping for fruit and vegetables online

Alibaba.com is the leading name for e-commerce in China, including fresh food. In view of the rising demand for fresh produce online, it has recently signed agreements with national fruit exporters’ organizations, such as that of October 2015 to promote Chilean blueberries and cherries in China or the MOU (Memorandum of Understanding) with New Zealand Trade and Enterprise signed in April 2016.

Maggie Zhou, director of Alibaba’s New Zealand and Australia branch, said: “With our strong networks in China and expertise in e-commerce, we will enable Chinese consumers to benefit from the premium products and fresh foods that New Zealand businesses can offer.” China’s consumption of kiwifruit has soared in the past 3 years and now represents more than 20% of Zespri’s exports. Simon Limmer, the Zespri chief operating officer, said: “(China) will be our biggest market by volume next year and probably by volume and value the following year.”

E-retailers are aware they have to optimize the organization of distribution channels for fresh produce. In June 2015 JD.com, the second largest ecommerce company in China, invested US$70 million in FruitDay, a fresh produce importing company. During the last Chinese New Year, in January 2016, sales of imported fresh food on JD.com rose by more than 300%.

Citrus is king of Chinese fruits during the New Year season

Contrary to Western countries, fruit consumption in China is related to celebrations. Even if urban and young people are buying more and more fruit for health reasons, most fruit is still bought as gifts. They still represent a luxury purchase for Chinese people. Those most purchased for the New Year are citrus. Aligned under the yang principle (sun), receiving and offering citrus fruits symbolises abundance and happiness. In some places, pomelos are used as decorations, as a symbol of family unity. Recently, Chinese people have been buying more and more small fruit, such as cherries, grapes, plums, jujube and kumquats, which symbolise wealth, fortune and fertility. In 2016, the Chinese New Year recorded the highest monthly import value of the past year, 798.87 tons (almost double that of a normal month). Chinese citrus fruit production is forecast to jump to 20 million tons in 2016, with surface area expansion in Guangxi, Hunan and Hubei provinces. In 2015, China represented 2/3 of global production, 2/3 of global consumption and 1/3 of global exports. South Africa is China’s top citrus fruit supplier, followed by the US and Australia.

Image: by Manuel Joseph via Pexels under CC0 License