Irregular freight transport, considerably higher transport costs and, to top it all off, the blockade of the Suez Canal. The New Zealand onion sector is not doing well this season. Smooth container transport is required to get the onions off their island. The period in which this can happen is small. The effects of difficult logistics are reflected in the figures.
The onion sector in New Zealand is fortunate that it has made good progress early in the season. The harvest was good with 170.000 to 175.000 tons of onions and export expectations were good in advance. The area decreased by 6% last season. Especially because growers were unsure about the consequences of the coronavirus. The logistical consequences in particular are troubling the sector.
Export figures do not match mood
Besides Europe, Indonesia is the largest buyer of New Zealand onions. The period in which there is demand for onions from down under is relatively short. In addition, there are more onions available in Europe this season, which means less demand. Exporters later started importing. Customers also choose locally grown products more often, they say. The export figures do not yet fully reflect this.
Despite a lack of container availability, irregular schedules and high prices, quite a few onions have already been exported. Up to and including week 13 (end of March), the export figure stood at 72.000 tons. This is 5.500 tons more than a year earlier. Exports to Europe are also at an average level, at 45.500 tons.
Exports decline
The provisional top was in week 8, when 6.850 tons of onions were exported from the country. After that, the volume declined, certainly compared to previous years. While normally the peak of more than 9.000 tons of exports was reached around mid-March, this year it is only 4.000 tons. The figures will probably show a further decline after week 13. This has everything to do with the container ship Ever Given, which blocked the Suez Canal for days and caused about $8,5 billion in damage to the global economy.
On March 29, the enormous ship, with almost 20.000 containers on board, became loose again. However, the traffic jam of over 200 ships is enormous. In mid-April, shipping traffic is still finding it difficult to get going. Because of the 'plug' that has arisen, harbors are becoming full because all boats want to moor at the same time. The port of Rotterdam is a popular final destination for many ships. New Zealand onions are also supplied via the shipping route through the Suez Canal. Circumnavigating Africa takes extra days. In the relatively short export season to Europe, the kiwis absolutely cannot use this delay.
Issues
In mid-March, the sector was already unable to export 50 containers of onions to Europe, reports industry organization Onions New Zealand. It is not the only sector that suffers from transport problems. The export season of kiwis and apples is also in full swing, which means the demand for containers is high. Exporters work overtime to be everywhere on time. As a result, ports have been skipped to avoid falling behind schedule.
New Zealand export figures should provide a picture of how things will proceed in the coming weeks. Will a wave of onions suddenly arrive on European docks, or will imports fizzle out? Exports normally continue until the end of April, and then come to a rapid end. Exporters in the country are eager to ship onions, but the question is whether they have the resources to do so and be competitive at the same time. For example, a 20-foot container to Asia costs $3.000 to $4.000. Significantly more than a year earlier. Less exports to Europe can be made up for by destinations such as Indonesia and Malaysia, but the question is whether that will happen.