Harnessing opportunities to shorten the supply chain

THE COVID-19 pandemic has disrupted the way fresh produce is traded. More noticeable has been the disruption to shipping, with dramatic rises in shipping costs, shipping container shortages and worldwide delays in deliveries. 

This is especially felt in fresh produce trade, where needs dictate more expensive reefer containers and short shipping times to avoid spoilage. Smaller exporters are bearing the brunt of this, unable to “pull rank” with shipping companies to secure shipping space and unable to resist cost increases to the same degree as larger exporters.

Importers too are facing disruptions. Unpredictable and recurring lockdowns can instantly dry up wholesale demand channels while containers full of product are already en route on the water. This can force Importers to lower prices in order to clear their product and avoid spoilage. Unfortunately, the opposite problem has also been faced due to shipping delays. 

Inability to meet their customers’ needs reliably has damaged importers relationships with their customers and has caused importers untold commercial harm. Again, it is the smaller importers that feel this most, with customers switching to larger importers who can guarantee supply and who do not face the same disruptions due to their buying power.

But the COVID-19 changes are not all bad news. Across the entire supply chain, we have seen industry-wide innovation to overcome the pandemic disruptions. Digital solutions for export documentation and tracing product provenance are being embraced at an accelerating rate, as are automated sorting, grading and packing equipment which is not as susceptible to interruptions in the available workforce. 

Importers are also using this opportunity to get closer to exporters, in order to reduce points of failure in their supply chain. Increasingly, digital marketplaces are enabling importers to trade directly with exporters, without the need for traders, agents and other intermediaries.

Source: Fresh Plaza