Cathy Burns CEO, Produce Marketing Association
What can the U.S. learn from the ongoing situation across the globe? This was a significant theme from the Produce Marketing Association’s first ever Virtual Town Hall.
Following an update from industry experts PMA CEO Cathy Burns, PMA Chief Science Officer Max Teplitski and Cornerstone Government Affairs Principal and Director Hunt Shipman, members were given the opportunity to join virtual roundtables to have topic driven discussions around the areas directly impacting their businesses. The virtual roundtable included participants from across the globe who shared their experience with the ongoing COVID-19 pandemic.
Here we share key takeaways.
The main priority in the European Union and of other international governments is to assist in and support international food trade.
Annemie Peeters from Port of Antwerp emphasized this: “Our greatest challenge today is to remain operational because as a world port we face a great social responsibility. It is extremely import to us to keep supermarkets and pharmacies supplied, in Belgium and Europe.”
She highlighted that the biggest challenge in the next three to four weeks will be around unwanted cargo and port congestion due to shutdowns.
“As shops and factories might be closing during the next weeks, there is a chance of having ‘unwanted’ cargo on the quays that will not be collected. As a port, we need to make sure that our terminals will not get congested. In order to do so, we are looking at possible alternatives to store the import containers in and around the port area.”
In Singapore, Gary Loh of Dimuto says that they’re already seeing a similar issue in terms of finding ways to transport cargo.
“The biggest challenge today is to get the current load on a flight. Air cargo capacity has shrunk, and prices has skyrocketed. Uneven distribution of capacity as Netherlands is full, Australia is standstill and Mexico has some spare capacity. We need to work together to share this information.”
Dr. Max Teplitski, Chief Science Officer, Produce Marketing Association.
A growing number of European countries are also seeing issues due to shutdowns, specifically when it comes to border shutdowns and access to seasonal workers.
“We foresee a problem with seasonal workers, both on farms and in packing houses. In Europe borders are starting to close. If this situation continues we will not have enough support on farms and in the packinghouses, as many seasonal workers come from Eastern European countries,” says Adriëlle Dankier of Nature’s pride.
In South Africa, Trevor Dukes of The Fruit Farm Group says that the focus is on supply consistency.
“We now focus on 'supply consistency' and we are trying to look ahead. What we perceive as the biggest risk is all the work that is done on the harvesting and packing side; where we have large teams working closely together. Critical now is to protect their well-being and assess our risks. We have upscaled hygiene practices, including social distancing, usage of different entries and exits for pack houses, rotating break times so that groups are smaller, hygiene awareness campaigns and protective clothing where possible. These are all World Health recommendations, accustomed to our situation. Ironically, we face a situation with increased demand, but we do not have all people coming to work. That said, it is not easy, but we are better off than many other businesses. The retail sector is experiencing a short-term boom.”
Supply Chain and Transportation
Cornerstone Government Affairs Principal and Director Hunt Shipman
Throughout the supply chain, the international trade of food items has also been deemed a key priority for the EU and other international governments, particularly in major supply markets. Measures are being put in place to continue a free-flowing international food trade. The current status of each type of transportation is:
Sea: The supply chain is largely seeing shipping capacity dropping to about 40-50 percent due to the difficulty in getting refrigerated containers from Asia.
Air: Countries are seeing similar difficulties with air freight. “Another concern is that air freight is coming to a hold. A considerable share of our assortment is supplied via belly freight on passengers' lines, which is a sustainability-conscious company policy. With many passengers’ flights being cancelled, we will not be able to receive these goods from production markets overseas like Thailand, Colombia, Brazil and Peru, this has a major impact on our partners in production,” says Adriëlle Dankier of Nature’s pride.
Ground: The trucking industry is not seeing issues with transportation overall. There are some delays in crossing borders between countries, but overall Europe is focused on maintaining the free flow of goods across borders. No current change in over the road freight rates.
In China, things are starting to return to normal, with the worry now on the global supply capacity and influx of people returning from overseas. “We are currently focusing on overseas supply to China and are concerned about global supply capacity. More production markets will be hit and more ports will come under pressure. An additional concern is the return of Chinese from overseas. Now all people arriving from abroad are being tested and quarantined,” says Eric Li of Yiguo.
Steve Alaerts of Foodcareplus echoes this concern, and offers his company's support during this time, 'We see volumes picking up into China, where demand is fast-growing. We are willing to provide shipping capacity to export PMA members in Northern Europe in their efforts to meet demand from Asia now.
In South Africa, Trevor Dukes of The Fruit Group states that, like in many other parts of the world, safe passage of fresh produce is important, giving him hope that things will return to normal quickly, as they have done in China, “We are in unchartered territory. Practically unpredictable how supply chain and business will look like in two months’ time. In the short term there is opportunity for fresh fruits and vegetables. Consumer behavior has led to record sales in some retail shops we supply.
Guaranteed safe passage by the EU and South African government of fruit and vegetables, along with other critical care, is giving us some confidence that we can continue to supply normally.”
There is currently enough produce supply to European supermarkets. However, it is expected that in a few weeks’ time supply will be less and prices will rise.
Some products will be difficult to obtain. These include airfreight imported produce, but also fruits and vegetables coming from Spain and Italy, two countries hit heavily by the coronavirus outbreak. This includes products such as lettuce, citrus and vegetables.
Transportation is becoming increasingly difficult and, due to social distancing measures, there are less people working in packinghouses. Transport from and to the fields in minivans, for those workers without cars, is also comprised by these newly implemented social distancing rules.
Throughout this situation the message in Europe is very clear: just like across the rest of the globe, it continues to be a priority to keep the flow and trade of food items as free and open as possible.
The foodservice industry is seeing significant and immediate challenges as more restaurants, bars, and clubs are closing during this ongoing situation. Wholesale markets that supply the foodservice industry are also seeing challenges during this pandemic.
We have seen a lot of unique ways of overcoming these challenges. Many restaurants have trimmed down their menus and ramped up their takeout and delivery operations, particularly restaurants who didn’t originally do takeout.
European countries such as The Netherlands, Belgium, France and the UK are making billions in funds available to support the economy, including tax breaks for businesses.
The retail industry has a seen significant spike in traffic over the past few weeks, with the influx just starting to level off. Retailers in Europe are seeing challenges at the frontlines, with empty shelves and a lack of childcare for employees who need it. Labor challenges will be further complicated by Brexit, with the reliance on importing produce and the cost of inflation due to freight rates.
Adriëlle Dankier of Nature’s pride says that many of the changes coming are due to shifts in consumer behavior caused by the pandemic, “Nature's Pride is a fluid organization, supplying different sectors in the industry, including wholesale, food service and retail, across different countries in Europe. Now that restaurants and foodservice has closed down, it is helping that retail and greengrocers remain open. Retail demand is stronger, but different than before. Consumer behavior has changed, people go lesser times to the store and have a different buying pattern. This narrows our wide assortment. We also experience considerable logistical challenges. It is beautiful to see how people, and companies, are working together and support each other in our industry, and how digitalization enables people to work from home.”
Stores are recruiting more workers to help with the demand and have implemented measures such as protective screens for check out staff and floor markings to enforce social distancing rules.
China is already past the first wave of the outbreak, and Eric Li of Yiguo explains how that wave effected the retail industry, “In China, we passed the first stage of the outbreak. What we witnessed was a big jump in retail demand, as foodservice and smaller businesses closed. There was also a huge jump, up to 300 – 400%, in online sales. Now the situation is stabilizing, and a backlog in port capacity is currently being solved. At the moment the supply chain is 80% to 90% back to normal.”
Similar to in the U.S., the floral industry in Europe has come to a standstill. The Dutch Flower Auction, Royal Flora Holland, is seeing a 70 to 80% drop in demand. Transportation is an additional problem for floral with virtually no trucks or refrigerated containers available to transport floral.
In an effort to boost the industry and safeguard pricing for the industry, artificial caps have been put in place each day by auction houses. Governments, including as the Dutch government, are releasing emergency funds to support the floral industry.
One popular initiative that is being utilized is the #flowerboostchallenge. Companies are purchasing flowers at the production price to give to staff, customers and others.