Red Sea Crisis Disrupts Food Shipment, Threatens Food Inflation

(MENAFN- Live Mint) "Chaos in the Red Sea is starting to disrupt shipments of produce from coffee to fruit - and threatening to halt a slowdown in food inflation that brought some relief to strained consumers loaded with foodstuffs are among those avoiding Houthi attacks in the key waterway by sailing around Africa, a longer and costlier route. But unlike gas, oil and consumer goods cargoes that have also been affected, lengthier shipping times risk making perishable foods unsellable Stainless export targets hit as Red Sea crisis escalatesThat's spooking the industry. Italian exporters fear kiwi and citrus fruits will spoil on the way, Chinese ginger is getting pricier and some African coffee cargoes were briefly delayed. Grain is being diverted from the Suez Canal and a livestock carrier bound for the Middle East has changed course the impact is so far limited, it's a reminder of how fragile food supply chains can be. If disruptions worsen, they could stall the slump in food-commodity costs that had started to filter through to cheaper grocery bills redesignating Houthis as 'terrorists' deepens Yemen's humanitarian crisis?“Everyone is a loser here,” said Nitin Agrawal, managing director of Euro Fruits, a major Indian grape exporter. The company usually ships to Europe via the Red Sea, but now uses the longer route that's more than quadrupling freight costs and doubling transit times.
That means grape quality will suffer, and most European importers have agreed to higher prices of Indian grapes, which will make them more expensive for consumers, Agrawal said. The European Union generally relies on India for about a seventh of its table grapes, and more than 35% at the crop's peak in March-April, according to European fresh produce association Freshfel re-designates Houthi rebels as 'terrorist'Italian exporters, which sell about $4.4 billion of agricultural produce to Asia, are worried that going around Africa will hurt freshness and add to costs for fruit like apples, kiwi and citrus, said Massimiliano Giansanti, president of farm group Confagricoltura's also a headache for farmers who could have to cut their prices to make up for higher shipping costs.“We have to sell even if prices fall as we can't prolong the harvesting period,” said Sandeep Dagu Sandhan, a grape grower in India's state of Maharashtra, where harvesting has started in some areas.“Exporters always manage to cover their costs. It will be our losses if prices crash.”Wider WorriesThe shipping issues are also a concern for Europe's exports of products like pork, dairy and wine, as well as imports of tea, spices and poultry - though it's unclear the extent of any impact - according to CELCAA, which represents agri-food traders. And ships carrying about 1.6 million tons of grain and headed for the Suez Canal were diverted to other routes in recent weeks, intelligence firm Kpler said. Most of that will be crops going to China and Southeast Asia grocery giant Tesco Plc has warned that shipping disruptions could lead to inflation on some goods and J Sainsbury Plc is working with the government to cope with delays ginger prices have jumped more than a third since December at East London's New Spitalfields Market. Muhammed Patel of wholesaler Amer Superfresh Ltd., which usually sources from China, said suppliers are raising costs to account for longer journeys.“Every now and then we have delays, but nothing like this,” Patel said traders have even delayed cargoes. UK-based coffee importer Mercanta briefly halted loading in East Africa while it awaited clarification of the route carriers will take. While it has decided to load again, any delays will slow sales to Europe at a time when shipments in the Americas also face constraints, including at the Panama Canal a cargo heads south,“it'll have to go on a very, very long transit and probably be more expensive,” Mercanta founder and managing director Stephen Hurst said like Uganda and Vietnam account for a big share of Europe's coffee imports, and the Red Sea is a crucial artery for that trade perishable foods are often transported in containers, some companies are switching to bulk carriers to ship coffee, according to the Vietnam Coffee Cocoa Association. That can make supplies harder to handle at places like ports and leave them more open to damage from the elements salt from Pakistan is another example of buyers balking. Majid Mahboob Paracha, manager of international trade at Shahpur Industries, said his customer base has shrunk because buyers are unwilling to pay higher transport rates, with costs to ship a container to Europe running at quadruple the norm.“We have the product, but if they are not comfortable with the freight charges, we cannot force them,” he said.

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