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Chile is one of the world’s largest producer of cherries, and Hapag-Lloyd is the market leader when it comes to the shipping of Chilean cherries. In our interview, Christian Seydewitz, Senior Vice President Area Chile, talks about Hapag-Lloyd’s concept for the transports of cherries, the popularity of Chilean cherries in China and how Chile could tackle the effects of climate change.
Christian, Chilean cherries are very popular in Europe, USA and especially in China. What makes the Chilean cherries so special?
There are a lot of countries producing cherries, for example USA, Turkey and even China. However, what is exceptional about Chilean cherries is that Chile produces them during the northern hemisphere winter. In China, the demand for cherries is especially high in winter, because the Chinese tradition in the New Year celebrations is to give away fruit, especially cherries. The cultural custom and belief indicate that red is a symbol of success, happiness and love. Chilean cherries are also special because producers have been working hard to improve the quality of the fruit and the Cherry Express with 22 to 23 days transit time direct to China, contributes to ensure that the cherries arrive with high quality at China markets. We started the service on 2017-18 season.
In our Cherry Express Service, we sped-up the service during peak season, saving us five to six days on the water, ensuring 22 to 23 days to transport the cherries from Valparaíso non-stop to Hong Kong and some other ports in China. The lower the transit time, the better the quality of the cherries at arrival.
Which role does Hapag-Lloyd play in the export of cherries from Chile?
For the last few seasons, Hapag-Lloyd has been the preferred carrier during cherry season in Chile. We expect to grow about 19 percent this year , aligned with the expected market growth.
65 percent of the volume of cherries is expected to be shipped within four weeks from week 49 until week 52 and 63 percent is shipped until week 51, to arrive before Chinese New Year. We, as the main Cherry Express service in the market, start shipping in week 46, subject to a minimum inducement to cover extra costs including the speed up cost, even when the demand is low to ensure that all cherries arrive in China with the best quality. But then the volumes quickly pick up during the peak’s weeks, to getting the expected contribution during all weeks of the Cherry Express. It is a package deal, which we agreed upon with our customers. This is what makes us so successful in the Chilean market. Since 2018-19 season, we started a similar service concept for other fruits as stone fruits like plums and peaches, and early grapes, just after the Cherry Express, which we named the Asia Express service, which runs until week 14 or to week 17. Due to the Asia Express service, the stone fruit market grows year after year. After that, we ship grapes in the standard service, which is also among our highest export volume.
The main market for Chilean cherries is China, but the demand from the USA and Europe is steadily growing. Two years ago, 98 percent of Chilean cherries exports went to China and only two percent to Europe and the USA. However, this percentage grew last year to about nine percent, and we are expecting it to grow to 15 percent this year. That is about 3,500 40-foot-containers are expected for non-Asia destinations and 18,500 40-foot-containers will be going to China.
How are the port congestions and COVID-19 affecting the quality of our transports?
The last season has been especially challenging in Chile. We had a lack of man power in the terminals – due to COVID-19 as well as in the depots, meaning less productivity and therefore less movements per call. Another issue was the availability of containers, which we needed to bring with cargo, which was a challenge which remains now and will be in the future. Furthermore, the port in Hong Kong was highly congested. However, we have been working with all the stakeholders in the logistics chain to ensure that the next season will be smoother.
What are the key challenges for the coordination and cooperation between sales and operations when it comes to the transport of cherries?
There is not only a coordination and cooperation between local sales and operation teams, but also between us and offices at the destinations. Our vessels arrive in the ports with up to 1,200 containers of cherries. To coordinate that, we have weekly calls and are working with cargo control and the logistics teams in the Regions. Fleet management and the crew on board are involved as well. We are also using more power packs to provide electricity for the reefer containers. This needs to be coordinated with the claims department, operations, the provider of the power packs as well as the captains of the individual vessels.
How are Chile and the producers of fruit experiencing the effects of climate change?
Climate change has a worldwide impact, and Chile is no exception. This year, it was particularly hot, and we had the driest season in ten years. This was quite a challenge for the producers of fruit here. Fortunately, there are possible solutions for the future. In Chile, we have alternatives for rainwater, as the whole country is situated on the west coast of South America. We can follow the example of Israel and Spain, to desalinate seawater and infiltration of groundwater. Desalination needs a lot of energy, but in the north of Chile we can produce a lot of solar power. We have great preconditions to create green energy and produce water – if we do the right thing as a country.