May 2022 monthly update from our global network of In-Market Representatives about what's going on in markets around the world.
Food Export – Midwest and Food Export – Northeast have developed a network of uniquely experienced 19 overseas In-Market Representatives around the globe. These local marketing experts with food industry experience provide on-the-ground help in assisting Food Export – Midwest and Food Export – Northeast to implement our various programs and services.
In addition, through regular trade servicing, these local representatives are aware of issues, trends and opportunities for international buyers to connect with suppliers of U.S. agricultural and food products. Every month we will share with you some of the top market information from the trade servicing reports we receive to help you improve your international exporting efforts.
Global shipping costs remain considerably higher than they were before the COVID-19 pandemic began, however there is a glimmer of hope as they are beginning to trend downwards. Recently Caribbean importers have seen almost a 50% reduction in shipping costs.
According to industry experts, the cost for shipping a 40ft container is now between $10,000 and $12,000 whereas last year it was between $18,000 and $20,000. However, before the pandemic it only ranged from $4,000 to $5,000.
According to a recent article from Forbes experts are concerned that China’s recent new string of COVID-19 lockdowns will continue to have a major impact on global supply chains.
The lockdown in Shanghai has been featured heavily on the news and social media for a few weeks now. The lockdowns are affecting much more of the Chinese population than just Shanghai, at least 373 million people have been affected by recent lockdowns.
Shanghai is the world’s largest port, and while it has remained open and operating throughout the lockdowns, it has not been smooth sailing. Shipping containers are stacking up at an alarming rate due to a variety of reasons. The shipping company Freightos recently commented that “Even with air and ocean ports open, the length of the shutdown could make this iteration the most significant logistics disruption since the start of the pandemic”.
It is expected that once the lockdowns end the amount of backed up goods that needs to be transported will cripple the supply chain even further, extending the effects for the foreseeable future.
Many retailers invested heavily in their e-commerce platforms the last few years because of the increase in online shopping due to the COVID-19 pandemic. Stores like Walmart, Soriana, Chedraui, and LaComer, all put significant resources into developing their online portals and strengthening their e-commerce strategies. Consumers are now much more confident buying online and retailers have to try and keep up with the efficiency and continue to add value to retain customers.
Walmart is the chain that has performed the best due to their higher number of stores, but Soriana, Chedraui and LaComer, have also been successful online. For example, LaComer’s e-commerce sales increased 14% in 2021 and represent 7.9% of the total sales. And Soriana’s e-commerce sales increased 58% in comparison with sales in 2020.
According to Euromonitor It is expected that by 2025 e-commerce sales with reach 24% of all sales for Mexican retailers.
According to the South Korean Ministry of Trade, Industry and Energy the demand for food products has soared in Korea recently. And sales by major retailers have increased significantly, going up 7.1% in March 2022 compared to the same period last year.
Other channels have reported increases in sales as well:
While sales have increased recently, the economic situation in Korea has become increasingly difficult since the COVID-19 pandemic began. More people prefer cost-effective products than ever before, but there is still also a large demand for premium products. According to the Korea Economic Research Institute (KERI), the Engel index, which shows the proportion of food costs among household consumption expenditures, reached its highest level in 21 years in 2021. The Engel index rose 1.5% points over the past two years, from 11.4% in 2019 to 12.9% in 2021.
Sales from retail and department stores are clearly polarized as consumers with low incomes are increasingly looking for inexpensive products, but demand for premium products is also increasing.
The inflation of food prices in the U.K. is at its highest rate in a decade. In February 2022 it was reported that food prices had increase by 7% while electricity prices have risen 19.2% and gas prices have risen 28.3%.
The National Federation of Fish Friers (NFFF) expects that one third of fish and chip shops in the U.K. might go out of business in the next 6 months due to the increase in electricity and ingredients prices. Specifically due to oil and white fish shortages, a direct result of the ongoing conflict between Ukraine and Russia.
50% of the sunflower oil used by U.K. fish and chip shops comes from Ukraine and 45% of the global supply of white fish, the type of fish most often used in fish and chip shops, is sourced from the Barents Sea in Russia. Seafish estimates that Russia supplies around a fifth of all the white fish consumed in the U.K. U.S. bans on buying Russian white fish has led to more exports from countries like Norway and Iceland. This new competition is contributing further to the increase in prices.
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