Chinese Onion Industry Facing Rising Shipping Costs, Other Challenges

Fast rising shipping costs, often delayed shipping, and appreciating Chinese yuan, are the main challenges the Chinese onion industry is facing today.

One exporter from Shandong stated that the factory price of peeled onions is already around $600 per ton, which is nearly $200 higher than around the same time last year.

Industry watchers say there are three reasons for this situation. First, the overall surface area devoted to onion plantation declined this year.

Furthermore, domestic demand has been high, so that a larger percentage of the production volume ended up in the domestic market.

Finally, the average product quality is not as good this year, which means that fewer onions are suitable for the export market. That is why the export price of top-quality onions is so high.

The price of shipping has been high since October last year and shows no sign of coming down. Shipping from Qingdao to Europe costs around 8,500-9,000 Euro ($10,305-$10,911) per container.

Calculated per ton of onions, the shipping cost can be as much as 375 USD. In addition, shipping takes longer and containers often arrive very late. Many ports process containers slower than usual because they have a labor shortage.

The containers are piling up. That is why cargo ships have to spend 2-3 days in port before the ship is cleared. By the time ships arrive at their final destination, they are often 10-15 days late.

In addition, the Chinese yuan recently appreciated, which weakens their export trade. Importers are less willing to import Chinese products because their price is now relatively higher.

All of these reasons combine to create a situation in which overseas importers have very little demand for Chinese onions. The order volume is extremely small.

The exporter from Shandong explained that this situation applies to peeled onions as well as red onions with peel. Now that the Dutch onion season is almost over, a number of European onion processing factories will have to import their onions from China.

At the moment the exporter from Shandong only supplies a small volume of #35-50 onions. The factory price of small onions is around $550 per ton, which is higher than last year.

 

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