With supply chains getting shorter, more direct sourcing and increased competition from emerging markets, trade is getting a whole lot tougher for Europe’s re-export hub.
“For European importers it’s becoming more and more of a challenge to get the right volumes and also quality of the products they want,” says Cindy van Rijswick, a fruit and vegetable industry analyst at one of the world’s leading agricultural lenders, Rabobank.
Van Rijswick, who will be one of the local experts in a global panel of thought leaders at next month’s Amsterdam Produce Show and Conference, says the Netherlands is losing ground to other European ports and her compatriots need to adapt.
“I think it’s a general trend that supply chains are get shorter so there’s also more direct trade instead of trade via an export hub like the Netherlands, so that’s a trend that will continue,” she tells PBUK.
“Although for certain products we don’t see that major change because some of the leading companies are based in the Netherlands.
“For example in avocados the Netherlands is still a very important hub and that has not changed much, but for other products the position is a little bit under pressure.”
While these dynamics may cut the country’s import and export statistics, the Dutch aren’t necessarily losing out.
“It sometimes can be Dutch import companies that send the product directly for example from Chile to Spain, but without sending them first to the Port of Rotterdam.
“Everybody needs to work more efficiently so if possible they will send more directly to other ports.
“What you also see is many of the overseas exporting companies – big companies like Camposol in Peru or Westfalia from South Africa – they have opened their own import offices in Europe. They can bypass Dutch, UK or French companies and do their imports themselves.”
And it is not just other European ports that are presenting competitive challenges.
“What I hear from importing companies is that more and more they need to pre-finance their suppliers which is quite risky for them,” van Rijswick says.
“And because there’s a big demand from Asia and other emerging markets, it’s getting more difficult for them to be an attractive market for countries like Chile, Peru, Morocco and others.
“The European market also has really high requirements in the big supermarket chains – they have very high requirements on residue levels, on ethical labor on all sorts of issues, while in Asia and the Middle East requirements are a little bit lower so often it’s more attractive for exporting countries to send more produce to these countries.”
In such an environment, how then do Dutch importers make the most convincing proposition to suppliers?
“I think there are different strategies. Of course they need to pay the right price which is sometimes difficult because the retail landscape in Europe is so competitive there is always pressure on prices,” the Rabobank analyst says.
“They have to do some payments up front but they can also become more of a partner to their suppliers, they can advise them on agronomic practices and they can also give more long-term guarantees.
“Maybe they can co-invest in new plantations or machinery and packing houses, so they need to find these types of ways to become long-term partners.”
Avocados are one commodity where competition is intense, while van Rijswick also points to blueberries, sweet potatoes and high quality table grapes as other crops where Dutch and other European importers are vying for supply.
“In other products it might be less of an issue, for example apples,” she says.
“But I think definitely the Dutch companies have to adjust their way of working. The trade environment is changing to more direct partnerships between growers and exporters and often the retailer.
“These import companies are sometimes still needed and sometimes they need to change more into a logistics company; often that will mean they have to work from other countries or change their activities or become part of an international group.”
In parallel to the increased sourcing challenges comes greater risks for fruit production and trading generally, she says, whether it be due uncertainty in politics, the economy or weather. And finally, the end product has to also be in line with consumer trends.
“The industry also needs to take care of that and find ways they can reduce the impact of these [weather] events.
“On the consumer side there has been a major change from traditional whole fresh fruits and vegetables and also processed fruit and vegetables to more fresh convenience products. I think that’s also a major change of the last few years and it’s a change that will continue.
“It’s partly driven by the companies that are searching to add more value to the products they sell, to have better margins, but it’s also highly driven by consumers and retailers.
“Retailers also need products to differentiate themselves and consumers are just looking for anything that is convenient.”