Bananas and shrimp, two pillars of Ecuador’s economy, get stuck in the global logistics crisis | Economy

Banana plant in Guayaquil belonging to the multinational Dole, in a file image.
Banana plant in Guayaquil belonging to the multinational Dole, in a file image.Andia (Universal Images Group via Getty)

Ecuador lives by selling bananas and shrimp to the world, but with the global logistics crisis a key link in the production chain has been released. The lack of containers interferes in the production and export process of the two economic pillars of the country, which move more than 6,000 million dollars a year and generate 770,000 direct and indirect jobs. Due to the international traffic jam in maritime transport, the arrival of necessary raw materials such as plastic, cardboard or fertilizers has been delayed, costs have risen, profits have been reduced and trade flows have slowed. But still no one dares to give an approximate figure of the damage in dollars.

“If we continue like this, next year will be tremendously complicated,” predicts Alfredo Hoyos, former president of the Ecuadorian Association of Plastics. “Only a miracle could bring down the prices of raw materials and normalize the entire chain,” diagnoses the representative of one of the core unions for the other productive branches of the country. Plastic, Hoyos recalls, is used in everything that is exported: bananas, shrimp, cocoa, flowers, coffee or fish. As the price of polyethylenes has skyrocketed, everything else becomes more expensive. And consequently, he points out, Ecuadorian products are less competitive in the international market.

Bananas transfer the logistical brake to their annual export figures, which have fallen both in volume and value. From January to September —the date of the last cut by the Central Bank of Ecuador— sales have fallen 5.5% in tons and 9.1% in dollars compared to the same period last year. In nine months, 5,253 tons of the fruit have left the ports and 2,598 million dollars have entered the economy from the banana sector, which generates 500,000 jobs. On the other hand, shrimp, which is the first export product and source of work for 270,000 people, has not yet had negative figures. Despite being also a victim of the brake in world trade flow, it has placed 19.9% ​​more in volume and 32.3% more in dollars, because it has harvested a good year in terms of production since it is an item with a higher price that absorbs the price hike in logistics.

A container that left Shanghai and docked in Guayaquil was chartered for 1,200 dollars a year ago. Today, it’s $ 18,000. And, according to what the director of the plastics union predicts, that price escalation will extend to 2022 until, at least, the third quarter. The same X-ray conditions the decisions of the cardboard companies of Ecuador. “2022 is going to be a very complicated year for exporters due to a possible shortage of cardboard boxes,” warns Andrés Jiménez, general manager of Papelera Nacional. A scenario aggravated by “significant increases in the cost of cardboard boxes and difficulties in finding spaces in shipping companies in addition to high transportation costs.” This year, the country has paid 2,100 million dollars more (47% more) in the import of 26% more raw materials.

The paper freight was paid a year ago 500 dollars for each ton, according to Jiménez, while now it comes out 1,200 dollars for the same amount of imported material. “The worst of all is that no matter how much we are willing to pay, the necessary volume is not achieved,” laments the businessman. Today there are 55,000 metric tons less of paper to make boxes, inventories are low and “that complicates the production of cardboard in times when more paper is required.” December is the high season for bananas and it is followed by the flower season, for Valentine’s Day, which is in the five main export items of Ecuador. “And not to mention shrimp exports that have also grown in volume compared to previous years,” concludes the manager of Papelera Nacional.

Without plastic, without cardboard and also without fertilizers, or paying much more than normal for these raw materials, Ecuador’s production chains must give up part of their profitability in order not to lose competitiveness in the market. The plastics sector, which employs 120,000 people, has absorbed up to 25% of the increase in the cost of polyethylenes with which they manufacture covers and wrappings for all kinds of products. But Hoyos talks about 80% more of the variable cost in imported material. “The entire chain is damaged. Who absorbs the price increase? All, and that pushes to dismiss employees ”, finishes the business leader.

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George Holan

George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.

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