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Interest rates bite sea freight demand as food growers prepare export plans

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Global shipping prices have eased as more containers become available and competition for freight increases.(ABC News: John Gunn)

Key points:

  • Global shipping rates are falling, giving exporters hope they may be able to access more global markets

  • WA's biggest table grape grower is harvesting and says export shipping containers are more readily available

  • A freight forwarder says interest rates appear to have hit household spending, reducing demand for sea freight

Roger Fahl from Fruitico says the table grape harvest signals the beginning of the company's export program. (ABC News: Jessica Hayes)

Table grapes from Western Australia will be carefully packed into shipping containers and exported to China over the coming weeks, with improved global shipping container rates and transit times a welcome benefit at harvest time for grape growers.

Due to COVID-related ports congestion, sky-high shipping costs, and a shortage of containers, exporters of commodities including grain, fruit, vegetables, and meat have struggled to get product to markets over the past two years.

But there are signals this year's crops could have a smoother journey to global markets.

In the Swan Valley near Perth, grape picking is underway while WA's largest table grape grower Fruitico has begun its harvest operations in the south of WA.

Chief executive Roger Fahl said the company pre-booked about 180 specialised shipping containers for its exports.

He said container availability had improved and shipping rates had reduced significantly.

"We've got containers booked in now ready to go. Probably 25-plus containers of fruit will go to China of our red seedless variety, that goes to Shanghai and Beijing," he said.

"We'll also be shipping some Celebration, our red seedless variety, to the east coast, and supplying our domestic customers in Perth."

About 60 to 70 per cent of Fruitico's crop is sold overseas, equating to about 400,000 cartons of grapes.

China is an important and valuable market for Australia's table grape industry. (Supplied: Tony Kundid)

Mr Fahl said containers would still be trans-shipped through Singapore, a process that had caused significant delays last year for some shipments, costing the company $180,000 in fruit quality loss.

However, he was optimistic less congestion in Singapore meant trans-shipments would operate more smoothly this season.

"We do need to get a lot of this product offshore. It's in demand, our brand is well known in Asia. We just hope we can get it through the system and it all flows nicely," Mr Fahl said.

Bottlenecks in the Port of Fremantle have also caused delays for Australian exporters and importers for the past two years.

"It's always a worry on the wharfs. Hopefully everyone plays ball and things move out of the country smoothly, but you just never know," Mr Fahl said.

"If [fruit] is held up there we pull it back to the farm and hold it here or move it to another market."

Grapes grown in WA, such as Sweet Sapphire, are in demand in Asia. (ABC Rural: Eliza Wood)

Hopes of returning to markets

Harvest is some months away for WA's citrus growers, but Joseph Ling from Moora-based AgriFresh said reduced container rates could allow the company to reinvigorate trade into pre-COVID markets such as the Middle East, Vietnam, and Indonesia.

"We are hearing by the second quarter of 2023, not far from our [citrus harvest] starting, the price will continue to drop, but not in a huge volume," Mr Ling said.

However, he stressed the industry was still a long way from pre-COVID pricing.

"Pre-COVID, for Singapore it was about $US1,500 container rate without any other charges. It went up to about $3,200 at the height of COVID, it's now about $2,000 ($A2862) for Singapore."

A WA citrus exporter unable to access markets in the Middle East due to high sea freight charges is hoping to resume exports this season.(ABC Rural: Kellie Hollingworth)

Premium Grain Handlers' manager John Orr exports grains in containers out of WA and expected global freight rates to drop, but agreed they were "not nearly" down to pre COVID levels.

"We've come from really dizzy heights, but it's now settling down so we can be competitive with low margin commodity products exported internationally again," he said.

"We have a lot to look forward to, to us being able to resume relationships with our customers that we had built up over the years."

Container grain exporters hope falling sea freight rates continue, allowing them to compete on the global marketplace.(ABC Rural: Jo Prendergast)

Interest rates decrease spending

Brian Hack from EES Shipping is a freight forwarder based in WA.

He said inflation and rising interest rates had reduced spending on some household items, which was flowing through to reduced sea freight and eased port congestion.

"It seems like there is a lot of surplus equipment around the world now. Shipping lines were using equipment and containers that should have been retired," he said.

"But now there is a lot of new equipment on the market and it's moving around the world quite freely."

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