Kenyan avocado exporters face challenges due to disruptions in the Middle East, which have increased freight costs and transit times. Instead of retreating, they need to expand production, diversify markets and improve infrastructure to remain competitive.
Kenya is one of the largest exporters of avocados in the world with 3,000 to 4,000 reefer containers of the nutrient-dense fruit leaving the Port of Mombasa every season.
Every year, Kenya’s avocado export season starts at the end of February and goes till October depending on the variety of avocados exported. Thus we are very close to the beginning of a new season. However, there is one thing that is at the top of every Kenyan avocado exporter's mind: the situation in the Red Sea. Because more than 90 percent of all their avocados take the sea route and thus access to their most important markets in Europe is limited.
The ongoing conflict in the Middle East and the Houthi attacks on the Red Sea have stretched the Kenyan and East African perishable logistics to their limit.
“We're right at the edge of what is technically possible,” says Christopher Flowers, Managing Director, Kakuzi.
Unless we get everything 100 percent right about the fruit maturity, pulp temperatures, cold chain temperatures and the management of gases, that fruit is dead on arrival.
Christopher Flowers, Kakuzi
Supply chain stretched to limits
Before the Red Sea disruptions, most of these avocados used to first travel on smaller ships from Mombasa to the Middle Eastern ports in Oman's Salalah or UAE's Jebel Ali before it was transferred to bigger vessels, travelled through the Suez Canal to enter the Mediterranean Sea and reached Europe within 30 days. Due to the Red Sea attacks, these avocados which still travel to the Middle Eastern transhipment ports, come down all the way back past Mombasa and travel through the Cape of Good Hope to enter the Atlantic Ocean and access Europe.
“We're now adding at least two weeks,” informs Flowers.
According to him, the controlled-atmosphere containers can preserve the creamy fruit for a maximum of 50 days. Our ability to handle that fruit upon arrival and move it to customers is now at rock bottom.
"We've got no safety margin whatsoever in the life of that fruit.” he explained.
“Unless we get everything 100 percent right about the fruit maturity, pulp temperatures, cold chain temperatures and the management of gases, that fruit is dead on arrival,” he added.
Kakuzi is a listed Kenyan agricultural company trading on both the Nairobi and London Stock Exchange. It is one of the biggest producers and exporters of avocado from Kenya with 1,200 hectares of avocados in the ground, predominantly Hass avocados. 60 to 70 percent of Kakuzi’s income is derived from its Avocado business.
“Anecdotally,” Flowers informed, “about half of the fruit that was exported out of Kenya last year was thrown in the bin.”
The biggest logistics challenge for avocados has to do with its perishability.
For instance, Martin Ochien'g, Group Managing Director & CEO, Sasini, points out that avocado follows a very strict timeline and if there are any delays, quality is affected.
“Between harvesting and eating, avocado has about 40 days. 10 days to get it from the orchards to the packhouse and 30 days to move it from our packhouse to the shelf. Once we put it on the refrigerated containers, we've got about 28 to 30 days to get it onto the shelf and then it starts ripening,” he said.
Founded in 1952, Sasini is listed on the Nairobi Securities Exchange and is one of East Africa's largest agricultural businesses that grows and exports tea, coffee, macadamia, and avocados. The company mainly sends avocados to European markets in Holland, Germany, France, the UK and Spain.
The Red Sea crisis is affecting not only the transit time but also the freight cost of sending avocados from Kenya to Europe. Even though there are no stable rates and it depends on shipment, time and destination, Ochien'g informed us that the freight rates have almost doubled from normal levels.
“A container from Mombasa to Europe pre-Covid-19 pandemic was between $1,500 and $2,000. With the pandemic, that went to about $2,000 to $3,000. After the pandemic, it normalised to about $2,000 to $2,200. With the Suez Canal closed, it's $3,000 to send a container to Europe,” he said.
Ochien'g also confirmed that their volumes have gone down due to the closure of the Suez Canal.
“We've been very selective where we're exporting because we don't want to export just for the sake of exporting and losing money. Also, where we used to export a lot of volumes, now we have to be careful because we have to make sure that the fruit arrives in acceptable conditions,” he said.
Ochien'g also noted that they have adopted a model where half the fruit they export is from their own orchards and the other half from small-scale farmers.
“So, we can play around with volumes. When we need a lot of fruit, we go to growers. When we need less fruit, we just use our fruit from our orchards,” he added.
If we can crack those markets, it will be a good expansion. The demand in Europe is very high, but the risks of getting fruit to Europe are also very high.
Martin Ochien'g, Sasini
How about other markets?
The Red Sea issue is a pure geopolitical crisis in the Middle East. Neither the East African governments nor the shipping lines can do anything about it, and thus, the European market is in a difficult-to-reach zone for Kenyan avocados. Here comes the question: why don't you take the fruits to the East?
In fact, Harm-Jan Mostert, Commercial Director Perishables, DB Schenker, reports that the Kenyan avocado industry is diversifying its business both in terms of markets and mode of transport.
He noted that the Red Sea crisis is pushing exporters more to air freight. “However,” he said, “not many customers are willing to pay for air freight because the rates are way higher than sea freight.”
“Airlines prefer flowers over vegetables or fruits, making it harder to secure air freight capacity for avocados,” he added.
Europe is by far the biggest market for Kenyan avocados.
As Flowers of Kakuzi puts it, “There is no way that any of the other markets can compete either in price or volume that they can take.”
According to him, Europe can absorb about 700 container loads or 17 million kilos of avocado in a week.
The Middle East and China are the two viable options in front of Kenyan avocado exporters but both these markets come with their own challenges.
“The Middle East can take a lot of fruit, but the prices are so low that there's no business,” said Flowers.
He also pointed out that China is a growing market but not at a very fast rate. It has a 1.4 billion population but the consumption level is very low. But education is happening.
Ochien'g called the dependency of Kenyan avocados on European markets a challenge.
“There's a need for us, not just as Sasini, but as Kenya as well, to look at other markets,” he said.
He informed that Sasini has already made inroads into the Chinese market, and is planning to enter the Indian market this season while also exploring the Middle East markets such as Qatar, UAE and Saudi Arabia. He also confirmed the price sensitivity of avocados in Gulf countries and mentioned the challenge with different protocols in China.
He added, “If we can crack those markets, it will be a good expansion. The demand in Europe is very high, but the risks of getting fruit to Europe are also very high.”
But remember Kenya is not the only country that is trying to sell their avocado in new markets. For instance, Peru is competing with Kenya for the Chinese market and they upped their game last year.
From an East African perspective, the Peruvians can now outcompete us in China.
Christopher Flowers, Kakuzi
Latin American competition
“Up until last year, Peru could land avocado into China at about 45 to 50 days and so it was right on the edge of what was technically feasible,” informed Flowers of Kakuzi.
In November 2024, during his Latin American tour, Chinese President Xi Jinping inaugurated the Port of Chancay, a newly developed deep-water port in Chancay, Peru in the Pacific. This $3.5 billion project is a joint venture between China's state-owned COSCO Shipping Ports, holding a 60 percent stake, and Peru's Volcan Mining Company, which owns the remaining 40 percent.
According to Flowers, the port can take fruits from Chile, Peru, Colombia, and Bolivia, reduce the turnaround time and move them to China in about 30 days or less.
“So they've taken about 20 days off their transit times by spending a huge amount of money in logistics,” he said.
“From an East African perspective, the Peruvians can now outcompete us in China,” said Flowers.
He also pointed out that the competition is not just with the origin but also with the market window. In fact, Kenya and East Africa have comparatively shorter market windows compared to their Latin American counterparts but it is ahead of their season.
Ochien'g of Sasini pointed out that Kenya has a specific window in which it's the only one that supplies avocado to Europe together with South Africa because of the seasonality of the regions.
“So we try to get into Europe just before South Americans, Peru, Mexico and Colombia come in because they have higher volumes and attract lower prices,” he said.
The earlier season is also an advantage for Kenya as the avocado market is affected by global production and flow.
“Peru is very big in avocados; they flood the European market, and the Kenyans suffer from that. So when the Peruvians are in their peak season in the European market, the Kenyans stay out because the avocado price comes down heavily,” said Christo van der Meer, Manager Seafreight Perishables at Kuehne+Nagel East Africa.
“For instance,” he added, “in June last year, no Kenyan exporter shipped avocados to Europe because the Peruvians were on the market.”
The Red Sea crisis has made it worse for Kenyans. Mostert pointed out that Latin America is gaining market share in Europe and North America due to these logistical issues.
Kenya is a very promising country when it comes to the export of agricultural products. But it is not that big that it is very important for container carriers.
Christo van der Meer, Kuehne+Nagel
Need to become big, spread out
Flowers of Kakuzi emphasised the importance of Kenya becoming big and spreading out in the avocado business. Talking about the competition, he noted that the quality of avocados comes down to two things: the original quality with which the fruit is put in the container and the transit time.
“If you're putting rubbish fruit in a carton, it's not going to get any better on transit. Then it's about the transit time. Are you managing the controlled atmosphere conditions in that transit time? And how quick is that transit time,” he said.
Kenya has so many perishable products, so why don’t container carriers just go directly from Mombasa to Europe? The hard truth is that Kenya enjoys less bargaining power in the freight market.
“East Africa doesn't have the volume of fruit that Peru has. The number of ships that operate and the capacity offered are sized to the volume being exported,” Flower said.
“So we've got to be big enough, and spread enough over the market weeks to be able to be relevant to retail players,” Flowers added.
“Kenya is a very promising country when it comes to the export of agricultural products. But it is not that big that it is very important for container carriers,” says van der Meer.
He also emphasised the need for the Kenyan avocado business to become big to attract more capacity and important enough to gain more bargaining power in the freight market.
Build more packhouses close to production centres rather than in Nairobi. This can help more small and medium-scale growers access the cold chain, allowing them to participate in the global supply chain.
Kenneth Oluoch, Knvella Fresh Exporters.
Let's focus on infrastructure
Kenyan avocados not only need to spread outwards but also inwards. For instance, Kenneth Oluoch, Director of Nairobi-based Knvella Fresh Exporters, pointed out the need to expand the avocado production centres from the current concentration in the central Kenyan region to other geographies in Kenya to make sure that the fruit from the country is available in the global market throughout the year.
“Out of eight provinces in Kenya, the two provinces of Central and Rift Valley produce the most avocados. If the government can support and mobilise, other provinces can produce avocados and have good volume and quality fruit. That will give us the all-year-round season,” he said.
He gave the example of Tanzania as he also works with Tanzanian farmers and exports avocados from the country which maintains an all-year-round avocado season.
“They have a very long season of avocado because they grow the fruit in different regions of the country. So if the season is off in one region, the other region will come up,” he said. Even though the volumes are low, he predicts that Tanzania will do better in the next five years.
Oluoch also emphasises the importance of building more packhouses and consolidation centres close to these production centres rather than in Nairobi, where they are currently concentrated. This can help more small —and medium-scale growers access the cold chain, which is necessary for maintaining the optimum shelf life of avocados, and allow them to participate in the global supply chain.
van der Meer supported this argument by pointing out cold storage and pre-cooling capacity as the biggest challenge for Kenyan avocado shippers particularly during the peak season.
“There have been quite a few successful Kenyan shippers before the Red Sea situation, because the transit time was relatively short, 25 to 28 days to Rotterdam. But when it comes to longer transit times or delays, the starting quality of the fruit has to be impeccable. If you properly pre-cool the avocados, making sure that they are loaded inside the container at five degrees Celsius, you start off quite well. But when it's peak season, we have a lot of avocados coming in, and packing a lot of avocados is a challenge,” he explained.
Stakeholders across the supply chain also confirm that there are positive signs of Kenyan avocados becoming big, and spread out and infrastructure getting built close to avocado farms in Kenya.
For instance, Raghav Gandhi, Chief Executive Officer of Africa Logistics Properties (ALP), informed us that ALP is currently in discussion with an avocado grower in Naivasha to create an 18,000 sq ft packhouse in a new land parcel for them.
Gandhi noted that the party is substantially increasing its business, moving into exports, and needs a dedicated facility for itself.
“They have an operation but not as sizable as they are planning to put together. So this would increase the scale of their business substantially. Right now, they have a smaller operation in a small facility in a wider park,” he said.
ALP and Gandhi are actively participating in the design of the packhouse. “How the supply chain would flow through the packhouse. Where are they going to do the receiving, and when are they going to do the sorting? Where are they going to do the packaging, etc,” he added.
“The company has approached us and this is a commercial arrangement specifically for this party. For us to do that on a speculative basis in places outside Nairobi is a very different proposition because it takes a lot more risk. We can build this because we have mitigated the risk significantly by having a pre-lease arrangement,” he said.
The Kenyan avocado industry is at a crossroads. The challenges posed by geopolitical disruptions and competition from Latin America are significant, but they also present opportunities for growth and diversification. By expanding production capacity, investing in infrastructure, and exploring new markets, Kenyan avocado producers can overcome these challenges and establish themselves as key players in the global avocado trade.
This feature was originally published in the January - February 2025 issue of Logistics Update Africa.