The start of something good, though challenges exist

Starting in 2015 20/20DC was a subcontractor and partner to the USAID Uzbekistan Ag Value Chain project.  We had some early engagement with the project and then were on “hold” with the project until 2019 when the project got a new Chief of Party (COP) and the focus of the efforts changed and matured to have some focus on the export market linkages.

Our new assignment in 2019 was to recruit global buyers who are interested in Uzbekistan products including cherries, fresh apricots, melons, dried and processed fruit.  We were successful in arranging two tours of key buyers from the Middle East, South Africa, Singapore, Hong Kong, and India. 

With two tours, one in the spring and one in the fall, the buyers were able to see packing plants, meet with exporters and begin to develop a dialogue with exporters. 

From the visits in 2019 to today, June of 2021, we kept the dialogue going between exporters and importers.  We have also worked to integrate and leverage the relationships between the USAID projects and European Bank of Reconstruction and Development projects by simply providing our assistance in the hopes of achieving success for the efforts. 

The following story is a good example of the execution of export trade.  This is not something that happens in a vacuum, it is the result of months of effort, constant contact, and a solid relationship between the 20/20DC Resident Entrepreneur – Heike Hagenguth of Germany, living in Egypt, and the buyers.  Without the trust established by Heike with the importers, which requires years of execution of the CHARM DANCE principles, this relationship would not have matured to this point.  Because of problems with the shipments, the engagement by 20/20DC Resident Entrepreneur Ms. Hagenguth was and is critical to maintain the relationships and keep things moving forward.

Shipment summary

The relatively short shelf-life of 10 – 20 days in the refrigerator and less when not chilled properly, causes great international demand for cherries that fit into a window when other cherries are not available.  Uzbekistan has a window of opportunity to ship fresh products globally during their harvest.  It is a window that closes quickly, but one which the astute seller and buyer will take advantage of when the season and maturity of the cherries cooperates with the open window.

The following is a case study on fresh cherries sent from Uzbekistan to UAE (Dubai) during 2021.   The details below outline what went right and what went wrong with the shipment.  This case study is written to be utilized as a learning tool for ongoing and future efforts to build Uzbekistan exports. 

 Key lessons learned from this experience:

C – Communications the first “C” in CHARM DANCE – full understanding between buyer and seller are critical and on-going.  Not only were communications critical before the contract was signed but also throughout the shipping process.  When problems arose, communications were most critical and in need of attention.

H – Honesty the “H” in CHARM DANCE – one of the lessons of CHARM DANCE is that it is critical to be Honest with the shipment and advise the buyer of any good or BAD news.  When the shipment missed the first flight the importer was advised that the shipment would go in a couple of days, but in fact, there was no flight at that time.  Retailers plan sales based upon pending shipments, so a delay in shipment needs to be advised as soon as possible (ASAP)!

A – Appropriate and consistent quality the “A” in CHARM DANCE – with the delay in shipment and inconsistent sizing of the fruit, the quality arriving at the buyers’ facilities was not acceptable for the market.  A review of the temperature recorders is underway; however, we have seen that the temperature was too high on the shipments for several hours in several locations.  This can be the result of many elements including improper insulation of pallets, the delay in shipment, or failure of the cold chain.  This issue needs to be addressed if this exporter, and for that matter, Uzbekistan is going to be a reliable exporter of chilled produce.  The initial analysis is that there were some major temperature breaches that have possibly affected the shelf life of the cherries. Also, during the actual journey, the temperature increased in the container storing the cherries. In sum, all breaches are probably responsible for the shorter shelf life.  These issues are addressable with proper attention to detail (D – CHARM DANCE).

R – Risk – the “R” in CHARM DANCE the buyer had significant risk with this shipment.  Not only were they doing something that had not been done regularly, if at all in the past, the seller required the buyer to pay 100% in advance of the shipment.  This is difficult as there is little incentive for the buyer to take such a risk when there are multiple sources for the product in the market.  Shipping cherries is a bit different as timing and shelf life keep cherries as a window of opportunity; Uzbekistan has a seasonal window that is different from others and therefore, they can require unusual payments.  If they were selling a more “commodity”, “substitutable” or “interchangeable” product they would not be able to demand terms that are not standard for the industry.  The buyer accepted the risk because he had faith in Heike and the 20/20DC team presenting them with an honest opportunity with in-country follow-up from 20/20DC contacts in Uzbekistan.  The 20/20DC involvement kept this from being a “blind” transaction as 20/20DC provided the role of the honesty broker, a broker only in terms of putting the parties together as 20/20DC made no commission on this effort.  The exporter did not provide claim handling procedures to his buyer.  There were no procedures regarding how to manage a claim and the timelines during which he can accept/reject a claim.  This lack of communications (C of CHARM DANCE) and understanding of the market (M of CHARM DANCE) creates mistrust and hard feelings by not having details (D of CHARM DANCE) defined prior to the shipment. 

M – Markets the “M” in CHARM DANCE – UAE is a new market for Uzbekistan cherries and therefore care had to be taken to ensure that the product was “Appropriate” for the “Market” and that everyone across the supply chain understood the importance of quality control, the timing of the shipment and execution of the shipment.  This was not the traditional local, Central Asian, or Russian market and therefore attention and details had to be handled differently than when selling to those markets. 

D- Details the “D” in CHARM DANCE.  In this transaction, the emphasis and importance of details show both successes and failures.  The first major error with details was the fact that Air Dubai did not accept plastic cartons.  This detail caused additional handling, costs, and delays.  Details were also missed with execution with the shipment “missed” the flight by 30 minutes.  When these delays occurred, it was critical that the importer be advised so that they can plan accordingly (Communications)

A – Advantages the “A” in CHARM DANCE.  This transaction was able to occur because all involved understood the advantages that Uzbekistan cherries presented to the Dubai market based upon the time of shipment.  The Uzbekistan cherries offered a great opportunity to be on the market when others were not available.  This advantage was a competitive and comparative advantage that would only be capitalized upon if the product arrived in Dubai on time and in good condition. 

N – Network the “N” in CHARM DANCE.  This transaction only occurred because the network provided to the Uzbekistan exporter and the Dubai importer through the relationship of the 20/20DC Resident Entrepreneur Heike Hagenguth and the confidence that the buyer has in the 20/20DC network.

This trade illustrates the need for constant contact.  The first meeting between buyer and seller occurred in 2018.  The network was kept alive through regular dialogue between the parties, often through Ms. Hagenguth. 

C – Customer relations the second “C” in CHARM DANCE this transaction would not have occurred if it were not for the strong customer relations between Ms. Hagenguth and the buyers.  The sustainability and strength of the customer relations will depend upon how well the exporter understands and values the concept that the customer is always right.  Long-term potential for this exporter is a strong possibility but will only occur if they provide follow-up on the customer service aspect of the transaction. 

E – Execution the “E” in CHARM DANCE.  This transaction had multiple slips in execution.  Some of these are to be expected with a new transaction as both parties learn the challenges, opportunities, and specifics of the transaction.  Most of the problems with execution can be overcome by the exporter learning from this effort and applying the lessons learned to future transactions, for cherries and all other export sales. 

This transaction proves that transactions do not happen on a timetable set by development projects but on the timetable of business.  This USAID project is closed yet the work continues to yield results. 

Where to from here?

If the issues above are addressed, the potential for exporting cherries in the future to Dubai and other countries is bright.  As trade relationships develop between Uzbekistan and imports like those in Dubai it is critical that execution improve and that buyers are treated with respect and given the value that they deserve.  A bad shipment from one supplier impacts the image of all. 

With the initial “success” of this effort, the 20/20DC team has received the following interest from global buyers after seeing the initial photos and details of the transaction:

Prime Orchards, Hongkong, Mr. Kam Lau: “Nice! Cherries are always interested. Next year in Hongkong.”

Joy Wing Mau, Hongkong, Mr. Allan Day (attended Uzbekistan buyers tour in spring): “of course I remember Uzbek facilitator, and this makes me so pleased. Well done both of you.”

Alex Farm, Egypt, Mr. Hazem El Hawary: “I see that is so good. What are the receiver’s comments? That’s such a good step forward. I need an estimated price to Egypt, I have some importers here who are interested”

Cairo3A, Egypt, Mrs. Eman Fouad: “I need details/prices for Egypt”

JWM Asia Holdings, Hongkong, Mr. Antony Greenstein, MD; “Looks good, Heike, perhaps we should also trial to Singapore. Are you in contact with Kelvin? Ask Danny to hook you up”

JWM Singapore, Singapore, Mr. Kelvin: “Please send quotation sizes 30-32+”

JWM Asia, Mr. Danny Gao: “Please send prices for Philippines, Malaysia, India”

 Timeline Summary of Events

Date	Action	Problem	Lesson learned
1st June 2021	Uzbek facilitator contacts 20/20DC Resident Entrepreneur Heike of Egypt, shows photos of Uzbek cherries exported to UAE, the client is a new Uzbek importer who opened the business in Dubai “Al Uzbek Trading Food Stuff”, photos look very promising, Heike requests if any quantities are remaining, Uzbek facilitator indicates 3,260 kg		Appealing, representative photos showing fruit core temperature in storage, showing fruit size, showing packed fruits in crates and in-store (in plastic crates with plastic liners), showing fruits on the tree
1st June 2021	Heike requests offers CIF Hongkong, Singapore, and Dubai	The exporter cannot quote for Singapore and Hongkong “because there are no direct flights”.   Only 1 cargo flight per week on Uzbekistan air to Dubai	We cannot limit ourselves to direct flights only because then there is hardly any business. It is very possible to transship in airports that have good cold storage facilities, like Istanbul or Dubai international airports. Direct flights on Uzbekistan Airways are subsidized but limited, while flights on Turkish Airlines and Fly Dubai/Emirates are more expensive. This requires the intervention of a freight forwarder, which cannot be done by the company alone as they lack experience.   Information that there is only one flight per week later turns out to be wrong, there are several cargo flights plus other airlines. It is important to know all available flight schedules prior to offering.
	Heike offers cherries to the targeted customer’s owner. Two team members of the targeted customer visited Uzbekistan on the buyers’ tour in spring 2019. customer is interested in the cherries and requests an offer.
	Uzbek facilitator offers CIF 4,350 USD/ton lading Al Makhtoum airport on Friday, 4th of June	Al Makhtoum airport is the old airport that is far away from Dubai wholesale, but Uzbekistan cargo flights only land here and the client eventually accepts	Whenever possible, ship to international airports as they usually have better cold storage facilities and are connected to modern highways.
	Customer offers payment 1 day after sound arrival, requests price revision. Specs: size 26+ min. preferred size 28++, packing in branded carton preferred	The exporter can only offer in plastic crates because cherries are already packed in the cold store, repacking would cause quality problems.	Do not repack perishable, sensitive products that are already packed.   Plastic crates are good for the ventilation of products but pose problems in some markets that do not prefer plastic.
	The exporter does not accept the payment terms of the targeted customer and insists on 100% cash in advance. Exporter offers some qty for free and revises the price.	The exporter does not accept any compromise such as 50% in advance and 50% after arrival, the customer finally accepts because they trust Heike	Exporter wants to “build trust” but that is not a one-way road. Trust comes with time. In case of claim 100% advance causes problems because exporter can easily walk away from the claim and not honor the claim. Insisting on 100% prepayment does not open many doors for business because importers want to manage their risk and cash flow. For long-term business, the exporter can credit insure the importer.
	Uzbek facilitator  suggests LC	Time is too short for LC and QTY is relatively small for an LC	In this type of business, LCs are not really common, not practical when amounts are small, or timelines are short
	The exact QTY is 3,250kg. Exporter wants to invoice 3,200kg and offer 50kg for free but wants to take 100% of the payment in advance. The final price is CIF 4,250USD/ton Uzbek facilitator says he trusts the exporter 100% that he is honest and will export and promised to Uzbek facilitator that he will honor any claim.
	Heike asks if there is any protocol to follow for Uzbek cherries to UAE	Uzbek facilitator /exporter do not know if there are any special protocols to follow	Always inform yourself about protocols to potential markets before offering products, worst case it is not possible to ship at all or only after lab analysis which costs additional time and money.
2nd June 2021	The customer confirms the order and requests an invoice to start payment transfer and to send consignee/notify details.   Shipping is scheduled loading Thursday evening, landing in Dubai on Friday morning.	Flight is scheduled HY143 departing Friday 5 am local time and landing Dubai Friday 8 am at Al Makhtoum.
2nd June 2021	Uzbek facilitator informs that there must be a formal contract for the shipment “but we have time till Thursday”.   Heike is requesting the invoice to start the transaction. The invoice is issued late on this day because the company is waiting for the director to sign/stamp the invoice.		Late documentation can cause delay or cancellation of the shipment when documents have mistakes or are incomplete. Better to send draft documents asap.   Due to the late sending of the invoice, the client can only conduct the bank transfer the next day morning.
3rd June 2021	Uzbek facilitator requests information for labeling. Heike drafts the box end label.	Exporter completes label data but modifies data from “size: 26+” and “net weight: 4.5kg” to “size 24-26-28+” and “net weight 4.5kg plus-minus 0.5kg”, also changed “class 1” to “Class 1-2”   During the discussion it turns out that the boxes also contain a certain qty of sizes 24+ and some class 2 fruits mixed with class 1 fruits.   This is communicated to the client, and he accepts 5% class 2 and 5-7% size 24+   Uzbek facilitator confirms that each box has an actual net weight of 4,625kg to compensate moisture losses.   Label information is communicated several times by WhatsApp and email, but no actual label photo is presented	Labels must be precise and reflect the order given by the client.   Net weight is a standard weight by which the SKU is sold, and it is expected in all markets that the actual net weight is higher to compensate for moisture loss in transit and storage.   Regarding classification, the client order was class 1. The product is either declared as class 1, class 1b, or class 2.       It is important to send the buyer a photo of the final label for final approval and to see the actual layout.
	Exporter starts pushing on the transfer and swift copy on Thursday morning because he has to start local logistics	Transfer done in the morning and transfer advice sent but exporter insists on the swift copy which becomes only available on Thursday end of the day. The exporter is afraid that the transfer advice is not real and wants the actual swift.	Always send all invoices and draft documents early!!!!!   The exporter is asking for trust but does not trust transfer advice enough to start his logistics procedures !!!!
	Uzbek facilitator sends live photos from packing and labeling. 1 pallet is equipped with a temperature logger.   7 of 8 pallets are covered with silver pallet covers to maintain and protect the cold chain. Trucking to the airport will be with the cold truck.		Always good to keep the client in the loop with photos and packing status
	Uzbek facilitator informs that the flight is delayed from 5 am to 5 pm	Heike informs the client and he accepts. Starts to ask for documents as he can only enter the airport to pick up goods with a copy of AWB	Flights during the day or early evening can be problematic because of high ambient temperature and/or humidity. An extra precaution to protect the cold chain must be taken.
	Heike asks for commercial registration and tax card of the importer	Never received	Such documents must be presented upon request
4th June 2021	Loading to the airport by mid-day	Departure canceled as the truck arrived at the airport 30 min after cut off. Distance PH to AP is 30 min only!!!! Cherries returned to the packhouse.   Comprehension of the problem is not fully there, Uzbek facilitator mentions “it is only 20 minutes, and the government must support”	Always load on time, calculate extra time for heavy traffic, inform yourself about cut-off time.   Airlines are not taxis that work on the demand of individuals! Government has nothing to support here. It is simply the mistake of the exporter for not being at the a/p on time.   Per hour Airlines pay 8000 euros, it does not matter even 5 minutes late (All exporters must remember that)
	Uzbek facilitator informs buyer on new landing on Sunday on Fly Dubai at Dubai Intl. Airport then postpones again to Wednesday on Uzbekistan airlines to Al Makhtoum	The client accepts Fly Dubai does not accept plastic crates and requests carton boxes and can only load 1.5 tons of products, so a second flight would be necessary anyway. In addition, the freight for Fly Dubai is 1.5$/kg more expensive than Uzbekistan air.   It is not recommended to repack.	Correctly informed about flight changes and packing concerns, however, this should not have happened with proper flight information requested BEFORE announcing the new landing.
7th June 2021	New flight details confirmed HY333 Tashkent-Dubai at 8.30 am landing Dubai 11 am Freight 100% paid   Original documents will be sent with the cargo including Invoice Packing list COO Export declaration AWB Phyto   Scanned copies of originals to be sent before arrival	Confirmed with client	Confirmation is very important!
8th June 2021	Uzbek facilitator says the client is worried about the shipment and that he cannot send it on time. He will not make any money on this order and just wants to open a new market.	The client is worried about having paid in advance and maybe not receive the shipment and also the possibility of claim	Trust is a 2 sided road, must be built over time and fair payment terms like 50/50 can help build this trust.
	Uzbek facilitator asks if insulated pallet covers are accepted in Dubai. Photos are sent to the client.	The client has no opinion and says they have never received shipments with these types of covers
	Pallets are in a/p cold storage, 7 pallets covered with insulation covers, 1 pallet without, all boxes labeled, photos sent to the client
	Copies of documents emailed to the client
9th June 2021	Cherries land Dubai. targeted customer driver picks up the fruits in the cold truck. Initial QC shows no problems	targeted customer has their own cold storage and has extensive experience working with cherries and other products.  The short life of the cherries was NOT a result of handling inside of Dubai as documented by warehouse temperature records.
	Uzbek facilitator requests that the targeted customer returns a stamped copy of the AWB. This will give some incentives for the exporter and close the tax file for this shipment and put him on the list of “good exporters” in Uzbekistan.   customer returns the stamped AWB.	We need to learn more about these incentives!	The first challenge is to find a buyer and support in this area is critical as Uzbekistan producers have limited international exposure.    Exports face logistics challenges due to the landlocked status of Uzbekistan.  Support from the for logistics, perhaps with rebates or tax incentives,
10th June 2021	Customer sends formal QC report and temperature logger readings. Photos of arrival condition included.	QC report mentions some minimal and tolerable skin defects but says overall the quality was fine. If there will be any serious quality issue upon unloading the pallets, they will inform as soon as possible.
14th June 2021	The customer informs that from 2 days after arrival the quality of the cherries started to collapse. They suspect a breach in the cold chain and that the pallet covers are responsible and “cooked” the fruits. Photos of current fruit condition were sent and shared with the Uzbek facilitator	Heike reviewed the logger readings. There were major breaches in the cold chain before shipping on the 4th, 5th, and 6th of June. Heike informed the Uzbek facilitator but no response throughout the day.   Heike requested stock level and updated QC from the customer.   The targeted customer-owner said he thinks the cherries got “cooked” under the pallet covers.	High chance for a financial claim. Will the exporter keep his word that he will be responsible for quality claims?   Silence is very worrying. The exporter should always keep up the communication, especially in a critical situation!
08/07/2021	Till today customer was only informed about the claim informally and did not have any updated QC or financial request and the customer absorbed the loss.   At the same time, they rejected any offers for a new shipment of cherries from another supplier who was willing to work on 50/50 payment terms.   At NO TIME supplier has contacted the client to inquire about customer satisfaction and walked away from the claim.	The client has lost trust in the product and the supplier.   Need to restore the relationship and also need to understand more details about the claim.   How was the product handled at the destination? Storage temperature?	Trusting the supplier’s words and paying him 100% in advance was a mistake as he walked away from the claim and did not follow up with the client after being informed of the claim.   He did not offer compensation or to share his profit which he claims were>2,000 USD. He spoke impressive words about building trust and gave his word to be responsible for any claim prior to the deal but did not keep his words.   The negative consequence of this behavior is that the relationship between client and facilitator is severely disturbed and currently interrupted. This needs to be restored in a personal visit -> extra, unnecessary expenses for the 20/20DC team that was not receiving compensation for their support of this effort.
	Dubai is a small market and word is already out about the bad arrival		The reputation of ALL exporters from Uzbekistan, and the greater Central Asia region, has been severely injured because of the lack of attention from the supplier.   Damage is a risk (R in CHARM DANCE) that is high in fresh produce.  Everyone involved in the industry understands this.  The challenge for exporters is to address issues relating to damage when it occurs.  This situation is unacceptable and harmful for ALL exports from Uzbekistan.

The use of company names and individual names is limited in this document to protect the privacy of the parties.  This is not an issue specific to these individuals but an example of issues that need to be addressed by the industry. 

Next Steps:

It is critical that lessons are learned from this problem shipment.  If Uzbekistan and Central Asia are going to succeed in exports of fresh produce, this problem needs to be overcome.  A business model needs to be established with expertise and assistance at every step of the process.  The 20/20DC team has several big importers interested in Uzbek cherries for next season and we need to plan that well.  The exporters need support from experts from business principles (negotiating, honesty, customer relations, and all other aspects of CHARM DANCE) to cold storage, packing, and transportation.