Logistics a challenge after busy Chinese New Year
By Mark Godfrey, SeafoodSource contributing editor reporting from Beijing, China
19 February, 2013
Peak season has passed for Chinese shipping companies, which are reporting record demand for seafood during the Chinese New Year festival.
Managers at two service centers managing orders for Shunfeng Express, one of China’s leading privately owned shipping companies, said the firm has been particularly busy the past month shipping crabs and seafood gift boxes around China as gifts for the Year of the Snake.
Shunfeng’s air delivery takes up to three days, with railway delivery taking four days. Shipments from Guangzhou to northern and westerly cities like Beijing or Xi’an. Shipment from Guangzhou to either city costs CNY 18 (USD 2.88, EUR 2.15) per kilo by railway delivery, CNY 22 (USD 3.52, EUR 2.63) by airplane with shipments weighing over 1 kilogram costing CNY 28 (USD 4.48, EUR 3.35) per kilogram and CNY 32 (USD 5.12, EUR 3.83) per kilogram respectively.
A visit to the Bai Jia Kou seafood market in China’s western city of Xi’an confirms how fast the country’s interior is growing in terms of demand for seafood — and how this is being facilitated by a national government emphasis on improving China’s logistics network.
Vendors at the large indoor market told SeafoodSource how they’re able to get live seafood from the south coast provinces of Fujian and Guangdong within one day. One seller, Hao Linlin, explained how his turbot, priced at CNY 42 (USD 6.72, EUR 5.02) per 500 grams, is trucked from Guangzhou city, capital of Guangdong province, a 24-hour drive on the highway that connects the two cities since 2008. Other vendors get their supplies from the other southeast coastal province of Fujian.
As with many of China’s larger seafood markets, most of the vendors hail from the southeast coastal province of Fujian.
“This is because there are networks of vendors and exporters and a huge overseas population through Southeast Asia and the U.S.,” explained one vendor selling dried shark’s fin, abalone and sea cucumber.
Live grouper is also shipped to Bai Jia Kou and sold at CNY 398 (USD 64, EUR 48). Vendor Xu Zhou, who also sells Australian and Canadian lobster, sells grouper at CNY 500 (USD 80, EUR 60) per 500 grams. He pointed to growing prosperity in Xi’an as well as an influx of brand name hotels and retailers. Indeed, one of his customers is the newly opened local branch of the French-operated Sofitel hotel chain. A western-style restaurant at the stylish hotel on Dong Xin street charges CNY 70 (USD 11, EUR 8.37) for a starter of Pacific shrimp and CNY 170 (USD 27, EUR 20) for cod fillet. A Japanese themed restaurant, Koi, serves sashimi while offerings at the hotel’s Cantonese-style Le Chinois restaurant include Australian scallops and barbequed lobster for CNY 98 (USD 16, EUR 12) and CNY 588 (USD 94, EUR 70) respectively.
Shipping long distances can be difficult, according to a Shunfeng manager surnamed Lin at the company’s Beijing service center. “We sign the contracts with the senders to make sure that if the crabs or lobsters are dead when they are delivered, the senders should take all responsibilities.”
Online stores in Guangdong, Shanghai and Suzhou questioned for this article said they could not assure that a crab or lobster could still be alive on arrival. One vendor, based in Shanghai and selling via the Taobao.com platform, explained: “We inject oxygen into the package to make sure the lobster could live as long as possible, but since the airplane doesn't accept packages with water inside, if the customer is really afar, then this is the only way. But if the customer is near to us, like our store is in Shanghai, and the customer is in Hangzhou, we could use the bus network to deliver the seafood and make sure the seafood would arrive alive.”
China’s logistics network has raced to keep pace with a Chinese state policy to develop the country’s western regions which has seen a rise in prosperity in provinces like Gansu, Sichuan and Shaanxi (of which Xi’an is capital). A recent report compiled by the Boston Consulting Group and China Construction Bank noted that the number of millionaires in inland provinces like Gansu was set to grow by 30 percent in 2012, compared to a national average of 17 percent. The report pointed to infrastructure and a shift of manufacturing activity inland as reasons for “high growth potential” in these regions.
Yet getting product to the new rich is not easy. End users of seafood such as chefs and hoteliers often complain of China’s comparatively high logistics costs. China’s government has recently put much emphasis on logistics, seen as key to transferring produce in a traceable manner from rural farming areas to growing urban areas. The Ministry of Commerce has also repeatedly cited a developed logistics system as key to China’s growing local consumption as a share of its GDP and has pledged to stimulate the sector by lowering highway tolls and taxes on the sector. Meanwhile, global logistics firms have complained that their operations in China are restricted to handling international freight only.
An inefficient logistics system is a “bottleneck” to China’s commerce and “pushes up prices and dampens the potential of China’s consumption economy” according to Zhao Ping, a researcher on consumption economics at the Chinese Academy of International Trade and Economic Cooperation (CAITEC). Zhao believes Chinese food producers and distributors “badly need to improve the supply chain.”
Though the logistics system is patchy China boasts sophisticated road and rail systems. Having long sought to put the infrastructure hardware in place, China boasts a highway system which increasingly weaves far-flung provinces together, allowing investment and labor to move between regions. In 2011 the country’s expressway system outgrew the U.S. interstate highway system in terms of length. Tailing out of Beijing, the Jingshi Expressway for instance now meshes into the Jingzhu Expressway, running to 2,000 kilometers in length. China went from 147 kilometers of freeway in 1989 to 53,600 kilometers in 2008 and plans to have 85,000 kilometers by 2030, with much of that figure being added in the less developed central and western regions.
19 February, 2013