China opening up new seafood supply lines
One of China’s largest and most inward cities, Lanzhou, is the latest to get an air cargo link to fly seafood from Southeast Asia. As China negotiates an end to trade tensions with the U.S. it has also been busily opening up new seafood trading routes and supply lines under its “One Belt, One Road” (also known as the New Silk Road) blueprint for opening up trade through new transport routes.
Not long ago, seafood imports into China were funnelled through just a handful of ports and airports, one of the reasons why smuggling such a popular route to get seafood into the country. Yet, recently, a 15-ton shipment of ribbonfish, grouper, and shrimp from Thailand was landed at Zhongzhou Airport, located in the desert outside Lanzhou – the latest in a series of inland ports and airports now allowed to handle seafood imports.
“With this new service seafood from Southeast Asia, we will now quickly reach local peoples’ tables,” a statement from the airport’s management proclaimed. Increasing the supply of imports of staple species like ribbonfish has also been central to China’s goals of keeping prices level.
Similarly, in the southern city of Nanning (capital of Guangxi Province), the Air Asia commercial service from Kuala Lumpur into Wu Wei Airport has become a supply line for both Indonesian grouper, Chilean salmon, and Canadian lobster, all transhipped through to Nanning, which last year was granted the right to handle customs for food imports.
Seafood exporters aiming for regional sales in China now have more options than ever before for entry ports, as Chinese and regional carriers have raced to increase service to regional airports to serve the rising flood of outbound tourists, who are using their newfound wealth to travel abroad. Chinese tourists have become the top visitor bloc in places like Thailand and Japan, but also in many Russian cities and in Indian Ocean islands like Mauritius. This opens up a whole new web of air routes – with new cargo options – servicing regional Chinese cities.
Some local governments have gone further to get into the imports game by using the opened-up trade routes to build giant seafood markets as tourist attractions and economic dynamos. The latest such foray is the Zhuhai Hong Wan Central Fishing Port, which opened recently in the prosperous city which borders the gambling hub of Macau.
The 720,000-square-meter site includes 800 berths for vessels as well as markets and will become a “distribution hub for South China” servicing Zhuhai, Macao, and Hong Kong, according to Liu Jia Wen, deputy mayor of Zhuhai, who performed the official opening ceremony alongside Gao Qing Ying, head of the local agriculture ministry.
The Zhuhai development also reflects another trend in Chinese government – to encourage the emergence of regional economic blocs within China with their own economic efficiencies. Further north, near Beijing, the port city of Tianjin is one of three test zones nationally (the other two are in Guangxi and Jiangxi provinces) for rapid port clearance for food products. Under the trial goods are driven directly from the port to the Hai Ji Xing Foodstuffs Logistics Park, where customs processing is done within two hours, according to Du Lin, assistant general manager at the park who spoke on Beijing TV, the city’s local channel.
The park is part of the officially titled ‘Jing Jin Ji Quarantine Experimental Area” – “Jing Jin Ji” being a bloc encompassing 112 million people in Beijing, Tianjin, and Hebei provinces. The bloc’s main purpose is to supply food – and specifically seafood – into the region, according to Du. He’s confident that supply will increase significantly and pointed out that the experimental zone is a 1.5-hour drive from Beijing’s wholesale markets and restaurants.
In addition to increasing supply, government has also been pushing to lower seafood prices. Zhuhai is offering a subsidy of CNY 100,000 (USD 15,000, EUR 13,200) each to 10 companies to help them expand cold-chain fleets for handling seafood, thus increasing local food supply. Seafood prices were largely flat year-on-year in November and December, according to a China Department of Commerce survey of 36 markets nationwide. This suggests that prices for staple species including carp and ribbonfish remain steady in China.
It’s easy to see how China’s once-huge trade surplus in seafood is shrinking as imports grow to match an export trade that’s largely stagnant. Imports of seafood into China have grown a massive 31 percent between 2013 and 2017. Exports in 2017 totalled 4.34 million tons, worth USD 21.1 billion (EUR 18.6 billion), up 2.40 and 1.99 percent year-on-year. Imports totalled 4.89 million tons, worth USD 11.3 billion (EUR 10 billion) – up 21.1 percent in volume and 21.03 percent in value.
By opening up its ports and airports to imports, China is seeking to nail down lots of supply options in seafood (and other foods) in order to keep prices steady and to reduce reliance on any one supplier, particularly in an era of trade tensions. This is what the “One Belt, One Road” was supposed to be all about, after all – new supply routes open up options for exporters.
But they also increase the specter of competition for resources as shipping to China gets easier.