Distribution of frozen seafood to Chinese consumers may get easier now that the country’s leading express delivery firm has announced that it’s ramping up its cold-chain distribution services in response to increased demand for seafood by online shoppers.
Shunfeng Express has launched ‘Cold Games,’ a service that will get perishable food products to customers who order online or through retailers. Shunfeng claims the cold chain covers only 23 percent of China’s seafood, compared to 95 percent in the European Union and United States. The company will provide a one-stop service of refrigerated warehousing, trucks and airplanes as well as supply-chain finance, according to Shunfeng boss Li Dongqi, announcing the launch to journalists in Beijing this week.
Increasingly, cold chain is being linked to the issue of food safety, a government priority in China, said Li, who says his firm will focus on cold chain as its “key business priority” over the coming decade.
But as well as being a third-party logistics operator, Shunfeng is increasingly tapping the online-shopping segment, selling high-end food products directly to consumers. Online sales of seafood and other perishables is limited by the cost of cold-chain logistics in China, which is four to five times the cost of non-refrigerated logistics, according to Li. Shunfeng will provide services to “all parties, even competitors,” said Li.
Well-known brands that look to a reliable cold chain to expand their presence include Zhangzidao, which retails packs of frozen scallops (flavored, cooked and in shell) for RMB 31.80 (USD 5.18; EUR 4.10) at Beijing outlets of Walmart, one of the biggest retailers in China by market share and geographic reach.
Up to 70 percent of the retail price of seafood goes to compensation for losses in transit, said Hans Peter Reust, managing director at Star Farm, which supplies outlets of German wholesale-retail giant Metro in China. That’s because 80 percent of food is trucked by road in non-refrigerated vehicles, he added.
Other seafood brands filling up the freezers at WalMart include the Thai-based Charoen Pokphand (CP) conglomerate, which sells shrims and pangasius fillets as well as frozen ready-meals such as shrimp wonton soup, a favorite dish in the popular Cantonese cuisine style. Among the multinationals, Marine Harvest sells packs of ‘heat and eat’ salmon portions at RMB 39.80 (USD 6.48; EUR 5.14) per 200 grams.
The expansion of these brands is very much dependent on reliable cold chain logistics networks across the country. Shunfeng is likely seeking to consolidate its position as China’s leading dispatcher, more nimble than state-owned giants like China Post, which previously monopolized deliveries here. “Cold chain logistics is very intensive industry in terms of capital and technology,” said Li.
The absence of cold-chain networks has limited domestic distribution for Chinese seafood processors. Among them, in the central city Chinese of Zhengzhou, is Xian Mei Lai, a Walmart supplier that sources shrimp, tilapia and other domestic seafood in Guangxi province, as well as pangasius from nearby Vietnam and also, increasingly, Pacific cod for Western-style battered seafood. The firm operates its own refrigerated trucks across populous central provinces but has been challenged in its national expansion by the high cost of road-based cold chains, according to a company sales prospectus.
Across China, government has backed major cold chain projects: In Tianjin, the port city just east of Beijing, the Northern China Cold Chain and Aquatic Products Processing and Distribution Centre is set to deliver huge refrigeration facilities to processors and pelagic fleets offloading here. A 10,500-metric ton capacity cold chain warehouse has already come online, says the Binhai district government, promoting the project.
Established in 1993, Shunfeng operates around 40 cargo planes and almost 12,000 vehicles. It’s estimated the firm’s had a turnover of almost RMB 25 billion (USD 4 billion; EUR 3.2 billion) in 2013 and while the firm models itself on giants like UPS and DHL it charges fees that are a fraction of those charged by multinational peers. These low fees, and a dense network of delivery personnel in China’s major cities, have been central to the phenomenal growth of online shopping in China.
