China’s recent move to tighten inspections and controls of imported seafood is forcing Russian seafood exporters to begin to look at other markets.
Claiming it has found live coronavirus strains being carried by seafood imports, Chinese Customs has increased its scrutiny of all imported food, resulting in delays in the time it takes for products to get to market.
China represents the largest market for Russian seafood, accounting for 61 percent of the country’s exports in 2019, with a total of 1.09 million metric tons (MT) supplied to China with a value of USD 3.3 billion (EUR 2.7 billion). The bulk of Russian seafood exports to China is pollock, with the pollock trade worth between USD 580 to 600 million (EUR 477 to 494 million) annually.
But beginning in early 2020, the COVID-19 pandemic has threatened that relationship. Initially, logistical problems were the primary difficulty, as the coronavirus ground global supply chains to a halt. More recently, as China has launched a comprehensive control campaign to ensure no COVID-19 strains enter the country on frozen food, Russia appears to have come under special scrutiny due to its proximity to China. In late September, Customs authorities in China’s Jilin Province reported a positive COVID test result for packaging of squid imported from Russian seafood giant NOREBO, raising the hackles of Chinese authorities, who ordered all of Russia's huge volumes of seafood exports to be subject to inspection.
NOREBO’s representative rejected claims that its products could be carriers of COVID-19, citing its controls over its manufacturing and shipping process. The company told media the crews of its fishingvessels are frequently tested for the virus, that every one of its vessels has a doctor on staff, and its catch and products are handled, manufactured, and transferred for sale using hands-free methods. The company laid the blame for the incident on a storage facility in Changchun, noting there was an outbreak of the infection registered among the facility's staff.
In November, Chinese Customs initiated virtual inspections of Russian vessels set to call in Chinese ports. The process, completed via a video connection, includes a visual inspection, an overview of on-board manufacturing processes, and an interview with staff in charge of the implementation of safety measures. The General Administration of Customs China has announced it will conduct eight virtual checks through the remainder of 2020.
It’s possible that the proximity between the two countries, a benefit to Russian exporters under ordinary circumstances, now brings additional risks, as the relatively short delivery time for goods moving from Russia to China give the coronavirus a better chance to survive the trip.
In November, a Russian railway cargo was suspected to have delivered strains of COVID-19 into the border township of Manzhouli, Global Times reported. Russia's own customs service, Rosselkhoznadzor, reacted by promising to work with Russia’s Federal Agency for Fisheries to tighten control procedures, a move requested by China.
As a result of these additional control, Russian exporters are now facing much more difficulty and significant delays in gaining customs clearance for shipments to China. Clearance for a container shipped by sea now takes more than 15 days, when it formerly took five to six days, an unnamed industry source told Kommersant. The delays were confirmed by Dobroflot CEO Alexander Efremov, who said the discharge of a 5,000-metric-ton reefer can take up to three weeks. In his estimates, because the shipping process accounts for 30 percent of the logistics chain, shipping costs are up by 10 to 15 percent in comparison to pre-coronavirus rates. Similar difficulties have been reported by other Russian companies, including the Russian Fishery Company and NOREBO.
Alexey Buglak, president of the Pollock Catchers Association (PCA), said crews of incoming vessels are being regularly tested for the virus, and packaging is closely inspected. Fishing companies in the Russian Far East deliver seafood to China through the ports of Qingdao and Dalian. Qingdao is now entirely closed, so the flow of goods has been diverted to Dalian, causing a queue. On one day in the middle of November, 13 Russian vessels were waiting in line with 53,000 MT of seafood on board.
Furthermore, companies have had to divert vessels to South Korea, but using this country as an intermediary for deliveries to China doesn’t provide a solution to the problem, Buglak told Kommersant. It also causes additional costs for the shippers. Buglak said the companies in his association are now considering a wider diversification of destination markets for their products. He warned if China continued to add complications that hurt its potential as an export destination, it could have a drastic affect on the entire Russian seafood export industry.
Nonetheless, due to the difficulties shipping to China now presents, Buglak said he is encouraging his members to look for new markets. This position is supported by Russia’s Federal Agency for Fisheries. The government body has recommended Russia's seafood companies increase their exports to Vietnam, and their service of Russia's own domestic market.
“In case the difficulties continue, the seafood export to China can stop,” one of the exporters told Kommersant.
But the impending arrival of a coronavirus vaccine may discourage companies from disrupting their supply chains. A massive vaccination effort has already begun in Russia, using the Russia-developed vaccine Sputnik V. Russian Federal Agency for Fisheries Deputy Head Pyotr Savchuk has said he will push for the government deliver the vaccine to the crews of fishing vessels as a priority for an industry deemed vital to the national interest.
If successful, Russia's vaccination push may have the consequence of restoring normal trading relations between Russia and China, its biggest fisheries trading partner. Even through this year of unprecedented trade disruptions, Russia's seafood exports to China were down just four percent through 22 November, in comparison to the corresponding period of 2019, the Russian Ministry for Agriculture reported.
Photo courtesy of Alexander Medvedkov/Shutterstock
