US companies accused of dumping lobster in Asia

An executive with a Chinese seafood conglomerate has accused U.S. lobster companies of dumping their products on other Asian markets at steep discounts.

Jack Liu, the Halifax, Nova Scotia, Canada-based, North American president of Chinese seafood company Zoneco, which owns the lobster-focused Capital Seafood, told the Canadian Broadcasting Company the dumping was a response to newly-imposed tariffs closing off the Chinese market to U.S. exporters.

“They are going to dump those amounts of lobster into other parts of the world,” Liu said. “We have seen that.”

Liu said U.S. lobster – often labeled as Boston lobster – is selling for at least a USD 1.00 (EUR 0.85) per pound less in Hong Kong, Malaysia, and Taiwan, putting pressure on Canadian lobster exporters.

"I believe Canadian lobster, as we speak, is somewhat losing market share in those Asian markets due to the lower price from the U.S.,” he said.

While Canadian exports to China have risen in the short-term, Liu said he is not comfortable with the situation. 

"Tariffs have never been a good thing. Any sort of tariffs are going to distort and disrupt the markets and we've already seen that,” Liu said.

Liu’s hunch was partially confirmed by a report from China’s customs authority, which seized 1.67 metric tons of North American lobster being smuggled from Vietnam into China’s Guangxi Province. According to a press release, the lobsters involved in the case, valued at CNY 300,000 (USD 43,700, EUR 37,130) had been shipped to Vietnam by air. One person was arrested while attempting to bring the lobsters illegally past the Chinese border. 

In interviews with SeafoodSource, executives of several Maine-based lobster companies acknowledged shifting their exports from China into other countries, including Tom Adams of Maine Coast. However, Adams said his margins were lower, and that the ongoing trade war was having an overall negative impact on the lobster market in the United States.

“We shipped to 29 different countries last year. But you don’t replace a market the size of China,” Adams said. “You’re not going to replace billions of people.

There is no doubt that U.S. exporters are changing their focus to other markets, but that is normal since they are not able to sell in China as they used to do, Geoff Irvine, executive director of The Lobster Council of Canada told SeafoodSource. Irvine said he believes Liu’s quote was taken out of context “as there is no lobster being ‘dumped.’”

“I have no knowledge, but would expect that other Asian markets, the E.U., and their domestic market would be their focus,” Irvine said.

However, one of Maine’s traditional, quasi-domestic markets is the state’s annual sales to Canadian processors. Canadian processors buy Maine lobster in massive quantities in the summer and early fall, while Canada’s lobster fishery is closed. 

“What is different this year is large quantities of live lobster being bought by Canadian live shippers and sent onward,” Irvine said.

With much of Maine’s product being soft-shell and therefore more prone to damage during travel, Canada’s industry is worried about the potential for damage to the branding and reputation, Irvine said, and is re-examining its regulations around country-of-origin labeling.

“We are studying carefully to understand the issues, encouraging government departments to enforce the rules and informing our members of same,” he said.

Stewart Lamont, managing director of Nova Scotia, Canda-based Tangier Lobster Company, said the issue was “complicated, complicated, complicated.”

“Canadian sales to China have literally taken off since 6 July,” Lamont said. “We get three inquiries from China that are legitimate on a daily basis. We had five separate direct charters from Halifax to mainland China last week alone. This has never happened in my memory.”

Just a year ago, there was only one direct flight a week from Halifax’s Stanfield International Airport (YHZ) taking lobster to China. But as of September 2018, that total has risen to five weekly flights, plus additional direct cargo flights launched from Moncton’s Romeo LeBlanc International Airport (YQM). 

Profits at Canadian lobster companies are being further enhanced by favorable landing costs currently, Lamont said.

“Stocks of Canadian live hard-shell lobster in our seasonal holding program (15 May to 15 October) are down to the last 20 percent,” he said. “Last year, we could not give them away because we paid the fishers CAD 8.00 [USD 6.17, EUR 5.25] per pound. This year, sales are much better because we paid CAD 6.50 [USD 5.02, EUR 4.27] and the China Trump [trade] war fell unexpectedly into our lap.”

But Lamont worries that the deals he’s making now might not turn into long-term relationships. He said the Chinese market is driven by “the lowest-cost model.” 

“[The customers] come and go, and come back again as if they were never missing,” he said. “Capitalism or modified capitalism is brand new to them. They love volume, massive volume, because of course they have 1.4 billion consumers in their midst.”

Lamont said Canada’s positioning has improved overall with U.S.-China trade war and with the implementation of the Comprehensive Economic and Trade Agreement (CETA), which improved trade with the European Union. But he said the market’s volatility had him holding his breath as to what surprise tomorrow might bring.

“A single event that is negative can turn our world upside down in a heartbeat,” Lamont said. None of us are doing more than quietly enjoying it, knowing trouble can be around the corner.”

Photo courtesy of China's General Administration of Customs


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