Seafood exporters see positive signs in China despite COVID concerns, shipping crunch

Seafood exporters are predicting a recovery in the Chinese seafood market this year after a bruising 2020.

China’s economic outlook improved last week, after it reported overall GDP growth of 2.3 percent for 2020, after a strong recovery in the fourth quarter. The country has weathered the last year better than most large Western economies, which spent far more on support to laid-off workers, compared to a Chinese emphasis on virus control measures. Whereas the U.S. economy declined by 23 percent in GDP compared to the same period last year and the Eurozone economy declined by 21 percent, China reported a year-on-year GDP increase of 0.2 percent in the first three quarters. China has, however, reported sluggish consumer demand with a recovery being driven by investment and government spending.

But intermittent outbreaks of COVID-19 continue to dent demand for seafood in China, and a rise in freight costs between China and Europe has added further complication to the short-term economic picture.

The Financial Times reported a shortage of containers was driving up costs on China-Europe trade routes. The cost of getting a 40-foot container from Asia to northern Europe has skyrocketed from USD 2,000 (EUR 1,647) in November to USD 9,000 (EUR 7,414) currently.  Shipping rates from Vietnam to major ports this month increased to USD 7,000 (EUR 5,798) per container, from USD 2,850 (EUR 2,360) per container last month, SeafoodSource reported last week.

“Even for frozen products, shipping costs from Europe-China are three to four times the normal rate at the moment,” explained Conor O’Sullivan, the Shanghai-based representative of Bord Bia, the Irish food promotion agency. “Exporters are struggling to obtain empty reefers [refrigerated containers] due to low efficiency in ports. Major Chinese ports have also seen reefer congestions, resulting in plug [to power refrigeration systems] shortages and containers being redirected to other ports.”

The logistics of shipping to Asia have been a big challenge for Irish seafood exporters over the past year, according to O’Sullivan. The volatile nature of regional COVID outbreaks in China is also complicating matters, with

“[It’s] particularly [bad] when there is a peak in [COVID-19 virus] cases, as we have seen in the last month or two. [Exports drop] severely whenever there are COVID outbreaks, and with them [come] more concern and controls. But generally recovering afterwards,” O’Sullivan said.

Irish seafood exports to China were down 64 percent to EUR 15.5 million (USD 18.8 million) between January to November 2020, according to Bord Bia. Overall, Irish seafood exports fell 10 percent to EUR 443 million (USD 537.2 million) in 2020, with the fast-growing Asia region one of the hardest-hit regions for exporters.

“Our high-value live shellfish are most severely affected, as they really rely on air routes and quick customs checks to be able to reach the market,” O’Sullivan said. “For China uniquely, perhaps the biggest issue has been general nervousness towards imported seafood because of repeated incidents of positive COVID samples being discovered on imported frozen food containers or packaging. Recent small outbreaks in China have almost all been reported as being traced back to imported food. [That means] longer time spent at customs, disinfection procedures, and COVID testing all adds significant costs for importers. Even then, many retailers and foodservice customers are still hesitant to purchase.”

O’Sullivan said the loss of the foodservice sector has been a hard blow for many Irish seafood exporters serving the Chinese market.

“Seafood, particularly shellfish, is highly reliant on the foodservice channel, which of course has had a difficult year in all of our major markets,” O’Sullivan said.

Chinese catering buyers also appear to be spending less, according to Des Moore, the director of Bells Isle Seafoods, which ships Irish oysters to Beijing, Guangzhou, and Shanghai. Moore told SeafoodSource that lockdowns across much of the European Union have prompted an oversupply of premium oysters from France and Ireland, while intermittent outbreaks of COVID in China have thwarted consumer demand. Moore, who ships the bulk of its output from farms on the Irish west coast to China, said he has managed to continue shipments, but buyers are looking for his cheaper shellfish.

“[Last] week, I sent in 3,300 kilograms to China, which is not bad, but not good either,” Moore said. “My lesser brand, ‘Blas,’ is thriving as it has cheaper fat meat but irregular shape, whilst my ‘Bells Isle Majestic’ and ‘Unique’ brands are top-class – round and fat – but are slow to sell, as they are more expensive.”

Despite the headwinds, O’Sullivan said he’s confident there will be a post-COVID recovery in China’s demand for imported seafood.

“As more vaccines are administered and COVID risks recede, we expect this issue will fade away and we will see much stronger seafood exports to China again,” he said. “There’s no doubt that China will continue to be a vital market for Irish seafood, despite a uniquely turbulent 2020.”

Moore is also optimistic about the long-term picture in China. He wants to eventually build up to shipping five tons of oysters per week to China, and hopes for more growth out of his premium brands, a category which is currently dominated by French firms.

“There is a feeling that if and when COVID is controlled and diminished, the market will explode and demand will rocket,” he said.

China represents the “overwhelmingly main market” for larger, premium oysters (over 120 grams) according to Moore.

“Ireland predominantly holds all the good oysters in Europe and that is indisputable. France has good wines but its oyster capability is going nowhere,” he said. “Basically, if we reach post-Brexit, post-COVID, the oyster business will be consumed by demand from both China and Europe.”

Photo courtesy of Bells Isle Seafoods