Air Canada Cargo boosts freight fleet while launching e-commerce service
Air Canada (AC) is jumping into the e-commerce market with a dedicated domestic service – ...
As economic activity in China begins to pick up after the extended lunar new year holiday in response to the Covid-19 virus outbreak, sales of imported perishables are rising.
But for some perishables shippers, it will be a long time before they get back to pre-virus volumes.
After reports of perishables rotting in China’s ports and warehouses in the aftermath of the holiday, Chilean fruit exporters’ association ASOEX said last week their fruits were selling again.
On 18 February, it recorded sales of 33 containers of cherries, eight of table grapes, 17 of nectarines and 21 containers of plums.
In addition to wholesale markets in Shanghai and Guangzhou, sales were also rising in secondary markets, like Zhengzhou, Chengdu and Chongqing, ASOEX reported, and expressed confidence that the remaining 1,478 containers of Chilean fruit still available in China would sell this week.
China is the biggest market for Chilean cherries; in recent years it has imported the lion’s share of the country’s cherry crop.
And US perishables shippers are now gearing up for more exports to China. The US Department of Agriculture (USDA) announced yesterday that China had taken “numerous actions” to implement its agriculture-related commitments under the Phase One trade agreement with the US, which came into effect on 14 February.
Among the measures is the opening of the Chinese market to fresh US chipping potatoes, the lifting of the ban on US poultry and related products and the updating of lists of goods that can be exported to China, including seafood.
In addition, China has begun announcing tariff exclusions for imports of US agricultural products and a reduction in tariff rates on certain US agricultural goods. According to USDA, “these types of actions will facilitate China’s progress toward meeting its Phase One purchase commitments”.
US perishables exporters have lost a lot of ground to foreign competitors, as the tariffs undermined their competitiveness. And as developing new markets takes time, they were forced to shift a large portion of their output to the domestic market.
A tsunami of US perishables headed for China is unlikely in the coming months, however. For one thing, there is still a lot of uncertainty about details of the US-China trade agreement.
Moreover, the Covid-19 outbreak has caused severe disruption in China’s marketplaces, and it will take months to overcome this.
Peruvian exporters’ association ADEX said numbers for March and April show the impact of the epidemic even more clearly than sales so far. The association warned that precautions to prevent the virus’s spread could seriously affect trading conditions next month, while capacity bottlenecks resulting from blanked sailings and drastically reduced flights to China would grow.
This is widely expected to create a spike in rates to China, which most exporters would struggle to absorb.
Brendan Harnett, chief executive of Flying Fresh Air Freight, said Canadian seafood exports to China were slowly resuming, as restaurants begin to open again, but did not anticipate a significant surge. Rather, he is braced for a slow road to recovery.
“It will take a long time before China regains its previous consumption habit,” he warned.
Nor is he expecting a return to the strong growth before the outbreak. “If we get back to 80% of our previous volume, I’d be pleasantly surprised,” he said.
Canadian lobstermen are looking for new markets for their catch, but none can match China’s volume, he added.
“Chinese companies have cancelled their freighters to Halifax,” noted Jamie Porteous, executive vice-president of Cargojet. The Canadian all-cargo carrier moves lobster from the Atlantic coast to Canadian gateways served by Asian airlines that have interline agreements with it, but this business is down, Mr Porteous said.
Meanwhile, perishables importers in Europe have reported shortages of garlic and ginger since shipments from China stopped in mid-January. Exports of garlic from Spain to markets as far as Mexico, Colombia and Senegal are up markedly, but Spain’s output is not enough to make up for the shortfall.