Photo by: WWF
With China’s population now exceeding 1.4 billion people, exporters globally are vying to tap into this market. Industries such as seafood see billions of dollars change hands, with China’s seafood imports at USD 15.6bn in 2019. This positions China as an important export destination for many African seafood producers. However, the combination of the supply chain disruption, changing consumer behaviors and increasingly stringent regulations adds considerable complexity for exporters. Effective supply chain management and route-to-market support is now more important than ever.
Covid-19 has created disruptions on multiple fronts. Where once an exporter could leverage highly integrated and efficient global logistics networks to send products to all corners of the world, virus prevention measures taken in many countries are delaying the arrival of containers at their destinations. While ports are operational again compared to the early days of the virus, congestion and delays continue to occur due to measures taken by port authorities to curb its spread. For example Singapore, one of the world’s busiest cargo ports, implemented regulations to limit the movement of crew bringing cargo in, as well as introducing stringent measures to monitor crew temperatures and cargo hygiene.
Many companies have instead turned to airfreight to avoid the delays caused by the ports. However, this too has felt the impact of COVID-19. While commercial flights were able to reduce the costs air freight cargo in the past, by the end of March it was reported that global cargo capacity had fallen by 35 percent, which saw inverse increases in costs by up to 158 percent. The cost and time implications under the current climate is an added burden for players across the value chain, particularly sectors that deal in perishable goods.
Seafood is one of these. It is an attractive export to China, as various types of seafood such as abalone are considered a delicacy among Chinese consumers. This lucrative industry sees high quality seafood products shipped to China in large volumes. Seafood, especially when sold frozen or live, requires special temperature controlled freight containers and rapid transit times. Although this adds to the cost of these products, the market demand still exists and is set to continue its recovery in the second half of 2020. But the nature of demand is changing. While demand among traditional seafood consumption channels such as restaurants and hotels is unstable, consumers are expected to seek out offerings that are suited to home consumption, for example. Seafood exporters to China must develop an agile approach to supply chain and route-to-market.
COVID-19 has disrupted the flow of all manner of products across the global supply chain, and while many exporters have been unable to survive the shift in a more regulated and health conscious environment, many still look to the middle kingdom for its wealth and demand for international products. Consumers in China may have felt the impact on their wallets at the beginning of the virus outbreak, however positive recovery in the second half of the year may see these consumers return to their pre-virus level purchases in various segments, including seafood. Africa still has scope to tap into this vast market, however, careful navigation is required in the post-Covid world.
“This article is produced by Axis Group and is published in The Econometer section of ChinAfrica magazine (July 2020), an English and French language monthly publication that provides news, views and analysis on all things China, Africa and China-Africa relations.”
