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Food & Beverage

Snarled China transport links trap pork suppliers

Foreign meat companies unable to secure containers or ship space

Shipping containers have piled up in Chinese ports with many truckers still facing local quarantines or transport controls amid the COVID-19 outbreak.   © AP

HAMBURG, Germany -- Demand for imported meat is at a record high in China because African swine fever has wiped out much of the country's pig herd. But exporters around the world are having trouble getting their pork into China because the coronavirus outbreak has snarled shipping links.

The most critical choke point centers on refrigerated shipping containers, or reefers, a necessity for meat shipments. Much of the world's supply of reefers is backed up in Chinese ports waiting to be unloaded or has been diverted elsewhere in the region because of the overflow.

"Due to many reefers being stuck in China, the availability of reefers for exports is seriously reduced at a time when Chinese import demand remains high," said Bernhard J. Simon, chief executive of German meat processor Simon-Fleisch. "Some of our reefers meant for Shanghai went into interim storage in Singapore and some others were unloaded at Chinese ports far from Shanghai."

A key issue is that many of the truckers who would haul meat from Chinese ports on to markets and stores in the country's interior still face local quarantines or transport controls intended to contain the spread of COVID-19.

As a result, Simon-Fleisch and other exporters face a long wait for empty reefers they can fill up with more meat for China.

"If China succeeds in containing the outbreak, it would still take at least two weeks to revive logistics and another four weeks' sail for ships to arrive back at European ports," said Burkhard Lemper, director of the Institute of Shipping and Logistics in Bremen, Germany.

Foreign pork is in keen demand in China, the world's biggest market for the meat, as the country's herd shrunk more than 40% last year due to African swine fever. As a result, domestic production of the staple this year is set to drop by 18.11 million tons from 2018 levels, a 33.4% shortfall, according to U.S. Department of Agriculture forecasts.

Under the added impact of virus-related domestic transport disruption, Chinese pork prices were 135.2% higher in February than a year before. This has widened the opening for foreign pork producers.

American pork exports to mainland China reached 74,350 metric tons in January, nearly 10 times the figure a year before, according to the U.S. Meat Export Federation. The U.S. Agriculture Department expects overall Chinese pork imports to more than double this year to 3.7 million tons.

But even for overseas meat companies that manage to secure reefers, slots on China-bound freighters have become hard to come by as shipping lines have cut back services amid the pandemic.

Some 400 container ships, representing a record share of overall capacity, are simply parked offshore, according to the Institute of Shipping and Logistics. As a consequence, shipping rates are climbing, with special surcharges for Chinese destinations.

"It is getting harder to get vessel space for the sailings we need," said Peter Friedmann, executive director of U.S. lobby group Agriculture Transportation Coalition. "Canceled bookings, reduced bookings and nonacceptance of new bookings are big problems for our food customers that need timely deliveries."

In the meantime, meat shipments are stacking up in production plants. Some meatpackers are cutting production while others are diverting supplies to closer markets.

"The logistics problems in China are causing high inventories in Germany," said Matthias Quaing of Pig Producers' Association of Germany. Added a spokesman for German meatpacker Westfleisch, "In the coming weeks, a lot of meat that had actually been destined for China will enter the market and that will affect prices and margins."

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