Shanghai lockdown slows meat trade

The prolonged lockdown in China’s financial hub Shanghai is slowing the country’s normally growing meat trade, with stringent Covid-19 measures causing logistical lockdowns across the food industry in a sign of further business disruptions.

The challenge of transporting food in and around Shanghai, where residents are in stressful month-long home isolation, signals similar problems in many other Chinese cities as Beijing persists with its controversial zero Covid strategy despite mounting risks to its economy. economy.

China is the world’s biggest meat buyer, having imported more than nine million tonnes last year, worth around US$32 billion. Shanghai accounts for most imports.

Traders rely on Shanghai’s ideal location to distribute products across the country, but since a surge in Covid-19 cases forced a lockdown in the city in late March, moving refrigerated or frozen goods has become a headache. guy.

“Unloading containers is going well. The real problem is the logistics outside the port, getting trucks and drivers to pick up the product,” said Soeren Tinggaard, vice president of Pinggu Retail & Foodservice for pork processor Danish Crown.

Frequent Covid tests, long quarantines and waiting times to enter Shanghai have kept many drivers away, while fewer refrigerated trucks are available due to special licensing requirements.

PRESSED IMPORTS

Other food products, including dairy products and edible oils, have also been stranded at the port of Shanghai, while beef imports into the city fell 23% in March from a year earlier.

Along with other cities under Covid-19 restrictions, the data suggests that food exporters such as Brazil, the United States and Australia are facing pressure in their trade with the world’s second-largest economy.

Australian beef exports to China were down 10% year-on-year in March, when the lockdown had just begun, while overall pork imports were down 70%.

Pork imports could fall by as much as 30% this year because of logistics issues, compared with a previous estimate of 10%, said Pan Chenjun, a senior analyst at Rabobank.

US meat processor Tyson Foods said this week it has diverted meat shipments to other markets until the situation improves. Brazilian exporters canceled shipments and stopped booking new cargo, a source told Reuters.

‘NEW CHALLENGE’ EVERY DAY

For now, much weaker consumption due to Covid restrictions is keeping prices in check, although this could become an issue the longer the lockdowns persist.

“All these logistics issues are adding costs to the supply chain, which ultimately leads to food inflation,” said Andrew Cox, general manager of international markets in Singapore at Meat and Livestock Australia.

Some merchants are rerouting products to other ports in China, but deliveries are slow and even so, costs are rising as cities intensify their own Covid protocols.