Daily Management Review

The U.S.-China trade conflict is reshaping global perishable food distribution


04/09/2018


The escalation of the trade conflict between Washington and Beijing could reshape the entire system of supplying perishable products to China, which is actively looking for alternative suppliers of fruits and meat.



pixnio
pixnio
Perishable goods are one of the largest items in the list of goods imported from the US, for which China intends to introduce an additional 25% duty. The first package of Beijing's response sanctions related to supplies of American pork, fruits, wine and nuts. The second package significantly expanded this list, adding 106 nomenclatures, the volume of deliveries of which amounted to about $ 50 billion last year. The list includes beef, soybeans, cars and orange juice.

Last year, the United States increased the supply of fruit to China by 33%, to $ 7.7 billion, and became the third largest fruit exporter to the country.

Colin Wells, head of Panalpina, which organizes supply of perishable goods, believes that sanctions against the US will have an impact on the entire global market for the supply of perishable products.

The list of new duties included beef, the supply of which China allowed only at the end of last year. Immediately after the lifting of the current 13-year ban, JD.com signed a contract for the supply of US beef for $ 1.3 billion over three years.

China is also a huge market for US soybean producers. Last year, the USA sold almost a third of the total soybean harvest to China - 56,693 TEU.

According to Wells, American manufacturers of cherries and other stone fruit, as well as apples, will suffer from Chinese sanctions. On the other hand, producers of other countries, such as Vietnam and Thailand, will benefit from the conflict. The two countries currently rank 1 and 4 in the rating of fruit importers to China with supplies of $ 12 billion and $ 7 billion, respectively. The USA was in 3rd place in 2017.

Also, major suppliers of fruit to China are Australia ($ 3.4 billion) and New Zealand ($ 3 billion). South Africa traditionally delivers fruit to Europe, but local producers can take up a vacant niche.

Data for the past year indicate that manufacturers in these regions have already begun to aggressively increase shipments to China. Thus, the export of fruit from South Africa to China grew by 50.5% in dollar terms in 2017, from Australia - by 49.8%. And the conflict between China and the US will only strengthen these trends.

Also, China will increase supplies from Latin America. These countries are also present in the Middle Kingdom market. Thus, Chile is the second largest fruit exporter to China: last year supplies totaled $ 10.3 billion; the top ten suppliers also include Peru ($ 2.2 billion) and Ecuador ($ 1 billion).

However, China is looking for new suppliers. In North Africa this is Morocco and Egypt. Suppliers from South America are also showing great interest in increasing supplies.

Wells notes that availability of capacity can be an additional factor that will determine trends of the market. He suggests that carriers will expand the supply and route network on promising directions. It is also expected that the volumes of sea transport will grow in connection with this. It can positively affect the African market, given that trade in this region is unbalanced.

source: theloadstar.co.uk






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