How Moncton Airport Helps Companies Meet Chinese Demand For Live Lobsters
MONCTON – Dieppe-based Partner Seafood is well-positioned to ship live lobster to an ever-expanding market in China. Literally well-positioned. Out the back door of their facility is the tarmac of the Moncton Airport, where large cargo planes regularly take off with lobster from the production management and marketing company for frozen and live seafood products.
“We’ve been exporting for ourselves and for third-party customers, and preparing the exports via our facility to Asia since last August. We’ve been [filling up] one or two planes per week since August last year,” said company owner Paul Farrah, who also says such “direct access” to the airport helps the company’s efforts to ship overseas.
Partner Seafood sells products from the Maritimes to more than 40 countries, with Europe being its oldest market. But it’s seen a decrease in demand there over the last five years, as the European economy slows.
China is the opposite. Although demand from other Asian countries – Korea, Taiwan and Japan – have also increased steadily in the past few years, China is the biggest opportunity in the east for Partner Seafood.
“What has changed and justified investment from processing plants and lobster holding facilities in the last couple of years is mainly the demand that comes from China that has exponentially increased,” he said.
Farrah says his company’s live lobster exports to China at least doubled in 2018 compared to two years prior. Its overall exports have increased also, thanks to higher demand from China, even though the company lost market share in Taiwan and surrounding Asian countries as they started importing American lobster.
A 25-per-cent tariff China imposed on U.S.-origin lobsters since September 2018 has “absolutely” helped Partners Seafood boost sales, Farrah said. Plus, China’s rapid economic growth means its middle- and upper-class population are also growing. The middle-class is 400-million strong, according to Chinese government estimates.
“The demand from Asia is so strong that we switched some of the market shares that we have in Europe to the Asian market,” Farrah said. “The U.S. remains our biggest customer in terms of purchases, but it’s always good to have a second big customer, which is Asia, and the third customer, which is Europe.”
Record Shipment of Live Lobster Cargo
The increase of Chinese demand for Canadian lobsters is also a boon for the Moncton airport.
In 2018, it reported a record volume of live lobster shipments to China and Europe. This marked a shift from its traditional freight activities, which mostly catered to integrators like UPS, FedEx and others that are making deliveries within Canada.
“What’s been different in 2018 is that we’ve actually had much larger aircraft that’s used for shipments internationally. For instance, China Eastern [Airlines] contracted a company called Kalitta, and they had 14 direct flights of [Boeing] 747 type aircraft headed directly for China,” said airport president and CEO Bernard LeBlanc.
Kalitta Air and Ethiopian Airlines operated 16 flights carrying around 1,050 metric tonnes of live lobsters from Moncton to China and Europe between August and December.
Many flights have carried high-value products that have a tight timeline, including live seafood, in the past. When the airport had air cargo services to Belgium in 2015, 800 metric tonnes of live lobsters were sent between June and December of that year. But LeBlanc said last year’s international live lobster shipments hit a record high.
“It’s 20 per cent more over a shorter season [in 2018], and more Asian destinations as opposed to European destinations,” he said.
The increase of such shipments to China through Moncton could be caused by congestion in the Halifax airport and the tariff on American lobsters, LeBlanc said.
Last November, the Halifax Stanfield International Airport received $23-million in government funding to expand its cargo facilities to reduce congestion, among other things. The investment was driven by strong demand for fresh seafood in China and Europe.
LeBlanc said the Moncton airport is complementary to Halifax Stanfield, where over 10,000 tons of seafood worth more than $220 million was shipped in 2018 and more cargo flights to China were added.
“This is an opportunity to provide a service for the people around us,” LeBlanc said. “It can buffer a bit of the congestion in Halifax as well, so it’s something that we can definitely see developing more and more.”
Cargo services generate an average of around $2.8 million a year in landing fees and terminal use for the Moncton airport, LeBlanc said, almost as much as passenger flights, excluding passenger fees. Cargo revenue has doubled in the last decade, he said.
“Our main activity remains the passenger side of it, but we have cargo planes that use the same runways as passenger aircraft…so it’s very complimentary that way. It’s not additional work for us,” he said.
It helps that Moncton is a logistics hub, with major trucking companies located in the area. It also has a 10,000-foot runway, and a cold storage warehouse called Xtreme Cold next door, which means the infrastructure is in place for shipments of goods like fresh seafood.
“If we can generate more local demand, there may be an opportunity for not only live lobster. For instance, Cooke Aquaculture has a lot of fresh salmon and they ship to Asia,” he says. “Typically, that might be driven to Halifax or Montreal and flown from there to Asia. That could happen out of New Brunswick.”
LeBlanc says the Moncton airport can do more on cargo services, too.
“With the logistical capabilities we have in the Moncton area, a plane could land here full of Amazon, Alibaba (China) or Apple type products and the trucking community could drive it to Boston or New York or Toronto or Montreal. It does provide those opportunities because we’re not a congested airport. We’re in a good location, [and] having the plane full in both directions makes the service more viable.”
Why Are Live Canadian Lobsters Selling Like Hot Cakes in China?
John Bitzan, an analyst with Export Development Canada’s economic team, says while the high tariff China imposed on U.S. lobsters gives a “really strong competitive advantage” for Canadian products, other factors are also at play.
“One is rising incomes in China, and the second is greater discovery and exposure to Canadian lobster,” said Bitzan. “And that’s being facilitated by online shopping platforms that are allowing people in smaller towns in China [to have more] access now to these more exotic goods,” he explained.
Last year, Huddle’s editor Mark Leger reported from China that live lobsters from places like New Brunswick were sold at 7FRESH – a supermarket in Beijing owned by retail and e-commerce giant JD.com. On last year’s Singles Day Shopping Festival, a popular annual shopping spree, the company sold 12 tons of live Canadian lobsters through its e-commerce platform and physical stores.
Business people and industry experts in China told Huddle fresh Canadian food like lobsters are popular because they’re considered healthier, as China itself has seen many scandals around tainted food.
Farrah echoed this sentiment, saying the Canada brand “is glamorous for China.”
“Anything that comes from cold, pristine, pure water from Canada is very attractive for Asian buyers,” he said.
Canada is known as a seafood and fish country where you find fresh, organic, wild-caught products. That’s our reputation in Asia.”
While the U.S. remains the top market for Canadian seafood products, China was the destination of nearly 17 per cent of all Canadian seafood exports last year, up from 10.8 per cent in 2015.
“From 2015 to 2018, Canadian exports of seafood, fish and aquaculture products to China grew at a compound annual growth rate of 22 per cent,” Bitzan said. “To put that into perspective, in 2015, Canadian exports of seafood, fish and aquaculture products to China amounted to just under $650 million, while in 2018, exports of these goods reached nearly $1.2 billion.”
New Brunswick exported more than 26,000 tonnes of lobsters in 2018, data from the provincial government’s department of agriculture, aquaculture and fisheries showed. A bulk of it went to the U.S., but Asia was the second largest market with 10.5 per cent share. Nearly half of that market was China, including Hong Kong.
Bitzan said Canadian lobster exports to China is expected to grow, even if the U.S. and China settle their trade dispute.
“[Lobster] is a category of goods where Canada has a competitive advantage from the get-go,” he says.
But Farrah is concerned about keeping up with demand from China as live lobsters become more popular. There’s a growing demand for wild-caught products in general, he said, adding that “for sure, we’re fishing more and more.”
“When you deal with the biodiversity such as marine species and when you tamper and you overfish a species, you’re tampering with the ecosystem in the ocean. So it’s very hard to calibrate the fisheries so that we’re keeping our resources and sustaining our resources to supply the growing demand for the 10 years ahead of us,” he said. “How much national resources do we have to sustain that demand? I don’t know. But I’m pessimistic that we have. And we will have to manage more carefully our national resource in the years to come.”
As the demand grows and supply diminishes, Farrah believes prices will increase and lobsters will be shipped by air more often.
“Having the airport in Moncton with an international reach with our facility next to it, that can build up stock and expedite the products in time out of Moncton,” he said. “That will definitely help to grow our exports out of the Maritimes.”
Farrah himself is unlikely to hop on a plane to China any time soon though, as diplomatic relations between Canada and China is rocky.
“Would I travel to China right now? I would think twice,” he said. “But in terms of business, our relationship with our partners in China has remained the same and it’s more a diplomatic issue than anything else at the moment.”
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