Undercurrentnews: Interview with Ocean Treasure CEO and Founders

The shipping cost from China to Europe remains high at $10,000 per container after the week-long Lunar New Year public holiday. Seafood exporters expect high freight rates to remain for a while, forecasting a gradual easing over the coming months.

Alex Zhang, managing director of Ocean Treasure World Foods — a Nantong, Jiangsu province-based seafood exporter — told Undercurrent News that the cost of shipping a container from China to Europe remains $9,000-$10,000, while the price to Latin America is $8,500-$9,500 per container after the holiday, which ended on Feb. 17.

The firm’s CEO, Oliver Nikolovski, added the shipping cost had climbed from $3,000-$5,000 per container since October, linked to the Chinese government’s strict coronavirus control measures in ports, which caused a shortage of containers and the closure of processing plants before the Lunar New Year.

“Because factories closed earlier and quarantined, many containers now ship out after the delay. The shipment price will not go down easily,” said Nikolovski. “Maybe at the end of February, the price will decrease by 5-10%, then in March down by 20%. It will drop slowly, but not at once.”

He said shipping costs to Mexico and Colombia had started to drop by about 10%, but those for Europe remain high. “Because the economic situation in Europe is quite bad, it affects the businesses a lot.”

Ocean Treasure, a frozen seafood provider headquartered in Nantong, exports whitefish, cephalopods, and shrimp to customers in Europe, North Africa, Latin America, and the US. It also imports vannamei, giant squid, and ribbonfish for processing and re-export.

Despite the coronavirus scares and high freight rates, Ocean Treasure’s exports increased by 17.6% to 21,582 metric tons in 2020, compared with 18,348t in 2019.

Nikolovski explained the firm’s business has been flexible and healthy during the pandemic. It does not have processing plants in China, and mainly relies on getting materials from other processors for export. “We know what products are more available and expensive, and we know what to promote at the right time. Most of our sales increases are relating to [domestically] farmed products, mostly tilapia and pangasius. The sales of imported raw materials, such as sea fish and cephalopods, increased just 5%,” he said.

Nevertheless, exports have started to decline amid the recent dramatic hike in freight rates.

“From October to December, we have slightly decreased [in exports]. But clients need containers in a hurry before the high season for seafood in Easter, and they [largely] accept the shipment price. But in January and February, it totally went down because people cannot afford anymore, about 25% less in volume,” said Nikolovski.

He pointed out some products like mackerel, surimi, and Alaska pollock were used to import and then re-export, but now those products have stopped shipping out as the freight price is higher than the products themselves.

Meanwhile, the firm’s imports dropped by 12.9% to 1,650t in 2020 due to the strict coronavirus control measures, including comprehensive nucleic acid testing and disinfection for imported frozen seafood products.

The time taken to unload containers at the port and deliver materials to factories has taken three-to-four weeks longer under the restrictions, said Nikolovski.

The restrictions have also discouraged foreign seafood suppliers from importing to China. “Suppliers shipping to China now have to take the risk their containers test positive. They have to get back the containers, so very few suppliers are willing to take this risk,” he added.

Chinese consumers’ loss of confidence in imported seafood has also hit the industry hard. “People do not listen to the news entirely, so they think if there is a thing in salmon, that means all the salmon in supermarkets are bad; they may not know to separate the news and reality,” he said.

Meanwhile, seafood businesses in the Chinese port of Dalian feared a collapse, with containers stranded at the port amid strict coronavirus control measures.

Zhang, Ocean Treasure’s managing director, said Dalian port had resumed operations after Chinese New Year. Still, many container ships and vessels cannot dock at the port, and the process of unloading imported products is still slow.

Since Chinese authorities have suspended Russian “tramper” transport vessels from unloading fish at the major ports of Qingdao and Dalian, some raw materials from Russia now ship to China via South Korea, leading to increased costs, Zhang said.

Despite the uncertainties caused by the pandemic, Ocean Treasure remains optimistic about the Chinese seafood market outlook in 2021. “Restrictions will become more flexible, more businesses will be able to start easily because this is a fast-consuming business,” Nikolovski said.

“I am sure the government will make decisions for businesses in the following months, so I am not afraid. There will be a big season when the price starts to go down, and clients will start to order again in March and April. I am still positive.”

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