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Reefer trade not all gloom from China’s woes

Reefer trade not all gloom from China’s woes
The reefer trade in general and more specifically into China has been impacted by the economic conditions and the recent devaluation of the yuan. However, the effect has not been totally negative and there have been some bright spots.

“There has been some impact,” said APL head of special cargo Ng Kar Loke. Citing anecdotal evidence from its US exporter customers who have told him that demand is not as good and this has been attributed to the drop in the currency.

However, Ng also pointed that there are various factors in play. “Some of it is because of greater competition from other markets supplying the same product, while some part of it is because of currency,” he said.

The flipside to this however is that China will become more competitive, however this is tempered by the fact that other countries in the region have also gone through competitive devaluations along with China. As a result orders into Asia have been on a downtrend.

“As regards China, we see a mixed bag. Some customers have told us demand is still as good, but others have been more cautious and are not putting in as many orders,” Ng said. Speaking to Seatrade Maritime News on the sidelines of the Asia Fruit Logistica in Hong Kong, he noted that the event was noticeably quieter this year compared to the previous year.

This was attributed to fewer Chinese fruit buyers being around. However, Ng cautioned that it might be premature to conclude that they are not buying since part of the show this year unfortunately happened to fall on a belatedly announced public holiday in Hong Kong.

Yet other customers are very optimistic about the China market because of its population size and emerging middle class, leading to demand for new kinds of fruits. “Whether currency comes into play they can’t tell yet but they still see there is going to be growth in consumption because the wealth effect is there,” Ng said.

The market is also being broadened by the wider range of fruits that can now be imported in reefer containers. New technology has enabled even sensitive fruits such as avocadoes to be shipped from as far away as Latin America to China, involving an over 30-day transit.

Other factors that have helped include the conclusion of new trade deals with China, which has eased the import of more food products, Ng noted. For example the bilateral trade in apples between the US and China has received a boost and new opportunities such Chinese exports of pomelos to Europe have been made possible.

In response to this APL, along with its alliance partners is constantly tweaking its network and capacity management to meet its customers’ needs. Ng pointed out for example that APL has enhanced a new Latin America to Asia service to help meet demand.