Australia’s largest producer of Western rock lobster is the main contributor to the country's half-billion-dollar live exports of the shellfish, but it faces a stark choice; export its live product to China using expensive cargo planes or export no live rock lobster at all.
It is the harsh reality facing seafood companies around the globe as commercial passenger airlines are grounded by the coronavirus pandemic.
“We've seen [passenger freight] capacity drop very significantly over the last few weeks, to the point where on Wednesday we had the last direct flight to China,” Matt Rutter, CEO of Geraldton Fishermen’s Co-operative (GFC), told Undercurrent News on Thursday (March 26).
“In fact, the last available for charter is through Japan. That last flight flies on Monday [March 30],” he said.
According to FlightRadar24, global commercial flights are down 55% in the final week of March 2020 compared with the same period in 2019. The trend is expected to continue as airlines continue to remove additional flights from their schedules, the flight tracker said in a recent blog post.
Source: FlightRadar24
In 2019, Australia exported 8,800 metric tons of rock lobster worth AUD 763 million ($530m at last year's average exchange rate), of which more than 95% went to mainland China in the belly of passenger planes, according to Australian customs figures. In a busy period, GFC can fly 30-60t of live rock lobster to China a day.
The huge drop in passenger freight capacity has therefore stifled green shoots of recovery for Australia's rock lobster sector as China opens up from its COVID-19 lockdown.
A Western rock lobster fishing vessel. Credit: GFC
“The global seafood industry was hit hard at Chinese New Year, when the market shut down. But the planes were all still flying,” said Rutter. “A few weeks after Chinese New Year we started to see some more demand coming from China again. But over the last 10 days, two weeks, the whole world has gone into lockdown, and so at the same time the route to market has gone into lockdown as well, as flights are grounded.”
FlightRadar24's plane tracker shows there were no flights between Sydney – Australia’s busiest airport – and mainland China, heading in or out, on Monday morning local time. There were also no flights between mainland China and Perth Airport, the largest airport nearest GFC.
Few flights were travelling to or from Sydney International Airport on Monday local time. Source: FlightRadar24
Perth Airport appeared slightly busier but there were no flights between Perth and China. Source: FlightRadar24
To get small amounts of live rock lobster to market, GFC is therefore clubbing together with rock lobster firms in West Australia to share the cost of air cargo. The firm aims to send 30t per week to China to start with.
“Just doing freighters [air cargo] the rates are a lot higher than what they normally would be for passenger flights. Part of the reason is freighters flying out of Australia typically fly back from China empty; you’re paying for an empty leg," the executive said.
“We know that a lot of our competitors in other industries are not big enough to cover the costs of a whole [air cargo] plane, and so we’re working with others within the Western rock lobster industry. It’s very much a collaborative effort,” he said.
GFC is also in cross-industry discussions to pool air cargo capacity with other sectors, including the federal government, to cover the return leg. “There are potential opportunities for us to work with the government, potentially to get supplies back to Australia as well, such as much-needed medical supplies. Also, meat exporters need air freight to access their various markets as well.”
Cargo inside a freight plane. By tratong / Shutterstock
However, Andrew Ferguson, managing director of Ferguson Australia Group, a seafood firm based in south Australia, expects the government would need to subsidize flights for firms in his region, which has a smaller rock lobster fishery.
“I believe it’s just China Airlines flying between Australia and China now, transporting Chinese nationals,” Ferguson told Undercurrent earlier last week. “Once that stops, I don’t know. There's no air travel unless we can convince the government to subsidize freight flying up there once a week or something.”
Norwegian farmed salmon on sale at a local Trader Joe’s store in Southern Nevada, 'freshly delivered today'. Photo: By chara_stagram / Shutterstock
The global seafood industry is more reliant on passenger air freight compared with other animal protein sectors. Everything from Scottish salmon and Boston lobsters, to French oysters and Russian king crab, is flown to markets in a mix of passenger planes and cargo planes.
Chile, the world’s second-largest salmon producer, flies 60-70% of its salmon exports to the US, worth over a billion dollars annually. As many as four or five connecting flights are needed from Chile to reach China, its second-largest market outside Latin America.
Rutter said because of the challenging situation many rock lobster fishermen have decided to tie up their boats. They hope they can catch the full quota at a good price once the coronavirus crisis ends.
“The state government has agreed to extend the fishing season out to the middle of the next year, so a five-and-a-half-month extension,” said Rutter, giving fishermen more time to catch this season's quota. “I guess the risk is that if we stay in lockdown for much longer, we will end up pushing more products to the back end [of the year]."
Geraldton's Fishermen Co-operative's live rock lobster export facility in Welshpool, Perth. Source: GFC's Facebook page
"But at this stage, we are just more focused on doing what we can to rekindle the market. Towards the end of the year, we'll be in a position to assess whether or not we need to make further regulatory changes around quota."
He said a priority of the company was to continue to serve the Chinese market in some form until then. It is also taking precautions to minimize infections at its plants, while non-operational staff are working from home.
“It’s just as much about us continuing to support our customers and the Chinese people as much as keeping ourselves in business as well,” said the executive.
According to latest trade data, Australia exported 1,355t of rock lobster in January 2020, at an average unit value of AUD 93 per kilogram. Exports typically peak in the month China celebrates Chinese New Year (see chart).
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