Counting sheep to China

New Zealand, despite its distance from world markets, is tapping into the rapidly growing demand for high-protein foods in China, thanks to supply chain efficiencies and reefer technology.

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Since 2005, meat volumes to China have grown by 500%, whereas in the dairy segment the growth is close to 800%. China is now one of New Zealand’s largest trading partners – second only to Australia.

At a meat processing plant in Lorneville, in the heart of New ­Zealand’s South Island, workers are heaving over 600 sheep carcasses into a long row of waiting Maersk Line reefer containers. Today’s load – 24 tonnes of frozen meat per container – will end up being served as choice lamb cuts on Chinese dinner tables.

The action starts at a plant belonging to the Alliance Group, a farmer-owned cooperative and one of New Zealand’s leading meat exporters. From Lorneville, the containers will be transported by rail to nearby Port Chalmers, loaded onto a Maersk Line vessel and delivered via transhipment to the world’s biggest market for sheep meat – China.

As global population surges and therefore food security swings to the East, countries like China are seeing a growing demand for protein from red meat, which New Zealand is poised to plug. Sheep meat, particularly lamb, is a popular choice with Chinese consumers, who consider Kiwi-produced food products to be of a high quality and freshness.

Supply chain efficiencies

Fuelled by the 2008 New Zealand-China Free Trade Agreement, Chinese trade has grown at an unprecedented speed. 

“The increase in trade between New Zealand and China has been massive,” says Gerard Morrison, Managing Director of Maersk Line New Zealand. 

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“Since 2005, meat volumes to China have grown by 500%, whereas in the dairy segment the growth is close to 800%. China is now one of New Zealand’s largest trading partners – second only to Australia,” says Gerard Morrison.

The New Zealand Factor

New Zealand is one of the more unique Clusters for Maersk Line, because of its remote geographical location, yet it is a promising market with high reefer export volumes. The country has an excellent reputation for fresh, quality farm produce, and dairy and meat products are primary exports.

“Since 2005, meat volumes to China have grown by 500%, whereas in the dairy segment the growth is close to 800%. China is now one of New Zealand’s largest trading partners – second only to Australia.”

While confident in New ­Zealand’s continued growth potential, Morrison says the country’s challenge remains its significant distance to global markets. 

“New Zealand is a long way away from anywhere else and we’re up against fierce competition from every other food-producing export country. To be competitive on the world stage, we have to be at the leading edge of efficiency right through the supply chain,” he says.

To Morrison, this means Maersk Line must work as business partners with both shippers and service suppliers to facilitate a sustainable growth in volumes to China’s millions. The Kotahi agreement, a ten-year agreement between Maersk Line New Zealand and the country’s leading freight and logistics company, Kotahi, is an example of committing to long-term plans.

The partnership opens up the potential for bigger ships calling at New Zealand’s ports over the next two years, as the deal commits up to 2.5 million TEU in volumes to Maersk Line over the decade.

“The new deal drives certainty and scale, which allows us to look forward to what lies ahead and commit to long-term plans instead of previously only having a one- or two-year outlook,” Morrison says.

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Maersk Line and the Alliance Group recently cemented a long-term service contract. The deal will see Maersk Line as the principal carrier of the Alliance Group’s annual 4,800 TEU of frozen sheep meat exports to China.

According to Morrison, the ­Kotahi partnership also has growth potential into China:

“Similar to the trend that we see in the meat segment, we also expect to see an increase in higher-value dairy products such as cream, cheese and infant formula. The potential for Maersk Line to grow with this trade in the next decade is enormous.”

Outside of the Kotahi deal, the need to look ahead is also recognised by other shippers. Maersk Line and the Alliance Group enjoy a history of a strong working relationship, and the collaboration has recently been cemented in a long-term service contract, counting several global destinations. The deal will see Maersk Line as the principal carrier of the Alliance Group’s annual 4,800 TEU of frozen sheep meat, which is discharged at the North Chinese port of Dalian before being further processed and sold through wholesale or retail channels throughout the vast country. 

The chilling potential

Chilled lamb, as opposed to its frozen form, is another animal altogether. Because of its freshness and quality, chilled lamb commands a premium price. However, the products have a shorter shelf life and require careful temperature control during storing and transportation. At the moment, due to regulatory controls and a lack of proper infrastructure, New Zealand meat exporters are not shipping chilled products to China.

Nevertheless, Maersk Line and the Alliance Group are collaborating closely on various reefer technology initiatives. The work includes trial shipments using Maersk Line’s QUEST II software, which focuses on product temperatures during transportation. Recently, remote container management (RCM) has also been tested for its ability to monitor temperature performance and allow ­Alliance to alter optimum temperatures during the voyage. 

Thanks to this reefer innovation and its global service coverage, Maersk Line already commands a healthy share of Alliance’s chilled products to major markets in Europe and North America. Adding China to that list appears to be well within reach.

Murray Brown, General Manager of Marketing for the Alliance Group, sees chilled meat as the next potential growth surge in trade in China, where the evolution of the middle class means that sophisticated and seasoned shoppers – those able and willing to pay a premium for quality – will soon emerge as the dominant force.

“Right now most of our China exports involve high-value frozen sheep meat. China is a volume market at the moment. The next aspiration for this trade is probably to look for value such as chilled lamb,” Brown says.

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