The outbreak of the coronavirus in China at the end of 2019 has had an impact on worldwide trade that increasingly being felt in most sectors.
The beer trade is of particular importance to Belgium, and China is for Belgian brewers a small but growing export market. Or it was until now.
Belgium’s exports to China have grown sevenfold since 2013, but China still accounts for less than 4% of total exports. Sales to the Netherlands are four times greater, for a population 82 times smaller.
The alarm was sounded this week in a Facebook post from De Struise Brouwers, based in Vleteren in West Flanders, recently voted the best in the world by the website Ratebeer.
According to the brewers, not only is it now more difficult to book a container for international shipments, the price has skyrocketed.
“In normal circumstances, out international customers can book a container for Asia in Zeebrugge or Antwerp with a maximum waiting time of one week,” the post says.
“As a result of the Covid-19 problem, the delays in the international logistics chain are a sad fact, and the waiting time is now six to eight weeks – with no guarantee that the container will actually be available”
The “Covid-19 problem” is only now making itself felt in the world of logistics. When the disease first made itself known, ships full of containers were already at sea. In the beginning, ships could deliver their loads and fill up again for the return journey.
But as the disease developed and spread, shipping slowed down, and the availability of containers was affected.
“Because of the scarcity on the ground,” Struise explained, “there has been an effect on the hire price of a container. Whereas a reefer (a refrigerated container) for Asia used to cost $2,500, the price nowadays is between $5,000 and $6,000 for the same container. Thanks to fluctuations like that, a lot of companies were priced out of the market from day one, because nobody has swings like that built into their business plan.”
The use of containers in international shipping relies on one rule: containers must be constantly under way. A container standing empty on the dockside is losing money, and costing money.
“In areas where the virus activity is high, the manpower is temporarily not present to assure loading and unloading. Containers remain stuck at their destination, and can no longer take part in the store of active transport containers. On the one hand this leads to an acute shortage, and on the other the ships concerned cannot be loaded on time,” the company said.
“A shipping company could take a ship out of circulation or change its destination to keep the efficiency ratio per ship high. Given that such a ship can easily transport 20,000 containers, that leads to astronomically high shortages for every ship taken out of circulation for any particular company.”
“Our Chinese importer has cancelled his order for the second quarter of the year,” brewer Urbain Coutteau told De Tijd.
And the outcome of all this is that Struise is now at the point of being unable to pay back the investors who took part in a crowd-funding action launched last year to finance the installation of a new bottling line.
That action raised €200,000, and investors were to be paid back from the start of this year at the rate of 5% per €1,000 pledged. In the first months that was paid, but now the brewer is having to write to investors to let them know that subsequent payment may be delayed for at least three months.
“We don’t know what awaits us down the line,” Coutteau said. “To be on the safe side, we’ve decided not to make any new investments in 2020.”