AJOT Insights

Giving lobster the cold shoulder

Jul 11, 2018

What better way to celebrate summer than with a barbeque? Steaks sizzling on the grill and lobsters boiling in a pot, it’s an American tradition. Last year China mirrored our taste for live lobster as export demand grew 7.4% to 55,500 tons at a value of over $126 million. In fact, total exports from Maine contributed around $1 billion to the state’s economy.

Lobsters Fresh or Frozen?

The demand for fresh lobsters in 2017 represented 64% of this export market, expanding from around 13 thousand to 16 thousand pounds. With demand growing, the preparation of live lobsters for shipment has undergone some unique changes. Traditionally they are shipped at between 32 to 40 degrees and can live out of seawater for 4-5 days. The secret to keeping them alive is keeping them cold and moist, that way they use less oxygen. Packing them in ice produces a buildup of fresh water which can suffocate them, and dry ice creates too much carbon dioxide. Live lobsters are packed in Styrofoam then covered with gel freezer packs. Getting them ready for shipment is the key. Lobsters are prepared 2 to 3 days prior to shipment. Feeding is stopped, and they are kept at between 48 and 50 degrees until shipped. The less active they are, the better they ship. I’m told one lobsterman prepares his catch a bit differently. To quiet his cantankerous crustaceans, he places them in tubes, then floods them with ice water. The extreme cold puts them to sleep. This quasi state of suspended animation slows heart and lung functions down so they require less oxygen, allowing them to stay fresh longer. Air shipment in specially prepared containers speeds delivery to overseas destinations.

Packed to Ship

FedEx provides international service for live and frozen lobsters. They recommend overnight shipping, avoiding weekend layovers where possible. Commercially they offer one day air freight for shipments weighing between 151 lbs. and 2,200 lbs. A pamphlet entitled “Packaging Perishable Shipments” explains various types of packaging options and labeling instructions. They also offer what they call “FedEx Cold Shipping Packaging Solutions”. The cold pack which they offer avoids the use of gels, using instead a chilling unit. Continuously evaporating a small amount of water at low temperature, the unit keeps the shipment between 35.6 degrees and 46.4 degrees for up to 4 days. FedEx claims their cold pack affords exporters consistent temperature and a high degree of shipment integrity, with no special training. For pallet load shipments, thermal blanketing and temperature-controlled trucks and aircraft provide additional solutions which help maintain constant temperature.

China turns a cold shoulder

In response to our first round of tariffs, Beijing has answered with their own, targeting our nation’s ranchers, farmers and fisherman. Heading into their prime season (July and August), lobstermen are especially hard hit by the 25% import tariff imposed by China. The Chinese market represents around 20% of their exports. In anticipation of significant growth this year, Maine lobstermen had negotiated contracts worth millions of dollars. For the moment, these deals are canceled, or at the very least on hold.

At the boiling point

As the trade war heated up, the four Congressional delegates from Maine issued a statement regarding China’s punitive tariff on American lobster. “Maine’s lobster industry is an irreplaceable piece of our state’s economy that supports thousands of jobs and entire coastal communities… the Maine delegation heard directly from our state’s lobster industry about the economic hardship a trade war with China would cause them…” The delegates have outlined their concerns to the U.S. Trade Representative but to date no relief is in sight.

A warmer reception

Interestingly, among the top five trading partners, Canada is the number one importer of products from Maine at 48% of total market share. China is second, holding 8.8% of the current market. Malaysia, Germany, and Japan make up the remaining partners with a combined total of 14.3% of Maine’s export products. It’s quite possible that given the current favorable conditions of Canada’s trade relations with China, Maine lobstermen might see more of their catch going north before it goes west!

What’s on the table?

Having attended a few lobster bakes in my day, I can tell you that timing is everything. We would load up an aluminum pot with layers of aerated seaweed and lobsters then drop a potato on top. When the potato’s done, everything’s done. China’s 25% tariff on U.S. imports is certainly today’s hot potato. Reciprocal tariffs have hurt many sectors of the American economy. Last year U.S. exports reached $45 billion. Rural America will be hardest hit as fishing, farming and ranching communities feel the pinch. China bought $14 billion worth of soybeans in 2017 and the National Pork Producers Council blames reciprocal tariffs for an $18 drop in hog futures. In Middle America, one in 33 jobs will be affected by import tariffs imposed by China. While our tariffs on Chinese goods were aimed at key issues such as unfair trading practices and Intellectual property rights, their unintended consequence may be doing more harm than good. As we sit down to that summer lobster bake, will this administration in the end be forced to eat crow?

Author Photo
Matt Guasco
INF Marketing and Logistics, Inc.
President