Supply Chain Disruptions in the Mud Crab Trade | Business Insights
Traditional aquaculture production relies on efficient supply chains to ensure that the product reaches consumers. While efficient, these supply chains might be disrupted under certain circumstances. Currently, our supply chains are impacted as COVID-19 is forcing countries to shut off their borders. The potential impact on the sectors depends on the culture species, storage methods, and consumer preference. For mud crabs, the consumers would require the crabs to be alive and well before consumption. In the previous blog post, we wrote about the impact of COVID-19 on China and pricing consequences. In this article, we will be discussing the impact of COVID-19 on movement restriction of mud crab trade.
Due to the contagious nature of the COVID-19, many of the consumers have opted to avoid crowds. Food outlets are affected as a result, and hence driving down the demand for live mud crabs. In southeast Asia, mud crabs are considered as a delicacy as typically consumed during festive seasons. Mud crabs importers have seen a 30-50% drop in mud crab sales over the past months. Hence, many of these importers have chosen to reduce the number of trades to avoid accumulating inventory. It is crucial to point out that mud crabs are also extremely perishable. Nevertheless, many restaurants have also taken the opportunity to utilize current food delivery to continue operations. However, it remains early to speculate the impact of food delivery services on mud crabs as mud crabs are usually consumed in large gatherings.
While the movement control has shown effectiveness in containing the COVID-19 in many countries, the same cannot be said for the mud crab logistics. As mud crabs are preferred live, the movement control hampers the flow of crabs from farms to consumers. One of these examples is the mud crabs produced in Indonesia that would require moving the goods through multiple borders before arriving at the final consumers. We have also seen a similar situation last December where protests in Hong Kong had disrupted the flow of live seafood.
While it might be tempting to blame the movement restriction order for the disruptions, there are other contributing reasons for this outcome. One of them is due to the low aircraft utilization rates airlines are currently facing due to the fears of COVID-19. As the mud crabs need to be shipped and consumed live, mud crabs have to be transported using commercial passenger aircraft. With 75% flight cancellations, mud crabs are no longer being transported from farms to consumers. It is not uncommon for the mud crabs to be stuck in the waiting area waiting to board the plane which results in high mortalities.
The rise of urban farms in the last few years has reduced (although at a small amount) the reliance on food from other countries or locations. The ability to farm right next to consumers reduces the risk for supply chain disruptions and ensures that the consumers still have access to crucial supplies. The same is observed in the mud crab trader, importers or traders that previously invested in recirculating aquaculture systems have enabled them to increase the shelf life of mud crabs. Traders integrated with fattening facilities are also able to continue mud crab production, sustaining businesses that rely on mud crabs as their signature dish. Urban farming methods will likely receive attention especially in countries like Singapore.
It remains early to conclude the impact of supply chain disruption on the mud crab trade in this region, the outcome likely involves a scenario with low supply and demand.