Stranded imports deliver heavy blow to China’s coffee industry

shanghai port is one of the most important for china's green coffee imports.
  • Shanghai has been under citywide lockdown since April 5
  • Around 30% of China’s green coffee imports pass through the city’s ports
  • The falling value of the yuan against the dollar is exacerbating problems for coffee businesses

CHINA’S ‘ZERO-COVID’ strategy is affecting green coffee imports as Shanghai enters its fourth week of lockdown.

According to local businesses, shipments are continuing to arrive at the city’s ports as normal, but there are “no logistics” in place to transfer the coffee to roasteries.

Most arrivals are still awaiting customs clearance, leaving them stranded in warehouses, while others have been diverted to regions such as Guangzhou. Shanghai is the country’s busiest port, accounting for around 30% of China’s total green coffee imports.

During the first quarter of the year, the amount of green coffee entering the country had already taken a hit, falling to around half of 2021’s total. This was due to the introduction of a decree stipulating that all food categories were subject to overseas manufacturer registration.

In March, it was showing signs of recovery, having climbed back up to 8,107 tons. However, the latest problems caused by Shanghai’s citywide lockdown are expected to lead to another dip.

“The epidemic in Shanghai has seriously affected the coffee import business this month,” says Tao Jian, who runs Coffee Finance Network, an industry news website. “And it could continue into May, which means the import volume is likely to fall during these two months.”

‘Extremely difficult’

The country is battling its largest outbreak of Covid-19 since the pandemic was first reported in late December 2019. Half of Shanghai was put into immediate lockdown following a surge of cases in March, before being extended to the whole city on April 5.

Most businesses have closed and people have been confined to their homes as the government pursues a ‘zero-Covid’ strategy to eradicate the virus.

Exacerbating problems for China’s coffee industry is the depreciating value of its currency – the yuan – against the dollar. This has made it more expensive for domestic traders to buy coffee, which is likely to cause a price rise in the coming months.

Coupled with the closure of Shanghai’s roasteries, Tao Jian says the current outlook is bleak.

“Coffee production plants in Shanghai and surrounding cities, such as Kunshan, have been almost completely shut down throughout April,” he says. “The interruption to logistics and express delivery has also made it extremely difficult for online stores.

“If this all happens at the same time that [the yuan] devalues, then the domestic coffee industry will face a heavier blow.”