China Market for Lobster Larger Than Previously Understood

by Laurie Schreiber

A new study finds that the Asian market for lobster, China in particular, appears to be considerably larger than previously thought.

“Seafood Trade Routes for Lobster Obscure Teleconnected Vulnerabilities”—whose lead author is Joshua Stoll, an assistant research professor with the University of Maine’s School of Marine Sciences in Orono and a cooperating scientist with the Maine Center for Coastal Fisheries in Stonington—maps global trade routes for lobster and quantifies the effect they have on obscuring the relation between harvesters and consumers.

“The team’s findings indicate that in today’s hyper-connected world, a growing number of nations are acting as ‘middlemen’ in the supply chain,” says a July 11 University of Maine press release. “This makes it increasingly difficult to trace where seafood goes and difficult to anticipate changes in market demand.”

Reached by phone, Stoll said most of his research of the past eight years or so has focused on local and direct marketing of seafood. The new study examines global trade.

Market data for Maine’s lobster fishery is known to be closely guarded by the network of individual harvesters, dealers, and suppliers in the industry. So for this study, said Stoll, producer-nations and their annual landings were identified using the Food and Agriculture Organization of the United Nations’s Global Capture Production database. Trade statistics were then extracted from the UN Comtrade database for all nations trading lobster from 2006 to 2015. The database is an online portal of international trade statistics. The database’s Harmonized System tracks the movement of commodities between nations.

“With seafood, those codes are often pretty broadly bundled,” he said. “But it happens to be that American lobster is only bundled with European lobster” and not with other species or origins of lobster.

According to the study, focusing on re-exported product allowed the researchers to distinguish between nations that are terminal markets and those that effectively serve as intermediaries.

“Seafood trade often involves nations that act as ‘middlemen’ in the supply chain, importing and then subsequently re-exporting product,” the study says. “This results in indirect linkages between nations, creating dependencies that are sometimes difficult to identify if focus remains primarily on direct trade (i.e., trade between a producer and a non-producer). As a result, they are rarely accounted for in assessments of fisheries resilience or sustainability.”

The study found that market dependencies between producer-nations and terminal-markets for lobster are consistently masked.

“Between 2006 and 2015 the underestimation of this market dependency (based on re-export) ranges from 7 to 14% of total traded value per year,” the study says, adding that the finding is conservative. “While this masking is notable in the trade network in all regions except North America, it is most pronounced in Asia. Asia is consistently the region with the largest change in rank when contrasting only direct trade with directly traded and re-exported volumes over time, indicating a strong masking effect in this region, which results from the existence of prominent trade hubs and also large terminal-markets that are receiving re-exported product.”

In particular, the study says, South Korea, Vietnam, Hong Kong, and China “become more central nodes in the lobster trade network during the 10-year study period.”

The study says that, while China’s expanding appetite for lobster has been well documented, estimates under-represent the magnitude of the Chinese market by underplaying the role that trade intermediaries play in routing product to China. In 2015, producer-nations exported $154.8 million worth of lobster directly to China, but an additional $29.1 million worth of product was routed to China through re-export by other nations. That indicates that China’s actual import of lobster was 19 percent larger than conventional estimates based on direct trade.

Re-exported lobster to China comes via seven primary intermediaries: Thailand, Hong Kong, Indonesia, India, Philippines, Malaysia, and Sri Lanka.

Stoll said the findings have implications for Maine’s lobster industry, especially in light of China’s new tariff on U.S. lobster. A trade war, he said, has the potential to trigger a larger-than-expected change in demand.

“One of the challenges of this complex trade route is that we don’t totally understand where the end markets are,” he said. “And if we don’t understand that and something happens in one of those markets, it could result in negative impacts to the fishing industry here in Maine. Now there’s all this talk of trade wars and tariffs—that’s the kind of thing we were talking about, even though we didn’t know [while the study was underway] something like this would happen.”

Ultimately, he said, demand and markets play an important role in sustaining fisheries.

“If there isn’t market demand, the price of product goes down,” he said. “We have a history in the lobster fishery where, when there’s a disturbance in that market, the price goes down and it causes stress in the industry. That happened in 2012, it happened in 2008, and it happened in 2001.”

In 2001, traders were unable to distribute as much product due to the downsizing of aircrafts in the wake of the terrorist attacks on the World Trade Center in New York City; in 2008, global economic instability led to less demand for luxury products worldwide; and in 2012, processors in Canada were unable to keep pace with supply. The study says, “This coupling between price and trade dynamics highlights the vulnerability that producer-nations can be exposed to through trade and underscores the need for understanding and anticipating these vulnerabilities and their origins. The risk associated with trade is particularly relevant for producer-nations that rely heavily on export markets like China, which have political structures that facilitate abrupt and broad-scale policy changes.”

“If we’re not understanding where our markets are,” said Stoll, “then it’s hard to understand potential impacts on the horizon. I think that sets us up for surprise. And surprise isn’t a good thing in a fishery that supports so many coastal communities.”