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Monday, June 27, 2022

Isolated Hong Kong faces higher food prices as pandemic restrictions bite

Hong Kong shoppers are bracing for a sharp rise in the price of foods including dairy products, fruit and meat after authorities cancelled cargo flights to protect the Chinese territory from the spreading Omicron coronavirus variant.

Cathay Pacific, the territory’s de facto flag carrier, announced last week it would suspend long haul cargo flights, while other airlines have either been banned from service to Hong Kong or halted flights because of the city’s strict pandemic policies.

The flight suspensions have squeezed cargo space, prompting freight companies and importers, who supply much of the food for one of the most expensive cities in the world, to warn customers of even steeper prices.

“More than 30 freight flights [have been] cut, which account for over 3,000 tons of cargo. Shipping cost is expected to go up 20-30 per cent and such increases will be passed on to Hong Kong consumers,” said the Hong Kong Association of Freight Forwarding and Logistics.

ParknShop, a supermarket chain owned by Hong Kong tycoon Li Ka-shing’s CK Hutchison, said logistics costs for many imported products had tripled. Supplies of yoghurt, soft cheese and certain fresh fruit had been particularly affected by the latest cargo pressures.

“We foresee the trend of higher cost prices . . . will continue in quarter one,” the company said.

Hong Kong has adopted China’s “zero-Covid” approach, which has entailed restrictions at its border and a mandatory three-week quarantine for travellers from most countries.

While the tough strategy has limited infections and deaths in the territory, it has also isolated the once-thriving Asian financial hub. Even air mail to countries such as the US and Australia has been suspended.

The city introduced even more stringent measures in late December after positive cases were detected among airline staff, some of whom had been given exemptions from quarantine to work.

Cargo air crew have to undergo seven days of hotel quarantine, while those operating passenger flights are required to endure up to two weeks of hotel isolation.

The move prompted Cathay to suspend its long haul cargo flights for at least a week. The carrier said the decision had affected freighter flights on transpacific, European, south-west Pacific, Saudi Arabian and United Arab Emirates-bound routes.

On Wednesday, passenger flights to Hong Kong from eight countries, including the US, UK and France, were banned for two weeks.

For Giovanni Bravo, the owner of Bravo Fine Foods, the flight cancellations have created havoc.

“There is no stability, there is no insurance as to when our flights will arrive,” said Bravo, who imports about five tonnes of food a week to supply local restaurants, cafés and hotels.

“Sometimes we need to truck goods to a different city to Belgium or Germany just to get them on flights . . . it’s increasing our costs in general, and there is a higher level of spoilage.”

While some food is brought in by road from mainland China, Hong Kong is heavily reliant on pricey imported products, owing to its limited agricultural land. A litre of milk can cost $4.50.

The freight forwarding association said that supplies from the US, Europe, Australia and New Zealand were the worst affected. ParknShop said it was looking to source more local products to minimise the impact on consumers.

“The cost will jump up substantially . . . because of invalidity of cargo flights,” said Bill Ip, from food importer Seafrigo. “It will be very bad, I can tell you.”

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