Qantas takes on VDL milk run to China

Qantas takes on VDL milk run to China


Moon Lake has existing distribution relationships in the Chinese city of nearly Ningbo, home to 8 million people who have been less saturated with imported products than nearby Shanghai.

Moon Lake has existing distribution relationships in the Chinese city of nearly Ningbo, home to 8 million people who have been less saturated with imported products than nearby Shanghai.

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In a deal that increasingly defines the trade relationship between Australia and China, Qantas will begin flying fresh milk from Hobart to the city of Ningbo and carry window blinds home.

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In a deal that increasingly defines the trade relationship between Australia and China, Qantas will begin flying fresh milk from Hobart to the city of Ningbo and carry window blinds home.

The weekly flight, loaded with 50,000 litres of fresh milk from the Chinese-owned Van Dairy, will begin early next year and may eventually run three times a week.

Fresh milk is the fastest growing imported dairy category in China but has become increasingly politically sensitive in recent months as local producers are being squeezed by imports.

This has seen at least two Australian exporters accused of food safety issues and in September forced Victoria's Camperdown Dairy Company to halt fresh milk exports to China.

Despite the recent issues, a carton of Australian fresh milk sells for up to $8 a litre in Chinese supermarkets or online stores, compared to as little as $1 at home.

Van Dairy part of the Van Diemen's Land Company, owned by China's Moon Lake Investments, will fly the milk into the wealthy port city of Ningbo.

Moon Lake has existing distribution relationships in the city of nearly 8 million people and believes it is less saturated with imported products than nearby Shanghai.

As the owner of Kresta Blinds, Moon Lake will then use the return Qantas flight to send curtains, awnings and other window shades manufactured in China to Australia.

The shipment of agricultural products to China and manufactured goods coming the other way is an increasing feature of Australia's trade relationship with the mainland.

China is the top destination for Australia food, fisheries and forestry exports, which, according to government figures, topped $11 billion in 2015.

Within this, dairy exports to Greater China were worth $424 million or 15 per cent of all exports last financial year.

Moon Lake managing director Sean Shwe said the newly established flight also provided an opportunity for Tasmanian producers of seafood, horticulture and other perishable items to send their goods to China.

"It will be a game changer for Tasmania, and we are proud to be leading the charge," he said.

The volume of fresh milk Moon Lake plans on sending to China is significantly more than that of Norco and A2, which are also flying product into the mainland.

Moon Lake paid $280 million for Van Diemen's Land Co in March, giving it access to 25 dairy farms in northern Tasmania.

It will market its newly launched fresh milk range under the Van Milk label and tell Chinese consumers that northern Tasmania has "the world's cleanest air".

While airlines such as Qantas have benefited from the Chinese tourist boom into Australia, demand for freight services is also growing strongly.

Qantas runs five dedicated freight services into Greater China each week.

  • This article first appeared in The Australian Financial Review
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