China’s difficulties a potential boon for US seafood processors

Mounting difficulties in bringing seafood processed in China into the United States has created an opportunity for U.S. processors, including Portland, Maine-based Bristol Seafood.

China’s response to the COVID-19 pandemic has slowed China’s seafood-processing sector’s production, and related logistical and transportation issues have impeded delivery of their products to the U.S. Those issues, along with the continued imposition of U.S. tariffs as high as 25 percent on seafood imported from China, have made China a less-attractive option for processing for U.S. seafood buyers, according to Bristol Seafood CEO Peter Handy.

Handy told SeafoodSource U.S. buyers are finding it increasingly difficult to price China’s cost advantage, particularly with plants in the country’s seafood-processing hubs shutting down on short notice due to COVID-19-related issues, including an ongoing shutdown of the key port of Dalian.

“Pricing is now complex to understand. To buy five loads out of China, I don’t know if anyone can quote [a price for] that,” Handy said. “Is it really inexpensive enough to operate in China to offset a 25 percent tariff, freight prices, and timing and the uncertainty about the plant’s operations?”  

Recent economic data shows Chinese exports as a whole are becoming more expensive, as China’s exporters are facing increased pressures to pass along rising costs to customers, the Hong Kong office of French corporate and investment bank Natixis reported. According to Natixis, price growth in the manufacturing and processing sectors shot from 0.9 percent in the start of 2021 to 15 percent in September, while the growth rate of retail prices moved from 0.2 percent in January 2021 to 1.4 percent in September. More than 40 percent of China’s overall export value in August 2021 came from higher prices rather than volume growth, according to Natixis.

“The passthrough from China’s higher production prices to the final consumer has already started,” Natixis Chief Asia Economist Alicia Garcia Herrero said. “The world cannot expect Chinese firms to further reduce their profit margin, at least not as long as external demand remains strong.”

Exports as a percentage of Chinese GDP shrunk from 35 percent in 2010 to 20 percent in 2021, Natixis reported. While China now boasts a larger GDP and domestic consumption figures, the drop also reflects a U.S.-led move to decouple its economy from dependence on Chinese suppliers, Natixis said. Nonetheless, China recorded the largest share of the world’s exports, accounting for 15 percent of total global exports in 2020.

But the growing complexity of sourcing seafood from China is creating an opportunity for firms like Bristol, Handy said.

“Even if only a small percentage of the production is re-shored to the U.S., it would create major growth for us,” he said. “There is a lot more awareness about the supply chain now. When China added tariffs, there was very little awareness among customers that haddock was being sent to China for processing.”

As a result, Bristol is receiving more inquiries from retailers lately, Handy said – especially for value-added products – as demand for seafood has grown in the U.S. through the pandemic. Bristol’s two ranges – My Fish Dish and Seafood Singles, launched to cater to growing demand for socially responsible and convenient seafood products, have proved successful.

“Retail sales of seafood grew considerably compared to the pre-pandemic,” he said. “The future of the sector is in easier to cook, socially responsible products.”

Handy said re-shoring of processing also reduces the carbon footprint of the seafood industry and adds American jobs. The company purchased an additional facility in Portland in October 2021 and increased its staff count by 40 percent to handle larger volumes of haddock processing and the expansion of the My Fish Dish line, he said. Solid relationships with Norwegian haddock suppliers and an established freight connection through Eimskip’s Portland terminal allows the firm to leverage its location and ensure fewer logistical challenges for customers, Handy said.

Photo courtesy of Bristol Seafood