Ice melting – one way or the other
Second conference on ‘The Future of Norwegian Seafood Air Logistics’. A series of challenges need to be overcome to ensure that Scandinavian seafood exports achieve their full potential, as ITJ correspondent Michael Mackey reports from a conference held in Oslo on 19 September. There’s a need to combat climate change and its impact on an industry that commands very low margins, as well as a raft of economic issues alongside these that also cause concern.
Three key indicators – the exchange, interest and airfreight rates – have to be watched, according to Sangik (James) Chung, CEO and founder of Myung Jin Holdings, a South Korean fish vendor. He painted a gloomy picture of how rate changes have throttled South Korean demand for salmon, which has dropped by one third. “Businesses and consumers can’t afford salmon any more.”
South Korea has suffered from a sharper version of a problem everyone on the east–west supply route has, namely Russia’s war on Ukraine. Moscow responded to sanctions by closing down its airspace. The route is now longer and more inconvenient – especially for South Korean operators.
Special efforts have been launched in South Korea, but Chung urged the sector to be creative. He urged it to “try charter flights and fix better rates.” This won’t be easy, but some firms are trying precisely this.
One of the killer statistics from the conference is that the 260,000 t of seafood that Norway exported last year included 20,000 t of ice, which prompted a stunned silence in the hall – apart from the sound of jaws hitting the floor. This will be exacerbated if exports come to 350,000 t in five years, as some estimates have it.
“Transporting ice by air isn’t a good business calculation at today’s airfreight rates,” said Hans Petter Vestre, the team manager for airborne seafood at Lerøy Seafood.
The Bergen-based firm is trying to reduce the ice by some simple housekeeping measures. “We try to ship less whole fish and more fillets,” Vestre explained. The company also works on the most efficient routes and airlines it can, although one problem is that it has is the lack of data from partners.
Turning from fish to fillet
This era of big data, suggested Fredrik Wildtgrube, Finnair’s senior vice-president for cargo, allows cargo to be managed in a much better way, providing not just traceability at box level, but a more accurate measurement of temperatures too. He pointed out that Finnair is developing an IT system to do precisely that. What really caught many a participant’s eye at the conference, though, was not the economic woes that people are wary of. Nor was it the post-Ukraine/Covid-19 world, with its instabilities.
The central theme was an awareness that climate change is real, and that meeting the industry’s goals of being carbon-neutral by 2050 is going to be hard. “This topic will come back to us. It’s the next problem,” as Carl Christian Skage, the Nordic GSA/ECS Group’s managing director for Norway, said. The issue isn’t so much a definable problem, but rather a set of interconnected ones – and big ones at that.
“CO2 calculations can vary by as much as 40%,” Skage said, “which adds to the problems of calculating the best route, type of plane, and mode of transport. Maybe we underestimate the truck leg.”
Further costs are coming
Skage opined that sustainable aviation fuels “aren’t even close” to doing what’s needed. When they actually are available they cost up to five times what standard jet fuel costs. Other technologies, such as hydrogen, “will come too late to produce the necessary emissions cuts.”
Skage’s key point concerned the sheer weight of political pressure to act against climate change, without compromising other goals. He sees a new regulatory and fiscal environment coming – “there’ll be new rules, and I bet there’ll be a new tax.” His advice is that the industry “needs to learn to carry the costs!”