Buyers Get Cold Feet
The worst part of the global economic crisis is there's no indication how deep the hole can get. Restaurant sales are down, as is demand, and seafood suppliers are short on cash. While some businesses are finding opportunities to grow or become more efficient, consumer confidence is poor any way you cut it. An equally big problem is seafood buyers' cold feet.
Nowhere is the financial crisis more deeply felt than in Iceland. Last month, Iceland seized control of the nation's three largest banks - Glitnir, Kaupthing Bank and Landsbanki Islands - all of which were major lenders to the global seafood industry. The value of the krona has declined by about two-thirds against the U.S. dollar this year. Citizens there are worried about their futures.
Now Iceland is reportedly contemplating European Union membership, a concept the island nation has shunned but one that may prove to be the only solution to its financial woes. If approved, the nation could join the EU by 2011, but would likely have to surrender rights to its lucrative fishing zones. Its seafood industry is facing permanent changes.
On the other side of the pond, Canadian shellfish supplier Clearwater Seafoods late last week reported a third-quarter net loss of US$8.4 million, fueled by a decline in sales revenue, foreign currency losses and evaporated lending. The company's tie-up deal with Japan's Maruha-Nichiro Holdings was nixed and privatization plans were canceled because of the "unprecedented uncertainty and volatility in global financial markets and, in particular, Glitnir being placed into receivership," according to a press release.
What's more, the Canadian dollar, which had previously rallied to surpass the U.S. dollar, has since fallen to the equivalency of 82 cents. Seafood suppliers everywhere are on edge.
A Vietnamese frozen seafood supplier told me last week that a shipload of fish exported to Europe was in limbo, as cash-strapped buyers sought to cancel their orders while in transit. Turning ships around, however, would be devastating to Vietnam, which lacks cold-storage capacity to warehouse surplus product until a new buyer comes along, the supplier says. Peter Redmayne, a longtime contributing editor at SeaFood Business, tells a similar tale that befell a West Coast processor-exporter in our upcoming December issue.
The struggles of both suppliers and buyers appear to be the new reality. They say hope floats, but multiple containers of frozen whitefish fillets won't for very long.