It’s a tough time for seafood suppliers in Hong Kong, long an aviation, financial, and tourism hub.
Hotel occupancy rates are hovering at 10 percent, restaurants are struggling to pay Hong Kong’s notoriously expensive rents, and airlines are doing even worse – the industry as a whole is operating at five percent of normal capacity, according to Chris Hanselman, the CEO of Pacific Rich Resources, which imports high-end seafood into Hong Kong and mainland China.
“Airline catering is just gone,” Hanselman said.
Pacific Rich normally supplies two containers, or 16 metric tons, of seafood per month to key clients like Cathay Pacific Catering, but the latter has projected demand of 250 kilograms for the entirety of April, Hanselman told SeafoodSource.
Factories in China and Vietnam, where Hanselman sources or processes 50 percent of his company’s product, are largely operational and ready to ship, but a lack of demand means Pacific Rich has excess inventory it can’t shift. Meanwhile, third-party cold storage firms are also full – and are charging “extortionate” prices, Hanselman said. That is making Hanselman’s job complicated, as he said he is doing his best to retain inventory levels.
“When this does clear, you have to be in a position to ramp up quickly,” he said.
Hanselman said many of his clients have cut costs by putting staff on unpaid leave. Hong Kong’s government hasn’t yet offered to cover the incomes of workers laid off or furloughed, but it is providing aid to licensed premises, with Pacific Rich getting the equivalent of a month’s rent for its processing factory. The government is also offering subsidized loans to small- and medium-sized firms up to HKD 2 million (USD 280,000, USD 240,000). But unless more aid is proffered, Hanselman reckoned many restaurants and others in the catering sector can hold out no longer than three months before being forced to close.
While dire times have come to Hong Kong’s seafood sector, Hanselman said a positive outcome from the coronavirus crisis is that suppliers in China have been more flexible on contracts.
“They’re not trying to screw you,” he said.
Other positives have been the strong demand at retail level as well as the ramp-up of online sales. While Pacific Rich does just a small portion of its sales to retailers, its e-sales operation, which it established only in October 2019, has taken off.
“[It’s] getting traction,” he said. “But there’s no way it can replace the volumes we sell to the airline catering sector.”
Photo courtesy of Chris Hanselman/Pacific Rich Resources
