After more than a year of supply-chain issues, the U.S. seafood industry is still facing soaring prices and tight resources – and there’s little sign of the situation changing.
It’s no secret that food and seafood prices are going up. Some of the factors contributing to the trend include labor shortages and supply-chain issues.
Frozen seafood prices were up 9.2 percent in the second quarter of 2021 versus the same period in 2019, according to IRI and 210 Analytics. Fresh seafood prices soared, too, climbing 8 percent in the second quarter of 2021.
In August, U.S. restaurants and casinos were removing seafood from menus entirely either because of cost or due to difficulties in acquiring it. Biloxi, Mississippi-based casinos reportedly pulled Alaskan king crab legs from buffets after they became impossible to ascertain, and an Atlanta, Georgia-based eatery saw a 140 percent increase in the price of blue crab.
Months later, transportation snags and material costs continued to be a burden for importers of products. A record-breaking 73 container ships, for instance, were waiting at anchor to unload goods in Los Angeles and Long Beach, California, as of mid-October. The long wait-times to access U.S. ports are related to both COVID-19 complications and labor shortages at ports.
Additionally, the U.S. restaurant industry is facing staffing shortages and high demand for seafood, resulting in difficulty sourcing seafood for local restaurants and suppliers alike.
“Every week. Every single week it’s different. Calamari has been an issue, my frying fish – everything – not one week you go ‘oh, this is great,’” Marc Yanni, owner and chef of Yanni’s Too in Coeymans, New York, told ABC News 10 in October.
Santa Monica Seafood President and CEO Roger O’Brien told SeafoodSource his company was also seeing difficulties at almost every point of the supply chain.
“Container delays, port congestion in every port across the country, reduction in production capacities overseas and here domestically, frozen cold storage demand increasing, seafood shortages, and price inflation in seafood as well as labor costs and most supplies – these have become the issues we face daily,” O’Brien said. “Restaurants have skimmed-down their menus and they’re removing seafood items where the price has become excessive and unacceptable. Retail stores are doing the same to their seafood offerings for super high-priced products. The challenges we’ve been dealt are severe and not getting any better.”
A National Restaurant Association survey in early September found that 91 percent of restaurants reported paying more for food, and 75 percent reported they changed menus due to supply chain issues. And 44 percent of restaurant operators said it would be 12 months or more until business normalizes.
A Technomic study in August found the labor crisis is not a temporary situation, as many former restaurant employees have moved on to other careers. Eighty-five percent of people surveyed found work-life balance and professional management to be the most-important factors in a job, and 20 percent of survey participants said their perceptions of restaurant chains as employers were either “negative or very negative.”
All told, the signs point to things not changing anytime soon, O’Brien said.
“Personally, I don’t see much relief through 2022 and I am starting to believe this will continue well into 2023,” O’Brien said.
The good news, at least for Santa Monica, is that the company has a fulfillment rate of greater than 99 percent for its frozen items by keeping a higher inventory on hand.
Still, O’Brien said supply chain issues have been persistent enough to attract the attention of Federal Reserve Chairman Jerome Powell, who recently said they are part of an inflationary economic cycle.
“Chairman Powell and his cohorts are being careful with their words about how long this situation could last, but other economists and business leaders are already talking about the strong possibility of ocean-shipping costs and port congestion continuing well into 2023,” O’Brien said. “Add to this picture the many trillion-dollar spending proposals [U.S.] President [Joe] Biden is trying to push through Congress and we need to realize that once inflation starts, it’s difficult to stop. Expectations of higher prices become a self-fulfilling prophecy. Consumers are incentivized to accelerate purchases in the short-term, creating supply pressures and price hikes.”
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