At first glance, it’s hard to see what advantage a Seattle, Washington, U.S.A.-based shrimp trading company could possibly gain from a Japanese steel trading firm that has a side business in amusement park rides.
However, for Seattle Shrimp & Seafood Co., business has been very good since being acquired by Japanese trading company Hanwa Co., Ltd. Originally founded in 2006 as joint venture between Hanwa Seattle’s E&E Foods, last year, Hanwa bought out its partner to make the company a fully owned subsidiary. The acquisition has been a major piece in Seattle Shrimp & Seafood growing its business to USD 100 million (EUR 93.5 million) in annual sales in 2016.
Most of Seattle Shrimp & Seafood’s business is in wholesaling Southeast Asian-sourced shrimp to major U.S. retailers, such as supermarket chains. And while that may not tie very neatly into Hanwa’s other businesses, which include steel, amusement park rides, cement, meat products, industrial machines, lumber, petroleum and chemicals, it is the company’s ability to access to low-interest loans from Japan that gives it a huge advantage over its U.S. competition. That advantage allows the Seattle subsidiary to tie up a greater share of its capital in inventory than its competitors, and at a lower cost.
Seattle Shrimp & Seafood Vice President and General Manager Bill Jones said his customers sometimes ask, “Why should I buy from you and not a packer?”
Jones said that through Hanwa, Seattle Shrimp & Seafood can arrange volume purchases and pay cash. Because packers generally like to convert their stock to cash quickly, Jones can get better pricing than a supermarket can. To reduce the risk of price fluctuations, the company sometimes works with packers to establish programs in which the price is tied to reported prices.
Yusuke Shibata, vice president of Seattle Shrimp & Seafood, who is dual-hatted as the general manager of Hanwa American Corp.’s Seattle office, said, “Food is a small part of [Hanwa’s] business, about USD 1 billion [EUR 935 million] out of USD 16 billion [EUR 15 billion] total.”
Hanwa has trading offices around the world, which helps Seattle Shrimp & Seafood Co. keep up with trends in supply and demand. Jones takes part in a weekly video call with other offices to stay on top of supply trends – for example, when demand on smaller-sized shrimp is strong, Vietnamese growers may decide to pull shrimp from ponds early.
The company keeps ample product in cold storage in strategic points around the U.S., but it does not operate delivery trucks, but rather contracts all its trucking. For restaurant chains, Seattle Shrimp & Seafood sometimes negotiates directly and then arranges to have the product delivered by Sysco. Besides shrimp, their offerings include scallops, lobster swai and tilapia, and crab.
In crab, the firm mainly deals in Canadian snow crab, with a portion of the product destined for Japan. It doesn’t deal much in Russian crab, as Jones said he concerned with trouble with documentation, since Russia has had problems with IUU fishing. However, the firm does a little trading in U.S.-caught crab, just to keep just to “keep [our] finger on the pulse of pricing trends,” Jones said.
In addition, the company was a pioneer in the red crab business, also known as Southern king crab, (Lithodes santolla), from Argentina. Jones said that quality has also improved with the product, after some early buyers had had a bad experience with excessive saltiness. Previously, the red crab was salty because the producers stored and cooked it in salt water. But that problem has dissolved as they eventually brought in staff from other areas with expertise in properly processing crab.
“We had a lot of doors slammed in our face,” Jones said of the initial marketing. Then, the perception changed. “People said, ‘Hey, it’s a really good deal.’”
But Asian buyers got involved last year, pushing up prices, Shibata said.
“We have competition this year,” he said. “The price of king crab has been stable at a high level, so they are looking for alternatives. We’ll wait and see as it may be too risky. We’ll watch the price gap.”
In the shrimp market – the company’s bread and butter – Shibata and Jones said that the quality of Indian vannamei has improved, so that it now sells at the same price as other more established imports.
It’s that kind of insider knowledge of the seafood markets that shows it’s not just low interest rates in Japan that’s keeping Seattle Shrimp & Seafood Co. on top in the U.S.
