REEFERS ON ICE

Logistical hurdles in the fisheries supply chain

Salmon are famous for their incredible lifelong journey, from smolt leaving their natal river to roam in saltwater until their adult return, against the current, to their spawning stream. If a human snags them along the way, they undergo another voyage, almost as miraculous.

Getting fresh, wild caught Alaska salmon—or any seafood—off a boat and onto a table in New York City is a logistical feat on many levels. If a seafood processor wants to get frozen or refrigerated product from point A to point B, it’s going to require shipping containers.

Unfortunately, “It is quite difficult to find them and get them organized,” says Rich Wolverton, vice president of sales for Peter Pan Seafood.

Supply chain issues have plagued the world economy since the onset of the COVID-19 pandemic, which saw consumer purchasing increase, production for many items decrease, and US ports choked as dockworkers struggle to unload ships quickly enough. A shortage of refrigerated trailers and containers, often called reefers, further complicates the situation.

“The supply chain is a mess right now,” Wolverton says. “The supply chain is disrupted, not just for seafood, but everything down to the consumer is challenging right now.”

About 5.7 billion pounds of Alaska seafood worth $2 billion was harvested annually in 2017/2018, according to a McKinley Research Group report. That was turned into 2.8 billion pounds of product worth $4.7 billion. The value of that seafood depends on processors’ abilities to move it south and get it to market.

“While the international delays in the supply chain have had some impact, the domestic industry has seen less volatility due to our closed-loop system,” explains Alex Hofeling, the president of TOTE Maritime Alaska. “As a domestic carrier operating a dedicated trade route between Alaska and the Lower 48, we have been more insulated from the pressures and challenges experienced by shippers moving items overseas.”

In response to the delays in turnaround times at ports and rising demand for refrigerated containers and trailers, Peter Pan Seafood has been forced to adjust its logistics.

“We were ready for this; it wasn't a shock that the supply chain wasn’t improving in 2022,” Wolverton says. “I think mentally we should be looking at 2023 still being a challenge.”

“Our job is to take the chaos out of it and make it seamless for our customers… They shouldn't have to see all the hard work that our teams put in to get product to them every day.”

Rich Wolverton Vice President of Sales Peter Pan Seafood

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How quickly ships turn over in a port is incredibly important to the supply chain. If a ship can usually make 100 trips a year but is slowed down to 80 trips a year because of port times, there suddenly is a significant shortage—even if the supply of containers and demand for them remains unchanged.

“You're either going to need to buy more equipment, or you're going to run out of equipment,” Hofeling says.

TOTE, which has been operating in Alaska since 1975, has made a significant investment in the state and continues to do so to meet the most recent increase in demand, explains Hofeling.

“We've done everything in our power to maintain and grow our refrigerated fleet to support the fishing industry,” Hofeling says. The company is pushing hard to bring as many refrigerated trailers into the fold as possible, extending leases on some, purchasing others when available, and even building them.

There has been a boom in the global refrigerated container market, which is expected to reach nearly 6 million twenty-foot equivalent units in 2030, according to Globe Newswire. This represents a 7.3 percent compound annual growth rate.

“The market is registering growth due to the emergence of real-time tracking technology, expansion of the e-commerce industry, and rising number of trade routes,” the release states.

The over-40-feet division held the largest share of the refrigerated container market in 2019. These containers are designed to transport delicate goods at fixed temperatures, including frozen and chilled items. The chilled division is slated to see the highest compound annual growth rate from 2020 to 2030.

TOTE currently has about 600 refrigerated cargo trailers, ranging from 30-footers to 53-footers. Because TOTE operates a closed-loop system, shuffling equipment back and forth through its own network, it’s able to hang on to all of its shipping containers.

“Our equipment stays within our network, which is an incredibly important aspect for supporting the Alaska supply chain, fisheries or otherwise,” Hofeling says.

“We deal with the seasonality by working closely with the processors, who can give us the most accurate forecasts of when they would need equipment and how much equipment.”

Alex Hofeling, President, TOTE Maritime Alaska

TOTE Maritime Alaska is extending leases on refrigerated trailers, purchasing whatever is available, and even building some to make sure the fleet can handle the seafood catch.

TOTE Maritime Alaska

The company does team up with export carriers, making room on its ships for their containers, moving them from Alaska to Tacoma before they are sent abroad.

“There is a meaningful amount of export, and I will say that's really where the challenges are when it comes to equipment,” Hofeling says, noting that such containers are basically removed from the system that allows for quicker turnaround times in the domestic market.

The export market accounts for about two-thirds of Alaska seafood sales value, according to McKinley Research Group’s 2020 publication The Economic Value of Alaska’s Seafood Industry. The US domestic market accounts for the remaining one-third.

“For the domestic market, we traditionally provide our own equipment,” Hofeling says. TOTE is mostly focused on supporting the seafood industry in Southcentral, as well as fish that are flown in from other areas, such as Bristol Bay, which continues to set new records for sockeye salmon production.

Seasonal Surge

One of the biggest challenges shippers face in catering to the seafood industry is navigating the unpredictability of the volumes processors will need to ship.

“If a processor is processing fish, they need equipment at their facility in order to move it and maintain their own throughput,” Hofeling explains. “It requires somebody like TOTE to spot equipment, not knowing if it's going to get loaded in one week or three weeks.”

Those unknowns can end up working against a shipping company’s turn times—something that is already under a great deal of pressure because of slow unloading times in ports due to the pandemic.

This requires day-by-day, real-time planning. If a shipping company gets a call that fish are running, it needs to be able to quickly respond and get the processors the equipment they need.

“We deal with the seasonality by working closely with the processors, who can give us the most accurate forecasts of when they would need equipment and how much equipment,” Hofeling says. “We understand that’s just part of servicing that segment.”

TOTE’s business model of being a roll-on, roll-off shipper—using trailers instead of containers—speeds up turnaround times, allowing the company to focus on handling fresh seafood shipments out of Alaska.

Hofeling explains that the fresh market is perhaps the most challenging segment of the seafood industry to manage because it requires incredible coordination between all parties to ensure that the product reaches the market in prime condition.

TOTE constantly monitors the temperatures and locations of shipping containers of fresh seafood products to ensure quality. Refrigerated containers need to remain in the range of 28°F to 30°F, while frozen product is stored at temperatures of 0°F or below. Advancements in the real-time tracking technology that allows shippers to monitor locations and temperatures of containers has been a major driving factor in the reefer container market.

“Fresh is a small part of the market, but it's also a really important element to be able to maintain with the customers,” Hofeling says.

Wolverton explains that Peter Pan Seafood is already looking beyond the shortages of shipping containers to cold storage space in the Puget Sound area, space to safely shelve seafood until containers are available to move it south.

“Cold storage space—that's the latest challenge because the containers are held up,” Wolverton says.

While shortages in refrigerated supply containers and trailers, as well as increased port times, continue to put pressure on the Alaska seafood industry, shippers and processors are adjusting accordingly.

None of this should be customers’ problem, Wolverton says, noting that the expectation is that seafood arrives to customers when they want it.

“Our job is to take the chaos out of it and make it seamless for our customers,” Wolverton says. “They shouldn't have to see all the hard work that our teams put in to get product to them every day.”