Neil Ramsden: UnderCurrentNews

A “perfect storm” of factors have combined to mean key global markets for farmed shrimp are likely to remain short of product for the rest of 2021, panelists on Undercurrent News’ latest webinar agreed.

The webinar — Farmed shrimp markets: The outlook for summer and beyond — was broadcast for free on May 26. You can catch it in full at our dedicated page, here.

Panelists on the call noted the US and EU were already encountering difficulties in supply.

“What we’re seeing now is a really significant shortage of many items, many of the primary items for the US,” said Jeff Sedacca, CEO of US shrimp importer Sunnyvale Seafood Company, part of China’s Zhanjiang Guolian Aquatics Products.

“That’s indicated both in the driving of the pricing, and the fact that for the first time in 13 or 14 months, we have warehouses calling us as containers come in. I’m specifically talking about port freezers, that couldn’t handle our business before, we had to ship ours inland. This doesn’t look like we’re going to see any significant letup over the next few months.”

For Sedacca, the perfect storm consists of three factors: COVID-19 issues in supplying nations, shipping and freight irregularities, and a summer demand spike as foodservice demand rebounds from a level of practically zero.

“Foodservice has exploded. We kind of expected it, but our initial thought was that business would get a lot better as restaurants in the northern states were able to start serving again. Many [importers] began to stock marginally more in anticipation that business would open.”

“What we’ve seen instead is a pretty massive opening across the board in virtually all states.”

Throughout 2020, most importers shifted their buying patterns to meet increased retail demand, he continued.

“Consequently, we’re all short right now of foodservice products. Prices have increased dramatically, in some cases up a dollar per pound, and for most customers there is more or less a short-term view. What they’re seeing now is, ‘oh my gosh, prices have got crazy’. In fact, prices have only gone up back to where they pretty much normally are.”

India, of course, has suffered tremendously with coronavirus in 2021. While shrimp harvests are taking place there, processing and shipping logistics have ground almost to a halt, panelists said.

Other supply nations are suffering, perhaps to a lesser extent, but this is seeing availability drop.

“We’ve gone from having way too much product, and freezers full, to having orders that we can’t fill, including orders that we did buy the product to fill, but the product hasn’t shipped or it’s delayed with shipping container problems,” said Sedacca.

Jim Gulkin, founder of Thailand-based frozen seafood supplier Siam Canadian Group, confirmed this picture of the US, and predicted other markets would soon see the same, if they weren’t already.

“Canada’s a little behind [the US] in [terms of] vaccines, so a lot of it will miss the summer boom,” he noted. “The EU is opening up now too, it’s traditionally more of a foodservice item than a retail item there, although retail has always been strong as well. So there’s going to be a massive increase in demand there.”

On the European market, Sophia Balod — editor-in-chief at European market analyst Seafood TIP — noted that EU markets had only just begun to reopen, but was con dent that the warm summer months would bring a strong return to out of-home dining and tourism.

Supply issues to last

Gulkin and Sedacca were clear that they expect the supply issues to last for the rest of this year.

“India’s suffering a catastrophe in terms of the COVID situation,” said Gulkin. “There’s no light at the end of the tunnel there either, vaccination rollout is not happening, it’s a mess.”

This has also seen harvests taken place early in India, with concerns over getting the product sold as soon as possible in the face of all kinds of health and supply difficulties. Those shrimp would ordinarily have waited to grow larger in their ponds, destined for foodservice in Europe and the US, he added.

“So, there’s going to have an abundance of these smaller, retail-oriented shrimp, and then I don’t know what will happen later in the year when they were supposed to be harvesting the larger sizes. I think those will come up short.” The “shipping problem” too will not resolve overnight, he said.

“There’s congestion getting into the ports to cold storage, and there are problems with a lack of containers. The shipping lines have more containers and vessels available, they’re going to make more money ultimately, so it’s not in their interest to keep everybody at their mercy with absurd increases in freight,” he said, adding Siam’s China of office has seen some freight routes go from $8,000 per container to $16,000, calling it “crazy stuff”.

He estimated the shipping issues would last until the end of 2021, though stressed there was no way of knowing for sure. “It’s not going to get resolved in the next few months, and it’s going to get worse over the summer as shipments into the US increase, Canada follows, the EU too.”

“I see no possibility of a weakness in the market between now and Jan. 1,” he said. “And I would be very surprised if you saw a weakness in the market in the first quarter of 2022.”

A new consumption paradigm

Late in 2019, at the Global Outlook for Aquaculture Leadership conference held in Chennai, India, speakers were talking about the importance of marketing shrimp; trying to maximize their value in the face of increasing output the world over, and fears of low prices being the “new normal”.

Now, that situation looks to be long past, with Undercurrent’s panelists agreeing the consumption hike seen in 2020, as retail sales boomed for people cooking seafood at home, was unlikely to fully drop back down.

“The bottom line is, I think that we’re going to see foodservice rebound back to normal levels and retail is not going to lose all the additional business that they picked up during COVID,” said Sedacca. “We have probably a whole class of people who’ve never cooked shrimp or seafood at home, and they’ve learned now. Seafood has become an option for cooking at home for millions and millions of people for whom it wasn’t before.”

“Things have changed,” agreed Gulkin, “and they’ve changed permanently”.

“Retail seafood sales will never return to pre-pandemic levels. People have gotten used to buying seafood, particularly shrimp, but other seafood as well. No, we won’t maintain these retail levels once everything’s completely back to normal, but it’ll never go back to pre-pandemic levels.”