Limits on air freight crimp fresh fish sales

Increase in exports could bring millions to regional economy

Posted: Friday, November 09, 2007

A small portion of the fish caught in Southeast Alaska could be worth a lot more, if it could just get on a plane.

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About 15 percent of the fish caught in Southeast could fetch 40 percent of the catch's $400 million total wholesale value by being shipped fresh, according to new research. But because of logistical limitations, not all that fish makes it out of Alaska on a plane and brings in as much money as it could.

Demand is growing worldwide, especially in the Lower 48 and Europe, for Alaska's fresh, wild-caught salmon, halibut and crab. Those products are fetching increasingly higher prices, as buyers are willing to pay a premium for what is marketed as the most sustainably caught and high-quality fish in the world.

"Seafood as a category is growing anyway and wild seafood from Alaska is the premium niche on that category," said Ray Riutta, executive director of the Alaska Seafood Marketing Institute. The demand is there, he said, but "we just can't get it out of Alaska."

Catching a break

Fish suitable for air shipping: 25 to 30 million pounds, 15 percent of regional volume.

Value of fish suitable for air shipping: about $150 million wholesale, or about 40 percent of the regional total.

Fish that is actually shipped out: 15 to 17 million pounds.

Fresh market premium: $1 to $2 per pound over frozen fish.

Potential: Air freighting another 5 million to 10 million pounds could add $5 million to $20 million to the regional economy.

Changes: Southeast fresh salmon production declined 1 million pounds in 2006, a reflection of air freight capacity and reservation system problems. The 2007 figures are not yet available.

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Source: McDowell Group, Southeast Region Fresh Fish Air Transportation Project

Record high prices for fresh king salmon and halibut, both above $4 per pound, have encouraged processors to get more of their fish out on planes. That has strained the air freight system, and efforts to increase the amount of fish leaving Alaska by plane have hit hurdles.

"For us, air freight has grown tremendously, and there's been times when we've been limited because of limited space on aircraft," said Mike Erickson, co-owner of Alaska Glacier Seafoods, a fish processor.

He said lack of competition in the airline business, lack of space and scheduling logistics are the primary challenges. When the airlines have extra capacity, the processors don't always have fish, and vice versa. When both space and fish are there, it's been difficult to schedule quick transfers from the docks to the processors to the planes.

"We all want an airplane when we've got fish, and when we don't have fish, we don't want to talk to anybody," Erickson said.

Of the fish caught in Southeast, 25 million to 30 million pounds are the right quality and delivered in an area with access to air freight. But only 15 million to 17 million pounds is actually shipped because of the logistical limitations of the current air service, said Eric McDowell, a partner at the McDowell Group, a Juneau consulting firm.

Alaska Airlines is the only carrier serving the area, and when demand peaks for air freighting fish in the summer, it also peaks for passengers, their baggage and their sport-catch boxes.

William MacKay, senior vice president at the airlines, told those attending this fall's Southeast Conference that the company has made some improvements, is committed to making more and to working with the seafood industry to ship out more fish.

Southeast Conference, a group that promotes economic development in Southeast Alaska, made it a goal last year to increase the amount of fish leaving by plane, to increase the total value of the catch.

The conference hired the McDowell Group to carry out the project. The firm conducted research, surveys and workshops where processors and Alaska Airlines discussed the challenges and possible solutions.

The 2007 season was a test ride, but didn't result in a lot of growth in the amount of fish leaving by air freight, McDowell said.

"Processors who were surveyed thought they shipped some additional fish at least due to increased catches, but the system still needs significant improvements," he said.

Unlike some processors, Erickson's company has the ability to schedule space on planes up to two weeks ahead of time and that has allowed it to increase its air freight business. But Erickson still thinks some things are lacking.

"If we had competing air service in here, everyone would enjoy a higher level of service," he said. "We get along quite well with Alaska Airlines, but I do know that without that competitive factor out there, we all get a little lackadaisical."

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