The wholesale seafood industry is significant on a global scale because of its impact on national and regional economies, eCommerce and development, food security, and the security of income and livelihoods. With 171 million tons of seafood produced annually, valued at about $362 billion, production has increased quickly during the past decades.
Key Takeaway: Rapid expansion, however, has occasionally come at the expense of investing on the industry's long-term viability. The expansion of the wholesale meat and seafood industry over the past few decades has resulted in a number of negative effects.
Many people around the world now rely on the global wholesale fish industry as a vital source of income. According to the Food and Agriculture Organization of the United Nations, the world's fish consumption in 2019 reached a record high of over 158 million tons (FAO).
However, you will need to overcome a number of challenges if you want to profit from the industry's expansion. What exactly are these issues, and how can digital solutions help?
In this thought piece, we take an insightful look at the major challenges within the global seafood and fishing industry. Our main discussion points are the following issues:
- Supply chain management challenges
- Logistics and delivery management challenges
- Wholesale distribution management challenges
Understanding the Challenges of the Wholesale Seafood and Fish Industry
According to industry analysts, actions made to avoid overfishing and consumer decisions to buy seafood from sustainably derived sources will benefit the fishery industry. The aquaculture industry's production value in the United States reached over US$1.5 billion in 2019.
Approximately 171 million tons of fish and seafood were produced worldwide in 2016, according to data compiled by the State of World Fisheries and Aquaculture (in this case, nearly 91 million tons of fish were caught and fished at sea). As a result, fish and seafood were among the most widely traded food commodities. Of this, 88 percent was intended for immediate consumption.
Without a doubt, seafood distributors and seafood distribution business owners make a lot of money. The numbers prove this fact. However, without the right tools, the challenges that face the seafood industry can cripple your wholesale seafood business before you start being profitable.
Some of the challenges of the seafood and fish industry include overexploitation of fish populations, loss of marine ecosystems including coral reefs and mangroves, and pollution. These effects not only have an influence on the environment and the population, but they also pose hazards to the industry, which ultimately compromises its long-term existence.
For instance, the World Bank estimates that over-exploitation of fisheries costs the global economy about US$83 billion annually in lost revenue. According to the analysis, aquaculture has lost billions of dollars in earnings as a result of disease and pollution.
The good news, however, is that some of these problems have working solutions. Let’s look closer at these issues and their solutions.
3 Challenges Wholesale Seafood Distribution Businesses Face With Best Solutions
For a quick recap on the types of distribution business you can operate, read our article on getting started with a Wholesale Distributorship business.
#1. Supply Chain Management Challenges
The demanding warehouse management process flow and logistics requirements for the seafood industry makes supply chain management a bit frustrating. Changes in industry demands and practices have been largely attributed to the pandemic.
As a result, exporting can be a more lucrative market for wholesale seafood distribution businesses now that there may not be as much domestic demand. Between fishers and farmers and the final customer, there are approximately 10 to 15 intermediates in the supply chain for seafood.
The perishable nature of seafood makes it very unstable and spoilage-prone. As a result, the product's shelf life is greatly influenced by temperature and packaging conditions.
Furthermore, improper handling or shipping seafood will cause the product to degrade, resulting in food waste and a drop in sales. Increased traceability and some logistical difficulties may be mitigated by the industry's use of cutting-edge asset tracking and monitoring technologies.
Complex supply chains can be more easily handled thanks in large part to traceability. With the use of cutting-edge asset tracking and monitoring technologies, issues like visibility across the whole supply chain, temperature excursions, and improper handling and storage can be overcome.
According to some estimates, as much as 35% of all seafood collected is lost or squandered throughout the cold chain. However, other research places the percentage closer to 50%, having a substantial negative impact on both the economy and the environment.
Highlights of Top Challenges
- Labor Shortage
Due to the severe environment, finding labor has always been difficult for the fish business. Recently, a severe labor shortage, increased labor cost, rising transportation expenses, and rising costs for seafood, eCommerce packaging, and other supplies have complicated the operations of U.S. seafood suppliers, processors, and wholesalers.
For the foreseeable future, there will likely be a severe lack of workers in the United States. There are a number of ways for businesses to continue operating productively in the face of a labor shortage.
- Consider alternative equipment: By exploring multiple developments in technology and equipment, you can accomplish more with fewer personnel.
- Modify your production techniques: For instance, switching from conventional to no-till tillage may allow you to scale back on some field work.
- Deploy new technology: Machines that operate on their own and drones can help to eliminate the need for human work.
- Lack of Traceability
The existing system has a lot of problems with traceability, which is the capacity to follow a food product through every step of the food supply chain. Many customers want to know where their food products are produced.
When your supply chain has numerous blind spots, efficiency is difficult to attain. Regulatory problems can also result from a product's inability to be tracked and traced, especially when there is a contamination concern.
Traceability and tracking have a few ready-made solutions.
- Using QR-codes and scanners: Barcodes have long been used by many companies as a practical method of tracking merchandise.
- Implementing RFID technology: An even more cutting-edge technology is RFID, which uses tags that can be scanned in bulk to offer real-time supply chain tracking.
- Integrating blockchain technology: As a promising technology to store and share data across a network in real-time, some suppliers are also conducting experiments with blockchain.
- Communication Gap
The wholesale seafood supply chain may be significantly impacted by a lack of communication among suppliers and fragmented information. This is due to the fact that neither party is aware of what the other is doing or not doing. Ineffective communication breeds inefficiency, mistakes, and unnecessary waste.
There are various technological solutions to solve the challenges of a lack of communication.
- Using cloud-based communication software
- Integrating customer relationship management software and seafood wholesale CRM software
- Implementing vendor management best practices
- Inventory Shortage and Overfishing
All businesses today fear and experience the terror of the two extremes of the supply chain cycle, scarcity and oversupply of commodities, at some point or another. Inventory that is sitting in large quantities in the warehouse causes loss of all types while the inventory shortages prevents you from meeting consumer demand.
In the event of overstocking, you will have to pay maintenance expenses including security charges, inventory manager fees, and rent for space. If the goods remains in the warehouse for an extended period of time, this expense will continue. You run the danger of losing your consumer base if there is a demand for your goods but you don't have any in stock.
- Track inventory turnover ratio
- Understand wholesale ordering levels and minimum order quantities (MOQ)
- Use wholesale inventory management systems
#2. Logistics and Delivery Management Challenges
In order to constantly supply the goods reliably and on schedule, the logistics of seafood require such careful attention. Logistics for seafood are particularly complex because of the demanding operational needs and harsh weather and environmental conditions.
Fish begins to spoil as soon as it is caught, so careful storage, preservation, and prompt deliveries are essential. Depending on the type of freight and the deadline, these problems are always changing, necessitating considerable agility and creative solutions.
Highlights of Top Challenges
- Insufficient Vessel Data Capture
Some seafood procurement companies struggle with poor record keeping and weak systems to identify who, what, where, when, and how each vessel caught its catch. Failures in resource management follow from this.
To assess a product's viability, legality, and stock health, these documents are absolutely necessary. Data pertaining to the sustainability and health of the stock dictate how quickly it needs to be delivered and by what means.
To address these concerns, the mid-chain provider should always require documentation of the place of capture in addition to the standard logbook that collects data on total weight, price, and species.
- Integrating data management software
- Using ERP software
- Adopting procurement management best practices
- Unsorted Aggregation of Supply
The efforts to identify the origin, method, date of harvest, size composition, and other forms of fishing-related data are sometimes thwarted by the combining of products from various fishing events into a single volume. This problem arises early in the logistical process.
Carriers frequently compromise on the quality of the seafood in order to make the best use of the limited space at their disposal. Any credible attempt at appropriate storage is undermined by the unchecked accumulation of seafood merely to fit them on the vessel that will yield the most profit.
- Use wholesale or multichannel inventory management software
- Decongest early enough
- Poor and Inadequate Cold Storage
In addition to being sufficient, cold storage facilities should offer the precise temperature ranges that each unique seafood product needs. Cold storage is crucial for logistics businesses that deal with fresh seafood goods.
Fish have an extremely low shelf life when compared to other goods that are delivered in a refrigerated environment. Markets require that their adequately refrigerated product be delivered to them within seven or eight days of being caught in order to prevent deterioration.
This necessitates the installation of a reliable cold-storage system and suitable temperature control. Careful route optimization and planning is critical in order to complete the delivery within the specified time.
- Optimize warehouse layout
- Invest in right equipment
- Streamline deliveries with delivery management software
#3. Wholesale Distribution Management Challenges
The goal of every seafood wholesale distribution and food distributor business is to sell products to their niche market and increase the business’ profitability. However, it can be challenging to maintain the quality and safety of seafood products without the right equipment.
Once a customer places an order for bulk seafood products, it is important to use the proper transport vehicles to deliver the order. Packaging materials are also critical.
Highlights of Top Challenges
- Complexity Challenge
This is majorly a problem for broadline distributors that sell more than one type of seafood product. It becomes difficult to keep up with online ordering and customer orders. There will also be issues of inventory shortages and excess inventory of some product lines.
- Invest in wholesale inventory management
- Use multichannel inventory management software
- Integrate multichannel order management platform
- Marketing Challenges
Wholesale seafood distributor marketing can be stressful if you don’t know where to start. With digitization and eCommerce technology, it is easier for seafood wholesalers to broaden their reach and get more customers.
- Streamline marketing with eCommerce software
- Use eCommerce marketing automation tools to stay ahead
- Implement online marketing strategies
- Design your eCommerce website
- Register your wholesale seafood business on B2B wholesale marketplace
- Try wholesale directories
The Perfect Solution With BlueCart
While some challenges, like overfishing, climate change, and ecosystem damage, require further pondering upon and stricter regulations, others are easier to solve. The wholesale seafood industry is one that comes with big opportunities, given you know how to use them.
Most seafood wholesale distributors will find that they face at least one of the challenges evaluated in this article. If you are one of them, the good news is that you finally understand the importance of streamlining your wholesaling operations with digital solutions.
BlueCart is an example of such solutions. With BlueCart, you can manage your wholesale seafood business, from warehouse management and inventory management to online ordering management and delivery management.
The BlueCart solution is an all-in-one eCommerce one that makes it easy for wholesalers to run their business operations. You can also take advantage of the payment processing software features for wholesalers.