The Effect of the Covid-19 Pandemic on Wholesale Pricing
Some shops have been asking me about wholesale pricing of fish, why it has risen and why it fluctuates more frequently since the pandemic.
For Aquatic Solutions over 70% of the stock we sell is imported and sourced from many different countries across the world. Since the pandemic started, many factors have contributed to fluctuating costs and I would like to give an overview of the challenges we’ve faced over the past year that remain an ongoing concern.
As we are all aware international flights have dropped significantly due to very limited international travel. Subsequently, the freight rates charged by many of these airlines have sky-rocketed. To give a rough idea some airlines have been charging up to $22usd/kg and even higher at the peak of the pandemic. This means for an 18-20kg box of fish mostly filled with water, we are looking at over $500 AUD per box. Some airlines do have cheaper rates but unfortunately, we cannot pick and choose what airlines we use, and in most instances, we are lucky to even be able the get the freight space to bring the fish to Australia. To ensure a continuous supply of fish we need to keep ordering and importing fish despite the varying freight charges which obviously means that wholesale prices will fluctuate. Some exporters are even asking us to prepay these astronomical freight charges!
Another challenge we face as an importer is that fish are predominantly purchased in US dollars meaning the exchange rate of our currency can also play a huge role in the cost of fish. Luckily, at present this has been more in our favour!
Size is our third factor to consider when we import fish. Individually bagged or larger sized fish take up larger portions of the box, so for example a box with only 50 fish/box would equate to $10 per fish just for the freight component. This means we are more reluctant to import bigger sized fish as they are highly uneconomical and could jump more than double in price.
In the end it is a supply and demand thing. If there is enough interest and requests for certain lines or sizes that are mostly unavailable in our local market, we often do take the gamble and many customers purchase them so the gamble has paid off in most situations.
Next on the list is our suppliers’ concerns. Many overseas countries have also been in lockdown and suffered economic downturn while they continue to struggle with 3rd and even 4th waves of the pandemic. Initially we were receiving oversized stock which was a welcome surprise but now these fish have been sold there is a gap in the supply chain whereby they need to catch up meaning short supply and smaller, younger fish are being supplied of late.
There are also environmental factors that have been hampering supply. Some areas in Indonesia, in particular areas around Borneo where clown loach are sourced, are experiencing major flooding making it almost impossible to capture these wild caught fish. Other areas in Thailand are experiencing severe drought conditions limiting water supply which impacts many lines of fish including sharks, sucking cats and flying fox.
Many farms and suppliers are increasing their fish prices as a result. We in Australia have been so fortunate and have fared much better than so many other countries, it’s easy to overlook the fact that the rest of the world is still struggling.
In regards to local stock, we fully back our Australian fish producers and where possible source as much stock as our producers can breed. Locally bred fish prices have remained quite stable despite rising domestic freight rates, but much fewer flights are available and this means we often cannot select the most cost effective and convenient times to land and send fish.
I know price fluctuations can be extremely frustrating but as you can see this is a very complex situation with so many different factors that are totally out of our control. When ordering fish please be aware of the price you are paying and check your margins are there when you price your fish. It is a critical aspect of your business and I know I myself have become much more aware of this lately when I order my own stock, as I too have been caught off-guard with pricing and added expenses from my suppliers.
Aquatic Solutions is doing our best to provide the widest range of fish of the highest quality and at the best prices and sizes in the market and we will always strive to give good transparency with this so when we source fish with cheaper freight charges you will find the price of fish drop and vice versa if the freight is higher. At the moment this is the price to pay for continual supply of certain lines of fish.
This industry has been forced to evolve at a much faster pace than anyone would ever have anticipated. The unexpected silver lining to Covid-19 was such a much-needed blessing for us all. All I can say is dreams can come true in the fish game but as always it is fuelled by a lot of blood sweat and tears.
Julian Wong B.Sc. Hons
JMW International Pty. Ltd. t/as Aquatic Solutions