The seafood capacity crunch
20 / 10 / 2013
WHICH COMES first, capacity or market? Is air cargo capacity put in place to serve an existing need, or by becoming available can it create a whole new type of demand? Colin MacDonald, chairman of Clearwater Seafoods Inc, clearly thinks the latter is the case in his home market of Halifax, Nova Scotia.
Clearwater was founded in 1976, by MacDonald and John Risley, as a retail operation selling lobsters. But the duo quickly realised that the local market was a very seasonal one. “There was a lot of demand from May to August, possibly into September, because lobsters were mainly consumed at the beach or on special occasions,” says MacDonald. “But there was not enough demand to keep us busy for the rest of the year.”
The usual solution for Canadian lobster producers was to sell into the US market, but their big distributors had all the buying power and could negotiate rock bottom prices. So Clearwater turned its eyes to Europe, focusing on smaller customers who might buy only five or six boxes of lobsters at a time, but would pay for a fresh, quality product. The company found it could make much better money shipping such small consignments direct to the end customer.
The concept worked, and in the 1980s Clearwater also developed customers in Japan, and went on to have its own offices there, in China and in Belgium, Germany and the UK. It was able to ship its goods thanks to the cooperation of airlines such as KLM, Sabena and Lufthansa, and so expanded from lobsters into scallops, coldwater shrimps, turbot and clams.
A success story, then, not just for Clearwater but for the Nova Scotia seafood industry in generally. MacDonald admits that the latter has grown tremendously since the mid 1970s, with the Canadian lobster catch alone rising from 25 million pounds then to 120 million today.
But he reckons that growth could have been much more had seafood producers not had to cope with limited airfreight capacity out of Halifax. Faced with limited widebody service and uncompetitive freight rates, he says exporters often have to truck their product to Montreal, Boston or JFK, where it is bought at lower rates by the large distributors.
He lays the blame for this on what he sees as a restrictive approach to air traffic rights by the Canadian government. “They let some foreign carriers in, but they are always thinking about how they can protect Air Canada,” he says. He describes the national carrier as “passenger-focused” and “only dabbling in air cargo”.
His view is that governments need to think not just about the passenger business when awarding air traffic rights, but look at how cargo can stimulate the economy. “We need to open up our airports with open skies policies and let local industry develop with the help of more daring and opportunity-focused carriers,” he says.
He also says airports need to lower their fees, rents and handling costs, which at current levels discourage cargo airlines.
Read Peter Conway’s full interview with Colin McDonald in the next edition of Air Cargo News 21 October – Issue 763