Supply chain logistics still a struggle for exporters

In Australian Cultural Exports, Business Resources, Food, Government, Harmonisation, Momentum, Transport

Of all the COVID difficulties, the price of fresh food export via airfreight is a major problem for food suppliers.

World their oyster, but freight a worry

From theaustralian.com.au, 18th September 2020

Angel Seafood founder and chief executive Zac Halman
Angel Seafood founder and chief executive Zac Halman

Listed oyster grower Angel Seafood says the high cost of air transport freight is a barrier to resuming its export market, as the company expands its domestic retail reach.

In July, the federal government pledged an additional $241.9m to continue its International Freight Assistance Mechanism, subsiding air freight until the end of the year in response to the pandemic.

“The government is only subsiding about 50 per cent of the added cost, which is still about 500 per cent increase of what freight rates were before, so it’s quite expensive,” Angel Seafood founder and chief executive Zac Halman told The Weekend Australian.

He said the South Australian company was focused on increasing its production to ensure its volume would meet future export demand.

“At the moment we’re struggling to supply the domestic market with the amount of volumes and production we’ve got,” Mr Halman said.

“We’re scaling up our multi-bay strategy to increase that production further. Our intellectual property that we hold in the multi-bays gives us the ability to hold a bigger size and more premium product for the export market.

“That will make the price per kilo of the freight more worth it.”

Mr Halman said the $20m-listed company wanted to allocate 50 per cent of stock to the export market over the next few years.

“As we keep growing the business, we’ll be allocating more product into export. We’re nearly at the end of export season now, so we’re looking at March and April for next year to recommence that focus.”

The company has previously exported to Hong Kong, Singapore and Shanghai and has told investors the Middle East represents a long-term opportunity.

The shutdown of restaurants in March prompted the company to pivot towards the retail channel, with COVID-19 accelerating its growth in the market.

The company posted a record 2.1 million oysters sales in the fourth quarter, a 5 per cent jump over the same time last year.

“It opened up a big opportunity for us to start to leverage our brand to consumers, which is a huge upside,” Mr Halman said.

“This kind of strategy will be significant in moving forward into the retail export, as well. Nearly 90 per cent of our product is now going into the retail market.”

The company is eyeing a significant growth opportunity to expand its retail reach.

“It hasn’t been serviced well in the past because no one has grown to this scale before,” Mr Halman said. “The only way anyone could get volume was to buy through agents and brokers, and that meant the broker would have to buy from 30 different growers, which had a lot of inconsistencies.

“The scale we’re at now has given us a competitive advantage to have consistency of quality, size, shape and flavours — we can supply that day in and day out now to the retail market.”

Shares in Angel Seafood closed at 15c, up 1c, on Friday.

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