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DnB: Seafood industry lagging on digital innovation

What do companies need to do to prepare?

DnB's seafood team is seeing a consistent deficit in the seafood sector: a true focus on digitalization and the way it's reshaping the sector. Dag Sletmo, advisor at DnB Seafood and

Trung Minh Tran, head of digital innovation at DnB for Large and International Clients, offer their view on key trends the industry needs to understand.

The seafood industry has been a laggard in digitalization. But that is now changing fast

There is an accelerating focus on how digitalization and innovation can help the seafood industry become more cost efficient, reduce risk, increase productivity -- and create better customer experiences.

Technologies such as artificial intelligence (AI), Big Data, Internet of Things (IoT), blockchain, digital twin technology, etc. have matured and will contribute to create new value increasing products and services.

Case study: How Minh Phu is using AI

There are good examples also globally on how digital development can create value in the seafood industry. Shrimp giant Minh Phu Seafood Co. in Vietnam has invested heavily in artificial intelligence in order to improve its internal efficiency, and now use it in both farming and processing.

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Before, the company needed several machines in order to assess water quality in the facility by measuring parameters such as Ph, NH3, salt, etc. Each machine cost several million US dollars. But thanks to AI, now one single machine can measure all these parameters and it costs only five thousand dollars.

AI will also help the company reduce its work force by 50-70 percent. Sales are expected to grow 30 percent, while costs will decline by 30 percent.

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The question now is what other opportunities digital developments can give the seafood industry and what will the focus be going forward?

We've seen from other industries that such company-specific internal improvements can be massive. But the really radical changes usually come through the interaction of many companies. The players who succeed in creating strong ecosystems become the winners. Those who remain on the outside risk becoming losers. The most famous example is probably the very diverging fortunes of Apple and Nokia.

In the last few years, several untraditional players who want to take a position in the seafood value chain have popped up across a wide range of fields including farming, transport and logistics, distribution and payment settlement.

The main ambition is to deliver better services and products via more structured and efficient processes. Aqua Connect is one example. This Indian farming company has ambitions to be the "Amazon.com for the seafood industry." The company has developed an app for shrimp fishermen in rural areas in India, helping them to sell their product in an easier and cheaper way.

Organizations like Earth Twine and World Wildlife Fund experiment with blockchain technology through the entire value chain hoping to revolutionize traceability within seafood. Will such companies be able to challenge the traditional players in the industry?

The Alibaba effect

Digitalization will be able to redefine industry borders and reduce friction in the seafood industry. We believe such changes in industry borders may happen in the seafood industry as players in other industries look at how they can play a role in a digital ecosystem.

One example is the Chinese e-commerce giant Alibaba. In March, the company took the Norwegian seafood industry by storm at a seminar in Bergen, Norway. They've since entered into a formal cooperation with the Norwegian Seafood Council on exports of Norwegian seafood to China.

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Alibaba is not a standard retailer, but has a multitude of different channels both online and in physical stores. They sell products under their own brand, but manufacturers can also sell on their own and with their own brand via the Alibaba platform.

The small Norwegian company IceFresh now sells salmon under its own brand directly to the Chinese consumer through Alibaba. At the same time, they are demonstrating to the Norwegian industry that their new freezing and thawing technology is so good that the product achieves the same retail price as fish that has never been frozen. Meanwhile, Alibaba can sit in the background and gather data and insight that will help it grow sales.

Valuable customer insight

We want to highlight two themes that will be relevant to the seafood industry in a digital ecosystem. The first theme is the use of digitalization to create better customer experiences. An ecosystem perspective that utilizes available technology can challenge today's distribution channels in the seafood industry. These will provide solutions with more intuitive interfaces and increased transparency and traceability.

One example is the Chinese company Gfresh, which is a global marketplace for buying and selling seafood. The company offers an end-to-end process for buyers and sellers with an integrated marketplace for purchase and sales, distribution, customs clearance and quality control. In addition, the company looks at customer data, which over time will provide valuable customer insights. This will also give them an increased competitive edge by providing valuable services no one else can offer.

Digital innovation

The second issue we want to emphasize is the role of data aggregators. Digitalization in the seafood industry will create large volumes of data. There is a lot of quality data in the seafood industry already, but this data is often very fragmented and the data collection is largely manual.

A data aggregator in an ecosystem will be able to gather data throughout the entire value chain and provide better analysis and insight for both customers and suppliers. This could contribute to better advice, increased transparency and better decision-making.

At DnB, we have established a unit called digital innovation within the division for Large Corporate and International clients. We focus on creating new business models together with different industry players.

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We've been involved in mapping the entire value chain and identifying different issues. One example is there is a need to simplify the sales and logistics processes in seafood, and that data is fragmented and unavailable. In this initiative we have observed that the seafood industry is going through the same journey as DnB has been through: digitalization challenges us, but also creates new opportunities.

Ecosystems and industry fragmentation are equally relevant discussion topics in the seafood industry as in finance, and there are many common denominators. Those who manage to think about ecosystems will be able to position themselves for this exciting future.

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