As seafood processors constantly look at finding new ways to reduce costs, it appears their options to do so are becoming increasingly limited.

Seafood companies are battling a business climate where growing consumption is pitched against demand for more value-added products, a fixed availability of wild-caught seafood, wage pressure and rising logistics costs, according to executives speaking at the National Fisheries Institute (NFI) webinar last week.

While an increased demand is generally positive, and retail interest has helped offset the drop off in foodservice, the items garnering the most interest from consumers are those piling on the most incremental costs, Bristol Seafood CEO Peter Handy said.

"There is nowhere to hide in the entire supply chain in terms of cost pressure," Handy said.

Those additional layers that come on top of basic commodity products, such as flavorings, packaging and customization are becoming more increasingly constant, leaving processors left with only structural areas for reducing costs.

Under the company's business turnaround plan, High Liner CEO Rod Hepponstall has overseen an overhaul of the company's working methods and practices over the past two years, including the ditching of unprofitable and low margin product lines.

"All the way from forecasting to inbound logistics are all areas where can work better together and reduce costs for all of us," he said.

Sam Calletti, president of the Great American Seafood Import Co., agreed that customers looking to reduce costs to allow for more promotions can help develop strategies to help add additional margins across the value chain.

Among the sector's biggest pressure points, he said, are transportation and distribution.

"Cold storage and logistics are just two things that are eating us up alive right now," Sam Calletti said.

There are strategies to get costs down, the executives said, from ordering in larger quantities to allow processors to secure better freight rates, to encouraging customers to commit to more specific volumes.

Processing

Cost inflation eating into seafood sector margins: 'There is nowhere to hide in the entire supply chain'