Covid-19 impacts on production and distribution from October to December

Review of Covid-19 impact on production and distribution of seafood from October to December 2020.

Key points

  • Businesses managed logistics challenges well until the end of the year when Covid-19 border closures in Europe hampered trade.
  • Processing businesses supplying export markets on the continent faced additional challenges as they tried to plan for different EU-UK future trade agreement scenarios on top of managing Covid-19 impacts.
  • Processors relying on imported whitefish benefitted from lower raw material prices.
  • Larger processing businesses that had to manage Covid-19 cases amongst staff were generally able to do so safely without reducing production capacity.
  • Lack of testing in some areas made it difficult for employees and employers to distinguish between Covid-19 and other illnesses common in winter.

Transportation and Logistics

Fish auctions stayed open through this period, with Covid-19 measures allowing operations to continue as restrictions increased. Billingsgate Fish Market also kept busy to the end of the year. Fresh product was supplemented by frozen imported product where necessary to meet demand.

Most transportation and logistics functions continued to operate at reasonable levels during the increased restrictions, albeit more slowly and at higher cost for long-haul transportation. Concerns continued to be raised about the ongoing imbalance in shipping containers. Covid-19 restrictions throughout 2020 severely disrupted global inbound trade, leaving insufficient empty containers in China for export. If left, this global imbalance of empty shipping containers could impact UK imports in 2021.

Trade with China continued to prove challenging. Exporters sending product there faced specific logistics issues associated with increased import checks and sanitisation measures at Chinese ports.

Specific, short term issues with getting product into and through France emerged at the end of December. A surge in cases of a new variant of Covid-19 in England caused a number of European countries to impose a travel ban. As a result, the port of Dover closed to lorries, many of which were transporting fresh produce, including seafood. This caused critical delays and issues at the border.

Processing 

While processing businesses continued to face unprecedented levels of operating uncertainty through the end of the year, the degree of impact varied. Those suppling retail reported being better prepared for increased demand as restrictions increased. Less panic buying was expected though some worried about retailers reducing their product lines over the Christmas period. Other processors continued to struggle to balance heightened retail demand with the increasingly volatile foodservice market.  

Some small businesses reliant on foodservice and hospitality trade closed again, having re-opened during the summer when restaurants resumed dine-in service. This was the second or third temporary shutdown for some of these businesses. 

Some businesses supplying into foodservice worried about the impacts of the prolonged financial challenges that the sector had faced. There were concerns that knock on effects through the supply chain, such as ongoing issues with bad debt, could adversely impact them in the coming months. 

Businesses supplying export markets on the continent faced additional challenges. On top of managing Covid-19 impacts they were trying to plan for an as yet unknown relationship with the EU. Some businesses suggested that the financial impacts of the new restrictions would be worse than the spring lockdown because of these concurrent factors.  

Businesses located in or trading with Northern Ireland had to put in considerable effort to fully understand the requirements and implications of the Northern Ireland Protocol. These requirements then had to be implemented to keep businesses running, adding additional operating pressures. Some businesses selling to or through Northern Ireland sent more material that usual before the end of the year. They aimed to create a buffer ahead of the end of the transition period and any potential disruption. 

Processors reliant on product from the Northern Irish fleet faced issues with continuity of supply in October and November. Up to half of the Northern Irish nephrops fleet reportedly took part in a tie-up scheme during this period. (The Northern Irish fleet accounted for 23% of all UK nephrops landings, by weight, in 2019.) This made it difficult for some processors to source enough raw material to meet demand. It also highlighted the knock-on impact that interventions can have elsewhere in the wider supply chain. 

With vessels tied up we lost our primary supply base. During this time, we should have been preparing for Christmas, our biggest sales period of the year. But instead we ran out of stock and couldn’t meet orders. I ended up furloughing staff until supply improved.
Andrew Rooney, owner of Rooney Fish in Kilkeel

Businesses relying on imported whitefish benefitted from lower raw material prices. As a result of foodservice closures in 2020, high value product previously sold fresh into the foodservice market was instead frozen. This relative oversupply in the frozen whitefish market led to a reduction in average raw material price for processors. Many of these businesses were able to stockpile raw material because prices were low. Cold stores returned to near full capacity ahead of Christmas and the end of the transition period. Unlike during the spring lockdown, fish and chip demand remained strong, keeping whitefish demand up for suppliers.

Some incidences of Covid-19 cases were reported at seafood processing factories across the UK. At smaller sites, positive Covid-19 tests forced some businesses to close temporarily.

Larger sites were able to manage cases and maintain operating capacity, challenging initial concerns that food factories could become ‘super spreaders’. Businesses reported that general guidance and best practice in managing Covid-19 risks were well-known across the sector so many were well prepared to respond to outbreaks.

Icons representing: social distancing, more personal protective equipment (PPE), staggering shifts, redesigning work spaces, moving training online, cohorting, rapid testing, incident management, risk assessments
Graphic showing adaptations made by processing businesses to become covid-safe

However, there were additional resource and cost pressures incurred in ensuring risks were managed and minimised.

Throughout the whole pandemic, the company worked hard to keep staff safe. Our first step was to form a cross-site Covid-19 management team, meeting daily. Site safety has been an ongoing process and we have worked closely with the Health and Safety Executive and acted on any ideas and feedback given. 

Towards the end of 2020, more measures were completed and introduced. This included screens between individuals, screens set up in our canteens to eliminate face to face contact, extra cleaning regimes and ongoing staff briefings, communication and monitoring.

Hours lost for Covid-19 reasons were relatively low across most of our sites. Only Nolan Seafoods required additional measures in December to further reduce risk. These included fully enclosing each individual filleting station and increasing guidance and monitoring, especially in high footfall areas
Jess West, International Fish Canners, Nolan Seafoods and Nor-Sea Foods

Some large scale Covid-19 testing and risk management initiatives emerged during this period. Defra invited English seafood processing businesses to take part in a pilot Covid-19 testing scheme starting in December. This scheme was part of the UK Government’s Covid-19 Winter Plan and aimed to routinely test asymptomatic employees to prevent transmission.

Following an outbreak of community transmissions affecting food processors in northeast Scotland in mid-November, an Incident Management Team was quickly formed. It included representatives from industry, Food Standards Scotland, Scottish Seafood Association, Seafish, Seafood Scotland, the NHS and environmental health officers. It aimed to:

  • Understand the problem;
  • Create a shared understanding of risks;
  • Support businesses and the community to bring rates down as soon as possible.

To help track and manage outbreaks, the Health and Safety Executive (HSE) and environmental health officers increased their inspections of food processing sites. These visits were designed to help businesses minimise the risks of transmission and improve health and safety protocols.

Workforce

There were 819,000 fewer workers on UK company payrolls in November than in March 2020. Hospitality was the worst hit sector, accounting for a third of these job losses, followed by retail.

Indications for the period October to December suggest that job losses could continue to increase in 2021. Even businesses seeing strong sales over the period reported making cuts. For example supermarket chain Sainsbury’s announced plans to cut 3,500 jobs, including those at all of its meat, fish and deli counters.

Covid-19 is also expected to have reduced worker mobility, with more workers staying in positions they might have otherwise left. Some seafood businesses raised concerns that once things begin to return to normal worker mobility will increase, creating vacancies to be filled.

Staff illness also impacted different parts of the industry. Some employees and employers reported that lack of testing made it difficult to distinguish between Covid-19 and common winter illnesses. Businesses across processing, retail and foodservice all reported staffing problems linked to illness or patchy availability of Covid-19 testing for workers with symptoms.

Some supermarket workers cited safety concerns over encountering shop customers not wearing face coverings. Nevertheless, businesses across the supply chain reported a strong commitment to ‘do things properly’ and keep employees safe while maintaining operations.

Many low activity fishermen reported self-isolating – and not fishing - for most of the year. Age and existing conditions meant many found themselves in the high-risk group for whom Covid-19 is often more severe. Poor market prices and inconsistent demand seen through the end of the year offered little financial incentive to fish. Some reported that they were considering retiring earlier than planned through a combination of health and financial factors. This cohort of the fleet will account for just a small proportion of overall UK landings by weight and value. However, their exit from fishing would be of social and cultural significance to the overall industry.

Changes coming into effect at the end of the Brexit transition period increased interest in food hygiene training amongst fishermen. Demand for this training remained strong through the end of the year. In particular this demand came from vessels where the catch is exported to the EU or is processed and frozen on board. Covid-19 also contributed, with interest from fishermen selling their catch direct to consumers.

Many onshore training programmes continued to be delivered online. Feedback suggests that participants (85%) are more likely to use remote and e-learning or a mixture of training delivery methods in the future. Savings in time and cost were noted as benefits of online training. Some apprenticeships were also delivered remotely during this period.

The availability of seagoing training, on the other hand, continued to be limited during this period. Fishermen’s safety training requires some practical training which is not possible to deliver online. Training providers were only able to offer reduced services, impacting the availability of training to the catching sector. In response the Maritime and Coastguard Agency took the decision to relax requirements, allowing crew more time to complete the required training. However, the inability of crew to complete and refresh mandatory basic safety training is an ongoing safety concern.

Read more about Covid-19 impacts from October to December

Contacts

For further information on our review of Covid-19 impacts on the seafood industry contact:

Ana Witteveen
Economist
t:
0131 524 8659
m:
07815 428 554