A U.S. seafood company is using new container technology to open a new market niche: live fish imported from South Korea.
For the last year, Pacific American Fish has been engaged in “beta” testing to import shipments of live black rockfish, olive flounder and turbot using tanks built into a 20-foot ocean container.
The containers are far from off-the-shelf technology. Pafco, the Korean government, the Gyeong Nam Province government, an association of small aquaculture fish farms from Gyeong Nam and the Korea Agro-Trade Center, Los Angeles (a quasi governmental marketing agency) joined forces to develop the container and its shallow but long and broad tanks that allow the fish to swim freely during the two-week trans-Pacific voyage.
“We’ve spent a year developing the process and trying to fine-tune the equipment,” said Peter Huh, Pafco’s CEO. “The process is so delicate — even if just a few fish die during the trip, it will pollute the tanks and could kill all the fish inside.”
No fish have died this year, leading Huh to declare the process ready for commercial launch. “Right now, we have six containers, which is the exact number needed for a once-a-week import schedule,” he said. “We’ll get more containers and have two deliveries a week by the end of the year.
“If this grows to our expectations, I think we can handle 10 containers a week. To go beyond two containers a week, we’ll be investing a lot more capital, but I think we’ll be shipping five containers a week within a year or so,” he said.
It will be quite an investment; each container costs more than $100,000. The Korean government and the regional government helped develop and fund the first containers, but there is private money even in the initial fleet.
Huh’s company is not publicly traded, and he declined to discuss exact investment levels, but said Pafco has invested in containers. Industry estimates place Pafco’s yearly sales at about $250 million, and it imports and exports fresh and frozen fish and sells some prepared seafood dishes. Customers include Costco and Fresh N Easy. The company sells seafood under four brand names: OceanKist, Pete’s Seafood, Pacific Surf and Snak N’Go.
The Korean government said it would not contribute any money after the first 20 containers, so expanding beyond that point will require private investment.
Each container currently delivers 4,000 to 4,500 pounds of live fish, but Huh said more research is being conducted in an effort to increase the density to 5,000 to 6,000 pounds.
Lowering the transportation costs is important to the success of creating a market for live fish. “Right now, you can get tilapia and catfish live, but not really other types of fish in the U.S. I think with lower transportation costs we’ll reach a slightly broader market. When we tried air freight, the cost was about twice as much per pound as on the ocean and the mortality rate was quite high. Few fish survived the altitude,” Huh said.
Once the fish are placed in the container tanks from Korean fish farms, they have about a one-month shelf life, according to Pafco’s Executive Chef Nora Ramos. The ocean voyage from Korea to Long Beach is about two weeks, leaving two weeks for the live fish to be transported to Pafco’s tanks and then sold to restaurants or fish markets.
“We cut that a little close on the first two shipments because USDA inspectors kept them for over a week, leaving us just five days to sell them,” Ramos said. Because it was a new product and a new shipment process, the inspectors wanted to really test them thoroughly. Now they get inspected and released very quickly.”
The live fish currently are marketed in Southern California, but Huh would like to see the exotic varieties shipped throughout the U.S.
In the year since the U.S.-Korea Free Trade Agreement took effect, shipments of Korean foods to the U.S. have increased 10.7 percent. Weonki Lee, president of the Korea Agro-Trade Center, Los Angeles said the increase isn’t directly related to the trade agreement. “The tariff itself for Korean food coming into the U.S. was already low, and for seafood it was just 1 percent,” Lee said. “So that was not a barrier. From the U.S. to Korea, the tariffs were much higher, so the change since the FTA went into effect has been much more dramatic for U.S. goods.”
Lee said the biggest advantage of the FTA was increasing cultural awareness, and bringing Korean culture and goods into the sightlines of American consumers. “For example, just in the last year K-Pop (the Korean pop music genre) has become much more popular here in the U.S. and helped people realize that the Korean culture was here and should be explored. So naturally, I think Americans are now more interested in trying food and seafood from Korea. That awareness of consumers is necessary when you are entering a new market,” Lee said.
The live fish shipped from Korea sells in the U.S. for $12 to $20 per pound, and the Korean government is anxious for the niche product to gain a foothold. But because of the expense and lingering economic woes, Lee said he doesn’t expect olive flounder or black rockfish to be mainstream purchases any time soon.
“It’s similar to when sushi first was introduced in the United States,” Lee said. “It was very expensive and not mainstream. Now it is a mainstream item in restaurants. That can happen with live fish if transportation costs continue to decrease.”
Huh said one big way to cut transport costs further is to use the expensive container equipment for two-way trade. “Our goal is not just to import live fish from Asia, but to export product back in the same container,” Huh said. “Our freight obligation is round trip so we have been testing lobsters and learning how to do it. Shipping live shellfish is different than shipping live fin fish, but I think we are getting it perfected. We’d like to ship lobsters, clams and Dungeness crabs.”
Shipping live lobsters by ocean isn’t new. A Danish company called Aqualife Logistics, working with Maersk Line, sends weekly shipments of live lobsters from Halifax, Nova Scotia, to a seafood market in Urk, Netherlands. The service is several years old, but Maersk isn’t marketing the service and equipment in other markets.
Those tank containers have a radically different design. Each container hold 20 barrel-shaped tanks and can hold about seven metric tons of lobsters. However, the equipment can’t be used to transport fin fish, such as the rockfish coming from Korea.
The Korean tank containers are carried by Hanjin Shipping in its regular service from Korea to Long Beach. “Hanjin charges a little bit above their normal reefer rate for this service because it is trickier,” Huh said. “They monitor the container and tank controls during transit. In addition to the physical monitoring, they make sure it is the first one to be unloaded and have special people in customer service to follow the container from loading to unloading.
“Having it off first is important because we want to rush the live fish into restaurants,” Huh said. “We’re really excited about increasing the market. The definition of fresh fish is 21 days after it’s caught and cleaned. It is going to take time to interest consumers, but the taste of a live fish dish is so different.”
Contact Stephanie Nall at email@example.com.