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Editor's Note: Get a handle on hidden costs

Fiona Robinson, Editor in Chief
Fiona Robinson
January 01, 2005

Nothing in life gets cheaper. Costs are rising on every consumer good imaginable. The price of seafood is increasing due to a variety of factors, including tariffs on imports, the cost of fishmeal to fish farmers and higher labor costs for processors. One less obvious factor that raises the price of seafood at every step in the supply chain is the price of fuel. And fuel prices have soared.

This issue’s Top Story (see page 20) by Senior Editor Lisa Duchene looks at how high fuel costs are affecting everyone in the seafood industry, from distributors to restaurants to airlines.

As we discussed artwork for the story, one idea was to show an image of a fish portioned to represent different costs in the supply chain as seafood moves from water to plate. But it became evident that many seafood companies can’t pinpoint costs to that degree of detail. They just know prices are up, and they are either taking a hit on their margins or passing the increase on to their customers — mostly the latter.

Coincidentally, the term “bleeding edge of technology” vs. “cutting edge of technology” came up in a recent conversation with a seafood processor. Many companies still operate on the “bleeding edge” because they simply don’t take time to break down their products’ cost by using the technology available to them.

If you haven’t identified the hidden costs in your operation, there’s no better time than the present to figure it out. It’s hard to increase margins until you know what your hidden costs are and whether you can control them or not. In the case of fuel, the cost is largely out of your control. However, you may be able to make up for high fuel costs by making your operation more efficient and putting a Band-Aid on that “bleeding edge.”

January 2005 - SeaFood Business


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