Fresh fish sold here. A historical perspective on supply chains in frontier markets

Over the past few years I have worked on a variety of supply chains in far flung places: Moscow in the transition years looking to build a series of distribution networks; India and the Rushikonda fishing community; Zambia and herdsmen taking their livestock to the abattoir and on to tanneries. All of these examples are distant from the highly sophisticated supply chains of the developed world. And yet, as I look back through history, I note that many of the emerging supply chains of frontier markets find echoes of their development in a number of industries that were born in the industrial revolution. 

I am from Hull in the UK. At one time Hull and its close neighbour Grimsby were the biggest trawling ports in the world. This took over a century to achieve and all was lost with months of the Cod War between Iceland and the UK. The life cycle of this industry carries clues for many others in frontier markets.

Before the 18th century sea fish was eaten mainly in salted form or cured by smoking. As such it could last indefinitely and was used by the Vikings to sustain them on their long journeys – cod would be caught and laid out to dry in the sun and freeze by night in the open air. This plank like substance would be ideal as a source of protein for long journeys or, as a base ingredient for stews. Herring was another valued fish with much of the catch turned into white (split and salt-cured) or red (smoked over a wood-shaving fire) varieties. Cured fish could then be transported inland by donkeys with panier baskets right up to the mid-19th century. Fresh fish had been food for coastal communities but the lack of a means to transport this perishable food stock made it unavailable or rare and expensive for inland communities. Then, the railways transformed the industry – in terms of demand and distribution. The supply side of life at sea for the trawlermen was dangerous – far worse than mining. Again, there are lessons to be learned.

I worked on the artisanal fishing industry in India and am struck by the similarities with this historical trade. Drive to the old Dutch colony north of Visakhapatnam (Andra Pradesh) and you will see fish being cured and salted as well as a whole community involved in the trade. Men go out to sea; mend nets on a Sunday; land fish on landing stages for women to segment and sell to agents before moving the rest of the fish to market. This could have been Hessle Road in Hull years before.

The railways transformed the fishing industry in 19th c Britain as the railway companies invested in dock facilities and speeded up connections to the fast growing towns of the hinterland. Suddenly, fish were available throughout the year instead of on a seasonal basis and prices fell dramatically – by about as much as 90 per cent in some cases. Initially, the railways did not grasp the opportunity and tended to cannibalise the volumes carried by traditional boat, cart and pannier pony. It took a while to grasp that logistics and supply chain improvements could transform the industry and generate unprecedented volumes. This happened with meat in the USA as the old cowboy model of herding cattle thousands of miles to the Chicago stockyards gave way to sending them by rail and then, with abattoirs close to the ranches and freezing technology the industry was transformed. Add in the telegraph and demand in the urban markets could be transmitted to the ranches to trigger supply as needed. Consider the potential impact of mobile telephony and the internet across frontier markets. Innovation in any supply chain is not a function of blue sky thinking but has to be rooted in reality.

With the advent of fish and chip shops across Britain – there were 25,000 by 1913 consuming at least a quarter of Britain’s annual catch of 800,000 tons of fish – fish became the staple diet of the working classes and, this demand provided the impetus for capital investment in bigger and better trawlers capable of fishing much further afield. Another key driver in patterns of demand was immigration. As the railways made supply more efficient, the huge influx of Irish immigrants fleeing the potato famine changed consumption patterns utterly. The 1861 census saw 806,000 Irish born people living in Britain – three per cent of the population. Most of them were Catholics and their routine of eating fish on Fridays and throughout Lent had a huge impact on demand. Again, we can learn a lot in frontoer markets about shifting patterns as demography transforms volume and needs.

We can learn from what happened to supply and demand but, there is much to be learned about how safety in an industry has to evolve too.

By the 20th century, the majority of the Hull and Grimsby fleets were fishing in the North Atlantic in treacherous conditions that saw the industry lag far behind other sectors in terms of safety. In 1863, Hull lost 24 smacks and 144 lives; in 1877, Hull lost thirty-six smacks and 215 lives; in 1883, forty-six smacks and up to 360 lives. Throughout this period Hull lost 1 per cent of the trawlermen every year. Fast forward to the 1960s and trawlers were going to sea with no radio contact. Following the triple trawler tragedy of February 1968 when the Romanus, Kingston Peridot and Ross Cleveland were lost a campaign to improve safety was launched. Lillian Bilocca, a housewife in the fishing community, led a campaign that became known as the “headscarf protest” against safety conditions for the menfolk taking the protest to the then Prime Minister, Harold Wilson.

Look at any number of industries across frontier markets and consider safety again. Think of the Bhopal disaster and the cavalier attitude of Union Carbide and consider any number of mining disasters that occur every year. Markets may be effective at linking demand with supply but, all industries need safeguards in place to ensure that a race to the bottom price does not mean a race to base morality.

Back to Rushikonda in Andra Pradesh and other fishing communities in frontier markets. Working with a number of students from Gitam Business School, we mapped the supply chain from the landing stage to the local Vizag fish market. This was a traditional industry rich in detail and generating the sort of experience that offers a unique insight into all aspects of the supply chain. Once mapped, we worked on the dynamics of the supply chain looking for opportunities to innovate and improve.

As with the Hull fishing industry, we looked at how to move from traditional panier baskets to more insulated packaging to preserve freshness. As we looked at this, the mobile phone became a tool for the fishing community to compare prices up and down the coast and check the control of agents. This is analagous to the use of ice to slow down the deterioration of fish in Hull from about 1880. At first ice was found in low lying fields on the East coast and then, imported from Norway.

Over in Kerala, the mobile phone reduced waste as more fish caught found a market and was not thrown back into the sea.Back in the 19th century, the UK fishing ports were hampered by the parochial policies of competing railway companies forcing separate payments and transhipment of cargo as fish crossed a different companies exclusive area of operation. This is analogous to India and the State taxes – soon to be alleviated by CGT (an Indian Version of a national VAT system) – or, a host of similar cross border tariffs in Africa.

Capital structures and business models are another area of commonality between traditional trawling industries of the developed world and the same industries on the same trajectory in frontier markets. Originally, the smacks were owned by those with money; by cooperatives of trawlermen or, partnerships of fishermen and those on shore. Then, a mortgage system was introduced for  skippers to buy more than one boat at a time. In parallel, Hull and Grimsby competed throughout the late 19th and early 20th century to provide facilities that would attract smacks and create a cluster of related activities. Interestingly, the cluster was distinctly poor at its own renewal over time.

Perhaps the most important lesson that this historical parallel with the Hull fishing trade gives us is the failure to transform a whole industry when technology or other circumstances threatens the status quo. Why did Hull and the Humber ports not manage to become a major fish distribution centre like Aalsmeer, Holland managed to to become a global distribution hub for cut flowers? Many industries across frontier markets will be faced with the same challenge. Take carpets in the middle east as political instability delivers whole markets to the Chinese with their industrial looms. And take the duplicity of free trade that sees US cotton farmers subsidised whilst frontier markets feel the full force of industrialised farming. More attention needs to be paid to the macro impact on frontier markets of a number of key operating assumptions.

With global population likely to reach 10 billion by 2050 and, the need for protein challenging food production the experience with fish could be instructive. Up to 75 per cent of people will live in towns and the supply chains that move all types of food to market will go through many of the experiences highlighted above. We can learn a lot from historical supply chains as we seek answers to the development of a transformational agenda in many markets.

Note. This post acknowledges the contribution to the ideas of Trawling, Robb Robinson (1996) and an earlier work The Fishermen, Jeremy Tunstall (1962). 

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