TRADE DURATION FOR SEAFOOD

Traditional food supply chains are characterized by many independent agents at each level. Transactions are focused on the specific physical commodity and its price, and there are no relationships between buyers and sellers. Until recently, this was also the main structure also in supply chains for seafood. In many cases, such competitive chains will be the most efficient way of bringing a product to market. However, the development of the large retail chains emphasizing efficient logistics with substantial economies of scale and scope have led to a number of new structures in food supply chains emphasizing higher degrees of coordination. This has also influenced supply chains for seafood, and particularly farmed seafood.

The control with the production process has also allowed a number of new transaction modes to be used. As such, vertical integration, contracts and other mechanisms creating relationships between buyers and sellers are becoming more common. This is particularly true for salmon, which is the species with the largest production companies with Marine Harvest at the lead and for which most types of contracts are being used.

It is impossible to obtain data for the transaction mode for a company. However, we have access to all individual export transactions by all Norwegian salmon exporters. This allows us to investigate the duration of a trade relationship at the company as well as the country level. A large literature in international trade shows that there is substantial variation in trade duration by industry as well as between countries, and this is likely to be the case also for seafood.

In this paper we will investigate trade duration of several product forms for the three most important species in Norwegian seafood exports. The most important species, salmon, is farmed, while the other two, cod and herring, are wild caught. Moreover, while salmon is being shipped to almost one hundred different countries, there are much fewer importing countries of the wild species. There is only a small overlap with respect to the destinations for the wild species, while salmon is going to all main destinations. Hence, we can investigate to what extent trade duration varies with production technology, product form and destination countries. The analysis is carried out by estimating hazard ratios and investigating how these are influenced by different factors.