A newly released report on the “Blue Economy” from the United Nations Conference on Trade and Development contains nary a mention of Alaska, but it is stuffed full of bad news for the 49th state.
The report comes with the SARS-CoV-2-driven pandemic still causing major disruptions in economic markets around the world, and it suggests a tough road ahead for Alaska’s two biggest employers – tourism and fisheries.
The latter is wedded to marine, coastal waters, and the former largely so.
By this time in a normal year, the so-called “Glitter Gulch” – a strip of hotels, bars, restaurants and shops along the George Parks Highway outside the entrance to Denali National Park and Preserve – would be a happening place.
But when cruise lines serving Alaska canceled their summer cruises, a high chunk of the Gulch’s business went away. It isn’t quite a ghost town. Some Alaskans are still visiting, but it is quiet.
Many hotels are also closed for the season. Still, it could be worse.
It could be Skagway at the northern end of the Alaska Panhandle where the only summer business comes from the cruise ships now no longer sailing, and the few people who come over the border from Canada on the Klondike Highway now closed to traffic due to the pandemic.
For entertainment in the city which served as the jumping-off point for the Klondike Gold Rush, the Skagway Convention & Visitors Bureau is hosting once weekly video reports “Live from the Red Onion” to keep the handful of year-round residents up-to-date on what’s happening, which is pretty much nothing.
The last report featured a tour of empty city streets, entertainment from a lone and lonely looking musician on a park bench, and a visit to the empty Red Onion, normally a tourist-filled bar, to pitch the takeout pizza.
From the looks of it, Skagway might be happy if the grim forecast in the Blue Economy report comes true. It would be an improvement on the current situation.
“The U.N. World Tourism Organization (UNWTO) recently revised its 2020 prospects in international tour arrivals from between 3 percent to 4 percent growth to a deep decline of between 20 and 30 percent,” the report said.
The details in the report only got worse:
- “More pessimistic forecasts point to a loss of up to US $2.1 trillion in travel and tourism GDP this year.”
- “Small- and medium-sized enterprises and autonomous workers make up around 80 percent of the tourism sector. They are particularly exposed….”
- “More than 50 million jobs are at risk.”
Fishing hard hit too
Those who are in the business of hooking fish instead of tourists might not be in much better shape.
“The seafood industry outlook is not bright,” the report says. “The COVID-19 pandemic is is already impacting fish products and seafood value chains through falling consumer demand (restaurants and hotels), closure of retails business, disrupted trade routes, changes in consumer demands as well as a potential increase in sanitary measures on fish and seafood products.”
Alaska’s iconic Copper River salmon fishery found itself caught in this perfect storm when fishing opened in May.
Demand from fine restaurants for first-of-the-season Copper River king (Chinook) and sockeye (red) salmon has for years allowed Cordova-based gillnetters to pocket state-leading, top-dollars payments for those fish.
Only two years ago, the fishermen averaged $12.91 per pound for kings, according to Alaska Department of Fish and Game records. Prices for net-caught Chinook from elsewhere ranged from a high of $3.56 per pound in Cook Inlet to a low of 77 cents per pound in Kodiak.
Not even troll-caught Chinook from Southeast – fish prized as ocean-fresh and carefully preserved by being bled and put on ice within minutes of being caught – came close to soliciting the sort of prices paid for Copper River kings wrapped in a mythical aura of uniqueness. The myth was good for a $5.61 premium over and above the price paid trollers.
Lockdowns driven by COVID-19 fears in major U.S. cities, unfortunately, strangled the demand from high-end restaurants this year. Precautionary measures to avoid SARS-CoV-2 infections that had to be taken by processors to try to protect employees in fish plants drove up costs. Most retail consumers balked at paying more for salmon than filet mignon steak.
And prices paid fishermen dropped.
Chinook were down to $6 per pound at the dock this year, and there are major storm clouds now on the horizon for the industry in general.
“…Massive cancellation of flights by most airlines is directly affecting trade in some high-end fresh products which are mainly transported by air,” the Blue Economy report said. Farmed salmon from Norway, the United Kingdom and Chile are among those products.
Farmed salmon now control about 75 percent of the global market for salmon, and they wholly dominate in fresh fish sales, where profits are generally highest. Wild salmon are nearly all frozen, canned or turned into packaged seafood products.
The salmon farmers have generally avoided those markets, but COVID-19 is changing the game.
“Some producers are freezing and processing their catch not only to react to short-term market signals but to also create adequate stock in view of market recovery,” the report says.
This could put more salmon in the frozen-food cases to drive up competition, which almost always drives down price. As a result, Alaska fishermen are likely to face falling prices for their catches as has already happened in Cordova.
The Blue Economy report did try hard to cast this in the best light.
“Some observers are indicating that hindered economic activity may be a ‘holiday/resting time” for nature and particular for biodiversity,” the report said. “This may well apply to the oceans, too. This critical period can even develop a better understanding of the close links between anthropogenic activity, fish stock pressure, marine biodiversity loss and levels of greenhouse gas emissions.”
Most commercial fishermen in Alaska, where salmon runs have been well-managed for decades, are unlikely to see restraints on their economic activity as an idyllic rest. Those in Cook Inlet were complaining about getting too little salmon fishing time even before the pandemic hit.
The Blue Economy report does envision marine and coastal businesses playing “a crucial role in global recovery once demand rises again, one hopes within the next months.”
To achieve that in the fishery sector, however, the report suggests governments will need to “apply the least possible trade-restrictive trade measures” to rebuild “international supply chains (that) exchange between 35 and 38 percent of global fisheries and aquaculture output, generating U.S. $152 billion in exports in 2017.”
Alaska is in that global mix. A good share of the state’s salmon processing is tied to China. Fish are headed and gutted here and then shipped overseas for filleting and boning. It was a business model working fine when everything was fine.
A U.S.-China trade war threw a wrench in the gears, and the SARS-CoV-2 pandemic, which is believed to have originated in China before spreading itself around the globe, has not helped relations.
None of this appears to bode well for Alaska unless your one of those who yearn for an older, simpler time in the north when the entire state population was less than that of the Anchorage metro area today.