Perishables to drive softer air cargo growth in 2020

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From Chilean blue berries or best of wines to high value perishables such as pharmaceuticals, to more traditional temperature-sensitive items such as frozen meat and fish, these products definitely have one characteristic in common – they require efficient infrastructure and innovative technological solutions to ensure minimum waste. Well, ‘Perishables’ is the only commodity that hasn’t seen a downfall in years, despite the ongoing trembly global air cargo business operations. According to a report, the global food logistics market reached a value of US$ 100 billion in 2018. Looking forward, the market value is projected to reach around US$ 162 billion by 2024, expanding at a CAGR of 8.3 per cent during 2019-2024.

Ritika Arora Bhola

The continuing US-China trade war which drastically affected the air cargo operations globally in 2019 indicating huge decline in worldwide revenue by 11.7 per cent, measured in USD, compared with the top year 2018, it couldn’t disrupt the trade of perishable cargo such as agro-based products, flowers, vegetables, fruits, meats and wines.

According to a report presented by MarketWatch, the global Perishable Goods Transportation market was valued at 13,200 million in 2018 and is expected to reach 19,500 million by the end of 2024, growing at a CAGR of 6.7 per cent between 2019 and 2024. According to another report by the WorldACD, January 2019 was relatively a good month for certain specific cargo categories.

Apart from general cargo, valuables and dangerous goods, all categories improved Year-on-Year (YoY). The big categories of perishables and high tech grew by six per cent and four per cent respectively, pharmaceuticals by five per cent and the much smaller group of live animals by nine per cent.

In spite of an overall growth of two per cent between the two years (2018-2019), the WorldACD report suggests, most airline groups hardly grew. Airlines from Asia Pacific reported 0.7 per cent growth, whilst those from Africa, MESA and C&S (US) languished around the no-growth point. Only the airlines from North America (+6.3 per cent) and Europe (+3.8 per cent) beat the worldwide average growth. Remarkably, the Europeans improved their share everywhere, but, except in Europe itself.

Perishable logistics: Growth

If we talk about perishable logistics growth, the world’s top-20 forwarders went from a 43.2 per cent to a 43 per cent market share. But within this elite group, differences were noticeable, says WorldACD report. The 13 forwarders with a European origin grew by 0.5 per cent only, whilst the 4 MESA and North American forwarders did just a bit better (+1.5 per cent). The real winners in 2018 were the Japanese forwarders, growing their business by 7.2 per cent, mainly driven by growth in Asia Pacific and North America. Leading forwarders in perishables, such as Kuehne + Nagel, Panalpina, DB Schenker and Newport, recorded double digit growth (between 13 per cent and 16 per cent) in this category. Apart from forwarders, GSA’s grew their business by 5.2 per cent.

Elliott Paige, Director- Air Service Development at Hartsfield-Jackson Atlanta International Airport (ATL) informs that Atlanta International Airport too witnessed a slowdown of overall air cargo of about 7 per cent in 2019 because of trade wars between the US and China, unrest in Hong Kong, and general uncertainty on global trade which depends on full ratification of USMCA– the trade pact between USA, Mexico and Canada.

However, Paige confirms, perishables growth has not seen any downfall. “Major US cities such as Atlanta, will continue to need air freight to move food for restaurants, grocery stores, our favorite shoppers’ markets, medical supplies and pharmaceutical medication, especially in an era when people are becoming more health conscious and want to consume fresh wholesome organic fruits and vegetables. Fresh seafood and meats are still required for thriving business of any metropolis.”

Paige continues, “In the US, perishables make up 21 per cent of our imports, and has the highest growth rate according to an internal airport study– some 4.2 per cent over a five-year period. US imports perishables mainly from South America, around 80 per cent, with the reminder from Europe, Asia, Central America and the Caribbean and Africa. We continue to work to increase our lift with countries like India, for both food perishables and generic drugs. We hope to see more trade diversion to India given the decline of trade with China based on policy as well as the recent outbreak of Coronavirus.”

Dallas Fort Worth International Airport (DFW) Airport in the US is also remarkably increasing its cargo footprint with more cargo tonnage coming through DFW than ever before. Mostly driven by domestic cargo growth, DFW Airport continues to see annual increases in total cargo volumes.

John Ackerman, Executive Vice President for Global Strategy and Development at DFW Airport says, “We’ve seen strong growth in cargo tonnage at DFW Airport and are anticipating further growth in air cargo traffic in 2020. Our team recognises the importance of investing in world-class facilities and systems that enable improved efficiencies across the cargo ecosystem and support our strong growth.”

Ackerman states, “We have seen increased interest in trade lanes that link Asia and Latin America, as companies in both regions seek markets that have less exposure to the US-China trade dispute. We believe our geographic location, facilities, and freighter network positions DFW Airport well for these potential market shifts. The Airport recently welcomed South America freighter service from Avianca Cargo and Qatar Airways Cargo, which are already carrying significant amounts of perishables. Many of the perishables transit DFW en route to fast-growing Asian markets, supporting DFW Airport’s goal to be the ideal gateway connecting Asia and Latin America. The new services have significantly reduced transit times and total landed costs between these two regions, resulting in fresher products for the consumer with longer shelf life and higher profit margins for the consignee.”

Talking about perishables growth, Nathan De Valck, Head of Cargo- Product and Network Development, Business Development at Brussels Airport Company says that in 2019, inbound perishables flow remained at a fairly stable volume at Brussels Airport, whereas the overall European air cargo market was in decline, confirming that perishable cargo is a commodity that does not follow the cyclical ups and downs of the economic cycle.

Although, perishables (PER) traffic does not make up a large proportion of Hactl’s total air cargo traffic, Paul Cheng, General Manager– Service Delivery, Hong Kong Air Cargo Terminals Ltd (HACTL) stresses, “it still represents significant business.”

Cheng highlights, “In 2019, Hactl handled 67,700 PER shipments, totaling 81,600 tonnes (around 5 per cent of Hactl’s total). 97 per cent of all PER shipments, and 99 per cent of all tonnage, were imports. The main categories were fish (32 per cent of tonnage), fruit and vegetables (30 per cent), seafood (15 per cent), meat and poultry (5 per cent) and flowers (1.3 per cent). The top three origin regions were Europe (42 per cent), Japan and Korea (17 per cent) and North America (16 per cent).

Cheng adds, “The year 2017 saw nine per cent PER growth, 2018 saw 10 per cent growth, but 2019 witnessed a decline of seven per cent, in line with global air cargo performance. Once current trade disputes are resolved, there is every reason to expect that PER traffic will resume its previous strong showing.”

Alexi Lachambre, Vice President- Development and Investments, Aeroterm (that works forMiami International Airport) avows, “When it specifically comes to perishables cargo, our attention shifts on the Miami International Airport (MIA) who by leaps and bounds leads all the US airports in perishables cargo.”

Of Germany’s 30 largest food groups, six have their headquarters in Hamburg, and six others, production facilities in the Hamburg Metropolitan Region. These include such household names as Unilever, Kellogg’s, Mars and Nestlé. Edeka Group, Germany’s largest retailer, is also based in Hamburg.

Stefan Worm, Managing Director of Edeka Fruchtkontor Nord in Hamburg at Port of Hamburg shares, “Today, Port of Hamburg is the world’s largest hub of perishables. There’s barely a single type of food or agricultural product that is not shipped via the Port of Hamburg. The port fulfils a major role, not just as a food handling centre, but also as a production base. More than 100 hectares of land of the total of 4,300 in the port are used for the production of edible oils and fats and other food products. The Port of Hamburg is now Northern Europe’s leading food hub and a vital centre of expertise for the food industry. The port makes a crucial contribution towards provisioning the Metropolitan Region’s 5.3 million consumers as well as those in its European hinterland, extending from Scandinavia via Eastern Europe as far as the Alps. Not only transshipment, but also production; around 185,000 tonnes of grain are milled every year in the Aurora mill in the Port of Hamburg and processed to high-quality flour for consumers as well as the bread and food industry.”

From an airline perspective, Wally Devereaux, Managing Director, Cargo and Charters, Southwest Airlines tells, “Southwest Airlines Cargo handles a variety of perishable commodities across our network and offer a specialised service called Fresh Fast to our customers. It provides a time definite guarantee, shorter tender, recovery, and connection time requirements, and access to coolers in many of our locations. We also offer access to our Next Flight Guaranteed service offering, which is highest priority service.  Southwest Airlines Cargo has been working with the perishable commodity shipping community for several decades and has developed an excellent reputation that we’re very proud of and perishables has always been in demand worldwide.”

Meanwhile, a spokesperson from Turkish Cargo says Turkish Cargo carried special cargo of more than 240 thousand tonnes in 2019, increasing the percentage of special cargo transportation operations by 20 percent compared to 2018. He mentions, “Some of Turkish Cargo’s high frequency special cargo destinations are Maastricht, Amsterdam, London, Dubai, Istanbul, Delhi, Seoul, Male, Muscat, Chicago, Tel Aviv and Madrid. Special cargo requiring protection consist of flowers, vegetables/fruits, meat/fish and sea food, medical supplies and medications, high-tech products, automobiles, dangerous goods, valuable items and live animals are carried from/to 126 countries around the world.”

Perishables handling

Perishables, no doubt, forms the biggest vertical or the biggest business segment for the air freight industry. Sixteen per cent of the overall freight that is carried by all the airlines is attributed to perishables. Consumers want access to virtually all types of food year-round, including products from different countries. But, time and temperature-sensitive perishable products require adequate handling, storage and transportation which is a challenging task for freight forwarders/airport operators/ground handling companies requiring them to move, store, process and deliver the perishables as efficiently as possible, with zero wastage while ensuring excellent quality. Today, LSPs worldwide use the best of cold chain facilities/ technological solutions available to store and move perishables amply. Air cargo is an excellent mode of transport to move these items around quickly and sustainably. That said, there is a very important emphasis on the correct handling to ensure food safety and ultimately consumer health. This has prompted air cargo industry experts – airports and airlines and even freight forwarders to up the ante and improve their performance if they actually want to take advantage of the growing perishables market in the coming years.

Perceiving the same, Sanjay Khanna, CEO, Ras Al Khaimah International Airport says, “Our airport has a dedicated cargo facility for handling perishable cargo which includes vegetables, fruits, chilled meat, frozen lobsters and fish. About 80 per cent of the import shipments arriving at our facility are perishable cargo arriving from the Indian subcontinent and Africa. The perishable cargo require protection from ambient conditions such as temperature and humidity. Different types of perishables have to be maintained at different temperatures. For instance, the chilled meat needs a temperature range of 4-6 degree Celsius and frozen lobsters need a temperature range of 0- 1 degree Celsius. Fruits and vegetables storage are done in separate cool rooms with optimal temperature of 15 degree Celsius. We use separate containers for transport of chilled meat/vegetables and frozen foods from aircraft to the facility at the cargo terminal. Our cargo warehouse is situated 20 meters away from the parking bays which reduces the risk of exposure to heat.”

Khanna asserts, “We are in the process of acquiring more envirotainers and chiller reefers for ensuring effective cold chain maintenance. There is a Standard Operating Procedure (SOP) set out for operations team and this varies depending on the type of product being shipped. Air freight is the best means for transporting these goods as they reduce many geographical challenges, decreases shipment times and reduce the amount of time that the goods will stay exposed to the external conditions.”

Ras Al Khaimah International airport receives wide body aircrafts with frozen lobsters, fish and vegetables which are offloaded within two hours and loaded to the refrigerated trucks which carry the perishables to the major markets.

Khanna says, “Another highly perishable product handled by us are live honeybees from Egypt which are airlifted in A330 aircrafts and the entire shipment of 40 tons is off loaded and transferred to beekeepers within a span of 40 minutes. As honeybees emits heat on its own, time taken for offloading from aircraft and loading to bee importers is of prime importance and we are meeting the timeframes set to make sure that no mortality of live bees happens.”

On similar lines, Joke Aerts, Head of Marketing, Nallian Data Sharing for Business Collaboration, Belgium asserts, “The perishable management process requires a smooth collaboration between the different actors involved, such as freight forwarders and authorities such as the federal agency for the safety of the food chain. In reality it’s more often than not a fragmented process that heavily relies on back and forth emails and phone calls, highly manual and paper-based operations and a lack of transparency. The absence of an integrated, uniform process makes it hard to plan inspection of documents and perishable goods efficiently– and misses the agility required to efficiently deal with shifting arrival or departure times. As a result, goods are blocked longer than needed, shipments may be released partly, and a lot of time is spent in manual, often duplicate data-input.”

Infrastructure and technology requirements

Recently, The International Air Transport Association (IATA) devised the Center for Excellence for Perishable Logistics (CEIV Fresh), to improve the handling and transportation of perishables by air. While IATA’s CEIV pharma certification binds airlines to set standards for the transportation and storage of medicines, CEIV Fresh certification lays out a series of requirements for time and temperature-sensitive transport of food items, fresh flowers and wines.

Even, Air France-KLM Cargo (AFKLM), successfully launched FlowerWatch certification which helps store flowers at exact temperatures required for particular hours. The airline also transports fruits and vegetables.

Various airlines and airports worldwide have taken innovative initiatives to improve their infrastructure and services to cater to the ever-growing perishables business.

Interestingly, Atlanta Airport was the first airport in the US to introduce a Cargo Community System, in partnership with Mumbai-based Kale Logistics Solutions to be in the race of digital cargo. “We look forward to more and more airports being connected via the Cargo Community System, because that ultimately means more efficiency and speed, a super valuable asset for perishable cargo,” says Paige.

In Atlanta Airport, all airlines on South Cargo Complex have refrigerated facilities to handle perishables. “We have a new building of 100,000 square feet that will have refrigerated facilities to be able to handle several temperature requirements similar to what our major carrier, Delta Air Lines, has for their facilities,” briefs Paige.

At Brussels Airport, Valck informs, “For the flower shipments out of Africa or South America the service providers at the airport focus on a quick transit of the shipments from the aircraft through the first line facilities into the trucks for onward transportation to the auction or final destination. This requires focus and effective operational processes to avoid bottlenecks at any point in the physical handling process.  For the lower volume shipments with specific temperature conditions specialised infrastructure, such as cool rooms are required. Brussels Airport has been working with a couple of specialised service providers, the local perishables heroes based at BRUcargo, that have the required expertise to offer the right type of handling and storage for each type of perishable shipment. Dedicated cool rooms are available both in first and second line facilities to guarantee the quality of the product during the transit at the airport.”

Valck also clarifies that Brussels Airport has worked closely together with all the operators and the regulators involved in the process so that both the handling and the control process run smoothly. A new Perishable Management Application has been developed in the BRUcloud, the data sharing platform of the Brussels Airport cargo community to streamline the check process and increase the transparency. “This has resulted in an improved and more pro-active communication between the operators and the regulator,” shares Valck.

While, Miami International Airport boasts of numerous cold-storage buildings at the airport that are currently 100 per cent leased,” says Lachambre as she adds, “We have recently broken ground on a new 150,000 SF cold storage building at the airport, which reflects the strength and growth of the perishables market. Another key strength to the MIA airport is the significant amount of off-airport cold storage buildings north-west of the airport – a crucial element for sorting, storing and distributing the perishables cargo arriving by aircraft.”

Turkish Cargo provides services in 43 special cargo storages available at its existing cargo terminal (ISL). “Perishable cargo with sensitivity to temperature is stored in special storage rooms with four different temperature ranges at the cargo terminal equipped with high standards. All products are monitored with hygienic and standard maintenance processes.Temperature values of special cargo rooms are monitored via the telemetry automatic system, and there is a system in place which is capable of sending an automatic message in case of any alarm caused by any difference in the temperature range,” says the official from Turkish Cargo.

The official continues, “Thermal covers and thermal dolly services are provided upon customers’ request for protection against external environment conditions for perishable cargo with sensitivity to temperature. Perishable cargo are monitored under an agreement with the Active Cold Chain brand ‘Envirotainer’ which provides customers with active temperature-controlled containers and QEP (Qualified Envirotainer Provider), referring to the accreditation proving that an airline company is capable of performing the Envirotainer transportation operations successfully at stations. Turkish Cargo, have been entitled to get the QEP accreditation at 40 stations across the world and all processes are handled out with the expertise of Turkish Cargo’s professional staff.”

Hactl uses IATA’s accreditation under IATA CEIV Fresh. Cheng says, “It enables us to anticipate and deal with potential threats to the condition of perishables. The over-riding aim of HACCP is to minimise the amount of perishables cargo which might become unfit for consumption during transit. Measures we have introduced include the use of thermal dollies to maintain optimum temperatures during transit from aircraft to terminal, the segregation of different perishable commodities through 22 dedicated truck docks, and the mapping and visual marking of optimum storage positions in our cool rooms (the so-called ‘Blue Belt’). Dedicated ULD charging areas have also been installed, already stringent hygiene and pest-control practices have been tightened further, and suppliers have been instructed on what they must do to comply with the new standards.”

However, Cheng stresses that IATA should also consider standardising weight limits for ULDs, and introducing guidelines on packing materials and strength for agents and shippers, to deal with the current problems of deformed packaging in stacked shipments arriving at Hactl.

“The enhanced screening requirements imposed by ICAO 2021, and the corresponding measures introduced by HKCAD, focus on outgoing cargo from Hong Kong. Given that the majority of perishables handled by Hactl are imported goods, the impact on PER traffic will be insignificant,” Cheng adds.

“With DFW Airport’s new airside cool chain facility, the airport has the resources and capabilities to compete in the fast growing, higher value, time and temperature-sensitive vertical markets,” says Ackerman. “Given Latin America’s strength and growth in perishable exports, the development of a cold chain facility, which features dedicated pharma chambers, was critical in supporting DFW’s Asia– Latin America strategy. To further capitalise on the favorable geographic location and distribution advantages, DFW airport has also made the investment and commitment to become an IATA CEIV Pharma Community.  DFW Airport plans to work with other CEIV Airports to develop strategic pharma lanes, position DFW as an ideal port of entry for pharma imports, and establish a pharma cluster in the North Texas region,” adds Ackerman.

DFW Airport recently announced a $3 billion, 10-year plan to upgrade the airport’s physical and digital infrastructure. Many of the projects included in the plan will improve the efficiency of its cargo operations. According to Ackerman, “DFW Airport has more than 3,000 acres of land available for development of private facilities, including hundreds of acres of land adjacent to runways that are ideal for cargo and logistics uses. DFW Airport is also focused on digital infrastructure and plans to deploy a cloud-based, open architecture data-sharing platform for the Airport’s cargo and logistics community.”

Elaborating on how Lufthansa Cargo is emerging as the fastest service provider for perishable goods Andreas Pauker, Spokesman and Head of Communications at Lufthansa Cargo, Frankfurt Airport says, “A temperature-controlled environment during transport as well as during storage, aircraft parking positions directly at the Perishable Center Frankfurt and specially trained staff ensure that perishables arrive freshly. With its own competence team at the highly modern and certified Perishable Center Frankfurt, the largest center for sensitive cargo in Europe, Lufthansa Cargo provides a fast loading process and the best product quality. The Perishable Center Frankfurt offers 20 monitored areas on more than 9,000 square meters of storage space. Here, temperatures can be customised individually between 24 °C and +24 °C with fast cooling and vacuum cooling systems available. Plant protection, the German Federal Office for Agriculture and Food and a veterinary office are directly on site and allow immediate checks at a temperature-sensitive environment.”

In 2019, Lufthansa Cargo was able to increase the amount of transported perishables. Especially, transports to and from destinations in Africa were growing due to new capacities of Brussels Airlines. In addition, the Door-to-Door service for perishables had an increasing demand in 2019. Lufthansa Cargo’s standardised solution for direct delivery enables optimal planning and direct transfer to the recipient with a temperature-controlled transport. Since January 2020, this service has been extended among further destinations.

Pramod Menon, Vice President at Atlas Aviation considers India as an important market for perishables. 

“Atlas Aviation represents Ethiopian Airlines Cargo and Logistics as their CSA in Mumbai and TACA Airlines- Avianca Group as their GSA in India. Both the carriers- Ethiopian Airlines and Avianca group has an excellent setup in their hubs for handling perishables and temperature-controlled shipments with advanced technologies. Infact, Ethiopian Airlines has a separate cargo terminal to handle perishables. This shows the importance provided for sensitive and other perishable shipments,” points Menon.

“India is one of the largest exporters of fruits and vegetables to England and Middle-East, and cut Amsterdam,” informs Menon.

While outlining the issues related to capacity handling in India, Menon observes that though the exports are huge, infrastructure to handle perishables and pharma is not up to the mark and there is a lot of difference on supply and demand in terms of infrastructure.

“Too much of outsourcing at various international airports in India has increased the costs which add to the problem. Europe, Dubai and many countries have understood the importance and potential of perishable handling and huge investments are being made by those countries by embracing new emerging technologies like Drones. Emerging technologies like Artificial Intelligence (AI) are still at an adoption stage in India. With global demand for perishables and Pharma increase day by day, India being one of the largest exporters has to ensure that the infrastructure is in place for perishable handling and even the govt should join hands with private operators and provide feasible infrastructure facilities to cater to the ever increasing demand,” comments Menon.

Brendan Sullivan, Head of E-Commerce and Cargo Operations at IATA links the viability between infrastructure and technology adopted by the airports and airlines across the world for competent perishables transportation. Sullivan says, “The infrastructure and technology to implement depends largely on the commodities one expects to move. In a general sense, something to cool has to witness acceptable temperature ranges at the airport as well as throughout the journey. Temperature-controlled containers, for example, have been used for pharmaceutical products for some time, but we now see it being increased used in the perishable sector as well. Tracking technology which integrates into warehouse and airline systems to provide visibility and also increase response times ultimately prevents issues that would otherwise arise.”

“Track and trace devices are not new, but they are becoming increasing prevalent and there are many more types being used in the market by everyone in the supply chain which leads to inefficiencies and lack of data sharing. Integrating and sharing this data into the various systems is critical not only for providing the traceability required for food items, but also to improve operational efficiency. Airports investing in and fostering growth in cargo is not just about the immediate impact on an airport, which can be substantial. In addition, acting as a gateway can have many other benefits to the local population such as additional logistics, distribution and other businesses emerging. It then becomes extremely important to invest properly in the infrastructure and how it connects that location to the world and its local catchment areas,” adds Sullivan.

Road ahead

Perishable cargo transportation mainly via air is said to be moving in the right direction as experts believe the growth is definite. With world-class infrastructure being developed at the airport terminals along with innovative and impressive technological solutions being adopted for efficient perishable handling ensuring zero wastage of time-sensitive perishable shipments, all the stakeholders– freight forwarders, airlines and cold chain industry are ready to embrace the rapid increase in demand and supply of perishables worldwide.

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