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Fresh thinking

New products demanded by expanding consumer markets around the world means that perishables do not need to be a low-yield commodity. Will Waters reports

A  recent study by Seabury Group, commissioned by IATA, identified perishables as one of the main commodity groups that had been most affected by modal shift during the last 13 years. But in that same study, the shippers and forwarders questioned also indicated that they expected very little modal shift from air to sea in the future – and if anything, any modal shift that takes place within perishables transport is more likely to go the other way, on balance, from sea to air.


In contrast with all of the other types of major air freight commodity groups analysed – automotive, electronics, machinery, semiconductors, fashion and pharmaceuticals – none of the customers surveyed predicted a strong shift from air to sea for perishables. Instead, around one third of respondents forecast a moderate shift, while a fifth predicted no significant shift and almost half expected either a moderate or strong shift from sea to air.


These are remarkable predictions for a commodity group that has seen over 1 million tonnes of annual volumes gradually switch to container shipping since 2000. So, what are the dynamics behind this, as well as the main issues and challenges affecting this sector?


Although capacity, price, quality and network connectivity are as important for perishables as for the rest of the air cargo sector, they have one basic and obvious feature – by definition – that distinguishes them from other commodities: their perishability. This means that the combination of a short transit time and maintaining the shipment within the appropriate temperature range for that product are essential prerequisites for being in the business – and what ensures the commodity travels by air.


Oliver Blum, Lufthansa Cargo’s head of competence centre perishables, says farmers and wholesalers are often paid according to the product’s final shelf life at its ultimate consignee – usually a food retailer – adding to the incentives on all parties in the chain.


“Speed and quality are the most important things for the product’s shelf life, so these are what we are working on with the customers,” says Blum.


Although perishables have a reputation for being one of the lower-yielding air freight commodities, carriers say this is not necessarily the case, and they remain an essential part of the product mix carried on many lanes.


Pieter Fopma, director for perishables at Air France-KLM-Martinair Cargo (AF-KLM), says: “It depends on many factors, such as the commodity, the density, and seasonality. The yields tend to be lower than the pharmaceuticals and high-value product yields, but that has always been the case. We try to find a better mix between the low-yielding and high-yielding commodities. But it is not possible to simply say that it is low yield.”


Nevertheless, overcapacity has increased on many of the main perishables lanes over the last 18 months, undermining yields. This is starting to make it difficult to justify the deployment of freighters, Fopma observes


Blum says certain customers and commodities want the lowest possible rates, while others will pay a little more for higher quality and for additional services, such as a vacuum cooler for flower shipments to Russia. “Otherwise, their roses will arrive in Moscow at 30-40°C,” he says. “So, customers are prepared to pay for these things where they are shown to be necessary.” >>

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