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Perishables prize

A recent run of acquisitions by logistics specialists shows the potential for the perishables sector, as Ian Putzger discovers

Panalpina has been on a roll lately, showing a hearty appetite for logistics firms which specialise in perishables. Between early and late September, it completed the takeover of Kenya-based forwarder Air Connection, announced in May, and concluded talks to acquire Dutch perishables specialist Interfresh Airfreight Handling with its sister firms and parts of the Cool Chain Group in Germany. The purchase of Air Connection followed the takeover of Airflo, another Kenyan perishables specialist forwarder, in 2016.

These acquisitions have dramatically boosted Panalpina’s footprint in the perishables sector, underscoring its ambitions there. Its declared objective is “to be the preferred global supplier of perishables logistics [by 2020]… offering customers in both origin and destination countries complete end-to-end solutions on a global scale”.

The acquisitions in Europe, revealed over 24 hours, illustrate the company’s aim to control flows at both ends. “Our recent acquisitions in the perishables market have concentrated on the export side, but we also want to increase our footprint in key import markets and build our end-to-end perishables capabilities at major gateways such as Frankfurt and Amsterdam,” commented Panalpina Chief Executive Officer Stefan Karlen at the announcement of the agreement with the Cool Chain Group.

The company signalled its vision for an integrated global set-up in April when it formally launched the Panalpina Perishables Network, which offers a choice of multiple modes of transport, ranging from temperature-controlled air freight to ocean reefer freight and road and courier services. The network kicked off with a footprint in 15 key countries, with the plan to double that to cover all regions.

Another multinational logistics giant, Kuehne + Nagel (K+N), also moved this summer to strengthen its position in the global perishables arena. It took over Commodity Forwarders Inc. (CFI), the leading perishables specialist in the US, as well as Kenya-based Trillvane. The former employs over 700 employees in 14 US locations, including Alaska and Hawai’i, and generates about $200 million in annual revenues. Together, the two acquisitions add over 150,000 tonnes of perishables a year to K+N’s volume.

K+N Chief Executive Officer Detlef Trefzger indicated shortly after these deals that his company is not done with takeovers in this arena. Citing growth in this market, he noted that there will be “other targets out there” and K+N will try to complement its network in places where it sees a need for additions.

Chris Connell, President of CFI, says that his outfit still deals frequently with independent agents in other countries who understand the market very well. He notes that retailers want a certain price point, which puts pressure on margins and tilts the field towards players that have economies of scale, adding that they “still see strong independents”.

“This business needs to consolidate. It is becoming more global,” remarks Eric Mauroux, Global Head of Perishables at Air France KLM Martinair Cargo (AF-KL-MP). He regards the fact that multinational forwarders are buying perishables specialists as a reflection of strong interest in this sector.

It is easy to see why. Over the past five years the perishables business has grown on average by 7% a year, outstripping overall market growth at 2%, Mauroux notes. Some markets, such as Norway and Turkey, have seen growth in excess of 20%.

While there is a drive for local produce, consumers expect fruits like strawberries and oranges to be available throughout the year, and this is a powerful driver for growth in international perishables flows, observes Colin Wells, Global Head, Specialty Vertical Perishables at Panalpina.

“People want a naturally ripened product,” he says, which points to robust demand for air freight to move certain perishables.

Moreover, the market keeps expanding. Besides healthier eating habits in mature markets like Europe and North America, the growing appetite of the rising middle class in emerging economies like China is a strong driver of mounting perishables volumes moving by air, Mauroux says.

“The market is changing,” Wells concurs, adding that the traditional pattern of produce moving from south to north has shifted to global flows. He points to the Kenyan market, which traditionally focused on Europe but now exports perishables as far as China and Australia.

Above all, China is looming large as a market everybody is scrambling to serve. “Everybody in the industry is looking to China for growth,” comments Mauroux.

Connell agrees that the range of produce shipped to China has increased continuously, remarking that, while US strawberries were recently added to the list of permitted fruits, the protocol has not yet been finalised.

He points out that cold storage capacity in China remains limited, which can cause problems and bottlenecks for certain commodities at fixed times of the year.

Growers in Latin America are increasingly targeting Asia for their exports, fuelling a rising tide of edibles and flowers being flown across the Pacific. American Airlines (AA) has targeted this sector and reported growing traffic, says Lorena Sandoval, Managing Director Cargo for Florida, Latin America and the Caribbean. „>>

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