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Cargo

Cool runnings

The perishables business is enjoying growth. But can it justify the investments in infrastructure being made by forwarders and carriers – and can air freight fight off the sea freight threat? Ian Putzger reports
 

The US airport landscape is littered with vacant cargo buildings headed for oblivion, freight terminals made redundant by depressed demand, a cull of freighter activities, changing flow requirements and greater efficiency brought on by third-party handlers as airlines walk away from freight. Existing capacity is expected to outweigh demand for years to come.

 

However, one type of air cargo infrastructure development is on a roll. At the beginning of May, Commodity Forwarders Inc (CFI) completed the expansion of its Los Angeles (LA) facility, which added 20,000ft2 of refrigerated storage space. This came after the modernisation and expansion of CFI’s terminal in Honolulu, which was finished in January. The same month also saw the completion of an expansion drive at Miami, which doubled the company’s footprint in the region.

 

“We will re-invest in our infrastructure in the Pacific north-west next year,” says CFI president Chris Connell.

 

Airlines have become increasingly reluctant to invest in cargo infrastructure, but American Airlines (AA) is in the process of expanding its cooler facility at New York JFK airport. This follows the opening of a new 1,800ft2 drive-through cooler at the airline’s home base in Dallas/Fort Worth (DFW) in October 2012.

 

The airline’s top brass obviously sees potential in this investment. “We got the funding approved during our restructure,” notes Joe Goode, managing director of cargo sales, western division. He adds that flows through DFW were up by 1,000 tonnes within six months.

 

Perishables are high on the radar for many airlines at the moment. AA Cargo has always focused on this segment, but Goode has noted a lot of interest from other carriers. “The combination of hard freight being slow with declining yields over the past 12 months, and the fact that perishables have been steady with a fair yield has resulted in perishables playing a larger role,” he remarks.

 

Brazil is a poignant reflection of this trend. In recent years, with the Brazilian economy going strong, Lufthansa and other carriers had focused more on other commodities that offer higher yields. However, the sudden slump in exports in 2012 shifted the attention back to perishables, notes Daniel Bleckmann, regional director for South America, the Caribbean and Florida at Lufthansa Cargo.

 

Yields have not escaped unscathed from the general economic adversity, but they have held up better in perishables than in most other segments, airlines report. Air France-KLM-Martinair Cargo recorded an increase in its perishables business last year, but yields have been under pressure, says Pieter Fopma, director of perishables logistics.

 

He expects this segment to be “at least steady and on budget, maybe [with] a slight increase” in 2013.

 

Some players are downright bullish. Neel Jones Shah, chief commercial officer of Able Freight, an LA-based forwarder that specialises in perishables, says that the $140 million company aims to double its revenues over the next four years. The company intends to get into new product lines and grow geographically. “All our big customers are expanding rapidly overseas,” he says.


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