There is no doubt that without airfreight, many lines in the fresh produce sector would suffer. The benefit of speedier transit times is vital to the quality and condition of time-sensitive produce, particularly exotic fruits and vegetables. The large majority of this kind of produce is procured from countries in the southern hemisphere and it would simply not survive a five-day long, deep-sea journey.
There is no disputing that a faster producer-to-consumer time is favourable and airfreight certainly delivers this. The effective alternative it offers has seen the sector steadily growing with more and more fresh produce lines being transported this way. Since 1992, the air freight sector has grown 140 per cent as a whole, and arguably, much of this growth can be attributed to the food industry and the diversification of supermarket shelves, fuelled by consumer demand for better quality, more exotic produce year-round.
But it is not without its drawbacks, a recent Defra report highlighted that transport of food by air has the highest CO2 emissions per tonne. Despite food carriage only constituting one per cent of food tonne kilometres measured, only 0.1 per cent of kilometres covered by vehicles in general, it produces a disproportionate 11 per cent of food transport equivalent emissions. But Gerry Mundy, manager of perishables at British Airways World Cargo says it is not that clear cut: “You have to bear in mind that 85 per cent of the fruit we carry is by passenger aircraft, so we are not adding to food miles in that respect,” he says.
Many think it is simply a case of environmental damage vs. consumer demand, but it is not all plain sailing for producers themselves. Some say that high fuel consumption with a comparatively small capacity makes transporting produce by air one of the most expensive methods of freighting available
This cost ultimately has to be shouldered by producers themselves and despite the low cargo rates available for fresh produce this ironically means that they lose out, as Michael Hoevel, managing director of aviation consultants, Inavia, explains: “It’s a very costly problem…those low rates mean exporters cannot get the capacity required by the markets because other, general cargo, is paying higher cargo rates. Thus traditional carriers get a higher priority,” he says.
He explains that exporters face a catch-22 situation, with perishables unable to carry the cost of a higher cargo rate: “Perishables do not pay a better rate because the end-user sales price would become unacceptably high. In order to sell a profitable volume, the price for transportation needs to be relatively low.”
In an attempt to turn the situation around, Hoevel says he thinks his company has come up with a solution; together with a client, Hoevel is setting up a new low-cost cargo airline under the name Freshline.
Freshline will freight fruit, vegetables and fish from Africa and the Middle East, for regional distribution in Europe, using a low-cost passenger airplane, the Airbus A310-304F (ET), which has been converted to a long-range cargo-carrying aircraft. “We do not intend to start a price war. We will simply offer more capacity at the same rate offered by other carriers now,” he says.
With the focus entirely on lowering costs without losing quality, Hoevel says that the Freshline business’ attention to detail will give them a competitive edge: “There are several areas where other carriers are throwing money out of the window,” he explains, and one of the ways to save money is by keeping the plane in the air as much as possible. “The most important principle is that aircraft should be flying and not standing idle on the ground. We are looking at a utilisation of up to 450 block hours per aircraft per month, and Airbus is prepared to guarantee to us that our aircraft of choice, the Airbus A310-304F (ET) can do it.”
Hoeval points out that the A310 also has economical engines that burn four per cent less fuel than standard engines. “Lower fuel consumption makes a hell of a lot of difference in operating cost, especially when you operate the aircraft with such a high utilisation,” he says, and explains that the financial viability of the journey is helped by two-way transits. “There is enough export cargo available to make the services viable, because, as with any low-cost passenger airline, our operation will only be profitable when we fill the flights in both directions. Some people may find it hard to believe that there is sufficient cargo to exotic places in Africa, but we have learned from many sources that there is enough cargo available in the market to fill such flights.”
Supporting the company’s frugal approach, Freshline uses a route cost calculation system, accounting for each Euro spent. “Everything is accounted for in there - even the cost of the toilet paper the crews will be using during flight,” Hoevel adds.
However, with no A310-304F’s available, Freshline has to purchase passenger versions of the aircraft and get them converted into freighters. Currently negotiating for over eight planes, Hoevel is confident that it will not take long to get the business up and running with the first one available in 2007, and expects all eight to be in operation by mid-2009. However, to take advantage of the market opening, the company is operating with a more expensive, leased aircraft: “We have to catch the market and we are prepared to operate at somewhat higher cost for the first year in order to satisfy our customers,” he says. “We have an enormous amount of requests coming in on a daily basis from customers. If we wanted to catch all the business we are offered, we could have all eight aircraft in operation the day after tomorrow.”
Cargolux Airlines of Luxembourg, which claims to be Europe’s largest all-cargo airline, is also reporting steady growth.
With perishables originating from the company’s stations in Africa, Pakistan, Thailand, the US, South America as well as from Amsterdam, Brussels, Frankfurt, Paris and the UK, it carries an extensive fresh produce repertoire.
Cargolux says that the changing consumer demand for a more extensive, fresher range of perishables has seen its transported tonnage figures increase from that of the previous year, and this is a trend they expect to continue, says Stavros Evangelakakis, Cargolux sales manager: “During the last couple of years, Cargolux’s perishable products operation has shown an increase of seven to 10 per cent each year and we feel this percentage can be further increased in line with additional capacity,” he says.
It currently operates 13 temperature-controlled B747-400 freighters and has plans for two more to join its fleet in October 2005.
By December 2006, the company says it hopes to provide the correct thermal environment for clients’ fresh produce by ensuring that its cool chain is unbroken. “It is the ideal long-range aircraft for perishable transportation,” Evangelakakis says. “We will carry more than 100t of fresh fruits, vegetables, fish, and flowers at a precise temperature over intercontinental distances without landing, thus significantly shortening the journey of the sensitive load.”
Evangelakakis explains that the cool chain is maintained with the fresh cargo immediately loaded on to special cool trucks upon arrival at the airport. Arranged by Cargolux to connect with their customers’ warehouses, this approach means that the shipment can avoid getting caught up in often congested airport warehouses, resulting in faster handling and aiming to ensure the produce’s freshness levels at all stages of the supply chain.
Perishable cargo is one of Cargolux’s regular commodities, making up 10 per cent of its tonnage each year and Evangelakakis says he expects this to grow by up 20 per cent within the next five years, reflecting consumer demand. He also predicts that the sector will move towards the processing of fresh produce at its origin, and offers a case in point: “The trend from South Africa, with regards to fruit products carried by air, is towards the higher value, processed, fresh seasonal fruits, already peeled and sliced, and mixed into fruit salads with their juices, to be ready for display on the shelves of European supermarkets,” he says.
Mundy has also witnessed this trend and says there is a definite move in airfreighting produce that has been prepared at source. He explains that this kind of value-adding practice means a healthier profit margin: “It allows imports in to the UK and Europe to reach the price expectations of the retailers,” he says. “The market is intensely fierce and they need to do what they can to protect their market share,” he says.
“The current trend is moving towards more shelf-ready pre-packed perishable goods rather than fresh produce and whole foods moving to containerised and finished goods,” he says, noting that the trend particularly favours fruits flown in from Ghana, Johannesburg and Cairo, the US, Mexico, and South America.
“We don’t just deal with the perishables - we offer value-added services which see packing, handling, building customer orders and delivering them in the UK - that’s unique. We are very pleased with our developments and our growth is about six to seven per cent year-on-year, which is very encouraging,” Mundy says.
BAWC seems to have really cornered the fresh produce air-freighting market with considerable investment in equipment and technology. The company has a unique Perishable Handling Centre that controls over 80,000 tonnes of fresh produce, flowers, and fish and seafood products every year. “Perishables are a very important part of a freight that BA world cargo carries. Our dedicated handling is the envy of the industry,” Mundy explains, and the company’s dedication to the industry could continue unabated, under the steam of £1m investment in its perishable handling services. Part of this is Constant Fresh, a defined scheme that ensures BA customers freshness of all perishable products right from supplier to retailer - an important assurance when transporting produce at such a high cost.
Mundy also has witnessed the wider growth experienced by the sector and says it is showing no sign of lethargy, with profits up year-on-year. “It’s actually growing quite well,” he says. “It’s the largest sector outside general cargo. Work I’ve done with Merge Global suggests that we would see sustainable growth of about seven to eight percent each year.”
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