Air cargo peak looms, Flexport warns – or here already and getting intense
Air cargo’s peak season will start in August – or rather, the existing peak will ...
US perishables shippers are facing some tough choices – with ocean capacity severely constrained, increasing numbers are considering shipping by air, but soaring air freight rates are a major obstacle.
Meanwhile, US agriculture exports are struggling.
According to one report, there are shortages of frozen, dehydrated and fresh potatoes in many markets, because US exports of the vegetable have been hobbled by the shortage of ocean containers.
Importers of fruit and other vegetables are also feeling the pain, one based in Miami reported vessels bringing in fruit from Central America had suffered delays, resulting in missed departure times for reefer trucks heading to supply US markets.
This in turn has resulted in several days of delays getting the imported produce to its destinations.
However, the outbound issues have not resulted in significant spoilage, noted Chris Connell, senior vice-president, perishables, North America at Commodity Forwarders, a Kuehne + Nagel company.
For one thing, temperatures have been seasonally low, but the more important factor is that many exports have not arrived at ports where they might have got mired in congestion – the shortage of reefers has prevented most from moving to the ports in the first place, said Mr Connell.
For the most part, the export problems have meant lost opportunities, rather than lost produce, as growers and packers have shifted focus to the domestic market, which has remained strong.
Many shippers have explored alternatives. With exports of stone fruit like peaches and nectarines nearing, interest in airfreight particularly has picked up.
“We’ve definitely had an increase in calls for airfreight quotes for spring and summer food export programmes. We even had some enquiries for charters,” reported Mr Connell.
The uptake has been slender, though, he added.
“Once we quote, people who are not used to shipping by air have ‘sticker price shock’, and those who have done air but not charters have sticker price shock at charter rates,” he said.
Airfreight capacity has been tight – tighter, in fact, than a year ago, he said, adding: “Last year we had all these charters with PPE coming in, which provided lift for exports. This year that’s gone.”
There have been some takers for airfreight, but a wholesale shift from ocean to air was never on the cards, said Mr Connell. For many commodities, airfreight is too expensive to absorb in the goods’ price, so consumers would simply substitute them with different varieties.
Furthermore, a portion of fruit and vegetables associated with airfreight is normally sent by ocean to create a second tier, priced lower than the airfreighted portion to broaden market reach and boost export volumes, he explained.
The cherry season – usually the highlight of US fruit exports – will be a key test of market conditions. The California crop has yielded good numbers, but the fruits are generally smaller this year, which works well with markets like Japan, but not Korea, China and Australia, where consumers prefer larger cherries.
Hopes now rest on the crop in the Pacific north-west, which kicks in later in the summer.
There is no hope of a quick end to the reefer shortage, however, said Mr Connell. While there have been some positive signals, this should take multiple cycles to improve.