Sea freight takes a bite out of air freight's perishable volumes

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Rising costs and shifting trade lane patterns towards sea freight and emerging markets are harming volumes in the air industry’s perishable goods sector.

Frank van Gelder, consultant of cool chain air freight projects at Adelantex told delegates at the recent Cool Logistics Global conference in Rotterdam that the variety of perishable products to be shipped by air would become more “limited” than previously expected.

The industry faces increasing costs overall and declining volumes. Rising costs for fuel, service operation and staff will all impact on the cost structure of businesses.

“We see decreased revenues and less volume. The import and export industry declined towards Europe, which is affecting the revenue,” Mr van Gelder continued.

Flowers are the biggest commodity to be flown from Africa to the EU. However, despite expectations of this commodity to see increased air freight shipments, an earlier presentation at the conference explained that flowers were probably going to shift even more to sea freight.

“So the most important products we fly-in, is indeed food products, more specifically vegetables, whereas, sea freight handles most of the world’s dry food products,” stated van Gelder.

“When you compare sea freight with air freight, you have to take into account that air freight only represents 1.7% of the entire volume shipped globally.”

Mr van Gelder told The Coolstar:“The perishable air freight business was fine until 2012 when it experienced a sudden drop in volumes.

“Up until 2011 there was an average continuous increase of 2.6% in perishable imports by air into the EU. In 2012 there was a drop of 4%. It was the first year of decline that the sector felt and the exact reasons why remain unclear.”

He said that the decline could be related to imports from more emerging markets such as Asia and South America, as well as an increase in local-to-local shipments.

“We had a strong decline probably because the economic crisis in Europe is ongoing. Countries like Spain, Italy, Greece who are flying in a lot of fresh fish probably don’t use air freight that much anymore,” he told delegates.

“Something must be going on with the food market in Europe, we are not importing as much any more. Not by sea and not by air.”

He explained: “When it comes to air cargo, building a business model on these statistics is pretty difficult. You have a steep volume decline of 30% in 2009, then a climb up of 30% in 2010.”

However, there is a glimmer of hope on the horizon. When comparing the first and second quarters of this year to the same periods last year, the perishable volumes of air freight look a bit more stable “so we didn’t further decline at least”, said Mr van Gelder.

“So, as they fly high and low the air freight business has been a very challenging business over the past months and year.”

The two largest exporters of perishables to the EU are South America and Africa. Africa contributes approximately 350,000 tonnes uplifted air freight into Europe and South America 136,813 tonnes.

These were then followed by Asia, which contributes 96,548 tonnes, and North America, which exports 91,182 tonnes.