The forwarder’s perspective

On behalf of CEVA Logistics, Juan Carlos Serna showed that during the past 10 years, the perishable business is enjoying an above-average demand growth where especially food commodities saw strong growth from 2005 to 2014. The majority of perishable goods transported by air freight are foods (more than 75%) whereas non-foods (such as flowers) only comprise 22%. Some 5.8% of the total growth in the perishable market is to be found in Latin America.

The majority of Latin American perishable exports are still destined for North America, but other routes are picking up. The perishable business from Latin America still faces challenges and needs to prove its value – and even though the perishable business has grown strongly in the past, it has also lost significant volumes to ocean freight. Still, according to industry experts, modal shift is expected to impact other industries (like automotive, electronics, machinery, semiconductors, fashion or pharmaceuticals) more than perishables in the future, as time is of the essence for perishables.

A shift from maindeck to belly operation is changing the way perishables are transported by air freight. Forecasts still expect strong growth for perishable business from Latin American countries, but a key challenge for perishables is infrastructure. However, huge investments have been made in the past five years and an important question is how to get a return on all that investment.

New infrastructure now exists and it is a key success factor is to optimise the end-to-end supply chain of perishables and to leverage and benefit from expertise developed in other vertical industries. Synchronisation of processes and sharing of information are key to focus on value creation, and visibility and transparency across the whole supply chain are important.

Finally, Lucas Kuehner from Panalpina stated, “You’re only as good as your last shipment” and that there is a serious risk of reputational damage in the cool chain sector. The company considers investing in training and certification important, as well as subcontractor management to understand if the airline is really in control.

In a brief side step on pharmaceuticals, Kuehner pointed out that documenting is key, and Panalpina uses loggers that measure temperature and shock. But even then, it is essential to understand how reliable these devices are. For instance, one customer sent 33 loggers in the same box where two showed temperature excursions and the other 31 did not. Biopharmaceutical products are much more challenging and this is the fastest-growing segment within the pharma sector.

Once again, Latin America–North America was highlighted as the biggest air trade flow for perishables while Africa–Europe and the East–West trade lanes are important. The pharmaceuticals tonnage of 409,000 is only a fraction of the total volumes of perishables (2.2 million tons) – but the yield and value of pharma are much higher. Interestingly, the US as the largest export market is declining, while India and China are growing year on year at 11% (2013-2014) and 7% respectively.

In terms of challenges in the cool chain, Kuehner compared perishables and pharmaceuticals and concluded that both face largely the same difficulties; in terms of handling processes, there is not a lot of difference between perishables and pharma, but obviously there are huge differences in terms of security and financial risk.

Panel: Breakthroughs 

Manny Fernandez from Flagler Global Logistics and Paul Herman from DuPont brought a joint presentation on technology breakthroughs for the transportation of asparagus. Fernandez explained the refrigerated infrastructure and fumigation capabilities of Flagler and how it manages the complete flow from farm to retail distribution centre. Providing fumigation chambers, five different temperature zones, repacking capabilities and a patented produce cold fumigation process, Flagler provides a key advantage as this special process captures all the fumigant at the end, in order to filter and reuse it.

Herman showed how DuPont’s Tyvek Air Cargo Covers protect perishables that are most at risk during cool chain breaks. The most important cause of temperature excursions is not the ambient temperature but radiation from the sun, so reflection is the most important feature, not insulation.

To show this is not all just theory, Fernandez presented an example process of green asparagus from northern Peru, flown from Lima to Miami where they are fumigated. Three pallets were tracked for temperature, humidity and quality and it was concluded that the fumigation method improved shelf life by seven days. In the process, the thermal blankets were also tested. During the flight the product gives off a lot of humidity, which the blanket reduced. Using the Tyvek covers increased shelf life at the distribution centre by three days, allowing retailers to sell the products for another four days.