Vol. 13 No. 9                                                                                                                                    Monday January 27, 2014
#INTHEAIREVERYWHERE 
THE AIR CARGO NEWS THOUGHT LEADER  




FruitLogistica2014
ZTI Mechatronics BV, Netherlands: "Grape destemming machine" separates the fruit from the vine. The machine will be in action in Berlin.

here are a number of well-known industry events that we have on our personal radar—even if we choose not to attend—for which we receive in-depth media coverage in all industry publications, such as the IATA World Cargo Symposium, Air Cargo Americas, and Air Cargo Europe every other year at Transport Logistik.
     Often overlooked but sometimes more important are those less well-known industry events where specific niche products are featured and the focus is on the subject, which is the core business for all attendees.
     One of these events known mostly to folks within the perishable trade is the Fruit Logistica in Berlin, an annual event that brings together producers, carriers, packers, handlers, and wholesalers of fresh produce of any kind.
     This year, the event will take place from February 5th until February 7th in the German Reichshauptstadt Berlin, lately—as FT has reported—notorious for the hiccups and delays as Berlin capital airport BBI continues to flounder.
     But flounder is a fish, and BBI is an airport, and this story is about fruit in February.

Much To Be Learned By All
     While for most cargo professionals the perishable business is a niche product seldom in the focus of the business, it should be noted that such special cargoes warrant much higher yields than general cargoes.      However, transporting perishables by any mode of transport requires particular knowledge, equipment, trained staff and facilities specifically equipped for the purpose of storing and handling the various perishable cargoes, because the requirements applicable to fresh flowers (PEF) significantly differ from those applicable to meat (PEM), fish and seafood (PES), the various fruits and vegetables (PEP) or temperature-controlled pharmaceuticals (PIL).
     Some of these commodities require active temperature control (ACT), and some require being kept cold (COL) or even frozen (FRI/FRO) in narrowly defined temperature ranges.
     Most consignments require import licenses’ (LIC) and phytosanitary inspections upon arrival and often a quick ramp-transfer (QRT) when connecting from one flight to another.

On Ice In Berlin
     The Fruit Logistica will likely attract in excess of 60,000 visitors from more than 130 states (2013 figures: 58,000), a clear indicator of the importance of this business.
     Sure enough, nourishment and nutrition is a global business, and in developed nations consumers have become used to fresh strawberries and cherries in winter, Durian all year round, and fresh sushi in the deli around the corner.
     This would not be possible without a highly complex supply chain for these perishable commodities, and while yields are high so is the risk of produce being spoiled:
     Wrong harvesting, excessive time for the surface transport to ports and airports, insufficient or non-existing chilling or freezing, wrong packing, excessive moisture (or too little of it), excessive cold and heat, handling in the required manner—all these factors are paramount to ensure that the product on our supermarket shelves or in the deli’s cooler can still be sold for the envisioned price.
     The 2,500 exhibitors expected at Fruit Logistica 2014 confirm that Germany is (with the U.S. on pole position) the “second largest market for organic products worldwide, which is confirmed by the latest statistics published by the International Federation of Organic Agriculture Movements (IFOAM).”
     “Since 2000,” (FL event management claims) “sales have substantially increased by 300 percent and consumption of organic products continues to rise at a steady pace.”

It’s About Markets
     The market for fresh convenience products in Germany presents a very mixed picture—while demand for such products is high in certain urban areas where income is high and attractive career opportunities are available, in other areas imported fresh produce is not (yet) an item on the average Mrs. Joe Lunchbucket’s shopping list.
     Unlike the French and Dutch market where high-quality, perishable foodstuff is in demand all year round, the primary factor for Germans is still the price.
     In fact, food in Europe cannot be found for less money than in Germany.
     Another factor, surprisingly, is the “green movement,” which in Germany has always been a driving factor.
     In Germany the green movement advocates using “local” produce of the season instead of imported fruits, flowers, and perishables because of the carbon footprint and the costs of transportation associated with imported fresh products.
     Lately, however, views have become more diverse in Germany as well, since one must acknowledge that whole economies depend on such trade and that, with long-term vision, it may be both fairer and cheaper to purchase Valentine flowers from Kenya or Colombia, or bananas from Costa Rica, in order to support local development and production there, than it is to shell out further development aid money.

Populations Shift Demand
     Another factor that ultimately fuels growth in the perishable trade is the simple fact that Germany has become a country of an additional 400,000 immigrants in 2013, which is a 20-year record-high figure.
     These figures include other European community citizens (who do not require a visa or work permit) but do not include temporary residents such as foreign managers or specialists temporarily employed in Germany.
     However, both of these groups significantly boost the demand for certain fresh products and aid in the popularization of these products among Germans.
     For example, the popularity of pizza and pasta in Germany is driven by the sizable Italian minority that poured into Germany as “guest workers,” as they were called, in the 1960’s, with the advent of the “Wirtschaftswunder” (Economic Wonder)

Fruit Logistica Berlin India Agriculture Argentina organic vegetables

Innovation Are Watchwords
     Fruit Logistica once again underlines its status as an innovative springboard for the international fresh produce trade.
     "Future Lab," a new series of events, will present products, projects, and solutions that can enhance the fruit and vegetable industry with innovations in the coming years, or contribute significantly to optimization along the value chain.
     A core part of Fruit Logistica 2014 will be what the organizers call their “Future Lab” where the latest developments in the perishable trade and supply chain are presented, discussed, and thought through. “These projects and some others on the menu in Berlin next month can potentially have a significant impact on the medium-term development of the fresh produce sector," says Gérald Lamusse, Fruit Logistica Global Brand Manager.
     “In half-hour sessions, the ‘Future Lab’ will cover topics such as ‘Quantum leap in lettuce breeding,’ to ‘Information superhighway for fruits & vegetables,’ ‘Customized Fruit – to your health!,’ ‘Water – scarce, valuable, indispensable’ and ‘Fighting Black Sigatoka,’” Lamusse declares.
     Watching a “leap in lettuce” is perhaps not your favorite kind of floorshow, but the message at least is clear.
     Today in most parts of the world, the times are long gone where farmers, fishermen, and other producers just needed to carry their products to the next town to reach market.
     In 2014, feeding seven billion people worldwide is one thing, but feeding them in quite different ways is likely the greatest challenge of modern times.

Argentina Focus
     This year’s official partner country of Fruit Logistica will be Argentina, a country in strong reliance on its agricultural sector: Argentina exports 1.9 million tons of fruits and vegetables annually, of which 32 percent goes to their largest export trade partner, the European Community. Argentina has, in line with an increase in the overall boost of prosperity within Latin America, reported an annual growth rate of 11.2 percent over the past 10 years within the fresh produce sector alone.
     So as Paul Harvey used to say: “Stand by for news,” because Fruit Logistica 2014 will surely have plenty.
Jens

 

Tough Shaking Freighter hangover

“Take two aspirin and call me in the morning,” the doctor used to say back in simpler times. Here, SkyKing talks of freighters and the lingering impact of lift as the industry struggles to work itself back into profits in 2014.

Andrew  Herdman Freighters     The hangover of freighter capacity will continue to cast a shadow over air pricing this year, despite the growing signs that global cargo demand is improving.
     That, at least, is the conclusion of Andrew Herdman, Director General of the Association of Asia Pacific Airlines, who is nevertheless cautiously optimistic that as the global economy picks up, his member airlines may at last turn the corner in terms of cargo revenues after suffering poor returns for more than two years.
     Chatting to FlyingTypers from his office in Kuala Lumpur, he points out that cargo volumes flown globally now are not much different than pre-global recession. The big change over the last five years has been structural—the huge increase in passenger demand, and therefore available bellyhold capacity, has taken a heavy toll on pure freighter and combo carriers.
     “The demand for pure freighter capacity has been badly affected, which has put downward pressure on rates and freighter aircraft values,” he said. “Volumes have been stagnant, so profits have been squeezed for freighter operators and asset values have declined, which has been reflected in the financial results of cargo divisions of combo carriers and freighter operators.”
     Many commentators have looked at the pick-up in cargo growth in key markets during the second half of 2013 and taken that as a proof that 2014 will bring operators welcome respite. Herdman, however, is more cautious. “It seems that volumes may have bottomed out in the second half of 2013 and there were signs of an upturn in the fourth quarter,” he said. “But the rate pressure continues. Revenues are not really picking up even though volumes are. But there is a degree of optimism because global economic conditions are improving.”
     He said there might be some truth in the view that since the global recession, trade has stopped growing at around twice GDP as FDI has fallen away and globalization has been replaced by protectionism and on-shoring/re-shoring of production. “Businesses are more cautious now about demand and their investments to expand capacity, so there has been some slowing in trade growth as a result,” he said.      “If global GDP grows at close to 4 percent more this year than in the past, this would have resulted in trade growth of 6-7 percent. But no one is expecting that. Asian airlines carry about 40 percent of world air freight, and year-on-year growth at the end of last year was 4-5 percent. I hope we will see about the same sort of volume growth this year.
     “Overall we are cautiously optimistic because consumption is picking up in the U.S., and Europe has turned a corner. Asia is also healthy with production growth and consumption increasing as the middle class grows.
     “But this doesn’t change the fact that there is still this overhang of freighter capacity hurting pricing and asset values.”
     A ‘back of an envelope’ rough calculation by Herdman puts the 5 percent per annum growth in passenger capacity over the last five years adding to around a global increase of a quarter in bellyhold space. Set against zero growth over the same period in freight flown, and a rough guide that about half of all freight is carried as bellyhold capacity, and he believes demand for space on freighters has fallen 15-20 percent since 2008.
     “As a result, there are lots of freighters parked or being under-utilized,” he said.      “And there are still lots of freighters ordered before the dip being delivered. Operators still want to deploy them because they are more efficient on fuel, but this is more capacity coming in.
     “What needs to happen for a rebound in pricing and yields is simple; demand growth will need to exceed supply growth for a decent few years. At the moment the adjustment is taking place mostly on the supply side, with Boeing and Airbus only delivering aircraft gradually—unlike in shipping, where shipyards can boost the supply side very quickly—and freighters being retired. There have also been a few bankruptcies by pure freighter operators, and combo operators are looking at whether they want to stay in the freighter market because the economies are tough.
     “Freighters do have a long-term role, but at present the latent capacity is an overhang on the whole market, even as volumes pick up.”
Sky King


chuckles for January 27, 2014

 

Reefer Madness Strikes India Perishables

Ajit Singhven as the pharma sector in India has captured a large slice of the air cargo pie, the government has seized the opportunity to push exports of fruits and vegetables.
In a move that can only help the perishable export trade, the Agricultural & Processed Food Products Export Development Authority (APEDA)—set up by the government for the development of industries related to the scheduled products for exports—has chalked out plans to put up refrigerated (reefer) storage facilities at international airports across the country.
     The move follows Civil Aviation Minister Ajit Singh’s assertion that the old terminal buildings in 24 international airports in the country will be transformed into cargo terminals.
     The government has finally realized the potential of the perishables market, at least on paper.
     Down on the ground these words should come as little to no surprise.
     After all, the country is the world’s second largest producer of fruits and vegetables.

Defy The Dumpster
     Even with its commanding position, the country has to dump fresh produce worth a whopping Rs 13,300 crore every year (US$2148 mn) into garbage bins because there is a woeful shortage of cold storage facilities and refrigerated transport, according to a report from Emerson Climate Technologies India, a part of the US-based manufacturing and technology company Emerson.
     Representing corporate India, one of the apex trade associations of the country, the Associated Chambers of Commerce and Industry of India (ASSOCHAM) pointed out recently that despite India ranking second in the world in farm output, it was 14th in terms of total export value of agri produce, while in horticulture, the country’s contribution to global trade was only one per cent.

Who Has The Cool?

     APEDA has initiated moves to construct cold store facilities at Mumbai, Hyderabad, Cochi, and Lucknow airports and has planned a perishable warehouse at the Bengaluru airport.
     However, APEDA has been facing problems about the low utilization of the storage facilities at the airports.
     According to sources, only around 20 percent of the storages are being used at present.
     Figures indicate that while the total tonnage in the cold storage facilities around the country’s international airports—those managed by the Airports Authority of India (AAI)—was about 150,000 tons, they were being used for only around 20,000 tons.

Holds Filled With Flowers
     Quite a few years ago, perishables arriving from the hinterland remained stored over long periods of time because of the unavailability of direct flights out of the country, but that situation does not exist any longer.
     Today, for example, a major share of the fruits, vegetables, meat, and fish exported to the Gulf countries originates from India.
     One such perishable facility—at the Cochi International Airport in Kerala—made news recently when 53,000 kg of flowers were sent to Doha for Qatar’s National Day celebrations on December 18, 2013.
     Valued at Rs one crore (US$162,560), the flowers came from the neighboring states of Tamil Nadu and Karnataka.
     The perishable center at Cochi was set up by APEDA in 2009 and regularly handles flowers as well as vegetables, fruits, and marine products.
      airport sees an average of 100 tons of perishable cargo in movement—comprising vegetables every day.
Among the other moves by the government to boost exports of perishables, the Customs department has been told to provide speedy clearance and only carry out checks in special cases.
Tirthankar Ghosh


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RE: Richard Malkin In His Own Write

Geoffrey: What a wonderful article from a man at any age, let alone from a person 101 years old. His memory of the early days of air freight is simply amazing. The repros of the old air cargo ads also were quite interesting. As a matter of fact, I found them more interesting than current ones.

Best—
Shura
Shura Bary Public Relations

Richard

     Your article is incredible. I enjoyed it immensely.
     You are truly the historian of our industry.
     I have to tell you it was honor to be interviewed by you back in 2005.
     It was truly one of the highlights of my career.

Sincerely,
Barry Medwed
Cargo Operations ManagerAF/KL

Hello Mr. Malkin,

     Greetings from KLM, JFK and at the outset I wish you and your dear ones a very healthy 2014.
     I have been reading your articles ever since I joined the airline industry 29 years ago.
     Do you have plans of writing a book on Air Cargo as I think you are uniquely qualified to do so.

Best Wishes
Cyril Joseph
Deputy Station Manager/JFK
KLM Royal Dutch Airlines

     Man this is great memory and some good reminders.
     What would we do today without you guys who made it happen.
     God bless you

Ken Singh BA CITT MCIT
Atlas Cargo

Hey Richard,

     I've just read your article in Flying Typers. For someone who has been writing about air cargo only every so often for the last decade it was absolutely fascinating. Now I know how we got here. You really captured what it must have been like as people tried to work out how the industry might develop, what cargoes could be moved by air and how they could do this.
     It struck me that a modern equivalent would perhaps be 3D printing - no one really knows yet how this might affect world trade and especially air cargo.
     So anyway, please keep on writing!

All the very best.
Mike King

     great article!
     Could A.E.I. have been mentionedJ my legacy company? I am now 38 years with DP/DHL and have your book “The making of a leader” on my desk! Mr. R. was my mentor for a number of years as I was the key account manager for Caterpillar, my two oldest now work for DHL Global forwarding and also love the business, thanks so much for the below I am sharing it with my team.

Regards,
Christopher F. Jensen
Engineering & Manufacturing
Sr. Vice President & Americas Industry Head
DHL CUSTOMER SOLUTIONS & INNOVATION

Good morning Mr. Malkin:

     I just wanted to thank you for such a wonderful article.
     You have such a great history in air cargo.
     As a new comer to the industry (I joined CNS in March 2008) there is a wealth of information unknown to me until now.
     I enjoyed your article tremendously.

Teresita Garcia-Maso
Financial Analyst
CNS


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