The perishables sector shows clearly the new conventional wisdom – that China is mightily important – but also sketches out the considerable mileage still to tap.
There can be no doubting the scale or the importance of the sector as bigger players in the market testify.
“Perishables is a major cargo segment handled at Changi Airport and is also a key cargo segment that we are actively driving. In 2016, Changi Airport handled more than 260,000 tonnes of perishables, a year-on-year (YOY) growth of 7.6 per cent and at a 5-year CAGR of 4.9 per cent,” Changi air hub development managing director, Lim Ching Kiat explains.
Singapore is not driving all this on its own (happy eaters though they tend to be) but its crossroads position between North Asia and Southeast Asia-Southwest Pacific i.e. Australia make it a good perishables transit hub.
This is in contrast to Hong Kong where Hong Kong Air Cargo Terminals Limited (Hactl) moves 90,000 tonnes of perishables each year largely for local consumption, its chief executive, Mark Whitehead (pictured) notes. Not that it is a trade to be sniffed at.
“Hong Kong imported $2.24 billion worth of fruit in 2014, with fresh grapes accounting for 20 per cent by value,” says Whitehead.
Hong Kong’s fruit industry is seeing two emerging trends – online shopping and specialist fruit boutiques, he adds. And the sector is growing.
“Between January and October of this year, Fresh LIFT contributed about one-sixth of our total cargo revenue and also showed a six per cent growth compared to the same period in 2016,” a spokesperson for Cathay Pacific explains.
Changi’s pitch meanwhile is China. Already the world’s largest food and beverages market, it has logged up an average growth rate of approximately 15 per cent for imports over the past five years, Lim says.
Between 2015 and 2020, Asia’s middle class is expected to grow by close to one billion, with China expecting to contribute significantly to the growth.
It is probably going to feel much more than that as they all have computers, and e-commerce and e-fulfillment is already a way of life for them.
“With end consumers demanding speedier fulfillment, Singapore offers the right value proposition as a transit point, consolidation hub or distribution centre for e-commerce players, importers or exporters in the region,” says Lim.
Changi already has a dense air network with links to 34 Chinese cities and cool chain handling capabilities, meaning “perishable products can be imported directly into the fulfillment hubs of Chinese e-commerce players or Chinese importers’ hands,” Lim adds.
Corroboration for this comes from two of the great source nations: Australia and New Zealand.
“Of particular importance is our relationship with Asia, with more than 50 per cent of the Qantas Group’s international capacity now servicing the region.
In the 2016-2017 financial year, we uplifted approximately 19 million kg/s of freight to Southeast Asia alone across both passenger and charter flights,” explains Qantas chief operating officer for freight, Nick McGlynn.
Qantas uplifts 27 million kilos of perishables annually. More telling though is a statistic from Air New Zealand who exported 42,000 tonnes of goods over 350 flights carrying cargo per week with more than half being perishable goods.
Both it and Qantas used the same word to describe what is carried -“everything”- from meat, seafood to capsicums, cherries and other fruit and vegetables and fresh cut flowers as well as dairy products.
Both airlines acknowledge the seasonality. “Peak season for the transportation of perishables traditionally coincides with Australian summer (end of November to end of March).
Significant spikes are recorded in December to accommodate the growth in e-commerce and fresh produce during the Christmas period and Chinese New Year,” McGlynn says.
“Flowers are the most seasonal of fresh commodities. Valentine’s Day is growing in popularity, but there are other important festivals and holidays that also drive flower sales, such as Chinese New Year, Mother’s Day and Christmas,” notes Whitehead.
Air New Zealand is watching “with interest” its Auckland – Buenos Aires route and is looking to open up possibly huge opportunities for trade development, by utilising Auckland as a hub.
Volumes between Auckland and Buenos Aires have grown YOY by 12 per cent, but the carrier is seeing real increases in beyond market growth with cargo originating before Auckland and terminating after Buenos Aires up more than 250 per cent over the same period.
Usually this is Asian products such as electronics and other general cargo and in return it brings a range of products from South America to New Zealand and markets beyond such as seasonal Chilean salmon to Shanghai and flowers coming from Bogota mainly destined to Australia.
“The new route helps to shorten the travelling distance and improve transit times for exporters between Asia and South America,” the carrier explains.
The precedent of perishables opening up new markets for general cargo is an intriguing and possibly lucrative one.