Panalpina is well positioned to grow its airfreight perishable volumes from Kenya, but there are some new trends emerging and challenges ahead.
In May, it said it would acquire Kenyan forwarder Air Connection, a specialist in the export of flowers and vegetables. This follows the buy-out last year of Airflo in Kenya and launch of its global Perishables Network.
Panalpina Airflo managing director, Conrad Archer says it is now the low season, but it has seen strong growth and prices are stable and he expects the second half of 2017 to be busy as demand rises with the Far East picking up.
He believes the peak season ahead will be interesting as capacity and supply could be stretched, which it has not seen for a while, but it bodes well for business, despite the challenges it creates.
“It is difficult getting south bound capacity into Africa and has been difficult from January/February this year and it is causing carriers to look at their routing, which could cause a shortfall of capacity,” he explains.
Archer says Panalpina has seen some emerging trends in perishables from Kenya including the “renaissance” of fruit and vegetables, which is really encouraging.
“Avocadoes have been strong in the last year and we are seeing a good number moving from sea freight to airfreight, which never used to be the case. The Middle East is importing a lot, mangoes in particular have been really good, and direct imports to Qatar from Nairobi have increased as a result of the embargo situation,” he notes.
Flowers continue their growth, there has been a five per cent increase this year, which is at the top end of the average annual three to five per cent growth.
But Archer says the market is changing somewhat: “There is a shift from the mass freighter cargo flights (flowers) into Amsterdam (AMS) and a good portion going directly to consuming countries like China, which is expanding and there has been a decline of volumes of flowers terminating in AMS. There has been increasing belly capacity into China, Australia, the Middle East and other non-European destinations,” Archer says.
Panalpina global head specialty vertical perishables, Colin Wells notes there are emerging flower markets where demand is high and Asia Pacific is probably the most active and more and more are being now moved from Kenya to different destinations, rather than just AMS.
He also says there has been a resurgence of fruit and vegetables not only from Kenya, but from other African countries like Zimbabwe, Uganda and Tanzania, which are exporting much more, something they had done back in the 1980s.
Both Archer and Wells highlight the impact e-commerce is having on perishables and will continue to in the exporting as the demand from consumers for fresher products ramps up.
Direct shipments are a trend in the perishables market, explains Archer as increasingly, buyers of perishables want to source directly from the producer and producers want to sell directly to the country of consumption.
Joining forces with Air Connection will offer additional opportunities for Panalpina to grow perishables business in Kenya, especially with the export of vegetables, herbs and cuttings.
To meet e-commerce demands, Archer says Panalpina is investing in track and trace technology for shipments, more comprehensive labelling, airside reefer transportation and it is working on other projects to meet the rising future demand for even fresher goods across the globe, being driven by growing middle classes, changing consumer needs and the digital age.
Wells notes making cool chain processes and the supply chain more efficient, is something Panalpina sees as its “responsibility” and it works with the supply chain in Africa to improve and find solutions to concerns arising. He says the quality of products is paramount and the company carries out quality standards checks with shippers.
Panalpina is expanding its infrastructure in Nairobi to meet projected future perishables demand. Archer says it is adding a further 1,500 square metres of cool chain space, the same area of offices and additional vacuum coolers.
“That is a substantial investment, which will bring us to 4,000 square metres of cold chain capacity making us the forwarder with the largest cold storage capacity in Nairobi,” Archer says.
Despite both Archer and Wells being very positive about the Kenyan market and Africa, there is political uncertainty, as many producers are worried about the impact of Brexit and elections taking place in Kenya this month that could have negative affect on business.
Panalpina itself is shielded due to being a global player, and Wells says it moves where the shift is. However, he says it does not just want to be seen as a “box mover”.
“We want to know what is in the box and make sure it is of a high quality. It is going to be interesting in the future, but people will always pay for quality,” he adds.