TRAVEL NEWS

Perishable cargo and the Middle East challenge

11 Oct 2006, The excitement of the opening of Suvarnabhumi Airport last month is now turning to hard work as airlines, shippers, passenger and cargo operators stabilise and streamline their processes and systems to provide a vital link to the global supply chain.

The International Air Transport Association (IATA), however, has reported only 4.8% year-on-year growth in international passenger traffic for August 2006. This is the smallest monthly increase since the end of 2003 and marks the fourth consecutive month of declining growth in passenger demand.

A good opportunity for Thailand, however, is perishable air cargo. Nearly 15% of world cargo is now perishable and the market is growing at 7.1% annually, faster than any other sector in global air freight.

The Middle East is important for Thai perishable exports as a trans-shipment hub between connecting carriers. The Middle East is one of the highest-growth regions for air cargo and led all regions with August passenger demand growth of 11.9% and for cargo at 13.1%.

Middle East carriers are taking advantage of the burgeoning regional and international cargo markets. According to Boeing, air-cargo traffic in and out of the Middle East accounted for 5.8% of the world's tonnage shared among 98 airlines and 31 freighter airlines.

Two of the fastest-growing airlines in the world are Qatar (based in Doha) and Etithad (the UAE national carrier based in Abu Dhabi), which are both growing at a staggering 35% or so annually.

Another key perishables carrier is Emirates SkyCargo (based in Dubai) which is dramatically increasing its air cargo-freighter fleet to cope with increasing demand.

Middle East airports and airlines, however, face ongoing challenges to maintain cold-chain integrity for trans-shipped perishables in the summer months from October to May. Tarmac temperatures often can reach 55-60 degrees Celsius and the airports have very limited tarmac-based cooling facilities, severely impacting the capability to handle perishables.

Despite many of the Middle East airlines offering lower freight charges, shippers fear to use these hubs during the hot season due to the likely heat damage to their temperature-sensitive, high-cost produce (such as baby corn and Thai asparagus). Many Thai shippers add 15-20% to the cost of consignments just to cover potential in-transit heat damage for which there is limited carrier or ground-handling liability.

With the explosive growth in the global trade of flowers and perishables, there is an increasing demand for innovative cold-chain solutions to enable the industry to reduce transit heat damage, lower costs, improve quality and increase profits.

According to a report in the Gulf News, cargo volumes had been boosted by the opening in July of the Dubai Flower & Perishables Centre, a new facility that can handle 180,000 tonnes of perishable products a year. However, the new facility is not close to the operational area where many connecting times between aircraftis only three to four hours, leaving insufficient time to make use of this perishable-handling facility.

Thai shippers also face extremely expensive local fuel charges that are some of the highest in the world. Lufthansa Cargo, one of the largest freight carriers worldwide, has, however, just announced it has cut its fuel surcharge by 9%.

The key to successful perishables logistics is an unbroken, high-quality cool chain. In conjunction with many of the leading global retailers, airlines are now dedicating themselves to improving the integrity of their respective cold chains by working with retailers, shippers, ground handlers and transportation companies to develop and deliver advanced cool-chain handling in any weather. Initiatives include:

- Refrigerated transit of cargo between cold rooms and passenger aircraft.

- Temperature-controlled storage close to cargo-aircraft docking areas.

- Unbroken cold-chain handling from dock receiving to loading airside.

- Segregated cold-storage facilities provided by ground handlers.

- Temperature logging of shipments.

Perishable-cargo specialists have been relatively secure from the expansion and service extensions of multinational forwarders and integrators. Nevertheless, multinationals are emerging despite the many difficulties involved in the perishable industry and the need for specialised cold-chain knowledge.

Forwarders, then, need to evolve alongside demands for a global logistics service by ensuring that exporters and/or producers can add value to their products. This can be achieved by offering portion control and packaging for supermarket shelves only possible with unbroken cold-chain handling.

Without having secured, global specia dhlist logistics partners with excellent cool-chain facilities, any attempt to create a value-added service will fail.

Source: bangkokpost.com

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