FROM MAGAZINE: Perishables in Africa and beyond

Addressing the challenges of maintaining right temperature during transit of perishables, especially flowers and fruits, would improve the quality and shelf life of African products. Technology plays a crucial role in air cargo logistics, but to get the maximum benefit, it must be implemented on a larger scale,
Renjini Liza Varghese reports.

Africa has been gaining prominence in the global perishable market with increased supply. Kenya leads the pack from the continent as a major cut flower contributor. Though the continent’s share still figures in single digit, good news is that it is consistently registering an upward move. Along with the growers and shippers, the other stakeholders including the logistics and supply chain management companies, airlines are all upbeat about Africa’s expanding portfolio of perishables and are tapping into its new found potential.

The attention that Africa has gained from the global peers in the recent past imbibed the desire to explore the world market with a renewed vigour. Kenya still holds its position as one of the leading exporters of the cut flower from the region. Ethiopia and Tanzania are other East African countries with significant share in global cut flower export.

Perishables, especially the cut flowers and fruits move in a temperature controlled environment that retains its freshness and thus increases the shelf life. Whether it is from the ‘farm to the fork’ or ‘from the farm to vase’, these items have a very short shelf life and get transported mainly as air cargo.

According to Royal FloraHolland, they process approximately 5 billion Euro of Horticultural produce (both Flowers and plants) per annum where a significant part of its flowers are exported from Africa by their member farms on this continent.

As per a report published by the International Air Transport Association (IATA) earlier this year, “Africa’s share of world air freight market is only 1.6 percent as against the whopping 37.5 percent in Asia Pacific. But this drastically will change as soon as more countries within the continent liberalise the sky.”

Europe accounts for 60 percent of the African cargo and commands the majority of international air trade.

In the recent past, Africa has become the largest contributor to the global flower exporting market. Kenya accounts for about 38 percent of cut roses sold in the European Union making it the third largest exporter of cut flowers in the world. Its share in the global market was 8.4 percent in 2016.

As per available data from Amsterdam Airport Schiphol, the country sending the largest amount of fresh cut flowers to Europe is Kenya and 90 percent of all Kenya’s exports are bound for the Netherlands. The second largest producing country for the Netherlands is Ethiopia. The South American production is equal to 20 percent of the East African production.

The Netherlands is the biggest importer of fresh cut flowers in Europe with 90 percent market share. In Amsterdam, fresh cut flowers represent almost 15 percent of Schiphol’s annual cargo volume.

Keeping pace with the demand growth in cargo segment, most of the operators are building new capabilities. Kenya Airways (KQ) opened a state-of-the-art cargo express centre at Jomo Kenyatta International Airport in April. Ethiopian Airlines joined the bandwagon by opening Africa’s largest cargo terminal in June in pursuit to offer its customers the best.

South African Airlines (SAA), for example, transports a mix of perishables namely; flowers, pharmaceuticals, fish, etc. “On the overall on ex-South Africa flights, perishables constitute approximately 40 percent of the cargo. And for SAA the biggest flower market is ex-Zambia and Zimbabwe where they transport about 90 percent of flowers which connect to Europe via Johannesburg,” pointed out Tleli Makhetha, general manager, SAA Cargo.

Interestingly, all stakeholders in the value chain are investing more in the perishable segment. As mentioned above, capacity additions in the cargo area of airports especially for the temperature-sensitive shipments is one part of it. Special services launched by airlines such as SkyFresh from Emirates, QR Fresh solution from Qatar Airways Cargo, ‘Cool Management’ pallets from Jettainer etc are a few to name.

That is not all, operators like Africa Express Line Ltd (AEL) have taken major steps in refrigerated container fleet expansion by placing an order for 500 Star Cool Integrated containers manufactured by Maersk Container Industry.

The latest IATA numbers substantiates Africa’s increasing position in the global market. According to the report released in November, “African carriers posted the largest year-on-year increase in demand of all regions in September 2017, with freight volumes rising 17.7 percent. This is a slowdown from August but still more than twice the five-year average growth pace of 8.9 percent. Capacity increased by 2.6 percent over the same time period. Demand has been boosted by very strong growth on the trade lane to and from Asia which increased by more than 67 percent in the first eight months of the year. However, the upward trend in seasonally-adjusted volumes has flattened in recent months.”

So what does this indicate? The share of perishable exported from Africa is on the rise. This includes cut flowers, fruits, vegetable, fish and meat products. The global freight forwarder, Panalpina has recently come out with a write up on the top 5 emerging countries in the perishable export map. Of the five countries, two are from the African region that has shown exponential increase in perishable exports: Zimbabwe— raspberries, blueberries and asparagus; and Angola - with citrus fruits. This is in addition to the leaders from the region Kenya and Ethiopia.

Conrad Archer, country manager, Panalpina Kenya, says that there are other countries that are gaining momentum from the continent. “Uganda is one of the countries that are becoming an alternative to Kenya. Ghana and South Africa will continue to develop the export of premium, ready-to-eat fruits. These prepared products, by default, have to be moved by air.”

Impediments
The growth also tags along a set of challenges. In this case, as the cargo figures under the temperature-sensitive category, the stake holders were in agreement while raising their concern on the lack of maintaining temperature during transit, inadequate infrastructure, demand for high quality levels but low rate etc.

The global transport and logistics company, Kuehne + Nagel puts it in perspective, by saying “The weak spot in the cool chain is the transport from the warehouse to the aircraft. Ground handlers and airlines need to focus on this; we have seen positive developments for example in the Dubai and Doha airports.”

Matthea van der Molen, general manager for East Africa at Royal FloraHolland, highlighted the five major challenges in the export of flowers from Africa: a) Managing the cool chain integrally to preserve product quality; b) Digitising order and logistical flows in the supply chain; c) Supply chain partner cooperation among producer, forwarder, carrier, and end client to jointly optimise processes; d) Packaging quality disparity in materials and form to adequately protect fresh products in the supply chain and presentation of fresh products; and e) Smoothening of governmental export process and requirement along with limited preferential handling by supply chain players for fresh flowers and plants to safeguard freshness and quality.

While Sanjeev Gadhia, founder and CEO, Astral Aviation, was quick in admitting the insufficiency in intra-continent connectivity, he said major airports are well equipped for handling perishables. “There is sufficient infrastructure for perishable handling in the key hubs of Nairobi, Addis Ababa and Johannesburg, however, more needs to be done in Cairo, Entebbe, Kilimanjaro, Lusaka and Harare which are emerging in perishable exports.”

Uta Frank, product manager Fresh/td, Lufthansa Cargo, emphasised on the issue in transit by saying, “Sometimes the facilities are of high quality, but the transport to the airport or at the airport to the aircraft are not optimised, often the transport to the airport are not temperature-controlled.”

Guillaume Halleux, senior vice president, Cargo and acting chief officer Cargo, Qatar Airways, elaborated on the ways to improve efficiency in ground handling. He said, “Speed of operations, efficiency and accuracy are very essential in ground handling operations to minimise aircraft turnaround time and handling costs. Investment in staff, training, technology such as unique piece identification i.e. individual piece barcode and investment on facilities are some of the factors that can ease ground handling. It is also essential to have good collaboration between all parties involved throughout the airport operations to ensure success.”

Right Packaging
As per Christo van der Meer, senior consultant Supply Chain Innovation, Royal FloraHolland, more than packaging, the temperature plays the crucial role in retaining the freshness and shelf life of flowers. “What we see in recent years is boxes/packaging becoming physically bigger. This mostly is not in favor of easily cooling down the temperature of the flowers. Because for the flowers packed in these boxes, in the middle of this bigger box it is more difficult to get rid of their heat. This is one of the reasons we are looking at this subject.”

However, Jeroen van der Hulst, director, Flower Watch was more focused on ways that can improve efficiency and quality of exports. He said “We are working on a series of standards for every link in the flower supply chain, enabling business partners to reach agreement on cold chain performance. As we are improving cold chain performance very fast on the Kenyan side, we now realise that it might be the European side which is the weakest link.”

Technology
For technology to make an improvement to the quality of the cool chain, it must be implemented on a large scale. It must be generic, so that each organisation can apply them, across their existing platforms, and connect their own system to their partners. Cloud based solutions; track and trace scanners, RFID, and temp loggers can all help one demonstrate the quality of operations to shippers, but only when it is rolled out across the whole chain.

Digitisation of the cool chain is a big issue said, Bart Pouwels, director Business Development Cargo, Amsterdam Airport Schiphol. This is something the Holland Flower Alliance (HFA) is addressing with the development of a cloud-based platform which all stakeholders can use to monitor status of shipments via a track and trace function, and are working towards being able to monitor aspects such as temperature.

“Linking flower cargoes with their air cargo information on box level continue to be a challenge for grower countries, and the HFA is investigating how procurement data can link to logistics data (air waybill). If you combine them, you have got really, for the entire chain, from manufacturer, to the buyer, transparency in the chain.

“The HFA is working with local governments in Kenya and the Netherlands to see how we can speed up the digitalisation of the paperwork that governments need to submit for shipments - this includes the inspection process that takes place in the flower industry, e.g., the phyto paperwork that needs to be submitted. These phyto tests must be done by law to check exports for injurious pests, diseases, noxious weeds, or any contagious conditions which could affect native flora,” he added.

Moving Forward
Given the current scenario, it is for sure that the African continent is poised to grow at a faster pace.

As Colin Wells, global head specialty vertical perishables, Panalpina puts it, “Carriers need to start having a meaningful discussion with their handling agents about perishables. Many still have a reactive approach. Carriers and ground handlers, in fact all parties including shipping agents, need to be more proactive and should be discussing the future requirements and necessary investments in order to move the business forward.”

In the foreseeable future it is expected that the growth in flower production on the African continent will surge on account of countries expanding their hectares in flower production. Also with more globalisation of trade flows with production being exported more to upcoming regions in the East – Far East. Kenya will have assortment of cargoes for exports going forward unlike just roses.

The market experts are of the opinion that the next major revolution in flower, fresh fruits and vegitable exports would come from the development of sea freight segment. This would primarily enable to meet the high volume demand arising from supermarket chains. However, with volume of production going up, the pie becomes larger ensuring a share for both air cargo and sea freight. Addition of more destinations serviced by air and sea will open up a wider market for Africa fuelling further growth.