FROM MAGAZINE: Ensuring smart logistics for perishables

The sheer volume of perishables transported out of Africa makes it a vital commodity in the air freight industry. Justifiably, the stakeholders in the supply chain are constantly defining policies and procedures to maintain the highest standards as shipments such as these are highly sensitive, Shreya Bhattacharya reports.

The most common view about agriculture in a country is that it should be able to feed its population. However, with the depletion of farm lands, tremendous population growth rate and heavy industrialisation, feeding all mouths is becoming an overwhelming challenge. Moreover, the needs are becoming more detailed and specific by each passing day. A growing appetite for best of the breeds of crop, organic food, international cuisines, seafood, trends on social media like #Instafood, #Eatclean and #Foodie have ultimately fuelled the craving for perishables from across the country borders.

As the world markets get more and more dependable on production areas, growers in Africa are also getting increasingly aware of the immense opportunities and challenges lying ahead. Replete with land and resources that are pivotal to meeting global food and agricultural needs, Africa has all the ingredients to drive global agripreneurship. However, a lot depends on how they deliver quality produce to each plate every day. A well equated collaboration between the growers and the logistics providers is indispensable here.

Freighter at Liege Airport

Trade lanes
Logistics stakeholders transporting perishables from Africa count Kenya, South Africa, Zimbabwe, Ghana, Egypt, Ethiopia, Uganda etc. among the top perishable exporting countries of Africa. The trade lanes mainly reach Europe, Middle East and Asia. However, Europe continues to be the primary trade partner.

Responding to a query about the growth in business from South Africa's perishables segment, a prominent regional player South African Airways Cargo’s GM (Acting) Justice Luthuli says, “SAA Cargo transports a mix of perishables namely; flowers, pharmaceuticals, fish etc. Overall on outbound South Africa flights perishables constitutes about 40 percent of that. Mostly to Europe and the region.”

Another major player, Ethiopian Cargo reported that out of 594,175,962 kilogram of perishable that has been transported from Africa to the world, Ethiopian did 79,539,531 kilogram from September 2017 to August 2018, which is 13.39 percent from the total perishable export. The African cargo operator is eyeing the Middle East region and considers Jeddah and Riyadh as its potential markets. It is currently serving the demand by upgrading passenger flight and will have B737F soon to fill any gaps. In August this year, the cargo operator also commenced its twice-weekly freighter service to Bogota, Colombia.The cargo service departs from Zaragoza (Spain) and flies to Bogota with a stopover in Miami, using the B777- Freighter.

Recently, the cargo operator also took delivery of its eighth Boeing 777 freighter aircraft. “As the largest cargo operator in Africa, we are currently serving over 44 international dedicated freighter destinations in the Africa, the Gulf, Middle East, Asia, the Americas and Europe, augmenting the export of perishable farm products from the continent of Africa and the import of high value industrial goods. With more freighters on order, we are set to consolidate our role in availing much needed airfreight service within Africa and beyond, further catalysing the continent’s economic growth,” says Ethiopian Group CEO, Tewolde GebreMariam. The carrier's 15-year growth road map, Vision 2025, expects the cargo operation to generate $2 billion of revenue per year with 19 freighter aircraft and transporting 820,000 tonnes of cargo across its network.

Fitsum Abadi, MD, Ethiopian Cargo & Logistics Services, meanwhile shares, “The major destination for perishable is to Europe from which Liege and Brussels take the lion's share.”

On the other side, giving a sense of the perishable volumes passing through Liege Airport, vice president, commercial, Steven Verhasselt says, “Liege Airport receives about 40,000 tonnes of Africa's perishables on direct freighters from Africa. The growth was strong in 2018, as Ethiopian Airlines is in full expansion. We look forward to their further development to grow hand in hand. We see also growth in Kenya and Uganda, with additional freighter connections coming to Liege. We do believe we can reach as much as 50,000 tonnes of import perishables by 2020.”

Speaking about the potential of the perishables segment,Verhasselt says, “While the results are already impressive, and the growth is healthy, I believe the perishable industry has only just started to develop its enormous potential. From statistics, we learn that only 3 percent of the ariable land is used. At the same time, Europe's potential to produce is in steep decline because of scarcity of land and the aging of the population. The potential towards Europe is huge. Other markets like the Middle East are growing as well. I really see great potential there, if production can follow demand.”

Can wastage be prevented?
The sheer volume of perishables transported out of Africa makes it a vital commodity in the air freight industry.Justifiably, the stakeholders in the supply chain are constantly defining policies and procedures to maintain the highest standards as shipments such as these are highly sensitive and do not tolerate sunlight or temperature fluctuations.At a time when a major debate is on, discussing whether there will be enough land to produce the extra food consumption of the growing population, spoilage and wastage of food on the go is highly undesirable.

Stressing on the fact that roughly 20 percent of perishables go to waste between harvest and delivery to the point of sale, Colin Wells, global head of Perishables, Panalpina says engaging with the customer is a really important step. “We consult with our customers by proactively engaging with them before goods are even in transit. We advise growers on the optimal time and temperature to deliver the goods into our care.”

Wells further says, “If the goods do not arrive at the right temperature, we instigate cooling by way of vacuum or forced air cooling. The goods are held in our cool stores at the correct temperature until the airline cutoff. We then insulate the pallets and, where requested, attach temperature loggers, for delivery to the airline. In Africa in particular, we use reefer trucks that deliver pre-cooled ULDs right to the airline’s warehouses at the airport. It is imperative that airlines set the hold of the aircraft to the correct product temperature to minimise temperature build-up during flight. This is obviously easier to achieve with freighter operators and not always possible with passenger aircraft where you typically have a mix of different products in the hold.”

Panalpina is also testing its inventory optimisation tool for perishables, D2ID or Demand-driven Inventory Dispositioning. The proprietary tool uses big data and algorithms to map out harvests and order patterns. The aim is to reduce excess shipping and overstocking. The freight forwarder believes D2ID will create huge efficiencies in the perishables sector, increase profitability, reduce wastage and as a result free up transport capacity.

Temperature fluctuations are one of the main causes of wastage. To minimise temperature excursions in transit and upon receipt at destination, the product has to be placed in a temperature-controlled environment as quickly as possible and the insulation removed to allow airflow. It becomes all the more challenging, when the perishables are arranged in a ready to eat sort of packaging — a trend on rise — wherein more and more of the washing, peeling, cutting, and packaging of the goods happens towards the very beginning of supply chains, which actually further reduces the shelf life. An example would be prepared fruit salads. This requires a very skilled handling, sophisticated equipments and process.

Giving a brief of what all is looked into, the CEO of another major player DHL Global Forwarding for East Africa, Pramod Bagalwadi says, “Our full range of services ensures the optimum conditions and proper compliance for perishables such as flowers, fruit, vegetables, cheese, sausages, fresh meat and fish across the supply chain. Services include document preparation, building pallets (Normal and Airline), cargo security scans, and liaison with local statutory agencies and manage customs formalities, prioritised space for perishable cargo on vessels and airplanes, as well as prioritised handling at ports of origin and destination.”

Apart from the control of temperature, quantity and damages, sanitary inspections and quality checks, the processes further include ensuring fast transit and turnaround times; a wide portfolio of service packages tailored to specific needs; end to end system visibility; and a door to door arrangement, informs Bagalwadi.

Earlier this year, DHL Global Forwarding and the Ethiopian Airlines signed a new agreement to form a joint venture company – DHL-Ethiopian Airline Logistics Services Ltd. – to enhance Ethiopia’s logistics infrastructure. Ethiopian Airlines, which assumes a majority stake in this joint venture, will provide regulatory and operational support as DHL Global Forwarding establishes air, ocean, and road freight connections between Ethiopia’s main trade hubs and the rest of the world. Bagalwadi is leading the new organisation.

The freighters on their part are also taking into account the specific characteristics essential to the preservation and appropriate handling of perishables.

“The African continent as a whole is a thriving region in terms of perishables. These products, be they flowers, fruit and vegetables, are highly in demand which encourages commercial growth in the region. At the moment Nairobi is still the driver for the perishable industry but other countries such as Ghana, Ivory Coast and Egypt have a strong development potential,” says Stavros Evangelakakis, manager global product management, Cargolux.

Evangelakakis adds, “Cargolux has clearly defined policies and procedures to maintain the highest standard throughout the transportation process. We work closely with our partners and customers to ensure the cool chain is unbroken during transport. As regards the flight itself, we operate a modern Boeing 747F fleet that offers temperature control range throughout the journey. As an experienced perishables carrier with trusted partners throughout our network, we are recognised as experts in the handling of such products.”

Challenges faced by shippers
Just as generalising all perishables under one umbrella is not a wise decision, as there may be specific temperature requirements that needs to be controlled, or even packaging materials that may be particularly sensitive to physical handling or moisture, taking care of all this is also not in the hands of the logistics partners only. Collaborations between the growers and the supply chain partners are definitely a way forward for a seamless supply chain.

A vital question here to ask is how aware are the growers about the importance of a cool chain. Pier Luigi Vigada, director Eastern & Southern Africa, Air France – KLM – Martinair Cargo, says the growers in Africa are getting involved actively to ensure a cool chain is maintained if perishables, especially flowers are to be exported outside. “Absolutely! They are becoming more and more aware and more and more involved in the process. All parties are involved and we talk about the freight forwarders, providers, partners and growers.”

He further makes a mention of the FlowerWatch, with whom KLM has a collaboration. FlowerWatch specialises in assessing and optimising full cool chain performance for fresh flowers. The collaboration includes a third partner Panalpina Airflo. Panalpina Airflo is KLM's main logistics partner on the ground in Kenya; FlowerWatch is a service provider, assisting companies in streamlining the cold chain. The three are working together to securing the quality and vase life of fresh cut flowers.

Ethiopian’s cargo terminal at Addis Ababa Bole International Airport

However, when it comes to perishable growers, they have their own set of challenges. According to flower growers in Kenya, high freight transportation cost and lack of direct flights to new markets like the US narrows the prospects of a profitable business. As much as 40 percent of flower price goes to transport and supply chain logistics, which many a time makes the markets uneconomical, say growers.

*Benchmark is the volume of cargo transported by all carriers that report to WorldACD, excluding Ethiopian airlines

To equate the costing balance FlowerWatch has introduced a few measures to facilitate farmers. “We work on improving product quality, while working on logistic efficiency. Most recently we have worked on improving pack rates, because the airlines introduced volumetric weight out of Nairobi,” says Jeroen van der Hulst, managing director of FlowerWatch.

van der Hulst further adds, “Farms had to come into action on the short term in order to prevent excessive increase in freight costs. However, after taking this first step, I do see volumetric weight as an opportunity, if we do even better than our recent improvement, we can possibly reduce our freight costs, handling charges by increasing pivot weights and reducing physical handling of flower boxes.”

Apart from the freight cost, another major challenge affecting the growers is the climate change. Climate change is expected to affect most regions of Africa negatively including through extreme events like floods and droughts which will become more frequent.

It is important to note that cooling products and keeping them at low temperatures costs more in hot climates than in temperate ones. Any factor that can contribute to energy efficiency is particularly important in Africa, be it choice of suitable systems, use of good practices (maintenance, defrosting, door closing, merchandise flow management, cold store loading), selection of vehicle colour (as light as possible), checking and improving insulation, etc.

Industry experts believe governments and the private sector must promote the emergence of cold chain-based commodity associations and similar groupings that can serve as information and training channels while fostering the implementation of shared actions by the various stakeholders.