Capitalising on perishables trade

There are opportunities galore for logistics providers to enter the refrigerated transportation market in Africa given that the continent needs better perishable supply chain services and “farm-to-fork” integration.

Almost a third of all food produced globally is lost or wasted every year. Of these, Sh350billion ($35 billion) worth of perishable foods are wasted annually, with nearly half of those losses due to temperature changes experienced in-transit between the grower and the grocer, according to the Food and Agriculture Organization (FAO).

Sub-Saharan Africa countries have been found to lose as much as 36 per cent of their harvested food, with up to 94 per cent of these losses due to inefficient supply chains during harvest, processing, and distribution.

According to an industrialisation blueprint released in 2015, Kenya is targeting Sh100 billion (USD1billion) in export earnings from the AGOA market in the next two years and Sh1 trillion (USD 10billion) by the time the renewal expires. The United States is now Kenya’s second most important trading partner, with Kenya’s exports to the US amounting to Sh30 billion last year.

The US and Kenya governments are now developing cold chain facilities in the country as demand for perishable exports-imports between the two countries increase.

Coming hot in the heels of a 10-year African Growth Opportunity Act (AGOA) extension, the Ministry of Industrialisation and US Department of Commerce has launched the Cold Chain Assessment Initiative.

The initiative will assess Kenya’s needs in cold chain infrastructure to ensure it complies with US standards and regulatory requirements in perishable exports.

Kenya remains one of the most popular countries in Africa in the export of perishable cargo to international markets. Kenya’s climate favours agricultural activity thus nurtures the horticultural sector as one of Kenya’s key foreign exchange earners. The Kenya Horticultural Council (KHC) states that the horticultural industry is one of the fastest growing sectors in the agricultural industry with a growth of approximately 20 percent per annum.

Last year, freight forwarder Panalpina acquired a majority stake in Airflo, a company based in Kenya and the Netherlands, eyeing an expansion in the perishables market, which specializes in the export and handling of fresh flowers and vegetables.

Airflo is Kenya’s second-largest airfreight forwarder and part of the Dutch Flower Group (DFG). Airflo organizes up to 1,500 temperature-controlled shipments per week from Kenya, for a total of more than 40,000 tonnes per year of fresh-cut flowers, especially roses.

Panalpina established operations in Kenya at the beginning of the year. Fresh-cut flowers accounted for more than 60 percent of Kenya’s total airfreight exports in 2014. Marco van Zijverden, the CEO of DFG, said Airflo is the only DFG member involved in the transport and logistics of perishables, and that it would benefit from Panalpina’s global expertise.

Once goods have been delivered to Airflo’s Nairobi warehouse by growers, the commodities are palletized and made ready for transport to the ground-handling agent at Jomo Kenyatta International Airport. The entire process is completed in a temperature-controlled environment, which includes a vacuum cooler to chill fresh-cut flowers down to 39°F in minutes. Airflo coordinates its shipments with airlines and takes care of customs clearance at Amsterdam-Schiphol Airport.

Ghana is another important agricultural export market for the US and European market and offers expanding market opportunities due to its remarkable record of economic growth as well as its liberal import policies.

“Generally, Ghana is a good country for perishables. European customers’ demand for perishables from Ghana will increase. We see Ghana perishables exports will grow and mainly imports of electronics coming from China and Hong Kong to this destination,” said Halit Anlatan, Cargo VP, Sales & Marketing, Turkish Cargo.

Ghana continues to maintain strong trade link with Europe which has 35 percent share of the Ghana market. Other major competitors for the Ghana market are Asia and South Africa. In recent years, imports from Asia especially China and India have grown rapidly. Additionally, Chinese investment in all sectors of the economy has also grown markedly.

Another country which is planning to revolutionise its perishable sector is South Africa. The South African is poised to transform the republic’s inadequate cold-chain facilities into a more reliable, efficient and profitable business.

To effectively export perishable products, an effective cool chain is a critical success factor. This includes facilities such as; cold rooms, freezers and refrigerated trucks. In line with the industry trends, air cargo industry players continue to align their products and services to ensure that they are able to meet the demands of the global market. Siginon Aviation is one such provider that recently opened at a new air cargo terminal on the airside of Jomo Kenyatta International Airport (JKIA). The USD 10 million facility was launched to meet customer and market demands for a functional yet convenient air cargo provider.

Figures from the Perishable Products Export Control Board (PPECB) show the Middle East, the European Union and the USA were major importers from South Africa last year.

The PPCEB 2015 annual report recorded bullish year-on-year export volume performances in avocados which increased by 26 per cent and citrus which saw 2 per cent growth.In total, 55 per cent of South Africa’s subtropical fruit including avocados, mangoes, pineapples, and passion fruit was exported to the EU last year.

Riding on this news, IAG Cargo is planning to expand its reach into South Africa by adding a new route to Cape Town later this year, to target the flourishing perishables market.

The carrier recently launched a new Boeing 777-200 route to Cape Town from London’s Gatwick Airport, which will operate three times a week.The new Cape Town route brings total flights to the country from both IAG’s London and Madrid hubs to 27 per week by the end of the year, offering customers a weekly lift of up to 440 tonnes into South Africa.

IAG says this extra capacity will benefit the buoyant perishables market in Africa. Over the past 12 months it has seen volumes of mangoes, avocadoes and pineapples, as well as floriculture continue to perform extremely well out of South Africa.

From 24 November 2016, the additional service will be running throughout the winter schedule. This route supplements the three times a week Airbus A330-300 Madrid- Johannesburg service, due to start 1 August and the existing Heathrow Airport to Cape Town and Johannesburg services already operated.