In early February, Qatar Airways underscored its interest in the Latin American market (where it had decided last year to take a 10% stake in LATAM Airlines, the region’s largest carrier) with the launch of a freighter service to the region. Since February 3, one of the Middle Eastern carrier’s Boeing 777 freighters flies twice a week from its Doha base via Luxembourg to São Paulo, continuing to Buenos Aires and Quito, to return to the Middle East via Miami and Liege.
The move stepped up the presence of Middle Eastern airlines in Latin America by another notch. Since the entry of Emirates into the region in 2007, the airline has increased their capacity in this market steadily, with the focus on São Paulo, Brazil’s largest market and gateway.
Much of the flows they carry – both in terms of passengers and the cargo beneath their seats – go beyond their home markets to points in Asia. Between 2010 and 2014 the trio of Emirates, Etihad and Qatar boosted their share of the passenger market between Latin America and Asia from 11% to 24%.
Perishables – far and away the leading commodities out of Latin America – are most prominent in their sights. At the launch of its new freighter venture, Qatar indicated it would carry major temperature-sensitive commodities out of São Paulo, Buenos Aires and Quito such as fresh flowers and pharmaceuticals. In the opposite direction, the airline has targeted a broader spectrum of goods, such as medicine, automotive equipment, chemical products, high-tech commodities and equipment for the oil and gas industry.
“Through our expertise in specialized solutions, namely QR Pharma for pharmaceuticals and QR Fresh for perishables, we are able to offer our customers a seamless and an unbroken cool chain for their temperature-sensitive products via our state-of-the-art fully automated hub in Doha,” says chief cargo officer Ulrich Ogiermann.
Perishables are attracting increasing attention from airlines, being one of the few sectors that have shown growth over the past several years. Moreover, the momentum is expected to continue. Research firm Market Research Store predicts that the global food logistics market will show compound annual growth of 8.74% through 2019.
The growing appetite of Asia’s middle class for fresh food is one of the key drivers, and a juicy target for airlines. IAG Cargo has been carrying large volumes of fish and seafood to Asian consumers, especially in China, according to Daniel Johnson, manager global products. Besides high quality meat and seafood, “superfruits” like blueberries (which are high in nutrients and supposedly convey health benefits) are increasingly moving from Latin America to Asian markets.
About 10% of Air France-KLM-Martinair Cargo’s perishables haul out of South America is headed for Asian destinations, and the management sees room to double this.
Lufthansa Cargo launched a freighter flight to Natal in northern Brazil last year, a market that is dominated by perishables, and doubled the frequency to twice a week this year. Some of its haul goes to Asia, but the bulk is for markets in Europe, Germany above all, according to Gunnar Löhr, head of region, South America.
Middle Eastern and European airlines have little reach into Central America. Nevertheless, perishables exports from there by air to Asia have been climbing. For American Airlines, this is a major focus on the region.
“The quality of perishables from Central America is very good,” remarked Fabiola Portes-Cruz, regional manager, cargo sales for the Caribbean, Mexico and Central America at AA Cargo. “We move a lot of eels, fish and vegetables to China.”
LATAM has no ambitions to mount trans-Pacific cargo flights in the foreseeable future. In fact, its freighter fleet is contracting in response to overcapacity in the region, which has depressed yields. However, it is looking to strengthen its reach to Asian markets through partnerships with other carriers.
“We are continuously working to improve our network with better connectivity in order to create more and better alternatives to our customers. This also means adding new destinations, whether on new routes with passenger aircrafts, such as Johannesburg, or connecting to Asia with our interline partners to provide more capacity to the growing Chinese market,” says Cristian Ureta, CEO of LATAM Cargo.
“We will upgrade our connectivity to Asia through new and improved connection routes, which will allow us to save transportation times from Chile to China for the growing fresh salmon market; at the same time, we will enhance our load factors on some belly routes, such as Los Angeles, New York and Europe,” he says.
Over the past 24 months, his outfit has revamped processes and structures to redevelop its service offerings. This will continue in 2017, with the perishable segment a major focus.
“The most important projects this year aim to continue creating value for our customers through the consolidation of the new portfolio of products, which will include the launch of FRESH, a new product for the transport of perishables,” Ureta says.
By Ian Putzger
Air Freight Correspondent | Toronto