A change of mentality and better integration are needed to improve the cold chain for the transportation of perishables and pharmaceuticals, according to speakers at the International Air Transport Association’s annual World Cargo Symposium in Berlin.
The initial problem for UCB, a biopharmaceutical company in Brussels with a focus on neurology and immunology, is a lack of visibility, accuracy and speed. According to Ludovic Ménédème, head of global distribution customer service and commercial relationships, some processes are broken and some parties may not always be aware of their responsibility.
Lead times are also not very clear for each step of the process. Another issue is that some players can be working with outdated documents or incomplete information. All of this results in a lot of inefficiencies, because shippers have to keep going down different trails to look for the most updated information.
“We need to be more integrated,” said Ménédème. “But when you go for more regulation, there could be more constraints. We need to deal with that. For example, when good distribution practice is not available at a destination, lane risk analysis will need to be done.”
According to Frank Van Gelder, business manager at Adelantex, a Belgium-based forwarder which specializes in perishables, the industry should be looking ahead and anticipating demands. “I think we need to change our vision, and definitely change our mentality,” he said. “I think we should not look at what the retailers are doing today, but at what they need in the next 10 years.”
He also said that logistics players will need to get better vertically integrated through innovation and forecasting vision so that customers can trust them with their products.
“This includes agreeing on standardized procedures, making data transparent so it can be shared, and having clear lines of accountability,” he said. “They will also need to meet the industry’s standards of expertise. Everyone is evolving toward a best-practice methodology. If we want to be their logistical partner for the future, then I think we have no other choice but to follow them. We can’t change that, but we can try to come with a model that can change the way we look to them so that there’s more quality in the food industry.”
The perishable food market is undergoing a significant change. According to Gerard de Wit, managing director of data provider WorldACD, global middle class consumption of perishables is closely correlated to income growth and is therefore shifting to developing economies like China and India.
“In 2000, the EU and the US took up about 60%,” said de Wit. “In 2050, the EU and US share is estimated to dwindle to 15%, while China and India, which hardly formed part of the middle class in 2000, will gobble up about 50% of the total middle class consumption.”
Another change exists in the shift between the use of air and sea for transporting perishables. Analyzing individual markets, de Wit said that, from the US to Japan in 2015, air exports of apricots, cherries and peaches grew by 0.8% and lettuce by 1.7%, while berries fell by 0.5% and tomatoes dropped 1.8%.
Other main trends, according to de Wit, include the growth of supermarket chains and the outsourcing of agricultural land, both of which will support the perishables trade, and the retention by air cargo of a very high market share for cut flowers and some fish products.
The modal shift for perishables is nothing new. Natasha Solano, global business development manager for perishables logistics at Kuehne + Nagel, reminded the audience that the shift is happening on a constant basis because importers and exporters are always looking for ways to save costs in a very money-oriented market.
“The need for cost-reduction has definitely been one of the underlying factors for perishables being shifted to ocean,” she said. “On the other hand, if there was no increased deployment of container vessels, these commodities would not be transported by sea because it would simply not have been possible.”
Another factor has been the development of advanced technology such as controlled-atmosphere reefer containers and modified-atmosphere packaging which have enabled the transportation of goods like papaya or avocado that used to be unable to be carried by ocean.
Similarly, there has been development of new varieties and improved post-harvest procedures. “As soon as the market senses that goods can be transported for a cheaper price, immediately the R&D engine starts,” said Solano. “Some new, more resistant flower varieties such as carnation and chrysanthemum have been developed, for example, but only certain varieties can be transported by ocean at certain times of the year and on certain trade lanes.”
There have also been calls for a constant and uninterrupted cold chain. Solano noted that, to a certain extent, this is available in ocean freight because there are fewer links than in air freight.
However, this does not mean that all perishables trade will eventually shift to ocean. One area where ocean freight still lags behind is refrigerated less-than-container-load shipments.
“That is something where the air freight segment has a huge advantage, because if an importer is not large enough to afford to bring full boxes of the same product, he will want to do a LCL shipment, but of course this is very difficult with reefer containers,” said Solano. “So that is something that ocean freight will actually never get.”
Nevertheless, air freight will have to work hard to ensure better cooperation between all relevant players in many areas, including knowledge of the product, education, infrastructure, packaging and communication, according to Solano.
She also said that the industry should standardize processes and develop new or improved solutions to minimize lead time in the handling links, because it is only then that it can improve the cold chain and therefore limit modal shift.
By Jeffrey Lee
Asia Cargo News | Berlin
