Keeping cool in a crisis: Perishables in the age of COVID-19

Now weeks or months into stay-at-home orders, depending on where you call home, you likely have a routine established for the new normal of the global pandemic. If you are fortunate, most of your daily work can be done remotely via Zoom calls from your home office or living room. As a treat and to support your favorite local eateries, you may order dinner via a meal delivery app once or twice a week. And at least a couple of times per month, someone in your household visits the grocery store themselves, or orders a curbside pickup. When lockdowns initially went into effect, early uncertainty led panicked shoppers to stock up on household products and groceries they feared might not reappear on shelves if the COVID-19 pandemic contributed to shortages. Toilet paper and bottled water became difficult to find at stores in Seattle, where Air Cargo World is based, and during a mid-March visit to a city grocery, the butcher’s corner and some areas of the produce section were heavily picked over, with few remaining items left for purchase. Despite the early panic the supply chain for groceries generally, and for perishables shipments with special handling requirements, soon had shelves restocked. Once the initial shock of passenger cancellations rippled through the airline industry, carriers moving important cargo likewise responded with new freighter routes, increased flying and new cargo-only flights using passenger aircraft. The pandemic has led to shifts in flying operations and in the types of commodities moving by air. The massive medical effort to contain and manage the virus has huge numbers of flights operating in support of the pandemic response, and the effort to maintain the food supply chain has been similarly important to keeping people sheltering in their homes safe and well-fed. Perishables — like all commodities moving today — must compete for tightening capacity along trade lanes. As providers of the quickest and most flexible mode of transport, air cargo operators are taking seriously their responsibility to keep the world fed. Air Cargo World spoke to operators moving perishables shipments to learn more about how COVID-19 has impacted the supply chain, and how the air cargo industry is responding. The global food supply effort Globally, “perishable airfreight is down by around 40% because of a combination of lack of capacity and demand coming down,” Vijan Chetty told Air Cargo World . Chetty is general manager of the coastal division with the Perishable Products Export Control Board in South Africa and a board member of the Cool Chain Association industry group. South Africa has faced particularly harsh lockdowns during the pandemic, which Chetty said has led to a “drastic reduction in perishable airfreight,” with only one airport in the country allowed to conduct international cargo flights. Most countries, however, have striven to exempt important cargo operations from general travel bans and lockdowns — as Chetty emphasized, “perishables like fruit and vegetables are essential foods worldwide. We assume that these food items will still be required by consumers.” To meet the demand, many air cargo carriers are prioritizing food shipments alongside the medical and protective equipment shipments for governments and hospitals. Atlas Air, Turkish Cargo, Amerijet and Emirates SkyCargo are among those carriers operating flights to support consumer demand for perishables products and other food items. With the increase in demand for flights, though, come higher airfreight rates. “It’s creating a bigger budget for companies that have to revert to air cargo to keep up with just-in-time supply chains or deliver finished goods to end customers,” said Mirko Woitzik, a risk intelligence product manager at DHL Resilience360, during a recent webinar on the COVID-19 supply chain. The higher rates impact everyone, but particularly cargo that falls outside of the traditional pharma and electronics, high-value categories. “Think about food supply chains, which are not as high-value, that can’t be shipped by ocean or rail because it takes too long,” Woitzik said. Some governments are intervening to overcome market forces that might otherwise make shipping perishables by air too expensive in the current environment. Australia’s government in March announced it would subsidize air cargo carriers willing to maintain the supply chain, and Middle Eastern carriers Emirates and Etihad have both announced plans to work with the government to facilitate exports from Australia. Emirates is working with the Australian government “to help provide a vital channel for Australian exports of fresh produce and seafood to reach worldwide markets in these critical times,” said Nabil Sultan, Emirates’ divisional senior vice president of cargo. “We are currently serving Sydney with four weekly flights on our Boeing 777 freighter aircraft and Melbourne with five weekly flights on our Boeing 777-300ER passenger aircraft. We are committed to supporting Australian farms and businesses and to helping transport vital food supplies to key global markets.” Mother’s Day flowers still moving In the U.S., Miami International Airport (MIA) is the primary air cargo entry point for international cargo and perishables. Specific cargo data for the first quarter is not available as of press time, but Dimitrios “Jimmy” Nares, the section chief of marketing at the Miami-Dade Aviation Department, told Air Cargo World that in April, while passenger flights were down by about 80% year over year, daily cargo flights were up by about 4% compared to the same time in 2019, averaging 150-170 cargo flights per day. Not all perishables moving into the U.S. are food or medical items — the lead-in to May is traditionally a peak season for flower exports into the U.S. ahead of Mother’s Day, which this year falls on May 10. According to Nares, flower season is underway, as is the season for seeds and grass moving to the U.S. from Argentina, Chile and Peru. While demand for some of these shipments has taken a hit with the pandemic, Nares said the Association of Flower Importers of Florida expects flower demand for Mother’s Day will reach about 70%-75% of demand from a normal year. “That’s down of course, but I still think it’s impressive, all things considered, since the world is in lockdown,” Nares said. U.S. Customs at the airport also have seen a dramatic increase of plants and flower shipments, in another indication that the nation’s mothers can expect the traditional bouquet on May 10. American Airlines is also flying its all-cargo service to and from MIA with its 777s, serving Ezeiza International Airport (EZE) in Buenos Aires. American Airlines previously accounted for about 65% of MIA’s passenger traffic, and were the fourth-largest cargo mover at MIA. “They’re now looking at having business where they can, and I think it’s very smart they and others are adjusting their aircraft for cargo-only at MIA,” Nares said. “We’re moving a lot of perishables right now and just keeping the food sources going,” Chris Isaac, American Airlines Cargo’s director of revenue management, said. The airline recently operated flights from the West Coast into Hawaii, moving 150,000 pounds of perishables to the islands. “Being able to be a part of shipping that level of perishable goods was a great opportunity for us,” Isaac said. “Not only for us to be able to fill some of these large airplanes that were pretty much going out with just a handful of passengers, but we could fill the belly of the aircraft and provide much-needed supplies to Hawaii.” While the islands grow some of their own produce, including tropical fruits, “the necessities and staple perishables” are moving to the islands via airfreight. “I won't mention any store names, but if you think of the big-box stores that you can go in and buy in bulk, they just don't have a way to get that restocking done as supply is completely cut from the mainland,” he said. “And we have the opportunity to be a part of that.” Keeping regional markets fresh Certain areas within the U.S., including the states of Alaska and Hawaii, are particularly dependent on airfreight for normal food supply, and airlines operating to these regions told Air Cargo World demand has been strong to keep staple products moving into the markets there. In addition to carriers with large international networks like American Airlines, leading interisland flight provider Hawaiian Airlines has prioritized its cargo service to keep the islands connected for relief shipments and necessities. Even with almost 95% of its flights suspended across its network, Hawaiian Airlines is utilizing its A330 aircraft for cargo transportation between Hawaii, Los Angeles and San Francisco, while utilizing its smaller 717s and ATR 72 freighters for interisland transport of produce and other perishables, as well as pharmaceuticals and shipments for the Blood Bank of Hawaii. In Alaska, regional airline RavnAir Group was forced to seek Chapter 11 bankruptcy protection last month due to the collapse of its passenger demand. RavnAir was the dominant small operator in Alaska, particularly for passenger operations, one freight forwarder with operations in the state told Air Cargo World . Regarding RavnAir’s airfreight and mail operations, the balance of the cargo industry will be able to fill the void left in intrastate operations by the carrier, particularly during the short term. The forwarder said cargo demand within Alaska is consistent, with most of the demand during the winter months for vital shipments like food items, which can be met by the freighters currently operating and by passenger aircraft. Many of the small regional aircraft operating in passenger service within Alaska can be easily modified to remove seats and increase cargo capacity since passenger demand is virtually nonexistent. Alaska Airlines’ cargo division is prepared to pick up the slack in shipments from the region, particularly as seafood shipments increase in the upcoming months, the carrier told Air Cargo World . With the fishing season differing each year in volumes depending on the catch, “you never know what you’re going to get,” said Torque Zubeck, managing director at Alaska Air Cargo. “For Q1, we saw volumes down compared with last year, which was a really good year.” Part of that decline is also related to restaurant demand, Zubeck said, which is typically a major demand source for seafood and other fresh products. “With restaurants closed, we definitely saw some shippers stop. It’s hard to predict what returns will be for products.” Local media in Alaska, including Anchorage Daily News, expressed doubts about seafood demand going into this year’s salmon season, as the Alaska Department of Fish and Game is forecasting a decline in the expected harvest. However, with the collapse of RavnAir, Zubeck told Air Cargo World that Alaska Airlines is “starting service earlier to some areas they served. If there is fishing this year, we’ll be there.” With salmon season nearly upon the industry, the question of who will purchase the expensive fish remains. Despite the vital nature of perishables to global food supply, the widespread economic impact of the pandemic is affecting more than just the companies moving and supplying the cargo. Airfreight moves at higher cost than other modes, and job losses have been widespread across the U.S. and other countries globally. “Consumers will be very price-sensitive, and their purchasing power will be restricted” as a result of the financial impact of the pandemic, the CCA’s Chetty said. The economic crisis “will significantly play a role in the purchasing power of consumers.” The association expects 2020 to be a challenging year for perishables shipments even if demand stays healthy. Industry cooperation will be increasingly important, Chetty said. “The Cool Chain Association brings together all parts of the temperature-controlled supply chain with a view to encouraging collaboration and learning from each other,” he concluded. “We have already kick-started initiatives to demonstrate the value of data sharing and the current pandemic puts into sharp focus the importance of working together.” This feature originally appeared in the May 2020 issue of Air Cargo World . To view the full digital issue, click here .

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