Blog post -
Quintessential | Air freight peak season vs. perishables peak season(s) and how they influence one another
- The general cargo peak season can have an impact on perishables’ trade (and the other way around). Let’s see how they differ from each other and how at times they overlap.
- Perishables are not a unified commodity, they rather grow in production pockets around the world. Seasons, both weather and culture-wise, vary.
- The appetite for certain products in China and Asia overall at different points of the year might coincide with the general cargo peak season.
- There have also been capacity constrains in the past, e.g. away from Africa when carriers re-routed their airplanes to more profitable routes, thus affecting African perishables exports.
Peak seasons in perishables, an opportunity or an increasingly challenging problem?
For years, people have debated on the definition of peak season for general cargo, but how does that reflect on perishables? Are there really peak seasons in our industry, or is it the seasonality that kicks in and requires additional capacity in a specific market?
I am often asked these questions, all of them valid. The truth is that answering them requires a little more insight than, say, 25 years ago.
Around the turn of the millennium, the perishables that were shipped by air were much easier to predict – there were fewer rules and regulations, more capacity available and no surcharges by the airlines. Carriers were happy to take perishables back on their round-trips to make the overall routing more profitable, no matter if the margins were low.
Fast-forward 25 years and all bets are off. Today, air-lifted perishables have to pay their way by themselves and compete with high-yield commodities.
The capacity restraints due to the global erosion of freighters in the last three decades and the implementation of all kinds of security rules and additional surcharges haven’t helped either.
Where airlines took the perishables for granted and considered them a nice-to-have, the perishables volumes have rapidly become base loads that are crucial for airlines to operate routes on.
Worth their weight
What has changed in all these years of shipping the same rose or the same bell pepper globally? Are we having more peak seasons in perishables around the world or is it really just the market change that dictates the capacity that has led us to believe so?
I think it is the latter. If you really look at some of the main commodities that are being shipped, that is fresh cut flowers, fresh fruits, and vegetables, there has always been this historic increased demand that can easily be explained.
For fresh cut flowers there is increased demand in some countries for events or holidays at the end of the year, but the real peak season starts at the end of January, in preparation for Valentine’s Day, arguably the biggest volume hitter for perishables globally.
The peak season for roses, and fresh cut flowers overall, continues until sometime in May, when after Mother’s Day, Secretary Day, and other relevant events and holidays, things slowly go back to normal.
For the big four flower producing countries that fill the aircraft – Kenya, Ethiopia, Colombia and Ecuador – this peak season has been there for many years. The supply and demand have always been there, what has changed is the market uplift (available air freight capacity for perishables) and the additional uplift needed to meet the increased demand.
In general, the market uplift has decreased over the years, especially for flowers, as these have always been a great product to ship on the main deck of freighters around the world.
Less freighters, more airliners, and modal shifts
However, with the demise of the freighter in the last three decades, flower shippers and forwarders had to adapt to a different model using more belly capacity in commercial airliners, changing their infrastructure to comply with the more rigid rules applicable to passenger aircraft.
The times of the flexible freighter services that could always be persuaded to fly a few hours later so all freight could be taken on board are gone.
Besides the shift from freighter to passenger aircraft for our business, we have seen a modal shift from air to ocean, including for flowers. More and more flowers travel in good conditions in reefer containers to their destination markets; this was inevitable given the global air freight capacity situation.
Nowadays we see also ocean-air solutions, a creative way of combining both modes of transport to position flowers and other perishables in markets that can’t go for a pure air solution. For fruits and vegetables, the typical peak seasons have always been Christmas, New Year, and Easter.
These holidays when families sit together for dinners and more dinners have always been the drivers for peaks and the consumption of various tropical and non-tropical fruits and vegetables.
Fruit and veggies have traditionally been transported in passenger aircraft, so the impact of reduced freighter capacity has only affected them in the sense that the queue to get on board the passenger flights has become longer. Today, they have more competition from former freighter commodities such as flowers that are also knocking on the belly carriers’ doors.
So the phenomenon of peak season for air freight perishables is clearly to be attributed to the market shifts in air and ocean freight capacity, but we now have a bigger challenge ahead of us.
The ecommerce boom has now reached the perishables industry and its impact is very quickly being felt. More and more ecommerce platforms, with Asia and especially China in the lead, are rapidly making inroads into the sector, disrupting every existing business model out there.
Members of Generation Z want their perishables delivered to them, they don’t want to go grocery shopping anymore. What was B2B has become a B2Me model, and the airlines, forwarders, exporters, and importers are being schooled by the digital revolution that ecommerce companies have started.
The new ecommerce players have highly sophisticated digital platforms where they can facilitate global transactions between consumers, growers, and producers. They also have the ability to use the historical data of years of trending patterns in our business with their algorithms, not only cutting costs but also predicting more and more precisely where to position the product, which by default leads to higher margins for all parties involved.
This can be good news, but the traditional perishables industry has to adapt quickly, or we will see a lot of companies disappearing in the next years after having become irrelevant and unable to compete.
We might soon have a Green Saturday following Black Friday, where perishables will be sold online for USD 50 billion in one single day. Three decades ago this statement would have made you laugh out loud, but the truth is that it is likely to become a reality sooner than we think.