Only a small percentage of the world’s refrigerated shipments are put on airplanes, but just as in other modes, air carriers and airport operators are fighting for a bigger market share.
France’s Airbus says the pie will get bigger, with demand for perishable food items the catalyst for what the aircraft manufacturer expects to be a tripling of air freight traffic over the next 20 years.
“Air cargo’s development is being driven by these emerging regions, where population migration and middle class growth creates the demand for food and other perishables,” Christopher Emerson, Airbus senior vice president, said in a briefing to journalists at the Dubai Airshow in December.
As Dubai’s economy has grown, its refrigerated air cargo facilities have grown to match, with dnata Cargo, part of the Emirates Group, prepared to bolster a perishables gate at Dubai World Village with a facility at the new Al Maktoum International Airport.
Capacity for perishables also will be a focus at the airport in Mangalore, India, where the government is investing in a cold storage facility to encourage exports of Jasmine flowers, fish and vegetables from the region.
In the United States, most shipments of perishable goods still go through Miami, despite the efforts of airports large and small to pry away some of the produce and flower business.
In St. Louis, a two-year effort by politicians and businessmen to use $360 million in state tax breaks to create an air cargo center for perishables at Lambert International Airport collapsed in October despite support from Missouri Gov. Jay Nixon.
Proponents of the plan said the tax breaks would allow freight forwarders to operate from St. Louis, because having nearby refrigerated warehouses would eliminate the trucking of beef and pork from Chicago. The National Center for Beef Excellence said in a study released this year the hub at Lambert would be used to export several thousand tons of pork and beef annually, with luxury hotels and restaurants in China the target consumers. Within three years, as many as 5,000 metric tons of pork would be shipped by air from Lambert, with possible future increases to between 7,000 and 10,000 metric tons a year, the center said in the report.
But fiscal conservatives and the Show-Me Institute, a libertarian think tank, killed the tax break legislation, arguing that government subsidies wouldn’t bring business to Lambert. Costs would be too high and proponents were overestimating the volume of available business, the institute and other argued. “The whole push at Lambert was a ridiculous and extreme example, but it also reinforces the dominant position Miami holds in the refrigerated sector,” air cargo consultant Michael Webber said.
“I’ve done consulting work for Miami for several years, but I also do a lot of consulting for other airports that would like Miami’s traffic,” he said. “There are some opportunities out there, but the first mistake airport officials make is to delude themselves that they can overtake Miami, or even take a significant chunk of their business.”
In 2010, Miami International Airport received about 73 percent of the 181 metric tons of produce imported into the United States by air. Despite having a huge consumer base that is the destination for much of the fruit and vegetables, only about 5 percent of fresh fruits and vegetables were flown into Los Angeles International Airport, ranking it behind Miami and New York’s John F. Kennedy International Airport in perishable imports.
Opportunities for new perishable air cargo business are in new, incremental business that comes with expansions of passenger flights to new cities, Webber said. “Any gains made by airports such as Atlanta, Houston, Dallas-Fort Worth and Los Angeles are based on increasing passenger service and therefore more belly capacity. None of the airports have been able to convince freight operators to relocate.
“As long as I’ve been in the business, the talk has been how to break Miami’s stranglehold on the perishables business,” Webber said. “No one has done it yet, and they are still talking about it.”
One advantage Miami holds is that it is the dominant gateway into and out of Latin America, the region where much of the imported fruits, vegetables and flowers originate. In contrast, Webber said, there is no dominant gateway into the United States from Europe or Asia.
As if to add an exclamation point to the debate, the world’s longest cargo plane landed at Miami as its U.S. stop in December, filled with significant amounts of perishables. The Cathay Pacific Cargo plane is a Boeing 747 that is 225 feet wide and 250 feet long. Cathay Pacific has launched a new international trading route connecting Asia to South America via the United States, stopping in Miami five to six times a week.
That doesn’t mean other airports and companies have given up trying to expand their market. Last fall, Apollo Freight, a subsidiary of Mercury Air Group, opened a 15,663-square-foot perishables center adjacent to LAX.
Politicians including Rep. Janice Hahn, D-Calif., were on hand for an opening ceremony and touted the facility’s potential to wrench market share from Miami. Produce bound for Apollo Freight’s facility is immediately moved from a refrigerated truck to a temperature-controlled setting, according to Ivo Skorin, Apollo’s chief operation officer, who told those gathered for the opening that it is more advantageous for importers to ship directly to Los Angeles instead of shipping goods to Miami and having them sent to the West Coast by refrigerated truck.
But Webber questions the math used in that equation. “The cost per ton-mile is much higher in the air than on the ground,” he said. “That’s why importers fly it to Miami, but then put as much on the ground as they can. Rising fuel costs aren’t going to make air more competitive than trucking.”
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