Ensuring freshness every step of the way

South Africa’s perishable air exports industry accounts for the bulk of the country’s air freight exports – but the pandemic’s after effects are driving changes and the industry must confront a number of challenges going forward.

Fresh meat (lamb and beef), processed fruit salad and Cape Flora exports take place all year round, while the high season for flower markets in the EU, UK, Middle East and Far East is from August to February, with the highest volumes in October for the All Saints’ Day on 1 November. Fruit exports (stone fruit) are busiest between September and December.

DSV’s  2,000 m² on-airport facility at OR Tambo International Airport in Gauteng and a purpose-built 1,700 m² warehouse at Cape Town International Airport support tailored-made, end-to-end import and export solutions for fruit, vegetables, flowers, meat, fish and other perishable goods. Markets include Africa, Europe, UK, the Middle East, Far East, Canada and the USA.

Despite the relative health of the export markets, Jaco Vlok, Director, Sales at DSV said many challenges – including expansion of exports to markets such as China, Japan, USA, Vietnam and India, land reform; collapsing of local government administrations; fixing regulatory issues such as dysfunctional state veterinary services and import and registration of key agricultural chemicals; sector financing, particularly developmental finance for new farmers; and loadshedding – had distracted SA from its agricultural expansion goals published in 2012.

• Freight capacity has been a major issue since Covid19. Perishables are typically transported on commercial airlines which all but stopped during the worst months of the pandemic, when airfreight rates escalated and have yet to fully stabilise. The evolving e-commerce market and continued growth of on-line shopping increased the demand for air freight capacity, and contributed to pushing up air freight rates.
• Security protocols have become exponentially stricter and more costly since 9/11, and Covid complicated matters, as does SA’s crime situation. Compliance is costly too, meeting International Civil Aviation Organisation (ICAO) and SA Civil Aviation Authority (CAA) regulations and the cost of staff training. Being a Regulated Agent with the CAA is imperative. It ensures total control over the cargo i.e. security screening by means of Explosive Detection Dogs (EDD), containerizing / palletizing and maintaining the cold chain.
• Operating a competitive cold chain service is essential to the perishables supply chain, and cold room facilities are subject to Perishable Products Export Control Board (PPECB) and Food Safety audits each year. DSV’s OR Tambo International Airport facility has five different cold rooms meeting different product needs - mini-vegetables (7-12 degrees), flowers (4-7 degrees), fruit (0-1 degree), exotics (8 degrees) and a freezer (-18 degrees).
• Risks associated with climate change affected agricultural production and, consequently, supply chains. They include changes in rain patterns, evaporation, temperatures, agricultural yields and pest control.

Vlok said specific market changes included a definite shift by some fruit exporters to aggressively exploring Asian markets, and increased competition from Australia, New Zealand and Chile for SA’s Protea (fynbos) markets.

Competitors in the northern hemisphere were able to leverage lower air freight costs because of their closer proximity to markets.

Vlok said while All Saints Day flower volumes from Cape Town were high in 2022, auction demand was lower than expected “as consumers focused more on putting food on the table than flowers for decoration”. Time would tell whether demand returned in the coming year, he said.

DSV’s largest client exporting Cape Flora, Bergflora, said 2022 was a difficult year.

“The war in Ukraine pushed energy costs in Europe to record highs, and inflation rocketed to approximately 10% from 2% the previous year. While the value chain struggled with rapidly increasing input and running costs, the consumer was ultimately hit hard in the pocket.”

Although Cape Flora production increased in 2022, Bergflora’s John Walsh said the conditions in Europe created a lacklustre environment with stagnating market prices year on year. Exports to China were negatively affected by sporadic Covid-19 lockdowns in various major cities, while trade to North America and the rest of the Far East remained stable”.

In addition, anticipated airfreight price reductions did not materialise in 2022, and uplift from South Africa remained constrained. “The net effect is that we exported more volume with a lower average farm gate return,” he said.

DSV introduced a local refrigerated road feeder service between Cape Town and Johannesburg during Covid19’s hard lockdown to accommodate perishable logistics services when air freight services out of Cape Town were suspended. “Johannesburg still had options on freight aircraft and commercial ghost flights (no pax), so the service connected our Cape Town customers with their markets. The service is still running today to accommodate volumes during peak season when aircraft capacity from Cape Town is exhausted. Reduced carrier rates are negotiated to compensate for the road feeder costs.”

Going forward

Walsh said the industry’s export value chain continued to collaborate around efficiency, quality, sustainability and technology.

Costs have been scrutinised and streamlined export solutions achieved. “For the first 5 months of the year, we've tracked good demand and favourable average farm gate prices as Northern Hemisphere cut flower productions seek to rebalance demand versus the sustainability of growing operations given a higher cost base. With Cape Flora volumes expected to increase for the 2023 peak season and airfreight rates reducing slightly as airlines seek to increase flights, we are poised for a challenging yet cautiously optimistic year ahead.”

Vlok said that South Africa needed to better manage the variables under its control – such as providing electricity and water – if it was to successfully navigate market and competitor challenges. “Only exporters with strong relations with existing critical export markets while searching for new lucrative markets will prosper under present conditions”, he said.

Learn more about shipping perishable goods with DSV