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Perishables Power Play: How forwarders are adapting to e-commerce disruption

Randy Woods by Randy Woods
February 1, 2018
in All Posts, E-Commerce, Freight Forwarders, Specialty Cargo, Technology
Reading Time: 8 mins read
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Less than three hours after the chartered 747-8 freighter, named “The Spirit of Panalpina,” touched down at the U.K.’s Stansted Airport, the last load of frozen guacamole was in the hands of the customer in Braintree, Essex. The pale-green concoction of fresh mashed avocados, tomatoes, onions, garlic and other spices was chilled to precisely -18°C, as pre-arranged by the shipper, and remained frozen during its entire journey, starting hours earlier in Guadalajara, Mexico, and making a short stop in Hunstville, Alabama, before crossing the Atlantic.

For Swiss forwarder Panalpina, this 10th and final shipment, was a satisfying “mission accomplished” moment, proving that its commitment to perishables in recent years was justified. The 10 frozen guacamole flights, completed in record lead time over a six-week period from June to mid-August 2016 and totaling 42 tonnes, were cited as one reason Panalpina’s Charter Network was named as “Air Freight Solutions Provider of the Year” from Lloyds Loading List.

“These shipments demonstrate how Panalpina can fully manage the cool chain from door to door,” said Quint Wilken, head of perishables for Panalpina in Europe. Avocados, he said, are normally transported by ocean freight, but in recent years they have been flown due to gaps in the market, when urgent shortages justified the higher costs. However, the ready-to-eat guacamole product is always made in small batches and then “quick-frozen” to maintain freshness, so shippers choose to move it by air to fulfill high-demand orders and avoid storage issues in the U.K.

With its stated goal of becoming “the preferred global supplier of perishables logistics by 2020,” Panalpina set an aggressive course of merger and acquisition (M&A) activity over the last few years, starting with Kenya-based Airflo in 2015, which quickly doubled its volumes of fruits, vegetables and flowers. Panalpina continued its M&A march with Kenyan flower and vegetable forwarder Air Connection last spring, followed by its September 2017 purchases of Dutch company Interfresh Airfreight Handling, specializing in perishables from Africa, Asia and Latin America, as well as Cool Chain Group Germany, a 14,000-tonne-per-day perishables operation.

The Interfresh deal will also include Panalpina’s ownership of sister companies Fresh Cargo Connection and Dutch Cargo Connection, which provide logistics services for various edible perishables, totaling about 20,000 tonnes of perishable airfreight per year. Panalpina’s most recent acquisition was the purchase of Belgium-based Adelantex and AD Handling, which import about 75,000 tonnes of fresh produce annually in Brussels, Liège and Ostend.

Panalpina may be one of the largest forwarders seeking greater control of the growing perishables market, but it’s hardly alone. Its chief rival, and fellow Swiss entity, Kuehne + Nagel has also been actively seeking market share via M&A, snapping up Community Forwarders Inc. in the U.S. and Kenya-based Trillvane last summer. In August 2017, German forwarder DB Schenker signed a deal to provide logistics services to Sichuan JiuYe Export Ltd., a Chinese perishables company that provides cross-border supply chain services to agriculture, perishables, e-commerce and food producers in China and abroad. While it has an extensive perishables network in markets that export to China, DB Schenker previously had a relatively less-established presence inside the country.

“With people traveling abroad today more than any other time in history, consumers want to experience the same exotic products at home,” said Gary York, vice president of global sales and marketing for Robinson Fresh, the perishables-handling arm of U.S.-based forwarder C.H. Robinson. “The continued globalization of consumers is driving the increase in mergers and acquisitions.”

As the top forwarders jockey for dominance in this fast-growing market, the question remains: Could perishables transportation become the victim of its own success? Rising air rates at a time when demand for airfreight is nearing an all-time high could put the brakes on growth. And what’s to become of the latest entrant into this perishables sector, a Seattle-based e-tailer called Amazon, which just gobbled up grocery giant Whole Foods for US$13.7 billion? Are the eyes of the perishables business too big for its stomach?

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Tags: Air ConnectionAirfloamazon.comavocadosC.H.RobinsonChinadb schenkerDutch Cargo ConnectionFeaturesfoodFresh Cargo ConnectionInterfresh Airfreight HandlingKuehne + Nagel (K+N)mergers and acquisitionsPanalpinaRobinson FreshSichuan JiuYe Export LtdTrillvane LtdWhole Foods
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