Despite the global economic crisis, DHL Global Forwarding (DHL GF) in Australia has registered growth in its substantial perishable airfreight business for the first five months of this year as a result of a combination of factors. Wong Joon Sanreports.

First quarter figures this year show DHL Global Forwarding has handled well over 25 per cent more tonnage than the same period last year. In 2008, DHL GF handled thousands of tonnes per month of perishable airfreight exports, representing a four per cent increase versus the previous year.

The main reasons for such significant growth have been two fold in the view of DHL GF, manager South Pacific Perishables & Livestock, Mike O’Neil.“Some exporters and importers ran down their inventories to maximise theircash position after the credit crunch hitlast year…and consumer demand didn’tshrink as much as predicted so thatcurrent volumes reflect some catch up.

“As well, our exchange rate position improved at the same time as seasonal and weather conditions in some regions and products improved also, resulting in a surge in some product areas,” he added.

No. 1 in Australia
DHL GF was listed as number one in Australia in relation to total International Air Transport Association (IATA) sales – including perishables and general airfreight – with A$78.5 million (US$62.17 million) in sales for 2007, said O’Neil, who has worked in the airfreight perishables business for 33 years, including 22 with DHL.

“This is more than double the sales generated by the company coming in second place in Australia in IATA sales,” he said.

In Australia, perishable exports are wide and varied in types, as well as in origins. DHL GF handles beef, lamb and pork products as well as fruit and vegetables. It also handles live fresh seafood, as well as specialty items.

Pork products to Singapore had been the largest perishable airfreight export product for DHL GF out of Australia and the Australian market in general. Most pork products are sourced from Queensland, New South Wales, Victoria and South Australia. In addition, DHL GF has also experienced growth in the amount of salmon and tuna products being flown to Japan and Asia.

O’Neil said Australian lamb demand in the Middle East and United Arab Emirates continues to increase. “We have noticed significant increased demand for lamb into Jordan and other Middle-east countries,” he added.

On-going access problems for North American beef products into some Asian countries have kept demand for Australian beef strong in these markets, O’Neil said. “We’re also noticing increased demand for beef products into Russia and the European Union.”

Perishables key service offering
“Our perishable product is an important part of our service offering to Australian customers as airfreight perishable exports can play a high volume role in many customers and airlines business from Australia.

“Within DHL GF our air import and export general freight, ocean and customs products amongst others are also market leaders with very large volumes…so involve very significant revenues,” O’Neil said.

Almost all perishable shipments ex-Australia are loaded into ULDs at forwarders’ premises off airport, with very little sent as loose cargo to an airline. DHL GF needs special approvals from government to handle various types of products and the requirements are different for meat, dairy, horticultural products, seafood etc. Food safety and hygiene issues are of critical importance.

“We collect empty ULDs of all kinds from the carriers and bring them back to our nearby airport coldstores around the country. We then clean and line them with insulating materials. Based on the type of product (whether chilled or frozen) and the length of the transit to destination, dry ice is added in insulated containers inside the units to maintain the required temperature.

“Having loaded the products into ULDs within our temperature controlled loading area (ante-room), the loaded units are then placed back into the specific chamber set for that temperature range where they are stored until pulled out several hours prior to airline departure, topped up with dry ice, sealed and trucked the few minutes to the airport,” O’Neil said.

DHL GF’s coldstores
Asked whether perishables is a lucrative business, O’Neil said: “We are happy with the product growth and the returns achieved. I expect Australia’s excellent reputation as a supplier of high quality fresh foods, together with access to excellent north-bound air capacity with our partner airlines, will ensure this remains a growth business for us and our customers, short and longer term.”

O’Neil said DHL GF operates its own purpose-built, government-approved coldstores within its forwarding terminals at all key airports in Australia, including Brisbane, Sydney, Melbourne and Perth. Exceptions being in Adelaide where there is a large ‘common-user’ coldstore already operating on the tarmac and Hobart, which is not a regular international airport so most perishable goods are either trucked or flown on narrow bodies to Melbourne for loading and dispatch.

“Our capital investment to date in newly built terminals in Brisbane and Melbourne alone is over A$50 million, with a significant expenditure on their integral coldstore areas.

“To support our strong growth in all aspects of our forwarding business in Australia, we have been engaged in expanding, building and consolidating our facilities around the country.This includes a major new facility in Melbourne currently under construction and nearing completion,” O’Neil said.

Asked about the arrangement with common carrier airlines for transporting perishables, he said apart from, perhaps specifying the product type and temperature requirements in more detail than normal airfreight at time of booking and then on the air waybill, there is no significant contractual or legal difference.

DHL GF has been almost exclusively handling exports out of Australia until recent years. Although Australia is a net exporter of fresh foods, there are some strong and growing airfreight import lanes…such as seafood and horticultural products from New Zealand and the US West Coast.

“So we have been developing and rolling out to customers solutions for cold chain management of import perishables, including customs clearance and fumigation, breakdown and distribution,” O’Neil said.