There can be little doubt that airfreight is a crucial part of the perishables business in the UK, with short shelf lives and tight deadlines very much at the forefront of the trade. Having proved itself as a fast and efficient epicentre for fruit and vegetables entering the UK for some years, Heathrow is arguably facing its toughest challenge yet as it fights rising costs and the recession, while creating an attractive offer and making the most of an expensive business. All this, as well as battling with a public image that has suffered from some common misconceptions.
Heathrow’s cargo operations have been clearly devised to be highly efficient, with product on its onward journey within four hours in some cases. With vehicles collecting perishables given priority on the runway, the product then goes through stringent customs processes, DEFRA checks and sometimes packing within the logistics firms’ facilities. With pressure from retailers to deliver on time, the smooth running of this process is crucial. Business is largely nocturnal, the busiest time being from 8pm to 2am to allow delivery on to the retail or wholesale sectors for the morning. Around 80 per cent of product at Heathrow reaches retail outlets, either directly or through distribution hubs, with the remaining 20 per cent going to London wholesale markets, including the nearby Western International.
Hellmann Perishable Logistics (HPL) is one of the most established companies working from Heathrow. HPL claims to be the first dedicated perishable global logistics provider to have a global chain of sites across every continent that allows the company to channel 50 per cent of its produce through its own sites at either end of its journey on a door-to-door basis. “It’s very important to have a global network,” says Colin Pickup, HPL customer services manager. “There are certainly some countries, such as China, coming to the fore in airfreight across the world and it is important to have people on the ground there. We have to respond quickly to what importers want and liaise with them all the time.”
HPL - like almost all the logistics firms based at Heathrow - also has a seafreight arm, allowing the business an alternate income stream and adding to its offer. “The rising cost of airfreight can put importers off,” says Pickup. “If there is something that we can alternatively move by road or sea then we will. It is important to be multi-modal in this business.”
Roy Barlow, finance director at Perishable Movements Ltd (PML), agrees that diversity is key in the logistics business. “Airfreight is basically there to plug the four- to five-week gap that seafreight creates. When the season begins, a lot of importers will move product in through airfreight for the first month while they wait for the boats. At the moment, we are bringing in Mexican grapes by air, as Egypt hasn’t started yet, so it is about filling in those windows. Seafreight then levels out those peaks and troughs of activity as a steady source of income.”
David McLean, managing director of CCG Logistics, says that across airfreight and seafreight, it is all about contacts. The firm holds around 50 per cent of the UK perishable seafreight market.
“In terms of volume and scale, the fresh produce business is massive, but the number of people involved is small in comparison, and whether you are a retailer, an importer, an exporter or a logistics provider, it is dependent primarily on close relationships,” he says.
A hugely varied and wide-ranging amount of produce is available via airfreight, with anything and everything, the importer requires brought into Heathrow. It is largely exotic produce that is in high demand, although when issues such as weather or labour problems stem seafreight supplies, staple lines do come in via airfreight.
Pickup believes that with such tight margins and potential handling issues, it is important to choose staff carefully. “Pretty much all the products that are airfreighted require careful handling as you can bruise fruit so easily, so we train our staff really well in dealing with them and make sure the temperature is controlled at all points from country of origin, then in flight and when it arrives,” he says.
Misconceptions widely pervade the fresh produce industry, with a range of issues from the environment, food safety and pesticides all coming in for public scrutiny with varying levels of comprehension from the public and media. Airfreight has experienced similar difficulties, partly due to the scale of large international operators, such as delivery agents FedEx and DHL, in the public eye and the common misconception that fresh produce is individually brought in, rather than, as is usually the case, on passenger planes that are already running. The scale of the industry is undoubtedly large but in terms of produce, the level of emissions, which has become the concern of both the media and public alike, is very low.
Steve Lewis, business development manager at CCG, says: “The media always points its finger at perishables when criticising airfreight, perhaps because of the speed of it all. But it is the labelling that singles it out. Other general cargo, which far outweighs fresh produce in terms of volume, is unfairly not labelled as airfreighted and does not give the consumer the right to decide whether to buy the product if they are against the carbon footprint produced by airfreight.”
Pickup agrees there is a perception issue. “If a flight is running with passengers on anyway, then why not utilise the space?” he asks. “The vast majority of the cargo we handle at Heathrow arrives on passenger aircraft. People today want to eat fresh produce year round, even if it is out of the UK growing season, and the only way to get this is to fly in products that do not have the life to travel by sea.
“People are also sometimes wary of produce flown in from other countries, but shipments are checked meticulously by DEFRA, Port Health and the Rural Payments Agency. These agencies are there for a reason,” he continues. “They help to stop disease coming in; it’s not something you can treat lightly after all - product has to be fit to eat.”
The dreaded ‘R’ word is a tough one to approach in a high-cost business such as airfreight, but companies are bullish that the recession can be dealt with practically. “Volumes are down around 15-20 per cent as people are buying in less, but trade is pretty constant and it depends on whether worldwide weather throws up any shortages to plug the traditional summer lull that the British season creates,” says Barlow. “PML is strong commercially and we try to be proactive, implementing temperature and complete online tracking systems, rather than being reactive for the customer - it’s about creating a point of difference in the market at times like these.
“Fuel costs have dictated the market over the last couple of years and that is difficult to deal with. If the fuel prices go up, the plane handling agents put up their prices and we have no choice but to pass this on to our customers. But we know things are going to turn around and we are very positive for the future.”
McLean thinks consumer belt-tightening could cost the industry dearly. “The main problem with airfreight is the cost of space on aircraft, which is accentuated when there is a recession,” he says. “Some airlines haven’t invested as much as they should have done in systems to look after products as, say, seafreight, which means that whenever there is a development in a cheaper form of freight, then we lose a percentage of that custom.
“There has definitely been a drop in demand for airfreight from importers and I think that has been passed on from consumers. A lot of the product brought in is exotics, which are highly perishable, creating waste which is not good with tight margins, and are less popular with consumers looking for low prices at the moment. But advertising can help this and some high-end lines, such as blackberries, have been booming.”
One contentious issue, driven by public environmental and social concerns, has been the proposed third runway at Heathrow. Following the decision in January by transport secretary Geoff Hoon to grant the construction of a third runway and sixth terminal to aid and increase traffic at the international airport, a number of environmental groups, local residents and top businessmen have come out against the move. Sainsbury’s ceo Justin King was among the revolt against the runway, which could, in theory, prove fruitful to his business and the produce industry. Lewis comments: “A third runway is a great idea. It is easy for airfreight to go into the Netherlands, France and Germany and get driven on from there so we have to be dynamic to keep business. It would generate thousands of jobs and attract more flights, which can only be good for the produce industry.”
Barlow says: “We could do with another runway in terms of international contracts and the wider economy. Whenever there is space on a plane, it will get filled, as there is so much demand.”
Whether the £4.5 billion Heathrow Hub project comes to fruition remains in the balance but, with a rail hub including mainline routes to the West Midlands, the West and South Coast and a link to London St Pancras station proposed, it is likely to have excellent implications for commercial residents at the airport.
One such company dealing with vast amounts of produce each day is catering and logistics specialist Gate Gourmet. The relatively young international company, founded in Switzerland in 1992, has rapidly risen to become one of the largest brands in international travel. Dealing with swift plane turnarounds, more than 900 food lines per day, deliveries from 5am to 6pm and deadlines dictated by long- and short-haul flights, Gate Gourmet faces considerable daily challenges.
Natalie Lambrou, procurement manager, tells FPJ: “Consistency is key for us; it has to be the same size and the same components in each meal, otherwise we are letting our customers down. It does mean we need suppliers who can deliver exceptional service every single day of the year, so we in turn can do this for our customers. The supplier relationship is very important to us; by ensuring that strict service level agreements are set and adhered to, we can ensure that unnecessary charges are kept to a minimum. Suppliers have to get in the mindset that they are working for the airline and keeping up with that brand, be it British Airways or Delta or whoever, and not just Gate Gourmet.”
Seasonality is also a key component of the menu development process. “We always try to include seasonal ingredients in our menus,” says Jim Headrick, executive chef at Gate Gourmet. “With the quantities that we work with being so large, it is critical that suppliers can provide us with the right ingredients for the entire menu cycle period, which can be as long as four months. Trying to find a new product or ingredient halfway through a menu cycle can be very troublesome, so setting the supplier requirements early on is key to success.”
Wherever the future of airfreight and Heathrow in particular lies, it is likely to be one that sees the industry continue to work towards faster clearances, more accurate, constant data and paperless systems. It is also likely that margins will remain tight in a high-cost business. As McLean says: “Being an important link in the cool chain of an extremely cost-conscious business naturally attracts the focus of retailers, importers and exporters alike. For companies like ours with extremely tight margins in place, volume is king. However, if like CCG you can provide an excellent service at a competitive price, and develop rapport and personal relationships with your customers, half of the battle is there. The rest is sheer hard work.”
BA PUSHING AHEAD ON CARGO
The joint operations between worldwide logistics company Norbert Dentressangle and British Airways World Cargo (BAWC) provide perhaps the most interesting example of a well-rounded airfreight operation at Heathrow. With a large logistics base in roadfreight, rather than in airfreight, Norbert Dentressangle’s purchase of Christian Salvesen in 2007 made a lot of sense and the company has run the large Perishables Handling Centre (PHC) for BAWC since. Before the site was built in 1999, a specialist handling facility in the grounds of Heathrow did not exist. The centre has helped to step up the airport’s operations in the sector.
Some 90 per cent of product goes to the multiples, with catering and wholesale receiving sendings too. With staff numbers fluctuating between 120 and 200 at peak times, the PHC is a considerable operation, seeing 400 tonnes of product coming through each day, adding up to 80,000t a year. With timings tight, BAWC benefits from a queue-jump system, which can see it redistributing products just two hours after it lands.
Mark Price, Norbert Dentressangle’s general manager of Heathrow operations, tells FPJ: “There really isn’t another site like it. We work with a range of handling agents and retailers closely to forge synergies and create better consolidation, improving speed. We import through the day and turn our operations towards exporting at night.
“It is great having the facility to pack products here, as we effectively take a journey leg out of the supply chain, eliminating the need for the fruit and veg to go to a retailers’ distribution centre and running consolidated, packed loads.”
Stuart Forsyth, global product manager for BAWC, believes consumer trends affect airfreight more than other trades. “We have seen some rapid evolution in the market over the last 10 years. The desire for pre-packed fruit has had a positive impact on volumes, with retailers reacting to cash-rich, time-poor consumers who want fruit, but perhaps don’t have time to go to the grocer and select produce.
“Obviously, the recession has had some effects - the import of some produce has declined. However, new sources have opened to replace this. It is always going to be more expensive than seafreight in our business, but it is more about speed than volume. With us, the BA brand strength cannot help but reinforce our offer, both at home and abroad.”
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