Vital exports allowed to perish

Press, 22 August 1979, Page 17

Vital exports allowed to perish

By

OLIVER RIDDELL

New Zealand has been told often enough that it must export or perish. But the problem facing many exporters is that their goods are perishable, and do indeed perish on the tarmacs of Overseas airports instead of reaching overseas customers.

The answer, obviously, lies in air freighting. But air freighting is a business with many problems of its own which have frustrated many would-be exporters and' prevented the expansion that many existing exporters are geared to achieve.

A study to identify the problems of air freighting and measure the size of those problems, so that solutions to them may be found, is just getting under way. It is being undertaken by the Horticultural Research Unit, a Government-funded body under the wing Of the Export-Import Corporation. The government established the unit tt> study horticulture — one of the fastest growing industries in New Zealand but one

with small and fragmented administering bodies. As none of these small organisations can undertake their own research, the unit will do it for them until they are big enough to carry on by themselves. With any dried or frozen product, time is no problem. But products that depend on their freshness for sale pose an almost insuperable problem for their New Zealand growers. They have to be sold half-way, or maybe all the way, round the world and have only a few days to travel from harvesting point to sale point.

Price is often not the problem with these fresh products. The market will pay for them if they look good. So their freshness and their appearance is everything. Only air freight can ship them and retain the appearance and freshness. Products involved include all berry fruits, stone fruits, pfp fruits, flowers, mushrooms, chilled meat and fish, and kiwi fruit. With kiwi fruit the problem is not quite

as acute, because it can be picked and shipped green, then artificially ripened at the point of sale. The only significant air carrier out of New Zealand is Air New Zealand, but it serves only the Pacific basin. So unless the product is intended for the Pacific basin, it gets transhipped on to other airlines at Melbourne, Sydney, Singapore, Hong Kong, or Los Angeles, and it is at the point of transhipment that major probems occur.

The product can be left in the boiling sun for days, when only 60 minutes is needed to ruin it. The product undergoes extra, and often inexpert, handling which greatly increases the possibility of damage. Does the fault lie with the airlines? They say, rightly, they are responsible for the product only while it is on board. Does the fault lie with the

insurance companies? If they were to assume responsibility, the insurance premiums would be prohibitive. Does the fault lie with the freight forwarders? But they are in the hands of agents. Exporters of these goods are very vulnerable to any delay. Strawberries have a maximum life of seven days after picking; boysenberries can have a life as short as three days; stone fruits have a life of several weeks, but are susceptible to bruising. Chilled meat and fish have different problems. They are more difficult to get to the point of departure (usually Auckland) than fresh fruits and flowers because they go off more quickly if . not kept chilled. Chilled meat and fish is worth a lot more overseas than the frozen product, so the incentive is there for the exporters to export it chilled.

Many of the problems come back to Air New Zealand. It is mainly a passenger airline and so does not have the capacity to shift exports as and when it would like. But it is the main lifeline for air freighters, so its problems become their problems. Recently, partly as a result of pressure from exporters and the Government, Air New Zealand set up its own freight division. This should put its freighting activities on a more solid basis. It has also sought Government approval to renovate a DCB specifically for air freighting, and McDonnell Douglas have been involved in this. If authorised, this renovated DCB will have a 40-tonne capacity for freight. It has been designed mainly, but not solely, for the air freight of livestock. Other firms have been keen to get into the air freight business. They have been stymied by the uncertainty of Air New Zealand’s role in freighting in the past. Now that

Air New Zealand intends to sell freight services, the position should become clearer. Other services would probably be charter services. Charters have the benefit that they provide a direct service to the market without transhipment or extra handling, so ensuring that the product arrives in good order. But they are considerably more expensive because New Zealand imports very little air freight (except electrical goods) and an aircraft returning half empty will load costs on to the exports. Current schedule costs for freight from Auckland to Frankfurt are about $2 per kilo. If charter costs substantially more than •this, then the profit for the exporter has gone, even if a good product arrives.

Air New Zealand has devised special rates for berry fruits. But these cease to apply from the point of transhipment onwards. Airlines generally are reluctant to carry berry fruits because they

are so light for the space occupied on board. Airline rates tend to be weight sensitive. Lower rates for light goods like fruits and flowers benefit ,the exporters by being cheaper, but are the least preferred goods for carriage by the airline and so tend to sit around while preferred goods get loaded on. Reduced profits for the airlines mean increased prospects for spoiling the cargo. Exporters are caught in a vice. On the one hand, cheap fares mean that the goods have a greater chance of spoiling; on the other hand, better service to the market can mean savage increases in freight costs.All these problems are widely recognised in the horticulture and transport industries. The Horticultural Research Unit study is designed to provide concrete details of the type and magnitude of the problems so that action to remedy them can be undertaken.