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Let us examine some of the mid to long-term impacts of COVID-19 on the air freight market. Many shippers and forwarders are wondering when we might return to a “normal” market condition and there are many factors that will come in to play. One of the most significant is demand for travel.
Each lane is different, but passenger flights make up a large portion of air freight capacity globally. As demand for air travel steadily increased over the years, airlines have responded with more passenger aircraft to support this demand. This additional equipment increased cargo capacity, even in years where demand for air cargo did not increase at a corresponding level.
With cargo capacity (supply) increasing faster than demand, many airlines operating both passenger and freighter aircraft reconsidered their need for freighters. Some airlines got out of the freighter aircraft market altogether, while others chose to let aging cargo aircraft retire without replacing them.
The clarion call at this time of Corvid-19 is minimal touch points hence a strong box. SoilQ is the solution as it will keep the product safe and will remain neat on arrival. The box is constructed using reinforcement band within the box, under patented technology.
Packaging might be the unsung hero of the fresh produce industry. It might not be the sexiest part of the supply chain. It is a sector that might be perceived – wrongly – as a less glamorous component of the supply chain. But without adequate solutions that work up and down the chain, produce will never arrive for presentation at the right quality.
However, behind the scene as Mr. Masila Kanyingi found out in a thirty minutes tour of Silpack Industries Ltd, there exists a wealth of innovation and dynamism within fresh-produce packaging. Silpack the introducers of SoliQ brand in Kenya has been exploring innovative methods to boost sustainability, increase efficiency, reduce costs and improve packaging as a marketing medium. Though introduced in their R&D department over six years ago “SoliQ”, is still the next generation packaging solution as Mr. Parit Shah, a Director with Silpack Industries Ltd, proudly refers it.
The Covid-19 pandemic is highlighting the supply chain problems which can arise when border clearance arrangements come under stress from increased demands and reduced capacities. This is bringing into question the future commercial viability of existing ACP triangular supply chains for short shelf life products in serving the UK market.
This needs to be seen in the light of the border clearance challenges and associated transportation disruptions which are likely to arise as a result of the UK governments’ current approach to future trade relations once it leaves the EU customs union and single market. Current policy responses to transportation disruptions associated with border clearance problems linked to the Covid-19 pandemic, could provide a basis for longer term arrangements to facilitate the continued smooth functioning of triangular supply chains. In the absence of such initiatives ACP exporters will need to explore opportunities for direct exports to the UK or diversification away from the UK market.
The floriculture is hit hard by the COVID-19 crisis, but when looking at the past, present and future, how is the industry expected to develop and recover? Rabobank tried to predict the global economic impacts and the effects on the floriculture industry. Lambert van Horen, Analyst - Fresh Produce at Rabobank, a Dutch bank with clients all over the world, was present at the PMA Virtual Town Hall*, to give an insight in the scenario they outlined.
Western world hit hard
When looking at the macro-economic baseline scenario, it is expected that a lockdown in a country takes about 3 months, that countries will reopen gradually - for many this will start in May -, and that it will take about 3 quarters to get back to the ‘normal’, without restrictions, van Horen explains.
When looking at the global GDP, the impact for 2020 is expected to be -2.6%, with The Western world being hit hard. “China and Asia (excl. China) are the only ones expected to have a (small) positive economic growth in 2020. Fortunately, for 2021, Rabobank expects the global GDP to grow with +5.3%.”
With the world’s human population expected to reach nearly 10 billion by 2050 and the negative impact of climate change on agriculture, maintenance of a stable global food supply is under significant threat.
The EU continues to set and re-set pesticide and fungicide Maximum Residue Level (MRLs) at far stricter levels than internationally agreed standards. ACP exporters serving EU markets have no option but to comply or exit the EU market. Freshfel’s call for ‘better defined international standards’ to facilitate EU fruit and vegetable exports, since uneasily with the unilateral standard setting practiced by the EU, which regularly presents new compliance challenges for ACP fruit and vegetable exporters. This raises important policy issues regarding the EU’s role in the de facto setting of international standards and the limitations of SPS chapters and institutional mechanisms established under trade ACP-EU FTAs for ensuring EU markets remain open to ACP products which comply with agreed international regulatory standards.
The current Covid-19 disruptions of Kenyan exports to Europe, particularly along triangular supply chains to the UK, highlights the importance of shortening supply chains by wherever possible, contracting with the final retailer and shipping products directly. For exporters who can get to grip with current logistical challenges, rising EU demand for fruit and vegetables and rising prices could yield commercial benefits to counter-balance some of the Covid-19 disruptions. This is particularly the case since labour shortages in the fruit and vegetable sectors as a result of disruptions to labour flows could depress fruit and vegetable production throughout 2020.