Australia`s airfreight food exports

Australia’s airfreight
food exports
Expanding supply chain options
Lindsay Hogan
Australian Bureau of Agricultural
and Resource Economics and Sciences
4–5 March 2014
Research by the
Australian Bureau of Agricultural and Resource Economics and Sciences
Why examine the airfreight supply chain?
•
Air transport is a significant food supply chain option
 Strong growth in livestock-based food exports (esp. meat and meat products)
 Victoria, Tasmania and Queensland are key growth areas
•
Opportunities
 Australia’s relatively abundant natural resources and comparative advantage in
food production
 Export market opportunities from increasing global food demand to 2050
•
Challenges
 Australia’s outbound freight has levelled off since privatisation of major airports
 Major airports increased international passenger movements, but need greater
focus on freight movements
Outline
1. Overview of Australia’s airfreight food supply chain
2. Infrastructure issues
3. Increasing the efficiency of the airfreight supply chain
1. Overview of the airfreight supply chain
Supply chain options for food exports
Food exports
Sea transport
Containers
Bulk
Unrefrigerated,
Refrigerated
Air transport
Cargo hold of
passenger
aircraft
Other
Dedicated
freight aircraft,
Ad hoc charter
Value of Australia’s food exports
Sea transport
Air transport
1.2
20
Fisheries products
Other food
15
0.8
10
Livestock-based food
5
2011-12
$b
Fruit & vegetables
1996-97
2001-02
0.4
Fisheries
products
2006–07
2011–12
Livestock-based food
Fruit & vegetables
2011-12 Other food
$b
1996-97
2001-02
2006–07
2011–12
Australia’s airfreight food exports, 2011-12
Supply side
Demand side
State of departure
State of origin
Victoria
Destination markets
Asia
Queensland
Middle East
Western Australia
Europe
New South Wales
Pacific
South Australia
Tasmania
North America
Northern Territory
Other
0
200 400 600 800
$m
0
400
800
1200
$m
Source: Based on BITRE estimates using ABS international cargo data, unpublished, 2013
Key areas of concern
Growth rates - state of origin, 2005-06 to 2011-12
New South Wales
Western Australia
Total food
Live animals (excl. fish)
Meat & meat products
Dairy products
Fisheries products
Fruit & vegetables
Other food
Total food
Live animals (excl. fish)
Meat & meat products
Dairy products
Fisheries products
Fruit & vegetables
Other food
-10
-5
0
%
Average annual growth rate
5
10
-10
-5
0
%
5
10
2. Infrastructure issues
•
World Economic Forum (WEF) global competitiveness indicators
•
Background on the policy setting for Australia’s major airports
•
Australia’s international airfreight and passenger movements
WEF global competitiveness indicators
Key results for Australia, 2013-2014
Rank
(out of 148 economies)
Australia’s global competitiveness index
21
Infrastructure
18
Available airline seat km/week, millions
6
Quality of air transport infrastructure
30
Quality of rail infrastructure
33
Quality of roads
40
Quality of port infrastructure
42
Airport infrastructure in destination countries
Hong Kong
Singapore
Japan
United Arab Emirates
China
Viet Nam
Switzerland
Thailand
New Zealand
Indonesia
Malaysia
United States
Bahrain
Qatar
Other
Countries rank
better than
Australia for quality
of air transport
infrastructure
0
10
20
%
30
40
Policy setting for major airports
•
Deregulation and privatisation process
 Australian Government privatised 22 airports, 1997-2003
 Airports Act 1996 (Cwlth) provides overarching framework
•
Tier 1 airports (airports with significant market power)
 Light handed monitoring for Sydney, Melbourne, Brisbane and Perth airports
 Mandatory price and quality of service monitoring
•
Tier 2 airports
 Self regulation for Adelaide, Canberra, Darwin, Gold Coast and Hobart airports
 Self reporting obligations
•
Productivity Commission reviews (2002, 2006, 2011)
Australia‘s international airfreight trade, 2011-12
Value of total airfreight exports
$28 billion
 Gold
$16 billion
 Medicinal and pharmaceutical products
$1.8 billion
 Food
$1.6 billion
•
Value of total airfreight imports
$68 billion
•
Value of airfreight net imports
$40 billion
•
Source: Based on BITRE estimates using ABS international cargo data, unpublished, 2013
International passenger movements, Australia
40
30
Inbound
Outbound
Total
20
10
million
1985-86
Source: BITRE 2014
1994-95
2003-04
2012-13
International freight movements, Australia
1,000
750
Inbound
Outbound
Total
500
250
kt
1985-86
Source: BITRE 2014
1994-95
2003-04
2012-13
3. Increasing the efficiency
of Australia’s airfreight supply chain
•
Victorian airfreight supply chain study, 2010-2011 (Victorian Freight and Logistics Council).
Six priority areas for efficiency improvements
1. Airfreight strategic plan
2. Education, training and awareness
3. Capacity
4. Infrastructure
5. Information systems and processes
6. Operating hours
•
Australian Government role to improve international market access
 Free trade agreements (e.g. Australia-Korea FTA)
 Technical barriers to trade (e.g. packaging and labelling requirements)
 Food safety, and animal and plant health measures (sanitary and phytosanitary
provisions; e.g. biosecurity reform)
Simplified airfreight supply chain
Farmer to flight
Farmer,
food processor
Transport
Packing location
Transport
Freight forwarder,
cross-dock location
Transport
Airline/aircraft
Overseas flight
Airport
Cargo terminal operator
and ramp operator
Customs/terminal release
Source: Based on Victorian Freight and Logistics Council 2010
Conclusion
•
Airfreight flies under the radar.
 Growth in some segments of the supply chain, but outbound freight levelled off.
Since privatisation, major airports have increased passenger movements.
•
Airfreight supply chain has growth potential. Key areas to address efficiency
concerns include:
1. Major airports to provide greater focus on outbound freight. Reliable cold chain
management is a key priority area
2. Extend the Victorian airfreight supply chain study to other jurisdictions
3. Progress the Australian Government’s biosecurity reform process; continue to
improve market access more broadly
•
All supply chain participants can benefit from increased airfreight food exports
 Farmers and food processors need economic incentives to invest in food
production – i.e. a reasonable return to the investment and risks incurred
daff.gov.au/abares