Perishables shippers near their price ceiling as airfreight costs climb

Latin American airfreight yields rose just 7-8% while global yields climbed 24-25%, a gap that WorldACD data show illustrates how little of the industry's cost inflation the region's perishables exporters can pass on. The figures, cited by Avianca Cargo CEO Diogo Elias at TIACA's Air Cargo Forum in Miami, frame the central question of the current cargo boom: what does this change for shippers of flowers, fruit and other perishables? For many, the answer is a shrinking margin between what airfreight costs and what consumers will pay.

"Perishables are a very low-margin business, in which there is only so much the consumers will pay," Fred Ruggiero, Cathay Cargo's VP cargo for the Americas, told The Loadstar at the forum. His counterpart at Avianca Cargo drew the contrast directly: customers moving AI servers are "paying whatever", Diogo Elias said, while flower exporters have far less scope to absorb higher transport charges.

The boom in AI infrastructure demand supports higher freight spending across the market. Perishables shippers sit on the wrong side of that dynamic. Their ceiling is not a corporate logistics budget but the retail price a consumer accepts for a box of flowers or fruit.

When does airfreight stop being viable?

Atlas Air chief commercial officer Martin Drew warned that sustained cost increases could eventually push some commodities out of the air entirely. "The longer it continues, what you start to worry about is … price elasticity, where you get to a point where it's just no longer viable to send by air cargo," he said. He named some perishable products as candidates for modal shift to ocean transport.

Sea freight, however, is not always a substitute. Seasonal produce runs on a calendar set by the harvest, not by the shipper. A delayed harvest can erase the time available for an ocean crossing, forcing exporters onto aircraft at exactly the moment their planning has come apart.

"As a result of the weather, the harvest may be delayed. That means it's going to miss the fast boats, so more has to be transported by air," Ruggiero explained. One air cargo executive at the forum described an economics in which a full year of work can be threatened by rain at the wrong moment, adding: "I don't think I'd ever want to be in that business."

How do cherries reach Asia?

Cathay's South American cherry operation shows the machinery behind a single perishables flow. Chilean cherries move through Miami, Los Angeles or New York and onward to Asia, a routing that requires speed and unbroken temperature control across several carriers and gateways.

"Transporting cherries from Chile through Miami, Los Angeles, or New York and onward to Asia is a complex journey where speed and temperature control are essential," Ruggiero said. "The product needs to move quickly, remaining at the optimal temperature throughout the journey. Otherwise, you're left with an awful lot of cherry juice."

Those movements are planned before the harvest. Cathay books interline charter capacity from Chile to Miami or Mexico in advance to feed its Asia network. The system works when the crop arrives on schedule. "The problem is, if it's all planned in advance and everybody is ready to go, what happens if the crop gets delayed?" Ruggiero said. "There's a lot of communication involved amongst ourselves, the forwarders, the growers, and even down to the farmers."

Where is the capacity bottleneck?

Cathay reported capacity shortages both from Asia to the US and within Asia, and is working to secure additional regional capacity. Securing lift is only part of the problem. Handling requirements differ by product, and treating all fresh produce alike can destroy the value of an expensive air journey.

"On the handling side, it takes expertise to handle perishables properly, and every type of perishable is handled slightly differently," Ruggiero said. Variables include how cold each product can be kept, how much humidity it withstands and whether it can be covered during transport.

For forwarders, the job is managing several moving targets at once: the harvest, connecting flights, handling conditions and a freight bill the customer can still afford. A delayed crop demands a faster journey but gives the grower no more money to pay for one. If yields keep rising at the global pace, the modal shift Atlas Air's Drew described moves from risk to forecast.