Australia extends funding support for airfreight exports

A big white Singapore Airlines plane, viewed at 45-degree angle from front as plane sits on ground.

The government of Australia is injecting AU$240 million ($166.4 million) into an emergency logistics program aimed at helping exporters of high-value, perishable products secure scarce airfreight capacity and said on Friday it will extend the program through year’s end.

The temporary program has already facilitated the movement of 36,000 tons of exports to 50 international destinations, as well as the import of critical medical supplies, according to the Ministry of Trade. Continuation is necessary because international travel restrictions are expected to remain in place in various regions of the world, making it difficult for airlines to resume regular schedules and shippers to catch a ride for their goods, officials said.

Exporters are being forced to consider ocean freight as their primary mode of transport while international passenger flights remain limited, according to the Australian Trade and Investment Commission (AusTrade).

“This is about restoring global supply chains. These freight flights have been critical to getting produce out the door during these tough times and helping to keep our exporters in business and connected to their hard-won established global customers,” Trade Minister Simon Birmingham said in a statement.

Australia established the International Freight Assistance Mechanism (IFAM) in early April to centralize and subsidize airfreight transportation for small and medium-sized shippers unable to book affordable space with cargo carriers after airlines suspended most international flight schedules in response to the novel coronavirus. The program, which started with US$72 million, consolidates high-value export shipments through a preferred list of logistics companies to guarantee enough business for freighter operators under contract with the government, which partially offsets the cost of transport arranged through normal commercial channels. Airlines are offering blocks of space or full aircraft charters.

The Australian effort is designed to overcome market distortions and keep exporters from losing overseas business until commercial passenger flights are restored. About 90% of Australia’s exports by air typically fly in the belly holds of passenger aircraft. Key commodities supported by the IFAM include lamb, beef, seafood and poultry. 

In addition to providing logistical and administrative support, and negotiating rates with airlines, Australian agencies are also working with other governments to facilitate cargo clearances and improve transparency of freight costs during the pandemic. 

IFAM has grown since inception to offer more trade opportunities. Last month, program managers announced they had set up two direct freight routes from southeast Queensland to Hong Kong and Singapore. The weekly flights on Cathay Pacific to Hong Kong carry various commodities, including fruits and vegetables. Singapore Airlines is operating the Singapore leg, with weekly flights containing 30 to 40 tons of produce.

Ocean Compromise

AusTrade recently highlighted on its website the challenges faced by agriculture exporters during the COVID-19 crisis because of the shortage of airfreight capacity. Tully’s Australian Organic Meats, which exports about 300 tons of chilled beef and frozen products to supermarkets in Gulf states such as Kuwait, previously could reach customers within 24 hours by sending containers by air, but has been forced to use ocean transport for the past three months. Shipments take an average of 38 days on the water, not including time for port discharge and inland delivery. 

The company now uses a tracking device with temperature sensors in the shipment to give customers confidence the meat has plenty of shelf life and was not compromised by heat at any point during the journey.

Many governments have provided loans and other economic assistance to smaller businesses of all stripes, but no countries besides Australia and New Zealand appear to have specifically targeted airfreight shipments for assistance. New Zealand’s program doesn’t restrict the type of shippers that are eligible to participate. 

Jonno Duniam, assistant minister for forestry and fisheries, said IFAM has helped the seafood industry get back on its feet.

“Under this program we’ve already helped get over US$347 million of Australian seafood from almost every state and territory out of the water and onto airplanes. This funding extension locks in ongoing support for the thousands of fishers, divers, deckhands and processors that underpin our world-renowned premium-quality seafood industry,” he said. 

“This funding extension locks in ongoing support for the thousands of fishers, divers, deckhands and processors that underpin our world-renowned premium-quality seafood industry.”

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