Australia secures subsidized airfreight for exporters

A big gray jet lifts off.

The Australian government has come to the rescue of agricultural and seafood exporters who are having trouble finding affordable air transport due to the scarcity of available aircraft.

By securing space with a network of 15 air carriers and freight forwarders, and partially offsetting users’ shipping costs, officials hope to speed up delivery of lamb, lobster, salmon and other high-value perishable products important to the Australian economy that faced transportation bottlenecks. The freight assistance program is especially beneficial for smaller companies because it aggregates shipments to create larger volumes that are more financially attractive to transport providers.

In the first three weeks of its operation, more than 560 businesses have registered for the program and 55 dedicated cargo flights have been arranged, according to the Ministry of Trade, Tourism and Investment. 

The airfreight contracts “will help kick-start regular cost-effective services to key export markets and enhance the capacity for full freight flights of agricultural products from regional locations. The quicker we can get our products off the farm and onto airplanes, the more Australian jobs we can save and the quicker our agricultural exporters can bounce back,” Deputy Prime Minister Michael McCormack said in a statement.

Coronavirus travel bans and quarantines forced passenger airlines to ground most of their fleets, eliminating the bellyhold space on scheduled flights many shippers rely on to move their goods. All-cargo carriers are operating their freighters at full capacity and passenger airlines have repurposed hundreds of airplanes for cargo-only service, but their focus on moving emergency humanitarian supplies for the coronavirus response often leaves little capacity for other products.

Logistics providers say demand for space on cargo aircraft is so high that most carriers are quoting daily spot market rates that are only good for 24 hours and demand prepayment at the time of booking. 

The Australian effort is designed to help correct the market distortion until commercial passenger flights are restored. About 90% of Australia’s exports by air fly in the bottom of passenger aircraft.

“With very few international passenger flights leaving Australia at present, our exporters are facing major hurdles,” Trade Minister Simon Birmingham said. “Through the better coordination of freight out of Australia, we can restore key freight routes and establish more frequent flights to our key markets so our agricultural and fisheries exporters can deliver their products to customers on time.”

The Australian Trade and Investment Commission, the government’s trade promotion and services agency that works to reduce commercial risk for exporters much like the U.S. Department of Commerce’s International Trade Administration, held a competitive procurement process and awarded contracts to:

  • Air Menzies International (Aust) – (Forwarder) 
  • CT Freight  – (Forwarder)
  • Cathay Pacific Airways 
  • DHL Global Forwarding
  • Emirates 
  • Etihad Airways 
  • Federal Express Corp. 
  • Japan Airlines
  • Kuehne + Nagel Australia (Forwarder)
  • Qantas Airways
  • Qatar Airways
  • Schenker Australia – (Forwarder)
  • Singapore Airlines 
  • Toll Group – (Forwarder)
  • Virgin Australia Airlines 

Under the arrangement, airlines offer block space capacity and full charters for exports such as premium fruits, packaged salads and vegetables, seafood, meat and dairy. Service is available from Brisbane, Melbourne, Perth and Sydney, with more departure points to be added based on demand and ability to consolidate shipments. Shippers in other cities can reach gateway airports through logistics companies with trucking options or utilize domestic air services offered by Virgin Australia and Qantas/Jetstar.

The government appointed Michael Byrne to oversee the international freight assistance program. His experience includes leading Australia’s two largest logistics companies, Toll Holdings and Linfox, as well as management roles at Australia Post.

Freight forwarders will take into account the government subsidy when negotiating rates with cargo owners, according to a fact sheet on the international airfreight support

“This is about reducing the barriers our agricultural and fisheries exporters face, so they can get back to focusing on producing the best and highest-quality products in the world,” said Agriculture Minister David Littleproud.

Inbound flights are expected to bring medicines, medical supplies and equipment to help respond to COVID-19.