RIRDC - Research Compendium 1993

Rural Industries
Research & Development Corporation

Research Compendium 1993 - 1994

Research Project

AIR FREIGHT ECONOMICS OF PERISHABLE GOODS

Objective

To identify opportunities to increase exports of perishable goods through structural improvements to the air freight transportation chain by identifying barriers to perishable goods, use of existing air freight capacity, and ways of overcoming these barriers.

Background

Australia exports around $9 billion worth of perishable goods by air per annum. Even though Australian air freight is relatively cheap and available capacity often under-utilised, it is perceived to be expensive and incapable of meeting demands. This study is based on the hypothesis that there are a number of structural barriers that constrain the use of export air freight capacity and therefore a greater volume of exports of Australian perishable goods.

Research

Demand for, and supply of, air freight capacity were compared between Australia and New Zealand, a country in which available air freight capacity, although dearer, is more fully utilised. Research focused on three fundamental goals:

obtaining evidence for under-utilisation of air freight capacity in Australia and how this can be related to the demand for capacity and to the patterns of air freight use for perishable goods;
defining the commercial and regulatory structure of the distribution chain from Australian grower to overseas buyer and end user and how this compares with the New Zealand distribution chain; and
identifying barriers against, and incentives for, use of air freight that are present in Australia but not New Zealand; and recommending appropriate action to encourage greater use in Australia.

Outcome

This study has indicated that by overcoming barriers to the use of export air freight services Australia may be able to increase the volume and value of perishable goods exports by up to $750 million per annum.

Furthermore it is likely that similar barriers could be identified for sea freight and the increased value of exports would be even greater. The major impediment identified is poor marketing of Australian products. This in turn has led to an inability to afford further investments in export marketing and to add value throughout the export marketing production and distribution chain.

Implications

It was concluded by the researchers that there are significant opportunities to increase the extent of export air freight use and they stressed the need for organisational structures and transportation systems to be seen as the first-level building blocks to export development. The report contains a great deal of useful information and suggestions for stimulating perishable goods exports that will prove invaluable to food producers, exporters, researchers, agricultural extension officers, and others involved in Australia's food and transport industries.

RIRDC Project No: STI-1A

RESEARCHER: Mr Tim Edwards

ORGANISATION: Strategic Initiatives Ltd

PO Box 341

MASCOT NSW 2020

PHONE: 09 368 3494

FAX: 09 368 1204

PUBLICATIONS:

RIRDC, 1994. 'Air Freight Economics of Perishable Goods: An Analysis of Opportunities for Value Improvement', RIRDC Research Paper Series No 94/2.