Exporters brace for rising airfreight costs

Disruptions continue for seafood exporters, and airfreight costs may rise as a result, as volcanic ash originating from Iceland forces the unprecedented closure of UK airspace for a fifth day.

The no-fly restrictions issued on 15 April across northern Europe have grounded air cargo.

“A lot of seafood is transported by air freight, and this is going to cause problems,” a spokesperson from the United Kingdom’s Freight Transport Association (FTA) told SeafoodSource on Monday.

The FTA warned that the cost to businesses may escalate as the drifting volcanic ash continues to hamper air travel.

“Even if British airspace opened up immediately, it would take a fortnight to clear the backlog of air freight destined for the UK, so we already face an unprecedented logistical challenge,” said Christopher Snelling, the FTA’s head of global supply chain policy.

And when air space is “unlocked,” seafood businesses are very likely to face a rise in airfreight costs. Leading freight forwarder Kuehne + Nagel warned on Monday that normal freight costs will no longer apply, as emergency surcharges may be levied in severely affected markets.

Scottish salmon is a key export for the UK, worth more than GBP 220 million (USD 336 million, EUR 250 million) annually and representing more than 55 percent of Scotland’s total food exports. But, to date, the region’s farmed salmon producers report minimal impact due to the airspace closure.

“The impact on our air freight customers is a manageable percentage for the moment,” Alan Bing, sales director for Scottish salmon producer Loch Duart, told SeafoodSource. “We have managed our way around the situation and received advice from our air freighter.”
A spokesperson for Norwegian farmed salmon giant Marine Harvest told SeafoodSource, “We are seeing no impact currently on our Scottish business, which predominantly deals in the UK and mainland Europe markets.”
Buoyant demand for Scottish salmon is, arguably, easing the situation for producers. According to a 2009 report from the Federation of European Aquaculture Producer Organizations, the global market for farmed Atlantic salmon is forecasted to experience an undersupply of 190,000 metric tons in 2010.

So as demand outstrips supply, Scottish salmon producers unable to fulfill orders due to the airspace closure will be chasing fresh salmon orders from export markets accessible by rail and road.

EuroControl is providing an update on the airspace closure early Monday evening. The agency expected 8,000 to 9,000 flights to take off in European airspace today, compared to 28,000 flights on a typical Monday.

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