atin American exporters of perishable products are feeling the squeeze as higher jet fuel costs drive up the price of the expedited service prized for their goods. So much so that exporters of fresh flowers, fish, fruits and vegetables could be priced out of the market for air cargo, airline executives say.

"Sixty-five percent of the exports coming from Latin America are perishables," said Tom O'Malley, UPS vice president of air cargo for Latin America. "How long will exporters of low-value perishable goods be able to sustain the high prices [for air cargo service] due to the high cost of fuel? It's a big concern."

Said Des Vertannes, executive vice president, cargo, of Abu Dhabi-based Etihad Airways: "We're all into consuming fresh, organic food."

But some Latin American exporters of perishables are struggling to help airlines cover the ever-increasing price of jet fuel.

The fuel cost problem is compounded in Latin American countries and puts foreign carriers at an official disadvantage, said Peter Scholten, vice president and general manager of the Americas for Martinair. "There are countries in Latin America where the local carriers get subsidized fuel," Scholten said, so "there is not always a level playing field."

Because of "the high cost of fuel … we think we are coming close to perhaps pricing certain perishable products out of the market," said Robert Rozek, global director of perishables for Martinair and its Colombia-based subsidiary airline, Tampa.

Higher fuel surcharges have been piled on top of myriad costs associated with perishable air cargo, including product damage on the ground.

"Most of the issues that we have with trucking originate … in Latin America and Africa, where trucks are not always refrigerated or completely closed in," Rozek said.

Flower Power

Flower growers in Latin America are adding to shipment problems by packing their produce in a wide variety of non-standard box sizes.

"This is one of those issues that snuck up on us in the last several years," Rozek said. "In the past, box sizes for flowers were pretty much standardized - same weights, same sizes. Today, you can have flower boxes from 15 kilos to over 45 kilos."

Multiple flower-box sizes can compromise not only the product quality but also airline efficiency and safety. "For the airline, it means longer times to build up our pallets, and the pallets are a bit less stable," Rozek said. Delays in perishable cargo processing by the U.S. Customs and Border Protection agency can be quite costly, too, especially for shippers whose goods are detained or seized by the CBP.

"It is the kiss of death if you have that detention notice followed by that seizure notice. It will take weeks, months and sometimes years to get that cargo back," said Lenny Feldman, managing partner of the Miami office of the law firm of Sandler, Travis and Rosenberg.

Customs' seizure process has been reformed by legislation, Feldman said. But further reform is needed because "a lot of the law does not pertain to shipments where another government agency" - such as the Environmental Protection Agency or Department of Energy - "must weigh into that determination," Feldman said.

Perishables account for about two-thirds of air cargo damage claims, leaving ample room for improvement by carriers, said Christian Helms, secretary general of the Bremen, Germany-based Cool Chain Association.

IT Fertilizer

Some U.S. trucking companies that handle imported perishables have made greater use of technology to avoid costly delivery delays.

For example, Miami-based trucking company Armellini Express Lines, a leading ground carrier of fresh cut flowers, has expanded the capacity of its training simulators to prepare drivers for a wider range of conditions including icy and snow-covered roads.

"It has really helped in reducing our accidents," said David Armellini, president of Armellini Express Lines, which also was planning to deploy upgraded Global Positioning System devices that display maps to drivers' destinations showing "truck routes that won't put you under a low bridge," he said.

But getting fresh roses, carnations and other varieties to retail shelves is half the battle.

"In the United States, only 28 percent of the households buy flowers, so we're looking at how to improve that," said Augusto Solano, executive vice president, Colombian Association of Flower Exporters.

Colombia is the second-biggest exporter of flowers in the world, with 13 percent of the world market in 2006, followed by third-ranked Ecuador with a 6 percent share the same year. But both remain far behind the Netherlands, which has 42 percent of the market.

Revised packaging and distribution patterns in the U.S. have put more fresh-flower bouquets in supermarkets at the expense of traditional florist shops, he said.

Perishable flowers must vie not only with consumer staples in supermarkets but also with gift items in florist shops with long shelf lives. "Cut flowers make up about 75 percent of the transactions in florist shops; 25 percent are for balloons, teddy bears and other things, said Solano. "We compete with those."

UPS Forward

UPS is making a strong bid for more business with air forwarders with what it terms its own virtual freight-forwarding network.

The carrier sharply expanded its express services in the freight arena, adding guaranteed door-to-door service and features such as online day-specific scheduling in what it calls a "simplified portfolio" for freight.

At the heart of the service is UPS Express Freight and scaled-down airport-to-airport services, UPS Air Freight Direct and UPS Air Freight Consolidated, a three-to-five day service that may include shipping on non-UPS aircraft.

UPS has long offered capacity to forwarders as common carriage service called UPS Air Cargo. But the new services suggest a more concerted effort for the heavy freight business that is moving away from combination carriers, particularly belly business, in international markets.

"This move will increase our relationship with forwarders," said UPS Spokeswoman Diana Hatcher. But the expanded service is not targeted necessarily at forwarders alone. The carrier has focused on specific trade lanes and shippers, especially medium and larger companies, such as industrial, high tech, auto manufacturing and retail consumer goods.

… Briefly

Cargo traffic for U.S. airlines, pushed by a surge in trans-Atlantic trade, grew 3.5 percent in November, the sharpest expansion in more than a year, according to the Air Transport Association. Atlantic traffic jumped 8.1 percent in November, and trans-Atlantic business was up 5.7 percent in the first 11 months of the year. International air cargo traffic overall was up 5.2 percent in November while domestic traffic grew 1.6 percent. … Northwest Airlines started daily non-stop A330-200 passenger service between Portland, Ore., and Amsterdam. … Air cargo traffic at Los Angeles International Airport grew 2.6 percent in November and was off 0.8 percent in the first 11 months of 2007. … Boeing CEO Scott Carson said he expects aircraft orders might level off in 2008, but was also optimistic some now-recovered U.S. airlines might begin to order new aircraft. … Canada's airports started a coordinated effort called "Cargo Canada" to promote Canada as a distribution point for goods moving between all of North America and the rest of the world. … Cargo traffic at San Francisco International Airport was down 5.5 percent in the first nine months of 2007. … Airgroup, a subsidiary of Radiant Logistics, formed an alliance with Omni Air International in which Airgroup provides freight forwarding and logistics support to the U.S. Department of Defense as a participant in the Civil Reserve Air Fleet. … Continental Airlines will start twice-daily 777 passenger flights from Houston and New York to London Heathrow Airport in March. … Canada's Cargojet will add two 767-200 Extended Range Freighters to its fleet. … Kraft Foods renewed and expanded its relationship with DHL, the company's primary U.S. express carrier. In addition to providing parcel express service, DHL will provide ground delivery and international express service for Kraft. … The Teamsters criticized FedEx for continuing to classify workers at FedEx Ground as independent contractors in the face of growing challenges, including a $319 million charge for penalties and back taxes from the Internal Revenue Service. FedEx says it will appeal the IRS ruling.