Innovative tracking technology will keep copycats at bay

Originally reported by The Australian: 5 Dec, 2014

QANTAS Freight and partner Peloris Global Sourcing have combined to milk a unique opportunity in China they believe will improve with the introduction of the free-trade agreement with Australia.

The partners worked for two years to develop a streamlined way of getting fresh milk into China quickly enough to give it a shelf life that would allow it to be sold in supermarkets. They developed special packaging and handling procedures for transporting fresh milk that would meet the requirements of Chinese authorities. The partnership exported 50,000 litres in the first quarter starting June and increased that to 110,000 litres in the second quarter and is expecting to double the volume each quarter for some time.

"The reason it’s possible is that we’ve managed to present a solution to the Chinese authorities that meets their testing and health and safety regulations … which has meant they've changed their processes to allow the milk to be cleared in a week," said Peloris managing director Peter Verry. "Previously it was three weeks and, of course, the shelf life of fresh milk is about 14 to 20 days."" The international export consulting company's cold chain pipeline solution includes quality assurance and handling controls to meet or exceed China's food health and safety standards.

The product is maintained at an optimal temperature at all times during transit and uses an innovative product security system that identifies and tracks individual units from the farm to consumer. There is a strong desire for Western premium food in China which, along with a mistrust of local production processes, has led experts to predict a potential market for fresh milk of 10-20 million litres a year. "But it could go beyond that," Mr Verry said. "It will take time because with a new product in China, there’s got to be an awareness of it. There’s a huge amount of UHT milk sold into China from overseas so there has to be some education of the public to understand the difference between UHT milk and fresh milk. So that’s happening, but 20 million litres a year would not be an exaggeration at this point."

There now four producers qualified to ship fresh milk to China. Qantas has already transported 30 bulk shipments this year, totalling 220,000 litres and Qantas Freight executive general manager Alison Webster said the airline had the capability to be at the front line of demand growth for fresh milk. “We’ve got both belly space on our daily Sydney-Shanghai services that’s being used to carry this milk,’’ she said. “But we’ve also got our 747-400 dedicated freighters which do a Sydney-Shanghai leg four times a week out of Australia. “And it absolutely needs to be air freighted because that’s the fastest and most viable way we can get in there because of that short shelf life.

The milk sells for $8-$10 a bottle, giving locals ample motive to print fake labels and making necessary the scanning system, which is accepted by the WTO, the OECD and Chinese authorities. The milk is flown in to Shanghai but Peloris takes it overland to Beijing and clears it to get it on supermarket shelves in the capital the same time it hits the shelves in Shanghai.

Qantas helps with its own local expertise. "We have a dedicated freight manager based up in Shanghai and he makes sure the operation runs absolutely smoothly and he’s very well connected in the local market," Ms Webster said. The companies expect the trade pact in China will boost commerce with Australia and produce opportunities beyond milk. "Milk’s the beginning of other Australian produce that is going to be much marketable in China," Ms Webster said. "With the signing of the free-trade agreement, the dairy tariffs will be phased out over the next four years. I think is going to grow quite quickly." Ms Webster said the airline wanted to partner with more Australian producers and manufacturers to get other Australian produce to China.

Mr Verry said Peloris was working to get chilled beef and seafood into China. However, he cautioned that the free-trade agreement would not make it easier to get products into China. "Actually, it doesn’t make it easier, but it does make it more affordable," he said. "They don’t magically waive the regulations just because of the free trade agreement, it’s more about the tariffs."

Originally reported by the Australian: 5 Dec 2014