African air cargo navigates through Covid turbulence

posted on 4th March 2021
African air cargo navigates  through Covid turbulence

Lockdowns, curfews and capacity cuts have challenged air cargo stakeholders throughout the continent in the past year, with freighter operators profiting at the expense of passenger capacity providers and changing the profile of cargo handlers’ businesses, reports Donald Urquhart

No country or territory has been spared the agony of the ongoing Covid-19 pandemic crisis, nor the economic destruction that has come with it. And Africa is clearly no exception, with severe slowdowns or contractions apparent in several of the continent’s largest economies amid lockdowns, travel restrictions and other containment measures.

For the air cargo market, this has had obvious implications, some predicable, others less so. Take, for example, the very substantial export flower market out of hubs such as Nairobi. Flower exports – a life-blood of both the Kenyan economy and the air cargo sector – took an immediate hit, with demand plummeting as the pandemic wrought tragedy through Europe last spring.

Sanjeev Gadhia, founder and CEO of Astral Aviation, notes that exports of cut flowers out of Kenya plummeted nearly 70% due to lack of demand from March last year. But with some demand remaining and gradually recovering, this potential bright spot was hit again from April due to a lack of capacity.

While cut flower volumes have steadily risen from 122,800 tonnes in 2015 to 173,700 tonnes in 2019, Astral estimates they will come in at about 50,000 tonnes for 2020.

As an all-cargo airline, Astral found itself – like other maindeck operators in the industry – in a tricky but nonetheless relatively sweet spot as demand for cargo uplift soared. But the standard playbook was suddenly rendered irrelevant.

“Astral continued to operate its scheduled flights during the pandemic despite the significant reduction in volumes of cut-flowers; however, the demand for vegetables resulted in most of the flights being operated with very high volumes into Europe,” notes Gadhia.

Perishable demand surge
Demand surged, and continues to be robust, for perishable fruit and vegetable exports out of East Africa to Europe and the Middle East, as consumers around the world clamoured for fresh produce from their local supermarkets. This translated into soaring demand for freighter services, particularly given the dramatic reduction of passenger belly capacity.

But it wasn’t just perishables that were driving up demand – and with it, yields; it was personal protection equipment (PPE) and a whole raft of healthcare cargo. “Our flights continued to operate on our scheduled network, while we increased capacity and offered priority for PPE and related COVID materials, which enabled us to distribute the products to over 42 countries in Africa,” says Gadhia.

And as the capacity crunch became even worse, carriers with maindeck fleets took some solace from their ability to serve this demand. “We were very fortunate to acquire additional freighters during the pandemic and launched new routes – which include the Nairobi to Johannesburg, Lusaka and Maputo routes that continue to operate to date,” says Gadhia.

For other carriers in the African market, much depended on the makeup of their fleet. Ethiopian, with its substantial freighter fleet, was better positioned to supply capacity to meet the surging demand than many others – even to the extent that in November 2020 it kicked off a transpacific route, extending from Incheon to Atlanta via Anchorage with a B777-200F.

The innovative air cargo industry solution to press grounded passenger aircraft into all-freight aircraft, or ‘preighters’, gradually spread across the globe with carriers like Ethiopian and Kenya Airways joining the ranks.

Kenya Airways took this passenger innovation a step further, as others around the world had earlier begun implementing, by removing seats on the main passenger deck to boost the cargo carrying capacity.

What was novel in Kenya Airways’ approach however, was to reconfigure two B787 Dreamliners for cargo missions. The fact Ethiopian had been given the green light by Kenyan authorities to deploy extra freighter capacity on the Nairobi-Amsterdam route to help move cut-flowers may well have been the spark for this world first.

Indeed, as Astral notes, the flower industry has recovered somewhat in 2021, reaching nearly the same levels of exports as 2019 in the same period, along with the exports of fresh fruits and vegetables from Kenya – which have surpassed pre-Covid levels, as European consumption continues to grow as a result of ongoing lockdowns.

Lockdown pain
One of the key impediments for the air cargo supply chain in many African countries was the implementation of strict curfews in much of the continent, as governments put restrictions on public movement. Applied universally, there was typically no slack cut for logistical movements.

As Malcolm Tonkin, general manager for cargo (South Africa) at Worldwide Flight Services (WFS) highlights, the lockdown hit hard. South Africa’s perishable exports are flown almost exclusively out of Cape Town, and the hard lockdown in South Africa – which stretched from end of March last year right through until September – hit Cape Town’s significant tourism business and associated belly capacity, as the airport was completely closed during the lockdown.

Trucking to Johannesburg was the only option, but both limited trucking capacity and uplift out of Joburg hampered those efforts. “Our local market was flooded with very good export-quality perishables – which was good for (local) consumers, but not the rest of the world, and not good for our economy,” Tonkin notes.

Cape Town reopened in October 2020, but with significantly reduced schedules and capacity. And while restrictions eased off a little bit in both Cape Town and Joburg, it was short-lived because at the end of December the country’s ‘second wave’ saw the government re-introduce curfews. And with that, “civil aviation decided to match the flying times with the curfew hours, so no aircraft movement was allowed between 9 PM and 6 AM”, he says.

Daytime-only handling
The end result is that cargo handling is now solely a daytime operation. This, he notes, has required some adjusting, as “we have flights arriving and departing very much straight after one another”, and this creates outbound backlogs. While pre-Covid times saw staggered flights through 24 hours, previously early departures from South Africa have now moved to midday. This has also had a major impact on shift scheduling.

The curfew problem also hit Astral, forcing it to re-examine all its ground processes during the pandemic as the Kenyan government had initially imposed a 19.00 – 05.00 curfew. This was later extended to 22.00-04.00, which remains in place to date.

“During the first curfew, we had to work with our ground handling agent so that the operations continued during the day, while having a smaller shift during the curfew. This worked very well as we did not experience any service failures in terms of pre-flight preparations,” says Gadhia.

For Nairobi’s main cargo hander, Siginon Aviation, they too had to grapple with the drastic changes in airline scheduling and capacity. Jared Oswago, acting general manager at Siginon, notes that among the adjustments were the conversion of passenger belly cargo to freighters, growing numbers of passenger aircraft charters carrying loose cargo on the maindeck, and reduced perishables volumes.

The cargo handler, like many in the industry, took the opportunity to improve its business processes, infrastructure, and staff training.

“At Siginon Aviation, we proactively focused on keeping our costs extremely slim; this also coincided with adoption of solar as an alternative energy source. There was also a move to integrate our processes, and automate more of the processes to ensure seamless and uninterrupted service delivery,” says Oswago.

Other measures were logical outcomes from the pandemic, such as investing in workplace safety for Siginon’s staff, customers and other stakeholders using its premises. It also undertook internal campaigns to refresh the Covid-19 safety message to all staff.

The third wave
The world has clearly adopted new terms into its everyday lexicon. ‘PPE’ is well understood, as is the term ‘lockdown’; and we’ve all come to grasp a basic understanding of virus variants. And then there are the ‘waves’.

Many countries are now experiencing a ‘third wave’ of viral assault. South Africa now has its own eponymous variant and with it a third wave hitting in late December, causing even more restrictions. This, unfortunately, saw WFS temporarily lose one of its largest customers, Emirates, which pulled out of Cape Town in mid-January because of severely flagging passenger load factor demand, although it is scheduled to return.

Emirates is still flying into Joburg, Tonkin notes, and other carriers such as Qatar and Turkish continue their services to Cape Town.

A silver lining
While there is no shortage of doom and gloom, not all the news is grim. WFS scored a substantial win with a cargo handling contract for Lufthansa and Swiss WorldCargo’s air freight operations at Joburg. As part of this, WFS acquired the lease on a further 3,600 sqm of warehouse capacity in Johannesburg, purchased additional cargo handling equipment, and increased its workforce.

John Batten, executive VP of cargo for EMEAA at Worldwide Flight Services, says it’s a move that the carrier group had been contemplating for nearly 10 years. “Because of Covid, they took the step to do it and we were in the right place at the right time, or coming in at the right offer,” he says.

This highlights an interesting aspect in the ongoing turmoil of the pandemic environment: the harsh impact on companies across the air cargo supply chain will inevitably result in some rationalisation, including among cargo handlers.

“When you look at all the local carriers in these markets, they’re decimated as well,” says Batten. “And the foreign carriers coming in are reduced because of Covid, and passenger volumes are minimal, so the outbound business in certain places has been decimated because of the cancellation of flights.” This is true the world over, he notes.

“There have been a number of cargo-only flights that are supporting some of the business, but that’s not going to keep them going in the longer-term; so we’re very keen to step in and take over and work in partnership, or take over the business,” he says.

Most would agree that consolidation has been needed in a number of segments of the air cargo supply chain for some time, something the Covid crisis may just spur. The African ground handling market, on the other hand, doesn’t need consolidation as much as it needs competition and liberalisation. And here too, Covid might just foster that change.

Another positive note for WFS is the fact the changing demand patterns have reshaped the cargo handler’s business.

“We’ve changed over the last 6-8 months,” notes Batten. “We’ve changed the profile of our business from being dominated by the passenger carriers with a few freighters to having a lot more freighters coming in.” This is a strength in the business, he says, because they are not as dependant on passenger traffic as they used to be.
Outlook

Astral says it remains cautiously optimistic in 2021 despite the threat of the new variant which has resulted in a severe lockdown in South Africa. “The first half of 2021 will be a challenge as passenger flights have not fully resumed, which will result in capacity challenges for air cargo,” says Gadhia. “But we remain bullish that the second half of 2021 will result in better levels of air exports into Europe while remaining optimistic that African economies will start to rebound with the arrival of the much-awaited Covid vaccine.”

In a similar vein Siginon sees 2021 as a recovery year, albeit fairly modest, with the industry needing to embrace the ‘new normal’, as Covid-19 will remain.

Likewise, for WFS the outlook is for numbers closer to 2019 figures; but Tonkin cautions that change is a constant, citing the situation of carriers. “One carrier will tell us they’re doing three flights a week and two days later will get notice that they’re going five days a week; and then a week later, they are modelling again,” he highlights.

Vaccine handling
With the global rollout of Covid-19 vaccines now underway, a key focus for the air freight industry will clearly shift to this important commodity.

As Astral’s Gadhia notes, 2021 will see an increase in demand for vaccine charters from the second quarter, as Africa starts to get its allocation. He does caution, however, that the new variant in South Africa may cause some disruption to the vaccine flow, as countries re-evaluate their vaccine strategies.

Siginon’s Oswago says he is fully confident that its cold store facility is well equipped for the handling of the COVID-19 vaccines. “We are ensuring the facilities are refurbished and ready to receive the vaccines at the right temperature,” he adds.

And in South Africa, Tonkin notes that investments for pharma handling were coincidentally done prior to the pandemic, and as a result its facilities in Johannesburg and Cape Town are both GDP Pharma accredited, and capable of handling Covid vaccines in the +2 to +8 degree Celsius range, but not -70 Celsius. He reckons this particular vaccine requiring a product temperature of -70 Celsius to be maintained is not ideal for the African environment, given the difficulty in maintaining proper temperatures in the field.

But he says biggest challenge in Africa will likely come not from the storage of vaccines, he says, but from keeping them secure – because they will become a high-risk commodity on the continent.