Hot and cold winds

posted on 6th June 2018
While parts of the Middle East remain troubled by political and economic uncertainty, much of Africa is experiencing a growth spurt, reports Phil Hastings

Last year was a challenging one for parts of the Middle East and North Africa, with political instability within the region adding to a generally uncertain global economic environment. But the latest global traffic figures indicate that Middle East and African air  cargo markets have held up surprisingly well, and performed better than many other parts of the world.

Analysis by Iata shows that Middle East carriers managed more than 8% growth in 2011, as the region’s ambitious airlines continued their capacity expansion programmes, although the region’s airports saw volumes slide last year by around 1%, broadly in line with the global average, according to figures from ACI. African airlines experienced a downturn of 1.2% in 2011, although the region’s airports achieved volume growth last year of 10.6%, the strongest performance among all regions worldwide.

Africa saw particularly strong figures in the final months of the year, with volumes through its airports up by 27% in November, thanks to “the burgeoning economies of southern Africa,” with Johannesburg in South Africa, for example, posting a gain of 47%.

Rafael Echevarne, economics director of ACI World, says that despite the overall slowdown in global air freight in Asia Pacific and Europe, key trading blocks in Africa, Latin America and the Middle East seem to be less affected by the continuing economic risks in the Euro area.

The figures are encouraging for global handlers such as Worldwide Flight Services (WFS), which entered the sub-Saharan African market in 2009, and which plans to expand its footprint in South Africa this year. Alex McRoberts, WFS’s senior vice president for Africa, says: “We feel sure that air cargo will continue to see growth in key locations across Africa in 2012. South Africa, in particular, being the largest economy in Africa and with its record of political and economic stability, has perhaps become the favoured starting point for foreign investment in Africa and remains a growing economy providing many opportunities. It therefore provides WFS with an excellent platform for trading across Africa.”

WFS’s cargo terminal at Durban’s King Shaka International Airport was set up in partnership with Dube Tradeport − the commercial arm of the local KwaZulu-Natal Province and the developer of the new airport complex. The 15,800 square metre cargo terminal, which has an annual capacity of 100,000 tonnes, opened for business in mid 2010, and is part of an ambitious economic development strategy for the region.

McRoberts says WFS Africa is now in the process of establishing air cargo handling operations at two more leading South African airports, Cape Town and Johannesburg, during the course of this year.

The prospects for East and Central Africa’s largest air transport hub, Kenya’s Jomo Kenyatta International Airport (JKIA) in Nairobi, also appear to be promising, with the country having apparently largely recovered from the political unrest experienced in 2007 and 2008. The airport saw its overall cargo throughput increase by close to 7% last year to around 320,000 tonnes, with increases in both export and import traffic.

According to William Simbah, cargo commercial manager for Kenya Airports Authority, volumes through JKIA last year were not impacted as much as many other airports around the world by either the uncertain global economic picture or regional political upheaval.

JKIA’s overall cargo figure is dominated by Kenya’s export business, particularly fresh cut flowers and perishable produce traffic to Europe, the Middle East and other markets worldwide. In 2010, for example, the airport handled 265,000 tonnes of exports compared with just 31,000 tonnes of imports.

“JKIA was not affected much by the unrest in certain other parts of Africa and the Middle East last year because Kenya generally does not have much trade with those countries, except for Egypt. But even that cargo moves more by ocean than air,” says Simbah.

Simbah expects 2012 to bring further increases in cargo volumes, boosted by recent infrastructure developments at the airport − such as a US$18 million airport apron expansion, completed at the end of 2010, which boosted the number of parking stands for large wide-bodied aircraft from three to eight.

However, he also points out that Kenya is due to hold presidential and parliamentary elections towards the end of the year. “Traditionally in election years, there is a bit of a slowdown in Kenyan business, particularly when it comes to imports, as many investors like to adopt a wait-and-see approach regarding further investment. So that could have a bit of an impact in 2012.”

One of the most significant potential new projects at JKIA is the anticipated establishment of a free economic trade zone at the airport, which would allow products to be flown in, processed and then moved on to other destination countries. Similar ideas have been mooted in the past without coming to fruition, but on this occasion, says Simbah, the Kenyan Government appears ready to allow such a development to happen.

“The stumbling block previously was the fact that we didn’t have an adequate legal framework to guide the processes,” he adds. “Once such a law is in place, there will be no going back – and we expect to see that happen very soon.”

Another potentially important development in the context of JKIA’s cargo hub aspirations, says Simbah, involves national carrier Kenya Airways’ recent addition of a long-haul B747 freighter to its fleet and planned introduction later this year of two B737-800Fs for regional operations across Africa.

Expanding on the significance of those moves, he explains that Kenya Airways has to date relied primarily on bellyhold space to move cargo. “The arrival of the B747F, which will operate out of Nairobi to Europe (Amsterdam), the Middle East (Sharjah) and China (Guangzhou), will boost international cargo volumes through JKIA. The plan to bring in the two B737Fs, which are expected to mainly serve African markets like Congo, Sudan, Rwanda, Burundi and Zanzibar, will also make a major difference and further strengthen the role of the airport as a cargo hub for the region.”

Meanwhile, Kenya Airports Authority is set to consolidate the routing of all export cargo at JKIA through the airport’s transit sheds. In the past, explains Simbah, Kenyan freight traffic expanded so quickly that JKIA’s cargo terminal was not able to keep pace with the growth. As a result, the government allowed certain companies to work in a ‘specialised freight area’, which includes packing houses where flower and fresh-produce exporters have facilities to prepare cargo for shipment.

“Many of those companies have been moving their air freight directly to a gate called Gate 14. But a decision has now been made to change that system so all the traffic is channelled through the transit sheds. Apart from enabling the recouping of the investment in those facilities, that change will also able us to harmonise the handling processes,” Simbah says.

Meanwhile, the Middle East’s biggest hub, Dubai International Airport, handled 190,000 tonnes in December, 1% more than in the comparable month the previous year, although that was not sufficient to prevent the 2011 full year figure ending up 1.5% down on 2010 at marginally under 2.2 million tonnes. But Andrew Walsh, vice president for cargo and logistics for Dubai Airports, points out that this figure does not include traffic handled through Dubai’s new airport, Dubai World Central (DWC). “There was also about 100,000 tonnes through DWC, so the combined Dubai air cargo figure actually increased last year,” he observes.

Overall, while the Middle East air cargo market as a whole “has probably slowed down from what we would have forecast in 2008, there is still growth”, he adds.

As far as Dubai is concerned, Walsh reports he is currently getting mixed feedback from industry contacts regarding likely global air cargo business trends this year.

“Some forwarders are telling me they still expect growth this year, some are saying they see business being flat and some are saying it will decline. So, overall, I think people are not sure yet what is going to happen,” he states.

“Our local position here in Dubai is that we are still forecasting modest growth for this year, based on expansion of the Emirates fleet, flydubai entering the cargo business [from the beginning of 2012] and an increase in the number of freighter operators at DWC.”

Similar cautious optimism is expressed by Yousif Hanafi, senior cargo manager for Bahrain Airport Services (BAS), the cargo handling and airport support services provider at Bahrain

International Airport (BIA), following a disappointing 2011.

BAS, which has a custom-built 19,000 square metre cargo warehouse at that airport with an annual handling capacity of 300,000 tonnes per annum, last year experienced a near 12% drop in total cargo and mail traffic, to 202,000 tonnes.

“BIA’s cargo volumes have been adversely affected by recent events in the Middle East and the global economic slowdown,” admits Hanafi. “Growth is expected to resume over the coming months as the situation improves, although we don’t anticipate the same level of growth seen in pre-crisis days for some time to come.”

He points out that in addition to handling traffic for Bahrain itself, BIA is also a well-established transhipment centre for cargo moving into/out of neighbouring Saudi Arabia, the region’s largest economy, and for international multimodal operations such as sea to air and air to road.

Hanafi suggests regional political issues and developments could have a significant but mixed impact on the longer-term prospects for cargo volume growth. “We anticipate growth in traffic to markets like Iraq and Libya, whereas volumes to Iran could be adversely affected by increased trade sanctions.”

Nonetheless, BIA is currently in the process of finalising a master plan for airport expansion and development that includes construction of a cargo village, says Hanafi, to take advantage of sea-to-air and air-to-road transhipment traffic possibilities “given the airport’s close proximity to the newly developed industrial park and sea port”.

Dubai has also seen recent growth in sea-air business, particularly commodities coming in from Asia by sea, reprocessed in the free zones and then air freighted on to final destinations elsewhere in the region, Europe and other parts of the world, and is planning further significant developments designed to boost its cargo business activities.

While the Emirate of Dubai itself has clearly had its confidence knocked by the global financial crisis and recession of late 2008, as an airport and multimodal transhipment hub it is still seen as having tremendous potential. Dubai Airports last year launched its ‘Strategic Plan 20/20’, which covers all projected developments, passenger and cargo, through to 2020. In the case of Dubai International Airport, this includes consolidating the currently separate express and perishables handling facilities.

“We have a perishables facility that has some excess capacity so we are going to put the two products together because it makes sense to have them in one building,” explains Walsh. “That will free up some real estate to enable us to expand our (43,600 sq metre/annual 1.2 million tonnes capacity) Cargo Mega Terminal, which is Emirates’ main hub facility.

“The consolidation of the two products will happen during 2012 and expansion of the Cargo Mega Terminal will start probably early to mid 2013, with a planned delivery period of a year to 18 months. There will also be a number of additional smaller developments designed to improve efficiency in the other facilities we have.”

The first phase of DWC, which initially opened for cargo-only operations in mid-2010 and now also handles business and VIP jets, has the capacity to handle up to 250,000 tonnes of cargo a year but Walsh says the building concerned can quickly be expanded to increase that figure to 600,000 tonnes.

Currently, DWC has around 22 freighter operators signed up to use the airport, “of which we regularly see about 19”, adds Walsh. “We don’t yet publish the actual cargo figures for DWC, because in relative terms they are very small numbers, but it is now running at around 100,000 tonnes a year. To put that in a regional perspective, DWC is already up with airports like Muscat in Oman and Amman in Jordan. Amman was number nine on the regional list of cargo airports in 2010, so we’d put DWC in at about 10th position now, only18 months after opening.”

As far as further expansion of DWC is concerned, cargo volumes are expected to increase “steadily”, says Walsh.  “We have probably got the initial tranche of airlines which were looking to put sea to air traffic through DWC, and the next batch of carriers may be a little more difficult to encourage across to that airport.

“That said, we do have a plan to build at least one further facility at DWC which should be operational by the end of 2013, and the initial forecast for that is an annual capacity of around 700,000 tonnes. So by the end of 2013, we will probably have close to a million tonnes of capacity available at DWC.”