The continent presents a mix of great promise and major obstacles when it comes to its economic development and the growth of its air freight industry
The African continent presents a mix of great potential and major obstacles when it comes to its economic development and the growth of its air freight industry, according to Glyn Hughes, global head of cargo at the International Air Transport Association (IATA).
Speaking at the 4th Air Cargo Africa Conference and Exhibition in Johannesburg this year, Hughes highlighted that today’s Africa has a young, growing population, that provides a large labour force and consumer market. It is “mobile-connected” – although this varies by country, with Nigeria leading – and contains a number of expanding economies. The services sector is growing, and Hughes also noted a significant degree of investment in infrastructure – including foreign direct investment from China, in particular.
But there is also a prosperity gap: 18 of the world’s lowest-GDP countries are in Africa, and the continent as a whole is perceived as a place where it is difficult to ‘do business’. On top of that, some African economies are suffering from the slump in oil and gas prices, and many receive poor World Bank LPI (logistics performance indicator) ratings. Only three African countries rank in the top 50 on that index, South Africa (at number 20) being the highest-rated, with Kenya and Egypt coming in lower; however, 13 African nations fall in the bottom 20.
Against this backdrop, what are the major challenges and how could they be overcome so as to ensure African countries fulfil their potential in terms of civil aviation, and air cargo in particular?
Infrastructure
A significant issue is the sheer cost of flying to African destinations. Jan de Vegt, chief operating officer of Kenya Airways, describes Africa as having “one of the highest cost structures in the world”, with factors such as the high cost of getting fuel to an airport, expensive landing and overflight permits, and low passenger numbers in the region having a negative influence on development. A lack of government investment in infrastructure compounds the problem.
Barry Nassberg, group chief operating officer at handler Worldwide Flight Services, believes that many airport operators in Africa continue to treat cargo as an ancillary activity or an opportunity to increase revenue from land rental, rather than having an “integrated approach” to air freight. Airports, he says, need to be a willing partner in the supply chain for investment to happen.
Another aspect is the inadequacy of ground transport. Even where airport infrastructure is sufficient, roads can be in a poor state of repair in some areas, for instance, with the result that the entire multimodal transport network suffers delays and cargo can be damaged in transit.
An increase in safety through the implementation of initiatives like IOSA (the IATA Operational Safety Audit) is driven by carriers, since ultimately their customers refuse to fly with unsafe airlines, de Vegt points out. Governments follow this drive, but they can be slow to get things moving.
In terms of security, IATA’s ACC3 (Air Cargo or Mail Carrier operating into the Union from a Third Country Airport) programme to meet the requirements of this latest EU aviation security rules is seeing “positive development” in many countries, says Rainer Mueller, vice president for commercial at Saudia Cargo. “Governments, airlines and other stakeholders are all working on it,” Mueller, notes, saying he is confident of improvements in safety and security taking place in Africa.
However, Graham Perkins, vice president for sales and marketing EMEA at carrier Atlas Air, says there are still issues at smaller outlying airports, where enhanced security may be required to protect staff and crew. He highlights the importance of standards and certification for ground handlers as well as airports and airlines.
On the subject of aircraft damage, Perkins notes that there seems to be a different mindset applied to the handling of freighters as opposed to passenger aircraft. Plus, having an aircraft on the ground in Africa is “more worrisome than elsewhere” because there is a lack of adequate support to repair damage. Training and awareness are key, he says; ground staff need to see that protecting all aircraft is part of their job function.
Workforce
But Africa benefits from a lower staff turnover than that experienced elsewhere in the world, Nassberg observes, partly due to the economic realities in these countries. As a result, there is “more stability in workforce, more willingness to use training, and more emphasis on safety and security – possibly because of the environments people live in here”.
Nassberg would like to see more local talent brought up through organisations operating in the region. “It needs to be more about attracting people into the industry with a longer term view on what we invest in people – giving them a career path,” he says.
Governments
When it comes to working with the authorities, it is generally agreed that industry must take an active role in order to keep development in line with best practice, as well as encourage investment in those areas that most require it. Mueller argues that while there are regulations, “a lot is in our hands – through cooperation and collaboration between ground handlers, airlines and forwarders – and we could do better in Africa.” Kenya works very well – for instance, flowers for perishables moving to Europe – and other markets are opening up, but he would like to see this elsewhere in the continent.
De Vegt adds that there are no really good tax-free zones in Africa like those that exist in Europe or China, for instance. This would be where Amazon would set up its hub for distribution, but it depends on the political will.
Echoing that point, The International Air Cargo Association (TIACA)’s Vladimir Zubkov comments that it is vital to have facilities that are favourable to development, plus trust between industry and government. “Liberalisation will increase trade and services,” he notes. “Africa is a sensitive place; letting established airlines operate here now would be premature, but if you don’t open up, they won’t open up.”
Yet the notion of liberalisation or ‘open skies’ across Africa is tricky, as the continent displays such huge disparities on many fronts, whether economic, social or political. Harmonisation of standards and regulations would be a big first step in facilitating the flow of goods. Added to that, improvements to infrastructure – a better hub system with good road feeder services – and maybe even combining with the integrators and e-commerce providers to expand the range of services available, are also avenues to be explored, executives say. Ultimately, a more efficient and better-regulated African air transport system would allow customers to plan their processes for on-time delivery as well as faster delivery; and it could also reduce cargo crime, notes Zubkov.
But it is unlikely that this market will be able to fully develop in the global arena until its own various economies have grown stronger, its aviation sector becomes more established, and costs fall, says de Vegt. “We need to get open skies within Africa first, without being protectionist, then look beyond,” he says.
Some wonder whether it might be possible for all African nation states to work together, along the lines of the Indian model. But this is not yet likely, given the aforementioned prosperity gap and other disparities that exist today, some cargo executives believe. Mueller feels that “we should just start, or we’ll never get it going” while de Vegt cautions against making the same mistakes as China did – “becoming a manufacturer for the rest of the world and forget its own home market”.
But China hasn’t done too badly, others note.
