The Middle East and Africa present attractive air cargo development opportunities, with Gulf countries building on their pivotal role in global markets and North Africa emerging as the world’s fastest-growing air cargo subregion this year, reports Megan Ramsay
The Middle East and Africa account for 13% and 2%, respectively, of the total global air cargo market, according to the International Air Transport Association (IATA), with both regions presenting attractive air cargo development opportunities, despite various challenges, and North Africa recording the highest growth this year among any of the world’s sub-regions.
Today’s air cargo markets are “unthinkable without the Middle East as its central jigsaw piece, recombining trade flows from all continents”, says Dirk Goovaerts, CEO Continental Europe, Middle East and Africa, and global cargo chair, at handler Swissport.
Air freight volumes carried by Middle East-based airlines fell 5.6%, year on year (YoY), in the first half of 2023, IATA figures indicate, although it was more or less flat in June. Figures from WorldACD indicate that volumes from the Middle East and South Asia origin region were down 4.2%, YoY, and from the Gulf subregion were down by 13%. But Dnata’s SVP for UAE cargo and global cargo strategy, Guillaume Crozier, says the Middle East market is growing, especially in Dubai. “A key spearhead is Dubai’s multimodal capability with its port and airport, which offers the market many options,” he notes.
Dubai Cargo Village, operated by Dubai Airports, has been a key centre for air freight developments in the region, and the Dubai South development – including the Dubai World Central (DWC) airport – has been designed to accommodate increased cargo operations and promote logistics activities.
In terms of verticals in Dubai, pharma and perishables are strong, and e-commerce volumes are up. “Although it’s mainly still transhipment cargo, we’re seeing more final destination imports in things like consumer goods, automotive, foods and medicines,” Crozier says.
Dubai is also focusing more on increasing its own production. “In terms of exports, there are more and more products made or transformed in Dubai – such as milk, food grown on vertical farms, textiles imported from Bangladesh and made into clothing for export,” Crozier observes. “Exports are unusually high for a Middle Eastern country, at 40% of total volumes.”
The Kingdom of Saudi Arabia, meanwhile, is opening up and positioning itself as a prominent logistics hub connecting the East and West. There is strong demand on key lanes such as Dubai, Cairo and Istanbul to Saudi Arabia, and the country is working to attract global companies such as Apple, Samsung or Proctor & Gamble to establish their regional hubs there.
Key developments such as Riyadh and Dammam cargo villages “exemplify the Kingdom’s commitment to stimulating import and re-export activities within its borders”, highlights Mansour Alasmi, VP of network and revenue management at carrier Saudia Cargo. “Saudia Cargo is at the forefront of this transformation,” leveraging its network “to enhance transit capabilities, amplify demand, and unlock cross-trade opportunities”.
Improved Saudi-Iran relations
Saudi Arabia has also restored its diplomatic and bilateral relations with other major players in the region like Iran, Turkey and Syria.
“Seven years after severing relations, Iran and Saudi Arabia agreed last March to restore ties and to reopen their embassies in Tehran and Riyadh. This is a major milestone that will certainly impact trade flow in the region for the better,” Mansour Alasmi notes.
Elsewhere in the region, Qatar Airways Cargo (QR Cargo) serves over 20 passenger and freighter destinations in the Middle East from its Doha hub. The carrier recently launched new freighter services to Riyadh operating Boeing 777 freighters up to four times a week, and to Dubai twice a week. QR Cargo also flies to 21 destinations in the Americas and recently increased its Chicago freighter flights from 10 weekly to 11 weekly in addition to a daily passenger service.
The airline also serves over 40 European destinations and over 50 in Africa. Having launched its Kigali (Rwanda) hub in March with twice-weekly B777F services, QR Cargo has since added a weekly service from Doha to Kigali via Istanbul as well as intra-Africa services between Kigali and Lagos (three times per week), Kigali and Kano (once a week) and Kigali and Johannesburg (twice a week), all operated by an Airbus A310. In July, RwandAir (now part-owned by Qatar) started the first ever direct flights between Kigali and Paris, operating Airbus A330s three times a week on the route.
Regional variations in Africa
As an origin region, tonnages ex-Africa were stable (-0.2%), YoY, in the first half of 2023, WorldACD analysis indicates, although there were significant differences within the continent. Central, East and Southern Africa saw outbound tonnages decline by 8%, 6%, and 4%, respectively, while North Africa was among just a handful of global air cargo origin subregions to record growth in the first half of 2023, with tonnages up 21%, YoY – by far the highest rate of growth among any of the world’s air cargo subregions during this period.
IATA analysis indicates that air cargo volumes carried by Africa-based carriers fell by 2.8%, YoY in June, and by 4.4% in the first half year. IATA highlighted that growth on the Africa to Asia trade route slowed significantly in May from 18.5% in April to 11%, “possibly due to the impact of the conflict in Sudan since mid-April”.
For instance, fresh meat exports from Sudan to Saudi Arabia have suffered from the war in Sudan – but strong demand remains on other key export lanes such as Nairobi–Saudi Arabia/Europe and Addis Ababa to Saudi Arabia where the majority of goods are perishables like flowers, fruits and vegetables, says Mansour Alasmi..
Indeed, agriculture and livestock farming industries across Africa offer high volumes of perishables exported outside the continent, mainly to the Middle East and Europe. For example, Goovaerts says Swissport in Tanzania continues to handle “record numbers” of fresh meat and fish exports to the Middle East.
Belly capacity lift for perishables
Perishable cargo traffic in the Middle East and Africa is supported by lower-cost airlines returning to the skies post-Covid. The segment looks set to retain its importance for air cargo in the coming years as food security continues to be a major challenge.
At the beginning of 2023, Swissport expanded its cargo facilities in Kenya, where the handler now boasts a new 750 sqm interconnected cold storeroom with direct access from the perishables hub to the airside. It can hold up to 110 aircraft pallets, equivalent to a load that fits on just over three B747 freighters, Goovaerts says.
Swissport’s facilities in Nairobi are IATA CEIV Fresh and IATA CEIV Pharma certified. Its sites in Accra and Algiers have undergone substantial refurbishments and obtained a Pharma Center label.
More recently, Jomo Kenyatta International Airport gained direct B757F flights to Tel Aviv, launched by Astral Aviation in June. The service reduces transit time for Kenyan perishables (which were previously routed via other hubs such as Istanbul, Addis Ababa and Dubai) bound for Israel.
The flights began at a weekly frequency, but Astral intends to double that and switch to a B767F. El Al Cargo and Challenge Airlines are feeding African cargo from their own networks to Astral’s hub in Nairobi via Tel Aviv.
Challenges for South Africa
Not all African countries are enjoying such positive developments though; South Africa is a case in point. “The contracting manufacturing output within the top industrial economies has resulted in weak exports for South Africa and ACSA in particular,” says Charles Shilowa, group executive strategy and sustainability at Airports Company South Africa (ACSA).
First-quarter trade statistics indicate a 5% increase in exports, but this follows a double-digit devaluation of the South Africa currency. “This indicates a real contraction in exports as the increase is largely influenced by a weaker currency,” Shilowa explaines.
Exports of minerals, base metals, chemicals, raw skin hides/leather and vehicle components have all weakened. ACSA saw 4% contraction in outbound air cargo tonnage for the quarter.
Inbound tonnage through ACSA’s airports dropped by 5%, whilst South Africa’s imports (measured in trade value) increased by 22% over the same period. Maritime freight has fared better than air cargo as forwarders have been moving their consignments from air to sea.
Imported commodities such as rubber, textiles and footwear have reduced significantly.
Improved connectivity for sub-Saharan Africa
Furthermore, stringent tax and security regulations, and improved global connectivity to large parts of sub-Saharan Africa, continue to erode transhipment air cargo through ACSA’s airports.
The region is still facing ongoing challenges resulting from the Covid era, too, with Africa appearing to be suffering rather more than the Middle East. The availability of qualified, skilled resources is one problem – but not the only one.
“We are also seeing handling partners across the network facing challenges in the procurement of equipment and consumables, including wood and plastics, and even gas to power forklifts,” says Thomas Schürmann, head of cargo operations and delivery at Etihad Cargo, which serves over 68 destinations worldwide from its Abu Dhabi hub.
Africa low-yield factor
The biggest challenge Menzies is seeing is reduced cargo volumes. The initial surge after Covid has fallen and, year on year, volumes are down for both imports and exports. Airlines are favouring other routes and regions that are providing higher yields than flying into Africa.
Connectivity and the global geo-political landscape are the biggest challenges in South Africa. The conflict between Russia and Ukraine has resulted in a disruption of supply chains that continues to impact South Africa’s – and ACSA’s – access to global markets.
In addition, Johannesburg’s OR Tambo International Airport (ORTIA), which accounted for over 85% of ACSA’s air cargo throughput prior to the pandemic, is still struggling to regain its pre-Covid connectivity.
According to Shilowa: “There is a significant part of ORTIA’s capacity yet to be restored, such as direct links to Hong Kong, Brazil and Saudi Arabia. A large part of the existing international route network is also operating below pre-pandemic levels.”
The resurgence of Covid-19 in Asia is dampening passenger demand, delaying the resumption of Cathay Pacific services between Johannesburg and Hong Kong – “a huge cargo route for ACSA and ORTIA in particular”, Shilowa says.
Investing in tomorrow
ACSA is working to restore and enhance links to key source markets. “Part of our strategy is to develop a dedicated freighter route network, by developing direct connectivity between our airports and global air cargo hubs,” Shilowa says. “In some of our target market, our plan is to develop new passenger routes, which will improve air cargo connectivity, through the belly freight capacity.”
Pre-Covid, South African Airways (SAA) had extensive local and regional freighter operations, which were discontinued due to the airline’s restructuring. Suid Cargo Airlines will fill the gaps, thereby helping ACSA to return to pre-pandemic air cargo volumes, Shilowa explains.
Overall, the Middle East and Africa are benefiting from increased investment, driven by higher demand and optimism in the wake of Covid – which highlighted the importance of a resilient, efficient air cargo supply chain for the global economy.
Crozier says: “The UAE government is investing massively in digitalisation and has a big roadmap for it.”
Dnata is about to implement the One Cargo system from IBS Software, which will increase data touch points and compute data. It will provide near-real-time data that the handler can share with its customers and optimise logistics flow. For instance, the appointment/dock management system can optimise slots and throughput efficiency.
“We are already semi-automated with ASRS (automated storage and retrieval system) and PCHS (pallet and container handling system) in our warehouse,” Crozier adds.
At Menzies, a new warehouse management system will be rolled out across the handler’s global cargo network.
“This new system will make us more responsive in meeting industry changes such as One Record, a new standard for data sharing, along with the further rollout of PLACI (Preloading Advance Cargo Information) globally,” outlines Charles Wyley, executive vice president Middle East, Africa and Asia at handler Menzies Aviation.
“It will enhance business intelligence and provide us with a more detailed and insightful understanding of our network performance than ever before. We are focused on the rollout and the way we train employees to sustain this new system so that we can reduce employee turnover and open new stations in a more efficient and effective manner than has previously been possible,” he says.
The system will also allow customers to self-serve more effectively, for instance when booking slots. Other innovations at Menzies include using robotics to support warehouse inventory management.
To mitigate potential risks of labour shortages, especially in warehouses, Etihad Cargo is driving automation as part of its ongoing digitalisation journey. One development is the carrier’s deployment of AI-powered processes in areas such as load planning.
Schürmann says: “While each load plan takes approximately 30 minutes to prepare manually, we will reduce this to one minute through automation, making the entire process more efficient in terms of capacity and time spent.”
Etihad Cargo is also using robotic process automation (RPA) to automate manual labour processes.
Schürmann adds: “We’re developing a state-of-the-art digital solution – Sales Cockpit – to optimise the customer experience. This first-of-its-kind sales optimisation tool will analyse data and, using sophisticated custom-built algorithms, automatically generate recommendations on how we can add further value to our customers and help them achieve their cargo business objectives.”
QR Cargo launched its customer portal, Digital Lounge, in October 2022 and relaunched its website last year.
“In 2023, we have been taking this journey forward by adding features beyond booking such as allotment dashboard for customers, auto stock replenishment, credit card payment with more focused enhancements tied in with clear operational strategies to complete the journey of cargo till its final destination. More digital solutions and new products are being developed under the Next Generation strategy,” says Qatar Airways’ senior VP for cargo sales and network planning, Liesbeth Oudkerk.
Across the Middle East and Africa, e-AWB has been widely adopted. Saudia Cargo has achieved a 90% e-AWB compliance rate, Alasmi says, and the carrier has successfully implemented e-AWB at African stations including Nairobi, Addis Ababa, Kano, Mauritius and Dar es Salaam.
With the Middle East now well established as a key link in global supply chains, Abu Dhabi also has big plans for growth. It has positioned itself as a manufacturing, pharmaceutical and life sciences, logistics and express hub, both for the region and internationally, with plans to launch a state-of-the-art general warehouse in the future.
“Recent developments have included the launch of a state-of-the-art cool chain facility at Abu Dhabi Airport,” says Schürmann. Established in partnership with Etihad Airport Services Cargo and Abu Dhabi Airports, the new pharma facility will double Etihad Cargo’s cool chain capacity, enabling the airline to carry and accommodate an additional 50,000 tonnes of cool chain commodities. The pharma hub will support the growing global healthcare and life sciences demand.
Etihad Cargo is already anticipating further growth of Abu Dhabi Airport in the coming years and is working on plans for a new global cargo terminal.
In Doha, Qatar Airways Cargo’s existing fully automated warehouse at Hamad International Airport was built to handle 1.4 million tonnes of cargo annually; however, the carrier is handling around 2 million tonnes annually.
“To cater to our growth and future demand, we are investing in a brand new, state-of-the-art Cargo Terminal 2 with an additional capacity of 3.4 million tonnes,” Oudkerk says. “This cargo facility of the future will be a safe, smart and green facility relying heavily on technology and automation for its material handling. It will offer faster storage and retrieval and cargo processing, enabling us to offer shorter connection for the growing demand of transit cargo.”
Saudi Arabia has also expanded its infrastructure in recent times, for instance with the inauguration of a free zone at Riyadh Airport, streamlining the re-export of cargo to neighbouring countries. The emergence of sea-to-air corridors is set to enhance direct import volumes, further solidifying the Kingdom’s position as a hub of east-west connectivity, highlights Saudia Cargo’s Mansour Alasmi.
Optimism and ambition are also clear to see among Africa’s air cargo community, which is looking beyond the immediate challenges.
For instance, a new cargo precinct is planned for ORTIA. Able to accommodate 750,000 tonnes per annum, the development will include general cargo warehouses, express and specialised cargo handling facilities and freight forwarders’ warehouses.
Swissport’s Goovaerts believes that while cargo volumes have seen a slight drop this year compared to 2022, this should be seen in the context of the record-breaking volumes 2021 and 2022 brought, and any apparent slowdown or contraction in demand now is simply “an inevitable normalisation back to the long-run growth trend”.
Preparing for growth
Menzies’ Wyley sees the current downturn in volumes as cyclical and is confident of growth to come. “To prepare for this, we have expanded our cargo warehousing capacity in Bengaluru (Bangalore), Johannesburg, Cape Town, Nairobi, Monrovia and Karachi through warehouse extensions, new premises and new facilities,” he says.
Dnata’s cargo presence in Africa is currently limited to Zanzibar, where it is investing in a state-of-the-art facility to improve cargo services at Zanzibar’s Abeid Amani Karume International Airport. The cargo centre, which is scheduled for completion in 2025, “will comply with the highest industry standards ensuring efficient and safe handling of a broad range of cargo, including perishables, pharmaceuticals, dangerous goods, live animals, aircraft engines and vehicles”. The handler’s One Cargo system with IBS was implemented in Zanzibar last year “and is a very good demonstration of how the Dnata network works, with bigger hubs supporting smaller ones”, the handler says.
Swissport’s air cargo network in Africa takes in Algeria, Ghana, Kenya, South Africa and Tanzania; and the handler is actively looking at expanding.
“There is significant potential across the continent to build a comprehensive network of air cargo hubs; however, entering specific new markets may require the development of local aviation legal systems, removal of monopolism, and investment in the airport’s existing or new infrastructure by local governments,” says Goovaerts.
He believes that while air cargo connections between Africa and other continents are well developed, interconnections between African countries and regions could be further explored and developed – providing lucrative opportunities for handlers.