Strong growth in many African markets has encouraged the air freight sector to take the continent far more seriously in the last 18 months, reports Martin Roebuck
The economic challenges elsewhere in the world have naturally turned the attention of air freight forwarders, carriers and handlers to anywhere showing growth, and Africa has finally started to get the attention of the world for economic rather than humanitarian reasons. Africa remains a relatively small air freight market in global terms, currently contributing just a few per cent to global air cargo revenues, but with more than half its countries experiencing annual GDP growth averaging more than 5%, it provides a welcome change from stagnant or shrinking markets in Europe, Asia and North America.
Charles Brewer, MD of DHL Express for sub-Saharan Africa, forecasts a continuing boom in the region’s trade, led by the technology and healthcare sectors and by new oil and gas discoveries, although he says there are still numerous challenges around infrastructure, labour relations and the ease of trade within the region which need very urgent attention.
“Emerging markets such as those in Africa continue to outpace Western economies,” he says. “While Africa only contributes 3% of the global economy, 28 of the 52 countries have 5% average economic annual growth and countries like Ghana, Ethiopia, Liberia, Mozambique, Niger and Uganda could potentially grow up to 10%.”
Colin Baldwin, senior VP Africa for Swissport Cargo, says that of the global carriers, Middle Eastern airlines such as Emirates and Qatar Airways have added the most African destinations to their networks, while Far Eastern carriers are looking to operate via South Africa or Kenya and onwards into West Africa.
Duncan Watson, Emirates SkyCargo’s VP for Africa, observes: “Airlines have taken Africa a lot more seriously in the last 18 months.”
However, broader political issues and security considerations are never far below the surface on this turbulent continent, as the conflict in Mali and the terrorist attack in Algeria have underlined.
ECS Group, the Paris-headquartered GSA network, announced only in December that it had taken a controlling interest in a new West African cargo airline, Niger Air Cargo, launched in collaboration with a local private investor. A weekly MD-11 or DC-10 freighter service was planned from Liège to Niger’s capital and largest city, Niamey, on similar lines to the services Avient Aviation, an existing ECS client, operates between Liège and eight West African destinations.
Promising “unique logistics solutions in the region”, ECS CEO Bertrand Schmoll sees intra-African business opportunities, especially in Nigeria and Mali, based on cargo such as communications equipment, apparel, healthcare products, fresh food and relief goods. A large warehouse was planned for Niamey.
It is unclear yet what impact the conflict in Mali and the terrorist attack in Algeria could have on these plans. But Baldwin fears the whole region is being held back because of the way in which conflicts can flare across neighbouring countries. Swissport has a small cargo handling operation in Algeria and is looking closely at West Africa, but the two years of unrest has hit the air freight industry hard, he says.
Undaunted, Emirates is pushing ahead with its launch of an Algiers passenger service on 1 March. It hopes to carry inbound supplies to Algeria’s oil and gas market as well as opening new export routes for frozen fish, lobsters and palm oil.
Emirates is seeing healthy double-digit increases in both directions in its African cargo business. Watson says demand from a growing middle class in markets such as Nigeria and Kenya, following the pattern previously seen in India and China, is driving imports.
Florence Desert, VP for France, Africa and overseas territories at Air France-KLM-Martinair Cargo (AF-KL-MP), says African volumes and revenues were stable in 2012, both north and southbound, and highlights Cameroon, Mauritania, Equatorial Guinea and Angola as markets that performed above average.
The emergence of the Chinese supply line into Africa led Martinair to partner with Kenya Airways to launch a B747 freighter service, the so-called ‘Safari Flight’, connecting Guangzhou with Nairobi and Lagos, though the frequency has reduced from bi-weekly to weekly.
However, Desert says exports from Africa to South America, the Middle East and Asia are running strongly, together with intra-Africa services. In the last two years, AF-KL-MP Cargo has opened new stations, or reinforced its presence, in Kigali, Lusaka, Harare, Dar es Salaam, Monrovia and Freetown. The group has increased its payloads thanks to larger passenger aircraft on routes to Dakar and Nouakchott, and has increased frequencies to Libreville, Conakry and Malabo.
The development of local sub-hubs is opening up the main-deck opportunity into challenging locations such as Douala, and the group has also worked on offering reliable overland on-forwarding solutions, for example between Brazzaville and Pointe-Noire.
“We aim to further develop business in new markets such as Liberia. We definitely see potential in industrial traffic such as machinery to and from West Africa, but lack of infrastructure, political instability and other constraints can sometimes pose challenges to our ambitions,” Desert admits.
Like many of its competitors, Turkish Airlines has targeted the Africa market, adding a host of new passenger destinations in the west and north of the continent especially.
“The growth trend in Africa is dramatically better than elsewhere,” says Gökmen Elkas, cargo sales and marketing manager. “When we look at the big picture, we see that the African outbound cargo market was around 3.6% higher, year on year, in the first 10 months of 2012, while exports out of Europe were stagnant.”
Turkish saw its own African cargo uplift increase by 15% to 315,000 tonnes in 2012. It is looking for a similar increase this year as it adds main-deck capacity. The proportion of cargo Turkish carries in its freighters increased from 23% to 35% last year, and four more A330-200Fs are scheduled to join the fleet in 2013.
IAG Cargo introduced a B747-8 freighter service to Johannesburg and Nairobi at the end of 2011. Tony Snell, commercial manager for Middle East and Africa, says: “Volumes held up well last year compared to other markets and we are optimistic that the Middle East and Africa will remain relatively strong, given the continuing demand from supermarkets for fresh African-grown produce.”
However, IAG has witnessed a decline in automotive shipments between South Africa and central Europe. Snell says the carriers that regularly ship auto parts are “pursuing more aggressive strategies in a highly competitive marketplace”.
European export yields have also dropped significantly for South African Airways, although overall cargo volume is up 8% in the current financial year, close to its 2011 growth rate of more than 10%. Tleli Makhetha, general manager of SAA Cargo, says exports to South America, China and the other BRIC countries are making up for the softness in Europe. The carrier services these long-haul needs with its passenger aircraft, mainly reserving its freighters for intra-regional traffic.
“African markets continue on an upward trend and our freighter network is expanding rapidly. We have increased schedules to Lusaka, Harare, Maputo, Entebbe and Dar es Salaam,” he says.
Consignments of textiles, car parts, pharmaceuticals, electronics and telecoms equipment help compensate for the more seasonal perishables, but competition is fierce. “We face stiff competition from other foreign carriers who are targeting Africa as a growth market,” says Makhetha. “They offer very low rates that are difficult to match.”
Figures from Nairobi-based regional operator Astral Aviation, though very healthy, illustrate this pressure on yield. CEO Sanjeev Gadhia says tonnage grew by more than 25% in 2012, with Juba in South Sudan and Mwanza and Dar es Salaam in Tanzania among the fastest growing ports of call, but sales revenue growth lagged slightly at 20%.
But redeployment of capacity to Africa by Asian and European airlines, as they try to combat the downturn on their traditional east-west routes, has been positive for Astral, giving East Africa’s imports and exports a more global reach. “Korean Air Lines’ recent launch of passenger flights from Incheon to Nairobi has brought a new interline opportunity and has opened up new destinations in Africa for Korean electronic products that were not previously available,” Gadhia says. Astral is set to broaden its base this year by opening new hubs in Johannesburg and Accra.
Swissport’s Baldwin observes a big swing towards import cargo in the last two years, up from 53% in 2010 to more than 66% in 2012. Tanzania has seen significant growth in imports of telecoms, gas and oil equipment, outpacing its exports flowers, fruit and fish. But exports from South Africa remain weak, and the company handled 12% less cargo through its four stations there last year.