Cargo charters: Is the future promising for Africa?

Africa's air cargo market, like those in other geographies, has spent the last few years navigating through extreme turbulence caused by Covid-19, with limited and fluctuating capacity affecting the efficient movement of cargo to, from, and within the region and posing unique challenges for certain key trade lanes, commodity verticals, and market stakeholders.

According to a recent market research study titled "MEA Air Cargo Industry to 2028 - Covid-19 Impact and Analysis and Forecast by: Type, Services, and End-user," the market is predicted to grow to $27.82 billion by 2028 from $17.70 billion in 2021. From 2021 to 2028, the market is expected to increase at a CAGR of 6.7 percent.

As the cargo chartering industry is recovering from the pandemic, the air cargo business is expected to grow and demand to climb. The cargo chartering sector aims at expanding its footprint by growing its cargo team in African countries with new offices and cargo charter brokers.

New opportunities
According to Lloyd's Loading List, the air cargo charter industry closed the year strongly in 2021 despite supply chain interruptions and restricted capacity alternatives, and set high demand for flights in 2022. Africa is currently regarded as a continent rich in potential, growth, and room for expansion, drawing major investment.

Kuehne+Nagel, for example, just announced its air logistics services with regular charters, many times per week, from Liège (Belgium) to the Americas, Asia, and Africa, as well as a fully dedicated healthcare operation for customers. "The solution called MedConnex addresses constraints in terms of air freight capacity, especially for cargo that requires specialised handling and transportation such as temperature-controlled and GDP-compliant shipments," says a statement.

"African operators can see the growth potential in Africa, with numerous freighters being acquired by key players to compensate for the near future demand"

Gerhard Coetzee, Regional Manager IMEA Cargo, Chapman Freeborn

Air Charter Service (ACS) offers an international network of 27 offices working together to identify the best solution for charter flights in various locations, utilising their experienced local knowledge.

"ACS strengthened its position in Africa 13 years ago when we opened an office in Africa. This has allowed the company to further grow this region. We find that local knowledge and languages are essential to best serving our clients. As Africa opens up to normal trade again, the demand to move freight into and throughout the region has opened up," said Lyndee du Toit, CEO, ACS South Africa.

Chapman Freeborn has over 45 years of expertise in the cargo air charter industry and works with customers and skilled carriers to organise the delivery of time-critical air cargo, large and outsize equipment, humanitarian commodities, and all other types of freight.

"We see Africa always as an optimistic point of view, with loads of new business and trade lanes opening, with the recent geopolitical situation. African operators can see the growth potential in Africa, with numerous freighters being acquired by key players to compensate for the near future demand. With Africa holding a rich oil, gas and mining sectors these will ensure the continuation of charter business. The only thing we are concerned with is external factors such as rising cost of aviation fuel, however we see beyond this as there is always potential, demand and need for chartering," said Gerhard Coetzee, Regional Manager IMEA Cargo, Chapman Freeborn.

Impact of pandemic
The commercial aviation industry reported a more than 90 percent drop in revenue and reservations. During the pandemic, Covid-19 has shattered the African economy and brought aviation connectivity throughout the continent to a standstill. Things have altered dramatically since the pandemic. The way the industry connects and does business has changed.

"The pandemic changed the way we worked, we learned new trades (passenger aircraft used for cargo loading) and saw loads of opportunities arise in our charter market, all started with the PPE flights, supporting multi countries. In 2021, the cargo we carried for the African region was mainly mining, oil and energy fields. There was one specific project that saw 11 flights chartered – ranging from Boeing 737, 767 to Boeing 747 freighters. Automotive also has been a key player since the lifting/easing of travel and work restrictions in generating charters and on board courier business for this industry," said Coetzee.

The cargo chartered air transport industry is expected to be impacted by the high cost of charter cargo aircraft services. The cost of a cargo charter is determined by a variety of criteria, including the origin and destination sites, the type of goods carried, dimensions, and weights.

"Africa is a very good place to start because the African air cargo industry is growing, particularly with the expansion of Ethiopian Airlines and Astral Aviation"

Edip Pektas, Founder, Airblox

The cost of a round-trip B777 or B747 transporting 100 tonnes of e-commerce products and ordinary cargo from Europe to China in 2021 increased from $470,000 to between $850,000 and $1 million, according to "Freight Chartered Air Transport Global Market Report 2021: COVID-19 Impact and Recovery to 2030". As a result, it is anticipated that the sector would be affected by rising cost of the freight charter services.

"The pandemic changed a lot in our industry, mainly pricing and availability of aircraft. A lot of the cargo that we would traditionally move did not move over the last two years, with a massive surge in PPE and relief cargo being booked. Based on the urgency of cargoes and an increase in the movement of cargo that were specific to the pandemic, we did very well in this period. We have noticed this year that the pre-pandemic traditional loads are coming back as businesses try and return back to normal," said Toit.

Exploring the new eBSA sector
An electronic block space agreement (eBSA) is a block space agreement with standardised legal structure and flexible economic attributes that may be defined by the issuer, such as an airline.

Airblox, a pioneer in aviation fintech, offers live feed of worldwide scheduled air freight aircraft capacity to help clients of its eBSA booking service.

Airblox is new to the African market and is looking forward to starting serving African airlines. "As infrastructure in Africa improves, charter flights and consistent air cargo capacity for items such as pharma, food, and other perishable cargo will also increase. Utilising standardised eBSAs will help establish the foundation for this market to be more efficient and transparent in regards to pricing," said Edip Pektas, Founder, Airblox.

Airblox was developing its product during the pandemic and released its live beta version in March 2022 at the Air Cargo America convention in Miami. During the pandemic, the founders gained considerable insight into how markets are irrational when it comes to out-of-control situations or market occurrences, such as the Covid scenario. Airblox would enhance efficiency while also reducing speculative market movements.

"African operators can see the growth potential in Africa, with numerous freighters being acquired by key players to compensate for the near future demand"

Gerhard Coetzee, Regional Manager IMEA Cargo, Chapman Freeborn

"Africa is a very good place to start because the African air cargo industry is growing, particularly with the expansion of Ethiopian Airlines and Astral Aviation. Actually, we are in contact with both, and we anticipate that our product will serve as a foundation for the establishment of a whole market, for the African market, this is digital. We feel that Airblox would be an excellent method for Africa to host the block space market," said Pektas.

I asked the founder how Airblox will be helpful to the African market. To this Pektas said, "a single marketplace where market participants come to exchange blocks of space will help reduce edginess of supply and demand interaction. Rather than agreeing on specific prices on specific days and nights, dynamic pricing environments accounting for external factors affecting space will also be built into pricing methodology. The market will establish those rates in real time, helping airlines and freight forwarders make better decisions."

Africa has a promising future. The industry believes that the African market will expand dramatically during the next five years. "Africa is a growing rich continent, with loads of potential in development, rich in minerals and resources needed in the production field. Being a big exporter of perishable goods, Africa will stay strong in the future. With operators in Africa growing their freighter fleets, will see a growth in the trades between Africa and other continents. We remain optimistic, and look forward to a successful five years ahead and see how the market is changing and adapting to the charter and customer market," said Coetzee.

Recent positive changes in the African market include expanded aircraft capacity as covid restrictions are lifted, but on the other side, air freight charges and fuel prices are increasing. To solve these challenges and achieve a balance between capacity, freight, and fuel prices, new technologies, startups, and businesses are expressing interest in the African aviation industry.