Covid-19, e-commerce triggering digital revolution in African air cargo

With its march towards becoming a mobile-focused economy, the African continent was recently pushed by the Covid-19 pandemic and the ongoing e-commerce growth to imbibe a digital revolution that could also disrupt the air cargo industry.

The African Airlines Association (AFRAA) in a recent communication noted that the revenues of its member airlines remained low with many operators battling cash-flow issues. Full-year revenue loss for 2022 is estimated at $4.9 billion, equivalent to 28 percent of the 2019 revenues. In 2021, African airlines cumulatively lost $8.6 billion in revenues due to the impact of the pandemic, representing 49 percent of 2019 revenues.

Clearly, African aviation is going through its worst period ever in history. However, with the Covid-19 pandemic receding, all eyes are on how the recovery would be and one of the plausible explanations is a digital revolution. Technology providers are betting big on African air cargo's ability to adopt new mobile and digital technologies and the curiosity to innovate.

According to Gautam Mandal, director-products, Cargoflash Infotech, African air cargo is experiencing an absence of skilled resources and comparatively low cargo volumes being handled by the region's airports. "The present technology landscape within the African air cargo industry comprises either legacy systems that are obsolete or manual operations that are unproductive and non-scalable," he said.

Mandal also reports that there has been a growing need for air cargo transportation between different African countries catapulted by various treaties recently signed by the country's regional governments including the Eastern Africa Community open air agreement, the COMESA (Common Market for Eastern and Southern Africa) agreements, ECOWAS (Economic Community of West African States) treaty and SADAC (Southern African Development Community) agreements.

"As a result of such regional cooperation agreements, there has been a surge in inter-Africa trade and commerce. The growth of trade between African countries especially in regional blocks has created an increase in the exchange of commercial goods and services in Africa. However, due to the poor road and rail network interconnecting African countries, the only reliable means of transportation is air transport," Mandal said.

Meanwhile, David Linford, director, global sales & account management, CHAMP Cargosystems, sees Africa as a continent that does a lot of innovation. "Africa is a unique continent, handling large volumes of e-commerce. It has shown and delivered great potential over the years, serving over 120 customers across the continent. Ethiopian Airlines, for example, grew during the Covid-19 pandemic and began pax-to-freighter flights, unlike most other airlines across the globe who did not operate at all. This shows they are innovative," he said.

Linford foresees that the African continent is moving towards a far more mobile-focused digital economy. He reported that their customers across the African continent can more easily implement mobile technologies as they are just starting their digitalization journey. "Mobile technologies offer ease and flexibility for the tasks required for both airlines and GHAs (Ground Handling Agents). Often, single staff members hold many responsibilities so having on-the-go technology brings the added benefit of access and job completion. Due to this, our existing customer GHA Air Flight Services Tanzania will take advantage of Cargospot Mobile, which offers seamless API integration to their Cargospot ecosystem and reduces the need for management to physically be on site to monitor progress," he said.

The 'nGen' cloud solutions are designed to work in low internet bandwidths and its mobile interface can perform almost all of the desktop functions
Gautam Mandal, Cargoflash Infotech

Ethiopian Airlines is CHAMP's largest African client who has been a SITA/CHAMP customer since 1992 and makes use of several CHAMP solutions. CHAMP provides cargo management systems, messaging platforms for interconnections between industry partners, customs and security compliance, eAWB penetration, automation and digitalization i.e. mobile.

Last year, Swissport introduced the Cargospot cargo app, developed by CHAMP Cargosystems, to record every step of the warehousing process, such as acceptance, build-up, check-in of goods and delivery. The company also noted its intention to roll out the technology across its locations in Africa by the end of 2022.

Linford said, "RwandAir is another CHAMP client of various solutions, such as adding many additional countries to its Traxon Global Customs system. The Ghana-based GHA, Aviance, has also recently adopted CHAMP's Cargospot Handling solution across Ghana and implemented APIs."

Meanwhile, Cargoflash has the vision to empower all airlines, warehouses and other stakeholders with the next-generation IT solutions on the cloud enabling them to connect seamlessly between each other and also, to the customs and other regulatory bodies.

They informed us that they see Africa as a market with huge growth potential, especially with the accelerated expansion of the e-commerce market, which can be served only through air transportation in Africa.

Mandal said, "The 'nGen' cloud solutions are designed to work in low internet bandwidths and its mobile interface can perform almost all of the desktop functions as well thus ensuring that users in even the remotest regions are also connected in real-time. Further, we plan to offer the solution with a modular and pay-as-you-use commercial model, which warrants that airlines of any size can start using the system without investing heavily in Capex."

In October 2021, Cargoflash Infotech announced that it will replace Kenya Airways' manifold of operations and management systems that either have limited connectivity options or systems working in silos, in which information sharing is restricted due to systems' limitations.

Mobile technologies offer ease and flexibility for the tasks required for both airlines and GHAs

David Linford, CHAMP Cargosystems

Kenya Airways' numerous operations and management systems are currently being substituted by Cargo Flash's single, next-generation 'nGen' system that includes cargo reservations (RES) system, cargo revenue accounting (CRA) system, cargo handling and warehouse management, ULD management solution, and customer portal.

"This has presented us with a completely new scope and sphere of the African air cargo market and we now foresee associating with more African airline leaders to offer simple, innovative yet cost-saving software solutions. We are certain that our web-based solution will further bolster not just the airlines' but the entire African market's scope to reap a seamless, error-free and spontaneous management, accumulating several processes under one roof. In such progressive and a potential-laden market like Africa, the scope of digital advancements can further encourage the expansion of the market size and margins," said Mandal.

Linford wants African air cargo stakeholders to further their expenditure of existing cargo management systems, mobility, and e-freight to solve their industry challenges. When asked about his plans for Africa, Linford said, "We work directly with clients in Africa and meet with them consistently to understand business challenges and future visionaries. We also offer Cargospot Competency Centers to bolster communication between CHAMP and the end-users of its products, which aids in evolving our Cargospot ecosystem to meet our customers' needs."

According to Mandal, most African Airlines are government-owned and governments tend to prefer physical papers and documents exchange, however, with the constraints created by the Covid-19 pandemic, there has been increased automation in government-owned organizations and digitization of government-owned processes.

"This has increased the electronic data interchange between cargo airlines and government-controlled customs, and airports. On the other hand, the pandemic accelerated the growth of e-commerce in Africa. This has resulted in online ordering and delivery of goods and services. There is a sudden reduction in human traffic to the Middle East and Asia where most African traders source their goods from. While there was reduction in people travel, there is increased cargo traffic flows between Africa and the traditional source of electronic and textile goods into Africa. This has been achieved through e-Commerce. Thus, African cargo airlines are adopting technology and electronic data interchange with shippers and consignees of air cargo," he said.

Mandal reports that over the last five years, several African customs and revenue authorities have increased demand for electronic manifests.

"Nigeria was one of the first governments to enforce pre-flight electronic manifests. This was closely followed by Kenya, Ethiopia, South Africa, Rwanda and other African governments. This increased demand for the electronic exchange of cargo manifests and AWBs. IATA e-AWB initiative has put pressure on African cargo airlines to acquire modern cargo solutions with global customs integrations and EDI," he said.

Mandal pinpoints that the logistical and technical challenges amidst this industry majorly belong to its mindset and not just the economical limitations of Africa.

"Cargo operators must automate their entire export and import methods to deal with the inadequacies in cargo handling processes and procure the expected growth. The industry requires technology that allows seamless data exchange between various entities and stays compliant with key industry regulations," he said.

The digital revolution, competently backed by modern and integrated technologies can help remove the intermediaries and plug revenue leakages due to prevalent unethical transactions within the region. The African air cargo additionally needs to think about the emerging trends like e-commerce and drone-based delivery, which will impact the business competitiveness.

This feature was originally published in the March - April 2022 issue of Logistics Update Africa.