FROM MAGAZINE: African air cargo market bucks global trend

Ongoing trade tensions between the US and China has taken a toll on global air cargo growth, but the only sector that has seen a silver lining during these troubled times is the perishable or special cargo space. It is no surprise then that the African air cargo market, which accounts for a majority of perishables exports, has been bucking the trend. The continent is also on the cusp of a digital transformation and is making major strides in infrastructural growth and liberalisation, which is set to take the African air freight sector to greater heights.

Africa accounts for only 1.7 percent of global air cargo. Nevertheless, African carriers are consistently posting the fastest growth than any other region for almost two years, according to the International Air Transport Association (IATA). Capacity has grown by 17.1 per cent year-on-year due to strong trade and investment linkages with Asia underpinning a double-digit increase in air freight volumes between the two regions over the past year.

At a recent workshop hosted by the Government of Nigeria, ICAO Council president Dr Olumuyiwa Benard Aliu cautioned that the realisation of better air connectivity in Africa, and the crucial sustainable development it promises, will only be accomplished through the mobilisation of sufficient and appropriate investment.

"It is especially urgent for Africa to address its aviation infrastructure gaps, given current and high levels of awareness of how air connectivity has become such a unique and indispensable catalyst for socio-economic growth on this continent," Aliu remarked at the 2019 Aviation Infrastructure for Africa Gap Analysis Workshop.

ICAO's long-term traffic forecasts presently indicate that passenger and freight traffic for the African region are expected to grow by 4.3 per cent and 3.8 per cent annually through 2035. Currently accounting for four per cent of global air transport services, Africa presents the highest potential for growth out of all of ICAO's global regions.

The speed at which the African air freight market is growing is attracting attention. While China recently confirmed a further $60 billion investment into the continent, what has been more encouraging is the investments carriers are making in infrastructure and aircraft. The dedicated cargo operations by African airlines is set to rise and countries such as South Africa, Nigeria, Ghana, Ethiopia, Kenya and Mauritius are taking a lead role in improving air cargo facilities and services, especially as most African air freight is %u2018special cargo' - such as perishables.

Ethiopian Airlines is already making the most of a mix of airline acquisitions, partnerships and strategic investments to build capacity in the African air transport market. By partnering with other governments to launch new national carriers, such as in Chad, or acquiring non-controlling stakes in other state-owned carriers as it has done in Zambia and Mozambique, the airline's expertise is being deployed in other markets. 

As for the air cargo space in particular, Ethiopian Airlines is planning the next expansion phase of its Addis Ababa Cargo Terminal-II facility, which opened in July 2018, to accommodate 1.2 million tonnes per year. The new 38,000 sq m facility increased Ethiopian Airlines' previous throughput capacity at the earlier single terminal operation to nearly one million tonnes per year from 350,000 tonnes.

"In the long term, in making this investment, we want to establish our capital not only as a freight hub for the African continent, but also as an international cargo hub. This puts us in direct competition with hubs like Dubai," said Tewolde GebreMariam, chief executive of Ethiopian Airlines in a media statement. In March this year, Ethiopian Cargo took delivery of its first B737-800 freighter, with a payload capacity of more than 23 tonnes. Africa's largest airline has seen its freighter fleet grow rapidly over the last decade, evolving from two leased MD-11Fs to an inventory of eight new Boeing 777 freighters - with more to come.

On Oct 30, 2019, Kenya Airways (KQ) marked one year since it launched direct flights to the United States. In its first year of operation on the Nairobi-New York route, KQ connected 34 African countries to the US with top traffic sources being Nigeria (16.3 percent), Uganda (14.7 percent), South Africa (15 percent), Tanzania (11.7 percent) and Congo (8 percent). The airline ferried 530 tonnes of cargo from Kenya and 80 tonnes from other African countries to New York.

Meanwhile, Jomo Kenyatta International Airport has been ranked as the second fastest growing airport in the latest world cargo ranking for airports that handled more than 250,000 metric tonnes of air cargo. This was revealed in the Airports Council International (ACI) latest World Airport Traffic Report, which highlights top airports for passengers, cargo and aircraft movements and showcases the world's fastest growing airports for 2018.

Kenya Airports Authority (KAA) has credited the notable growth at JKIA to substantial increase in air cargo traffic to and from Europe, Asia, America, as well as recent additions China and Australia. KAA also said the country's biggest airport has recently transformed its air cargo management and also embraced participation of public and private sectors hence its improvement in global standing. The authority said the construction of several modern transit sheds at Jomo Kenyatta International Airport has seen the airport's overall cargo grow to 1.2 million tonnes annually.

New trade corridors are emerging linking the markets of Africa with the rest of the world. Africa's emerging middle class, infrastructure developments and increasing foreign direct investments will eventually drive cargo traffic growth, which by 2030 is expected to grow by 5.8 percent. Africa's fleet is also expected double to 1,210 aircraft, 60 percent being additions to existing fleets.

AfCFTA to boost air cargo within Africa
Liberalisation of air space creates new routes and greater connectivity on the continent leading to shorter travel times, greater convenience and fare savings for customers. The signing of the landmark African Continental Free Trade Agreement (the "AfCFTA") by 54 of the 55 countries signals the importance to Africa of promoting trade with itself. The AfCFTA, together with other continental initiatives including The Single African Air Transport Market (SAATM), will be a game changer in stimulating intra-Africa trade, if fully implemented. This will inevitably lead to increased diversification of economies which have traditionally relied on abundant natural resources and so create value. This, in turn, will help boost air cargo in the region. 

This story was originally published in Logistics Update Africa's November - December 2019 issue.