Air freight helping to change and grow Africa

8th May 2015

By: Keith Campbell

Creamer Media Senior Deputy Editor

  

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Largely unnoticed, air freight has come to have a pervasive influence on the lives of people, the prosperity of enterprises and the growth of nations. “Look around any household and you will see the influence of air cargo,” International Air Transport Association (Iata) director-general and CEO Tony Tyler has pointed out. “Work areas and living spaces host computers, mobile phones and other technology produces [sic] assembled through global supply chains.

“The front end of the story is the value that air cargo literally delivers to make our lives richer,” he adds. “In total, about $6.8-trillion [worth] of goods traded internationally get to their destination by plane. The back end of the story is equally impressive. The global marketplace facilitated by air cargo has created enormous opportunities for jobs, innovation, collaboration and the improvement of people’s lives. It is not as easy to measure. But it would be no overstatement to say that air transport has transformed the way the world lives and works.”

Africa: Growth and Constraints

Africa is no exception. Last year, according to Iata statistics, air freight carried by African operators, measured in freight (metric) ton kilometres increased by 6.7%, compared with 2013. The figure for the world as a whole was 4.5%. For Asia-Pacific carriers, it was 5.4%; for North American airlines 2.4%; for European operators 2.0%; and for Latin American airlines a mere 0.1%. Only operators in the Middle East region performed better than African carriers, experiencing a jump of 11.0%.

In December, African airlines carried 12.2% more air cargo than in December 2013. The figure for January was 5.2% higher than in January 2014. For the world as a whole, December 2014 saw 4.9% more traffic than December 2013, while the figure for January 2015 was 3.2% up on January 2014.

In terms of the air cargo capacity of the African airlines, this increased by 0.9% in 2014, compared with the previous year. In January, the capacity was 2.4% up on that in January 2014. In its reports for both 2014 and January 2015, Iata noted that this limited increase in capacity had strengthened the load factor for African operators.

“Although major economies Nigeria and South Africa underperformed during parts of 2014, regional trade activity held up, supporting the demand for the air transport of goods,” said Iata in its press release about air freight during 2014. In its report covering January 2015, it said almost exactly the same thing: “While major economies such as Nigeria and South Africa are under- performing, regional trade activity is holding up”.

“While air cargo represents only 2% of world cargo, it is 35% by value. It traditionally carries high value,” pointed out South African Airways (SAA) acting CEO Nico Bezuidenhout in his address to the third biennial Air Cargo Africa 2015 conference, at OR Tambo International Airport, east of Johannesburg, in February. (The growth of this conference and exhibition itself reflects the growth of the African air freight sector.) “I believe that, in Africa, we have only seen the tip of the iceberg. If the reports are true, we can expect almost 20% continental growth in GDP (gross domestic product) over the next five years . . . African countries do not trade sufficiently with each other. That represents a big opportunity, going forward. It is, in fact, the next big opportunity . . . Additional investment in airports and air cargo drives inward investment into a country . . . An air cargo service in itself is a catalyst for economic growth.”

There are, alas, constraints that must still be overcome. These include old and inadequate infrastructure, inefficiently run airport systems, lack of oversight for safety and security, poor connectivity and high costs. Many of these, and other, problems affecting air transport (passenger and cargo) within Africa were meant to have been dealt with by the Yamoussoukro Declaration, adopted by the Heads of State of the then Organisation of African Unity in 1988 (Yamoussoukro is the political capital of Côte d’Ivoire). This became the Yamoussoukro Decision in 1999, signed by 44 countries, which became officially binding in 2002. This was and is meant to liberalise the air transport market within the continent. The actual experience of air transport liberali- sation in other regions, such as Europe and North America, has shown that it costs, increases traffic and stimulates the wider economy.

Unfortunately, the Yamoussoukro Decision has still not been implemented across the continent. Finally, in January this year, 11 African countries committed themselves to opening up their air transport markets and create a single air transport market between them by 2017. Very importantly, these countries include the continent’s three largest economies – Nigeria, South Africa and Egypt – plus two other major air transport hubs, Ethiopia and Kenya. The other six countries are Benin, Cape Verde, the Republic of Congo, Côte d’Ivoire, Rwanda and Zimbabwe.

The View from the Cockpit

“Africa – the potential can only be massive,” SAA’s Bezuidenhout tells Engineering News. “Part of air cargo’s potential is that road and railway infrastructure on the continent is inadequately developed. SAA’s growth is most definitely focused on the African continent. The bulk of our expected cargo growth is expected to be from Africa.”

SAA’s cargo division accounts for more than 50% of all air freight movements into and within South Africa. “Cargo services account for about 8% of our turnover,” he adds. “That is not where we want it to be. We want it to be more than 12%. We need to invest more in automation and warehousing. We want to put more emphasis on SAA Cargo. Currently, it’s a loose division but we want to make it more commercial; we want to make it a business in its own right. When you have a division in a big organisation, it can get lost in the woodwork. We believe there is a lot of scope for SAA Cargo – it’s very profitable and very successful. The optimisation, efficiency improvement and re-engineering of SAA Cargo are already under way. We’re fortunate that our air cargo facilities are excellent.”

SAA carries most of its air freight in its airliners – in the cargo holds located under their passenger decks. “The [Airbus] A340-600, in particular, is very good for cargo – it’s got a lot of space,” he pointed out. But it does also currently operate three dedicated freighter aircraft. These are Boeing 737-300F cargo versions of the famed single-aisled airliner. (Reportedly, one is leased). The company uses such relatively small freighters for good reasons. “With the majority of African airports, you’d struggle to get to them with wide-bodied aircraft. Currently, the 737-300Fs are used 95% within South Africa,” he explains. “They are used on routes on which neither SAA nor [low-cost carrier subsidiary] Mango flies passengers but where there is a cargo demand – for example, East London to Cape Town.”

It has been reported that, in March, SAA issued a request for proposals for the lease of one Boeing 737-300F, one 737-400F, three ATR42-500F regional turboprops with large cargo doors and two ATR72-200F turboprops, also with large cargo doors. These aircraft would be leased and would replace the current all-jet freighter fleet.

But African air freight is not just about transport within the continent: it is also about linking Africa to the world. And major intercontinental operators are heavily involved in this. One of the biggest is Emirates, which is based in Dubai, United Arab Emirates and has a network of 144 destinations in 81 countries. With a fleet of 233 aircraft, it carried 2.3-million tons of air cargo (including mail and courier) worldwide, bringing in revenues of $3.1-billion, or 15% of the airline’s total revenues, last year. For the past three years in a row, it has been the world’s biggest international air cargo carrier. Most of this cargo is carried in the bellies of its airliners, but the company does operate 14 dedicated freighters, all of them wide-bodied aircraft: 12 Boeing 777Fs and two Boeing 747-400ERFs. This gives Emirates great capacity. And it is continuing to increase that capacity.

Emirates currently serves 24 destinations in Africa, five of which are specifically for cargo – Eldoret, in Kenya; Djibouti, Kano, in Nigeria; Lilongwe, in Malawi; and Ouagadougou, in Burkina Faso. The other destinations are for both passengers and cargo (including Jomo Kenyatta International Airport at Nairobi). “Lilongwe is mostly imports,” reports Emirates senior VP: cargo revenue optimisation and systems Pradeep Kumar. The frequency is once a week and the aircraft is usually fully loaded with merchandise and pharmaceuticals. However, it picks up very little in Malawi, instead calling in at Nairobi on its return flight and loading cargo there for Europe.

“Kenya is a major air cargo hub, serving the East Africa region,” he elucidates. “Johannesburg is our other major regional hub in Africa.” Traffic into Kenya is dominated by electronic items, mobile phones, equipment spare parts, industrial spare parts and garments, often for onward distribution throughout the region. Traffic from Kenya is 90% composed of fresh produce, flowers and fish. Into Johannesburg, most of the cargo comes from China, Germany and India. From India, most of the products are pharmaceuticals; from Germany, mainly automotive parts and from China, “anything and everything”, he observes. From Johannesburg, traffic used to be dominated by fresh produce and fish – traditional African air freight exports. But now, thanks to government encouragement, there has been a significant increase in manufactured exports, including automotive components, pharmaceuticals as well as precious metals and stones. “Today, 60% is fresh produce and 40% is manufactured goods.”

“Most of the governments in Africa are spending money on infrastructure developments, specifically for road networks and upgrading airport facilities,” he highlights. “These upgrades will allow us to bring our freighters to smaller airports. We offer 777F and 747-400F freighters, which cannot use narrower runways. We already operate to most markets in Africa and the developing world. We link African cities to the world.”

Kumar is also enthusiastic about the prospects for Africa. “We believe that the next five years will see significant traffic growth between Asia and Africa. Regarding Johannesburg – we talk about the Brics (Brazil, Russia, India, China and South Africa) economies and South Africa is part of that. We see great potential for the economy of South Africa. We are looking at South Africa as a growth area. We have seen signs of this over these past years. We also fly to Durban; we also fly to Cape Town; we cover the whole of South Africa. We’re expanding into West Africa – very much. We fly to Lagos and Abuja, in Nigeria; to Accra, [Ghana]; Dakar, [Senegal]; and Abidjan, [Côte d’Ivoire].”

Airframer Forecasts

The world’s two dominant manufacturers of airliners, Airbus and Boeing, are also upbeat about Africa and its air cargo market.

In its ‘Global Market Forecast 2014: Freight’ report, Airbus predicts that sub-Saharan Africa will grow at an average real rate of 4.6% (as against 3.1% for the world) and that its air cargo traffic will increase by 4.5% a year for the next 20 years. Per capita GDP (calculated in purchasing power parity terms) is expected to rise from $4 511 in 2014 to $10 080 in 2033. As a result, the continent’s dedicated freighter fleet is forecast to increase from the 39 in service last year to 86 in 2033. Of the latter number, 47 will be replacement aircraft for the current fleet and 37 will represent the expansion of the fleet. Only two of the freighters currently in service are expected to still be in service in 2033. Of the 84 new freighter aircraft (some of which will be built as such and some of which will be converted from airliners), 39 will be in the small category (with payloads between 10 t and 30 t), 28 will be midsize (payloads between 30 t and 80 t) and 17 will be large (payloads greater than 80 t).

Boeing, in its ‘World Air Cargo Forecast 2014-2015’, defines Africa as the whole continent (not just sub-Saharan Africa), plus offshore islands, including Mauritius and the Seychelles. It reports that total air freight from or to Africa came to 1 730 000 t in 2013. The continent’s international air freight flows were dominated by five countries – South Africa (16.7% of the total), Egypt (14%), Kenya (13.1%), Nigeria (9.4%) and Ethiopia (9.1%). Air cargo traffic between African countries accounted for 5.8% of total African air freight. Domestic air freight – that is, within individual African countries – was estimated at 206 000 t. The countries with the biggest internal air freight sectors were the Republic of Congo, the Democratic Republic of Congo, Nigeria, South Africa, Angola and Sudan.

The US aerospace group predicts that air cargo between Africa and Europe will grow at an average of 4.3% a year from 2013 to 2033, while, over the same period, Africa–Asia air cargo will rise at an average rate of 6.6% a year and Africa–North America air freight by 5.2% (annual average).

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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