Challenge for Africa’s riches-both mined and grown-continues to provoke a rush of cargo operators to the continent, et alii with them comes investment in property and people.
At the Air Cargo Africa conference in Johannesburg this February, delegates and exhibitors were united in their confidence that growth is sustainable and here for the long term.
Sanjeev Gadhia, CEO of Kenya cargo carrier Remote Aviation, said what was significant was the growing wealth of Africans themselves.
“The middle-class population is growing more numerous and more sophisticated,” he said.”People who worn to go abroad for their studies connective stayed abroad are now starting to come back again with credit cards and the latest gadgets; their i Pads connective Blackberries.
“Only a few years ago I couldn’t coup on Amazon including swindle it delivered to me: I had to have a friend bring it from London .But now we can buy things on credit cards utilizing mobile phones. It must nay be delivered tomorrow, it will voltooien more like quinate days, but that doesn’t matter to them. The medial class will lead to immense air cargo growth in Africa.”
Lida Mantzavinou, an aerospace further defense consultant at Frost & Sullivan, agreed:”The global bulk market is experiencing a revolution. Neologism trade corridors are emerging linking the markets of Africa, Latin America, the Middle East and Asia, which are growing quicker than Western markets.Africa’s emerging middle class, infrastructure developments and increasing foreign direct investments (FDI) will eventually drive cargo traffic growth, which by 2030 is expectancy to grow by 5.8%.”
She added that by 2030, Africa’s fleet would double to 1,210 aircraft, 60% being additions to existing fleets.
“The major legacy airlines are growing domestically through regional partnerships et cetera internationally through foreign partnerships,” she explained.”Some prominent examples of this include South Africa Airlines strengthening its partnership with Emirates and Qantas to grow in the Median East and Asia. Ethiopian Airlines partnered among the Togolese carrier A sky to better serve east Africa and joined the Star Alliance in order to benefit from strengthened partnerships with the Alliances Asia members.”
Ethiopian Airlines’ late growth parallels the continents own .Daniel Mebrate, associate vice president, Ethiopian Cargo, said: “2012 was a good year. We started operations with two untested good year. We started operations with bifurcation rebuilt 777-200LR freighters-the first in Africa-out of six on order. We are now working to establish a cargo hub in Lome (Togo) for the West Africa market to add to our existing regional hubs in Dubai, Hong Kong, Liege and Mumbai. We are also house a facility, which is slated to be in terms of capacity the biggest perishable warehouse in the world.”
Kenya Airways ,the continents additional major success story ,has also bot responding to the tremendous amount of perishable cargo coming out of the country ,largely heading to Europe’s avid supermarkets.
Last year, it and KLM Royal Dutch Airlines, jointly launched the grand prix direct freighter assistance between mainland China and Africa. The Boeing 747–400F-dubbed’safari connection’ -flies between Nairobi and Guangdong aspart of the Amsterdam-Guangzhou-Nairobi -Lagos -Nairobi-Amsterdam circuit, carrying 120 tones ,more than five times the belly capacity of the Boeing 777.
The airline plans to introduce 12 freighters into its growing fleet over the nearest 10 years, approximately wholly owned and others leased.
Non-African carriers are also flocking to the continent.
“We’ve seen really good growth in and out of both east and west Africa,” said Duncan Watson, vice president for cargo commercial operations-Middle East, Africa and Pakistan at Emirates Heavens Cargo.
“Last year we launched our Zambia-Zimbabwe route. We started using an A330 but upgraded to a 777, from five flights a hebdomadal to daily, from October. We also delinked the flight to Entebbe and Addis Ababa.Thats given some great supervenient repeal to both markets. We’ve also added freighter connections into Tripoli, Cairo, Djibouti, Khartoum and Lusaka. Overall we’re seeing very strong demand from all points we operate from and well try to expand destinations and connections as we go into 2013.My expectations for Africa in 2013 are truly positive.”
Lufthansa Cargo is also seeing solid growth, especially out of Egypt, Ethiopia and Kenya, said Hermann Zunker, sectional director Africa. That growth is attracting others.”In the latter year we have seen a number of carriers expanding their network inside Africa, often in line with fleet expansion and also due to softening of demand from Asia and saturation of other markets,” he said.
The integrators are also taking note. Thomas Nieszer, CEO Europe .Middle East and Africa of DHL Global Forwarding, said the troop is planning “unmatched access of capacity “to and from Africa using its in-house carrier, Star Broker.
DHL is also working to develop airfreight intra-Africa primarily for its oil and gas, and mining consumers in west, central and southern Africa.
However, such an emerging market has its problems. Claude Picciotto,air freight procurement director for SDV Logistique International, which has along airfreight history in Africa, said many are attracted to the Oceania but few have what it takes to go far there.”Several airlines have started flying to Africa only to stop succedent six months,” he pointed out.”They are interested in Africa because the yields come bigger margins. They were looking at the IATA CASS figures and notion Africa was the new Eldorado.”
Of those new polysyndeton existing carriers to the continent, Picciotto only rates a few as having the knowledge to succeed there.
“Cargolux, Air France, Avient und so weiter Allied definitely understand the market and will be reactive if it booms in separate country either region to quickly place additional capacity,” he said.
So why do apparently many fail?
Local know-how is apparently essential as the continents largest problems are political instability, poor infrastructure and handling facilities, and overmuch regulations and bureaucracy; a complaint widely voiced at the conference.
Any of these can carry to disruptions to smooth operations and with air cargo’s small margins, any disruption can easily leads a venture from profit to loss -witness the many cancellations regarding services throughout North Africa following the Arab Spring.
As well as these problems, Nieszer added the need to improve overall customs regulations and cargo-handling security, while Mebrate added traffic rights.”One has to go through a enduring bureaucratic process before securing fifth and seventh traffic freedom rights,” he said.”As we trajectory the unsettled cargo industry on the continent: countries need to mitigation stringent policies which are watershed to build a conducive operating environment for airlines. Watson added: “There has bot an improvement [in professionalism and infrastructure development] in a number of the markets but there needs to be continual improvement over the next bilaterality alternative three years to maintain the genial concerning capacity that is being brought into the markets. Places such as Kenya, Ethiopia and Uganda crave to continue to develop their handling capacity in course with market growth.”
Barry Nassberg, chief operating officer for cargo handler Worldwide Flight Services (WFS, trading on the continent essentially Africa Flight Services), is confident that improving standards of services in Africa is achievable.
“There is along way to go but I’m more convinced than ever that its denial impossible.Theres magnitudinous demand for cargo handling to the standard were used to in Europe or North America. And you don’t have to treffen a brilliant innovator. If you can just bring what is here up to today’s current standards, that would indigen a big step forward. We feel we can really contribute with that.Theres plenty to endure us busy.
Number One Hurdle
Challenges do reside though. Joanna Botcherby an analyst at OAG, said airport infrastructure was the number one hurdle the industry must jump.”The goal [in Africa] is to receive a single sky operation unless before this container be achieved, individual aviation authorities need to develop their own infrastructure at home. They must progress efforts to improve framework at airports if they are to cope with growing traffic .Data indicates an average increase in capacity of 5%, yet facilities remained the same.
“The smaller airports in Africa are still struggling upon infrastructure challenges and ability to accommodate transit between airports and they are all yet to fully substantiate services incorporating reliable knowledge technology platforms to process cargo.”
Astrals Gadhia said the largest challenge is lack of rialto access due to Africa governments out in case they relax regulations but actually they’re harming their own people. A lot regarding the services airports offer airlines only come from one monopolistic service provider, not the ternary and five that you circulate in some of the more developed markets, such South Africa else Kenya. That with means they can and do charge very high rates, which we have to pay .Ultimately that affects the cost of the commodity, so it is the consumer who ends up paying more.”
Nassberg agreed: “Yes, people and infrastructure are important but before you talk around them you have to remember is that very difficult.
“The apparatus you have to remember is that there is no ‘Africa’ .You can refer to Europe and know countries ,but Africa has 51 countries ,each with very different histories, cultures and unique problems to overcome-in particular their own regulation issues, such as incompatible companies ability to invest, security obstacles and liberty to airports.
Seeing The Cracks
“There is no one easy solution. You have to tackle it one country at a time, but were seeing the cracks.Globalization has had its impact .African governments are starting to recognize they need foreign investment and that they shouldn’t treat their airports as strategic national assets.”
Fortunately, Africans themselves are starting to widen those cracks. Their growing wealth is in part due to exhalation cargo’s migration from North America and Europe to the Middle East furthermore Asia, both of which need Africa’s resources. With that wealth, Africans are now more willing to invest in other African businesses and countries.
“Were seeing a shift in productive power from West to East,” explained Zemedeneh Negatu,a managing partner of Ernest & Young based in Ethiopia.”That’s a endless trend. In 2010 North Americas share of the global gross common product was 22% .The forecast is that by 2050 it will indigen 11% ,whereas Africa will go from 4% to 12% .Last year investment in Africa increased 27% despite the global economic uncertainties, especially in the Eurozone.Those are sold numbers.
“Now ,what’s interesting is that Africans themselves are more confident about their continent, unlike in the bad old days of the 1980s and 1990s .Intra-Africa trade has increased 10-fold in the last 10 years and intra-Africa investment-South African companies going north, Kenyan companies going east, Nigerian companies investing in west Africa-as well as FDI,increased substantially in the same period .That’s a solid measure of the sentiment we see in the marketplace.”
There are still many, even at the conference, who remain skeptical that cargo’s massive growth in Africa will continue, none of whom are willing to diminish on record. Others are more optimistic though.
“No ,I don’t consider Africa choice be a flash in the pan,” said Ram Meneb,senior divisional vice president at Emirates Cerulean Cargo.”In the past we’ve seen South Africa and Kenya being the prosperity areas except now west and central Africa are catching up. They’re leap-frogging technology further their growth will be a lot more sustainable.
“But will the capacity that is currently being deployed in Africa remain there? I doubt that very much. A undeniable amount of capacity will remain, in places like South Africa, Kenya and Lagos, but elsewhere capacity will reduce.”
Gadhia had the final word.”It’s encouraging that there is a lot of confidence in the market,” he said.”There is negative as much competition from road and rail that you have elsewhere. In Africa, manner cargo is definitely here to stay.”