Building capacity to help Africa trade better

Greater collaboration needed for air cargo to unlock intra-African trade potential


Greater collaboration needed for air cargo to unlock intra-African trade potential

Greater collaboration needed for air cargo to unlock intra-African trade potential
Photo credit: Diodos International Forwarders S.A.

African airlines have called for greater intra-regional trade, better connectivity and more carrier cooperation if they are to take advantage of the continent’s potential, delegates heard yesterday [25 February 2015] at Air Cargo Africa in Johannesburg.

Africa is “the last frontier of globalisation” and its potential is huge – but many of its problems must be resolved by its own governments and companies, while trade opportunities need to be opened up, they argued.

Fitsum Abady, managing director of Ethiopian Cargo Services, listed a diverse array of challenges that the continent faced, including trade imbalance, lack of infrastructure and integrated multilmodal solutions, high operational charges, bureaucracy, inefficiency and corruption – as well as the more recent ebola outbreak and terrorism.

But one of the keys to growth, Mr Abady noted, was that there was very little intra-African trade and collaboration.

“The co-operation between carriers is still not there; there is no codesharing, no interlining. That could help contribute to air cargo growth.”

His words echoed rival operator South African Airways acting CEO Nico Bezuidenhout, who had said: “African countries don’t trade sufficiently with each other – a huge opportunity, going forward.”

World Bank figures show that intra-Africa accounts for just 10-12% of total trade, compared with 40% of the total emanating from regional trade in North America and 60% in Europe.

Mr Bezuidenhout added: “African countries have to open up. We are quick to offer open skies to others, but there is very limited co-operation between African carriers.”

One source, on the sidelines of the event, believed this was as a result of government-owned airlines in monopolistic positions failing to see the advantages of closer co-operation, opting for rivalry instead of seeing an opportunity to grow the market together.

The eight-strong opening panel – from just two African companies – agreed that despite the many challenges, there was huge opportunity for growth.

A second panel, on Africa, called for greater collaboration between Customs to facilitate regional trade.

Sanjeev Gadhia, CEO of regional carrier Astral Aviation, said that while intra-African trade was the fastest-growing sector in the market, at about 15%, “the stumbling block in Africa is Customs. I’d like to see us all working towards a common goal.”

Ivin George, vp air freight for sub-Saharan Africa, at DHL Global Forwarding added: “The amount of bureaucracy at border posts is amazing, and that’s where we lose efficiency. If it all goes well, it takes 12 days to get from Johannesburg to Luanda becuase of the amount of documentation.”

With mobile connectivity in sub-Saharan Africa set to reach 930 million people by 2013 – a change which leads to a direct economic impact of 0.8% growth in GDP in developing countries – e-commerce was likely to be another significant growth area.

“African consumers don’t have the luxury of ordering something on the internet and receiving it next day,” said Mr Gadhia. “There is a gap in the market where the integrators have not offered that service. There is high demand – but it takes a long time for products to reach the consumer.”

Growth beyond the continent, interestingly, is not framed as many might have predicted.

“We are seeing growth of Asian-African trade, rather than the traditional north-south,” said Barry Nassberg, COO of Worldwide Flight Services, which has expanded its operation in Africa significantly in the past couple of years. “Because of the investment by Asian countries, especially China, some of the growth is staggering. We do see it changing.”

Mr Bezuidenhout also pointed out that it was taking time for African countries to establish their trades. “There is a slow change to the make-up of the economies. Countries will start to specialise: South Africa, for example, is strong on motor manufacturing and that has been a natural progression. It will all have an impact.”

While economies may be continuing to develop, investment remained challenging.

“Africa represents about 8% of our tonnage, but in the past five to six years it has been about 80% of our investment,” said Nils Pries Knudsen, head of global cargo at Swissport. “We want to improve infrastructure but there needs to be a payback. We would like to carry on but we have to be selective.”

Mr Nassberg added: “We are at very early stages, in terms of what the market is demanding in infrastructure. Shippers are looking for a world standard, but the ability to meet those needs goes hand in hand with the opening of those markets.”

Operating costs in Africa are also very high, noted delegates. Jet fuel prices, for example, currently average twice the global price, said Mr Abady. “Africa is not benefiting from the the fuel price plunge,” he said.

But, he added, “so many landlocked countries, and the growth of the middle class, means air cargo will be a driving force for development.”


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