Demand for Africa’s riches-both mined and grown-continues to stimulate a rush of cargo operators to the continent, and with them comes investment in assets 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 Astral 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 used to go abroad for their studies and stayed abroad are now starting to come back again with credit cards and the latest gadgets; their i Pads and Blackberries.

“Only a few years ago I couldn’t buy on Amazon and have it delivered to me: I had to have a friend bring it from London .But now we can buy things on credit cards using mobile phones. It may not be delivered tomorrow, it will be more like five days, but that doesn’t matter to them. The middle class will lead to immense air cargo growth in Africa.”

Lida Mantzavinou, an aerospace and defense consultant at Frost & Sullivan, agreed:”The global cargo market is experiencing a revolution. New trade corridors are emerging linking the markets of Africa, Latin America, the Middle East and Asia, which are growing faster 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 expected 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 and 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 Middle East and Asia. Ethiopian Airlines partnered with 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’ recent growth parallels the continents own .Daniel Mebrate, associate vice president, Ethiopian Cargo, said: “2012 was a good year. We started operations with two new good year. We started operations with two new 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 building a facility, which is slated to be in terms of capacity the biggest perishable warehouse in the world.”

Kenya Airways ,the continents other major success story ,has also been responding to the tremendous amount of perishable cargo coming out of the country ,largely heading to Europe’s hungry supermarkets.

Last year, it and KLM Royal Dutch Airlines, jointly launched the first direct freighter service 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 next 10 years, some 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 Sky Cargo.

“Last year we launched our Zambia-Zimbabwe route. We started using an A330 but upgraded to a 777, from five flights a week to daily, from October. We also delinked the flight to Entebbe and Addis Ababa.Thats given some great additional lift 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 very positive.”

Lufthansa Cargo is also seeing solid growth, especially out of Egypt, Ethiopia and Kenya, said Hermann Zunker, regional director Africa. That growth is attracting others.”In the past year we have seen a number of carriers expanding their network into 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 company 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 customers 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 continent but few have what it takes to succeed there.”Several airlines have started flying to Africa only to stop after 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 thought Africa was the new Eldorado.”

Of those new and existing carriers to the continent, Picciotto only rates a few as having the knowledge to succeed there.

“Cargolux, Air France, Avient and Allied definitely understand the market and will be reactive if it booms in one country or region to quickly place additional capacity,” he said.

So why do so many fail?

Local knowledge is apparently essential as the continents largest problems are political instability, poor infrastructure and handling facilities, and excessive regulations and bureaucracy; a complaint widely voiced at the conference.

Any of these can lead 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 of 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 long bureaucratic process before securing fifth and seventh traffic freedom rights,” he said.”As we develop the air cargo industry on the continent: countries need to ease stringent policies which are crucial to build a conducive operating environment for airlines. Watson added: “There has been an improvement [in professionalism and infrastructure development] in a number of the markets but there needs to be continual improvement over the next two or three years to maintain the kind of capacity that is being brought into the markets. Places such as Kenya, Ethiopia and Uganda need to continue to develop their handling capacity in line with market growth.”

Barry Nassberg, chief operating officer for cargo handler Worldwide Flight Services (WFS, trading on the continent as 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 not impossible.Theres huge demand for cargo handling to the standard were used to in Europe or North America. And you don’t have to be a brilliant innovator. If you can just bring what is here up to today’s current standards, that would be a big step forward. We feel we can really contribute with that.Theres plenty to keep us busy.

Number One Hurdle

Challenges do remain 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 have a single sky operation but before this can be achieved, individual aviation authorities need to develop their own infrastructure at home. They must progress efforts to improve infrastructure 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 with infrastructure challenges and ability to accommodate transit between airports and they are all yet to fully establish services incorporating reliable information technology platforms to process cargo.”

Astrals Gadhia said the largest challenge is lack of market access due to Africa governments out if they relax regulations but actually they’re harming their own people. A lot of the services airports offer airlines only come from one monopolistic service provider, not the three and five that you get in some of the more developed markets, such South Africa or Kenya. That also 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 about them you have to remember is that very difficult.

“The thing 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 foreign companies ability to invest, security obstacles and access 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 air cargo\’s migration from North America and Europe to the Middle East and Asia, both of which need Africa’s resources. With that wealth, Africans are now more willing to invest in other African companies and countries.

“Were seeing a shift in economic power from West to East,” explained Zemedeneh Negatu,a managing partner of Ernest & Young based in Ethiopia.”That’s a permanent trend. In 2010 North Americas share of the global gross domestic product was 22% .The forecast is that by 2050 it will be 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.”

Remain Skeptical

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 go on record. Others are more optimistic though.

“No ,I don’t think Africa will be a flash in the pan,” said Ram Meneb,senior divisional vice president at Emirates Sky Cargo.”In the past we’ve seen South Africa and Kenya being the growth areas but now west and central Africa are catching up. They’re leap-frogging technology and 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 certain 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 not as much competition from road and rail that you have elsewhere. In Africa, air cargo is definitely here to stay.”

Anthony A Juma is the Editor and Director Commercial & Flights Operations at Wings Over Africa Aviation Limited. This is an Air Charter Company that specializes on Scheduled, Consolidated & Private Cargo Charter Flights Africa. The website has guided thousands of travelers to achieve their dream holiday. For more information and guidance, visit the site at http://www.wingsoverafrica-aviation.com/index.php/services/cargo-and-freight-flights.htm

Anthony A Juma is the Editor and Director Commercial & Flights Operations at Wings Over Africa Aviation Limited. This is an Air Charter Company that specializes on Scheduled, Consolidated & Private Cargo Charter Flights Africa. The website has guided thousands of travelers to achieve their dream holiday. For more information and guidance, visit the site at http://www.wingsoverafrica-aviation.com/index.php/services/cargo-and-freight-flights.htm

Author Bio: Anthony A Juma is the Editor and Director Commercial & Flights Operations at Wings Over Africa Aviation Limited. This is an Air Charter Company that specializes on Scheduled, Consolidated & Private Cargo Charter Flights Africa. The website has guided thousands of travelers to achieve their dream holiday. For more information and guidance, visit the site at http://www.wingsoverafrica-aviation.com/index.php/services/cargo-and-freight-flights.htm

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