Africa airfreight down as carriers adjust to challenges

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African airfreight tonnage fell by 2.7 percent in 2013, according to Airports Council International. South Africa’s economy in particular is suffering, and Johannesburg, Africa’s leading air cargo hub, saw a 5.4 percent drop in volume for the year.

Ronel Rossouw, national cargo sales manager for South African Airways, says a weak rand and rising fuel costs has affected import, export and domestic markets.

“Our volumes have been under pressure due to reduction in capacity on some of our passenger routes, and stiff competition has resulted in yield erosion,” she says. “More and more customers are seeking alternatives to move goods and cut transportation costs.”

Routes to Zimbabwe, Kenya and Senegal are underperforming, but Rossouw reports growth in domestic perishables traffic. Intra-Africa pharmaceuticals, automotive, electronics and perishables volumes are strong in and out of Mozambique, Angola, Democratic Republic of the Congo, Uganda and Nigeria, thanks partly to extra freighter capacity.

SAA’s recent announcement that it is suspending planned orders for new long-haul aircraft and focusing on A320s will see its capacity and market share decline, Rossouw accepts.

Duncan Watson, vice president Africa for Emirates SkyCargo, confirms that the depreciating rand – trading 20 percent lower against the dollar in March than a year earlier – has hit imports into South Africa. Weaker demand into Europe has driven exports down and prompted a shift to oceanfreight.

While most African countries are net exporters of air cargo, imports such as personal effects, textiles and electronics are fueling Nigerian business for Emirates. It operates a weekly freighter into Kano, carrying exports such as leather goods, kola nuts and fresh meat back out, and will supplement this beginning August with a passenger A340-500 to Kano and Abuja, Nigeria.

Growing Algerian volumes have led Emirates to support its daily passenger service from Dubai with ad-hoc freighters since the beginning of this year.

ECS, the French-owned GSSA group, is bullish about the Africa market, forecasting 4 percent annual growth with intra-Africa traffic expanding faster still.

Brussels Airlines, a longstanding ECS principal, last year launched a Washington, D.C., flight in addition to its existing JFK service. Overnight flights from the U.S., operated using passenger A330s, allow Africa-bound cargo to be transshipped over Europe next morning, so there is little delay reaching destination markets, ECS chairman and CEO Bertrand Schmoll explains.

Where extra trans-Atlantic capacity is required – for example, to transport oil drilling or other heavy equipment from Houston or Canada – ECS has a main-deck option in AV Cargo Airlines.

The former Avient operation, which restructured in 2013, is focused on the oil and gas business and operates scheduled services to many African destinations. The imminent arrival of AV’s third MD-11 freighter will increase charter availability.

ECS specializes in West Africa, and launched its own airline, Niger Air Cargo, in 2012 in association with a private investor.

“Niger had no carrier, and we saw an opportunity to create something from scratch, supporting local industry, including some of the world’s largest uranium mines,” Schmoll says.

However, civil unrest in neighboring Mali curtailed growth last year.

“Political troubles led to flights being suspended and redirected,” Schmoll says.

Niger Air Cargo operates a weekly MD-11 freighter service from Liège, Belgium, to the Niger capital, Niamey. All ECS stations worldwide are selling the Niger Air Cargo service and deliver cargo to Liège for consolidation, including communications equipment, apparel, pharmaceuticals, fresh food and other perishables.

ECS, which also looks after handling for the carrier in Niamey and manages a dedicated warehouse there, aims to establish the airport as a hub for distribution across the region.

The GSSA additionally represents Senegal Airlines on flights from Europe to its Dakar, Senegal, hub and onward across the region. Although Dakar is also a Brussels Airlines destination, the situation is a win-win, according to Schmoll, because of Senegal Airlines’ dense network to points such as Nouakchott, Mauritania, and Bissau, Guinea-Bissau.

Brussels Airlines’ southbound export volumes to Africa fell by 10 percent to 13,700 tonnes in 2013, but it claims to have maintained market share despite discontinuing its operation in Bamako, Mali.

Depending on route and whether it is operating the -200 or -300 version of its A330s, the carrier has an average 12-15 tonne cargo payload on its Africa services.

“This reduces drastically during the high passenger (and baggage) seasons of June-September and December,” Herman Hoornaert, Brussels Airlines head of cargo, says.

Brussels Airlines achieved a 4 percent increase in northbound volumes at 13,300 tonnes last year, bringing the two directions into near-balance. Cameroon and Gambia saw rapid growth in perishables exports.

“In some months, northbound produced more kilograms than southbound for the first time ever in 2013,” Hoornaert says. “We have very high load factors of around 90-95 percent southbound and 85 percent northbound, which are exceptional figures given that a lot of our Africa flights are operated in a triangular pattern. We are currently talking with full-freighter operators to give us additional sales opportunities to Africa.”

After a slow start on the Washington route, Hoornaert says westbound services are now fully booked.

 

Mideast surge

The Middle Eastern carriers that have added so much African capacity in the last two or three years have focused on serving the east of the continent. For those flying further west, ECS’s Schmoll claims “the lack of return cargo is an issue,” requiring ferry flights across to points such as Nairobi; Entebbe, Uganda; and Dar es Salaam, Tanzania, to pick up perishables.

Undeterred by this imbalance, Saudia Cargo increased its export volumes to Africa by 145 percent in 2013 to more than 50,100 tonnes. Exports from the continent saw an 85 percent increase, reaching 20,600 tonnes.

The carrier operates scheduled freighter services from Saudi Arabia to seven African destinations, including a daily B747 to Lagos, where it is developing a regional hub that now feeds transit cargo to 13 destinations.

Saudia Cargo has added two additional freighter flights per week from Nairobi to Amsterdam, taking the service daily, and is replacing MD-11s with B747-400s.

Turkish Airlines now operates to almost 40 African airports, including 11 freighter destinations. Tarik Parlak, regional cargo director Africa, says cargo exports increased by more than 80 percent in 2013, led by South Africa, Kenya, Ghana and Uganda, while imports were up 50 percent.

A Nairobi freighter was launched in 2013 and Tunis in March, while frequency to Entebbe was increased. Turkish Cargo’s other fastest growing main-deck markets are Tripoli, Libya; Lagos; Algiers; and Entebbe.

Major export streams are flowers, vegetables, fruits and fresh fish, mostly for European, Middle East and Asian markets.

“Though some products are seasonal, efforts to irrigate agricultural production have reduced the effect of low season,” Parlak says. “Exploitation of mineral ores, oil and gas has led to high demand for exploration and mining equipment. We also carry pharmaceuticals, medical products, industrial, electrical and electronic products into Africa.”

Astral Aviation operates freighter services across Africa from Nairobi. CEO Sanjeev Gadhia estimates growth in intra-Africa airfreight at 15 percent in 2013. In addition to mainline airports such as Johannesburg, where Gadhia aims to establish a second hub next year, Astral operates to less well-served destinations such as Juba, South Sudan; Mogadishu, Somalia; Pemba, Mozambique; Mwanza, Tanzania; and Kigali, Rwanda.

Astral is also targeting Lagos. The Nigerian capital “has advantages in terms of connectivity with Europe, the Middle East, China and the U.S.,” Gadhia says.

In October 2013, Astral introduced a twice-a-week B747-400F service connecting Nairobi with Manston, U.K.; Ostend, Belgium; and Lagos. The Nairobi-Manston leg, largely filled with perishables, has operated at 95 percent load factor since IAG Cargo pulled its Nairobi-London Stansted freighter service in February – a “correction in the overcapacity that existed before,” according to Gadhia.

The South Sudan conflict toward the end of 2013 brought a significant reduction of general cargo, but Astral has positioned an extra freighter in Juba to take care of domestic movements of relief cargoes from Nairobi and Entebbe.

In addition to its two existing cargo hubs in Addis Ababa and Liège, Ethiopian Airlines has established a third hub in Lomé, Togo, in partnership with ASKY Airlines. It plans similar ventures in Central and Southern Africa.

Around 80 percent of Ethiopian cargo travels on freighters, and the carrier is taking delivery of two Boeing B777-200LR freighters this year and another two next year, supplementing its six freighters. Lomé was added as a new main-deck destination in 2013 together with Khartoum, Sudan; Kuwait; and Delhi.

Ethiopian saw cargo revenue growth of 12 percent last year, way ahead of its 2 percent increase in freight tonne kilometers flown. A spokesman identifies Johannesburg, Dubai, Brussels, Mumbai and Guangzhou as the fastest-growing trade lanes.

The opening of cargo terminal 2 at Addis Ababa in the next two years will boost Ethiopian’s capacity by 600,000 tonnes and a third terminal is already on the drawing board.

There will be a major focus on temperature control in the new facilities, given the high level of pharmaceutical imports and Africa’s dependence on perishables for up to 70 percent of its airfreight exports. Flower exports are now a year-round business, though with a peak from mid-January to mid-February. Fruit and vegetable shipments to Europe are at their highest from November to May, the spokesman says.

Kenya Airways has received the first of six Boeing 787s and will replace a B767 on its Nairobi-Paris passenger service in June.

“It’s not the extended version but gives us one more pallet position,” says Katrina Hanson, area manager cargo, Europe and North America.

The 787s, to be delivered this year, will be deployed on thicker long-haul routes to destinations such as Johannesburg and Beijing. Kenya Airways will meanwhile place its second B777-300ER, arriving in May, on the Amsterdam route and hopes the new fleet will boost its cut-flower traffic.

Though tonnage out of Hanson’s territory ended 2013 slightly below budget, revenues were ahead – a trick competitors struggling to maintain yields would doubtless wish to emulate. She partly credits two passenger-to-freighter conversions of 737-300s that have now been operating for a year on intra-Africa routes.

The freighters serve scheduled destinations in Congo, Tanzania, Uganda and Cameroon, Hanson explains, as well as offering ad-hoc and charter capacity.

“We have niche products and destinations such as Juba, where we have little competition. Freighter capacity has helped us on routes such as Entebbe, where we previously couldn’t carry more than 100 kilos,” she says.

Kenya Airways’ only intercontinental freighter service is the Safari Connection, operated weekly on a Nairobi-Amsterdam-Guangzhou-Nairobi-Lagos loop using a Martinair B747-400. The carrier has this year expanded its cooperation with KLM in East Africa, in a joint-venture agreement covering the passenger and cargo business, but has also pledged to add long-haul freighters to its own fleet over the next 10 years.

This move would capitalize on Kenya’s efforts to encourage more companies to base their East African operations in Nairobi, and thus reduce its dependence on horticultural exports.

Samsung has set up an assembly plant supplying laptops, printers and TV sets to 16 countries from Kenya. Nokia, cellphone network provider Orange, Siemens, telecommunications company Airtel, Nestle and PepsiCola have also invested in Nairobi. Honda opened a motorcycle plant there last fall, while Toyota chose Mombasa for a new bus assembly plant.

Florence Desert, vice president for Air France-KLM-Martinair Cargo responsible for France and Africa, says the group has maintained its position southbound to Africa except for Hong Kong-originating cargo. Its Hong Kong-Paris freighter, a significant feeder for Africa, has been withdrawn.

Southbound business into countries such as Ivory Coast, Mali, Chad and Angola is growing, particularly out of France, supported by oil and gas traffic, food, industrial equipment and spare parts and traditional consolidations.

On these West and Central African trade lanes, yields are satisfactory, but Desert reports rate erosion into South and East Africa and, in line with other operators, says the Johannesburg market has been particularly weak.

“South Africa is also becoming a challenging northbound market which faces major overcapacity, putting significant pressure on yields. The situation is similar in Kenya,” she says. “However, intra-Africa activity, driven mainly by South Africa feeding other countries, is increasing.”

IAG Cargo has been able to compensate in part for its withdrawal from the direct-operated freighter business following parent British Airways’ decision to serve Johannesburg with an A380 that replaces the previous B747. The new aircraft offers air-conditioned hold capability for temperature-sensitive goods.

BA is also the first customer to receive an uprated version of the A380 with a 12-tonne higher maximum takeoff weight. IAG Cargo has optimized belly-hold capacity by taking two additional ULD positions.

Beginning May 1, BA’s London-Cape Town passenger frequency increases from seven to 10 per week following SAA’s suspension of this route.

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