Asia has risen to become Africa’s top trading partner, with plenty of demand for cargo shipments between the two regions. We find out that while challenges to growth persist, there is greater focus to invest in air freight services.
It is no secret that Asia and Africa have forged strong trade links over the last two decades. Furthermore, this trade lane has been driven by the growing appetite for Africa’s commodities and the popularity of electronic gadgets from Asia.
African airlines have registered significant growth in freight volumes between these two regions over the last couple of years.
Sanjeev Gadhia, the chief executive officer of Nairobi-based Astral Aviation Limited, tells Airline Cargo Management that the air freight market between Asia-Africa comprises mainly of e-commerce and electronic goods, which is intended for Africa’s growing middle-class population.
“China, in particular, is Africa’s leading trade- partner, and the growth is derived from the high demand of all types of Chinese manufactured products into Africa,” he says.
Astral Aviation is represented in Asia by its offline GSA, CTS in Hong Kong and Network Airline Services in China. “Most of the cargo shipments move on interline carriers from Asia to our Nairobi hub for onward connection to Astral’s intra-African network of eight schedule destinations and 50 charter destinations.”
Gadhia lists that inbound cargoes from Asia comprise mostly of mobile phones, electronic goods, e-commerce and project cargoes, and popular outbound cargo shipments from Nairobi to Asia are mainly seafood perishables.
Except for Ethiopian Airlines Cargo, who operate direct China-Africa freighters, most of the freight is routed via the Middle East or Europe due to the lack of main-deck freighter capacity, Gadhia mentions.
Ethiopian Cargo is the largest network cargo operator in Africa. Fitsum Abadi, Managing Director for Ethiopian Cargo and Logistics Services, says that, currently, eight freighter destinations are served in Asia by Boeing 777Fs including Hong Kong, Shanghai and Guangzhou.
“We also operate to the major Indian airports like Mumbai, Delhi and Chennai,” Abadi adds that more than 90 per cent of the cargo shipments have a final destination in Africa.
As Gadhia stated, much of the air freight is routed via the Middle East, and Emirates SkyCargo has an extensive presence across both Africa and Asia via its Dubai hub.
“These are strategically important regions for us, and we are committed to growth to serve the growing economies across the Asian and African continents,” comments Khalid Al Hinai, Emirates vice president Cargo Commercial Africa.
Emirates serves 27 destinations across Africa and for Asia, with a network that spans over 40 destinations across East, South and Southeast Asia. And, of course, there are also 15 destinations served in the Middle East.
“We offer a mix of belly-hold and main deck cargo capacity in these markets based on demand.” Al Hinai says the freighter fleet serves around 40 destinations globally on a scheduled basis, and out of this, over 15 cities are based in Africa and Asia.
“Through our network and frequency, we have been able to facilitate a large amount of trade between Africa, Asia and the rest of the world.
Our strength is providing direct air connectivity with daily multiple departures to many places in Africa and the only carrier to be able to offer all widebody capacity.
The belly-hold capacity on our passenger aircraft [ 777s and A380s] can take as much cargo as a small freighter aircraft. We are committed to adding more capacity to meet the growing demand as needed,” tells Al Hinai. Air cargo operators seem keen to plan accordingly in order to grow their presence on the trade lane.
Gadhia reports that Astral Aviation is negotiating with interline partners to increase the cargo shipments capacity from Hong Kong and Guangzhou to the Nairobi hub due to the absence of their own freighters on this route.
“We want to expand our business from China to Africa with the view of carrying an increase in the volume of cargo bags, which has become increasingly popular due to the ease of customs clearance”
Gadhia adds that due to the lack of capacity from China to Africa, Astral is considering setting up a mini-hub in Dubai for consolidations of Chinese cargoes for onward distribution to Africa.
Ethiopian Cargo is increasing both flight frequency as well as the number of destinations. Abadi states that the carrier has aligned its strategy to intensify its frequency connecting Asia with Africa.
“We have also recently increased our frequency to Hong Kong and Guangzhou, and as a result, we have the largest market share from those stations.”
Al Hinai regularly sees instances where Emirates SkyCargo has been able to help develop new markets for exporters and help trade growth.
He says with rapid economic growth across many countries in Africa, consumer demand is on the rise, and consequently, cargo imports are showing growth: “For instance, we were able to support exports from Asia, which include a high volume of telecom equipment to cater to infrastructural development, a wide range of mobile phones, pharmaceuticals, equipment and machinery, and other commodities.”
In the last three years, among other shipments, Emirates has transported more than 800,000 units of malaria tester kits and other associated equipment from South Korea to Malawi, Zambia, Tanzania, Zimbabwe and Nigeria.
Al Hinai also speaks of the essential need for rapid flight connections between East Asia and Africa. “We are able to offer some of the quickest connections between several points in Asia and Africa through Dubai. We also facilitate increasing quantities of cargo shipments with exports such as fruits, vegetables, flowers and seafood from Africa to different parts of the world, including the Middle East, Asia and Europe.”
Al Hinai says the airline continuously analyses patterns of consumer demand and trade flows across all the markets operated: “This is to ensure that we are deploying optimum capacity in markets where there is demand.”
There are of course several challenges that carriers contend with despite the growth in cargo activity. Gadhia feels the main challenges arise from the lack of direct capacity as most of the freight from China is being moved via the Middle East and European hubs.
“Chinese carriers do not offer the main-deck capacity to and from Africa which is much-needed.” In fact, the Asian carriers have clearly resisted penetrating the African market directly.
This means that Asian operators, particularly the Chinese, would need a strong partner – and an efficient connecting hub – to leverage the potential of the China-Africa market, as their routes would depend to a large extent on connecting offline traffic.
Of course, this does not mean that Chinese carriers won’t eventually enter the African market, but they have thus far clearly pursued long haul opportunities in denser city pairs, notably North America and Europe – just maybe leaving some opportunity for African airlines to squeeze in further.
Abadi from Ethiopian feels there is a directional imbalance on the trade lane, and it affects air freight services between Africa and Asia; additionally, poor infrastructure, political turmoil, high royalty and operational charges, low level of technological development, bureaucracy and corruption in Africa restricts further growth in some air freight markets.
He also cites that non-African carriers have taken the lion share of the business, in particular, the Gulf airlines. Despite the growing Asian connecting traffic at African hubs like Nairobi and Addis Ababa, there are some challenges and further opportunities present here too.
Ethiopian, for example, has a well-located hub, very competitive cost structure, and profitable subsidiaries, such as a ground handling monopoly at Addis. Because of this, it is well-positioned to serve the Africa-China/Far East market, without the need for partnerships with Gulf carriers, provided that it makes intelligent decisions about its route network and doesn’t overextend itself.
Analysts have stated that in order to remain competitive with the ever-growing Gulf carriers for Asian business, Ethiopian needs to strengthen operational efficiency at its hub.
Connectivity is Ethiopian’s lifeblood, and Bole International Airport in Addis cannot afford to fall far behind the Gulf hubs, which are rapidly adding capacity, and offer high passenger convenience.
In terms of investment, there are signs of progress scattered around the African continent. Several new airport projects are underway or already completed, with significant emphasis on capacities of cargo shipments, such as facilities being built in Senegal and Zambia.
Al Hinai concurs, saying Africa’s emerging middle class, infrastructure developments and increasing foreign direct investments continue to drive cargo traffic growth into Africa, and these markets are predominantly import oriented. “To meet this forecasted growth, there are ongoing efforts to modernise and expand the quality of overall aviation infrastructure.”
Over the years Emirates has worked with airport authorities, cargo handlers and other stakeholders to improve warehousing facilities and customs processes to improve speeds of cargo clearance and increase efficiency.
He observes that local governments are also investing in infrastructure development. “For example, the new facility commissioned at Dakar [Senegal] has a large capacity for storing imports. However, progress is at different stages in the various African markets.
“They should continue to foster a competitive, low-cost model for specialised air cargo facilities that meet the individual operating needs of carriers, freight forwarders and the cargo industry in general.
“This would not only help imports but also go a long way in supporting and growing exports making a direct contribution to the country’s economy. With the growth of exports and development of new export markets, the imbalance in trade can also be addressed,” Al Hinai explains.
Ultimately, from a competitive position, there is no reason why African and Asian carriers can’t successfully coexist with the major Gulf carriers, especially given the size and growth of the Africa- China market.
Read more about air cargo demand between Europe and Asia.