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Trade lanes: Europe to Africa – how airlines adapt to survive

Trade lanes Europe Africa
photo_camera Flags of the European Union and South Africa on darts hitting bullseye of the target. International cooperation or competition conceptual 3D rendering

Following a year of uncertainty that highlighted the importance of the cargo industry, Melissa Moody assesses what trade between Europe and Africa looked like in 2020 and what is in store this year and beyond.

This feature first appeared in the Spring 2021 issue of Airline Cargo Management, which you can read in full here.

A challenging year has left the air cargo market in somewhat of a flux. After a deep decline in April 2020, numbers steadily increased until the International Air Transport Association (IATA) reported in its November air cargo analysis that the recovery in ‘headline’ year-on-year growth had stalled.

Industry-wide cargo-tonne-kilometres (CTKs) fell by 6.6 per cent year-on-year in November 2020, according to the report. The growth performance was “broadly unchanged” compared to October which had a 6.2 per cent decline, representing the first month without improvement since April 2020. 

“The soft growth outcome this month can be attributed to a strong month of November 2019, when the impact of the US-China trade war was starting to wane,” reads the report. 

Trade lanes Europe Africa

IATA also reported that industry-wide available cargo tonne-kilometres (ACTKs) continued to improve at a modest pace, with the year-on-year decline moving from 22.4 per cent in October to an even 20 per cent in November.

Bellyhold cargo capacity fell by 53 per cent in November, “a robust gain” from October which saw a 58.4 per cent decline. While actual dedicated freighters ACTKs increased slightly, airlines were unable to match the increase in demand for the peak season due to limited fleet size and a number of specific operating issues. 

A slow surge 

While things are starting to look up for many, some countries are experiencing a slower growth than others. Europe, which has been hit by multiple lockdowns, has been impacted across the continent and this has had a knock-on impact on its trade routes globally, including the Europe-Africa route which was down 15 per cent in November compared to 2019. 

According to IATA, European carriers reported a decrease in international demand of 13.7 per cent in November compared to the previous year. This was a 2.7 per cent decline in performance compared to October 2020. Air cargo in the region has been significantly affected by the resurgence of Covid-19, the report claims, and the impact of lockdowns on consumer demand and business activity. It also found that lack of capacity remained a challenge, as international capacity also decreased 24.9 per cent in November.

African airlines also saw international demand fall by 1.7 per cent year-on-year in November, after three months of positive year-on-year growth. According to IATA, this has been primarily driven by a soft performance on the Asia-Africa route, which was down 4.5 per cent year-on-year. It also noted that international capacity decreased by 19.4 per cent.

Kenya Airways

The impact of Covid-19 in real terms on the airlines means that many have had to change the way they operate. In April 2020, like many airlines across the globe, Kenya Airways made the decision to transport cargo on passenger services. The carrier’s CEO Allan Kilavuka said that the pandemic created demand for cargo aircraft across the world with the main freighters operating mostly in Europe and the USA, therefore creating a shortage of cargo capacity in Africa. 

“We are exploring different options to keep the lights on in the organisation,” Kilavuka notes. “Cargo is one of those areas where we have converted four of our widebody passenger aircraft to cargo aircraft. We are also looking at narrowbody aircraft for shorter missions across Africa.” 

The airline’s focus on cargo looks set to continue, with the announcement in February 2021 that the Kenya Civil Aviation Authority had approved its request to convert some of its large passenger aircraft into freighters, the first being a Boeing 787 Dreamliner. This will see the airline increase the available capacity at the Jomo Kenyatta International Airport by over 100 tonnes, a boost for exporters. 

The airline said that the move would help it to use its 787s for long haul cargo services between Africa and other continents and also carry high volumes. 

Chartering a solution

Another solution has been the use of charters to transport cargo across trade routes. In response to the fluctuating market, Perishable Movement Ltd (PML) made the decision to charter its own freight flights in an effort to maintain the supply of fresh produce from Africa during the pandemic and post-Brexit. 

Working with Kenya Airways, the specialist perishable goods transporter has chartered a 787 Dreamliner to fly from Nairobi to London Heathrow twice a week. The flights will be able to carry 36 tonnes of cargo and, with planned modifications, eventually 42 tonnes. 

“Our decision last year to charter our own flight out of Nairobi represented an initiative designed to improve the supply of fresh produce during the pandemic and post-Brexit,” says PML’s managing director Mike Parr (pictured below). 

Mike Parr PML Trade lanes Europe Africa

The move comes hot on the heels of the company setting up a dedicated in-house charter air freight service to cater for the increasing demand for the transfer of perishable goods by air. Parr says the pandemic has resulted in cargo numbers going up due to the lack of passenger aircraft, and that this is the best solution for the transfer of perishable goods. 

Shipments have mainly focused around fresh produce, such as mange tout, sugar snap peas, fine beans and flowers, but PML has also been involved in transporting PPE. The timings of the flights mean that it is able to deliver fresh produce into the UK on the same day and maintain the quality and shelf life of the fresh produce consignment. 

According to PML, demand for these fights has been reasonable but the main challenge of the service is its price. “Fuel and running costs for this mode of transport are naturally much higher than those associated with shipping,” Parr explains. “Added to this is the fact that the global demand for PPE, primarily out of China, has meant that charters are quickly being filled enabling the airlines to charge a premium price for space.”

However, the impact of Covid-19 and Brexit has created extra hurdles, says Parr. “These are undoubtedly difficult times, but PML has continued to operate throughout the pandemic,” he adds. 

“The situation could have been made a whole lot easier if the UK government, customs, plant health and HMI (Horticultural Marketing Inspectorate) had not been so intent on creating so many bureaucratic hurdles which severely impede our ability to transfer goods seamlessly. All of the current red tape is leading to a shortage of fresh produce on the supermarket shelves – and the government must be held accountable for this.”

A future after Covid 

As vaccines are now being distributed globally, questions about the air cargo landscape and its routes are among the many being asked. Although there has been a sharp rise in demand in cargo, decimated passenger numbers mean some airlines and airports are having to try and balance the books. Parr believes there is scope for improved collaboration between government and industry. “We could prepare for the future far better if the government would listen to the experts who are actually working in the field,” he says. “With UK ports being given in the region of £200 million to ensure their survival, it is staggering to note that currently no such funding is being made available to airports.” 

Like Kenya Airways, more airlines may look to convert further aircraft whilst passenger flights remain grounded for the foreseeable future. But the situation is not all negative. IATA believes a “robust rebound” in economic activity is coming and suggests there is pent-up demand for air cargo, as has already been the case in recent months. 

While cargo capacity remains insufficient, this translates into elevated load factors and yields, which is expected to continue through to February and Valentine’s Day, a significant e-commerce event for the cargo industry. With this in mind, the association predicts that current monthly gains point to cargo volumes returning to 2019 levels around March or April 2021. The end, potentially, is in sight. 

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