Europe and Africa bonding strong
The renewed growth in African extractive industries coupled with infrastructure development, urbanisation, and increased demand for consumer goods have fuelled the surge in the Africa-Europe trade. This has opened up enormous opportunities for the airfreight industry by way of collaboration and investments, reports Shreya Bhattacharya
African trade is dominated by perishables to petroleum products, that the continent has in abundance. Despite the global slowdown, the continent, the growth rate rebounded in no time and presently remains one of the preferred frontiers for investments and doing business. While Asia and North America are critical parts of the principal markets for the continent, Europe is its primary trading partner accounting for nearly 60 percent of the cargo, largely because of its proximity and longstanding historical and investment ties. The Africa–Europe market accounts for approximately 2.3 percent of the world’s air cargo tonnage and 2.3 percent of the world’s tonne-kilometers, quotes a Boeing report.
“With the onset of the global economic downturn in 2008, Africa air exports to Europe continuously declined until 2013. After suffering from more than a half-decade of decline, Africa to Europe air flows finally rebounded, to more than 503,000 tonnes in both 2014 and 2015. On the other hand, Europe to Africa air flows rebounded from the recession relatively sooner. Although this flow slightly declined again in 2012–2013, this volatility seems to have normalised in the last two years as the trades in this flow have resumed growing again,” the report further says. 2016 also marked a year of fair air trade between the two continents, opine the air cargo players.
“Total volumes between Africa and Europe last year totalled almost 1,000,000 tonnes, with a relatively equal split between import and export. Total import from Africa was 492,238 tonnes while total export from Europe was 488,328 tonnes. Of these volumes, a fairly big portion was transported via Brussels Airport. In total, we handled 56,696 tonnes of import or 11.5 percent of all volumes, while on export we handled 34,884 tonnes or 7.14 percent of all exports out of Europe. The main reason for this imbalance is that one of our biggest cargo carriers, Ethiopian Airlines, are flying from Africa to Europe but then onwards to Dubai and Hong Kong, only generating one-way uplift out of Africa,” reveals Steven Polmans, head of cargo and logistics, Brussels Airport.
Liege airport, which also places prime focus on African import export, divulged a positive output. “We are the main gateway for widebody freighters to and from Africa. Of the total of 660,000 tonnes of cargo throughput in 2016, about 1,50,000 tonnes came from the Africa lane, a slight increase compared to the record breaking 2015. The Northbound has been performing very strong, but the southbound is picking up again as well,” says Steven Verhasselt, Vice President, Commercial, Liege Airport.
Meanwhile, Noud Duyzings, Director Eastern and Southern Africa, AFKLMP Cargo shares, “AFKL saw a slight decline in their EU – AFR volumes (vs. 2015), but still carrying almost 100,000 tonnes to the African continent in 2016. From Africa to EUR we gladly saw a slight increase in volumes in 2016 (vs. 2015), also carrying almost 100,000 tonnes between Africa and Europe.”
Another major player, Brussels Airlines revealed it transported nearly 25,000 tonnes to and from Africa via Brussels.
The rise in the growth trajectory of Africa-Europe trade can be credited to the renewed growth in African extractive industries, related infrastructure development, urbanisation, and demand for consumer goods. However, the growth can easily be affected by both African and European politics and economy. Possible factors which make the business vulnerable include weak European economic growth and Brexit.
Duyzings, for instance, explains that almost 30 percent of the Europe traffic to Africa is destined for South Africa, which remains very volatile at the moment. The tense political situation in South Africa which also led to a further weakening of the ZAR, will not quickly provide a big boost in business between Europe and South Africa. He, however, adds that there has been an increase in traffic to Eastern Africa and also in some parts, the oil and gas business seems to pick up slowly. “The Africa to Europe traffic looks more rosy, especially due to the strong growth in perishables from Africa,” he says.
Nevertheless, the air freight industry is all positive and hopeful for a fair business in 2017, as it sees growing investment in the region.
Brussels Airlines, which expects an increase in volume growth later in the year as oil prices surge, plans to offer 30 percent more capacity in 2017. “Although we see in the first months of this year a limited growth of the business between Western-Europe and Africa (less than 5 percent), especially in comparison to the global growth of more than 10 percent, I think that the volumes growth will start to increase as the oil prices are getting higher. Brussels Airlines Cargo is offering in 2017 nearly 30 percent more capacity due to (a) additional frequencies on specific destinations- Accra (ACC) to Abidjan (ABJ) and (b) to an increased capacity per flight. Near these short-term capacity increase, Brussels Airlines will renew shortly the long-haul’ fleet selecting aircraft with higher payload and will further expand its network in Africa,” says Alban Francois, vice president global cargo for Brussels Airlines.
Meanwhile, Air France recently launched a three-times-a-week service between Paris and Accra utilising a B777. Its three-times-a-week Cape Town service will be operated year round while its Cairo service has been upgraded to B787-900s. Additionally, KLM has opened a three-times-a-week service between Amsterdam and Freetown and Monrovia this summer, informs Duyzings. Strategic alliances have also been developed with Air Cote d’Ivoire and Kenya Airways to act as gateways to destinations where the group does not have a presence in Africa, ultimately generating new traffic, he says.
Recently, Ethiopian Airlines, one of the largest cargo operator in Africa, launched two new cargo routes to Europe; Milan, Italy and Zaragoza, Spain respectively. Tewolde GebreMariam, group CEO, Ethiopian Airlines, on occasion said, “Ethiopian Cargo is contributing its share to the fast and sustainable economic development of Africa. Airfreight plays a critical role in international trade and especially in the carriage of high-value goods, temperature controlled cargo like flowers, fruits and vegetables, pharmaceuticals, life science, etc.”
The airline has also added Oslo to its network of destinations recently. Besides, it is also upgrading the infrastructure at Addis Ababa Bole International Airport with its state of the art cargo terminal. The uplifting capability of the terminal is said to be equal to cargo terminals at Amsterdam Schiphol, Singapore Changi or Hong Kong.
Currently, Ethiopian is providing the European market with minimum weekly tonnage capacity of 2,200 from Liege, deploying modern game changing fleet, Boeing 777 Freighter.
Mentioning the same development, Steven Verhasselt, vice president, commercial, Liege Airport says, “We are very optimistic for 2017. Ethiopian Airlines, our most important partner, is opening its brand new state-of-the-art perishable center in Addis, and keeps adding capacity to its fleet, both freighters and belly capacity. We expect Ethiopian Airlines to grow, and as its hub in Europe, Liege should be able to support this growth. We also believe that exports from Kenya will keep growing. From Liege, the products can connect to anywhere in Europe by truck, including the UK, or connect to Asia and the Americas by widebody freighter connections. For the Southbound, we are positive as well. The oil industry starts investing again in new capacity in Africa, and the necessary equipment for that, originating in the USA or Asia, often transits on the Liege platform.”
Primary products traded
A wide range of commodities is exchanged between Africa and Europe, of which perishables and machinery are by far the most traded products. Polmans gives a clear picture of the proportion of commodities exchanged between the two continents. “Import from Africa to Europe is for 90 percent fresh foods and perishable non-foods (flowers). On export the primary commodities are raw materials/semi-manufactured industrial products (35 percent), chemicals & pharmaceutical products (12 percent), machinery parts (17 percent), capital equipment and machinery (8 percent), land vehicles (7.5 percent) and high-tech (6 percent) goods,” he says.
Brussels Airport’s main focus currently goes in facilitating the import of perishables and flowers from Africa into Europe via Brussels. “We are doing this by improving procedures, facilitating checks and investing in adapted infrastructure for the handling of these goods. At Brussels we are lucky to have some very robust and active perishable companies such as Adelantex and Sotracom, who have proven to be loyal and good partners for us and our customers,” says Polmans.
Policy and infrastructural changes to tap full potential
Africa’s air cargo sector is a key contributor to the continent’s competitiveness in global markets. The governments see it as one of the crucial engines of economic growth and social development. However, some constraints must still be overcome. These include inadequate infrastructure, lack of safety and security of cargo, high costs and policies that should be more flexible. The Yamoussoukro agreement, which is meant to liberalise the African skies, could untangle many complexities.
Ethiopian Airlines, for instance, lays emphasis on the implementation of Yamoussoukro Decision (YD), which will have a paramount role in enhancing air connectivity of African continent. It also hopes for an efficient utilisation of free trade agreements like NEPAD (New Partnership for Africa’s Development), and regional free trade zones like COMESA (Common Market for Eastern and Southern Africa ) and other regional partnerships that will enhance trade volumes. “Investment on airport infrastructures, warehouse facility, trucking and IT solutions are needed to take the logistics and trade to a higher level. The new state of the Art Ethiopian Cargo Warehouse facility with the annual capacity of 1.2 million tonnes and the expanding airport and ICT infrastructure will make us more capable of handling the current booming Air Cargo business,” says Fitsum Abadi, managing director of Ethiopian Cargo.
Secondly, exporting of perishables from Africa to Europe like fruit, vegetables and fish, requires the right accreditation and certification from the European bodies for health safety and customs authorities. “These rules are often complex for local growers to understand and to file their application. Brussels Airlines is, therefore, bringing these persons in contact with the right parties and providing the necessary pieces of advice,” says Francois.
“also, the handling of these goods and also other temperature sensitive products imported in Africa (such as pharma) requires the adequate warehousing infrastructure and necessary policy to make sure that the temperature is assured at all times. We see however in more and more countries that the right decisions have started to be taken,” he further says.
Africa has a young and burgeoning population who has access to mobile, increased purchasing power, an expanding economy and a booming service sector. This gives way to increased demand for more variety of imported products including gadgets as well as food, medicines and drugs, which fits nicely into the value proposition of airfreight for timely and temperature-controlled goods. To tap the opportunity, collaboration and investment is a key that would ensure a great future for the airfreight business between Europe and Africa.