in Air Transport / Features

Figuring out the reasons for Africa's weight loss

Posted 27 February 2019 · Add Comment

Media reports of sharp contractions in Africa’s air cargo market are not all they seem, reports Alan Dron.

Air cargo statistics are notable for strong upward and downward movements, depending on the health of the global economy.
One of the first signs of an impending recession is often a fall-off in the amount of freight traffic moved by air as companies start to pull in their horns, perhaps a year or more before the recession actually bites.
Similarly, an upturn in air freight volumes normally precedes a general improvement in world economies, as organisations start re-stocking with raw materials and goods.
The International Air Transport Association (IATA) freight statistics, issued in October, noted that in August, the latest month for which figures were available, African air cargo transport had contracted by 7.1% when measured in freight tonne kilometres (FTK) compared to August 2017, and that this was the fifth time in six months that demand had shrunk.
Having peaked in seasonally adjusted (SA) terms at the end of last year, FTKs look to have stopped declining in SA terms in recent months, although they remained 8% lower than their November 2017 peak. More widely, demand remained weak on all the key markets to and from the continent.
Available capacity for cargo in Africa actually increased by 6%, which resulted in a 2.8% fall in freight load factors (FLF) across the continent, to just 19.7% across all flights, to from and within Africa.
Overall, Africa had just a 1.9% share of the global air freight market last year.
However, said IATA’s head of industry analysis, Andrew Matters, the figures showing a sharp drop in African air freight had to be put into context as 2017 had been a particularly strong year, which meant that 2018’s figures tended to pall when compared to the previous 12 months. “The level of African FTKs is still actually very high,” he confirmed.
“For an extended period between 2014 to the latter part of 2016, the level of FTKs flown by African airlines was very stable. What we saw from the end of 2016 to the end of 2017 was substantial growth in African FTKs; we see a distinct shift in level.
“The level of FTKs has stepped up and is much higher than the 2014-16 period. The growth rate for FTKs in 2017 for African airlines was essentially 25%, year-on-year.”
This was partly due to some African economies benefitting from the rise in oil prices and the generally sound economic backdrop. There was also strong foreign investment from the Asia-Pacific region as a whole, particularly, but not only China, said Matters. Increased freight and passenger flows were associated with that surge in investment, he added.
On top of that, a couple of large African carriers – notably Ethiopian – had expanded their operations.
“If you look at the Africa-Asia market, FTKs increased by more than 50% in 2017. That gives you an idea of how sharp the run-up was. The level has come back, but it’s more a reflection of that previous very sharp rise.
“In level terms, African air freight is actually doing pretty well. The story is considerably more positive than the [current] negative growth rate would suggest.
“As things have moved on this year, in some countries there’s increased instability – economic or social. For example, South Africa has lapsed back into recession.
“It’s very difficult to generalise about the African economy, because [different] countries are quite diverse. Overall, performance is generally solid, but there are certainly divergences across countries – large divergences, in some cases.
“The story for Africa in the longer term is a very positive one in terms of improvements in the air transport market, on both the passenger and freight side. We’re quite upbeat about longer-term prospects for the region.”
Factors such as the increasing number of countries signing up to an African ‘open skies’ agreement were very positive, he said.
Some issues, such as the extent of taxes and charges on air carriers and necessary improvements to infrastructure, still needed to be looked at.
“However, if you look at the growth rate for air freight in isolation, the story does look much worse than the reality.”
 

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