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How to make the African cargo industry shipshape

Posted 13 December 2017 · Add Comment

Two major air cargo conferences took place in Addis Ababa, the Ethiopian capital, in June. Kaleyesus Bekele reports.

The Global Perishable Conference, organised by the Cool Chain Association and the STAT Trade Times, took place at the Sheraton Addis on June 26.
Sponsored by Ethiopian Cargo and Logistics Services, and Brussels Airport, stakeholders came from various global cargo industry and perishable producers to discuss ways of best avoiding the waste of goods.
Up to 40% of perishables produced in the developing world are spoiled before reaching the appropriate markets due to the absence of cool chain and proper cargo-handling facilities.
Billions of dollars are wasted as food is damaged due to mishandling. Better storage and transport systems and education are now of paramount importance.
Fitsum Abadi, managing director of Ethiopian Cargo and Logistics Services, said there was a long way to go when it came to perishable cargo transport in Africa. In an effort to plug the gaps, he said Ethiopian Airlines was investing heavily in cargo infrastructure.
Ethiopian has inaugurated a $150 million state-of-the-art cargo terminal. With eight dedicated cargo aircraft, Ethiopian Cargo is the largest cargo operator in Africa. It operates six B777 and two B757 freighters and it has placed firm orders for two more B777Fs.
“We are in close contact with flower, vegetable, fruit and herb growers, and exporters,” he said. “We have also built a cold store for meat products. Our new cargo terminal has positioned us to handle all these products based on their temperature requirements.”
According to Abadi, perishable products lose up to 50% of their quality during transport from the producer to the retailer and another 15% at the retailer.
“The consumer gets 70% less quality. Hence, the speed to market and the cold chain all the way from producer to retailer is crucial,” he said. “We should all be prepared to serve the consumer with fresh products. That is why Ethiopian Airlines is investing heavily in its fleet and cargo terminal.”
Sebastian Scholte, chairman of the Cool Chain Association, noted that there was a lot to do in infrastructure development in Africa. “What you do for horticulture and pharmaceuticals are almost the same – quite similar for perishables and pharmaceuticals.
“We need to have common standards but not enough attention is given to perishables,” he added.
Tewodros Zewide, executive director at the Ethiopian Horticulture Producers and Exporters Association, remarked that the cost of doing business with traditional exporting countries, like the Netherlands and Ecuador, was going up. “Greenhouses in the Netherlands are shrinking because of the high cost of doing business. If you go to any parts of the world outside of Africa the costs are increasing. So this naturally calls for Africa to intervene in the market,” he said.
The global perishable air cargo industry is estimated to be valued at nearly $250 billion. The Cool Chain Association, in its capacity as an industry organisation, supports and takes initiatives to address the challenges in the movement of perishable cargo by air from farms to destinations around the world. Hurdles like poor cold chain infrastructure, transportation delays, and temperature excursions, result in wastage to the stakeholders.
It is estimated that an efficient cold chain facility and management could significantly reduce wastage.
The following day, the International Civil Aviation Organization (ICAO) held its second meeting on African air cargo development at the United Nations Economic Commission for Africa (UNECA) Conference Hall.
Dr Olumuyiwa Benard Aliu, president of the ICAO Council, said that technological innovation, regulatory reform and investment in infrastructure would be crucial for Africa’s growth in the air cargo segment, adding that the full implementation of the Lomé Declaration [to enable the unobstructed flow and rapid release of goods through enhanced trade facilitation and custom clearance frameworks] would drive the air cargo segment growth.
“In Africa today, aviation supports millions of jobs and $72 billion in GDP. The importance of air freight as a key enabler of international trade, especially on high-value and time-sensitive goods, is reflected in the fact that it transports around 35% of world trade by value,” he said.
He also added that growth in African freight traffic outpaced the global average last year and that cargo capacity offered by African carriers in the region surged by more than 20% in 2016.
Innovation is particularly crucial, as e-commerce trends will continue to be a significant driver of growth. “The air cargo share of items purchased online grew from 16% to 74% between 2010 and 2015 and is projected to reach 91% by 2025,” said Aliu. “The number of parcels flown by air has increased from around 130 million in 2011 to around 400 million in 2015, at a staggering 30% average annual growth rate.”
According to the council president, progress on the implementation of the Lomé Declaration requires enhanced investment in ground infrastructure, aircraft, and human resources.
The Lomé Declaration was issued at the first African air cargo development forum held in Togo in August 2014. It identified regulatory and operational programmes for the development of air cargo in Africa.
June’s follow-up meeting in Addis Ababa adopted a new statement on the implementation of the Lomé Declaration, reaffirming commitment to the sustainable development of air cargo in Africa.
Director general of the Ethiopian Civil Aviation Authority, Colonel Wossenyeleh Hunegnaw, said air cargo was an extensive and highly complex industry, adding that operators should respect various international standards. “Airlines and cargo-handlers should work together to improve operational safety and efficiency,” he said.
Global air cargo accounts for $6 trillion worth of trade goods – around 35% of global trade. More than 68 million people earn their living from air cargo and 52 million tonnes is carried by air.
Ethiopian Airlines Group CEO, Tewolde Gebremariam, discussed how Ethiopian and Kenyan flowers were transported by air to Europe. “Hundred of thousands of Kenyan flowers are carried by air to Europe daily. More than 200,000 tonnes of fresh flowers is transported by air from Addis Ababa to Europe every year. Ironically, there are some African countries that import flowers from Europe,” he noted.
He said that not enough attention was given to the air cargo industry in Africa and air transport in general.
“Air Cargo in Africa needs help. We need to take out paper from the process. IATA, ICAO and all of us working together successfully managed to take out paper from passenger travel and now it is time to work together with customs and governments to take out paper from cargo transport. It makes it efficient, fast and allows us to compete with the rest of the world. With the advent of e-commerce speed is very important.”
Vladmir Zubkov, secretary general of The International Air Cargo Association (TIACA), said all stakeholders needed to improve the air cargo business supply chain. “We have to solve the problems quickly through e-air waybills (e-AWB) and E-freight. We want to contribute to the growth of the global chain. We have to have single-window processing to facilitate cargo movement. We need to have coordinated boarder agency procedures.”
Sergio Mujica, deputy secretary general of World Customs Organization, said e-commerce was all about speed and efficiency. “The challenge is to ensure safety and security,” he added.
Sanjeev S Gadhia, founder and CEO of Astral Aviation, pointed out that the air cargo sector in Africa was not fully liberalised. As vice chairman of the African Airlines Association cargo taskforce, he highlighted restrictions on traffic rights on the intra-African sector for African carriers due to outdated bilateral air services agreements, which were limiting growth potential.
He noted a lack of intra-African connectivity, lack of cargo infrastructure, the high cost of operation (caused by higher jet fuel price, cargo-handling fees, royalties, freight fees and taxes), lack of cooperation between African countries, dominance of foreign carriers, and the ageing freighter fleet were some of the major challenges facing the industry.
Foreign carriers control 85% of the air cargo traffic in Africa, he pointed out.
Gadhia also mentioned that the presence of rickety Soviet-era freighter aircraft was a threat to safe air cargo operations in the continent.
According to Boeing, Africa air trade with Europe, Asia and North America will grow 3.8, 6.5 and 5.3% respectively per year through to 2035. Boeing forecasts that African airlines will acquire about 100 freighters up to 2035, mostly standard-body (up to 45 tonnes capacity), to tap fast-growing intra-regional markets.

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