African carriers suffered a decrease in freight demand for the seventh month in a row.
Demand reduced by 4.2 per cent in October, compared with the same month last year, even as its top three airlines increased their cargo haulage capacity.
According to the International Air Transport Association (IATA) data for global air freight markets, despite the increase in capacity by 5.4 per cent year-on-year, the demand on all key markets to and from Africa remain weak.
“Nonetheless, seasonally adjusted international freight volumes have stopped declining and recovered sharply in recent months. This led to a -3.7 percentage point decline in average freight load factors (FLF), i.e. the amount of revenue-generating capacity taken up by the market, for an average FLF of just 36.8 per cent,” IATA said in its latest report released on Wednesday.
Alexandre de Juniac, IATA’s director general, said cargo is a tough business, but the sector remains cautiously optimistic as the end of the year approaches.
“Slow but steady growth continues despite trade tensions. The growth of e-commerce is more than making up for sluggishness in more traditional markets. And yields are strengthening in the traditionally busy fourth quarter. We must be conscious of the economic headwinds, but the industry looks set to bring the year to a close on a positive note,” Mr Juniac said.
African carriers have expanded their capacities to accommodate more cargo haulage but are facing the challenge of poor infrastructure.
Currently, only one third of the airports on the continent have sufficient infrastructure to meet the requirements of freighter airlines.
In September, the continent’s largest cargo operator, Ethiopian Airline Cargo and German logistics giant DHL signed a joint venture agreement that is billed to transform the continent’s logistics business.
In June 2017, Ethiopian Airline Cargo opened a new cargo terminal at its Bole Airport in Addis Ababa, constructed at a cost of $150 million which can handle 600,000 tonnes annually.
This is an improvement from the existing terminal which could handle 400,000 tonnes, pushing its capacity past the one million tonnes mark.
The cargo terminal, whose capacity now matches those in Amsterdam, Singapore and Hong Kong, includes a dry cargo terminal warehouse, perishable cargo terminal with cool chain storage as well as fully automated elevating transport vehicle technology.
“We have invested in modern infrastructure projects to expand our cargo facilities. The new cargo terminal will give us an annual tonnage capacity of around one million, which is the largest on the continent,” Ethiopian Airlines Group chief executive Tewolde Gebremariam said.
ET currently handles more than 350,000 tonnes annually, generating more than $357.18 million in revenues.
Its closest regional competitor Kenya Airways in its 2016/17 financial report said its cargo total uplift for 2016 declined to 51,668 tonnes compared with 60,457 tonnes in 2015, which saw the airline make $71.6 million from freight revenue.
Internationally, freight capacity, rose by 5.4 per cent year-on-year in October 2018. This was the eighth month in a row that capacity growth outstripped demand.
The global air freight markets showed that demand rose 3.1 per cent in October, compared with the same period the year before. This pace of growth was up from a 29-month low of 2.5 per cent in September.
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