Cargo demand in Africa still falling on Covid-19 concerns

Saturday August 22 2020

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Mombasa port. Africa holds 1.8 percent in total cargo traffic market share. PHOTO | FILE 

BUSINESS DAILY
By BUSINESS DAILY
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The International Air Transport Association (IATA) data for global air freight markets shows that this was a weaker performance than the 7.3 percent fall in demand in May.

IATA said the decline was attributed to the risk of increased spread of the coronavirus on the continent especially in the month of June, causing economic shocks to the lower and middle incomes countries.

Analysts worry of a rampant spread of the virus due to weak health systems and adoption of prevention measures including social distancing in the continent’s overcrowded cities and slums.

More than a third of Africa's population is said to lack access to adequate water supplies and nearly 60 percent of urban dwellers live in overcrowded slums - conditions where the virus could thrive.

“African airlines reported a 13.8 percent year–on-year decline in international cargo volumes in June, up from a 7.3 percent fall in May,” IATA stated.

“The Asia-Africa trade lane continues to grow swiftly (from 3.0 percent yoy in May to 20.1 percent in June), but the pandemic became more severe in Africa during June.”

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Some of the African airlines in cargo freight operations include Ethiopian Airlines, Kenya Airways (KQ), South African Airlines and RwandAir.

And while the aviation industry was among the major affected sectors in the country, Kenya’s national carrier, KQ, continued to operate cargo flights to offer emergency services even after suspension of all international services from March 26.

However, the airlines’ cargo demand is now been affected due to decline in international seasonal exports.

Cargo volumes at the Jomo Kenyatta International Airport (JKIA) have dropped to about 2,500 tonnes a week from about 5,000 tonnes.

Sanjeev Gadhia, the chief executive officer of Astral Aviation told Shipping and Logistics that the decline was due to low season of fresh produce in European markets.

High seasons in the European market are always between September and May after which the demand for fresh produce goes down as summer kicks in.

While air cargo demand declined in Africa, the same continued to recover in other regions in June, however on a slow pace. The revival was driven by exhibition of stronger recoveries by some countries and strict lockdowns having ended in most parts of the world, reducing supply chain congestion.

, while other regions including Asia-Pacific hold 34.5 percent, Europe 23.6 percent, North America 24.3 percent, Middle East 13 percent and Latin America 2.8 percent.

Global demand for air cargo fell by 17.6 percent in June, a modest improvement from the 20.1 percent year-on-year drop recorded in May.

“While the improvement in air cargo volumes seen in May continued into June, its pace appears slightly slower than expected,” IATA stated.

“This relative slowness is consistent with air transport losing world trade market share to ocean and rail transport, a typical pattern during downturns. Despite an initial rush towards air freight for urgent PPE and medical shipments, buyers have generally turned to cheaper but slower means of transport.”

IATA has maintained that cargo business is doing better than the passenger business as most governments continue to seek emergency supplies to help in fighting the virus.

Since the pronouncement of the virus as pandemic, most global passenger aircrafts were grounded.

“Cargo is, by far, healthier than the passenger markets but doing business remains exceptionally challenging. While economic activity is re-starting after major lockdown disruptions there has not been a major boost in demand,” said IATA's Director General and CEO Alexandre de Juniac.

“The rush to get personal protective equipment (PPE) to market has subsided as supply chains regularized, enabling shippers to use cheaper sea and rail options. And the capacity crunch continues because passenger operations are recovering very slowly.”

IATA represents about 290 airlines comprising 82 percent of global air traffic, however the statistics cover international and domestic scheduled air cargo for IATA member and non-member airlines.

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