Air cargo feels the heat: Although global trade is expanding, the air-cargo market is constricting. This has forced carriers to look at novel ways to maximise efficiency in a highy-cornpetitive industry. African Business's Aviation Correspondent Martin Rivers reports on latest developments.

Position:AVIATON
 
FREE EXCERPT

For an industry that is often described as a bellwether of global economic health, any underperformance in the air cargo market rightly rattles nerves across all sectors and regions. African airlines fared worse than most in 2013, growing freight volumes by just 1% compared with 7.1% the previous year.

Tony Tyler, chief executive of IATA, the industry body representing most of the world's large carriers, describes air cargo as the "biggest worry for the airline industry right now". About $6.4 trillion of goods are transported by air each year, and although world trade is growing roughly in line with economic expansion, exports have historically expanded at twice the rate of global GDP growth, but the share of this going to airlines is decreasing. As well as hurting airlines' bottom lines, analysts fear that this sluggishness could point to a slowdown in the global economic recovery.

Within the African airline market itself, the outlook is particularly uncertain. Cargo volumes trailed significantly behind the continent's 4% GDP growth last year. IATA blames a slowdown in major economies such as South Africa, as well as invoking the familiar criticism of 'sub-standard infrastructure'. "Moreover, competition from airlines registered in other regions is intense on important trade routes," it notes.

Yet new partnerships offer a glimmer of hope. In 2012, exports to China drove much of the continent's cargo growth, aided by Middle Eastern carriers connecting the two regions via their own hubs.

This year, a new trade agreement between the EU and the Economic Community of West African States should strengthen trade flows to Europe. With non African carriers accounting for about 80% of intercontinental traffic in Africa, European operators like International Airlines Group...

To continue reading

REQUEST YOUR TRIAL