Africa’s air cargo potential

When we talk about cargo, we generally think of large ships on the high seas. And when we think of aircraft, we think of passenger transport.

The truth however, is that an important proportion of the cargo that travels around the world is above us in the skies. This can take the form of dedicated cargo aircraft, or capacity in the belly of a passenger aircraft. IATA puts the number at US$6 trillion in goods annually, or 35% of world trade. During the Covid-19 pandemic, air cargo represented one third of airlines’ revenue.

Aircraft remain an important means of moving goods around the world, for many reasons – it’s quicker and aircraft are also able to avoid the key “choke points” that often afflict global shipping. As we’ve seen in recent years, key waterways, such as the Panama Canal (recently affected by drought) and the Red Sea (affected by attacks on ships by Houthi rebels), are vulnerable to climatic and geopolitical events. While airspace is by no means immune to areas of conflict, there are more alternative routes available.

Air cargo will typically not include the bulk products best suited for ships (eg commodities or large manufactured goods), but can include a wide range of lighter, high-value, time sensitive or critical products, including everything from vaccines and other medicines, to automotive parts, electronic goods, clothing and fresh food and produce. Many of these have grown as categories as e-commerce has grown.

As a category, air cargo has grown steadily since the trough period of mid-2020, at the height of the Covid-19 pandemic. According to IATA’s Air Cargo Market Analysis (March 2024), global air cargo demand grew for a fourth month in a row in March, with double-digit year-on-year growth in cargo tonne-kilometres (CTKs) of 10.3%, or 17.4% month-on-month, for a total of 23.1 billion CTKs in March.

“For the first time, cumulative Q1 traffic surpassed the record heights experienced in Q1 2021. Seasonally adjusted CTKs grew by 11.4% year-on-year in March,” IATA reports.

The cumulative year-to-date figure reached 63.6 billion CTKs in March.

IATA adds that the year-on-year growth number of 10.3% was mostly driven by rapidly growing e-commerce demand. 

Middle East and Africa to the fore

The Middle East and Africa were the best performing regions in the 12 months to March, seemingly benefiting from the issues impacting the Panama and Suez Canal routes noted above. These were followed by Asia Pacific, Europe , and Latin America. North American carriers experienced the lowest annual growth with 3.1%.

Thato Matsha, Aviation Finance consultant at Investec, says the outlook for air cargo over the rest of the year will depend on several factors, including geopolitics, weather patterns and the outlook for global growth.

“We have already seen the impact of El Niño on commodities such as cocoa and coffee, as well as in the ongoing drought that’s affecting volumes through the Panama Canal. The normalisation of shipping volumes through the Red Sea/Suez Canal also remains an unknown,” says Matsha.

Great potential in e-commerce

Looking at longer term trends, e-commerce remains a growth area to watch. The use of air freight is a key tool that the leading e-commerce providers use in order to execute on next day delivery. For example, Amazon is an extensive user of air freight, operating its own Amazon Air, branded as Prime Air services in the US, and works with suppliers in Europe and Asia Pacific.

However, e-commerce is a relatively young industry in Africa, with low levels of penetration. As this expands, demand for air freight in Africa will rise. With Amazon entering South Africa, other global e-commerce providers expanding into Africa, and the emergence of home-grown African e-commerce providers such as Jumia and Takealot, there is extensive potential for air freight expansion in Africa. 

As a result, we are seeing a number of African carriers have been focusing on their cargo operations,” says Matsha. She notes that Ethiopian Airlines has for several years had a large dedicated cargo business, and in March 2024 announced the introduction of a US$55m cargo centre in Addis Ababa focused on e-commerce operations.