Map­ping cargo route to Africa

Re­cent fig­ures of African ex­ports to Asia re­flect a sharp in­crease in trade to China and In­dia. Though China presents a more dy­namic mar­ket for Africa’s ex­ports, but with ge­o­graph­i­cal ad­van­tage and skilled man­power, In­dia has the po­ten­tial to over­take Chi

Cargo Talk - - Front Page - KALPANA LOHUMI

The In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA) Forecast 2014-18 high­lighted the fact that Africa is the sec­ond fastest grow­ing mar­ket of the world with a CAGR of 4.4 per cent. With this promis­ing growth tra­jec­tory turn­ing the re­gion’s great eco­nomic po­ten­tial to re­al­ity, the In­dian air cargo in­dus­try is also bound to feel an im­pact. In re­cent years, Africa has also shown ma­jor in­ter­est in In­dia in terms of in­vest­ment in the air cargo sec­tor. How­ever, there are cer­tain chal­lenges that In­dian freight for­warders and air­lines face while mov­ing cargo to and from Africa.

Ac­cord­ing to the United Na­tion’s Com­mis­sion for Africa, more than 80 per cent of Africa’s ex­ports, es­ti­mated at 1,730,000 tonnes per an­num are des­tined for out­side mar­kets. And while Europe is still Africa’s pri­mary part­ner the per­cent­age split of this mar­ket has dropped from over 70 per cent to 56.9 per cent. Cur­rently, the Mid­dle East and Asia are fast gain­ing trac­tion as crit­i­cal ex­port mar­kets for Africa. Mod­er­at­ing a round ta­ble dis­cus­sion on this topic, Tom Crabtree, Re­gional Di­rec­tor for Mar­ket Anal­y­sis, Boe­ing Com­mer­cial Air­planes ex­plained that the rapidly ex­pand­ing shares of these mar­kets are presently gauged at 14.4 per cent for the Mid­dle East and 12.9 per cent mar­ket share for Asia.

In­dia’s in­ter­est in trade and in­vest- ment with Africa presents a sig­nif­i­cant op­por­tu­nity for growth and in­te­gra­tion of the Sub-Sa­ha­ran con­ti­nent into the global econ­omy. Since 2000 there has been a mas­sive in­crease in trade and in­vest­ment flows be­tween Africa and Asia as a whole. To­day’s scale and pace of In­dia’s trade and in­vest­ment flows with Africa wholly un­prece­dented.

China and In­dia are pur­su­ing com­mer­cial strate­gies with Africa in terms of in­vest­ment that are far more than re­sources. In­dus­try vet­er­ans spoke to CARGOTALK about the African mar­ket, trade op­por­tu­ni­ties with In­dia, chal­lenges and more.

Bharat J Thakkar, Co Founder & Joint Man­ag­ing Di­rec­tor, Zeus Air Ser­vices

Africa’s growth in the air freight in­dus­try is ex­pected to be around four per cent in the next few years. The gov­ern­ment has iden­ti­fied cer­tain sec­tors of In­dia namely trans­port equip­ment, phar­ma­ceu­ti­cal prod­ucts, ma­chin­ery ex­ported to African coun­tries. The gov­ern­ment is also pro­vid­ing cer­tain fis­cal ben­e­fits to EXIM to ex­plore these mar­kets. In­dia Africa bi­lat­eral trade dur­ing 2012-2013 was over $70 bil­lion and tar­get set for 2015 is $90 bil­lion. While ex­ports from In­dia to Africa grew by over 18 per cent, im­ports from Africa to In­dia reg­is­tered a de­cline of over 6.5 per cent. Dur­ing the meet­ing of In­dia-Africa Busi­ness Coun­cil (IABC) at Johannesburg, a con­crete ac­tion plan was rec­om­mended for strength­en­ing sub re­gional and pan African lev­els for in­vest­ment in tech­nol­ogy trans­fer for small in­dus­tries.

Shan­tanu Bhad­kamkar, MD, ATC Group & Chair­man,


The Ex­port Im­port Bank of In­dia sanc­tion Lines of Credit (LOCs) for the East/West African Com­mu­nity (EAC) and is likely to strengthen In­dia’s po­si­tion as the top ex­porter to a re­gion con­sid­ered a vir­gin ter­ri­tory for in­vest­ments and in­fra­struc­ture de­vel­op­ment, and as a gate­way to rest of Africa. Im­ports into In­dia from Africa in­clude min­er­als/ores, base met­als, nor­mally moved by sea route. The LOC will be used for sourc­ing of goods and ser­vices from In­dia. Un­der the LOC, Exim Bank usu­ally re­im­burses 100 per cent of con­tract value to the In­dian ex­porters, up­front upon ship­ment of goods.

Ravin­der Katyal, Di­rec­tor, UTI

Tak­ing ev­ery­thing into ac­count, Africa busi­ness is grow­ing fast but ma­jor­ity of growth is com­ing through ocean as com­pared to air due to many pro­ject busi­nesses or move­ments. IT, en­gi­neer­ing, gas and oil, auto and in­fra­struc­ture/pro­ject move­ments are the key op­por­tu­ni­ties to in­crease trade be­tween two coun­tries. Tele­com sec­tor has good de­mand in the coun­try with the pur­pose of in­creas­ing In­dian ex­ports. Re­li­able so­lu­tions, car­rier op­tions and com­pet­i­tive pric­ing in air cargo are the main chal­lenges freight for­warders are fac­ing while mov­ing cargo to and from Africa. We still need to have more re­li­able and di­rect so­lu­tions for ex­pected growth be­tween the two coun­tries.

Keku Bomi Gazder, Re­gional Di­rec­tor – Cargo In­dian Sub-Con­ti­nent, Saudi Ara­bian Air­lines Cargo

The African cargo mar­ket is grow­ing ex­po­nen­tially. Ear­lier the mar­kets of East and South Africa dom­i­nated the in­bound loads. How­ever, to­day the de­mand for des­ti­na­tions to West Africa has grown by leaps and bounds. Traders from Africa can be seen in many Asian coun­tries to­day seek­ing deals for im­port of both con­sumer and lux­ury goods driven by strong eco­nomic growth in their home coun­try. The scope of trade be­tween In­dia and Africa is im­mense. Most of the es­ti­mates point to­wards a trade growth of be­tween 17-19 per cent be­tween the two coun­tries pri­mar­ily driven by the pharma prod­uct. Although while mov­ing cargo to and from Africa, we face sev­eral chal­lenges like cur­rency fluc­tu­a­tions, change in im­port reg­u­la­tions and de­layed re­mit­tances.

Cyrus Kat­gara, Part­ner, Jeena & Co.

Africa is truly one of the fastest grow­ing air freight mar­kets and Indo-Africa trade has been tra­di­tion­ally strong with his­tor­i­cal ties. Presently the trade bas­ket is quite var­ied with ma­jor con­tri­bu­tion from phar­ma­ceu­ti­cals, con­sumer goods like FMCG and power equip­ments for in­fra­struc­ture. Indo -Africa pro­ject trade is heav­ily re­liant on the trade fi­nance from Exim Bank of In­dia and World Bank aid be­cause of lack of the reg­u­la­tory is­sues and le­gal in­fra­struc­ture in most African coun­tries. The po­lit­i­cal in­sta­bil­ity across the con­ti­nent is also detri­men­tal for the busi­ness be­tween Africa and In­dia. The scope of growth of trade be­tween both the coun­tries is im­mense as many In­dian phar­ma­ceu­ti­cals are al­ready sup­ply­ing both ther­a­peu­tic as well as generic drugs to Africa. It is also very big mar­ket for vac­cines be­cause of the trop­i­cal dis­ease.

Sa­mar Nath, CEO, DHL Global For­ward­ing

Africa is def­i­nitely a high po­ten­tial mar­ket for air freight, es­pe­cially when the share of life sciences and health care and chem­i­cals into this con­ti­nent from In­dia has seen an en­cour­ag­ing growth in the last decade. In­dia and Africa are strate­gic busi­ness part­ners. As In­di­ans we are heav­ily in­vested in this con­ti­nent across var­i­ous busi­ness ver­ti­cals with in­vest­ments to the tune of $60 bil­lion in the pipeline. Although, each coun­try in Africa may have a dif­fer­ent reg­u­la­tion for the same cargo. Serv­ing in many of those land­locked coun­tries can be very chal­leng­ing if one does not un­der­stand the ter­rain and ty­pog­ra­phy of lo­gis­tics needs as it has lim­ited in­fra­struc­ture and sup­port over land move­ments.

Gurmeet Singh, Re­gional Man­ager-Cargo, Na­maste

In­dia Avi­a­tion

Africa has a strong “hub and spoke” mar­ket, with air­ports in cities such as Johannesburg, Nairobi and Cairo, which have strong in­fra­struc­ture, act­ing as the “hubs”. The log­i­cal next step for African air cargo is to ex­pand these air­port hubs, par­tic­u­larly within the eastern coastal cities, to ease cargo flow from Asia across Africa. Asian im­ports to the con­ti­nent will be the prin­ci­ple driver for growth of African trade with Asia. The ris­ing de­mand for con­sumer goods, par­tic­u­larly in In­dia and China, will boost air trade growth in the Asia to Africa di­rec­tion.The growth in African ex­ports to In­dia in the last few years is largely driven by large un­met do­mes­tic de­mand for nat­u­ral re­sources re­flect­ing grow­ing in­dus­tries as well as in­creas­ing con­sump­tion by house­holds. Petroleum is the lead­ing com­mod­ity, fol­lowed by ores and met­als.

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