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African ecommerce logistics market potential huge, but challenges remain

THE air cargo industry in Africa has a bright future provided it improves its infrastructure and regulatory environment given its expanding population and rising e-commerce demand.

Despite droughts, low oil and gas prices, softer consumer demand, low currency integrity and overcapacity due passenger jet bellyhold expansion, delegates to the Air Cargo Africa convention were positive about the longer term.

Speaking at the opening panel session, IATA global head of cargo Glyn Hughes pointed out that by 2050 estimates suggest that the continent's population could reach two billion people, representing one-fifth of the world's population, the youngest on any continent, reported London's Air Cargo News.

"This means there is an increased labour force and huge potential consumer market," Mr Hughes said. "If the infrastructure and all the other aspects are in place that need to be in place."

He added that 11 of the top 25 fastest growing global economies were from Africa, based on International Monetary Fund figures.

However, he pointed out there was huge disparity in wealth, connectivity and in terms of ease of doing business between the various countries on the continent.

One potential growth area identified by Atlas Air vice president Graham Perkins was e-commerce, an area the aircraft lessor is looking to continue to grow in after it last year announced a deal to operate a fleet of 20 aircraft for Amazon.

One of the major areas for improvement identified by Mr Perkins was in customs rules and regulations, which he said in some countries "dated back decades".

The lack of credit card and bank account penetration in Africa is another problem as this means the payment process could be a hindrance to the potential growth of e-commerce, although there are certain mobile payment solutions coming through, while poor road infrastructure was also an issue.

It was also suggested that if an African country could create a free trade zone, they could stand to benefit from e-commerce retailers, integrators and air cargo businesses investing in regional hubs.

Meanwhile, Saudia Cargo vice president Rainer Mueller identified the lack of road feeder operations, both cross border and nationally, as holding back air cargo growth; and Worldwide Flight Services chief operating officer Barry Nassberg said that airports needed to develop a cohesive cargo strategy if they wanted to attract developers to build multi-tenant cargo facilities.

"One of the biggest challenges I see is on the ground when it comes to ground transport," said Mr Mueller. "We are successful because we can combine our air cargo services with road feeder transport.

According to Mr Nassberg, by having a cargo strategy "you could make it attractive to private developers to come into an airport, develop multi-tenant cargo facilities and realise a return on that as a property development project.

"This would then make it possible for handlers to come in, invest in the internal infrastructure in the facility and improve cool chain procedures and really up the game in term of what is possible in terms of service delivery."