Logistics Update Africa - March issue by LemonQueen

Volume 12 Issue 2

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TEETHING TROUBLE

LOGISTICAL LOGJAMS THREATEN TO THWART THE WORLD’S BIGGEST FREE TRADE AREA

Mar-Apr 2022 www.logupdateafrica.com

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CONTENTS 2

VOL. 12 ISSUE 2 | MAR - APR 2022 GROUP EDITOR-IN-CHIEF R. K. Patra editor@statmediagroup.com EDITOR Reji John reji@statmediagroup.com ASSOCIATE EDITORS Lakshmi Ajay lakshmi@statmediagroup.com Jyothi Shankaran jyothi@statmediagroup.com

TEETHING TROUBLE: LOGISTICAL LOGJAMS THREATEN TO THWART THE WORLD’S BIGGEST FREE TRADE AREA

As Africa’s policy translates to ground reality, sky-high transportation costs, coupled with unorganised regional networks, emerge as the biggest perils in the logistical landscape. So, will these challenges endanger a free trade area that can potentially revolutionise Africa’s economy?

SPECIAL REPORT AFRICAN AIRPORTS OFFER NEW 8 OPPORTUNITIES FOR INVESTORS Airport infrastructure across Africa requires a major overhaul as the pandemic exposed the industry. Infusion of funds to enhance the existing infrastructure and new investments into modern passenger and cargo facilities are urgent for Africa.

INDUSTRY REPORT LITHIUM SHIPMENTS- CAN THE 11 INDUSTRY GET ITS ACT TOGETHER?

Lithium batteries have known to cause spontaneous ignition on aircraft. Stakeholders lean in on how they navigate the tricky path of regulations and the menace of rogue producers and shippers.

GUEST COLUMN GROWTH ON THE HORIZON FOR AFRICAN 16 E-COMMERCE AND LOGISTICS IN 2022

PRINCIPAL CORRESPONDENTS Libin Chacko Kurian libin@statmediagroup.com Zinal Dedhia zinal@statmediagroup.com MARKETING Dinesh Balan dinesh@statmediagroup.com Renju Raju renju@statmediagroup.com ART DIRECTOR Suhas Patki SENIOR GRAPHIC DESIGNER Prasad Mohite CIRCULATION IN-CHARGE Pratibha Gholap subscribe@statmediagroup.com EDITORIAL & ADMIN. OFFICE LOGISTICS UPDATE AFRICA 710, Vindhya Comm. Complex, Sector - 11, Central Business District, Navi Mumbai - 400 614. (INDIA) Tel.: (91 + 22) 2756 3481 Fax: (91 + 22) 2756 3482 E-mail: info@statmediagroup.com

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Africa present huge opportunities in e-commerce but businesses must overcome challenges around infrastructure, logistics and financial inclusion to fully realise the potential, writes Mahmood Al-Bastaki, chief operating officer of DT World. Volume 12 Issue 2

REPORT E-COMMERCE TRIGGERING DIGITAL 18 COVID-19, REVOLUTION IN AFRICAN AIR CARGO

With its march towards becoming a mobile-focused economy, the African continent was recently pushed by the Covid-19 pandemic and the ongoing e-commerce growth to imbibe a digital revolution that could also disrupt the air cargo industry.

NEWS

21 Read the latest news from aviation, shipping, logistics, and supply chain sectors.

TEETHING TROUBLE

Photo: Tom Tiepermann on Unsplash

Mar-Apr 2022 www.logupdateafrica.com

LOGISTICAL LOGJAMS THREATEN TO THWART

THE WORLD’S BIGGEST FREE TRADE AREA

Published by REJI JOHN on behalf of STAT MEDIA GROUP, 710, Vindhya Comm. Complex, Sector - 11, Central Business District, Navi Mumbai - 400 614 and Printed at LINGAM FINE ARTS C-221, GHATKOPAR INDUSTRIAL ESTATE BEHIND R CITY MALL, GHATKOPAR (WEST) MUMBAI – 400086 – INDIA All rights reserved, no part of this magazine shall be reproduced in any form in full or part thereof without prior written permission from the Publisher.

COVER STORY TEETHING TROUBLE

LOGISTICAL LOGJAMS THREATEN TO THWART THE WORLD’S BIGGEST FREE TRADE AREA

The West Africa Container Terminal (WACT), operated by APM Terminals, is located in Onne port in Nigeria 2 LUA

MARCH - APRIL 2022

hortly after the launch of the world’s biggest free trade area instrument – the African Continental Free Trade Area (AfCFTA) – the CEO of DHL Global Forwarding Middle East and Africa, Amadou Diallo, welcomed the initiative, calling it a “new baby”. With the AfCFTA entering its terrible twos this year, LUA delves into its biggest roadblock – an unsteady logistics sector. In our previous issue, we explored how Nigeria was missing out on reaping benefits from AfCFTA, launched in January 2021, due to poor transport and logistics infrastructure. A short rewind for those who missed out, the AfCFTA is a trade liberalisation

MARCH - APRIL 2022

instrument that stitches together 54 of the total 55 African Union nations – making it the biggest free trade area in the world. The aim was to reduce trade barriers and drastically lower tariffs by about 90 percent However, once the policy hit the ground, high transportation costs and poorly developed regional logistical networks remain a challenge.

THE AFCFTA IN A NUTSHELL

According to the World Bank data, the AfCFTA is expected to cater to a market of over 1.2 billion people and will raise the incomes of 68 million people. “Growth in West and Central Africa is expected at 3.2 percent in 2021, up from -0.8 percent

in 2020 and estimated to grow further by 3.6 percent in 2022. The sub-region is expected to pick up momentum from last year’s weak performance to 4.5 percent in 2021 and 5.3 percent in 2022. Nigeria is projected to grow from -1.8 percent in 2020 to 2.4 percent in 2021, thanks to better performance of both oil and non-oil sectors. Excluding Nigeria, The West African Economic and Monetary Union is projected to grow at 5.6 percent in 2021 and 6.1 percent in 2022, reflecting favourable terms of trade.” In December 2021, the United Nations Conference on Trade and Development’s (UNCTAD) publication of a report entitled – Economic Development in Africa Report

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COVER STORY

2021 – revealed a growing inequality. The report stated that inclusive growth remained elusive for African nations, with the Covid-19 pandemic only adding to the situation. “Africa’s unprecedented growth in the 2000s has not translated into significantly improved livelihoods for most Africans, as the income gap between the rich and the poor has widened…. The Covid-19 pandemic has exacerbated inequalities and vulnerabilities of marginalized groups, resulting in an additional 37 million people in subSaharan Africa living in extreme poverty (at the poverty line of $1.9 per day).” As a solution, the report amplified the need for intra-African trade and trade liberalization policies. “Intra-African trade is currently low at 14.4% of total African exports. It comprises 61 percent processed and semi-processed goods, suggesting higher potential benefits from greater regional trade for transformative and inclusive growth… when considering informal cross-border trade, Africa records higher intra-regional trade, particularly in agriculture.” According to the report, “Informal cross-border trade can account for up to 90 percent of official trade flows in some countries and contribute to up to 40 percent of total trade within regional economic communities such as the Southern African Development Community (SADC) and the Common Market for Eastern and Southern Africa (COMESA).” Apart from this, such intra-African trade “also functions as an employer of last resort for many vulnerable groups, making it an important source of income for the poorest segment of the population and marginalised groups like women and the youth.” The report also found that the continent’s current untapped export potential amounts to $21.9 billion, equivalent to 43 percent of intra-African exports with an additional $9.2 billion of export potential that can be realised through partial tariff liberalization under the AfCFTA over the next five years. During the launch of the report, Rebeca Grynspan, UNCTAD secretary-general, said the AfCFTA has immense potential to spur economic growth. “The AfCFTA has immense potential to spur economic growth and transform the continent's development prospects if additional measures are taken to realize and fairly

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The AfCFTA has immense potential to spur economic growth and transform the continent’s development prospects if additional measures are taken to realize and fairly distribute its many potential benefits, as these gains will not come automatically. REBECA GRYNSPAN UNCTAD

distribute its many potential benefits, as these gains will not come automatically.” Through its trade liberalisation policies, the AfCFTA is set to revolutionise the way trade functions in Africa. It’s no surprise that Free Trade Areas have long been hailed as the ultimate instrument to boost industrial productivity. Daniel Sakyi, an associate professor at the department of economics at the Ghana-based Kwame Nkrumah University of Science and Technology, authored a paper – The Effects of Trade Facilitation on Trade Performance in Africa – published in the 2019 Journal of African Trade. In the paper, he outlines how reduced trade costs would augment productivity in the domestic industrial landscape.

“The reduced trade costs would spur productivity growth of domestic firms more likely to export while existing ones would increase their trade volume…trade facilitation increases the chances of firms' participation in international trade. This outcome is crucial for Africa as improving trade facilitation within the continent can foster economic integration among African countries and give more impetus to the proposed African Continental Free Trade Area agreement.”

ROADBLOCKS IN THE LOGISTICS SCENARIO

So, how deep is the link between an FTA and logistics infra? It’s important to take a look at some academic literature. In a 2019 academic paper published in the Journal of Shipping and Trade, authors Kee-hung Lai, Yu Pang, Christina W. Y. Wong, Y. H. Venus Lun and Y. N. Eppie Ng, examined Free Trade Agreements templating the effects of the same on the Association of Southeast Asian Nations (ASEAN) countries. Their findings revealed that trade liberalisation through instruments like Free Trade Agreements only helps to bolster regional as well as global trade development. “…trade liberalisation and transport logistics development are mutually reinforced.” The paper titled – Are trade and transport logistics activities mutually reinforcing? Some empirical evidence from ASEAN countries – further stated that FTAs led to a proportional spike in demand for transport logistics. “Elimination of internal tariff in the free trade area facilitates trade, thereby increasing the demand for transport logistics. Transport logistics development generates a spill-over effect to promote trade with non-members. The findings of this paper indicate that a country’s transport logistics development will bolster both of its regional and global trade development.” Logistics is, therefore, a vital component when it comes to AfCFTA. However, closer home, Africa is still currently facing troubled times when it comes to trade logistics. According to a World Bank report – Africa in the New Trade Environment: Market Access in Troubled Times – published in 2022, “The relatively high cost of trading across borders in Africa is partly driven by the region’s poor performance in trade logistics. Sub-Saharan Africa’s logistics performance MARCH - APRIL 2022

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COVER STORY

index scores are, on average, 25 percent lower than those of countries in Europe and Central Asia.” The six core performance parameters on which countries were graded as part of the World Bank’s Logistics Performance Index were customs, infrastructure, international shipment, logistics quality and competence, tracking and tracing, and timeliness. The World Bank further stated that although the AfCFTA is expected to benefit all members, the expected welfare gains by 2030 range from 0.2 per cent to 16 per cent. “Thus, the impact of the agreement will depend on its depth and the extent to which it covers non-tariff barriers and services—especially in backbone sectors like transportation and logistics—and the respective export basket and economic structure of each country.” The report states that trade directly decreases with distance, suggesting that policies, institutions, and infrastructure such as transportation and communications, which reduce the trade costs of distance, would ease the challenges of intraregional trade. Another major challenge when it comes to logistics and the AfCFTA is regional fragmentation and geography. “Africa is the most fragmented region in the world and is characterised by thick borders that pose significant challenges for regional trade and integration. With a population slightly smaller than that of China or India, Africa is home to 54 countries, more than any other continent, and the high fragmentation presents a significant geopolitical challenge for the AfCFTA. Most of the economies are small, half with GDP less than $10 billion. In addition, close to 30 percent of the countries (16 countries) are landlocked. The high cost of trading faced by landlocked countries is well documented. Trading costs for an average landlocked low- or middle-income economy are 40–50 percent higher than those for a representative coastal country (Radelet and Sachs 1998).” This in turn affects regional trade networks that remained poorly developed. “Infrastructure and trade networks were designed with the goals of transferring natural resources outside the continent. As a result, the regional transportation networks are poorly developed. Most transportation networks, including rail lines, run from

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The relatively high cost of trading across borders in Africa is partly driven by the region’s poor performance in trade logistics. Sub-Saharan Africa’s logistics performance index scores are, on average, 25 percent lower than those of countries in Europe and Central Asia. WORLD BANK

the location of a mine or agricultural production hotspot to a port, with a focus on exports to the rest of the world.” Ultimately, this translates to steep prices in intra-regional trade networks, with transportation costs in Africa around 136 percent higher. “This situation still characterises most of the region’s countries and is reflected in the higher costs of trading within Africa. Transportation costs in Africa are, on average, 136 percent

higher than in other low- to middleincome regions…. The persistent cost of the deep fragmentation goes beyond the transportation costs.”

A HOPEFUL FUTURE

However, the future looks optimistic as Africa already has robust regional economic communities (RECs) that facilitate a thriving trade scenario in the continent. The AfCFTA is expected MARCH - APRIL 2022

merits of the AfCFTA, saying it was still too soon to talk about the same. However, all firms remained optimistic that the policy would boost intra-African trade, provide greater employment and augment African market competencies due to free movement of labour. Amadou Diallo, CEO of DHL Global Forwarding Middle East and Africa, had hailed the initiative calling it a “new baby”. “It’s a new baby, it needs to grow, learn to walk and talk. The intention is great, but it’s completely in its infancy. Its success totally depends on the implementation of its measures.” Diallo had also said that visa applications across Africa were demanding. “It’s easier to travel to Kenya from Paris or from China than

it is from Senegal. Visa applications are very difficult across Africa; many countries don’t have representation in others.” Hennie Heymans, CEO of DHL Express Sub-Saharan Africa had also welcomed the initiative, saying, “Between 2012 and 2014, more than 75 percent of the continent’s exports were extractives, yet less than 40 percent of intraAfrican trade was extractives during the same period, according to the African Union (AU), further underscoring the need to boost trade within the continent. There is also an enormous opportunity for services under this agreement. In addition, the free movement of labour will be critical as this will strongly complement the objective of the free trade agreement.”

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to smoothen and fine-tune this network through the integration of RECs. The report recommends further strengthening of regional links leading to a large-scale concentration of economic activities that would eventually ease the challenge. “Expanding economies of scale through the AfCFTA could address the problem of small size that restricts trade in the region. Hence, regional integration is also the solution to the current low levels of intraregional trade. The high level of trade within the current regional economic communities (RECs) provides an optimistic picture for the AfCFTA’s future in promoting intraregional trade.” In 2021, shortly after it was announced, most logistics firms seemed hesitant to speak on the MARCH - APRIL 2022

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LUA 7

SPECIAL REPORT

AFRICAN AIRPORTS OFFER

NEW OPPORTUNITIES FOR INVESTORS

he unprecedented demand for airport capacity to handle essential cargo such as temperature-sensitive pharmaceuticals and Covid-19 vaccines over the past two years of the Covid-19 pandemic exposed the massive shortage of airport infrastructure in Africa. Even among major airport hubs in various parts of Africa, passenger and cargo figures have overwhelmed available capacity, or would do so in the near future. This poor capacity restricts African airports’ growth and associated revenue. In response to this challenge, Ethiopian had increased the existing Bole International Airport capacity from seven 8 LUA

million passengers per annum capacity to 22 million capacity. In addition, Ethiopian Airlines few years ago announced plans to build a $5 billion massive airport in Addis Ababa, to complement the existing Bole International Airport and accommodate fast-rising passenger and cargo traffic. The airport would cover an area of 35 square kilometer and accommodate 100 million passengers annually. Agreeably, this lack of airport capacity in Africa represents investment opportunities for investors. Transit sheds, cold stores, specialized freight consolidation centres and e-warehousing, among others, present

good investment opportunities all over the continent. Daniel Eckstein, Business Development Manager Middle East and Africa of Munich Airport International (MAI) – Munich Airport’s international business subsidiary, said African airports and investors have opportunities to create airport cities, business parks or free trade zones in order to tap further non-aviation revenue potential. On the landside too, African airports could diversify revenue streams with shopping, restaurant, hotel and conference centres, office leasing for international companies, rental events spaces and construction of a smart city in form of MARCH - APRIL 2022

Airport infrastructure across Africa requires a major overhaul. The pandemic exposed both the strengths and weakness of the aviation industry in the continent. Infusion of funds to enhance the existing infrastructure and new investments into modern passenger and cargo facilities are urgent for Africa to realize its aviation potential. Roy Ezze reports.

due to its multi-modal transportation capabilities and proximity to the Kisumu Port, the ICD and the modern road network,” KAA states. KAA is also in the process of modernizing and expanding Eldoret International Airport’s transit sheds to handle more cargo “as we envisage increased airfreight activity, both local and international.” Cameroun recently announced infrastructure improvement inaugurated at the Yaounde-Nsimalen International Airport including the Emergency Operations Centre (EOC), the patrol road, the rehabilitation of the security fence and the Yaounde-Nsimalen International Airport ring road. Sierra Leone also reported efforts to improve safety at its airports. Jack Massaquoi, General Manager Sierra Leone Airports Authority (SLAA), says the Sierra Leone Airports Authority wants to keep first responders on their toes and to always stay cognizant of their safety roles. For Seychelles airports, they have a “strategy to proactively pursue innovative business ventures to provide more diverse services for our customers.”

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LEADING FROM THE FRONT Currently, a number of African airports and airport authorities are already developing or executing future expansion plans to meet crucial current and future demand, ensure steady growth and development of their airports and contribution to their economies. The Kenya Airports Authority (KAA), which refers itself as “the largest air freight service provider in Africa”, is implementing its Air Cargo Strategy 20192022 to drive cargo development. At Isiolo MARCH - APRIL 2022

International Airport, KAA says cargo handling sheds have been completed to take care of export of agricultural produce and Miraa. Construction of modern transit shed is underway at Mombasa’s Moi International Airport; and new cold storage room and specialized consolidation area will form part of the upgrade planned for the airport. Kisumu is being positioned to attract massive trade and investment in its Great Lakes region. Early January 2022, Kisumu Airport announced its first cargo flight to international markets on Kenya Airways. “Local and international investors are attracted to Kisumu International Airport

Partnerships are vital to reposition African airports to meet current and future needs of airport users including airlines, tourists and business meetings. Public-private partnership is instrumental to the development of Kenya airports, and this offers the solution to develop Africa’s remote airports where agriculture and other primary produce are generated. In West Africa, Nigeria’s move to concession its major international airports in Kano, Port Harcourt, Abuja and Lagos could be a first step towards positioning the country’s airports benefit from the air transport and trade liberalization in the continent. Without the intrigues and controversies that marred previous concession in Lagos, Nigerian airports development could be another example for other African airports to toe their line.

AIRLINE-AIRPORT SYNERGY Both Kenya and Ethiopian Airports expansion are significantly driven by their LUA 9

SPECIAL REPORT

well-established national carriers, Kenya Airways and Ethiopian, respectively, which spearhead cargo and passenger traffic to the airports. Other African states could drive their airports expansion relying on traffic from privately-owned domestic or regional African airlines, which have now been empowered to fly into airports on the continent unfettered by the glorious Single African Air Transport Market (SAATM) established in 2018. About 35 states have signed the SAATM, so airlines from these states are expected to explore the airports in these states and the high volume of trade expected to ensue from the operationalization of the complementary African Continental Free Trade Area (AfCFTA) launched continent-wide in January 2021. Under the new SAATM and AcfCFTA environment, there must be robust collaboration and partnerships between African airlines and African airports. This also pre-supposes that African airports must intensify their nonaeronautical revenue drive which would enable these airports, in turn to reduce emphases on charges on airlines. Most of African airports operate far below 50 percent of non-aeronautical revenue. Ethiopian Airports, for instance, is showing good example in nonaeronautical revenue development, with its luxury Skylight Hotel that offers 373 guest rooms and conference hall for 2500 guests, being the biggest hotel in Addis Ababa.

EMBRACE TECHNOLOGY AND E-COMMERCE

Cargo is now one-third of the airline business and it is hoped that air cargo can grow even further with the advent of the African Continental Free Trade Area, e-commerce and the linkages to manufacturing facilities and Special Economic Zones (SEZ). ALI TOUNSI ACI-AFRICA

TARGETS AND TIMELINES The examples of multi-year development plans by Kenya Airports Authority, Ethiopian Airports, and Airports Company South Africa (ACSA) have clearly demonstrated benefits. The 2010 World Cup in South Africa enabled ACSA develop especially the Johannesburg airport to accommodate the traffic resulting from the event and future traffic. Setting airport expansion and development targets would enable African airports measure their direction, as well as growth achieved within a given period. It will also guide the private sector investors and concessionaires to expedite action in areas of immediate need. Most importantly, Africa is still providing less than two percent of global air traffic; thus, setting a realizable target 10 LUA

of 5-10 percent of global market share over the next 5-10 years is a project all African airports should strive towards, as a priority.

SYNERGIZE WITH CARGO VALUE-CHAIN Aviation cannot develop in a silo. Airports development stakeholders must collaborate with especially cargo sources such as the agricultural sector and the transport and packaging value-chain to develop and facilitate acceptable products and package standards for movement by air. This would reduce spoilage and economic losses associated with movement of perishable agricultural and other products by poor road networks over long distances in Africa.

Africa’s 1.3billion population has remarkably the youngest population that is also largely immersed in mobile technology and e-commerce. African airports should realign accordingly and adopt new airport technology to enhance customer experience, and further explore the fast-rising e-commerce industry. E-commerce should be a key feature among businesses in the evolving Free Trade Area in Africa which is designed to drive massive trade activities within Africa. The current traffic trend mired by the Covid-19 pandemic could make shortterm traffic projections rather difficult. The International Civil Aviation Organization (ICAO) says “Africa and the Middle East recovering moderately, until Africa plunged again due to Omicron restrictions.” In fact, Ali Tounsi, Secretary General of Airports Council International Africa Region (ACI-Africa), says that cargo is now one-third of the airline business; and it is hoped that air cargo can grow even further with the advent of the African Continental Free Trade Area, e-commerce and the linkages to manufacturing facilities and Special Economic Zones (SEZ). Despite this challenge, 2022 presents a window of recovery for African airports and investors to take the better option of planning and executing for the immediateand longer-terms, given that the pandemic would become better managed to unstop reopening of borders and flow of air traffic to African airports. Government must take responsibility According to Tounsi, African airports are controlled nearly 90 percent by governments. This puts the responsibility of driving the evolution of African airports on the governments. Governments must, in turn, create the enabling environment that attracts private investors, including airport-airline partnerships. African governments must take responsibility to ensure that African airlines are supported – under a robust Dispute Settlement Mechanism of the SAATM to drive cargo and passengers to African airports, including airports with huge cargo potentials. Foreign airlines are already positioned to take away the opportunities emanating with the AfCFTA, with Qatar Airways relishing prospects of cargo from Nigeria’s Kano International Airport. MARCH - APRIL 2022

INDUSTRY REPORT

LITHIUM SHIPMENTS

CAN THE INDUSTRY GET ITS ACT TOGETHER? Lithium batteries have been known to cause spontaneous ignition and uncontrollable fire on aircraft. How can the industry fight misdeclaration, wrong packaging, improper handling, absence of labelling and stem the spate of aviation accidents that have dented the safety aspect that characterised the aviation and supply chain industry? Stakeholders lean in on how they navigate the tricky path of constantly changing regulations and the menace of rogue producers and shippers. Lakshmi Ajay reports

he aviation industry has in recent years been witness to a surge of incidents owing to mis-declared or ill-packaged shipments carrying lithium batteries(LB) that threaten the very safety standards that the industry swears by. Lithium batteries which come under the category of Dangerous Goods (DG) have been known to cause spontaneous ignition and uncontrollable fire on aircrafts. Further, misdeclaration, wrong packaging, improper handling, absence of labelling may even cause aviation accidents. Despite stringent rules on the packaging, handling and declaration of lithium batteries, badly packaged batteries and misdeclared or counterfeit MARCH - APRIL 2022

shipments have led to fires and air carriers being unable to check for dangerous goods. The aviation industry and its stakeholders have time and again received flak for negligence and being soft on offenders after several incidents in the last decade showcased the lack of stringent regulations or the passing of culpability. More recently the trade association of the world’s airlinesIATA (The International Air Transport Association) updated rules on carrying lithium batteries on 2 January this year. So what has led to the world taking notice of lithium battery shipments?

AVIATION INCIDENTS SPARK GLOBAL CONCERN

As per the details on recent events involving smoke, fire, extreme heat or explosion involving lithium batteries shared by the US FAA(Federal Aviation Administration), as of December 22, 2021, there have been around 350 air/airport incidents involving lithium batteries carried as cargo or baggage recorded since January 23-2006. The FAA has in the past said that lithium batteries could spark fire under certain conditions which may be beyond the aircraft’s fire suppression system and lead to a catastrophic failure. More recently an Aiastar-TU Tupolev Tu-204C caught fire at the HangzhouXiaoshan Airport this January. The aircraft was supposed to fly with 20 tonnes of general cargo for Alibaba’s logistics arm Cainiao. While its eight LUA 11

SPECIAL REPORT

The need for operators to have robust safety management systems in place is also important but we must be cautious to think that operators can have transparency of upstream processes. GLYN HUGHES

TIACA

crew members escaped, the aircraft was destroyed. Speculation is rife about the cause of fire but e-commerce flights are vulnerable to the danger of lithium batteries especially as Hangzhou is known for its electronics manufacturing might. In 2016, global e-commerce giant Amazon was slapped with a fine of £65000 by the UK's Civil Aviation Authority (CAA) for attempting to fly lithium-ion batteries and flammable aerosols on a passenger aeroplane in 2014 and 2015. In one of the most tragic incidents, a UPS cargo plane crashed in Dubai, UAE in 2010 and had no survivors because of a fire in the cargo hold whose cause was reportedly believed to have been caused by a shipment of lithium-ion batteries in the cargo-hold.

DEMAND SOARS FOR LITHIUM

Despite the risk associated with carrying 12 LUA

lithium shipments without due diligence, there is growing global demand for lithium batteries. As per a July 2021 report by Research and Markets, the global lithiumion battery market size is projected to grow from USD 41.1 billion in 2021 to USD 116.6 billion by 2030. Further, it is expected to grow at a CAGR of 12.3% from 2021 to 2030. The Coronavirus pandemic has further fuelled the need for continuous power supply, automation, plug-in electric vehicles and smart devices and the use of lithium ion batteries in the renewable sector are said to be driving this growth. Lithium prices have hit record highs due to high demand and according to a forecast by S&P Global Market Intelligence, this trend is likely to continue well in 2022. The forecast further cites that lithium chemical supply is forecasted to touch 636,000 mt lithium carbonate equivalent in 2022, up from 408,000 mt in 2020 and an estimated 497,000 mt in 2021. Giving a peek into the volumes of dangerous cargo and the share of Lithium

batteries handled by international cargo carriers, Guillaume Halleux, Chief Officer Cargo from Qatar Airways told Logistics Update Africa, “Dangerous goods flown on our flights account for 10% of our total volumes with 63% of that being lithium batteries. Over the last 3 years, lithium battery growth on our flights has risen by close to 12% year on year as an average.” Another key air cargo player AFKLMP is reported to have carried prior to the COVID crisis, well over 80,000 DG shipments/year of which over 35% contained LB. Meanwhile, as per figures shared with the publication, in 2021 Moscowbased Volga-Dnepr Group transported over 100 thd (thousand) tonnes of dangerous goods cargo, which is around 15% among the total cargo carried. The company, which is a leading player in the movement of oversize, unique and heavy air cargo, cited that the CAO (cargo aircraft only) lithium batteries accounted for over 9 thousand tonnes, which is 1.3% in their volumes. MARCH - APRIL 2022

MOVE TOWARDS STRINGENT NORMS, COLLABORATIONS

For the past years, aviation authorities have been developing numerous regulations to ensure safe and secure transportation of lithium batteries. IATA the apex trade association of the global airline industry has published its rules in the Dangerous Goods Regulations (DGR) which are drawn from the International Civil Aviation Organization (ICAO) technical instructions that are developed in specialised expert groups by states following input and dialogue with the industry and other experts which have spent considerable energy in testing products and packaging and looking at processes and applicable training regimes. Once made, these rules are constantly reviewed and upgraded when necessary and training regulations are provided. Speaking about the overarching updates made by IATA to the transportation of Lithium batteries and Lithium-ion batteries on aircrafts recently, David Brennan, Assistant Director Cargo Safety MARCH - APRIL 2022

& Standards, IATA told the publication, “Effective 1 January 2022 the allowance for small packages of lithium cells or batteries that while restricted to a cargo aircraft were not subject to the normal controls for dangerous goods was removed from the IATA DGR. This exception was removed as the allowance for these packages to move through air transport without controls was seen as being inconsistent with the requirement that airlines must, through a safety risk assessment, have established appropriate controls to manage the risks associated with the loading and quantity of dangerous goods in aircraft cargo compartments. There continues to be work on developing a packaging standard that can be used to verify that the package is capable of containing a fire event, although this work is taking some time to complete.”

SAFETY FOR ALL

In 2018, IATA also developed a digital tool called Dangerous Goods AutoCheck (DG AutoCheck) to facilitate the acceptance of DG shipments. It in fact lets airlines,

We need regulators to step up and realise that the current regulation has become insufficient in front of a lithium risk that has grown tremendously over the past years. It is also not enough anymore to regulate only the carriers. GUILLAUME HALLEUX QATAR AIRWAYS CARGO

ground handlers and freight forwarders to automatically check the compliance of the shipper’s Declaration for Dangerous Goods (DGD) against the relevant provisions of the IATA DGR Regulations. Air France KLM Cargo (AFKL Cargo), IAG Cargo, the cargo division of IAG (International Airlines Group), MASkargo, ground handler dnata, cargo handler BCUBE Air Cargo, ground handler Havaş, Shanghai Pudong International Airport Cargo Terminal Co Ltd (PACTL) are some of the stakeholders who have adopted IATA’s DG AutoCheck for the acceptance of dangerous goods shipments. Last year IATA launched a new industry certification program called the Center of Excellence for Independent Validators Lithium Battery to improve the safe LUA 13

SPECIAL REPORT

handling and transportation of lithium batteries across the supply chain. More recently, leading logistics player CEVA Logistics became the first to receive IATA CEIV Lithium Battery certification. With this, CEVA’s Amsterdam and Hong Kong air freight stations are now CEIV certified in the handling of lithium batteries. The CEIV certification programme was designed to enable shippers and freight forwarders of lithium battery products to meet their safety obligation by complying with the applicable transport regulations. It supports companies to develop capacity and resources in handling and transporting lithium battery shipments in a safe and compliant manner. Brennan added that the certification has several multi-pronged outcomes including ensuring IATA DGR and LBSG (Lithium Battery Shipping Regulations) and other pertinent national and international regulations and standards, in reducing risks associated with transporting and handling of lithium battery shipments, in increasing confidence in industry stakeholders’ operations and give visibility on best players when it comes to the transportation of lithium batteries. Despite many overtures towards adoption of more stringent regulations for lithium shipments, Glyn Hughes, Director General of TIACA that represents the many varied stakeholders of the air cargo industry cautions, “The need for operators to have robust safety management systems in place is also important but we must be cautious to think that operators can have transparency of upstream processes. Each entity can only really be responsible for what it can control.”

VISIBILITY - KEY TO SAFETY

Many stakeholders have taken to having a series of checks to enable visibility of the LB shipments and integrating them into the cargo acceptance process. Identifying some good practices undertaken at AFKLMP Cargo, a key air cargo player, Edwin Boon, Cargo Operational Safety Manager & Dangerous Goods Policies said, “For LB under UN 3480 and 3090 (shipments containing just LB batteries), only our full freighter operation at both Martinair and AF can accept these. Fully regulated shipments, needing a shipper declaration for dangerous goods, already allow some degree of ‘visibility’ of these shipments. 14 LUA

We believe that Civil Aviation Authorities (CAA) should be much more active in undertaking oversight and surveillance of shippers of dangerous goods, with a focus on shippers of lithium batteries, as well as of freight forwarders. DAVID BRENNAN IATA

Up and above all of this, we are currently profiling all FWB (Freight Waybill) and FHL messaging to any indication that the shipment might contain LB without the proper booking/AWB requirements such as documentation (DGD), statements and/or relevant special handling codes. Instances of poor and/or unsafe packaging as well as misdeclared/undeclared shipments are always intercepted at the cargo acceptance point, but also in the hubs (AMS/CDG) during transit.”

TRAINED STAFF KEY TO SAFETY CHECKS

From a European perspective, the Brussels Airport handles significant volumes of DG shipments. Geert Aerts, the Director of Cargo & Logistics at Brussels Airport said, “The ground handlers are supervised, audited

and monitored by the Belgian Civil Aviation Authority (DGLV), which ensures that ICAO regulations are strictly followed by both handlers and airlines as far as DGR is concerned. At the Brussels Airport, there is a lot of attention for training and safety awareness. Every handler must have a minimum number of IATA certified staff members who have a DGR certificate and who follow a refresher course and take an exam at least every two years, at a training institute recognised by IATA.”

STAYING INFORMED CAN BOOST SAFETY

Dmitriy Kulish, Director for Hi- Tech and Automotive, Volga-Dnepr Group said, “We offer as much help prior to shipment as we can – advisory support, assistance with documents, provision of the current regulations and requirements. By doing this, we expect no cases of poor or unsafe packaging. The Covid-19 affected a lot of industries to a certain extent, although what we managed to achieve in logistics is more collaboration which eliminates the mistakes upon transportation and creates a more transparent environment. Furthermore, we keep on paying particular attention to additional safety control measures upon lithium batteries’ transportation, carry out risk assessment analysis on a yearly basis and make a list of preventative actions to minimise the risks.”

TECHNOLOGY CAN BRING VISIBILITY

Aerts added, “Every DGR shipment undergoes a documentary and a physical check, these are supported by a digital DG dashboard to enable smooth and standardised checks. The slightest anomaly will result in refusal of the shipment. Once accepted, DGR goods are stored in accordance with the Belgian legislation (included in the environmental permit). Further handling strictly follows IATA rules for handling and marking of DGR. Means of transport with DGR are marked so that they are clearly identifiable in case of emergency.” Going one step forward, AFKLMP is now looking to use automation and/ or IT solutions to block any shipment that they profile in their system for any further activities by the GHA (Ground Handling Agencies) , including unable to manifest the concerning shipment MARCH - APRIL 2022

on a flight or (administratively) add the shipment to a ULD. Boon added, “This step is still in Beta testing, but it will be of great help as we will be able to change our interception process from a live communication with the concerning GHA (phone, mail, telex) to an IT based intervention. The GHA simply cannot move a blocked shipment within their own cargo handling system (IT platform). For DG specifically it will make our use of the IATA DG Autocheck platform easier in a way that we can send eDGD (Dangerous Goods Declaration) data through the program to validate at least the shipment data is what it’s supposed to be. This can be done already at the booking stage as soon as we can share the DGD data in a phase where the shipment is still at the customer's warehouse." Meanwhile Halleux from Qatar Airways Cargo says, “When we identify noncompliances, we work backwards to try to identify the root causes of the failures. We start with trying to understand what the GHA missed, if anything. We also need forwarders and shippers to know where the gaps are and do their part to correct them. With significant cases (i.e. undeclared, grossly mis-declared), we share the details with IATA via the Dangerous Goods Occurrence Reporting Alert System for further sharing with the industry. We have also invested in 13,000 fire resistant containers and are currently replacing our entire AKE fleet with Safran QKE units.”

THE WAY FORWARD

While many players like AFKLMP, Qatar Airways Cargo admitted to having ended a business relationship with shippers or forwarders who did not follow regulations in the past despite several consultations, Halleux says that it's time to take the issue beyond the industry. Halleux says, “The first thing we need is regulators to look beyond carriers in their regulations, oversight and enforcement. We need an even playing field for carriers dictated by regulators, starting with ICAO. Sure, we’ve caught undeclared lithium battery shipments via x-ray screening, but until it’s mandated for all carriers, we have a gap. Until all carriers are subject to the same strict requirements, bad actors will only move their shipments to less strict carriers, and the public and industry are MARCH - APRIL 2022

The way forward is a joint approach between the dangerous goods community and the security community in order to ensure that shipment details that point to any inconsistency with documentation or data, are being captured for close survey or investigation. EDWIN BOON AFKLMP CARGO

no safer. We need regulators to step up and realise that the current regulation has become insufficient in front of a lithium risk that has grown tremendously over the past years. It is also not enough anymore to regulate only the carriers.” Giving his take, Boon added, “It has been proved that it’s possible to distinguish batteries ‘contained in/packed with’ shipments from shipments containing just batteries, specifically when performing screening on ‘piece level’. Also shipments that are said not to contain LB but actually they do, can be well distinguished by image. We see now the ‘5th protocol’ security scanners come into service that contain a range of possibilities for recognizing specific types of DG. In our opinion, the way forward is a joint

approach between the dangerous goods community and the security community in order to ensure that shipment details that point to any inconsistency with documentation or data, are being captured for close survey or investigation.” Speaking about how government authorities can step up and proactively block rogue producers and manufacturers or exporters and those who abuse the regulations and place aircraft and passengers’ safety at risk, Brennan further added, “This is an area that IATA continues to have concerns about. We believe that Civil Aviation Authorities (CAA) should be much more active in undertaking oversight and surveillance of shippers of dangerous goods, with a focus on shippers of lithium batteries, as well as of freight forwarders. In addition, the CAAs should take appropriate action, including prosecution where appropriate, against shippers where an airline has identified and reported instances where lithium batteries were found to be offered when not in compliance with the DGR.”

CAN MORE AWARENESS HELP?

Since safety is a critical aspect of the entire supply chain, TIACA (The International Air Cargo Association) has recently partnered with ICAO to jointly develop a course with appointed professional training and consulting partner SASI (Strategic Aviation Solutions International) to author and deliver. “The course which educates on applicable rules and regulations whilst explaining the importance of relevant and complaint application in the operational context will help address the need for enhanced awareness by regulators of operational issues and of the need for increased awareness of regulations by practitioners,” Glyn Hughes said. Citing awareness, compliance and responsibility as the touchstones for the industry when it comes to LB shipments, Kulish adds, “Stakeholders should understand that flight safety is a number one priority, because in case of any accident the damage could be really harmful to all the participants of the supply chain. The air cargo industry should also encourage more awareness, create more visibility, improve the level of competency and quality management.” LUA 15

GUEST COLUMN

GROWTH ON THE HORIZON FOR

AFRICAN E-COMMERCE AND LOGISTICS IN 2022

Countries across Africa present huge opportunities in e- commerce but businesses must quickly overcome challenges around infrastructure, logistics and financial inclusion to fully realise the potential, writes Mahmood Al-Bastaki, Chief Operating Officer of DT World.

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ince 2020, we have witnessed African markets embracing the e-commerce revolution. Thanks to rising disposable incomes, growing internet penetration, and emerging cross-border e-commerce markets, the continent is poised to become the world’s next big online retail destination. To realise this ambition, e-commerce platforms must now focus on building this momentum in the wake of increased economic and logistical pressure. With more and more international attention on Africa’s economic potential, I am seeing increased investment from global brands and the creation of numerous new payment platforms in nations where opportunities have been long overlooked. What is most important now is ensuring that we –e-commerce platforms – ride this wave and continue to provide the best possible support for consumers and businesses alike. A report from 2021 conducted by global fintech business, PayU, revealed the massive potential for digital businesses across the continent, with South Africa, Nigeria and Kenya experiencing a major increase in internet and e-commerce penetration (37 percent in both Nigeria and SA, and 25 percent in Kenya). The growth potential for these countries is overwhelming, but it is not only these economic centres that are experiencing a new digital dawn. According to analysts at Statista.com, e-commerce in Rwanda was projected to reach USD 79 million in 2021, with an annual growth of around 12.5

percent year-on-year until 2025. In only six months of operating in Rwanda, DUBUY.com has received over 500,000 website visits from sellers and buyers and has built a community of more than 4,000 active merchants on the platform. With an additional five million users expected to begin using e-commerce services in Rwanda alone by 2025, it is up to the logistics sector to keep up with growing demand across the entire continent. As we look further into 2022, the team at DUBUY.com has noticed a series of trends that we believe will define the way in which the e-commerce sector will evolve in Africa.

CONTINUED INVESTMENT IN DIGITAL (AND PHYSICAL) INFRASTRUCTURE

The Asian Infrastructure Investment Bank (AIIB) has rightly noted that e-commerce has, in the past, been largely concentrated in developed markets. Yet its ability to offset pandemic-related job losses and create new business opportunities makes it an important sector across the globe. The key to enabling these markets at a faster rate will be investing in digital communications infrastructure, meaning internet access becoming more prevalent. The Infrastructure Outlook estimates that USD 6.5 trillion will have to be invested in digital infrastructure between 2020 and 2040 to grant full access across the globe. But physical infrastructure will also have MARCH - APRIL 2022

to keep up, as e-commerce’s continued growth cannot be feasible if logistics cannot support the increased movement of goods. Supply chain optimisation is crucial, as poorly timed deliveries can lead to major monetary loss. Improving delivery routes, identifying the stumbling blocks in the supply chain and optimising shipping processes is not only costeffective but also creates a good customer experience and grows loyalty among consumers. Investing in physical and digital infrastructure is a must for all online platforms that want to succeed.

Payment security is paramount regardless of the size of a business and the ability to secure a reputable sales base through these platforms is a unique draw for African businesses

BALANCING CONSUMER NEEDS AND BUSINESSTO-BUSINESS (B2B) RELATIONSHIPS

SMALLER BUSINESSES TO START TRADING ONLINE

Whilst a wide consumer base is vital to success, it is equally important to ensure B2B partners are also satisfied. In 2020, the global B2B e-commerce market size was valued at USD 14.9 trillion and B2B brands are looking for new ways to increase their sales. This can start with growing their online presence, but also means embracing omnichannel strategies, meaning moving between brick-and-mortar shops to websites, social media, online newsletters, chatbots and beyond. This strategy of unifying data and putting customers first has been the B2C focus for years, but it’s likely the future of B2B as well. Because of this, we should be engaging even more with our B2B partners to ensure their needs are met. An important factor appears to be providing them with access to easy-to-use, diverse payment options across numerous markets. By partnering with payment gateway service providers, e-commerce platforms are letting businesses (and individual entrepreneurs) make secure online payments at a much wider scale. Payment security is paramount regardless of the size of a business and the ability to secure a reputable sales base through these platforms is a unique draw for African businesses. According to the World Trade Organisation, transaction security is a major concern for African e-commerce participants, and it is the countries and platforms that focus on cyber security that are seeing a boom in the sector.

IMPLEMENTING THE SAFEST PROCESSES TO ENCOURAGE MARCH - APRIL 2022

Keeping customers can be tricky, especially when many of them may simply turn to other platforms if their first ordering experience is shaky. For many smaller businesses that use DUBUY.com as a wholesale e-commerce platform, they need us to provide them with the most secure processes possible to ensure they keep their own customers happy. Data security on the web is essential, as is the on-time delivery of merchandise. Blockchain technology allows data to be securely held in a single place – creating synergies with the shipping companies and suppliers that work with us –allowing us to precisely track the entire e-trading process. Micro, small and medium-sized enterprises across Africa are keen to take advantage of digital markets for the inherent increase in reach and profitability, which is why their safety and security should be our priority if they decide to use our platforms. By providing safe digital infrastructure, we hope to encourage these kinds of businesses to take the leap into e-commerce, improving their reach and ultimately strengthening and boosting local economies.

NEW LEGISLATION, RESOURCES AND GOVERNMENT SUPPORT WILL BE VITAL TO GROWING AFRICAN E-COMMERCE While the private sector has a significant role to play in the growth of e-commerce on the continent, considerable public sector support can hasten this substantially. For example, the Kenya Revenue Authority, which tracks payment of taxes

and transit goods, has concentrated its efforts in putting in place protective mechanisms for the courier industry – which is, of course, responsible for the delivery of items purchased online. Through this government support, e-commerce guidelines for couriers are in place to ensure professionalism, safety for the couriers themselves and security for consumers. In Rwanda, the local government has begun promoting e-commerce and set up its first e-commerce Service Centre in Kigali – helping local businesses enter the sphere with minimal investment and risk. While we’ve seen similar projects in other African countries such as the E-commerce Forum of South Africa– and they are a phenomenal first step – it will be government legislation and societal encouragement of trade that will truly facilitate the growth of e-commerce. Governments need to realise that supporting initiatives (and following their recommendations) such as the African Union’s Digital Transformation Strategy for Africa will transform lives, heighten digital economies and close the gaps of the developing world. For consumers, new emerging markets mean more product varieties and more opportunities to invest in the countries we want to succeed. Access to a world of trade should not be a privilege – which is why DUBUY.com believes in diversifying opportunities and attracting investment to the continent from across the world. Andrea Gruber is head, Special Cargo at the International Air Transport Association (IATA). Based in Geneva she developed and implemented for the industry three IATA Center of Excellence for Independent Validators (CEIV) quality audit programmes certifying the handling and transport of pharmaceuticals, live animals and perishable products. LUA 17

REPORT

COVID-19 E-COMMERCE TRIGGERING DIGITAL REVOLUTION IN AFRICAN AIR CARGO

18 LUA

MARCH - APRIL 2022

he African Airlines Association (AFRAA) in a recent communication noted that the revenues of its member airlines remained low with many operators battling cashflow issues. Full-year revenue loss for 2022 is estimated at $4.9 billion, equivalent to 28 percent of the 2019 revenues. In 2021, African airlines cumulatively lost $8.6 billion in revenues due to the impact of the pandemic, representing 49 percent of 2019 revenues. Clearly, African aviation is going through its worst period ever in history. However, with the Covid-19 pandemic receding, all eyes are on how the recovery would be and one of the plausible explanations is a digital revolution. Technology providers are betting big on African air cargo's ability to adopt new mobile and digital technologies and the curiosity to innovate. According to Gautam Mandal, directorproducts, Cargoflash Infotech, African air cargo is experiencing an absence of skilled resources and comparatively low cargo volumes being handled by the region's airports. “The present technology landscape within the African air cargo industry comprises either legacy systems that are obsolete or manual operations that are unproductive and non-scalable,” he said. Mandal also reports that there has been a growing need for air cargo transportation between different African countries catapulted by various treaties recently signed by the country’s regional governments including the Eastern Africa Community open air agreement, the COMESA (Common Market for Eastern and Southern Africa) agreements, ECOWAS (Economic Community of West African States) treaty and SADAC (Southern African Development Community) agreements. “As a result of such regional cooperation agreements, there has been a surge in inter-Africa trade and commerce. The growth of trade between African countries especially in regional blocks has created an increase in the exchange of commercial goods and services in Africa. However, due to the poor road and rail network interconnecting African countries, the only reliable means of transportation is air transport,” Mandal said. Meanwhile, David Linford, director, global sales & account management, CHAMP Cargosystems, sees Africa as a continent that does a lot of innovation. “Africa is a unique continent, handling large volumes of e-commerce. It has shown and delivered great potential over the years, serving over 120 customers across the continent. Ethiopian Airlines, for example, grew during the Covid-19 pandemic and began pax-tofreighter flights, unlike most other airlines

The ‘nGen’ cloud solutions are designed to work in low internet bandwidths and its mobile interface can perform almost all of the desktop functions. GAUTAM MANDAL

CARGOFLASH INFOTECH

across the globe who did not operate at all. This shows they are innovative,” he said. Linford foresees that the African continent is moving towards a far more mobile-focused digital economy. He reported that their customers across the African continent can more easily implement mobile technologies as they are just starting their digitalization journey. “Mobile technologies offer ease and flexibility for the tasks required for both airlines and GHAs (Ground Handling Agents). Often, single staff members hold many responsibilities so having on-the-go technology brings the added benefit of access and job completion. Due to this, our existing customer GHA Air Flight Services Tanzania will take advantage of Cargospot Mobile, which offers seamless API integration to their Cargospot ecosystem and reduces the need for management to physically be on site to monitor progress,” he said. Ethiopian Airlines is CHAMP’s largest African client who has been a SITA/CHAMP customer since 1992 and makes use of several CHAMP solutions. CHAMP provides cargo management systems, messaging platforms for interconnections between industry partners, customs and security compliance, eAWB penetration, automation and digitalization i.e. mobile. Last year, Swissport introduced the Cargospot cargo app, developed by CHAMP Cargosystems, LUA 19

REPORT to record every step of the warehousing process, such as acceptance, build-up, check-in of goods and delivery. The company also noted its intention to roll out the technology across its locations in Africa by the end of 2022. Linford said, “RwandAir is another CHAMP client of various solutions, such as adding many additional countries to its Traxon Global Customs system. The Ghana-based GHA, Aviance, has also recently adopted CHAMP’s Cargospot Handling solution across Ghana and implemented APIs.” Meanwhile, Cargoflash has the vision to empower all airlines, warehouses and other stakeholders with the next-generation IT solutions on the cloud enabling them to connect seamlessly between each other and also, to the customs and other regulatory bodies. They informed us that they see Africa as a market with huge growth potential, especially with the accelerated expansion of the e-commerce market, which can be served only through air transportation in Africa. Mandal said, “The ‘nGen’ cloud solutions are designed to work in low internet bandwidths and its mobile interface can perform almost all of the desktop functions as well thus ensuring that users in even the remotest regions are also connected in real-time. Further, we plan to offer the solution with a modular and pay-as-you-use commercial model, which warrants that airlines of any size can start using the system without investing heavily in Capex.” In October 2021, Cargoflash Infotech announced that it will replace Kenya Airways’ manifold of operations and management systems that either have limited connectivity options or systems working in silos, in which information sharing is restricted due to systems’ limitations. Kenya Airways’ numerous operations and management systems are currently being substituted by Cargo Flash’s single, next-generation ‘nGen’ system that includes cargo reservations (RES) system, cargo revenue accounting (CRA) system, cargo handling and warehouse management, ULD management solution, and customer portal. “This has presented us with a completely new scope and sphere of the African air cargo market and we now foresee associating 20 LUA

Mobile technologies offer ease and flexibility for the tasks required for both airlines and GHAs DAVID LINFORD

CHAMP CARGOSYSTEMS

with more African airline leaders to offer simple, innovative yet cost-saving software solutions. We are certain that our webbased solution will further bolster not just the airlines’ but the entire African market’s scope to reap a seamless, error-free and spontaneous management, accumulating several processes under one roof. In such progressive and a potential-laden market like Africa, the scope of digital advancements can further encourage the expansion of the market size and margins,” said Mandal. Linford wants African air cargo stakeholders to further their expenditure of existing cargo management systems, mobility, and e-freight to solve their industry challenges. When asked about his plans for Africa, Linford said, “We work directly with clients in Africa and meet with them consistently to understand business challenges and future visionaries. We also offer Cargospot Competency Centers to bolster communication between CHAMP and the end-users of its products, which aids in evolving our Cargospot ecosystem to meet our customers’ needs.” According to Mandal, most African Airlines are government-owned and governments tend to prefer physical papers and documents exchange, however, with the constraints created by the Covid-19 pandemic, there has been increased automation in government-

owned organizations and digitization of government-owned processes. “This has increased the electronic data interchange between cargo airlines and government-controlled customs, and airports. On the other hand, the pandemic accelerated the growth of e-commerce in Africa. This has resulted in online ordering and delivery of goods and services. There is a sudden reduction in human traffic to the Middle East and Asia where most African traders source their goods from. While there was reduction in people travel, there is increased cargo traffic flows between Africa and the traditional source of electronic and textile goods into Africa. This has been achieved through e-Commerce. Thus, African cargo airlines are adopting technology and electronic data interchange with shippers and consignees of air cargo,” he said. Mandal reports that over the last five years, several African customs and revenue authorities have increased demand for electronic manifests. “Nigeria was one of the first governments to enforce pre-flight electronic manifests. This was closely followed by Kenya, Ethiopia, South Africa, Rwanda and other African governments. This increased demand for the electronic exchange of cargo manifests and AWBs. IATA e-AWB initiative has put pressure on African cargo airlines to acquire modern cargo solutions with global customs integrations and EDI,” he said. Mandal pinpoints that the logistical and technical challenges amidst this industry majorly belong to its mindset and not just the economical limitations of Africa. “Cargo operators must automate their entire export and import methods to deal with the inadequacies in cargo handling processes and procure the expected growth. The industry requires technology that allows seamless data exchange between various entities and stays compliant with key industry regulations,” he said. The digital revolution, competently backed by modern and integrated technologies can help remove the intermediaries and plug revenue leakages due to prevalent unethical transactions within the region. The African air cargo additionally needs to think about the emerging trends like e-commerce and drone-based delivery, which will impact the business competitiveness. MARCH - APRIL 2022

NEWS

Suez Canal Authority hikes toll, charge may hit shippers T

he Suez Canal Authority (SCA) has decided to increase the canal tolls by up to 10 percent for both laden and ballast vessels transiting in north or southbound directions. The hike was made “in line with the significant growth in global trade, the improvement of ships’ economics, the Suez Canal waterway development and the enhancement of the transit service,” SCA said in its circular. While no carrier has mentioned hiking rates, it kind of becomes obvious due to various other developments including geopolitical worries and increasing oil prices. “Globalisation is a bit under siege now. With freight costs going up and up. Especially the Suez toll that hits all - and comes unexpected and only one month after the Feb 1 hike of 6 percent,” says Peter Sand, chief analyst, Xeneta. “Risk premiums going up as well as sanctions being put up basically prevents most ships and goods from moving into the Ukraine and Russia Black Sea and Sea of Azov waters.” Suez Canal, owned and operated by Egypt, reported 1,776 transits in January 2022, a decline of 35 from last month but an increase of 183 compared to the same period last year.

CMA CGM launches SMART containers for refrigerated goods F

rench carrier CMA CGM announced the launch of SMART containers equipped with state-of-the-art Emerson technology, allowing users to: monitor the status and conditions of the container in real-time, receive key data such as location, temperature and gas variations, and set up notifications to detect possible anomalies and quickly implement corrective measures. "Supply chain management is facilitated through an intuitive online interface that is updated in real-time. This enables you to be more proactive at every step of the transport process," an official statement said. The SMART reefer container launch is a complement to the SMART container offering for dry goods. "Since its launch in 2018, TRAXENS smart container allows you to track your dry goods in real-time."

MARCH - APRIL 2022

LUA 21

NEWS

Ghana bright spot in Agility Emerging Markets Logistics Index 2022 G hana, Africa's 8th largest economy, jumped eight spots to No. 32 in the Agility Emerging Markets Logistics Index 2022. Ghana saw its ranking increase in every element but its eighth position rise to 37 in the international logistics opportunities ranking was the strongest, the report said. "No nation in the 50-country Agility Emerging Markets Logistics Index opened eyes as much as Ghana." So is Ghana a model for the rest of the continent? That's not clear, says global logistics company Agility in the report. Ghana posted GDP growth of 6.6 percent in Q3, far ahead of the forecast rate of 3.5 percent. "The World Bank projects GDP growth for the country to be 5.8 percent in 2022 vs. just 3.5 percent for sub-Saharan Africa as a whole. What's troubling economists is the country's debt load. Suffocating interest payments could eat up 46 percent of Ghana's government revenues, according to S&P Global." Across the continent, sustained recovery is closely likely tied to Covid vaccinations, the report said.

"Less than 10 percent of the continent's population has been fully vaccinated. In many countries, the availability of

vaccines is not the biggest issue: it is the ability to safely store, transport and administer shots on a large scale."

Hapag-Lloyd to acquire container biz of Africa specialist DAL

erman carrier Hapag-Lloyd has signed an agreement to acquire the container liner business from German

22 LUA

carrier Deutsche Afrika-Linien (DAL). "With a history dating back to 1890, DAL is an established liner shipping

company for the transportation of containerised cargo and operates with four liner services between Europe, South Africa and the Indian Ocean," says a statement issued by Hapag-Lloyd. Headquartered in Hamburg, the Africa expert is represented with its own offices in Germany and South Africa as well as through third-party agents in 47 countries worldwide. Their liner business (including agencies) employs more than 150 people. DAL owns a 6,589 TEU container ship and operates a container fleet of around 17,800 boxes (owned and leased), which will be taken over as part of the acquisition, the statement added. MARCH - APRIL 2022

Astral Aviation to be launch operator for first two of the five A320P2F aircraft from Vaayu S T Engineering has on Monday announced that its commercial aerospace business has signed an agreement to lease up to five Airbus A320 Passenger-to-Freighter (P2F) aircraft to Vaayu Group (Vaayu) which is a leading UAE based aviation solutions player. In line with this development, leading Nairobi-based all-cargo airline Astral Aviation will be the launch operator for the first two of the five A320P2F aircraft which will be subleased to them from Vaayu. Incidentally, this is the world’s first A320P2F aircraft by Elbe Flugzeugwerke, a joint venture of ST Engineering and Airbus that is currently in its certification phase and is expected to be ready for revenue service in the first half of 2022. This will also be the world’s first A320P2F aircraft to go into operation. ST Engineering is also slated to convert

and lease the remaining four freighter aircraft progressively. Sanjeev Gadhia, CEO at Astral Aviation, said, “The Airbus range of freighter aircraft is impressive and will

add immense value to Astral’s fleet and network expansion, which will result in Astral considering future freighter aircraft acquisitions of the A320, A321, A330-300 and A350.”

African airlines’ revenue loss to be $4.9 billion in 2022: AFRAA T

he African Airlines Association (AFRAA) noted that airline revenues remained low with many operators battling with cash-flow issues. “Fullyear revenue loss for 2022 is estimated at US$4.9 billion, equivalent to 28 percent of the 2019 revenues. In 2021, African airlines cumulatively lost $8.6b in revenues due to the impact of the pandemic, representing 49 percent of 2019 revenues,” reads the release. In the month of February 2022, AFRAA estimates that African airlines’

MARCH - APRIL 2022

capacity reached 64 percent compared to same month in 2019. Similarly, traffic is estimated at 49 percent. The domestic market maintained the biggest share for capacity deployed through traffic share saw a small dip. Domestic demand however at 45.3 percent outperformed intra-Africa and intercontinental which

remained subdued at 31.2 percent for intra-Africa and 23.5 percent for intercontinental. Four African airlines continue their international routes expansion and by end of the year 2021 had exceeded the number of international routes operated pre-Covid. 11 other African airlines also either re-open routes or launched new international routes. As of the end of January 2022, African airlines had reinstated approximately 78.7 percent of their pre-Covid international routes, though frequencies remained low.

LUA 23

NEWS Ethiopian Airlines intends to purchase five Boeing 777-8 freighters B oeing and Ethiopian Airlines announced the signing of a Memorandum of Understanding (MoU) with the intent to purchase five 777-8 freighters, the industry's newest, most capable and most fuel-efficient twin-engine freighter. Ethiopian Airlines currently operates nine 777 Freighters, connecting Africa with more than 40 cargo centres throughout Asia, Europe, the Middle East and the Americas. The carrier's fleet also includes three 737800 Boeing converted freighters and a combined commercial fleet of more than 80 Boeing jets including 737s, 767s, 787s and 777s. "To this effect, we are increasing our dedicated freighter fleet with the latest technology, fuelefficient and environment-friendly airplanes of the 21st century. We have also started the construction of the largest e-commerce hub terminal in Africa," said Ethiopian Airlines Group CEO Tewolde Gebremariam.

Egyptian logistics platform Naqla raises $10.5 million

aqla, Egypt's trucking technology platform and marketplace connecting truck owners with cargo companies, has raised $10.5 million in a Pre-Series A round. The round was led by major investors El Sewedy Capital Holding (SCH), Hassan Allam Holding (HAH), and the Sallam Family.

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Naqla's business model addresses the historically underserved road freight sector in Egypt, which has grown in importance since the start of Covid-related supply-side constraints, according to an official statement. "Businesses are continuously looking for further efficiencies in inland transport from

Egypt's major entry and exit ports to maintain the flows of goods within their supply chains." The rapid growth of Egypt's construction and consumer goods industry has meant demand for trucking continues to rise with employees in the sector now making up 2 percent of the labour force and 3-4 percent of GDP. "Many of the 1.5 million trucks in Egypt are owned by individual drivers whom Naqla aims to onboard onto its carrier ecosystem consisting of road assistance, finance, insurance, health care and maintenance. Established in 2017 by Taher and Samer Sallam, Naqla has delivered 4.6 million tonnes of cargo in 35+ zones across Egypt and connects more than 400 shipping and cargo companies with 10,500 drivers. MARCH - APRIL 2022

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