2Growth in Africa: yes, but where exactly?

February brought a volume increase of 4.7% year-over-year, pushing the WorldACD Index further up to 108.6. Yield developments for the month were rather remarkable. Measured in USD, they dropped by 2.8% worldwide compared to January. However, this was purely caused by the dismal yield declines from Asia Pacific to most regions, ranging from -2.1% to -7.3 %, depending on the destination area: all other areas showed yield improvements, varying from 0.6% for North America to 5.6% for South America. Eliminating the sizeable Chinese New Year effect on individual monthly data, we see that Asia Pacific started the year 2014 (Jan/Feb) with a volume increase of 3.4%, but with a revenue decrease (in USD) of 2.6%, both measured year-over-year.

Lately, there has been a lot of talk about growth in the African air cargo market. The industry seems to be upbeat about the prospects for what was once called the dark continent, due to its mysteries and to explorers’ lack of knowledge about it. What is the optimism based on? Fact, fiction, tell-tale signs, hope, all of the above? To look at the first element, WorldACD put together a view of air cargo’s recent past in Africa. Our first conclusions: total USD-revenue for the continent dropped slightly in 2013 (outbound and inbound together), the traditional engines for African air cargo development actually lagged behind considerably, and the bright spots were mostly found in Central and West Africa.

Revenues in USD contracted in 2013 in three of the largest African cargo countries, South Africa, Kenya and Egypt (-6.8% for the countries combined, outbound + inbound). This was not just due to lower yields, but also to less volume. Champions of outbound revenue growth were the smaller countries of Cameroon, Uganda and Morocco, with 35%, 28% and 14% respectively. Inbound volumes jumped most in Libya (+75%), Chad (+47%) and Algeria (+31%), albeit from relatively modest bases.

Of the five African regions, Central and West Africa fared best with a USD-revenue increase of 11 respectively 7% year-over-year for outbound business. West Africa also topped the list for growth in incoming cargo (volume +13%). Remarkable was the volume growth from West Africa to the USA (+33%), but – not surprisingly - China appeared as by far the most important partner in growth: the volume from Africa to China almost tripled from 2012 to 2013, though yields declined by 21%. Most of the inbound growth from China went to West Africa. Contributions of South Asia and the Gulf to incoming cargo were significant: +9% and +16%.

We see other changing patterns as well. Virtually all of the top 20 global forwarders lost ground in Africa, Kuehne + Nagel and Geodis being the exceptions. Whilst the Top-20’s revenues declined by 4.7% worldwide, the group’s position was even more weakened in Africa (-7.4%). Another remarkable shift could be seen in the Perishables market ex Africa, a segment dominated by airlines from the Middle East and Europe with a combined market share above 90%. Whilst the Middle Eastern airlines gained 8%, the Europeans lost 9% (in USD-revenues in 2013 compared to 2012). Ironically, where most would like to see a shift, i.e. in redressing the directional imbalance in traffic to and from Africa, very little happened. For the time being, Africa remains the continent showing the largest imbalance with other continents.