Doing business in an emerging market can sometimes feel like driving a car without a seat belt — there is significant risk, and the road is littered with potential dangers. Uncertainty is something Larry Wenrich, vice president of government services at Pilot Freight Services, learned about the hard way when Pilot made its foray into the African market four years ago. He reveals that Pilot, which regularly handles shipments to Africa via a partnership with the U.S. military, encountered a lack of transparency among African businesses.
“For us, the hardest part of establishing ourselves in Africa was finding dependable companies to partner with,” Wenrich says. “I don’t want to say that it was trial and error, but that’s what it was.”
Wenrich says it’s not a problem anymore, as the U.S.-based forwarder has found two African companies to employ. But he acknowledges that fraud, or the potential for misrepresentation, is more prevalent in Africa than in many other regions. “We had some issues where shipments would be delayed, or we realized that somebody couldn’t get something out of Customs because they had no expertise, when they told us they did,” Wenrich says. “So we ran into that kind of stuff a lot.”
Dealing with African border disputes has also been an obstacle, he says, albeit a surmountable one. Instead of trucking goods from one contentious nation to another, Pilot Freight Services often ships cargo on alternative routes to avoid altercations. In fact, he says, Pilot may have to fly freight traveling only a few hundred miles thousands of miles out of the way to prevent violence or theft.
Some in the aviation sector think the problems in Africa are overblown, however. Yannick Erbs, CEO of Togo-based AfricaWest Cargo, says that although security breaches do exist in Africa, they aren’t exclusive to the continent. Erbs also maintains that African airports take strong measures to protect cargo. “Based on AfricaWest Cargo’s 15 years of operation, I can say that [security issues] are very marginal at most airports in Western and Central Africa due to the strict and efficient security measures that are put in place,” Erbs says. “In addition to this, it should be made known that there is an assuring presence of a large group of security personnel roving around the concerned areas, who are well-trained and reliable.”
Like Erbs, Air France-KLM Cargo’s Joost Ruempol says that his company’s operations in Africa haven’t been impaired by safety breaches. He also asserts that cargo theft — a problem commonly cited in South Africa and the western region of the continent — hasn’t been an issue for the airline. “Safety and theft in Africa are no bigger of a problem than in other parts of the world,” Ruempol says.
As evidence of AF-KLM’s confidence in Africa, the Dutch carrier recently ramped up its service to the continent. Earlier this year, AF-KLM launched routes to Luanda, Angola, and Lusaka, Zambia, with thrice-weekly service to Zimbabwe’s Harare International Airport recommencing in late October after a 13-year hiatus. The latter route — which Ruempol says will complement partner carrier Martinair’s B747 freighter service to Harare — will likely be inundated with mining equipment, he projects. After all, Zimbabwe is a land known for its rich natural resources.
Ruempol says mining equipment is also a key commodity on the carrier’s flights to Luanda. “Angola’s oil and gas industry is developing,” he says, “and therefore we mainly transport equipment related to this industry, complemented with personal effects.”
Flights to Zambia, however, are commonly filled with spare parts, in addition to oil and gas equipment. And without airfreight, Ruempol says, such goods might not reach the Southern African nation.
“There is no seafreight option to Zambia, and therefore the success of international trade depends a great deal on air cargo.” Still, he thinks the industry has only begun to realize the potential of the Zambian market. Take the nation’s flower export sector, for example. Ruempol says the launch of additional, nonstop flights from Europe could better address the market and its potential for growth.
Whether more carriers target this market or not, one thing’s for certain: Cargo in Africa is on the rise. Nowhere is this more evident than in the International Air Transport Association’s June statistics. Although carriers in several regions reported lagging airfreight volumes in June, African airlines recorded a 15.9 percent, year-over-year, increase domestic cargo in traffic amid a 12.1 percent, year-over-year, capacity surge.
Despite this positive development, African carriers also reported an alarmingly high accident rate in June. On June 2, an Allied Air Cargo freighter overshot the runway at Ghana’s Kotoka International Airport and crashed into a minibus, killing a dozen passengers. One day later, Dana Air Flight 992 slammed into a residential building in nearby Nigeria. The crash — which reportedly stemmed from an engine fire — resulted in 159 casualties.
Tragic coincidence or not, these incidences highlight the aviation problems that have long plagued Africa — issues that IATA addressed in its 2011 global accident rate report. Although the total number of accidents among African carriers fell from 18 in 2010 to eight in 2011, Africa is still the most problematic region in the industry, according to IATA.
In fact, IATA reports, the accident rate for African carriers not appearing on the IATA Operational Safety Audit registry is quintuple the global average; the rate among African carriers on the IOSA registry, however, is nearly equivalent to the world average.
Such a discrepancy led aviation authorities to devise the Africa Strategic Improvement Action Plan. The plan, sanctioned by IATA and the International Civil Aviation Organization, calls for all African carriers to complete IATA Operational Safety Audit registration and contains specific ways to improve aviation safety in Africa from now until 2015. Key objectives range from the establishment of independent African civil aviation authorities to the implementation of flight data analysis and safety management systems. IATA and ICAO also encourage African officials to employ “transparent” safety oversight systems and accident-prevention measures, with the latter focused on runway safety and loss of control.
Tony Tyler, IATA’s director general and CEO, believes such developments could drastically improve Africa’s aviation infrastructure. “Over the years, there have been many initiatives to improve African safety,” he says. “While progress has been made, the problem has not been solved. This time could be different.” After all, Tyler says, “The eyes of the word are on the continent’s economic expansion.”
Much of Africa’s economic growth is stemming from intra-regional trade, insiders say. AfricaWest Cargo, for instance, has seen such strong volumes out of Western and Central Africa that it is looking to serve 10 new African destinations in the near future. Demand for petroleum, oil and gas equipment, and telecommunications products is propelling the need for increased services, Erbs says. He reveals that AfricaWest Cargo has also been eying the Far East for growth, in hopes of better addressing the Africa-to-China trade lane.
Pilot’s Wenrich expects more carriers to follow suit, as “more people want to get their hands on the natural resources that Africa has to offer.” He says some are even referring to Africa as the “new India or China.” Industry hype or not, trade in Africa shows no signs of slowing down, Wenrich maintains. “And Africa’s is an interesting place because we still don’t know the potential there,” he says.
Whether that potential is hindered by the continent’s high accident rate and cross-border violence or fostered by improvements to Africa’s aviation infrastructure remains to be seen, however.