Air freight firms eye lift from Kenya’s growing pharmaceutical imports

The number of medicinal and pharmaceutical product imports increased in the past year, spurring interest in air freight and cargo service providers in the segment.

Official data from the Kenya Bureau of Statistics indicates that the value of principal imports increased to Sh62.7 billion in 2015 up from Sh60.2 billion in 2014, making it one of the top 10 imports into the country.

Middle East based air service provider dnata, a member of the Emirates Group, is one of the carriers who have shifted their attention to the steadily growing segment in the country and the region as a whole.

The country imported 24,954 tonnes of medicinal and pharmaceutical products, up from 20,713 tonnes the previous year.

“We did look at the perishable traffic and movement to and from Somalia, however, the pharmaceutical traffic to from both East and West Africa from the Indian Sub-Continent has increased in leaps and bounds and holds tremendous prospects for the future,” said Kevin Ennis, VP at dnata Cargo in an interview with Business Daily.

Kenya has been the hub for the East African region, providing a key entry point to smaller economies in the East African block.

The international air cargo front in Kenya has been largely dominated by Kenya Airways, Emirates and Ethiopian Airlines, upping the competition for the cargo, especially perishables, which are a major export for Kenya.

“Kenya is better positioned, more central, to take advantage of this situation and a case to point out is the Somalia traffic which is also routed via Kenya, specifically Eldoret. In addition, Kenya also has more exports to and from the Middle East than Ethiopia,” he added.

The airline in January opened a retail shop in Tea Room, in downtown Nairobi, targeting thousands of small traders who buy their goods in the Middle East and Asia.

Despite recording a 4.5 per cent drop in the value of imports, India remained the second largest source of imports in 2015 with pharmaceuticals and medical products being some of the key good coming from the highly populous nation.

The United Arab Emirates, Japan and Saudi Arabia had imports valued at Sh91 billion, Sh88 billion and Sh55 billion, respectively, in 2015. The value of imports from the United Arab Emirates dropped by 12.3 per cent over the same period.

“The airfreight coverage to and from Africa is limited with only a few airlines having the ability to really distribute freight within Africa,” said Mr Ennis.

The Economic Survey 2016 showed growth in export earnings from goods destined for Rwanda, Somalia and Nigeria. According to Mr Ennis, the use of Kenya as a hub has contributed largely to this, owing its strategic positioning which enables dnata to distribute various product lines to East and West Africa.

Africa has been viewed as the new frontier market bypassing traditional hubs including Dubai with direct imports and exports between the region and its markets.

“There will always be a fair amount of traffic that will bypass Dubai and move directly into Africa. However, we feel that Dubai remains a central location through which we can address this traffic,” said Mr Ennis.

The dnata has stated that it has experienced 2.95 per cent growth in the past year connecting Kenya to other markets, attributed to temperature sensitive shipments and perishables such as fruits, vegetables and flowers.

Export earnings from horticulture rose by 7.6 per cent to Sh90.4 billion in 2015, making it one of the leading export earners for the country alongside tea, articles of apparel and clothing accessories and coffee, collectively accounting for 54.6 per cent of the total export.

Kenya Airways’ cargo business, which consists of freight, courier and mail, grew 3.4 per cent to 73.7 tonnes in the year to March 2015, earning the airline approximately Sh8.6 billion.

In addition to pharmaceuticals, local carrier Kenya Airways has been transporting live animals, letters and packages, fresh farm produce, valuable products as well as human remains.

Currently, Africa remains a key market for KQ, but the airline is banking on the new route to Hanoi in Vietnam to grow cargo traffic to the Asian countries.

There has been increased activity in the local manufacture of medical products as well as growing portfolios by the locally based pharmaceutical giants including Swiss manufacturer Norvatis.

Most industries in the sector recorded growth, key among them being the manufacture of pharmaceutical products which registered a growth of 23.9 per cent during the review period.

Production of syrup, tablets and capsules went up by 26.4, 24.7 and 20.4 per cent respectively.