Opinion and Analysis
Development of air cargo hub is vital to local growth
Posted Tuesday, February 26 2013 at 17:39
The cargo market is globally facing a revolution as a result of linkages amongst key markets in Africa, Latin America, Middle East and Asia, whose growth is faster than Western markets.
Industry experts estimate that by 2030, cargo traffic will grow by 5.8 per cent leading to doubling of aircraft and addition to existing airline fleets.
Domestically, major airlines are growing through regional partnerships and internationally through foreign partnerships. Locally, Kenya Airways has a similar set up and has experienced unparalleled advantage through its sky team partnership.
Cargo movement follows a unique trend as it primarily follows one cargo direction either as imports or exports which provides a unique opportunity for the development of cargo hubs. These would serve Africa’s main trade partners in Europe and Asia Pacific Zones which control 70 per cent.
However, air freight trade is unfortunately hampered by limited capacity due to structural constraints arising from the fact that most carriers in Africa rely on narrow bodied aircraft in their continental stop overs.
To effectively counter the barrier of capacity constraints, manufacturers in key markets need to be provided with an opportunity to develop distribution hubs in international airports like Jomo Kenyatta International Airport in Nairobi to enable the manufacturers to hold inventory as a means to significantly reduce shipping costs as well as transit times.
Nairobi offers the best regional distribution hub for North, East and South Africa, coupled with the large network of intra Africa flights offered by most carriers plying the East Africa route which provide a good atmosphere for the development of manufacturing and distribution hubs where manufacturers can hold inventory for efficient delivery to their clientele in Africa.
This is to enable key supplier markets in Europe and Asia which primarily provide products such as machinery spares to cost effectively streamline the supply chain and enable storage of inventory and timely delivery as well as reduce machinery down time that has a direct effect on production.
Further, many manufacturers in Europe have outsourced component manufacturing to companies in Asia, where the cost of manufacturing is much lower.
It is therefore important for all stakeholders to develop a legal framework within which manufacturers and merchants can set up distribution hubs in Kenya.
As a country we must take advantage of our strategic location, infrastructure and strong local carrier capability to sell Kenya as a hub destination.
Mr Songe is Airfreight Manager, Siginon Global Logistics