Kenyan flowers which represents 23 percent of perishables business lose about 20 per cent value equating to a loss of Sh 10.3 billion because of limited cold storage facilities.
This is because running refrigerated warehouses in Kenya is quite expensive
According to a research done by Tulisi Logistics, energy costs typically accounts for 15per cent of warehousing operating budget, with refrigeration alone accounting for 60 percent of electricity used.
On December 1, Kenya Airways will be flagging off its first non-stop cargo flight from Kenya to US, a festive gift to Kenya’s flower growers as well as fruit and vegetable farmers. For years now, they have decried the lack of direct and non-top flights to the US market has narrowed the prospect of a profitable business.
But does this cargo route really stand to be a cash cow profit stream for Kenyan flower growers, fruit and vegetable farmers?
Now, air cargo transport has two main segments that define the sector, the perishable products which include flowers, fruit and vegetables as one subsector then pharmaceuticals and medical equipment.
In the US, fresh food consumption is going up dramatically and according to the latest Nielsen’s Total Consumer Report, fresh produce categories are driving nearly 49 percent of all dollar growth in the consumer goods in stores: the US mangoes market is seeing a 10 to 15 percent growth every year, average red fruit consumption tripled in the past eight years and avocado consumption went from three to nine dollars pounds per capita in seven years.
So, there is huge opportunities for Kenyan fruit and vegetable farmers in the US market. However, Kenya is constrained by an efficient transport and logistics infrastructure deficit. For example, as much as 40 percent of flowers prices goes into transport and supply chain logistics making it expensive to fully exploit the US market.
Just like India the largest producer of milk, ginger and okra as well second largest producer of fruits and vegetables, it only stores 11 percent of its total produce because of unavailability of uninterrupted cold chain storage facilities causing 40 to 50 percent of produce to go to waste. Nairobi is the main driver of perishable industry in Africa ahead of South Africa, Zimbabwe, Ghana, Egypt, Ethiopia; but has a cold storage management problem like India i.e.
Kenyan flowers which represents 23 percent of perishables business lose about 20 per cent value equating to a loss of Sh 10.3 billion because of limited cold storage facilities.
This is because running refrigerated warehouses in Kenya is quite expensive. According to a research done by Tulisi Logistics, energy costs typically accounts for 15per cent of warehousing operating budget, with refrigeration alone accounting for 60 percent of electricity used.
This cold chain management problem spills over to the lucrative pharmaceuticals business where constant temperature storage is needed to maintain the physical and clinical integrity of pharmaceuticals.
Despite JKIA boasts of being the nerve hub for transit cargos going to the Eastern, Central and Southern Africa and KQ a leading airline flying to a large network of African destinations, it has been Emirates SkyCargo that has been transporting over 800,000 units of malaria tester kits and other associated equipment to African countries including Tanzania, Malawi, Zambia, Zimbabwe and Nigeria since 2015 due to lack of pharmaceutical handling capacity.
There is a growing demand for reliable transport for pharmaceutical in Africa and Ethiopia and South Africa are already establishing themselves as the go-to hub. Like for Ethiopia, it has just completed a new cargo terminal whose capability is equivalent to terminals in Armsterdam Airport and Schipol well equipped with enhanced cold chain facility that will boost Ethiopia airlines capacity for storage and handling of pharmaceuticals.
At the same time, Ethiopians Airlines has purchased six Boeing 777 freight aircraft and two 757s. It has also ordered four Boeing 777s and two 737s which will make the airline’s transport capacity adequate enough for the fast-growing demand in the continent.
So, Kenya also has to invest in ultra-modern cold chain facilities, training and certification required to transport pharmaceuticals efficiently in order to tap into this lucrative business segment.
But more general, Kenya has to develop a modern and cost-efficient logistics and supply chain infrastructure which will go a long way in cementing Kenya Airways and JKIA position as the continents cargo transport airline and hub.
