Transport

Importers face higher freight charges as Covid-19 crisis bites

Importers are grappling with a sharp rise in freight charges as cargo operators hike the cost to compensate on reduced consignments and empty flights coming in from Europe and Asia to pick shipment in Africa.

For instance, a trader importing cargo now would now have to part with Sh1,000 from Sh200 for a kilo of freight transported by flight from China to Nairobi.

The increment has been precipitated by closure of airspace in South Africa, Lagos and Abuja, which act as major hubs for cargo flights coming in from European countries to Nairobi, given that there is not much load to transport to Kenya directly.

The airlines carry cargo they would drop in these cities before proceeding to Nairobi, hence cutting down on their operational cost. However, Nigeria and South Africa have put in place a total lockdown that restricts movement of both international cargo and passenger flights.

Major freight carriers have already stopped flying to Jomo Kenyatta International Airport (JKIA) in Nairobi because of sluggish business.

“We are flying back empty from Europe and other cities, meaning that we are not making any money by flying to Nairobi. That way, we need to raise the charges to cover for that cost,” said Sanjeev Gadhia, chief executive officer of Astral Aviation.

Mr Gadhia, whose airline operates in different African destinations and Europe, has now cut the number of flights from five to three on the European route every week.

Major cargo airlines have pulled out of the Nairobi route for lack of business between Europe and Asia route to Africa, even after the government made it clear that freight carriers would be allowed to operate.

On Wednesday last week, the Kenya Civil Aviation Authority (KCAA) issued Notice to the Airmen (NOTAM) banning all the passenger flights from coming to Kenya as government moved to contain the spread of the Coronavirus, which has now hit 142 as of April 5.

Astral Aviation said there business has gone down by 40 percent even as they project the total volumes to be hauled this year to drop to 30,000 tonnes from 75,000 tonnes last year.

The Fresh Produce Consortium of Kenya (FPC) wants the government to offer some incentives to freighters in order for them to charge lower fees on the consignments being shipped abroad given sluggish business at the moment.

“We want the government to waive taxes and other charges levied on freight airlines coming to Nairobi so that these carriers can also reciprocate by offering lower charges on the export cargo,” said Ojepat Okesegere, chief executive officer of FPC.

Expensive imports implies that Kenya will have to pay more for goods that are imported in the country, even as retailers have warned that there is a looming shortage of supplies from overseas, which will push up the prices of goods.

The lockdown in some the countries rspecially in Europe, which is a major market for Kenya’s horticulture produce, means that there is not enough cargo to haul.

The flower auction in Amsterdam has closed implying that no cargo can be ferried to the Netherlands for trading. Flowers form a major component of the horticulture produce that is exported to Europe.

The closure of the market means that flower farms are now left with the option of looking for direct market in order to salvage the situation.

The International Air Travel Association (IATA) has already projected that airlines will make huge losses in 2020 because of the virus.

“It is unclear how the virus will develop, but whether we see the impact contained to a few markets and a $63 billion revenue loss, or a broader impact leading to a $113 billion loss of revenue, this is a crisis,” said IATA.

The aviation body has called on African and Middle-East governments to provide financial support to airlines in order to protect their operations.

The national carrier-Kenya Airways is already requesting for a bailout from the government in order to meet its financial obligations in the coming months, after grounding all of its international services.

KQ is at the moment operating local flights to Mombasa and Kisumu but the route only contributes less than 10 percent of the carrier’s total revenue.