Cargo industry braves a shrink in volumes

Monday, June 30, 2014

As the airfreight industry flocks to Johannesburg for the 2014 leg of the Cargo Show, the leading idea exchange conference for the African cargo owning community, delegates are eager to find innovative solutions for transporting their cargo in an industry that is experiencing a shrink in volumes. Operators throughout the supply chain are open to new opportunities that will build efficiencies throughout their operations in an effort to stem the downward spiral.

Although there are many factors that have contributed to the status quo, the spoke and hub strategy adopted by major airlines in South Africa, to use Gauteng as the central hub for the country, has certainly hurt the development of a healthy and competitive market from both the passenger and cargo side. This strategy has prioritized Gauteng at the expense of the rest of the country, having forced passengers to add an extra leg to their flight to get an international connection. On the cargo side, a substantial amount of bulk freight is still being transported from KwaZulu-Natal (KZN), as well as other major centers, to Johannesburg by road where it is then flown out to its final destination. Road transport to O.R. Tambo International Airport results in a one-day delay in the export of time sensitive goods from KZN. This adversely affects the competitiveness of certain products from locally based enterprises due to the nature of product demand, such as reduced shelf life or the ability to satisfy just in time delivery schedules.

Dube TradePort has built Southern Africa’s premier air logistics platform, which has a state-of-the-art cargo terminal designed with airfreight in mind. This modern cargo terminal allows for faster, more efficient and more affordable airfreight for shippers located within KZN. This facility, located adjacent to King Shaka International Airport, has developed a refined air services strategy with a smart incentive package to support new route development out of KZN. This is helping to stimulate export industries by adding efficiencies to the supply chain in the region, and encouraging the entry of new airlines offering direct routes into international and regional destinations.

The other factor adding strain to air cargo volumes is cost. According to a recent IATA & Seabury survey of the industry, freight forwarders and shippers agree that transport cost is the main decision-making driver upon selecting which mode of transport to use when shipping goods. Sea freight is increasingly attracting a fairly large amount of cargo, which in the past was airfreighted. All of the 40 shippers interviewed, as well as the majority of the major freight forwarders, said between 2010 and 2013 they witnessed a strong modal shift that was around 16 % from airfreight to ocean.

“When interpreting such surveys it is important to note that all air cargo accounts for only 0.5 percent of transported goods by volume, but it represents 35 percent of world trade in monetary terms. Since only the most expensive, time-sensitive, temperature-sensitive and urgent goods are shipped by air, airfreight keeps the modern economy going. The successful flower industries in Kenya, Ethiopia and elsewhere rely critically on air transportation, as do other similarly perishable agricultural goods, not to mention the pharmaceutical industry that moves an estimated one trillion dollars worth of products per year globally; lifesaving medicines such as radiopharmaceuticals have a shelf-life of 24 hours thereafter they are useless,” Says Saxen van Coller, Dube TradePort, Chief Executive Officer, South Africa.

The whole airfreight value chain from truckers, freight forwarders, cargo terminal operators and ground handlers need redemption in the eyes of shippers, providing them with unparalleled value, “Playing to our strengths, in providing fast, efficient and secure freight solutions. Instituting clear key performance indicators throughout all our operations and opening channels of communication with our clients that will lead to greater transparency on performance and improve the supply chain,” adds Ms van Coller.

As an airfreight terminal operator, Dube TradePort is an advocate for the industry, providing a secured supply chain. Therein lies our strength and the primary way we can distinguish our selves, making airfreight an attractive option.

“As Dube TradePort we are in the process of implementing a new state-of-the-art Ultra High Radio Frequency Identification (UHF RFID) system in an effort to uphold our cargo terminal’s record of 0% cargo loss by ensuring that cargo is always identifiable and secure. From Dube Cargo Terminal’s perspective, it is these incremental innovations we continually introduce that create our niche that is now our competitive advantage: by creating the first purpose built cargo terminal, that has a record 0% cargo loss or pilferage, and have a fully automated cargo handling systems throughout our operation. We also ensure that we satisfy all our Service Level Agreements with airlines, and to avoid any delays in delivery and collection of cargo from our clients we have provided that last mile component to the supply chain by adding our integrated AiRoad fleet of trucks. We then sealed the deal by ensuring that we provide the most competitive tariffs on cargo handling; all of this has culminated in a 30% increase in cargo volumes through our cargo terminal,” concludes Ms van Coller.

Regardless of the current state of the airfreight industry these shifts should be accepted as shippers and freight forwarders work to find the most efficient ways to move the their products around the globe. The ability of all operators throughout the entire supply chain to adapt and innovate will ensure a healthy and sustainable airfreight industry that will endure to see the volumes rise again.