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Kenya: Is Kenya Losing Its Air Freight Edge to Ethiopia?

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High costs and long cargo dwell times are hampering Kenya’s competitiveness in the air cargo business in the region.

Transporters say that while the Kenya government has invested heavily in upgrading its airports, particularly Jomo Kenyatta International Airport (JKIA), rising fuel prices, security threats and changing inventory policies are making the country lose its competitive edge to Ethiopia.

Ethiopian Airlines operates eight freighters on 39 global routes with an average daily uplift of 650 tonnes to 95 destinations globally.

Although Kenya is strategically placed to serve as the hub of air traffic for East and Central Africa, challenges like cargo long dwell time, which ranges between three to five days; lack of free storage facilities that cause demurrage charges; lengthy Customs documentation that delay cargo clearance; and numerous regulatory agencies with overlapping mandates are driving away traffic.

“These have negatively impacted shippers’ competitiveness on the global market and the growth of the sector,” says a report by the Shippers Council of Eastern Africa, which is studying Kenya’s air freight sub-sector.

About 18 per cent of Kenya’s total value of exports destined for international markets is transported by air. These are mainly high-value fresh vegetables, cut flowers and fish.

Globally, more than one-third of the value of goods traded is transported by air.

Challenges

Fresh produce exporters, who are the main users of air transport at JKIA cargo centre, say the cost of doing business accounts for close to 55 per cent of the total export value.

“Agricultural producers have goods to export, but are simply unable to economically do so due to the cost and or lack of air cargo options,” says another report on costs and benefit of open skies in East Africa Community done by consulting firm InterVISTAS.

InterVISTAS says that addressing the challenges facing transporters, including liberalising the region’s airspace, would result in new markets for regional air cargo transport, thus allowing perishable goods to flow to key markets in the European Union, Asia and the US.

Despite the government investing about $150 million in upgrading JKIA over the past decade, these challenges continue to impact cargo volumes at the airport.

Airport underutilisation

Data from the Kenya Airports Authority shows that the volume of cargo handled at JKIA between March 2016 and March 2017 declined by two per cent, from 20.7 million tonnes to 20.3 million tonnes.

The authority, however, blamed underutilisation of the airport’s capacity for the dwindling cargo volumes. JKIA has a capacity of 5,000 tonnes a week but only 3,000 goes through every week.

At least 25 airlines operate cargo services out of JKIA, with Kenya Airways handling a paltry 65,000 tonnes annually.

In April, the airline opened a new cargo centre projecting to increase its annual revenue by $2 million.

Kenya’s two other international airports, Eldoret and Moi International Airport, recorded growth in cargo volumes at 21 per cent and 103 per cent respectively.

During the period, Eldoret handled one million tonnes, up from 845,985, while Mombasa handled 311,000 tonnes up from 153,000.

According to a report by the World Bank, the demand for air freight is limited by cost, typically priced about five times that of road transport and 15 times that of sea transport.

Air freight rates range from $1.50 to $4.50 per kilogramme, while the value of air cargo typically exceeds $4 per kilogramme.

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