Africa: Chinet: Growing Air Cargo Value Chain in Nigeria’s Aviation Sector

Siginon cargo safety

Air cargo is a trade facilitator that contributes to global economic development and creates millions of jobs. The global economy depends on the ability to deliver high-quality products at competitive prices to consumers worldwide.

According to the International Air Transport Association (IATA), air cargo transports over US $6 trillion worth of goods, accounting for approximately 35 per cent of world trade by value.

According to a report by thewillnigeria.com, following the advent of the COVID-19 pandemic, about 2.5 million lives are saved every year by vaccines. This is made possible because of supply chain solutions, as vaccines can reach their destination in time to be effective.

The World Health Organisation estimates that immunisation programmes prevent up to 3 million child deaths per year. Air cargo is critical in flying these temperature-sensitive pharmaceuticals in the best conditions, using cutting-edge technologies and procedures.

READ: Africa: Nigerian Travel Expert Uko Says Air Cargo Is The Future For Food Distribution, Wealth For Farmers And The Economy

In a survey, IATA had estimated that 7.4 billion parcels are sent every year, while 328 billion letters and 7.4 billion postal parcels are sent every year and airmail plays an essential role in their delivery.

While the emergence of electronic communications caused a dramatic decrease in the number of letters sent, more and more parcels are delivered daily thanks to e-commerce.

Due to the importance of air Cargo, IATA recently launched the ‘Air cargo makes it happen’ campaign to raise awareness on the importance of air cargo to commerce, economies and the global community.

Domestic cargo
Experts have drawn a wide gap between domestic air cargo and international air cargo in aviation business.
In his presentation at the Aviation and Cargo Conference 2021 organised by ATQ Magazine at the Lagos Marriott Hotel, the CEO, Mainstream Cargo Limited, Seyi Adewale, observed that domestic airports in Nigeria are at different stages of growth, sophistication and air cargo volumes.

He said that state governments understood the need to build legacy projects and capitalise embedded opportunities, and this has recently been a defining moment for the interested state governors.

Applauding efforts made by the Ogun and Kogi State Governments to establish cargo airports, Adewale noted that since airports are a critical need for the movement of air cargo, connecting-the-dots in moving mostly agricultural produce is a veritable need.

READ: Africa: Lack of dedicated cargo airlines in Nigeria’s aviation sector hampering perishable goods exports – Adewale

He said, “As at date, many agricultural products or farm produce are moved via road transport, particularly from the North and the Middle-Belt to the South whereas finished or manufactured goods, equipment and material resources move in the direction of the North and Middle-Belt.”

He therefore concluded that there is a need to encourage and support state governments to build infrastructure in order to grow their economies, generate IGR and create jobs, noting that supply creates its own demand.

To support the needs of the domestic airports, Adewale advised that Nigeria needs good and effective cargo warehouses within and around these airports.

He lamented that as of today, the countrydoes not have dedicated air cargo airlines operating within the domestic airports, adding that Allied Air appears to be the only cargo airline attempting to bridge this gap.

International air cargo
Most stakeholders believe that international air cargo is the more developed aspect of the air cargo business in Nigeria.
However, Adewale warned that clean air (and eco-friendly environment) around and within the airport should be a concern to all.

He said the carbon emission level of the various aircraft handling equipment operating within our airports ought to be investigated, so as to enable the country contribute its quota to the global carbon emission reduction drive.

“The Federal Government could institute a task force to manage this important aspect of our livelihood as a nation and join the global conversation regarding a safer and more secured air space.”

Incentives could be given to cargo airlines and handling companies who have a robust plan to reduce their carbon emission. This is a major value contribution to the whole of society and it must not be trivialised.”

Another air cargo booster, according to him, is the need to create, build and develop many export processing zones/ centres (EPZ) across the country that are proximate to the respective international airport.

He equally advised that the states and Federal Government must develop more export development programmes that encourage investments from multinational companies.

“Another value-add is its linkage to backward integration that was assured by some businesses like BUA and Dangote Group in the production of cement, sugar etc.

Within the airport, it is observed that there are more modern warehouses under construction and this is very valuable,” he added.

Warehousing as a major challenge
Globally, warehousing of goods is never an easy task. It requires equipment for specific purposes and for effective warehousing to be in place, ground handling companies should invest heavily in the purchase of Ground Support Equipment (GSE) ranging from scanning machines, ETD, forklifts, tow tractors, trained and experienced manpower, space for storage of cargo, effective CCTV with good storage capacity, dollies, racks and pallets. These require foreign exchange.

Listing some of the challenges of warehousing goods for export at the Aviation and Cargo Conference 2021, the Managing Director of Skyway Aviation Handling Company (SAHCO), Mr Basil Agboarumi, said electricity, high cost of forex, tariff/charges, duplications of duties by government agencies, double taxation and limited space for expansion and cargo procession.

Proffering way forward so that export can be encouraged, Agboarumi advised that elimination of bureaucratic bottlenecks and the need to encourage ground handling companies. The government needs to encourage ground handling companies by making forex available for the purchase of Ground Support Equipment. Increasing availability of credit and provision of space for ground handlers will go a long way to encourage exports.

Corroborating Agboarumi, the GMD/CEO of Nigerian Aviation Handling Company (NAHCO) Plc, Mrs. Olatokunbo Fagbemi, in her presentation, titled, ‘The Role of a Handling Company in Air Cargo Business’ at the conference, said that despite their critical and vital role in the air cargo ecosystem, the ground handling companies are not being accorded their dues.

According to her, ground handlers are underpaid by airlines and they get blamed for any challenge within their warehouses, whether it is due to airline or government agencies, etc.
“We look to the government for support with our persistent calls for duty waivers, just as it applies to airlines. This is yet to be acceded to.

“I wish to draw attention to the need for standardisation of the various elements of the air cargo business, as this will enable the actualisation of the desired air- cargo industry in Nigeria. I pray that the government and stakeholders would work together to create a better operating environment and an effective framework to support cargo export so that the planes would stop flying from Nigeria empty,” Fagbemi said.

Exports to the rescue
Stakeholders in the nation’s aviation industry strongly believe that exports play a lot of positive roles in a country’s economy as they contributes immensely to the country’s Gross Domestic Product in various ways. They, therefore, advise that governments at all levels should do everything humanly possible to encourage the sector. Some of the economic benefits of exports to the economy, as disclosed by Agboarumi, include the fact that they strengthen currency, establish relationships, create employment and encourage farming.

By Awunor Anthony

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