Industrialisation could boost airfreight demand

The demand for airfreight is higher than ever, but that demand is outpaced by supply – one of the biggest challenges the air cargo industry is facing at the moment, according to David Shepherd, global head of commercial at IAG Cargo. He told FTW that the fact that Africa was still a largely untapped market for global trade – and offered an abundance of under-developed resources– provided huge opportunities for airfreight growth. “Furthermore, there is less trade protectionism on the continent, which should also open up opportunities for economic growth,” Shepherd pointed out. “Seafood and other perishables such as fruit, pharmaceuticals and f lowers, still do well out of Africa, but of course there is increased competition for certain fresh fruit and vegetables from European and South American markets such as Spain and Chile respectively,” he commented. Therefore, said Shepherd, the continent, southern Africa in particular, needed to create demand by attracting a strong global manufacturing base. “In South Africa, manufacturing is all but static. Automotive production output – once an extremely strong export industry in the country – has slipped dramatically and the skills just aren’t there anymore either,” said Shepherd. He said textile production out of Africa was down as well, competing with production out of other emerging markets such as India and China. According to Shepherd, volatile economic factors on the continent – including power outages and labour unrest – have impacted industrialisation in the southern African region. “The exchange rate is very favourable for exports into countries with stronger currencies but the number of exports out of the region continues to slide because of a lack of industrialisation.” Shepherd also noted that the recent uncertainty around the renewal of the African Growth and Opportunity Act (Agoa) – the United States Congress has yet to make a decision and the September 2015 deadline is drawing near – could negatively affect manufacturing demand in the short-term. “And of course it will have a huge impact on certain industries in the long-term,” he said. INSERT & CAPTION There is less trade protectionism on the continent, which should also open up opportunities. – David Shepherd