Pricing and capacity challenge airfreight operators

CFR Freight is gearing for future growth of its airfreight division on the back of rapid development in Africa that has seen an escalation in demand for its services on the continent. Stephen Bishop, CFR Freight’s airfreight general manager, said the company had a large interest in Africa and the growth it was experiencing. “We have several partners in most major territories that assist with DAP (Delivered at Place)/ DDP (Delivery Duty Paid) requirements where needed. This network is growing, and should hopefully see us covering most of Africa in the short term. We also have an Air Cargo Group partner in the form of African Express, based out of Nairobi, that has an ever-expanding footprint in several African countries,” he said. “CFR is now a top 10 IATA cargo agent and we are looking to strengthen our position over the next six months. The start of the year has been incredibly good and we will look to carry this momentum forward and our strategy and growth plans in Africa are at the forefront of our plans,” he said. He sees a large demand for the movement of mining-related cargo such as spares, as well as for commodities needed to support business teams in Africa. “The majority of our shipments into Africa originate from South Africa but with our Air Cargo Group network, we have a growing interest in cross-trade shipments from the US, China and Europe,” Bishop said. “CFR has been on a massive drive with our export product over the past six months, which started with the re-launch of our airfreight exports product in Johannesburg in March.” While he’s bullish about airfreight at the moment, he says that it is still a sensitive market with limited capacity – and pricing is by far the major challenge facing the sector. “Airlines are under increasing pressure to increase yields and profitability, which puts the market in a constant state of flux. This has a knock-on effect on agents and consolidators, which increases the demand to find a competitive advantage and secure business, as clients will move for a marginal saving,” he said. “Capacity can be a constraint with airlines always looking to re-direct aircraft onto more profitable routes. Passenger business drives the cargo market, and where there are no passengers, there is no capacity. The market is extremely competitive,” he said. Bishop said Africa would continue to remain at the forefront for most South African export agents given the importance of its economy to the continent. “Many airlines are looking to increase their footprint in the continent as well, which will hopefully increase capacity and allow for more options." INSERT & CAPTION Passenger business drives the cargo market, and where there are no passengers, there is no capacity. – Stephen Bishop