Stronger
rand impacts negatively on profits
Joy Orlek
BUCKING THE global trend, national carrier South African Airways Cargo has recorded significant volume increases in the first half of 2003, both in imports and exports, according to executive vice president and general manager Tleli Makhetha.
The good news however comes with a downside.
“A major problem has been the strength of our rand, and since 90% of our business is dollar or pound related, it has affected our revenue.
“Compared to last year there’s been an 18% negative exchange range impact so although we have pushed our volumes aggressively, our revenue has lagged.”
The mitigating factor has been the saving on costs, where 55-60% are dollar-driven, but this is a small compensation, says Makhetha.
In terms of total contribution to the airline the cargo sector has marginally improved on last year’s results.
Several strong trends have emerged, says Makhetha. “South African exporters are doing exceptionally well and we are seeing a lot of demand for export space. Despite suspicions to the contrary, the stronger rand has clearly not hurt exports.
“The motor industry has been the driving force in this growth, and while perishables will remain important for the SA market for some time, the automotive sector has been a winner in terms of components and spares, particularly since it’s not limited to a particular region. Europe, South America, the Far East and Australia are all strong contenders.
The airline has also noted a significant increase in textiles, as countries in the region take advantage of the benefits of the Africa Growth and Opportunity Act, all of which is contributing to the development of Johannesburg as a regional hub.
The single constraint at this stage is lack of space.
“We are investigating options like putting the Airbus 600 on the US route which would almost double current capacity. On the Hong Kong route, the new Airbus increased capacity from six to 20 tons.”
Imports too have improved dramatically, although not to the extent of exports. Electronics, mining equipment, textiles and motor components are all contributing to the boom.
The airline’s efficiency is however closely linked with co-partners in the logistics chain, and Makhetha is heartened by the increased attention that the Airports Company of SA appears to be paying to cargo.
“We’re talking to Acsa with a view to improving the infrastructure and therefore the efficient flow of cargo. We’ve also noticed an improvement in Customs procedures, all of which are vital elements in developing a seamless supply chain hub at Johannesburg International Airport.”
