The Reporter (Addis Ababa)

Ethiopia: IATA Calls Ethiopian Air Cargo Market the Fourth Fastest Growing in the World

The International Air Transport Association (IATA) last week announced that Ethiopia's air cargo market is the fourth fastest growing in the world.

IATA's Airline Industry Forecast 2013-2017 released at the IATA annual Cargo Media Day held on December 11 in Geneva, Switzerland, shows that Vietnam is expected to be the fastest growing country for air freight volumes over the forecasting horizon with a compound annual growth rate (CAGR) of 6.6 per annum, followed by Bangladesh (5.7 percent CAGR), Brazil (5.5 percent CAGR), Ethiopia (5.3 CAGR) and Peru (5.2 percent CAGR).

Africa is forecast to be the fastest growing region over the forecast period with a growth rate of 4.0 percent CAGR. According to IATA, the fastest growing freight route for Africa is the inter-Africa market (5.3 percent).

Not far behind Africa are the Middle East and Latin America, both with a CAGR of 3.8 percent and the Asia-Pacific at 3.5 percent per annum, followed by Europe and North America at 2.4 and 2.7 CAGR respectively. The report indicates that the five largest international freight markets will be the United States, China, Germany, Hong Kong and the United Arab Emirates. Desmond Vertannes, global head of cargo with IATA, told The Reporter that the growing investment coming from Asia to Africa is boosting the air freight business in Africa. "China's increasing Trade and investment in Africa is a big contributing factor. African exporters are finding new markets. The big contributor is the perishable cargo industry. The perishable industry, the flower, fish industry and the manufacturing industry contribute to the growth of the air cargo in Africa," Vertannes said.

According to Vertannes, Ethiopia is doing an exemplary work in expanding cargo transport sector. Ethiopian Airlines is acquiring new cargo fleet and building new cargo terminal. He went on to say that expanding the handling facility to greater capacity will help the country's economic growth. "Lots of African countries can do the same thing. They are enhancing the handling capacity for the air cargo. I congratulate Ethiopian Airlines for pursuing working with their customs authority on e-freight agenda. They have been very good in adopting the e-freight business. We want to encourage other African countries to follow suit. We know that it is happening in Kenya and South Africa. But more countries should join the club."

Ethiopian Airlines CEO Tewolde Gebremaraim told The Reporter that Ethiopain is the largest cargo operator in Africa and among the top fifty in the world. Tewolde said Ethiopian currently operates a fleet of 6 dedicated freighters to 24 destinations around the world and carries annually around 200,000 tons of cargo. Over the last years, Ethiopian has seen a huge upsurge in our cargo operations thanks largely to the growth of Ethiopia's exports.

"In 2005-06, our cargo revenue was just 610 million birr. In 2012-'13, it was close to 6 billion birr, a tenfold increase. Ethiopia exports mainly perishable products such as flowers, vegetables and meat, which are carried by air and in bulk by Ethiopian Cargo."

Tewolde said although the cargo business is very difficult in the current context of slow global economic growth, persistently high fuel price and imbalanced directional flows, the economic growth of Africa in general and Ethiopia in particular as well as our competitive advantages give us great confidence about the future prospects. Africa-Europe and Europe-Africa cargo business is expected to grow by between 5-6 percent per annum over the next years. Owing to the growing economic and trade ties between Africa and Asia, robust air cargo growth is also forecast between the two regions.

"Our cargo business has strong competitive advantages such as recognized brand in Africa, strategic location, low unit cost advantages, economies of scale with strong hub and spoke network, deployment of latest technology, growing exportable products in north-bound direction, and synergetic advantages with cross utilization of resources with our other businesses," Tewolde said.

He continued, "We are now into the fourth year of our Vision 2025 Ethiopian Cargo strategic roadmap and are meeting all our targets. In line with our Vision 2025 Ethiopian Cargo strategic roadmap, we have recently established our cargo business as a full-fledged profit center of the Ethiopian Airlines Group with the aim of fully tapping into the fast growing air freight business between Africa and the rest of the world." The airline has also started to implement multiple cargo hub strategy with its partner airline in West Africa, ASKY, by deploying a B737-400 freighter, which, through its West African hub, in Lome, Togo, is collecting outbound cargo from West and Central Africa and feeding Ethiopian global cargo network. Similarly, the airline is distributing in-bound cargo to the entire West and Central Africa region through this partnership. The airline intends to replicate this model in other regions of Africa. The airline's Vision 2025 Ethiopian Cargo strategy is based on 4 pillars. The first is the fleet. The national flag carrier continues to expand its cargo fleet with 4 additional Boeing B777F on order, two of which will be phased-in in October and November 2014, while the remaining two will arrive in September and October 2015. By 2025, the airline plans to operate close to 20 dedicated freighters to 37 destinations across five continents.

The second is infrastructure. Currently, the airline has a cargo terminal with over 300,000 tons annual capacity. The airline recently completed a state-of-the art cold storage facility with a 65,000 tons annual capacity and is in the process of building, in two phases, a new cargo terminal with a 1.2 million tons annual capacity, which will be one of the biggest in the world.

Tewolde added, "The third pillar of our strategy is human resource development. We are investing heavily in our Aviation Academy so that it is able to produce sufficient technical and leadership personnel for our growing cargo business. Over the last three years, we have invested around 55 million dollars into the expansion of our academy, which now has 1,000 trainees intake capacity."

Tewolde said his airline is improving its systems, processes and procedures, with the aim of providing the most efficient cargo service to its customers. "We have started to implement e-AWB since 2012 and are finalizing preparations to implement e-freight with the expected ratification by Ethiopia of the 1999 Montreal Convention and are working to achieve cargo 2000 (C2k) certification by 2015." This would enable the airline to process airway bills fully online. IATA says Ethiopian is taking the lead in Africa by introducing the e-freight business. The national flag carrier plans to carry 820,000 tons annually and to generate 2 billion dollars from the cargo business by 2025.

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