EAST AFRICA’S INFRASTRUCTURE: A REGIONAL PERSPECTIVE

# **Box 2.3 . The importance of air freight in East Africa**

Air freight is an essential mode of transport for time-sensitive goods and for expansion into more distant markets as globalization continues.

_Kenya_ . Horticulture is the third-largest and fastest-growing sector in the Kenyan economy. In 2003, Kenyan exports of fruits and vegetable totaled $260 million (around 15 percent of all exports). Kenya is the largest single supplier in the European flower market, with a 31 percent market share. Around 70 percent of exports are shipped to wholesale markets in the Netherlands. The average value of Kenyan cut flowers varies but stood at around $4 per kilogram as of 2009. Demand for Kenyan flowers is increasing, which has encouraged new entrants to the market, including Rwanda and Uganda. Uganda not only has an environment conducive to growth but also utilizes passenger and freight services (DAS Cargo) that provide sufficient cargo capacity.

Around 90 percent of fresh horticultural products are air freighted, which makes securing air cargo space a priority. Large exporters have some control through joint ventures with freight forwarders. As much as 90 percent of the shipments are carried as belly cargo on Kenyan Airways. Air cargo carriers such as Lufthansa Cargo and Cargolux provide dedicated cargo space from Nairobi to Frankfurt or Maastricht.

Around 70 percent of the flowers are grown northwest of Nairobi at the rim of Lake Naivasha. Good-quality roads between this area and Nairobi’s Jomo Kenyatta International Airport are therefore imperative. Bad roads along this route can compromise the growth of the industry.

_Tanzania._ Seafood comprises the bulk of Tanzania’s exports to the European Union. Around two-thirds of the West Nile perch catch are shipped fresh by air. Tanzania exports about 22,000 tons of fresh and frozen fillets that are worth some $77 million. Around 80 percent is sold in Europe, the rest in Asia.

The fish are caught by fisherman as well as commercial fishing operations and then transferred via air to Mwanza or Nairobi. The cargo is driven from factories and loaded at night for morning delivery. For cargo to Mwanza, chartered aircraft are used. These are costly because the short runways restrict operations to smaller, older aircraft. Shipments through Kenyatta International Airport incur a higher land transport cost, but the airfreight costs are lower. There is competition for space on passenger aircraft for flowers and vegetables during the peak season. These are sent on scheduled airfreight services to Brussels, Liege, and Ostend but require transshipment in Spain, Italy, and Germany. There are relatively few shipments that are large enough to justify chartering a larger air freighter. The overall cost of transport to the market is estimated to be about $1 per kilogram.

To maintain the cold chains required for seafood, air shipments need to be delivered close to the time of departure. Where the seafood is carried on a passenger aircraft, there is the additional problem of ensuring that the flight is not delayed in taking off. If the route involves a change in the aircraft, as it often does in the case of Tanzania, or significant wait on the ground, the cold chain could be compromised. To minimize this problem, airlines offer ―tail to tail‖ service where cargo is moved directly from one plane to the other. This reduces handling costs and transit times.

Air freight will continue to be an essential mode of transport for time-sensitive goods and will play a growing role in developing exports for landlocked countries. To facilitate its use, landlocked countries will need to improve operations at their airports and liberalize access for foreign airlines. It is unlikely that scheduled air cargo operators will have significant operations in landlocked countries unless they become major suppliers themselves. Instead most air cargo will move as belly cargo on passenger airlines, with complementary use of chartered air freighters. It is necessary to expand access to foreign passenger airlines.

<u>Source: World Bank 2009b.</u> 35