Can pharma save South Africa's air freight business?

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Perishable volumes shipped by air in South Africa have shrivelled as rising costs, competition from other carriers – and African countries – have harmed the trade.

Ronel Rossouw, national sales manager for South African Airlines, told the Cool Logistics conference in Cape Town last month that “the business is dying”.

“We are getting more money moving perishables between Johannesburg and Cape Town that we do to London these days,” she said. “Intra-South Africa is definitely a growing market. But the real trend is that the perishables market is really getting smaller. South Africa used to export quite significantly to European markets.”

SAA’s biggest perishables air freight volumes are now domestic, Kenyan, Angolan and Nigerian exports. The strongest import markets are France and Kenya, according to WorldACD data.

“The market in Johannesburg is really bad,” one airline executive told The Loadstar. “The Rand is quite weak, and it’s strike season. Where lots of cargo used to be taken from other countries by road to Johannesburg, it is now flown directly from countries such as Zambia and Zimbabwe, now that Emirates and Air France-KLM are flying there. Go in [to those sorts of destinations] with a 777 and you just hoover up all the volumes.”

Ms Rossouw also noted that while South Africa used to export 80% of its flowers, it now imports 80%, and that East Africa “is kicking our butt”.

“Kenya and Ethiopia are strong on flowers – Ethiopia is exporting 300 tonnes a week,” she said. Technological advances in sea freight had further weakened the perishables trade by air.

While some 50% of SAA’s cargo continues to be perishable, it only accounts for 41% of revenues – and Ms Rossouw pointed out that falling yields and rising costs for items such as security made it hard to invest in cool chain infrastructure.

“In air freight we know our fruit and veg business is dying, and to replace that we need investment,” she said, adding that SAA sees growth in the pharmaceutical business. South Africa currently only exports 0.06% of its pharmaceuticals  – around 30 tonnes a month – but it is a major hub for pharma cargo from India to Africa.

“We are going to upgrade our facilities. We are trying to minimise gaps in the cold chain, to ensure that cargo gets to its destination at the right temperature. But upgrading fridges and so on is quite difficult to justify. We’ve looked at the Envirotainer option but it is extremely costly and can make South African products less competitive than those from South America or India.

“We can’t put all our money into pharma,” she added. “But the Indian and Chinese markets are very big, and we can’t turn our back on it. So we’re upgrading our facility, looking for pharma coming in and going out and we are working on a global agreement to ensure we can get Envirotainer into our fleet.”

Other challenges in Africa include language difficulties, bilateral deals, infrastructure, and track and trace. “I get so annoyed when I sit at airports – there are lots of fancy gadgets but if you can’t get cargo off an aircraft, it’s extremely frustrating. We need to track and trace – but there might be no internet access at an airport. Warehouses can be big black holes – cargo goes in, someone writes it in a book and that’s as far as track and trace goes.”

However, she said, to be the leading carrier in Africa meant SAA had to invest in other countries. “We look forward to making African our biggest growth.”