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BA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING TGT: INVENTORY WATCHTGT: BIG EARNINGS MISSWMT: GENERAL MERCHANDISEWMT: AUTOMATIONWMT: MARGINS AND INVENTORYWMT: ECOMM LOSSESWMT: ECOMM BOOMWMT: RESILIENCEWMT: INVENTORY WATCH
BA: WIND OF CHANGEMAERSK: BULLISH CALLXPO: HEDGE FUNDS ENGINEF: CHOPPING BOARDWTC: NEW RECORDZIM: BALANCE SHEET IN CHECKZIM: SURGING TGT: INVENTORY WATCHTGT: BIG EARNINGS MISSWMT: GENERAL MERCHANDISEWMT: AUTOMATIONWMT: MARGINS AND INVENTORYWMT: ECOMM LOSSESWMT: ECOMM BOOMWMT: RESILIENCEWMT: INVENTORY WATCH
Kenyan flower exporters have warned that the rate and capacity levels in air cargo are at “critical” levels for farmers.
In the first week of October, according to Rotate’s capacity database, airfreight capacity out of Africa into Europe fell 8%, year-on-year, while out of Nairobi, capacity was down nearly 12%. And rates have risen sharply.
“The rates for this winter season, which started last week, have increased substantially from Kenya,” said Willum Van den Hoogen, managing director of Florius International.
“We observed a 15% rise in rates compared to the previous winter season. Compared to Ethiopia, the rates from Kenya are now 80% higher into the Benelux.
“What we are seeing is that structural and historical capacity is reducing due to East-West ecommerce opportunities and sea-air alternatives, driven by the Middle Eastern crisis. This situation, at the current rate and capacity, could become critical, especially during slower market periods and/or for heavier or bulky flowers.”
He added that pressure on airfreight had intensified due to the challenges on the Suez Canal.
“This will also affect other East African perishables that could have been shipped via reefers but now also resort to air freight.”
And if Kenya has a dry and sunny winter and spring, airfreight will be in even stronger demand. Last year’s season saw poor weather affect flower production.
But while the data shows lower capacity, most airlines on the route have insisted they haven’t reduced flights.
Lufthansa Cargo told The Loadstar that it had in fact increased services to Kenya, via its Brussels Airlines belly service to Nairobi, in addition to the Lufthansa passenger flight. It acknowledged, however, that it had increased freighter frequencies to other destinations, in India and China, to capture more of the ecommerce market, primarily with its new 777F.
A spokesperson added: “In the future, some of our freighters will have fewer stopovers, allowing our customers to benefit from direct connection and transportation of their freight within our global network.”
Qatar Airways Cargo told The Loadstar that it too has not cut capacity, with three weekly freighters to Kenya, but noted they are now going via Doha rather than direct to Liege, a less popular routing for perishable shippers who prefer direct flights.
And chairman of Network Aviation Group, Andy Leslie, noted on social media that it operates six flights a week from Nairobi to Liege with a 747F and “will endeavour to operate a seventh frequency if possible”.
He added: “We have never been ‘fair weather friends’ to the Kenyan horticultural industry and have always given it our top priority and have done so for nearly 40 years.
“Even the temptation to earn the big bucks during Covid and even now would never sway us from our utmost support for the Kenyan farmers and exporters.”
Magma, meanwhile, admitted it had cut its Nariobi–Liege flights from four to three a week in September, due to a “temporary reduction in our fleet”.
However, head of commercial, James Gilliard, explained: “Magma Aviation highly values and remains fully committed to the Kenyan and African market and once we increase our fleet we will be reviewing placing the fourth flight back into Kenya.”
In line with carriers, he said that when there was availability for ad hoc services, they would be deployed to Asia for the peak season.
“There are several requests for longer-term flying contracts from Asia so the demand looks set to continue, but our commitment is to our long-term partners, of which, Africa is a key part of our network.”
Mr Van den Hoogen suggested that during certain times of the year when other cargoes were limited, such as Chinese new year, airlines “could take advantage of the opportunity to make a loop to Kenya to pick up flowers and transport them to Europe. We may, therefore, see more dynamic effects in the market and in the volumes being shipped”.
But demand for expensive airfreight will ultimately depend on flower production.
“There will be times next year when the market can pay a somewhat higher premium for peak production, and other times when it’s smarter to compost the excess production and discard the flowers on the farm,” he explained.
“The clock prices at the Dutch flower auctions will predominantly determine whether it’s still feasible to export or not.”
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