As the cargo sector rebounds, operators are exploiting huge revenue potential in the air cargo and logistic value chain estimated at over trillions of naira. In Nigeria, experts say that segment of the industry holds the key to turning around the economy, if the relevant regulatory bodies enhance their oversight duties, design tailor-made training programmes for operators and package other interventions that will step up participation in air cargo, NIYI JACOBS writes.
Nigeria is yet to optimise the potential in the air cargo value chain. If operators step up their game, and adopt the right processes, exeperts say, they will harness the huge resources in the sector.
According to the International Air Transport Association (IATA), the umbrella body of global carriers, air cargo is valued at over $6 trillion and an estimated 35 per cent of world trade by value.
According to the global body, shipping by air is a fast and efficient means of transport for goods. Airlines transport over 52 million metric tons of goods a year, representing more than 35 per cent of global trade by value but less than one per cent of world trade by volume. That is equivalent to $6.8 trillion worth of goods yearly, or $18.6 billion worth of goods daily. However, the effects of the COVID-19 pandemic has affected the air industry, including air cargo.
To deepen participation in this business, airlines, ground handling companies, freight forwarders and other players in the logistic value chain have continued to up their game.
To underscore the development, players in the air cargo value chain say bespoke strategies by stakeholders would enhance the value of air cargo and contribute to the business.
In an interview, Managing Director and Chief Executive Officer, Prime Ports Logistics, Otunba Femi Adewunmi said one way to harness the benefits of air cargo business is to move goods and other materials from the major airport in Lagos to other locations such as Port Harcourt.
According to him, though the pandemic and its variant has affected air transport business, there is still huge revenue potential in air freighting because Nigeria as an import dependent country would require materials for its industries.
Adewunmi said the import dependent nature of Nigeria, with huge needs form materials for the manufacturing, oil and gas and other industries would require materials across the globe to run their businesses.
He said: “Air cargo or freight business starts from procurement, which requires that you are buying a material for your organisation.
“After procurement, the people or organisation involved would need to move the items by air from the point of purchase to the location where the material is needed. This is where air cargo and players in the logistic business needs to get involved. As much as Nigeria remains a heavily import dependent country, air cargo would continue to thrive.
“What players in the logistic sector need to do is to scale up their services by adhering to the required regulations, practices and procedures to thrive in the business.”
Adewunmi continued: “Nigeria has a huge potential in the air cargo and freight value chain because most of the industries with huge demand for imported raw materials need to keep their operations running.”
He said though a lot needs to be done to scale up regulation by the relevant agencies for operators in the value chain.
Adewunmi said: “Air cargo in Nigeria could be profitable, if the operators are doing the right thing. It is all about the value you bring to the process of offering services that would bring in huge revenues in the sector.
“But, the value you are able to extract and add is what primes your opportunity to grow in the business.”
While giving value for the air cargo industry business in Nigeria, Adewunmi said though the market is worth over trillions of naira with stiff competition among the players it was difficult to capture data on the scale of operations.
The Prime Ports Logistic boss said: “All I will say is that it is becoming increasingly difficult to put a figure to the value chain because we are still navigating around how to agree on industry estimate.
“In Nigeria it is difficult to capture and keep data, though it appears like work-in- progress as relevant government agencies are trying to improve on issues of linkages and non- compliance. This explains why the government is pushing to follow due process as an import step in getting statistics, which is required when policies and decisions on the industry would be taken.
“All I can say is that the value of air cargo and freight in Nigeria runs into billions of dollars. But, it is extremely difficult to give an exact figures straight.This is because the majority of everything we use in Nigeria or consume in one way or the other are produced with imported materials. We are still dependent on importation.This explains why many manufacturers are pushing for local manufacturing as research and development will drive us to another direction.”
On classification of operators in the air cargo value chain, Adewunmi identified three groups; the low, medium and top players, which have changed the dynamics in the sector to push it into an unstructured regime.
He said the air cargo value chain could contribute more to the economy if opportunities available for low and middle range players are scaled up to address issues bordering on funding are resolved.
He said: ” Air cargo business could be better, if the market is turned around to be more formal, improve regulations.”
On the effects of the pandemic, Adewunmi said though the air transport sector has been affected , but there is hope for a rebound of business, throwing up opportunities for those who are ready to tap opportunities available in the sector.
He said: “It is not the end for air cargo business, while the pandemic is still biting hard, it is time to organise the business by getting the right structures in place, the requisite training and plan ahead when the opportunity beckons to unleash.”
Adewunmi threw a challenge to the relevant agencies to fix equipment gap at the airport for air freight and logistic operators.
He said having the right operational equipment at the airport for air cargo processing would create a conducive environment for operators.
Giving updates on his experience in the last seven years in the value chain, he wondered why clients would prefer to ferry their air cargo through Lagos Airport and not Port Harcourt.
To reverse this trend, he urged the aeronautical agencies to speed up and overhaul the procedures and processes of facilitating cargo by improving facilities in airports outside Lagos to attract more players.