Ongoing strikes have taken
their toll on the airfreight
industry with export volumes
down compared to last year.
According to Mike Todd,
VP Africa for Air Menzies
International SA, volumes
for the first six months of this
year have declined by at least
5% compared to the same
period last year.
“The biggest contributor to
the drop in volumes has been
the strikes,” he told FTW.
“The protracted strikes saw
lower production levels while
some businesses were unable
to move their export stock out
of their warehouses due to the
intimidation of hauliers.”
Economists have warned
of the detrimental effect of
the strikes on the country’s
economy. Not only do
they discourage foreign
investment, they also
significantly dent export
earnings – the impact of
which is felt across the supply
chain.
According to Todd the
airfreight industry was
particularly hard hit, and
with predictions of South
African GDP growth being
only in the region of 1.7% this
year, there is very little chance
of gaining lost ground.
“It is very unlikely that we
will improve on 2013 volumes
in the second half of the year,”
he said. “It also seems that
airfreight rates are set to
continue on their downward
trend in this economic
climate.”
With an over-supply of
service providers all chasing
a reducing cargo pot it
has become an extremely
competitive environment.
“It becomes questionable
whether airlines should be
happy about the distribution
of International Air
Transport Association (Iata)
statistics showing volumes
and rates of its agents as
it makes the environment
even more competitive,” said
Todd. “While it is interesting
marketing information, it
also opens the door for the
competition, adding pressure
to the already downward rate
spiral.”
Todd also questions the
practice of sending out
monthly or quarterly specials
as an attempt to attract more
cargo.
“Generally those specials
are countered by opposition
airlines and the end result
is a dilution of yield on the
business you were
carrying
anyway.
We know
that
airlines
servicing
the South
African
route
are firstly
attracted due to passenger
volumes and secondly by
import traffic,” he said.
“The positive spin-off is that
South African exports are
benefiting from relatively
low subsidised freight rates
as a result of passenger
and import cargo demand
and the freight price war.”
INSERT & CAPTION
With an over-supply
of service providers
all chasing a reducing
cargo pot it has
become an extremely
competitive
environment.
– Mike Todd
