Nigeria’s exports struggle amid surging global cargo demand

While there is a global increase in air cargo demand, Nigeria is struggling with an imbalance between imports and exports. This is exacerbated by inadequate airport facilities, a lack of aircraft, and a declining aviation infrastructure, writes Princess Etuk

The demand for air cargo services has grown significantly over the past decades, as reflected in the rising volume of air cargo traffic between countries.

Globally, air cargo traffic increased from 38 million tonnes in 2005 to 57.6 million tonnes in 2019.

In terms of distance, air cargo traffic expanded from 142,580 million tonne-kilometers in 2005 to 225,001 million tonne-kilometers in 2019.

This surge in air cargo volume was driven by factors, such as economic growth, political stability, liberalisation policies, improvements in customs quality, and reduced corruption.

However, in May 2024, African airlines saw 18.4 per cent year-on-year demand growth for air cargo, the strongest of all regions. Demand on the Africa–Asia market increased by 40.6 per cent compared to May 2023, the strongest performance of all trade lanes. The capacity in May increased by 21.4 per cent year-on-year.

While a report estimated that the Nigerian Air Freight Market would reach $3.01bn in 2024 and is expected to reach $5.64bn by 2029, industry experts have expressed concerns over the air cargo situation in Nigeria, noting the need for better airport facilities and increased production to improve exports.

They stated that the country’s cargo export growth had been weakened by a lack of available aircraft.

An aviation expert and Chief Executive Officer of Centurion Security Limited, John Ojikutu, pointed out the stark differences between Nigeria and other countries in terms of passenger traffic.

“When you look at other countries, even the passengers, we are talking about what our passenger traffic is compared to other countries, we are number eight.

“If there is any increase, the increase is in South Africa. They are well ahead of us in passenger traffic. The industry is collapsing, we just have to know that,” he stated.

According to Ojikutu, the decline in passenger traffic has been a long-standing issue.

“In 2019, I told them to convert all their aircraft to carrying cargo because the passengers would drop. Look at the passenger figure in 2019 and compare it to what we have now.

“The situation is further compounded by a lack of available aircraft. The minister said there are no aircraft. If there is no aircraft, how do you carry cargo and passengers?” he remarked.

The lack of aircraft, he said, had also affected Nigeria’s export capabilities.

“We are not thinking; everybody is looking for how to steal money. We had about 30 to 40 foreign airlines coming to this country, how many are coming now? What are we exporting?” he asked.

The Nigerian air cargo sector is currently underperforming, according to Ojikutu, who raised concerns about the limited scale of air cargo operations within the country.

“Nigerian air cargo is by far too small. The total cargo you will find moving around in this country is between 80-100 million tonnes,” he stated.

The aviation expert highlighted the inefficiency of the current air cargo system, which, he said, failed to meet the nation’s potential and needs.

Ojikutu suggested a strategic focus on domestic agricultural products as a starting point for revitalising the sector, saying, “The only way we can talk of cargo now is to let them start with lifting food crops locally. Let them target about one million food and cash crops and bring them down.”

To support this initiative, he called for government subsidies to make air freight more viable, particularly for transporting essential goods like food.  He urged the government to subsidise air freight because food is national security.

The Assistant General Secretary of the Aviation Round Table, Olumide Ohunayo, maintained that due to the increase in flight tickets and inflationary trends, most people have decided to fly to different countries.

He added that they ordered goods online and that had increased the cargo freight into Nigeria.

“But unfortunately, we have not been able to match that with exports. We have more imports with cargoes coming in than going out. Most of the aircraft go back empty,” Ohunayo lamented.

He also pointed out the need for improvements in airport facilities to support cargo transportation.

According to Ohunayo, cargo within Nigeria is available, and the market is there, but the aircraft is not available and the facilities at the airport are not encouraging cargo by air.

“There is a need to increase production. Companies are folding up. We must find a way to start producing so that we can start producing to join the export market. We are really poor in the export market,” he stressed.

The Coordinator of the Federal Airports Authority of Nigeria AviaCargo Roadmap Committee, Ikechi Uko, stated that Nigeria lost $1bn annually due to the lack of certification for agricultural exports, despite being one of the world’s top agricultural producers.

He observed that while considerable attention had been given to passenger traffic, aircraft movement, and flight operations—mainly focusing on safety, security, and policy—air cargo flow had been largely overlooked.

Additional challenges, he asserted, included high costs for aircraft and maintenance, expensive freight rates, insufficient incentives, poor government regulations, cargo security lapses, outdated technology, harassment by law enforcement, climate change, and multiple taxes.

Uko called for improved certification for farms and operators within the value chain, adding that despite those hurdles, many Nigerian airlines depended on the cargo business for revenue, though they were not dedicated cargo carriers.

Nigeria’s domestic cargo industry is estimated to be worth over N40bn (around $32m as of February 2024), presenting substantial revenue opportunities for both airlines and the government, according to a report.

A former Chief Executive of the Federal Airports Authority of Nigeria, Hamisu Yadudu, said Nigeria could triple its existing volume of cargo traffic if it gets its priorities right, having surpassed Africa’s growth of 11.6 per cent in 2021, recording an increase of 52 per cent within 2021 over 2020.

He disclosed that Nigeria has a population of more than 200 million and is the largest market in Africa, with a higher air cargo import than export.

According to FAAN’s data, almost 871 million kilogrammes of cargo passed through Nigeria’s airports, between 2017 and 2021, but imports were much higher than cargo exported.

Stakeholders believe this massive gap between imports and exports should be bridged.

The significance of freight to Nigeria’s gross domestic product has motivated governments at all levels to take action to foster the sector’s growth by working to reduce the gap between import and export volumes. This is reflected in the increasing number of airports established by state governments, many of which have been designated as cargo airports. Of the 32 airports in Nigeria, 15 have been officially classified as cargo airports.

The growth of the freight business is further supported by the rising number of cargo airlines. For instance, ValueJet Airlines recently ordered a CRJ freighter for dedicated cargo services, joining Allied Air, which has long operated as a dedicated cargo airline in Nigeria.

The demand for freight services has also increased due to the high level of insecurity in the country, leading to competition between road and air transportation for freight delivery.

Data provided by IATA for June 2024 showed that Africa-Asia air cargo routes have emerged as the top performers in annual growth, recording a 37.5 per cent increase.

This is considered vital for Nigeria, as its aviation sector plays a key role in Africa’s industry.

The IATA report indicated that the June figures continued a trend of double-digit annual growth that started in September 2023, highlighting the dynamic evolution and rising demand for this crucial trade route.

“The annual expansion in international CTK was supported by all major route areas as well, although with some differences in magnitude.

“Equivalent to the month before, Africa-Asia and Middle East-Europe championed annual growth in June with outstanding evolutions of +37.5 per cent and +30.2 per cent, respectively. For both route areas, the June reading reflects the continuation of a streak of double-digit annual growth that originated in September 2023,” the report read in parts.

The within-Asia trade lane followed behind the Africa-Asia and Middle East-Europe routes with an annual surge of 21.0 per cent, marking four consecutive months of double-digit growth.

Other notable increases were observed in the Europe-Asia routes, with 20.3 per cent within Europe at 16.7 per cent and Middle East-Asia at 15.1 per cent

Europe-Asia experienced its seventh consecutive month of double-digit growth, Within Europe marked six months, and Middle East-Asia recorded nine months of such growth.

The IATA report showed that global air cargo capacity experienced a slight decline of 1.7 per cent compared to May but rose by 8.8 per cent compared to the same period last year.

The annual growth in Available Cargo Tonne Kilometers showed an increase in cargo space on flights, which has steadily risen over the past six months, though at a gradually slowing pace. The first half of 2024 saw record levels of air cargo capacity.

This capacity growth was primarily seen on international routes, which expanded by 10.8 per cent year-over-year in June. The surge was largely fueled by an increase in belly-hold capacity, where cargo is stored in the lower deck of passenger flights. This segment experienced its 38th consecutive month of double-digit growth, with a 16.8 per cent increase in June.

However, to curb this issue, pundits have suggested that stakeholders should analyse the dominant cargo types, origins, and destinations to understand traffic patterns and make informed planning decisions.

This analysis will also reveal projected future cargo growth rates, enabling airports and airlines to plan their capacity for effective service delivery.

They also noted that Nigeria must strengthen policies to boost the export of various cargo types, particularly agricultural products while continuing the dominant export of goods like hair attachments.

The country can learn from Ghana, which has successfully increased its agricultural exports.

Additionally, the experts stated the country should strategise to enhance relationships with other countries, especially Germany, Ethiopia, the United Kingdom, the United Arab Emirates, and Turkey, to foster new business opportunities with foreign airlines like Lufthansa and Ethiopian Airlines.

According to analysts, strengthening these relationships through bilateral air service agreements will promote the exchange of goods.

There is also a need to prepare airport capacities to handle the anticipated increase in cargo traffic. To achieve this, the focus should be on improving the adequacy and condition of equipment and facilities managed by private terminal operators, ensuring the airports are equipped to meet the expected future growth in cargo traffic.