Exclusive – Kenya Could do Better in Air Freight, Swissport’s de Clercq claims

Cargo volumes are growing only very moderately at Kenya’s gateway Jomo Kenyatta Airport, consisting of 85 percent exports and 15 percent imports. The near to stagnation situation is not
God-given but the result of political negligence and inefficiencies, asserts Swissport executive and market expert Jeroen de Clercq in this exclusive interview held in Nairobi.

Swissport’s Jeroen de Clercq is a recognized expert of the cargo market in most parts of Africa and the Levante  -  photos: hs
Swissport’s Jeroen de Clercq is a recognized expert of the cargo market in most parts of Africa and the Levante – photos: hs

CGO: Mr de Clercq, having lived in Kenya for 18 years, you are very familiar with the economic and political conditions in this East African country. Your thesis is that Kenya does not
live up to its potential. Kindly explain in short.

 
JdC: This is corroborated by data and reiterated by personal experience.  According to stats, the air cargo market slowed down year after year since 2011. Exports overall remained stable at
best whilst imports declined. This is rather poor measured against the huge economic potential Kenya has. Experts say that an average GDP growth of 7 to 9 percent should be achievable considering
the level of proficiency. But internal factors such as bureaucracy, political infighting, and – unfortunately – also corruption are huge stumbling blocks, so is the poor performance of the
judicial system. Lastly, Kenya has been a repeated target of terror attacks by Islamist groups, which negatively affects the investment climate and hampers economic growth, which is 4 to 5
percent at best.

According to stats there are 42 different tribes in Kenya. What effects does this ethnic diversity have on the economic development of the country and on the political
system? 

 
Let me start with saying that Kenya’s ethnic diversity with its rich cultures is one of its beautiful treasures. But it also has its downside: most people still tend to vote along ethnic lines,
which prevents the proper development of true national cohesion. Besides recurrent ethnic conflicts and disputes over land ownership, every group wants to be adequately served by the government
and thus the outcome of national elections is in their interest. This leads to discord and conflicts over income distribution. It negatively affects the way this country is governed and by
extension its investment climate.

Local shippers and forwarders we spoke with told us that corruption, as also just mentioned by you, is widespread. For instance, due to many road controls by local police units trucking
goods from – say – Mombasa across Kenya into Uganda becomes quite expensive. Payments are demanded at every arbitrary checkpoint. Swissport Kenya doesn’t run a fleet of trucks but from your
everyday experience can you basically confirm what we were told by leading local cargo managers?

 
The information you mention is not new to me; we obviously interact with the same forwarders and shippers. Unfortunately, corruption in Kenya is getting worse by the day; I can’t remember it ever
having been this blatant! For us as Swissport, I can only reiterate that we strictly do business above board; we are fully compliant with all Kenyan and international laws. I am well aware that
this means that at times we lose out on certain business opportunities, the price you pay for doing business straight.

//


Handling rates went south
Last year, about 330,000 tons were handled at Jomo Kenyatta Airport, of which roughly 85 percent were exports, predominantly flowers and other perishables such as vegetables & fruits, with
imports accounting for the balance. These consist of high-end consumer goods, spare parts, pharmaceuticals and electronic items. Swissport handled about 70,000 tons in 2018.
Some years back, the Swiss company was the first ground handler building a new handling facility with direct airside access. Meanwhile, three competitors have followed suit, running their own
facilities first line, one has yet to start operating. This has increased the warehouse capacity within the cargo area of Nairobi Airport enormously, without the air freight market growing
simultaneously. It’s not hard to guess what happened to the pricing structure: handling rates went south, with every player struggling to produce healthy financial results. For the airport
operator a questionable move since they get little in return from the handlers because of their reduced revenues, of which the airport authority gets a percentage. Insiders speak of US$1.5
million per year the airport authority loses on concession fees that are linked to the handler’s turnover figures compared to about 10 years ago.
Another factor for Swissport and their peers is the fact that most forwarders are running their own cargo facilities at Jomo Kenyatta International Airport, building BUPs on their own. These are
transferred to the handler’s warehouses afterwards, leaving little to do for them except check-weighing, doing documentation and loading the goods on board the aircraft.

Growing gap between state and private sectors
However, despite many deficits, Kenya along with South Africa are the places to be for the air freight industry in sub-Sahara.
As to Kenya, their main resource are the people of whom most are well educated, speak very good English, think in entrepreneurial terms, and don’t shy away from hard work. This rising middle
class has developed a healthy sense of identity, but stays widely out of politics, concentrating mostly on economic progress. This development has led to a schism between state and private
sector, both of which co-exist side by side without really interacting with each other. Due to this juxtaposition there are little synergies between both sectors, Mr de Clercq regrets.

Next, we asked the Swissport executive how Kenya’s neighbors are doing in air freight, for instance Ethiopia.


Vegetables and flowers are Kenya’s main export goods
Vegetables and flowers are Kenya’s main export goods

The market is becoming stronger and stronger, mainly driven by perishables, as in Kenya. The problem has been the protectionist policy of the Addis Ababa government and the fact that it’s been
extremely difficult for foreign companies to repatriate money out of Ethiopia. Let’s see whether this will change under the regime of the much more progressive new Prime minister Abiy Ahmed. We
would be very eager to get a handling license but unfortunately did not succeed so far. But we’ll obviously keep on trying.
 
Finally, as Vice President Swissport East and West Africa & Levant, you are responsible for a very large area. So it would be interesting to know which are the most dynamic cargo
markets, and which are rather stagnant or even fall behind the general development. Kindly provide a short overview.

 
JdC: By far the most dynamic cargo market in my region is Israel; it’s booming and has been for the last couple of years with double digit growth year on year. We recently opened a dedicated
facility for FedEx, which is state of the art in terms of handling systems and IT infrastructure. In our existing warehouse we are running out of space even though we expanded our storage
capacity by 30% just 2 years ago; we are developing plans to further increase our capacity within the existing footprint which will probably entail investing in ETVs.
Another market that works very well for us is Accra, Ghana. We opened a new facility about 2.5 years ago, the most advanced one in Swissport’s entire global network in terms of handling systems,
and have gained about 65% market share since, with other customers eager to join us in the foreseeable future; a true success story.
A market that’s struggling somewhat is Tanzania. Under its current government, economic growth has dwindled which we see mainly reflected in strongly reduced import volumes. Since imports account
for about 90% of Tanzania’s total air-cargo volumes, this has hit us hard and there are no clear signs of imminent recovery. At the same time, competition was introduced which means that a
shrinking cake needs to be shared. However, given our very strong market position, our excellent infrastructure and strong team, we are confident that we will remain the market leader by
far.

Thank you for this exclusive interview.

Jeroen de Clercq – in short
The 55-year-old Dutch national started his business career unsuccessfully as a farmer and professional musician. The next step taken in 1985 was more promising although not really thrilling when
he was hired at a small ground handling company at Amsterdam Schiphol Airport, becoming a pusher of wheelchairs.
However, after a three-year stint with EL AL Israel Airlines Mr de Clercq joined national Dutch carrier KLM where he held various operational and managerial positions in the Netherlands and
abroad. He climbed up the career ladder in 2004 by joining ground handler Swissport, becoming CEO for Kenya. Next, he was appointed Vice President East and West Africa & Levant, a position he
holds today.
Jeroen de Clercq is married to a (“beautiful,” as he emphasizes) Kenyan national with whom he has a son. He and his family live in Nairobi.

Heiner Siegmund

//

Source: Cargoforwarder

Be the first to comment on "Exclusive – Kenya Could do Better in Air Freight, Swissport’s de Clercq claims"

Geef een reactie

Het e-mailadres wordt niet gepubliceerd. Vereiste velden zijn gemarkeerd met *

*