Nigerian air cargo volume slides 6.7% in 2023 due to inflation, production costs

Air cargo operations in Nigeria witnessed a 6.7 per cent decline in 2023, with key players like the Nigerian Aviation Handling Company (NAHCO) and Skyway Aviation Handling Company (SAHCO) experiencing a dip in their total tonnage. This downturn can be attributed to a confluence of factors including rising inflation, increased production costs, and a challenging economic environment.

According to data from NAHCO, there was a 6 per cent decrease in total tonnage, dropping from 65.65 million kg in 2022 to 61.09 million kg in 2023. This decline was observed across all service segments including import, export, and courier services. Similarly, SAHCO reported a reduction in total tonnage, falling from 68.23 million kg in 2022 to 63.56 million kg in 2023.

The decline in air cargo volumes is primarily linked to the adverse effects of inflation on production costs and purchasing power. Seyi Adewale, CEO of Mainstream Cargo Limited, emphasized the impact of increased production costs. “These higher costs include diesel, supply chain costs due to airfreight, fuel surcharges, and higher exchange rates affected by CBN on Customs Currency Exchange Platform,” he said.

Adewale further highlighted the challenge of passing these increased costs onto consumers in the face of eroding purchasing power, which has resulted in a decline in cargo volumes processed across Nigerian airports. Additionally, the closure or temporary shutdown of manufacturing companies has contributed to the dwindling cargo volumes.

Ikechi Uko, organizer of the Aviation and Cargo Conference (CHINET), commented on the broader economic implications of the decline in cargo volumes. He noted that the reduction in imports reflects the shrinking economy and the overall economic situation in Nigeria. Uko also highlighted the shift towards increased export activities driven by the desire to earn foreign exchange amidst a depreciating local currency.

The impact of the decline in air cargo volumes extends beyond the realm of economics to the aviation industry itself. BusinessDay previously reported on the cessation of cargo operations by major freighter airlines such as Cargolux, Saudi Cargo, and Emirates Cargo due to foreign exchange scarcity and trapped funds experienced by carriers.

Kingsley Nwokeoma, president of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), highlighted the operational challenges faced by airlines, stating, “Currently, no freighter cargo airline is coming into Nigeria. We used to have freighter cargo carriers like Cargolux and others that fly into Nigeria between three to four times weekly, but all of them have stopped.” Nwokeoma explained that airlines now rely on the belly compartments of passenger aircraft for cargo transportation, with oversized cargo requiring chartering cargo planes at exorbitant rates.

As a consequence, industries reliant on air cargo for transportation, such as the telecommunications sector, have had to charter planes for transporting large cargo, further adding to operational costs. The marine sector, seizing upon this gap, has seen an increase in sea freight as an alternative means of import and export.

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