Exporters advised to pool cargo as high freight fees take toll

The government has over the past year strengthened the push to improve the country’s export volumes and revenues. It has signed agreements with different firms to support them produce and export more local products. Growing the exports sector is also one of the priority areas of the current financial year budget. However, these efforts could be in vain, thanks to the lack of affordable cargo airlines, which has led to the skyrocketing of freight charges. The problem is aggravated by the low volumes and poor co-ordination, among other challenges, sector experts say. Peter Gatheru, the managing director of Lotec Rwanda, one of the leading cargo companies in the country, said exporters should consolidate their cargo and export according to sector is instead of individuals with small packages to attract airlines. The move also enables them to raise the minimum required tonnage, Gatheru adds. According to him, Rwandan exporters can only raise a combined two tonnes per shipment, which he says discourages airlines from operating cargo planes out of Kigali International Airport. “The minimum tonnage airlines are looking to is between 15 and 20 tonnes of cargo. This coupled with high landing fees, pushes freight charges up,” Gatheru says. Therefore, exporters need to work together to raise the required volumes if they are to benefit from fair fees and thrive in the market, he adds. Gatheru says this could also help solve the challenge of high freight fees. He urges the Rwanda Civil Aviation Authority to review the high landing, saying they are keeping away airlines. Exporters have complained about high freight fees and lack of a cargo aircraft, especially those that operate direct flights from Kigali to Europe. Airlines also say landing and holding charges are high in Rwanda compared to regional airports, which has discouraged firms from the airport. According to Vainney Kabera, the managing director, Freshpak Limited, lack of cargo aircraft creates unnecessary delays and has pushed the fees high. “Because there are no reliable air cargo services, most exporters are using passenger planes to different destinations. This is expensive and affects the competitiveness of Rwandan goods on the global market,” Kabera said. Using passenger airlines to transport cargo, especially perishable produce like horticulture products, is risky and compromises quality of the goods, according to exporters. “Often, passenger bags are thrown on top of the produce, damaging them and affecting quality,” Kabera says. There is therefore need to pool our exports into one container to attract air cargo services, which could eventually lead to reduction in freight charges and make the sector efficient and profitable, he adds. He also cites the issue of cargo delays at the airport and lack of cold chain facilities for perishable produce at the airport. Exporters say high parking fees charged by regional airports has forced them to transport goods to neighbouring countries by road. Rwanda charges about $65 for every A330- 200 aircraft as parking fees and $10 for Q400 aircraft, Burundi charges $46.6 and $5.84, respectively, for similar aircraft, while the fees range from $10 and $50 for the same type of planes in Kenya, and Uganda charges between $12, according to figures from the Rwanda Civil Aviation Authority. In Tanzania, airlines part with $24.38 and $194.17 in parking fees. For landing and takeoff fees, Rwanda charges $160.91 for A330-200 aircraft and $160.91 for Q400, while Uganda charges $116.5 and $146.29 respectively, and Tanzania, $116.5 and $146.29 for the Q400 and for A330-200 aircraft. Kenya charges $1345 and $102 and Burundi 1,304.8 and $163.84, respectively. Though Rwanda charges the highest parking fees, especially for A330-200 aircraft, Burundi, Uganda, Kenya and Tanzania levy higher landing fees, lighting, and passenger and navigation charges. The data also indicates that airlines are charged between $65 and $10 per day per tonne depending on the type of the aircraft. However, the first six hours are duty free. Most cargo aircraft weigh between 35 and 40 tonnes. According to logistics firms, some airlines recently increased freight charges from $1.6 to $2.06 per kilogramme for products destined for Europe. Exporters are also calling for more government subsidies to farmers and export sector to increase volumes and attract more air cargo service providers into the region. A business opportunity for RwandAir According to John Mirenge, the RwandAir chief executive officer, air cargo services is yet another opportunity the national carrier is considering to invest in. Currently, East African states are trying to harmonise airspace regulations to facilitate trade and ease movements of goods, people and service. Government has signed deals with exporters to increase productivity, but such challenge could stifle these efforts. Ethiopia Airlines deal In May 2013, the Government signed a deal with Ethiopian Airlines cargo freight to transport the country’s exports to the Republic of Congo to enhance Rwanda’s export receipts. Under the one-year renewable agreement, exporters were to pay $1.75 per kilo, with the government contributing $0.25 a kilogramme. The firm was expected to airlift 30 tonnes of goods twice a week from Kigali International Airport to Brazzaville, with hope of extending the service into Gabon, depending on demand. Rwanda’s exports are mainly dominated by traditional cash crops - coffee and tea; and horticulture produce, handicrafts and minerals. Exports raked in $599.8 million in revenue last year from $573 million in 2013, an increase of 4.7 per cent in value, while volumes went up by 5.1 per cent.

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Exporters advised to pool cargo as high freight fees take toll