CHINET 2024: Experts chart path for insurance, regulations to grow air cargo

L-R: Babajide Olatunde-Agbeja, Chairman Boff & Co. Insurance Brokers Ltd; Shadrach Adegoke of AIICO Insurance Plc; Ikechi Uko the conference organiser, Segun Omosehin, commissioner for insurance; Omowale Olatunde-Agbeja, acting managing director, Boff & Co. Insurance Brokers Ltd; Abedeen Musa, ED, NSIA Insurance Co. Ltd. and Jimalex Orjiako, ED, Consolidated Hallmark Insurance Co. Ltd.

As airports and airlines look to grow revenue, air cargo has become a major boost for income as operating costs continue to increase.

The current foreign exchange rate is straining the operations of several airlines, eating into their income as all spares and fuel are bought in foreign exchange currencies.

Findings show that aviation fuel currently takes about 45 percent of operating cost; labour, 17 percent; aircraft rent and ownership, 8.5 percent; non-aircraft rents and ownership, 7 percent; professional services, 4.5 percent; landing fees, 2 percent; food and beverage, 1.5 percent; maintenance materials, 13 percent, and transport related, 1.5 percent.

Following these challenges, it has become important that airlines look inward to drive revenue generation and experts in the sector say air cargo continues to be a low hanging fruit.

This is because in recent decades, the aviation industry has become the most effective means of transporting cargo in a safe and timely manner. Air cargo revolutionised the shipping industry, vastly reducing shipping times for freight across the world compared to popular alternatives such as trucks and boats. As goods could be shipped more quickly, companies around the world suddenly had access to supplies that were once, for time or price constraints, impossible for them to access.

This allowed them to reduce prices and make their goods more accessible to the general population. Companies could boost profits by taking advantage of these competitive prices, allowing not only for cheaper consumer goods but also offering more opportunity to enter other lucrative industries.

Another benefit of air freight is security. Air transportation is the safest mode of transport in the world, with accidents resulting in the loss of cargo happening far less than with transportation via road or sea.

Airlines have secure handling measures in place to ensure staff or third parties do not interfere with cargo. In conjunction with technological advances in cargo handling such as freight tracking, air cargo provides a safe and secure mode of transport for goods and products.

Considering these huge benefits of air cargo, experts say it has become imperative for major challenges hindering the growth of air cargo be addressed. Most of these challenges are centred around regulations and insurance.

This was why stakeholders in the aviation cargo and insurance value chain converged recently on Lagos for the 4th edition of Chinet Aviacargo conference.

Held at the Marriott Hotel, Ikeja, Lagos, CHINET is the only air cargo event in West Africa and organised by ATQNEWS Ltd.

Challenges of air cargo export

Speaking during the event, Frank Ogunojemite, the National President of Africa Association of Professional Freight Forwarders and Logistics of Nigeria, (APFFLON) said some of the major factors identified as impediments to successful export via Nigerian Airports are bureaucracies and protocols.

Ogunojemite said the government and its agencies must review and enforce a smoother process to export potentially multi-million dollars Nigerian goods.

Moreover, he stated that from not meeting standardisation, inefficient regulation, corruption to hiccups in cargo freighting from the nation’s airports, it is obvious that many facts have proven that it is Nigeria that is holding itself down from taking advantage of the huge market, whereas Nigerian farm produce and other products from Nigeria are in high demand from different parts of the world.

Ogunojemite said fact has emerged that for Nigeria to benefit maximally from the African Continental Free Trade Area (AfCFTA) agreement, projected to elevate 30 million people out of abject poverty, generate a market hub that will connect 1.3 billion people in 55 countries and also generate $3.4 trillion aggregate GDP, the country has to be adequately prepared to effectively compete in export trade.

He said for this to be achieved, there must be effective distribution channels in which logistics, which is movement of people and goods, play an indispensable role of bridging the gap between the dream and its reality.

He hinted that reference was made after a report carried out after a conference recently, which highlighted inadequacies within the export space, which include problems of limited export production, limited/ or no capacity for certification/packaging of exportable products, infrastructural deficiency in the logistics and evacuation of exports, low penetration and access to key markets.

However, another problem, he said, includes limited export production, as Nigerians are more interested in importation of goods rather than promoting export.

Most of these challenges will continue to exist until every agency of government will consciously aim at helping to mitigate and resolve some of these issues, and not seeing themselves as being up there, while every other person is down beneath.

However, certification is one of the major challenges exporters face, even to obtain certification from National Agency for Food and Drug Administration and Control (NAFDAC), which is a Nigerian agency, is difficult to get.

Possible solutions

Frank Ogunojemite listed possible solutions to include infrastructure development, automation and digitalization, efficient customs processes, capacity building, regulatory framework, Public- Private Partnership collaboration, security and safety, competitive pricing, and collaboration with international airlines.

Air cargo regulations

Chris Ona Najomo, the acting director general of NCAA during his presentation at the CHINET conference said it is imperative that air cargo regulatory frameworks are aligned across borders.

This he said requires collaboration between international bodies such as the International Civil Aviation Organization (ICAO), national regulatory authorities, and industry stakeholders.

Najomo said such collaboration ensures that regulations are consistent, comprehensive, and capable of addressing the multifaceted challenges of the air cargo industry. The ICAO’s Annex 17 (Security) and Annex 18 (The Safe Transport of Dangerous Goods by Air) provide the guidelines that are essential for achieving global harmonization.

The DG who was represented by Ayokunle Jimoh, management staff of NCAA said the advent of technological advancements offers both opportunities and challenges for regulators.

The DG said innovations such as electronic documentation, real-time tracking systems, and automated handling processes can enhance efficiency and transparency.

However, he said these innovations also require updates to regulatory frameworks to address new risks and ensure that these technologies are implemented safely and securely.