FROM MAGAZINE: Propelling South Africa’s automotive sector

FROM MAGAZINE: Propelling South Africa’s automotive sector

Posted By : STAT Trade Times


For the automotive industry, airfreight is the most reliable mode to transport goods when it comes to delivering time-critical production requirements. The air freight industry is trying to sustainably optimize the automotive industry’s value chain, as it sees high growth potential in the segment.

Shreya Bhattacharya

South Africa’s automotive market is definitely something to watch out for, predicts the airfreight industry, which is keen to accelerate speed and reliability to drive efficiency in automotive logistics. At the Air Cargo Africa 2017 Air Shippers’ Forum-Automotive, discussions were held on challenges, opportunities and the current trends in the automotive sector of South Africa.

At the very beginning, Anke Giesen, COO, Fraport AG drew attention towards cars being one of the most important products in terms of business. “Cars are one of the most important product groups in South Africa- German bilateral trade. The figures are impressive. Automotive products rank as South Africa’s second most important export to Germany and on the other hand automotive products rank as the single largest product exported from Germany to South Africa. In Frankfurt and its extended region, we present the major markets in itself for cars and automotive components.” She informed that at least 35,000 tonnes of cargo tonnage was flown between Frankfurt airport and South Africa last year, which translates to an increase of 8.5 percent.

The panel discussion on the topic ‘Auto & auto components by air - accelerating speed and reliability’ began with sharing the overview of the current market scenario in South Africa.

Andries Botha, Senior Manager Strategic Planning, Toyota South Africa highlighted that while the South African vehicle market is currently under pressure as the market is shrinking, there still lies massive opportunity in the continent. He said, “The market in Africa, especially inside Africa has been growing. In contrast to the vehicle sales, we see that even when the market is shrinking, people keep their vehicles longer. When you keep your vehicle longer, you have to keep doing the maintenance.”

Air freight is often chosen as a mode of transport for spare part logistics, particularly when dealers order urgent parts for waiting customers. Depending on OEMs’ regional stocking strategies, flying parts for maintenance, both internationally and domestically, is fairly common.

Ralf Schneider, Managing Director, Senetor International South Africa seconded Botha’s views and said maintenance part of the vehicle is definitely an area they look forward to on a frequent basis. “We are seeing on a daily basis the volumes, what we are obviously moving and what is coming to the country and the African market is definitely something to watch.”

While concerns were raised over shrinking market, Giuseppe Tarantini, Regional GM Cargo Europe, South African Airways said that they never faced any significant drop. “We have had overall always consistent loads of automotive parts from Europe from the time that I have joined at least. We have never really had huge significant drops.”

When it comes to the shipments in the automotive sector, air freight is on the high end of the price scale that dissuades the shippers from choosing the mode as an option. While a large OEM will move millions of tonnes of freight by truck each year and ship hundreds of thousands of containers around the globe, the material it sends by air is often a very small percentage.

But in many cases, air freight is also used more strategically, including on scheduled services. As Anchen Genlloud, Automotive Key Accounts Manager, Southern Cluster, Kuehne+Nagel says, “If shipping is pre-planned, manufacturers can negotiate for better. I didn’t really see reduction because air freight is costly. At the end of the day, you have a customer, whom you need to keep happy. So for me it all depends on sales.”

In many cases, air freight is seen as an option of last resort – an option for emergency in order to fill a component gap before it shuts down a line or holds up a launch. The panel unanimously agreed that time is of essence when it comes to shipping through air.

The panel also agreed on the point that frequency of airlines coming to South Africa is of prime importance. The panel observed that the air cargo industry needs to have a daily plan and flights should come to South Africa on a daily basis so that the manufacturers have an option of sending their shipments to the destination within 24 hours.

Airlines and airports are taking note of the needs of shippers and are driving more efficiency into the sector. Dirk Schusdziara, Senior Vice President Cargo, Fraport AG said, “At the airport, we are the infrastructure provider, we are the site where several players of the air cargo supply chain have their offices and have their warehouses. We have the cargo handlers, ground handlers on the site. So certain logistics processes happen there and that’s why we work together as partners in our effort to create a more efficient process.” He further emphasized on collaboration being an important part and for this the air cargo community Frankfurt was formed. “We have 40 members now and we work along the process chain and we can discuss it between the partners. On the other hand, there is digitalization, this is also important that the electronic data flows from one partner to the other and for this we have our cargo community platform. This is making the process much more efficient.”

Airlines are also trying their bit to comfort the manufacturers, however, they do come across certain challenges in the process. “For us the challenge is in the planning, the part which is planned, we more or less know the nature, and the nature being, it is always voluminous cargo. And an airplane on a particular route, depending on the aircraft type and depending on the route, can either be weight restricted or volume restricted. From our route, from Frankfurt to Munich or Johannesburg, we are actually running out of space way before we run out of payload and that is the nature of the commodities that we carry. In particular, the automotive industry is among the most voluminous cargo that we carry. We have to try to offset the volume to optimize our loads,” said Giuseppe Tarantini, Regional GM Cargo Europe, South African Airways.

According to an IATA study an average shipment on the road from door to door takes an average of six days pointed out moderator Roland Weil, Vice President Sales Cargo, Fraport AG. He added that the aim is to reduce one day from it.

In the same backdrop, Tarantini said they are doing their bit to shorten the days of transit. “In the airfreight part of the automotive industry, we observe this regular transshipment on a daily basis so our daily flights really help us in this sense. For the urgent bits, the demands are higher. The 5-6 days you mentioned, in it the part that we use up in time is maximum 36 hours. Typically we would get the cargo in the morning, it will fly in the evening flight in Joburg, arriving here in the morning, so in the next afternoon, it is released, so less than 36 hours. We have then the express products that you can deliver 2 hours before departure, and you can still make it work.”

The panel unanimously agreed that the automotive sector can still be a growth segment, with the rise most notable in Africa.

Photo: (L-R) Moderator Roland Weil, Fraport AG; Andries Botha, Toyota South Africa; Anchen Genlloud, Kuehne+Nagel; Ralf Schneider, Senetor International South Africa; Giuseppe Tarantini, South African Airways; Dirk Schusdziara, Fraport AG