Kenya upbeat on direct cargo flights deal with US

Kenya is optimistic of improved trade connectivity with the US after the two countries struck a new deal for direct cargo flights between the two nations.

The amendment deal, which adds all-cargo rights to the existing air transport agreement, is expected to offer air carriers greater flexibility to meet customers’ cargo and express delivery needs more efficiently.

It adds seventh-freedom traffic rights for all-cargo operations, meaning cheaper costs and efficiency in cargo movement. The agreement was signed in Washington D.C by US Assistant Secretary of State for Economic and Business Affairs Manisha Singh and Kenya’s Transport Secretary James Macharia.

Mr Macharia said the deal “will facilitate expansion of air freight services by allowing airlines from both countries to set up and operate air cargo hubs in either country”.

Manufacturers welcomed the introduction of direct cargo flights to the US from Kenya, saying they can now explore opportunities to sell flowers directly in America.

“Generally we expect to see faster movement of goods and increased penetration of Kenyan products to the US market, particularly flowers which pass through Amsterdam before being dispatched to their destination,” said the Kenya Association of Manufacturers (KAM) in a statement.

Kenya imports capital goods and machinery from the US while some of the products Kenya exports to the US include textiles and apparel. KAM said the direct cargo flights would cut costs.

“Direct cargo flights from US to Kenya will ease logistics for Kenyan importers by cutting down the time it takes to import such goods to the country,” said KAM.

While national carrier Kenya Airways said it would not immediately be able to tap the opportunity due to capacity constraints, the airline said it would work with other carriers to leverage the new opportunities for air freight services arising from the deal.

“KQ does not have big enough cargo aircraft at the moment to be able to fly directly to the US and therefore benefit directly from this agreement,” KQ acting chief executive officer Allan Kilavuka told the Business Daily.

“This arrangement will mainly benefit US carriers with KQ being an incidental beneficiary from interline cargo to smaller African destinations from our hub in Nairobi.”

Trade data released by the Kenya National Bureau of Statistics (KNBS) for the 11 months to November last year showed that the US imported Kenyan goods worth Sh46.4 billion compared to Sh44 billion over a similar period in 2018.

This made the US the second biggest market of Kenyan products behind Uganda (Sh49 billion) in the period to November 2019.

Goods worth Sh55.1 billion travelled the opposite direction in the 11-month period registering a 10.4 percent growth compared to Sh49.9 billion spent on American imports over the same period in 2018.

The new cargo pact is expected to enter into force shortly having been negotiated from last December.

Kenya Airways launched direct flights from Nairobi to New York in October 2018 after being granted security clearance by US authorities.

Former Kenya Flower Council CEO Jane Ngige had earlier said that the direct flights to the US would open a new and lucrative avenue for Kenya cut flowers and horticulture products at large.

“The rights in the Amendment facilitate the movement of goods throughout the world by providing air carriers greater flexibility to meet their cargo and express delivery customers’ needs more efficiently,” said the US State Department in a statement.

“Specifically, the Amendment allows US all-cargo airlines to fly between Kenya and a third nation without needing to stop in the United States, an important right if operating a cargo hub.”

Kenyan all-cargo carriers have reciprocal rights to serve the United States under the deal.

“This Amendment further expands our strong economic and commercial partnership, while creating new opportunities for all-cargo airlines, exporters, and consumers,” said the US.

“It will fully open the Kenyan air cargo services market to US carriers, and represents one way in which the US Government is delivering for US all-cargo carriers and American workers.”

The Jomo Kenyatta International Airport (JKIA) in Nairobi was last year ranked as the second fastest growing airport in world cargo ranking by a global report highlighting top airports for passengers, cargo and aircraft movements.

The World Airport Traffic Report Data for 2018 released by Airports Council International (ACI) ranked JKIA second in the ‘Fastest Growing Airports (Handling over 250,000 metric tonnes of air cargo)’ category.

JKIA handled over 342,000 metric tonnes of air cargo in 2018, a 25 percent growth from 2017.

According to the Kenya Airports Authority (KAA), JKIA air cargo traffic growth has been seen to and from Europe, Asia, America, and most recently China and Australia.

“In the last few years, JKIA has seen the entry of several modern transit sheds, increasing its annual overall cargo to 1.2 million tons,” said KAA earlier.

Mitchell Cotts, a leading cargo and logistics company, is currently also constructing its new shed at JKIA whose completion is expected to inject an additional annual capacity of 150,000 metric tons at the airport.

Astral Aviation, a cargo airline operating from JKIA, has in the last year acquired three Boeing 747-400 cargo aircraft to boost its freight capacity and expand its network.

President Uhuru Kenyatta is currently in the US for an official visit and was expected to meet his host, President Donald Trump, for bilateral talks aimed at deepening trade and investment between the US and Kenya.