Analysis in brief: Africa can only develop through economic growth, which is impossible without the movement of goods within countries and across borders. Africa’s logistics industries are undergoing innovative changes to expedite the shipping that fuels businesses.
Difficulties faced by Africa’s logistics sector
Africa’s logistics sector is moving beyond the paradigm it has followed for a century, spurred by e-commerce and consumer demands for ecologically benign business practices. Since modern shipping began on the continent, goods have been moved in and out of seaports by road or rail, though air freight has never played a large role in the shipment of African goods because of its expense. The 21st century has brought online purchases, and while some African companies provide their own fleet of delivery vehicles, like Nigeria’s Jumia, most rely on the established shipping firms and logistics companies that have run Africa’s shipping for years. The logistics industry is confident that it can meet additional needs that require the movement of goods in greater volumes and more swiftly than ever before.
This must be accomplished on a continent notorious for long truck queues at border posts, congestion at seaports and slow customs procedures that are encumbrances to speedy delivery service demanded by package recipients. Additional challenges face Africa’s logistics industries. One is that speedy deliveries are more easily accomplished in urban areas than in rural locations, yet Africa’s population is largely rural. Africans may live in the countryside, but they can still order goods using smart phones, and logistics firms must deliver those goods and cannot be hindered by poor road infrastructure, which presents a barrier to quick deliveries throughout Africa.
As a means to meet this particular challenge, online solutions are proliferating as a means to bridge the rural-urban divide. A Kenyan firm, Twiga Foods, ensures supplies of fresh agricultural products by offering an online platform to connect retailers and other buyers directly with farmers in rural areas. Another Kenyan firm, InspiraFarms Cooling, which operates in Kenya, Rwanda and South Africa, provides solar-powered refrigeration systems to rural farms to keep the integrity of the cold chain that must be maintained from farm to product delivery but is impossible in areas unconnected to an electricity grid.
Yet another challenge for Africa’s logistics sector is the nature of shipping itself, which has been altered by the expanding demands of e-commerce and the need to meet these demands. More Africans are buying larger items online, such as refrigerators and furniture. For stores that did not have delivery services, pickup of these items was once arranged by the buyer. However, logistics companies arrange deliveries of items purchased online, and sales of larger items in 2023 increased the weight of the average item moved to Africa by half (47%). Africa’s logistics companies have to develop constantly to meet new needs such as these. A recent survey of Africa’s logistics companies found that 87% of these firms work delivering goods to businesses – the business-to-business or the so-called B2B trade. Only 5% of Africa’s logistics firms devote their energies to business-to-consumer (or B2C) services, which will grow significantly as more Africans shop online.
Automation, digital solutions and robotics lead technological transformationInnovative solutions are led by the use of new electronic tools to make shipping more efficient. Shipping orders and payments are primarily done online. Data analytics is a way for Africa’s logistics companies to co-ordinate between shippers, buyers, the transportation providers that move goods by air, rail, road or sea, as well as warehouses, customs officials and delivery services. By analysing data to make the supply chain more efficient, faster routing is accomplished by identifying and avoiding bottlenecks, inventory management is streamlined, and shippers and recipients can track the movement of goods on the internet in real time. The process is facilitated by African countries’ investments in their ports and particularly their rail and road systems. The Pan-African Highway system, composed of national highway segments throughout the continent, will expedite road travel efficiency on a continent where shipping is largely done by road.
Logistics activities are becoming increasingly automated. Shipping orders are placed through online websites, processed and fulfilled electronically without human intervention. Warehouses are also being upgraded to become fully automated. Robots stack and retrieve parcels, which are identified by barcodes. Human handwriting is only seen with customer signatures. By reducing labour costs, shipping costs decrease, benefitting businesses and consumers. The job loss caused by automation finds compensation in the increased employment that comes with more business revenue from online sales.
Through efficiencies enacted by the logistics industry, Africa’s e-commerce market is projected to surpass 500 million users by 2024, achieving an impressive 18% annual growth rate since 2017. Shipping efficiency and dependability allows for the delivery of perishable goods such as groceries. Personal care and fashion items are also expanding e-market niches and contribute to estimations that Africa’s e-market will reach a value of US$2.35 billion in 2030, up from US$1.14 billion in 2021.
Logistics embraces the green business model
The logistics sector co-ordinates transportation systems that are almost entirely driven by fossil fuels. Consequently, the industry’s culpability in the release of greenhouse gases that lead to global warming is enormous. Pressure from consumers is driving the logistics industry’s embrace of green solutions. Buyers desire products with reduced carbon footprints. To reduce greenhouse gas emissions, logistics companies are switching to electric vehicles in urban areas where these are more practical and installing renewable energy sources such as solar in warehouses. Perhaps the most significant method of reducing fuel burning is route planning using data analytics so that trucks spend less time on the roads or are stuck in fewer traffic jams and border crossing queues.
The use of robotics has also provided a measure of energy efficiency to the system. According to a survey of Africa’s logistics companies, 45% of these firms intend to use automation, robotics and data analytics to improve their operations in 2024. Using industry bodies that represent their interests, the African logistics industry is also constantly lobbying local and national governments to improve roads, expand rail systems and make ports more efficient.
The critical points:
- Africa’s logistics sector keeps Africa’s goods moving and is critical to trade and economic growth, undergoing changes in operations and energy used to meet rising shipping demands, particularly from expanding e-commerce
- With rural Africans also shopping online, logistics companies are tasked with bridging the rural-urban infrastructure gap to ensure deliveries
- Truck consumption of fossil fuels is one of Africa’s leading contributors of greenhouse gases, and while prompted by consumer pressure, the logistics industry is seeking green solutions