The Africa Logistics October 2021

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October 2021

THE

Africa Logistics www.theafricalogistics.com

Better connected – to, from and within Africa

CARGOHUB COMMUNITY & MOBILE SOLUTIONS FOR AIR CARGO OPERATORS

Savino Del Bene

Marine protection in Africa

The future of urban mobility

Logistics contracts management


Hamburg is our home. So is Africa. For more than 170 years Hapag-Lloyd is connecting markets, countries and people. We are among the Top Carriers serving the African Continent – enabling the respective countries to strongly participate in World Trade. With 13 Services to and from Africa, we cover 17 different ports in the Region. That’s why we are proud to call Africa our home.

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EDITORIAL

Integration of logistics in Africa is key to boosting trade Africa is split into 5 economic regions, each with different expectations for growth and specific conditions for building infrastructure, necessary for developing a competitive logistics sector.

standards. Some ports currently under construction across the continent will need to be modernized to face the large volume of trading expected from the growth in population and economic development.

Because of this inequality, we cannot see the country as a homogeneous market since there are clients with specific needs in each of its 54 countries. This has created a growing demand for logistics among manufacturers and retailers that aim to expand their operations and improve their supply chains and transport networks.

African ports’ activities center on the transfer of loads since they are located on strategic regions for world trade. Johannesburg, Nairobi, Lagos, and Cairo are considered the most important developing logistics centers in terms of volume of cargo.

During the past decade, globalization and technology have created new opportunities for internationalization, boosting the supply chains and competitiveness in Africa which, as a developing continent, offers unexploited opportunities for multinational corporations that wish to venture into virgin markets. Currently, the most important countries in terms of logistics are Algeria, Angola, the Democratic Republic of Congo, Egypt, Ghana, Kenya, Mozambique, Nigeria, South Africa, and Tanzania. Some of them own the most important ports in the continent: Barra do Dande and Lobito in Angola, Lekki in Nigeria, Musoma in Tanzania, and Lamu in Kenya.

The logistics sector is increasingly relevant for the development of properties in Sub-Saharan Africa because of the increasing demand on space for retail warehousing and the manufacturing of consumer goods. This is consequence of the expansion of the middle class, the growth of consumer markets, and the increase on online sales. Some Middle Eastern developers from Kuwait and Dubai are even planning to build a network of logistics centers across the continent. This growth in e-tail and the widespread use of smart devices have boosted the use of drones as potential tools for helping logistics companies overcome the challenges of transport infrastructure.

Africa has a vast amount of natural resources, such as oil, gas, minerals, and agricultural products. Generally speaking, infrastructure in Africa is behind when compared to that of other continents’, and there are differences even among its own regions: on one hand, South Africa still has a good infrastructure despite having the lowest annual growth, and on the other hand, Nigeria and Kenya have shown some of the highest growth rates in the past years. Close to 90 per cent of Africa’s trade is carried out by sea, which makes its ports crucial for supply chains despite being small as per global

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The Africa Logistics is a monthly publication and circulated to professionals in the logistics industry, members of relevant associations, government bodies and other personnel in the logistics and infrastructure industries as well as suppliers in Eastern Africa. The editor welcomes articles and photographs for consideration. Material may not be reproduced without prior permission from the publisher.

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DISCLAIMER: The publisher does not accept responsibility for the accuracy or authenticity of advertisements or contributions contained in the journal. Views expressed by contributors are not necessarily those of the publisher. © All rights reserved. No part of this publication may be copied or reproduced without prior permission from the publisher. Circulation Ken Kilozo Robert Kimani Marketing Executives George Otieno Liz Kyalo

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inside ...

Accelerate Covid vaccination

COVER STORY

16 COMMUNITY & MOBILE SOLUTIONS FOR AIR CARGO OPERATORS

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NEWS & FEATURES

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6.DSV inaugurates its largest logistics centre in Africa 8. Belt and Road Initiative fulfills UN Charter spirit, says expert 9. Nigerian Chamber of Shipping becomes full ICS member 9.

New direct service links Port of Gothenburg to South Africa and Oceania

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11.TVS Motor Company expands and strengthens its presence in South Africa 15. Kenya plans for future of Urban Air Mobility 24. Kenya banks on Naivasha depot to boost regional trade

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OPINION

Mozambique Channel May Become the Next Maritime Security Hotspot

23 Khato Civils grand plan

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International connectivity staring at a crisis

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Logistics contracts Management

27 36 Boosting investment in transport and logistics

Manage complex logistics contracts very carefully,” is a message often heard at logistics seminars. So you would expect that almost every company does so. www.theafricalogistics.com

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NEWS

P&O Maritime Logistics launches ‘FlexDELIVERY™’ in Nigeria

oday, P&O Maritime Logistics and Nigerian firm IO Materials Services (IOMS) jointly announce the launch of the new ‘FlexDELIVERY™’ model to provide integrated last-mile delivery services to the offshore energy industry in Nigeria. FlexDELIVERY™ disrupts the traditional model of high shore base startup costs, rentals and vessel time-chartered contracts by focusing on the service that is required by the energy industry – cargo delivery. FlexDELIVERY™ has marked new grounds with a freight rate model targeted at the Offshore Energy Industry which traditionally worked on an asset and facility model. This service proves to reduce delivery times, enhance visibility and predictability which will reinvent procurement strategies, inventory management tactics and the energy supply chain as a whole. This industry first model, be it exploration, drilling, production or maintenance will drive down operating costs and capital expenditures for the energy producers by driving out structural oversupply in the energy industry which will be a welcoming shift. By injecting a tech-led solution, FlexDELIVERY™ enhances visibility throughout the last mile delivery which has been a bottleneck for some time. Harnessing BigData and AI technology, it provides predictability with a real time view on cargo movement and delivery dates all controlled through an online booking platform. The platform reinforces the integrity of the energy supply chain, providing energy producers with peace of mind to focus on their core business being extraction of energy. The new offering, which began service on the 4th of September 2021, is an expansion of P&O Maritime Logistics’ disruptive innovation ‘Supply on Demand’ to integrate shore base and quayside operations to deliver a comprehensive logistics solution, strategically named FlexDELIVERY™ for the Nigerian market. Nigeria being a microcosm of the energy sector, P&O Maritime Logistics and IO Materials Services saw a huge potential in the country The Africa Logistics

to offer a disruptive and tech-driven offshore supply solution like FlexDELIVERY™ï¸ due to the current expensive energy logistics supply chain. Currently, most platforms offshore Nigeria rely on antiquated manual paper-based operations, that duplicate manpower, facilities and equipment, and cost approximately 2-4 times more than the global average for running an offshore supply operation. On average, FlexDELIVERY™ reduces costs by 20-30% per good transported, has 20-30% lower fuel consumption and 40 -50% less distance travelled compared to traditional timecharter supply contracts. Martin Helweg, CEO at P&O Maritime Logistics said: “Following the success of our Supply on Demand service, we saw a gap in the Nigerian market, spotting that the country’s offshore supply market was ripe for the revolutionary FlexDELIVERY™ system that brings efficiency and value to our customers.” “With the continued expansion of our innovative service in partnership with IOMS, we’re bringing a step change to the offshore supply industry and aligning our service to be in sync with our customers’ needs: reduced delivery times, visibility and predictability.” Through its state-of-the-art system, powered by P&O Maritime Logistics innovative technology, FlexDELIVERY™ gives customers clear visibility of cargo movement and sailing schedules in a boon to forward planning. Christian Arndt, VP Logistics at P&O Maritime Logistics said: “By launching in Nigeria, P&O Maritime Logistics is showing the industry that smart solutions can generate efficiency gain and lower production costs. Customers will see reduced equipment, inventory carrying, and supply chain costs, while boosting productivity. With ‘FlexDELIVERY™’ offshore operators will gain back time to focus on core business activities. We are looking forward to presenting our FlexDELIVERY™ innovation to existing and future clients.” Shore bases will be operated by IOMS from its locations, providing wide coverage for oilfields across the Nigerian offshore energy industry. Matteo Volpi, CEO at IOMS said: “We are thrilled to be P&O Maritime Logistics’ partner in launching FlexDELIVERY™ into the Nigerian market. FlexDELIVERY™ will further reduce supply chain costs in combination with IOMS’ Digital FlexBASE™ offering. With our deep local industry knowledge, and our network of locations and logistics partners across Nigeria, IOMS is working to further reduce supply chain costs for industrial clients, powered by P&O Maritime and our innovative supply chain solutions.”


NEWS

DSV inaugurates its largest logistics centre in Africa

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SV has consolidated its Gauteng operations in South Africa into a new, centralised facility which is the largest of its kind in Africa. It is situated near O.R. Tambo International Airport between Johannesburg and Pretoria and with easy access to the East and West Rand. The logistics centre consists of approx. 130,000 m2 of buildings and covers supply chain solutions from first to last mile controlled and managed under one roof, by DSV. The investment in DSV Park Gauteng is a testament to DSV’s commitment to South Africa and to continuing to strengthen the logistics infrastructure in the country to the benefit of DSV customers and the South African society. The new DSV logistics centre is officially being inaugurated at a virtual ceremony today, and the ceremony host and CEO of DSV Africa, Keith Pienaar, says: “The inauguration of DSV Park Gauteng once again underlines DSV’s strong commitment to South Africa and our will to grow the business in the region. DSV Park Gauteng consolidates several smaller offices and warehouses around Johannesburg into one large, modern logistics centre. The foundation of our values and culture is to promote an inclusive workforce and sustainable

business practices. One consolidated facility will enhance collaboration and offer truly integrated supply chain solutions for our clients and customers.” A large-scale and modern logistics facility The sprawling complex houses a logistics warehouse of 79,000 m², a cross-dock facility of 41,000 m² and office space of 10,000 m². DSV’s divisions Air & Sea, Road, Solutions as well as the Shared Services function will be inhabiting the new logistics centre while other specific units such as Healthcare and parts of Mounties and Solutions will continue out of their current specialised facilities. “With DSV Park Gauteng, DSV has developed a large-scale modern logistics centre which captures the essence of our consolidation strategy to create larger and more efficient facilities, enabling us to have many of our business units together under one single roof.” “We have packed the new DSV facility with solutions such as an innovative sorter that can handle 12,000 packages every single hour. Throughout the whole building process, we have also utilised our global experience to construct buildings where sustainability and resource optimisation have been fundamental in all processes,” says Brian Almind Winther, EVP and Head of Group Property, DSV.

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NEWS

Belt and Road Initiative fulfills UN Charter spirit, says expert

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here is a fulfillment of the United Nations (UN) Charter spirit in the Belt and Road Initiative (BRI), said a long-time member of the Schiller Institute, a Germany-based political and economic think tank. The UN Charter affirms the equal rights of all nations, no matter big or small, said Richard A. Black, the Schiller Institute’s representative at the United Nations. The BRI is an exemplar of the way in which a big nation like China can cooperate with “nations across Southeast Asia, South America, Africa, and treat them as equal partners, because the process is win-win,” Black told Xinhua in an interview on Friday. Black also sees the BRI as the great up-lifter of nations out of poverty in the 21st century while the Article 55 of UN Charter outlines that the “conditions of stability and well-being” among nations demand “higher standards of living, full employment, and conditions of economic and social progress and development.” China’s complete victory against absolute poverty is an astounding achievement for mankind and “it is one that I think is not appreciated enough at the UN organization,” said Black. Black noted that the Maritime Silk Road, one of the two arms of the BRI, is extremely important for world peace. In the last weeks of tremendous turmoil and

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transition in Afghanistan, fertilizer has been coming into the port of Gwadar of Pakistan along the China-Pakistan Economic Corridor and making its way safely to farmers in Afghanistan, said Black. “When we look at the Maritime Silk Road, it is a way of connecting the world land bridge through all the continents, a key component, and it is functioning quite well,” Black said. Chinese rebound in exports from the hit of the COVID-19 pandemic benefits from China’s foresight in taking the long term approach embodied in BRI, according to Black. The ability of China to bounce back so quickly after the horrendous pandemic, said Black, “was not only its very wise and strict public health measures applied universally to the population, but (also) that the basis of the BRI is very, very wise,” said Black. China’s goods trade with countries and regions along the Belt and Road surged by 37.9 percent in the first half of 2021 year on year to reach 824.55 billion U.S. dollars, according to data issued by China’s National Development and Reform Commission. China has understood that the key to continued prosperity is advanced, energy-intense infrastructure, which transforms the entire economic process, added Black.


NEWS

Nigerian Chamber of Shipping becomes full ICS member

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he Nigerian Chamber of Shipping has today become a full member of the International Chamber of Shipping (ICS). Guy Platten, Secretary General of ICS, said: “We are delighted to welcome the Nigerian Chamber of Shipping as a full ICS member. This continues our goals to have a broad and truly global shipping community. We look forward to strengthening our connections and collaborations within the Nigerian maritime industry.” The Nigerian Chamber of Shipping, formed in 2002, has grown to not only represent the country’s domestic shipping industry but also all stakeholders in Nigerian maritime, including ship owners and operators, port and terminal operators, shipyard and dry dock owners service operators in the oil and gas sector. Mr Andy Isichei, President of the Nigerian Chamber of Shipping, expressed gratitude to ICS and stakeholders within and outside Nigeria that supported them in attaining the new membership status. Mr Isichei said: “For us at the Nigerian Chamber of Shipping, we recognise the significant position Nigeria holds as a maritime country; consequently, we consider our admission to full membership of ICS, as a call to higher responsibility and commitment to the goals and ideals that ICS represents. “As the first African Member State on the board of ICS, the Nigerian Chamber of Shipping will embrace this new position with en-

thusiasm, leveraging on our unique African experience to build a bridge between ICS and African Ship owners and operators with a view to broadening ICS’s geographical sphere of influence. “African Continental Free Trade Area (AfCFTA) creates a great opportunity for inter and intra African Trade despite existing challenges to shipping within Africa.” Mr Isichei will represent the Nigerian Chamber of Shipping on the ICS Board. The Nigerian Chamber of Shipping has been an Associate Member of ICS since 2019.

Guy Platten

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FEATURE

Accelerate Covid vaccination

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HO Director-General Dr Tedros Adhanom Ghebreyesus and a group of global health leaders have issued an urgent call for vaccine equity globally and in Africa in particular. The leaders stressed that the worst pandemic in the last hundred years will not end unless and until, there is genuine global cooperation on vaccine supply and access. They also reiterated the WHO’s global vaccination target for 70% of the population of all countries to be vaccinated by mid- 2022. Dr Tedros was joined by Dr Seth Berkley, CEO Gavi, Strive Masiyima, AU Special Envoy for COVID- 19, Dr John Nkengasong, Africa CDC Director, Professor Benedict Oramah, President and Chairman of the Board of Directors, Afreximbank, Dr Vera Songwe, UN Under- Secretary- General and Executive Secretary of the Economic Commission For Africa and Dr Matshidiso Moeti, WHO Regional Director for Africa. The press conference followed two days of meetings among the leaders, with Richard Hatchett, Chief Executive Officer of CEPI joining the meetings as well. Dr Tedros Adhanom Ghebreyesus: DirectorGeneral, WHO “More than 5.7 billion doses have been administered globally, but only 2% of those have been administered in Africa.” “This doesn’t only hurt the people of Africa, it hurts all of us. The longer vaccine inequity persists, the more the virus will keep circulating and changing, the longer the social and economic disruption will continue, and the higher the chances that more variants will emerge that render vaccines less effective.”

Dr John Nkengasong, Africa CDC Director “We will not be able to achieve 60% of our population fully immunised if we do not fully explore and deploy the power of partnership, the power of cooperation, and the power of solidarity” … “We all have acknowledged now that vaccines are the only solution for us to get out of this pandemic collectively. That has to be done quickly.” Dr Vera Songwe, UN Under- Secretary- General and Executive Secretary of the Economic Commission For Africa “For every one month of lockdowns in the continent cost us $29 billion of production that was lost. For [the African continent], when we say that COVID-19 is an economic issue and we need to respond to it, to be able to recover and reset our economies, it is real. And for that we need financing and we need to see how we can bring together global financial structures to ensure that we can actually respond to this crisis”. “We know that scarcity means increased cost, and we cannot afford today as a continent that kind of scarcity.” Professor Benedict Oramah, President and Chairman of the Board of Directors, Afreximbank “Africa did not want to once again be at the bottom of queue in regard to vaccines because it was well known to everybody that economy recovery meant bringing the virus under control.” “It is important that we do this for the simple reason that countries want us to make sure that we do not fail, and make it difficult for us to recover quickly.” Dr Seth Berkley, CEO Gavi “Today’s meeting is important, as it symbolizes the spirit of partnership between COVAX, the African Union and AVATT: Africa needs more doses and together we will get them.” “We’re poised to embark on the busiest period of what is the largest and most complex vaccine rollout in history. We’ve demonstrated that COVAX can work at scale, but it’s really time for the world to get behind it.”

Strive Masiyima, AU Special Envoy for COVID19

Dr Matshidiso Moeti, WHO Regional Director For Africa.

“Vaccine sharing is good but we shouldn’t have to be relying on vaccine sharing. Particularly when we can come to the table, put structures in place and say, we also want to buy.”

“The question is sometimes asked do African countries have the capacity to absorb the vaccines? The simple answer is yes. The continuous challenge is that global supplies are not being shared in ways that will get the world out of this pandemic.”

“American taxpayers, European taxpayers, they financed some of this intellectual property and it should be for the common good. So, it is not wrong that we say there should be waivers, it was for the common good. So, we ask for this IP to be made available.” “It was a great miracle to have these vaccines, now let this miracle be available to all mankind.”

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“Hundreds of WHO staff are on the ground, ready to support countries to expand vaccination sites and to manage the complexities of small deliveries of a variety of vaccines“. “What’s more, African countries have done this before – successfully implementing massive vaccination campaigns against polio, yellow fever and cholera.”


FEATURE

TVS Motor Company expands and strengthens its presence in South Africa

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VS Motor Company, a reputed two-wheeler and three-wheeler manufacturer globally, today announced their new distribution partnership with ETG Logistics (ETGL). TVS Motor Company ranks amongst the top five two-wheeler companies in the world with a presence in over 70 countries across Africa, South East Asia, the Indian Sub-Continent, Latin America and the Middle East. ETGL is a division of ETG (Export Trading Group) – a global conglomerate present in 48 countries with expertise across various industries. ETGL will operate 30 dealerships for TVS Motor Company in South Africa as part of this partnership. The company will also support TVS Motor with dedicated sales, service, spares and customer relationship management (CRM), including the assembly set-up and training centre in Johannesburg. Speaking on the occasion, Mr. R Dilip, President – International Business, TVS Motor Company, said, “We are delighted to partner with the reputed global conglomerate, ETGL, to expand our presence in South Africa. ETGL comes with rich experience, deep understanding and vast knowledge of the market. South Africa is an important market for us, and ETGL’s extensive distribution network,

along with our shared ethos and values, makes them the ideal strategic partner. This association with ETGL is a significant step towards expanding TVS Motor Company’s market presence in Southern Africa, driving innovation through bestin-class products and setting a customer experience benchmark.” Mr. Rajeev Saxena, Director, ETGL, said, “We are excited to announce our partnership with TVS Motor Company. This partnership will be instrumental in bringing a range of mobility solutions to address specific requirements of different customer groups in the country. The technology and quality prowess of TVS Motor Company combined with our strong understanding of the market will definitely create an impact in mobility space in South Africa.” TVS Motor Company will launch products such as TVS Apache series, TVS HLX series, TVS NTORQ 125 and TVS Duramax Cargo in South Africa. The premium motorcycle series, TVS Apache, will cater to the aspirations of the customers and the global favorite, TVS HLX, will provide last-mile connectivity for both personal commute and commercial delivery segments. TVS NTORQ 125, a revolutionary Bluetooth enabled scooter, will address Gen Z’s superior style, performance and technology promise. The three-wheeler Duramax Cargo will carve a niche segment in the delivery space with an economical TCO offering. www.theafricalogistics.com

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Aramex Redesigns Operating Model to Capture Growth Opportunities in a Fastchanging Industry

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ramex (DFM: ARMX), a leading global provider of comprehensive logistics and transportation solutions, today announced adopting a new operating model with the strategic objective of enhancing customer service levels and operating efficiencies while capturing greater global market share within both the B2C and B2B customer segments. Operating Model Redesign Aramex Express, which includes international and domestic delivery solutions will serve the B2C customer base including Shop & Ship, e-commerce, FMCG, SMEs and other customers needing innovative last mile solutions. Meanwhile, Aramex Logistics, which includes air freight, sea freight, land freight, and warehousing and distribution, will serve B2B customer base across multiple industries including oil & gas, healthcare & pharmaceutical, aerospace, retail & fashion, amongst others. To ensure the new operating model can successfully create greater value for multiple stakeholder groups, a Chief Operating Officer role has been created for each of Aramex Express and Aramex Logistics. Mohammad Alkhas has been appointed COO for Aramex Logistics. Alkhas is a senior logistics executive with over 24 years of experience in leading large and diverse teams within the transport and logistics sector. He is re-joining Aramex, having spent 19 years with the organization through 2016, when he most recently served

as Aramex’s Regional CEO for the GCC. Alaa Saoudi has been appointed COO for Aramex Express. Saoudi joined Aramex in 1998 and has held several senior geographic and operations positions. He was most recently Global Senior Director of Ground Operations for Aramex. All support functions, including Finance, Human Resources, Procurement, Digital and Customer Contact Centers will be provided centrally by Aramex’s Corporate Centre, which will also manage M&A and Strategy, Legal, Risk and Compliance to ensure global control and alignment across the newly formed clusters. Othman Aljeda, Group CEO of Aramex, said: “The global transportation and logistics industry is undergoing a fundamental shift, driven predominantly by the boom in e-commerce, supply chain disruptions, customers’ increasingly discerning expectations and the turbo speed of digitization. For Aramex to stay ahead of the curve and remain a competitive, reliable and sustainably growing industry leader, we decided to focus on capturing growth opportunities by decoupling our core services. By creating Aramex Express and Aramex Logistics we will have a more agile company, focused on capturing the right opportunities to grow and diversify our customer base, investing in and deploying the best and latest technologies, and operating at higher efficiency levels. The investments we are making in our business today will enable us to provide our customers


FEATURE pointed Aramex Group’s COO in November 2020, is leaving the company to pursue other interests. Market opportunity and growth ambitions Othman Aljeda, Group CEO of Aramex, said: “We see good growth opportunities in the express segment, which currently represents 70% of our revenues. We intend to continue to grow our express business by creating new trade lanes domestically and internationally, and scaling up ground operations to cater to growing customer demands, while continuing to invest in technology and automation. Our logistics business accounts for 28% of our revenues and we intend to aggressively grow our footprint in our core markets, and markets that will enable trade flow into the region. Therefore, we are investing in specialized warehouses to cater for high potential verticals, and are also scaling up infrastructure beyond main cities to provide extensive coverage. On freight forwarding, we see good growth opportunities in several sectors, one example being O&G with the revival in global oil prices and trade activity.” According to recent market studies, the global logistics industry is expected to reach USD 1,232 billion by 2025, registering a compound annual growth rate (CAGR) of 7.5% from 2020 to 2025. This is underpinned by a robust projected growth across all logistics segments. The global e-commerce logistics industry is expected to reach a value of USD 657 billion in 2025, recording 8.6% CAGR in the forecasted period. with improved service levels, and our shareholder with long-term value.” New regional structure To support Aramex’s global growth ambitions, the organization has also created a new regional structure composed of the Americas; Europe; Sub-Saharan Africa; Middle East, North Africa and Turkey (MENAT); GCC; South Asia and North Asia; and Oceana. Each region will be led by a Regional Vice President and will have dedicated Commercial and Operations teams focused on growing Aramex’s local footprint and driving commercial opportunities and customercentric innovations.

The international express and parcel segment is expected to rise 9.2% to reach a value of USD 117 billion while domestic express and parcel is anticipated to register an 8.6% growth to USD 543 billion. Meanwhile, both freight forwarding and contract logistics are projected to record a 6.2% growth to reach USD 242 billion and USD 331 billion respectively.

Each region will report to Andy Van der Velde, who has been appointed President. Van der Velde was previously Aramex’s Regional CEO for GCC, Australia, New Zealand and Southern Africa. Aramex has also appointed Dr. Johannes Distler as Chief Strategy Officer, a newly created role, with the purpose of ensuring the development and execution of Aramex’s corporate strategy as well as the group’s international expansion and M&A agenda. Dr. Distler joins Aramex from Roland Berger, where he was a Partner in the firm’s Dubai office. Alkhas, Saoudi, Van der Velde and Dr. Distler will all report directly to Othman Aljeda, Group CEO of Aramex. Thomas Kipp, who was apwww.theafricalogistics.com

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NEWS

Kenya plans for future of Urban Air Mobility

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ve Urban Air Mobility Solutions (“Eve”) signed a Memorandum of Understanding (MoU) with Kenya Airways PLC, the flag carrier of Kenya, through its fully owned subsidiary Fahari Aviation. This collaboration aims to develop operational models for the wide-accessibility of Urban Air Mobility (UAM) to support Fahari Aviation’s key markets. In addition, this partnership will establish the co-creation of a foundation of concepts and procedures to safely scale electrical vertical takeoff and landing (eVTOL) aircraft, also known in the market as EVA (Electrical Vertical Aircraft). Eve will support Fahari Aviation, the Unmanned aircraft systems (UAS) division of Kenya Airways that promotes safe and secure UAS usage in the region, in establishing its UAM network and collaborate on the required Urban Air Traffic Management (UATM) procedures and UAM operating environment. This partnership will also allow Fahari Aviation to support Eve’s aircraft and product development process which will help guide the integration of UAM with Kenya Airways’ overall operations. Eve’s fully electric aircraft is designed to be accessible to all while being a community-friendly aircraft with a low noise signature and no emissions. It aims to drastically cut road travel time. It is ideally suited as a UAM aircraft bringing all traditional aviation travelers closer to their final destination efficiently and comfortably. “We are thrilled to partner with Kenya Airways to provide new forms of air mobility throughout the region for both people and goods. The creation of disruptive and widely accessible Urban Air Mobility solutions will help democratize mobility by making it more accessible, affordable and giving communities more The Africa Logistics

options. This partnership will foster long-term mobility strategies throughout the country and region. With our aircraft and aerospace services backing and Kenya Airways’ innovative approach to air mobility, we are enthusiastic about opening this region to more sustainable and community-friendly air access for all,” said Andre Stein, President & CEO of Eve. “Partnerships are vital in mapping out the future of our airline, something which the global crisis has reinforced. Innovation is a critical element of our long-term sustainability. Fahari Aviation is at the forefront of exploring advanced technologies, with a key focus in aviation, starting with drone technology. With this partnership, we look to develop innovative air mobility solutions for our clients in Kenya and throughout the region,” stated Allan Kilavuka, Group Managing Director and CEO of Kenya Airways. The partnership will deliver a robust strategy to provide Fahari Aviation’s passengers with a sustainable, accessible, and affordable transportation option. It is estimated that using UAM from the airport to downtown, EVA can reduce conventional road trips by up to 90% turning an hour and a half ride into a 6-minute flight.

Eve will support Fahari Aviation, the Unmanned ai-rcraft systems (UAS) division of Kenya Airways


NEWS

DP World strengthens African business in H1 2021

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P World reported 7.5 percent growth in revenue in the Middle East, Europe and Africa regions to $3.1 billion during H1 2021, benefitting from the full contribution of the TIS terminals in Ukraine and the new port concession in Angola. Profit after tax was up 11 percent to $877 million from $790 million during H1 2020, the company said while announcing strong financial results for the six months to June 30, 2021. DP World invested $516 million in the regions, mainly focused on capacity expansions in UAE, Sokhna (Egypt), Berbera (Somaliland), and London Gateway (UK). In the first half of 2021, the company invested $687 million in its existing portfolio, adding capacity in key markets and investing selectively in container port terminals that offer compelling value. The company started operations of the multipurpose terminal in Luanda, Angola, the fifth largest economy in Africa. DP World’s existing operations in Dakar (Senegal) have seen solid growth in recent years with high utilisation rates and has announced a 50-year concession agreement and development of Ndayane terminal in Senegal. The new port will support Senegal’s development over the next century, and further reinforce Dakar’s role as a major logistics hub and gateway to West and North West Africa. Capital expenditure guidance for 2021 is for approximately $1.2 billion with investments planned into UAE, Canada, Jeddah (Saudi Arabia), Berbera (Somaliland), Sokhna (Egypt), Luanda (Angola), P&O Ferries, London Gateway (UK) and Callao (Peru). The company’s cash from operating activities remained strong at $1.5 billion compared to $1.1 billion in the same period last year. DP World Group chairman and CEO, Sultan Ahmed Bin Sulayem, said, “We are delighted with the strong set of first half results with adjusted EBITDA growing 18.2 percent and attributable earnings rising 51.9 percent. In recent years, we have seen cargo owners respond positively to our integrated end-to-end product offering and we aim to continue with our drive to enable trade. Our recently announced acquisitions of Imperial Logistics and syncreon bring value-add capabilities in high growth verticals and markets, which will

allow us to offer a more compelling set of supply chain solutions. DP World aims to lower inefficiencies and provide improved connectivity in fast growing trade lanes such as Asia, Middle East & Africa.” The acquisition of Johannesburg-listed Imperial Logistics is part of DP World’s transformation into a logistics solutions provider. Imperial has a presence across 25 countries, including a significant footprint in the African market. Both Imperial Logistics and syncreon bring complex solutions capability and strong long-term relationships with cargo owners that fit with DP World’s vision to provide smart, tech-led supply chain solutions to enable trade across key markets. “Overall, the near-term outlook remains positive. While we are mindful that the Covid-19 pandemic and geopolitical uncertainty could once again disrupt the global economic recovery, we remain positive on the medium to long-term fundamentals of the industry and DP Worlds ability to continue to deliver sustainable returns,” Bin Sulayem added. Market conditions in the Middle East, Europe and Africa regions were positive as volumes rebounded strongly. Consolidated throughput was up 15.9 percent excluding Jebel Ali (UAE), with Europe being the key driver of growth. However, Jebel Ali volumes turned positive with 3.4 percent growth in the first half as market conditions stabilised. www.theafricalogistics.com

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COVER STORY

COMMUNITY & MOBILE SOLUTIONS FOR AIR CARGO OPERATORS

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ince the launch of their first cargoclaims solution in 2015, awarded by IATA for cargo innovation, CargoHub Schiphol based IT provider has dedicate its efforts to developing digital products to make life better for Airlines, handlers, forwarders and truckers.

As the world struggles back to normality after the disastrous pandemic, air cargo operators are searching for solutions and technologies to make them more efficient and cost effective in a highly competitive global marketplace. The CargoHub group based at Schiphol Airport, has developed a community platform over the past 3 years, offering an integrated number of useful digital products for just this very purpose.

The Africa Logistics


CARGOHUB

Raoul Paul founder of CargoHub explains “All our energy and research are directed at giving our customers the best tools for the job. Cloud based digital products that are easy to use, have been tried and tested here at Schiphol by leading handlers and carriers.

Single window eco system approach

Raoul continues “ We have built a cargo community platform to enable logistic stakeholders to share data amongst themselves, providing transparency and predictability on cargo shipments and truck movements. On top of this platform we have built- in community products which are focusing on Cargo Claim and loss prevention management. ULD care & control, Quality assurance and Airport collaborative decision making (CDM) which offers slot booking, digital acceptance / delivery and shipment status updates between truckers, airlines, handlers and forwarders. “Our approach is to offer a wide range of products and to disclose data in a single window with the possibility to share data to any external system. This offers a maximum flexibility on how data is used or disclosed. We collect data and offer operational process supporting tools to offer the ultimate digital process efficiency for individual stakeholders.” “Pushing digital transformation forward with innovative solutions”

Cargo Claims and loss prevention Program (CCLP) In January this year a new CCLP program was introduced to simply and control the cargo damage reporting process between ground handlers and airlines. Raoul explains,” Traditionally, once damage to a consignment is caused or discovered, a report would be drawn up in Word or Excel or generated by a WMS system. The CCLP program offers handlers a simple to use mobile app to create, control, validate and (semi) automatically sent damage reports to the airline representatives involved in the stretch. In this way, the damage reporting requirements stipulated in the service level agreement with the airline are easily met. At the same time airlines are offered access to the CCLP platform to access the assigned reports enabling the carrier to swiftly anticipate to customer service requirements and to monitor shipment quality performance within their network.

Mr Raoul Paul

“The fully customer centric focusses CCLP solution” continues Raoul, “identifies risks, provides loss prevention management insights to both the handling company and airline. Last but not least, it provides a fully integrated quality assurance program to investigate root cause and to classify corrective actions. This new solution has successfully been tested in Amsterdam by Menzies World Cargo and Airbridgecargo Airlines and will be made available to other handlers and carriers starting from 01-01-2022”. ULD Care & Control Raoul elaborates… “Our platform built in ULD care and control app is yet another useful solution for combatting another problem area for airlines, www.theafricalogistics.com

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COVER STORY

CARGOHUB DOOR WHY MANAGEMENT WHY

SOLUTIONS TO SUPPORT THE QUALITY OF THE AIR CARGO PRODUCT

CARGO CLAIMS LOSS PREVENTION

INTEGRATED QUALITY MANAGEMENT SYSTEM

COLLABORATIVE DECISION MAKING (CDM)

Airline – Handlers – Forwarders - Shippers

Airline – Handlers – Forwarders - Shippers

Airline – Handlers – Forwarders - Shippers

handlers and forwarders. Unreliable registration combined with human error means that time and money are seeping away with damaged and lost containers cause delays and costs.There are some 800,000 ULDs currently in service worldwide and every year the industry spends $300m in ULD repair costs not counting damage to aircraft caused by broken or bent containers. Our ULD solution saves much of these daily problems. By re-using existing ULD messages in our eco system platform, forwarders are enabled to monitor their ULD on loan in a digital environment. The CargoHub ULD app at the same time offers a fully operational supporting solution to manage ULD’s during the acceptance and delivery process and allows airlines, ground handlers, GSA’s and forwarders to real time monitor the full ULD process. This new solution eliminates the administrative burden, unnecessary inquiries, which often requires forwarders to prove that ULD are already returned to the handler to prevent demurrage costs. “To summarize - we offer easy to use business excellence supporting products” “Logistics are in the need for easy to implement and to use products that contributes to efficiency and the quality of the cargo product” continues Raoul Paul, “ Our new CARGO SNAPSHOT platform add- on is a cloud based digital app for quality control covering acceptance, storage and delivery. The condition of shipments can be captured, is reported and the data is made available in the single window dashboard. Handlers for example can easily share data on damage shipments upon acceptance in the account of forwarders and forwarders collecting shipments at the handler can re-use captured snapshot data to inform the carrier about a potential damage to comply with possible cargo claims proceedings. The Africa Logistics

The loss prevention focus is also embedded in this solution to assure and contribute to the quality and service offered to shipper clients”. Collaborative Decision Making at Airports CargoHub is also known for its Trucking CDM platform, streamlining handling and trucking coordination. Raoul explains. “ Our system allows trucking companies and forwarder to digitally pre announce their arrival for pickups and deliveries to handle. This enables handlers to manage their capacity and available timeslots, status updates for cargo documentation. Customs and security status are shared in the transaction between forwarder, handler and airline to provide full transparency and predictability to reduce waiting hours, paperwork and traditional communication by phone and email to request shipment status updates. Groundhandler dnata in Amsterdam successfully has eliminated a significant flow of email communication as a result of the CDM partnership of trucking companies Wallenborn and Jan de Rijk. Not only front yard control, loading times and driver validation can be improved but also the re-use of data increases the speed and quality of truck order processing at the handlers side. The advantages of digital transformation must be engineered throughout the whole process, in order to achieve maximum result, keeping end to end supply chain visibility and predictability for handler, trucker, airlines forwarders and shippers in mind. The cargo community needs to work together as one and our single window CDM solutions are all built just for this purpose. Contact information CargoHub BV raoul.paul@cargohub.nl


Hapag-Lloyd

CARGOHUB COMMUNITY SOLUTIONS

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Rijk • The Netherlands Beechavenue 54 – 80 • 1119 PW Schiphol-Rijk • The Netherlands Beechavenue 54 – 80 •


HEALTH

Cash payments in Africa could boost vaccine uptake

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ny global-health researcher can tell you that solving one problem at a time is not enough. As the COVID-19 pandemic surges in Africa, securing access to vaccines is the dominant focus. But more must be done to ensure citizens will get them. The best option, in my view, is cash incentives. There is a debate across the globe on how best to incentivize immunization. Regions of the United States have offered entry into prize lotteries, and even US$100 savings bonds. Uptake is particularly important in Africa. Only about 1.4% of Africa’s 1.3 billion people have been fully vaccinated. Since the start of the year, cases have more than doubled, with Botswana, Namibia, South Africa and Tunisia reporting their highest jumps in cases since the pandemic began. Right now, the problem is vaccine availability. Rich countries have more vaccine than they need, and African countries have been left with only 2% of the total supply. Outrage at this disparity (plus the potential for more-dangerous viral variants to evolve where infection rates are high) has prompted promises of one billion doses to poorer countries alongside other initiatives

“Still others say that offering cash incentives to people for behaviours that benefit them is ethically problematic, coercive or erosive of trust. The Africa Logistics

and the ramping up of vaccine production. Attention must now be paid to getting shots into arms. Already, vaccine hesitancy has cost Africa. Several African countries, including the Democratic Republic of the Congo, Malawi and South Sudan, have had to destroy or return vaccines because doses could not be used before their expiry date. As chief economist at the African Development Bank in Abidjan, Côte d’Ivoire, and, before that, for the World Bank’s Middle East and North Africa Region, I have evaluated many programmes and studies on cash transfers. I know the idea is controversial. Some critics argue that all efforts should be focused on securing vaccines. Others counter that the capacity to implement a cashtransfer programme on this scale does not exist. Still others say that offering cash incentives to people for behaviours that benefit them is ethically problematic, coercive or erosive of trust. When I first heard of cash transfers, in a 2008 employment programme in Liberia, I was sceptical. But I have seen them used carefully and effectively. For instance, a programme targeting women of childbearing age in Nigeria significantly


increased tetanus immunization. These programmes encourage vaccine uptake even as logistical challenges such as maintaining the vaccines in cold storage and distributing them are managed. That means that a cash-transfer programme would complement other ‘supply side’ efforts, including logistics, communication and community engagement. (Of course, cash transfers must be combined with other mechanisms, such as mobile clinics, to ensure that people who want vaccines can get them.) In another example of their effectiveness, cash transfers to families in Indonesia for bringing children in for routine health care and enrolling them in school showed significant results, reducing stunted growth in children by up to 23%. These programmes are so well established that they are being used to benchmark other interventions. Both development banks and non-governmental organizations (NGOs) have developed best practices for designing and implementing these programmes at scale, including targeting them to vulnerable communi-

ties. I envisage a programme that would offer each individual eligible for vaccination in West African countries a payment for receiving the shot, say, 6,000 West African CFA francs (US$11). That amount is 10% of the monthly guaranteed minimum wage in Côte d’Ivoire. In 2019, Africa received about $58 billion in foreign aid. I estimate that an effective cash payment would add some $9 billion to an estimated $15 billion for providing and administering COVID-19 vaccines across Africa. The bulk of the money would come after the second dose — or full payment be made at once in the case of one-shot vaccines. Funding would come from the world’s richest countries, foundations and corporations, particularly those with business interests in the continent. This programme would reduce vaccine inequity, save lives and bolster hard-hit economies where the pandemic has plunged many into poverty. The infrastructure to carry out such a payment programme is already in place: about half of Africans have mobile phones, and programmes designed around these have improved childhood vaccination rates in Bangladesh. By transferring money directly through mobile phones, authorities can better ensure that funds go to the intended recipient. For those without a phone, beneficiaries would receive a voucher with a unique identifier that could be redeemed for cash. Again, there is precedent. During the Ebola crisis, a vast cashtransfer programme used many delivery methods, including direct payments to people in the most remote areas without mobile phones. The vaccine-incentive fund could be administered by development banks working with public-health bodies, NGOs and telecom operators. Blockchain technology could record doses and payments, to ensure traceability and limit corruption. The technology to record doses has been put in place by airline corporations and British hospitals. This would be a huge benefit for Africa, and would be in donors’ self-interest. Arresting the virus’s spread in Africa would both revive a major global market and reduce the chances of the virus mutating into more-dangerous forms.

These programmes encourage vaccine uptake even as logistical challenges such as maintaining the vaccines in cold storage and distributing them are managed. www.theafricalogistics.com

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OPINION

Mozambique Channel May Become the Next Maritime Security Hotspot

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he waters off Mozambique are becoming a major new security hotspot in the Indian Ocean. An Islamist insurrection in northern Mozambique that the government seems powerless to suppress has also increasingly led to disruption in the Mozambique Channel, a key global shipping route. The Quad countries and European partners must help contain the problem before other actors step into a regional vacuum. The insurgency in Mozambique has the potential to destabilize Southern Africa and embolden Islamists throughout the region. It threatens security in the Mozambique Channel, the 1,000-nm long waterway between Madagascar and East Africa that carries some 30 percent of global tanker traffic. It is also the location of some of the world’s largest gas reserves. The insurgency was started in 2017 by groups drawn from Muslim communities on the so-called “Swahili coast”. This has now included more than 800 separate attacks across northern Mozambique, resulting in at least 2600 deaths and more than 600,000 people displaced. A report from the UN SecretaryGeneral to the Security Council also pointed to transnational links, with Somali-based Islamists in Puntland acting as a “command center” for Mozambique insurgents. However, other analysts discount close operational links with Islamic State. Armed clashes escalated sharply in 2020, with attacks spilling over the border into Tanzania, where the government faces local Islamist extremists. There are also growing attacks on maritime infrastructure. In August, insurgents seized a key port in northern Mozambique from government forces, raising concerns that this is a first step in insurgents venturing into piracy, as occurred in the Horn of Africa. Maritime drug smuggling is a key source of funds for insurgents. The so-called “Smack Track” has long brought heroin grown in Afghanistan down the East African coast, where a substantial portion is now landed in northern Mozambique before being transported to Europe and elsewhere. Heroin is also increasingly supplemented by crystal meth, produced in Afghanistan from local shrubs. Map reproduced with the permission of CartoGIS Services, Scholarly Information Services, The Australian National University Another big factor is the development of a major offshore gas industry in the Mozambique

The Africa Logistics

Channel off northern Mozambique. This involves planned investments of some US$50 billion to extract an estimated 100 trillion cubic feet of gas, including a major onshore gas liquification plant. France’s Total and USbased ExxonMobil are major investors. In January 2021, following a series of escalating attacks, Total began to move part of its logistical operations from northern Mozambique to safety on the French-administered island of Mayotte in the Channel. The Mozambique government, which is in severe debt distress, is unable to take effective action against the insurgency, and has increasingly relied on mercenaries. But it has been somewhat reluctant to accept international assistance. Russia has tried to promote itself as a partner, eyeing a share of Mozambique’s offshore gas reserves for Gazprom and Rosneft. Moscow uses private security contractors as its proxies in many countries in Africa. In September 2019, up to 200 mercenaries from the Russian Wagner group were deployed to Mozambique with equipment and logistical support from the Russian Air Force and, possibly, also the Russian Navy. But the contractors suffered heavy casualties and were withdrawn from operations within months. France and other European partners are now stepping up efforts to contain the problem. France is historically a leading maritime security provider in the southwest Indian Ocean, with two French frigates and patrol boats based in French Reunion. But France lacks maritime patrol aircraft based in the region. Portugal, the former colonial power in Mozambique, has agreed to send a training mission of more than 1400 troops. Lisbon is also using its current Presidency of the European Union to lobby for the deployment of an EU military mission. Spain has also offered military support. The United States is also finalizing an offer of counter-terrorism assistance. The South African Navy has conducted intermittent anti-piracy patrols in the Mozambique Channel since 2011, and is now establishing a new forward operating base at Richards Bay in South Africa’s north in response to the insurgency. South Africa and its Southern African Development Community (SADC) partners have offered naval and intelligence support. But Mozambique appears reluctant to involve African partners. India has also long positioned itself as a net


FEATURE

security provider in the south-west Indian Ocean and as a security partner to Mozambique. Since 2020, Indian Navy P8I maritime patrol aircraft, staging through Réunion, have conducted joint patrols with the French Navy in the Mozambique Channel. India is also in the process of constructing an air and naval facility on Mauritius’ remote Agalega island, near the north end of the Channel, improving its ability to cover the region. Australia will be wary of any new defence commitments in the western Indian Ocean. The Royal Australian Navy has been deployed there for years, interdicting smugglers on the Smack Track. But that presence is being reduced, following an increased focus on areas closer to home, including the Pacific. Australia may need to consider what non-military assistance it can provide. The Quad and like-minded partners have important interests in stopping the insurgency spilling further across Mozambique’s borders or into the maritime domain. A decade ago, Somalibased piracy was the trigger for the international militarization of the waters off the Horn of Africa. There are good reasons to avoid a similar dynamic in southern Africa.

The crisis should also be seen an opportunity for countries such as France and India to demonstrate their value as security partners in the region. It may also be an opportunity to build cooperation with South Africa, which is increasingly a “swing state” in geopolitical competition. Failure to contain the conflict will leave a vacuum for other actors to fill. Dr. David Brewster is with the National Security College at the Australian National University, where he specializes in South Asian and Indian Ocean strategic affairs. He is also a Distinguished Research Fellow with the Australia India Institute. This article is part of a two-year project being undertaken by the ANU National Security College on the Indian Ocean, with the support of the Australian Department of Defence. It appears here courtesy of The Lowy Interpreter and may be found in its original form here. The opinions expressed herein are the author’s and not necessarily those of The Africa Logistics. www.theafricalogistics.com

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PORTS

Kenya banks on Naivasha depot to boost regional competitiveness

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he full operationalization of the Naivasha Container Inland Depot is expected to boost and promote economic potential and business competitiveness within the larger Eastern Africa member states. Speaking at the site, East African Community PS, Dr. Kevit Desai, said the inland depot holds a huge potential in promoting interconnectivity and shared infrastructure within the member states, while ensuring seamless transportation of cargo from the depot to individual countries’ destinations. Dr. Desai said the inland depot seeks to achieve and realize economic and social developments in the country and those of individual member states, while also opening opportunities for joint business ventures. The PS said the construction of the depot by the government aims to enhance business and save time as well as the cost of transporting cargo from the port of Mombasa to other countries, which will promote high level of inter-trade along the Northern Corridor. He said the depot which sits on an area of 100 acres in Naivasha and served by the newly constructed Standard Gauge Railway, will enhance efficiency and promote high level of manufacturing and value addition of goods that individual countries aspire. “This depot is part of SGR logistics which brings the Mombasa port closer to by over 500KM in the Eastern Africa hinterland, thereby reducing time 24

The Africa Logiistics

and cost of transportation of cargo to and from the port,” said Desai. The PS said the depot has so far handled 11,000 TUES since the ICD freight operations were launched in December 2019 following the construction of SGR line, adding that the capacity will increase once individual transit countries kick start freight operations at their designated 50 acres of land at the expansive Naivasha Industrial Park. Additionally, Dr. Desai said economic competitiveness will be promoted through enhanced partnerships and collaborations by the member states as Kenya puts major efforts at the various ports in integrating Customs Management Systems and in automation of systems and processes to enhance efficiency in the verification of pre-arrival and clearance of cargo. The PS was happy to note that Kenya has already embarked on heavy infrastructure investments including revamped ports, road networks, new railway lines, one stop border points and the upgrade of the Metre Gauge Railway, with the aim of creating seamless interconnectivity and structures to support public-private partnerships so as to ease and promote dedicated services for transport within the region. By KNA


3 lessons we can learn from marine protection in subSaharan Africa

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n 1995, the Kenya Wildlife Service (KWS) established the Diani-Chale marine reserve. This was meant to be a marine protected area (MPA) that would protect and restore marine life, and restrict destructive human activities such as beach seining. However, many members in the community were opposed to the MPA. One of the Kenya Wildlife Service shelters was set ablaze and mistrust towards the KWS simmered for a long time. Today, things are changing. The community, county government and KWS are holding talks to jointly decide on how to operationalise the MPA. And across the African continent, we are seeing stories of transformation and hope in marine protection. Gabon has protected 28% of its national waters. Madagascar is using locally managed marine areas to empower its communities. And the Seychelles has restructured its debt for marine conservation – the first in the world to do so. Altogether, Africa has now protected over 1.8 million square kilometres, or 12%, of its waters. The future of Africa’s “blue economy” is brimming with promise but this depends on effective management. However, like the Diani-Chale marine reserve, many of the MPAs in this 12% are simply “paper parks” – MPAs drawn up on paper but not effectively managed. Both the failures and the successes we see across the continent can teach us a lot about how to approach marine protection. Here are three key takeaways: Conservation must be recognized for its essen-

tial role in food security As the steady stream of overfishing and climate change drowns out the viability of fisheries, many fishing communities have been left desperate. Naturally, any measures deemed to be a further hindrance to fish catch, such as MPAs, are met with hostility. However, MPAs have been clearly shown to increase the abundance and diversity of fish. Reserving these ocean refuges allows time for fish to grow bigger and reproduce more. And some of these fish will swim outside the MPA, causing spillover effects that benefit adjacent fisheries. “I think the way we look at MPAs needs to change,” says Dr Arthur Tuda, Executive Secretary of the West Indian Ocean (WIO) Marine Science Association and contributing author to the “WIO Marine Protected Area Outlook” report. “We should see MPAs as an investment. Some investments can take a long time or a short time, depending on what you’re aiming for. It can take a long time if the system was completely destroyed, so you have to close off the area to wait for restoration, because you won’t get much fish anyway. But if it is a system already providing food, you might want to control the way you harvest. MPAs can be designed as multipleuse areas, they can be zoned where one area is used and another is closed off.” Community engagement determines success In the Grand-Béréby region of Côte D’Ivoire, the aquatic species targeted for food were not only fish, but also turtles. In 2020, however, Grand-Béréby became the site of Côte D’Ivoire’s first MPA. Abou Bamba, Executive Secretary of www.theafricalogistics.com

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FEATURE the Abidjan Convention, highlights one factor that led to this success: trust. “When we went to the villages, it was important for us to listen to them. They gave us a long list of their needs and, of course, marine protection was not included. They had basic needs like hospitals, roads, safe drinking water, jobs, food and so on,” Bamba says. “For us to be credible, we need to balance conservation and environmental needs with the socioeconomic needs of the community. We won’t be credible if we go there and say: ‘We’re only here for the turtles, dolphins and whales’.” For almost 10 years, the Abidjan Convention worked with the Ivorian government, and later with Conservation des Espèces Marine, the University of Exeter and other partners and donors, to gain the trust of the villagers by addressing some of their needs and securing their support. Today, the hunting of turtles has fallen drastically. The GrandBéréby MPA is now also able to provide employment opportunities in eco-tourism; restrict industrial foreign trawlers from pillaging local waters; promote sustainable, regulated fishing for artisanal fishers; and serve as an encouraging model for the other four MPAs that Côte D’Ivoire is planning to establish. Communication can change the game “For most of my time working in marine protection, we’ve communicated the benefits to nature

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The Africa Logiistics

of MPAs. It’s important now that we change the narrative to protecting nature for people,” says Dr Judy Mann-Lang, Conservation Strategist at the South African Association for Marine Biological Research. Dr Mann-Lang has been working on marine communication for over 20 years. She’s helped organize national campaigns to raise awareness and public pressure to increase MPAs. This included a survey on how visitors of uShaka Sea World perceive MPAs. “The word that came up most often was ‘no’,” she says. “As in, ‘no fishing’, ‘no diving’, ‘no this’, ‘no that’. If people perceive something as a ‘no place’, they’re not going to support it. However, if we turn that narrative around and start talking about how people can benefit from MPAs, people are far more likely to support it.” The campaigning and long-term careful research on MPAs worked. On 23 May 2019, the South African government announced the creation of Marine Protected Areas South Africa and increased the percent-

age of its MPA coverage more than tenfold. On 1 August 2021, South Africa celebrates its first Marine Protected Area Day. The world observes dozens of environmental awareness days that highlight environmental causes, but none of these days is dedicated to MPAs. Dr Mann-Lang’s dream is for Marine Protected Area Day to become internationally recognized as an official date to highlight the benefits of MPAs for people and planet. Marine protection must be promoted, designed and evaluated within specific socio-economic, cultural and environmental contexts. One thing is sure, however: it is relevant for all of us, no matter where we are or where we come from. Conservation, community engagement and communication are key to safeguarding the health of the ocean which ultimately determines our collective future.

Madagascar is using locally managed marine areas to empower its communities. And the Seychelles has restructured its debt for marine conservation – the first in the world to do so.


FEATURE

Astral Aviation and Etihad Cargo sign Pharma Service Level Agreement (SLA)

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stral Aviation Limited and Etihad Cargo, the cargo and logistics arm of Abu Dhabi’s Etihad Aviation Group, have deepened their cooperation into Africa with the signing of a Service Legal Agreement (SLA) to provide reliable and cost-effective airfreight solutions across the continent. Astral Aviation operates a fleet of 14 freighters out of its Nairobi and Johannesburg hub, which Etihad Cargo will leverage on for increased vaccine distribution across Africa. Both carriers are members of The International Air Cargo Association (TIACA) and Pharma.Aero, whose joint Project Sunrays initiative offers cross-industry collaboration for pharma shippers managing complex vaccine distribution logistics. The SLA, a first Pharma Interline agreement, ensures both parties are fully compliant with latest GDP and IATA Pharma regulations and standards, and guarantees processes, from booking to handling of such sensitive goods, are standardised and performed to the highest quality. The agreement defined the steps and responsibilities of each party to ease the transfer between the two airlines, boost transparency and making sure that pharma specific documentation, labelling and messaging are used and shared under a precise order and form.

“In addition to significantly expanding Etihad Cargo’s reach across Africa, this inter-airline agreement ensures complete adherence to the specific requirements of pharmaceutical product transportation. Customers can be reassured that Etihad Cargo partners will expertly maintain cool chain integrity,” explained Martin Drew, Senior Vice President Sales and Cargo, Etihad Aviation Group. Astral Aviation and Etihad Cargo have committed to shipping and storing pharmaceuticals with passive packaging between the main temperature ranges known as COL (+2 to +8°C), CRT (+15 to +25°C) and ERT (+2 to +25 °C). “We are honoured to partner with Etihad Cargo and participate in the critical distribution of COVID-19 vaccines to and within Africa. The equitable access and distribution of COVID-19 vaccines in Africa will be enhanced with the help of partnerships and collaborations within the aviation sector, such as the one enacted between Etihad Cargo and Astral, which will offer one-stop solution for the vaccines to and within Africa,” said Sanjeev Gadhia, CEO of Astral Aviation. This Agreement will provide a timely boost in both the Nairobi and Abu Dhabi hubs positioning as a global logistics hub capable of facilitating vaccine distribution.

www.theafricalogistics.com

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NEWS

Etihad Cargo interlines with Astral and KQ to accelerate vaccine rollout in Africa

Etihad Cargo has signed a pharma interline agreement – officially named ‘Service Legal Agreement’ (SLA) – with Astral Aviation and Kenya Airways (KQ), which will expand its pharma reach in Africa, as well as providing “reliable and cost-effective” airfreight solutions across the continent. The agreement comes as the global rollout of coronavirus vaccines continues and it is expected to support Etihad Cargo’s Hope Consortium operations. Etihad Cargo said it is committed to shipping and storing pharma goods with passive packaging between the temperature ranges: ‘COL’ (2 to 8°C), ‘CRT’ (15 to 25°C) and ‘ERT’ (2 to 25 °C). The terms of the agreement were outlined by Etihad Cargo for its new partners – Astral Aviation and Kenya Airways – to “boost transparency and make sure pharma-specific documentation, labelling and messaging are used and shared under a precise order and form”. Under the terms of the agreement, Astral Aviation and Kenya Airways will comply with

The Africa Logistics

GDP and IATA Pharma regulations throughout the cool chain. Martin Drew, senior vice president of sales and cargo at Etihad Aviation Group, commented: “In addition to significantly expanding Etihad Cargo’s reach across Africa, this inter-airline agreement ensures complete adherence to the specific requirements of pharmaceutical product transportation. Customers can be reassured that Etihad Cargo partners will expertly maintain cool chain integrity.” He added: “The World Health Organisation has recently reported that only 2.5% of African citizens are vaccinated against Covid-19 and that millions more doses are required to meet even modest targets. “Through Etihad Cargo’s ever-expanding portfolio of partnerships and collaborations, the Hope Consortium can play a greater role in meeting vaccine demand.” Peter Musola, head of cargo commercial at Kenya Airways, added: “Kenya Airways Cargo is excited to join Etihad Cargo in the HOPE Consortium initiative through providing logistical solutions in our home continent. “With only 2.5% of the African continent vaccinated against COVID-19, this will go a long way toward achieving the Africa Centre for Disease Control and prevention (CDC) to vaccinate 60% of the population by the end of 2022. This is a fundamental need and prerequisite toward aviation recovery in Africa.” Sanjeev Gadhia, chief executive of Astral Aviation, said: “We are honoured to partner with Etihad Cargo and participate in the critical distribution of Covid-19 vaccines to and within Africa. The equitable access and distribution of Covid-19 vaccines in Africa will be enhanced with the help of partnerships and collaborations within the aviation sector, such as the one enacted between Etihad Cargo and Astral, which will offer one-stop solution for the vaccines to and within Africa.” Since the pandemic, Etihad Cargo has transported almost 2,500 tonnes of pharmaceuticals to Africa, including 41 dedicated flights on behalf of the United Arab Emirates government. The carrier currently serves 72 network destinations in the Middle East, Asia, Europe, Africa and the Americas. It’s fleet of 65 aircraft operate 430 weekly rotations, in addition to charter flights, which serve demand at nonnetwork destinations. Astral aviation serves 15 African destinations out of its Nairobi and Johannesburg hubs with its fleet of 14 freighters. Both Astral Aviation and Kenya Airways are members of TIACA and Pharma.Aero, whose joint Project Sunrays initiative offers cross-industry collaboration for pharma shippers managing complex vaccine distribution logistics.


FEATURE

DHL Global Forwarding and TotalEnergies partner to develop a solar project

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s part of their strategic cooperation agreement, a solar energy project is launched; Over 14,000 MWh of electricity will be produced per year on eight sites; The reduction of CO2 emissions is part of Deutsche Post DHL’s (www.DPDHL.com) Sustainability Strategy. DHL Global Forwarding, the leading provider of air, ocean and road freight services, and TotalEnergies have signed a contract for a solar energy project in Dubai. It is in continuation with their Strategic Cooperation Agreement signed in 2019. TotalEnergies will solarize eight of DHL’s sites in Dubai to cover the equivalent of over 46,000m² of photovoltaic panels. The solar system will save more than 6,000t of CO2 the first year. The project complements Deutsche Post DHL Group’s sustainability roadmap to achieve zero-emissions logistics from 2050 onwards. “With an annual average of 8.7 hours of sunshine per day, Dubai has a clear advantage in terms of solar energy. I am all the more pleased that we can use this asset to advance our sustainability goals further”, says Amadou Diallo, CEO DHL Global Forwarding Middle East and Africa. “With TotalEnergies, we have a partner at our side, not only to drive forward the use of alternative fuels but also to optimize our overall energy consumption. In this way, we are going step by step to achieve our ambitious target to reduce all logistics-related emissions to zero by the year 2050.” The whole solar system will produce over 14,000 MWh per year, enough energy to power over 16,000 homes yearly in the UAE. In addition to supplying the sites with solar power eight electrical vehicle charging stations will also be installed. Thus, DHL Global Forwarding contributes to the Group’s goal of electrifying 60% of its fleet by 2030. Hamady Sy, Managing Director at TotalEnergies Renewables Distributed Generation Middle East and Africa, declared: “We are delighted to support DHL Global Forwarding with their green

initiatives in the UAE of which solar will play an important part, and look forward to helping them reducing their carbon footprint in the region and beyond”. Not only does the solar system produce more sustainable energy, but the program also includes that 85% of the solar modules are recycled. Furthermore, they are produced exclusively in Landfill Free certified factories. All this contributes to making the entire product cycle more sustainable and saves more than 150,000 tons of CO2 over the contract duration. In keeping with its policy of “burn less – burn clean”, DHL Global Forwarding is consistently optimizing the carbon efficiency of its transport network, its fleet and its real estate. In order to achieve its sustainability goals, Deutsche Post DHL Group is investing €7 billion in climate-neutral logistics solutions through 2030, by which point at least 30 percent of its fuel needs should be met by sustainable fuels.

With an annual average of 8.7 hours of sunshine per day, Dubai has a clear advantage in terms of solar energy. I am all the more pleased that we can use this asset to advance our sustainability goals further www.theafricalogistics.com

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OPINION

Khato Civils Announces Drive To Mentor Next Generation Of African Firms The leadership of South Africa based infrastructure development firm Khato Civils (www.KhatoCivils.com) has announced an ambitious programme to mentor a new generation of African firms. After already working on major infrastructure projects in South Africa, Malawi and Botswana, Khato Civils intends to expand into markets such as Zambia, Zimbabwe, Tanzania and Kenya while working with local companies and communities in each infrastructure project it embarks on. As part of its continental growth plan, Khato Civils is making an unprecedented commitment to mentorship of local firms with 30% of the value of projects to be distributed to three partner firms in each market it enters. Khato Civil’s long-term growth plan is to enter 42 African markets. However, Khato Civils is also engaged in a communications campaign to raise awareness of the challenges faced by African entrepreneurs and professionals who seek to play a role in building the continent’s infrastructure. With the majority of major infrastructure works going to multinational firms, and many markets lacking legislation that ensure local subcontracting & supplier opportunities, African entrepreneurs are being locked out of the development of their own nations. Khato Civils is calling for change across the sector and for African firms to lead in Africa’s infrastructure rollout. In a series of interviews with AfricaLive. net, CEO Mongezi Mnyani and Chairman Simbi Phiri announced the mentorship programme and called for Africa’s infrastructure development to be led by African firms, highlighting that: *Only 16% of Construction on Africa’s Infrastructure (https://bit.ly/3laIOsn) build is carried out by local firms. *According to Deloitte (https://bit. ly/3uOLz64), Chinese contractors alone

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constructed an estimated 30 per cent of all major projects in Africa in 2020. *International financiers will often insist on work going to European or Asian firms, overlooking that African firms have the capabilities to deliver and the understanding of how to work with local communities. *Projects that fail to create local employment and subcontracting & supplier opportunities are at risk of protests, disruption and sabotage from excluded communities. *Khato Civils has highlighted five threats to African development from failing to engage local communities in infrastructure projects: economic threat, threat of instability, social threat, threat to infrastructure and reputational threat. CEO Mongezi Mnyani Calls For Engagement With Local Communities and Local Firms Khato Civils CEO Mongezi Mnyani recently worked with AfricaLive to highlight the threat to African economies that the lack of involvement from locally owned firms creates. Mr Mnyani is working to make sure financiers hear the message: engaging with local firms and communities is not only the right thing to do - it makes economic sense. In the case of the Khato Civils 100km pipeline project in Botswana, recruiting workers and engaging with local leadership along the route of the pipeline resulted in the project being delivered ahead of schedule and under budget (https://bit.ly/3laSRhh). Botswana’s Water Utilities Corporation credited working with Khato Civils as saving them 1.2bn Pula (over USD 100m) as compared to similar large scale water projects. Mr Mnyani explained “You can’t just undermine what local companies can do. If you show up in these communities biased and not willing to engage, you will fail. “In Mozambique, for example, we have seen cases of project failure because multinationals had little respect for the locals. It can directly lead to protests, strikes or sabotage of projects. “You should always have a mindset of working with the locals to avoid animosity. If we are serious about the health of the economy, we must accompany aid with capacity development. “The mindset of feeling superior to the locals needs to go if projects are to work properly across the continent. “In Botswana, our approach was to reduce cases of conflict as much as we could. Our recruitment system had to change and become more inclusive. “We ensured that we had workers from each village where the pipeline was crossing through. “Consultation with local leadership could mean talking to traditional leaders, councillors, members of national assemblies and community leaders. Consultation can be very complex and time-consuming, but it is all worth it to eliminate any problems along the way. This is our process everywhere we go and we don’t intend to change it.” The UK based NGO Engineers Against Poverty (http://EngineersAgainstPoverty.org/) are also working to highlight the risk to African


OPINION development that overlooking local firms creates, and have stated that “Reliance on foreign enterprises to design and construct facilities often means they are not sustainable as the expertise may no longer be available once the construction is complete.” Chairman Simbi Phiri Announces Strategy To Mentor Africa’s Next Generation Of Firms In order to address these risks to African infrastructure, Khato Civils has now committed to an ambitious mentorship programme for local firms. 30% of the value of projects will be distributed to three partner firms in each market Khato Civils enters. Announcing the plan, Chairman Simbi Phiri said “We plan to expand into 42 African countries and give 30 per cent of each project to local companies. “We plan to allocate resources to a few local companies in each of those countries to expose them properly. They will come in

and see how we work and how we prepare. They will learn from us how to run finance, management and to adapt our model. If we start training three small local companies, at least two should succeed. We made the mistake of allocating 30 per cent of the contract value of the 100km pipeline project to train one local company in Botswana, however, that was managed poorly. “In future, we will allocate that 30 per cent to three different local companies with each getting 10 per cent. Learning from such experiences is how we can ensure we have a positive impact as we grow.” Expanding on issues facing Africa’s entrepreneurs, Mr Phiri told the story of his own entrepreneurial journey on AfricaLive.net (https://bit.ly/3uGZfzI) and spoke of his desire to help ambitious Africans from across all sectors, saying “I want to make one thing clear to young entrepreneurs reading this; banks are not the only source of funding.

www.theafricalogistics.com

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REPORT

Outrageous: Infrastructure Costs Increasing $2.3 Billion in a Crisis

T

he International Air Transport Association (IATA) warned that planned increases in charges by airports and air navigation service providers (ANSPs) will stall recovery in air travel and damage international connectivity. Confirmed airport and ANSP charges increases have already reached $2.3 billion. Further increases could be ten fold this number if proposals already tabled by airports and ANSPs are granted. “A $2.3 billion charges increase during this crisis is outrageous. We all want to put COVID-19 behind us. But placing the financial burden of a crisis of apocalyptic proportions on the backs of your customers, just because you can, is a commercial strategy that only a monopoly could dream up. At an absolute minimum, cost reduction—not charges increases—must be top of the agenda for every airport and ANSP. It is for their customer airlines,” said Willie Walsh, IATA’s Director General. A case in point is found among European

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air navigation service providers. Collectively, ANSPs of the 29 Eurocontrol states, the majority of which are state owned, are looking to recoup almost $9.3 billion (€8 billion) from airlines to cover revenues not realized in 2020/2021. They want to do this to recover the revenue and profits they missed when airlines were unable to fly during the pandemic. Moreover, they want to do this in addition to a 40% increase planned for 2022 alone. Other examples include: Heathrow Airport pushing to increase charges by over 90% in 2022 Amsterdam Schiphol Airport requesting to increase charges by over 40% over the next three years Airports Company South Africa (ACSA) asking to increase charges by 38% in 2022 NavCanada increasing charges by 30% over five years Ethiopian ANSP raising charges by 35% in 2021 “Today I am ringing the alarm. This must stop


REPORT if the industry is to have a fair opportunity at recovery. Infrastructure shareholders, governmental or private, have benefited from stable returns pre-crisis. They must now play their part in the recovery. It is unacceptable behavior to benefit from your customers during good times and stick it to them in bad times. Doing so has broad implications. Air transport is critical to support economic recovery post pandemic. We should not compromise the recovery with the irresponsibility and greed of some of our partners who have not addressed costs or tapped their shareholders for support,” said Walsh. Some regulators have already understood the danger being posed by the behavior of infrastructure providers. Regulators in India and Spain successfully intervened on the increases proposed by airports. They provide an example for other regulators to follow. And the Australian Competition & Consumer Commission[1] warned in their recently published report that increasing charges to recover lost profits from the pandemic will demonstrate airports systematically taking advantage of their market power, damaging the vulnerable airline sector’s ability to recover at the expense of both consumers

and the economy. Airlines undertook drastic cost cutting from the outset of the pandemic, reducing operating costs by 35% compared to pre-crisis levels. This was supported by increased commercial borrowing and shareholder contributions. Airlines also sought government aid, the majority of which was in the form of loans that need to be paid back. Of the $243 billion that was made available to airlines, $81 billion supported payrolls and approximately $110 billion was in support that needs to be paid back. As a result, airlines have amassed a huge debt burden of over $650 billion. Any defaults could result in airline failures and the loss of tens of thousands of jobs. IATA urged airports and ANSPs to apply solutions to address the financial impact of the pandemic including: Implementing sustainable cost control measures Tapping shareholders Accessing capital markets Seeking government aid

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33


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35 2016/07/05 2:27 PM


ANALYSIS

The prospect of easier intra-Africa trade is boosting investments in transport and logistics

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frica’s transport and logistics start-ups are on track to raise more growth funds this year, in deals that could help ignite intra-Africa trade. Since the outbreak of the Covid-19, there has been a rising shift towards tech-enabled transportation across the continent to overcome movement restrictions, improve efficiencies and grow food chain resilience. The wider growth of e-commerce in Africa during the pandemic has also created fresh demand in the logistics sector, sparking a rise in last-mile delivery apps for food and other goods. Baobab Network, a social impact technology accelerator, shows that the transport and logistics sector is staring at a startup fund-raising record, following a year in which it raised $217 million. Over the last eight months alone, the sector has already raised funding worth $200 million. “Transport and logistics companies are still on track for their best year yet in terms of value raised. This year, transport and logistics companies in Africa have secured $200.77 million over 37 funding rounds,” says Baobab’s transport and logistics sector map 2021. Of the 37 funding rounds, the majority, 62% are either seed or pre-seed funding rounds, with val-

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ues averaging $50,000. Togo’s Gozem and Nigeria’s SEND technologies) were two tech-enabled west African logistic firms that raised over $3 million, while Egypt’s ondemand warehousing and logistics platform, Flextock raised $3.25 million in a pre-seed funding round as the North African country saw increased activity in the sector. MAGNiTT, a startup data platform for emerging venture markets in Middle East and North Africa, affirms it has been a good year for Egypt with the country breaking its quarterly and half-yearly records in venture capital funding. The country’s start-up funding in the first half of the year was equivalent to 91% of all funds raised in 2020, with a year-on-year growth of 28%. “Out of the top 3 most-funded geographies in MENA, Egypt was the only one to witness an increase in deal volume YoY reflecting a healthy startup space and capital allocation,” according to MAGNiTT Since the beginning of the year, seven Egypt-


ANALYSIS

based delivery and logistics startups have raised $42 million in funds. Baobab network puts the number of Africa’s transport and logistics start-ups at over 430 with 65% founded during or after 2017 with the value range of funding for these startups seen rising beyond $10 million. “We see investments in the 10M+ range have greatly increased this year, accounting for almost 30 per cent of the investments,” according to the report. This points to growing investor attraction to this space, possibly to tap into the world’s single largest market-AfCFTA. Nigeria’s mobility startup, Moove, recorded a big raise after closing $40 million in a debt financing round in May and $23.2 million in a Series A funding round in August. “It has already been a record year for transport and logistics companies in Africa, with 4 months left to go in 2021. Will funding continue to flow in

as the year wraps?” according to Baobab Network. Pending deals in the more mature transport and logistics market include a July offer by UAE port operator, DP World to acquire South Africa’s listed firm, Imperial Logistics for $890 million. DP World and other logistics companies like South Africa’s Grindrod are also looking to benefit from private participation in a number of South Africa’s harbor operations. This story was republished with the permission of bird, a story agency under Africa No Filter.

www.theafricalogistics.com

37


OPINION

Tips for Logistics contracts management By Jan Runge Petersen Patient negotiation is key “Manage complex logistics contracts very carefully,” is a message often heard at logistics seminars. So you would expect that almost every company does so. And that as a minimum, they review monthly key performance indicators (KPIs) with their suppliers in order to improve logistics performance. But do they? In practice, logistics contract management that focuses on value optimisation is a difficult process for many companies. The contract management process contains several common pitfalls that can prevent you from getting the most out of the relationship with your logistics service provider (LSP). We take a look at logistics contract management from both sides of the table: where the most common pitfalls lie in managing the clientLSP relationship, how they can be identified and – more importantly – how to avoid them. 1. Choosing a supplier based on costs alone “How low can you go?” Costs are the single most important aspect during contract negotiations. But this means that opportunities for incorporating other aspects often get overlooked. Aspects that can generate a lot more value than the savings made from negotiating a few extra percentages of discount. For example, creating a joint planning process between the logistics service provider and the shipper could potentially yield more value than a 5% discount on storage. Develop a number of concepts where extended

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services will add direct value to your logistics operation, and consider introducing them during contract negotiation. LSPs are often more open to discussing an extension of the activities than negotiating rock-bottom tariffs. Think in terms of how to create value and include these in the contract. “Price is what you pay; value is what you get,” as Warren Buffett said – let yourself be guided by what you will receive. 2. Negotiating contract terms and KPIs out of line with daily operations “Things turned out to be quite different in practice” It often becomes clear, as soon as the contract management phase starts, that the framework has been based on how the negotiators expected the operation would run at the time of contract negotiation, instead of the actual daily operation. In many cases, the defined KPIs are irrelevant or impossible to measure in daily practice and, as a consequence, the quality of the performance cannot be measured or is perceived as bad. Agree to review and revise the cost base and standardisation after a certain time, e.g. 6 months into the contract, to align the initial plan with reality. During this initial contract period, a joint team should be responsible for evaluating the performance quality, terms, conditions and assumptions agreed upon during contract negotiations. Building on the experience gained in this first part of the cooperation will strengthen the contract and boost mutual trust. 3. Strategy mismatch “We lost each other along the way” Strategy can be an over-used term, but in a supply chain context, the logistics strategy defines a company’s approach to ensuring the logistics process contributes to the distinctiveness of its offering. In short, how do we differentiate ourselves, or outperform our


OPINION

competitors, by optimally using our (or our LSP’s) logistics capabilities? An LSP that has no match with your own logistics strategy will at best fulfil its operational obligations at the start of the contract. Soon, however, the discrepancy on where you want to go and the ‘opposing’ strategic direction of the LSP will develop into a serious obstacle for the overall competitiveness and distinctiveness of the entire company. Consider aspects such as the LSP’s long-term plans and investment into areas such as IT landscape, visibility, industry-specific solutions, footprint and product development. Request details of the supplier’s strategy; ask for a thorough explanation by one of the board members and translate this into a specific logistics strategy. Know which standards are needed for the processes in order to outperform the competition. These standards can subsequently be addressed in the logistics contract.

Changes in the supply chain are usually heavily scrutinised by the client’s commercial organisation. These changes will often be justified in terms of substantial savings or quality improvements. The exact service level of a new logistics contract is often interpreted differently, or its scope and limitations are not clearly communicated, resulting in the commercial organisation of the client overselling to its end customers. We have seen examples of ‘On Time In Full’ (OTIF) commitments including bonus-malus agreements and liability acceptance at order level. It is very important that the commercial organisation knows what it can – and more importantly what it cannot – sell to its clients. It is vital that the logistics team on the client side proactively communicate the limitations of the logistics operation and Service Level Agreements internally.

4. Multiple contracts for warehousing and distribution “Now I have two single points of contact” Obviously there are instances in which it makes sense to split warehousing and distribution. From a contract management perspective, however, this type of set-up adds complexity. Apart from perpetual investigations into who was to blame, whether the address was wrong or the order was picked too late for dispatch, planning and reviewing is shared among various parties, with the shipper being responsible for orchestrating the flow between the providers. This set-up does not suit all, and there should be a clear business case in favour of separate contracts. The renewal frequency of distribution contracts should be seen as separate, and can be re-negotiated on an annual basis.

7. The lock-in “You can check out anytime you like…” The final pitfall is in fact the most common one. There is often an unclear barrier for shippers to terminate a contract and change suppliers. This can be caused by a variety of reasons, such as reluctance to enter into a demanding move project, good relations with the provider, or the fear of service disruption for example. The incumbent logistics provider is familiar with the procedures and methods used by the shipper, and the people involved on both sides know each other well. The more long-standing the relationship, the more disappointing the service needs to become before that relationship is ended. In such a case, it should be clear how the existing contract can be terminated effectively when a fruitful longterm collaboration is no longer viable. Include the exit criteria in the contract. Furthermore, create a step-by-step build-up of the relationship. Let the provider first prove that it can meet the standards that have been set before further integrating the processes and systems.

5. The buyer is not the user “That’s not what I agreed to!” Many buyers, in their role as logistics managers, are not in charge of the budget and therefore are not allowed to make final decisions. Instead, the final responsibility for approving supplier contracts often lies with purchasing departments, who sometimes negotiate unsuitable or different contract terms and specifications. These will only become apparent in the implementation phase, by which point the relationship will likely already be under stress. The end user is best positioned to assess the supplier’s performance during the contract management phase, but is unlikely to be fully informed about the contractual service levels. Even if the end user is involved in the specification phase of the purchasing process, he or she is usually unable to influence the final details of the contract, which are in the hands of purchasers and lawyers. The translation of the operational paragraphs in the contract into daily practice plays a significant role during the contract management phase. Don’t get caught out: create a team that is responsible for the complete process from start to finish and that is knowledgeable about the specifications that are linked to actual daily practice. The team makes all decisions throughout the entire process. This is much more effective and prevents conflicts of interests and misunderstanding in communications. 6. Overselling “We deliver anything, anytime, anywhere – or your money back!”

Contracts are usually regarded as lengthy, bulky and complex legal documents. When contracts are well-structured so that their contents are clearly visible, they become great control instruments. Logistics contract managers from both the shipper and the provider should not need to frequently refer to the legal text and small print, as the basis for daily operations should flow from within the well-defined boundaries of the contract. Manage your logistics contracts with greater clarity and get the basics right. See our expert insights on how to negotiate logistics services contracts. About the author Jan Runge Petersen has been active in the logistics industry for 40 years, during which time he has held various management positions within logistics and freight forwarding globally. He has spent the last 18 years at DSV. He started out as a Division Manager with DSV Road, later as Managing Director DSV Solutions in Sweden and currently holds the position Senior Director Business Development Nordics at DSV Solutions, based in DSV’s Headoffice in Hedehusene. www.theafricalogistics.com

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