Moving goods in Africa – what you need to know
When Africa supply chain management is the topic of discussion, frequently used words include inefficiency, bottlenecks, bureaucracy, corruption, poor infrastructure and the occasional “chaos”. It is easy to fall into the trap of grouping all African countries into the same categories. However, there are significant similarities and differences from country to country and region to region. For any executive, it is important to understand how these similarities and differences will impact their business.
For organisations moving goods in and around African markets, the high cost and long lead times are two of the biggest challenges for almost every industry. A World Bank study found that, with the exception of Durban, South Africa, cargo spends on average 20 days in African ports, compared to three to four days for most other ports. For Africa’s numerous landlocked countries (the highest of any continent), the lead times are significantly longer. For example, landlocked countries such as Burundi and Uganda are negatively impacted, as they depend on transit solutions from neighbouring Kenya and Tanzania. A report by Trademark East Africa noted that it takes up to 71 days to import goods to Burundi from any of the other East African countries. It is estimated that the cost of transporting goods in Africa is 60%-70% higher than in the US and Europe.
For organisations, it is important to work with third party logistics (3PLs) that understand the regulations and have the necessary relationships with customs and port officials. Furthermore, the legal and regulatory environment differs from port to port. However, managers should guard against taking a backseat when dealing with port and customs officials. It is important that managers understand the lead times, processes and have the necessary contracts, controls and systems in place to ensure 3PLs are compliant.
For many organisations, counterfeit and parallel imports remain a major concern. African markets remain a dumping ground for many importers and exporters that buy expired (or close to expired) products from European retailers. Large trading groups operating out of the Middle East (e.g. Dubai) are normally a major source for importers. Close cooperation with authorities are increasingly bearing fruit. Anti-counterfeit initiatives such as scratch codes and text message service (e.g. pharmaceuticals) are also important measures to safeguard against counterfeits.
Roads, transport and warehousing
The transport systems of African countries vary significantly across region and countries. For example, Chad has only 60km of paved roads per million people, whereas countries like Algeria and Namibia boast over 2,000km of paved roads for a similar population. In many countries, cities and villages might find themselves cut off during the rainy season. Organisations need to have a good understanding of the road network, all-season roads and trade corridors. In Africa, distribution distances tend to be large and distribution centres (DCs) limited. Furthermore, overnight routes and driver per diems can increase costs and reduce truck utilisation. Organisations need to evaluate the need for more DCs and the role that cross docking can play in streamlining distribution processes and reducing costs.