Viewpoint - Bolloré Highlights African Warehouse Shortage

From Lloyds Loading List 14 February 2017: Bolloré Logistics has highlighted an urgent demand for international-standard warehousing capacity to accommodate Africa’s booming consumer goods sector.

The swift emergence of a vast African middle class is radically altering the volume and composition of the continent’s import and export flows, the French logistics services provider (LSP) and forwarder underlined, adding that the continent’s supply chains have long been used to outbound commodities like coffee, cocoa, lumber and minerals, and to inbounds largely composed of industrial machinery and full container loads delivered straight to their final destinations.

This scenario began to change a few years ago with the delivery of sophisticated telecom systems into Africa for new mobile networks – and requiring more careful treatment in transport but also in storage.

“The increased diversity of goods and the evolution of distribution networks have naturally driven us to expand capacities and services to match more advanced requirements from industrials in terms of contract logistics,” said Bolloré Logistics’ head of supply chain and logistics for Africa, Thierry Retourné.

“Clients are asking specialists to upgrade African supply chains so they reflect the value and demands of the expanding consumer goods market,” he added. “So in contrast to earlier periods, we are now breaking containers down in warehouses, preparing goods there, proposing a wide range of value-added services and organizing delivery to avoid retailing shelves from ever being empty.”

During the course of last year, Bollore Logistics opened hubs in Lagos and Accra, Ghana, joining existing African hubs in Abidjan (Ivory Coast), Johannesburg, and Nairobi. It said these hubs were “strategically located in proximity to regions where economic growth potential is strongest”.  

After Europe, Africa is Bolloré Logistics’ main geographical region for business and a “key differentiator” in relation to its rivals, representing around 25% of its turnover and 10,000 of its staff.

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Viewpoint - Growth in E-commerce Spurs Demand in Kenya Warehousing

From The Business Daily 21 Sep 16: The growth of e-commerce in Africa has led to an increase in demand for warehousing facilities, the new report by property management company Knight Frank has shown.

The Logistics Africa 2016 report notes that international retailers have increasingly demanded properties suited to the efficient fulfilment of online orders.

“Africa’s online retail sector has started to grow at a fast pace, driven primarily by the increased penetration of smart mobile devices into the continent’s markets,” the report showed.

Knight Frank estimates that warehousing and logistics sector grew by 24 per cent over the past 10 years in Africa.

A growing shift to e-commerce in parts of the region has in the last five years seen an increase in ecommerce site ranging in a variety of products from fast moving goods to vehicles and online restaurant bookings.

Sites such as Mama Mike, OLX, Brighter Monday, HelloFood and Jumia — which has several brands in Kenya and Uganda including Jumia House, Jumia market, Jumia cars and Jumia food — continue to attract buyers who do not have to leave the comfort of their homes to make purchases as new ones emerge daily.

Good customer service and timely delivery of goods by motorcycle riders remains the advantage that the e-commerce platforms seek against each other in gaining the market share. 

Poor transport infrastructure and traffic congestion continues to be a nightmare for the ecommerce sites as well as the logistics companies they have partnered with for deliveries. The poor quality of road and rail networks forces companies to transport most of their cargo by air ultimately increasing the cost to customers. 

“The cost of moving goods in Africa is, on average, estimated to be two or three times higher than in developed countries and transport costs can represent as much as 50-75 per cent of the retail price of goods,” the report said.

Among the innovative ways that firms across the region are using to circumvent the transportation crisis is the use of drones to make deliveries.

“Drones could allow logistics operators to move goods to locations without reliable road networks and may prove to be a “leapfrog” technology for Africa, in the same way that mobile telecommunications have allowed many Africans to skip fixed-line networks and move straight to wireless technology,” says the report.

Already at least 1,000 applicants are seeking regulatory approvals to operate unmanned aerial vehicles for film shooting, relief services and other commercial purposes from the Kenya Civil Aviation Authority.

The delay in approving use of drones has been occasioned by the National Security Advisory Committee which is yet to okay the regulations on commercialisation of the aerial devices which will limit civilians to flying them at a height of not more than 400 feet.



Viewpoint - Mombasa Port Second Container Terminal

Kenyan President Uhuru Kenyatta will commission on Sep 1 the Mombasa port second container terminal (CT2), one of the biggest projects along East Africa.

The project is part of the jubilee administration’s flagship projects under Vision 2030, said the Kenya Ports Authority (KPA). The project was funded on a government-to-government arrangement with Japan which provides a cheap loan of 0.2 per cent interest with a repayment period of 30 years.

The terminal spans across 100 acres, which was reclaimed from the sea to create a 900-meter long quay. The project is expected to be completed in three phases.

Phase one, which is set to be commissioned, consists of two berths that are numbers 20 with a quay length of 210 meters and a draft of 12 meters to serve medium size vessels.

KPA Corporate Affairs Manager Hajj Masemo, in a statement announcing the commissioning, said berth No 21 has a 350-meter long quay and a depth of 15 meters that is capable of accommodating post-Panamax vessels of 8,000 twenty-foot equivalent units (TEU) capacity.

“This first phase was constructed at a cost of Sh30 billion which includes supply of two ship-to-shore (STS) gantry cranes and four rubber tyred gantry (RTG) cranes for yard operations,” said the statement.

A new six lane access road was also constructed joining the Port Reitz road for ease of entry and exit of cargo traffic from East Africa’s largest port.

Viewpoint: Africa’s logistics industry offers opportunities - Knight Frank

The logistics sector is a growing focus for property development in Sub-Saharan Africa, on the back of rising demand for modern warehouse space from retailers and consumer goods manufacturers, suggests Knight Frank’s recent report on emerging logistics property sector. This trend is being driven by the growth of the region’s middle classes, the expansion of its consumer markets and the increased prevalence of mobile retailing.

Developers active in the logistics sector include those from the Middle East and China, as well as South African developers seeking to transfer their expertise to the rest of Africa.

Africa’s poor transport infrastructure although a major challenge for logistics operators, presents a real opportunity on the back of the numerous large-scale projects across Africa which aim to improve transport networks.

Drone technology has the potential to help logistics operators overcome transport infrastructure challenges, and several projects are underway exploring the use of drones in Africa.

Future demand for logistics property will be shaped by the rapid growth of online retailing in Sub-Saharan Africa, which is being driven by the increased penetration of smart mobile devices. The African online retail sector is forecast to be worth US$50 billion by 2018, representing a six-fold increase in value in the space of five years.

Around 90 per cent of Africa’s trade happens by sea, making its ports crucial locations in logistics networks. Several major new ports are under construction across the continent and sites near to ports are highly desirable for logistics property development.

Andrew Marshall, Senior Surveyor in Logistics, at Knight Frank Middle East commented, “As Sub-Saharan Africa undergoes a wave of modern commercial property development, the logistics sector is emerging as a focus for activity. Already some leading Middle Eastern developers have targeted the sector; Kuwaiti based Agility has ambitious plans to create a network of logistics hubs across Africa, while Dubai’s DP World has been granted a concession to develop and operate a new logistics centre in Kigali, Rwanda.”

Dana Salbak, Associate Partner and Head of Research, at Knight Frank Middle East Knight Frank, said, “GCC countries such as the United Arab Emirates and Saudi Arabia have gained global prominence with their world-class infrastructure and transport systems. Combining their strength in developing high-spec warehousing and sophisticated infrastructure, with the growth potential that the African logistics market offers, the opportunities cannot be emphasized enough. We realise however that for this to materialise, efforts need to focus on improving security, increasing transparency and combating corruption, along with establishing robust legal frameworks.”

Viewpoint - Sub-Saharan Africa Improving Real Estate Transparency

JLL have just published their 2016 Global Real Estate Transparency Index which shows overall improvement in property market transparency across the region. Out of the 12 markets from the region included in the report, six have recorded reasonable progress in transparency. 

Kenya has maintained its position in the semi-transparent category together with the much smaller markets of Botswana, Zambia and Mauritius. Ethiopia, is among the top ten global improvers, but from a very low base. 

Technology is allowing SSA markets to speed up normal transparency improvements such as the digitisation of the Nairobi land registry together with online and mobile stamp duty payment systems. In Kenya a National Construction Authority to regulate construction firms has recently become operational also and several new Kenyan REITS are being assembled. All this bodes well for further improvements to the Kenya and other markets ALP operates in and we hope to contribute through our own organic data and research to further transparency improvements in develop the regional property markets. 

Click here for the complete GRETI 2016 report

Viewpoint - Kenya Ranked Second Best in Logistics Index

Kenya moved up 32 places in a World Bank ranking to become the second-most efficient African country in moving goods across borders. According to the latest Logistics Performance Index (LPI), the country is in position 42, up from 74 in what is perhaps the global lender’s approval of the Government’s efforts to improve the ease of doing business. The country comes second to South Africa in the index that ranks logistics in 160 countries . Kenya’s LPI score of 3.33 puts it ahead of economies like Russia, Brazil and Argentina. The report attributed this positive performance on “strong political will” and implementation of administration reforms in the region. “Relatively rapid improvements can also be achieved regionally if countries have a strong political will and align their efforts in implementing administrative reform. This is the case, for example, for the Northern Corridor that links Burundi, Rwanda, and Uganda with the Port of Mombasa in Kenya, and also serves eastern parts of the Democratic Republic of Congo, South Sudan, and Tanzania,” said the World Bank in the report.

Viewpoint - Logistics Growth in Africa

Logistics is becoming an important growth industry in Africa with potentially lucrative opportunities for logistics providers, despite significant infrastructure challenges.

Industry experts say growth in Africa’s logistics market is being driven by higher trade volumes as local economies diversify and expand, domestic consumer demand skyrockets, global demand for natural resources escalates, and as infrastructure improves, boosting intra-African trade.

Global logistics companies are taking note.

In November, Chicago-based Seko Logistics opened offices in Uganda and Ethiopia, urged on by strong energy, mining and technology industries (Seko’s core markets) in East Africa. The new offices add to Seko’s existing coverage in Libya, Egypt and South Africa. Bob van der Putten, Seko’s managing director of the Europe, Middle East and Africa region, says the company is also opening offices in Morocco, Tunisia, Kenya, Tanzania, Djibouti and Zambia, as part of its aggressive African expansion strategy.

A delegation of Kenyan logistics and information technology firms travelled to the Netherlands last September to develop partnerships with Dutch companies that provide IT solutions for the logistics sector and to learn from logistics companies that use IT systems to enhance the efficiency of their operations. The mission was organized by the Kenya Shippers Council and Teampro Kenya Ltd., the local arm of the Dutch consultancy, Teampro, and partly sponsored by the Dutch government. 

The greatest growth will be seen in Nigeria (more than 70 percent), Kenya (around 60 percent), Morocco, and Uganda. South Africa, the continent’s largest and most developed logistics market at a value of $3 billion, will post a compound annual growth rate of more than 4 percent, a report by research group Analytica predicts.

Food commodities and agri-business will be key drivers as countries move to higher levels of food processing and trade in food products. Facilitating this trade “will require vast improvements in cold-chain services, including both transport and temperature controlled storage facilities,” the report says.

Moreover, “by 2060, there will be 1.1 billion Africans in the middle class, creating a significant rising consumer base and demand for contract logistics services. Indeed, by 2011, Africa already had more households in the middle class than India.” 

Viewpoint - Underdeveloped supply chain ‘massive challenge’ in Africa

Underdeveloped supply chains in Africa differ widely across countries and are a major challenge for retailers looking to move into the continent.

That’s according to Bart van Dijk, partner at AT Kearney and co-author of the African Retail Development Index, a new study designed to help retailers determine where and how to best enter Sub-Saharan Africa’s growing retail market. Rwanda, Nigeria, Namibia, Tanzania, and Gabon occupied the top five positions on the index.  

“There are wide differences in infrastructure and supply chain development across African countries,” said Dijk. “Understanding the opportunities and limitations from country to country is a critical element of the retail expansion decision.”

The report added: “Supply chain remains a massive challenge in Africa. How to develop a supply base in Africa remains an open question.” It explained that a lot of the urban growth in Africa is “informal and uncontrolled”, which can put “overwhelming strains” on deliveries.