What you need to know:
- By prioritising factors such as geographic location, diversification of transport modes, technology adoption, trade facilitation and partnerships, Africa and Middle East can enhance their adaptability in global supply chains, according to the chairman Emeritus and Advisory Council Member Uganda Freight And Forwarders Association, Mr Hussein Kiddedde.
- Prosper Magazine’s Ismail Musa Ladu engaged Mr Kiddedde during the International conference that brought together freight logistics stakeholders from Africa and Middle East in Kampala. Excerpts ...
Why should Africa and the Middle East care about leveraging their logistical advantage?
Freight logistics play a crucial role in facilitating the movement of goods across borders, connecting suppliers and consumers worldwide. In the Africa and Middle East region, the diverse geographical landscape and strategic location make it an ideal hub for international trade. With extensive coastlines, major ports, and well-established transportation networks, the region offers significant opportunities for businesses to expand their reach and optimise their supply chain operations.
Furthermore, the Africa and Middle East region boast of a rich array of natural resources, manufacturing capabilities, and emerging markets. This diversity allows for the development of specialised logistics solutions tailored to different industries and sectors. From oil and gas to agriculture and manufacturing, the region offers a wide range of opportunities for companies to leverage local expertise and resources, contributing to the resilience and adaptability of global supply chains.
Moreover, investing in freight logistics infrastructure in the Africa and Middle East region can enhance its connectivity with the rest of the world. Improving transportation networks, modernising ports, and implementing efficient customs procedures can reduce transit times, lower costs, and increase the region’s competitiveness.
What is this obsession about Africa and Middle East strategic connection all about?
The freight logistics industry in Africa and the Middle East is a vital component of global supply chains, contributing to their resilience, adaptability, and diversity. These regions, with their strategic geographical locations and connectivity to major trade routes such as the Suez Canal (with over 20,000 annual ship traffic) and the Strait of Hormuz (which accounts for 30 per cent of global seaborne traded oil), play a crucial role in the global supply chain.
Africa and the Middle East serve as key transit points, offering efficient connectivity and reduced transit times for goods traveling between Europe, Asia, and the Americas. Additionally, they possess abundant primary commodities, making them more valuable. Regional trade blocs like the East African Community (EAC), SADC and the Gulf Cooperation Council (GCC) further promote intra-regional trade and integration, creating opportunities for businesses to access regional markets and connect with global supply chains. With major logistics hubs such as Dubai, Djibouti, and Durban, these regions enhance their strategic importance by serving as central points for consolidation, distribution, and value-added services. The Gulf Cooperation Council (GCC) region, in particular, benefits from its location at the global crossroads, with the Gulf of Aden and the Red Sea being major routes for 30 per cent of global trade.
Are the two continents doing something about coordinated logistics infrastructure?
Both Africa and the Middle East are investing in the development of logistics infrastructure. This includes the expansion and improvement of ports, airports, road networks, and rail systems. These infrastructure projects aim at strengthening logistical capabilities by increasing connectivity, capacity, and efficiency in the industry. This will enable the handling of larger volumes of goods and adapt to changing market demands. Improved connectivity will also open up new markets and establish global supply chains. In Africa, countries like Kenya, Ethiopia, and Egypt are focused on developing transportation hubs, such as the expansion of the Mombasa port in Kenya and the construction of the Grand Ethiopian Renaissance Dam.
In Egypt, the development of the Cairo metro and national railway networks is improving connectivity within the country and beyond. Similarly, the Middle East, including the United Arab Emirates, Saudi Arabia, and Qatar, have undertaken ambitious infrastructure initiatives, such as the expansion of Jebel Ali port in Dubai and the construction of the new Doha International Airport. Tanzania is positioning the central corridor as a key route option to inland countries through infrastructure enhancements and policy reviews.
Infrastructure development and support services are key considering that the most significant logistics cost concerns transportation (58 percent), inventory carrying (23 percent) and warehousing (11 percent) thus jointly accounting for 92 percent.
However, challenges such as securing funding, establishing regulatory frameworks, and coordinating stakeholders are crucial factors that should be addressed for successful implementation of these infrastructure developments.
Talk of diversifying transport modes keeps coming up. How crucial is this?
Diversification of transport modes is a key factor in building resilient logistics industries in these regions. Logistics providers in these areas utilise various transportation modes such as air, sea, road, and rail to ensure flexibility and adaptability. This approach enhances connectivity, improves efficiency, mitigates risks (such as port congestion, natural disasters, or geopolitical tensions), and provides access to landlocked countries. Additionally, promoting the use of more sustainable modes like rail and inland waterway transport aligns with global sustainability goals and attracts businesses prioritising environmentally friendly supply chain operations. By adjusting routes and transportation modes, logistics providers can avoid bottlenecks or disruptions in the supply chain, ensuring reliable movement of goods and responding to challenges that may arise.
In terms of technology adoption, where are the two continents?
In the freight logistics industry, technology adoption enables real-time tracking and visibility of shipments through GPS tracking systems and IoT devices. This allows businesses to monitor the location, condition, and status of their cargo, improving supply chain security and visibility.
What about on trade facilitation initiatives?
Both regions have been involved in trade facilitation initiatives. For example, the African Continental Free Trade Area (AfCFTA) aims at creating a single market and facilitating trade among African countries. Similarly, the Middle East has implemented various initiatives to streamline customs procedures and reduce trade barriers.
These initiatives enhance the efficiency of cross-border logistics, contributing to the resilience of global supply chains.
And that is why collaboration and partnerships between governments, logistics providers, shippers, support service sectors, and other industry players is important. By working together, these stakeholders can share knowledge, engage in joint problem-solving, improve policy and regulatory environments, foster investment, and develop innovative solutions to enhance supply chain resilience.
Talent development remains a sticky issue. How will this be solved?
The industry’s investment in talent development initiatives is steadily creating a skilled workforce of international standards, thanks to human capital development efforts of organisations like FIATA. This effort is led by freight logistics associations, academia, business management organisations, and corporate companies in the region. Through training programmes, educational partnerships, and continuous professional development opportunities, these initiatives nurture a diverse pool of competent professionals with varied backgrounds and skills.
There is a growing trend and demand among supply chain actors, including financiers and underwriters, to have a freight logistics professional on the management team or as a consultant. The same is notable among shippers, both consignors and consignees in international trade. This highlights the crucial role of freight logistics in ensuring supply chain resilience and adaptability.
Africa, with its population of 1.4 billion and young median age of 18.8 years, presents potential opportunities as a labour and skills source as well as a market for various supply chains. However, realising these opportunities requires integrating sought-after skills, soft skills and internationally accredited certification into the region’s talent development efforts.