Africa has much potential, especially in the logistics industry, but its great soft underbelly is the infrastructural challenges plaguing the continent.
That’s quite an impact, but should businesses, especially those in the logistics industry, give up and go home?
I think you will agree that the answer is no. So, what can these businesses do to overcome their situation?
I will explore some of that in this article, alongside the common infrastructural challenges logistic businesses face on the continent and some of the benefits of great infrastructure.
Infrastructural Challenges Logistics Businesses in Africa face?
There are three major infrastructural challenges businesses and individuals encounter on the continent.
Road Network
Road is the major mode of transportation everywhere in the world. It accounts for 90% of all transportation.
The same statistic is mirrored in Africa, with one major difference. Africa is riddled with poor roads.
About 40% of the roads in the continent are paved. Compare that to the United States, which has about 94%.
Poor roads lead to the breakdown of vehicles, slower deliveries, and, in many cases, accidents.
Because road networks play a significant role in the African supply chain, these delays tend to find their way into different supply chain processes.
Power Supply
Benjamin Franklin discovered electricity in 1752. It has since gone on to become the foundation of modern supply chains.
However, its supply remains a problem in many African countries and cities. More than 30 countries experience power shortages, and this has gone on to impact many businesses.
In trying to source alternative power suppliers, these businesses spend too much, which impacts their profitability.
Electric vehicles seem far-fetched for many logistics businesses in these countries, throwing sustainable visions in jeopardy.
Security
Many African countries have questionable security systems, whether through theft, vandalism, or the occasional political instability.
Security issues spread their tentacles across the continent, leading to rising costs.
Did you know that logistical issues of which security is a chief proponent can hike the price of goods in Africa by almost 75%?
The security system for much of the continent is flawed and, as such, negatively impacts businesses’ productivity and profitability.
Here is Why Proper Infrastructure Can Benefit Logistics Businesses Across Africa
Investing in top-notch infrastructure in Africa can work wonders for logistics businesses. Here’s how:
Uninterrupted Flow of Goods:
Good infrastructure guarantees efficient ports, dependable railroads, and smooth roadways.
Potholes and crowded ports are no longer a cause of delays. Goods flow smoothly, cutting down on transportation time and spoilage risk.
Reduced expenses:
Good infrastructure enables logistics companies to drastically reduce operational expenses by investing in excellent infrastructure.
Significant savings can exist due to fewer breakdowns, shorter journeys, and increased fuel efficiency.
Additionally, fewer maintenance costs translate into more money in the bank.
Shorter Lead Times:
Faster, more dependable infrastructure results in shorter lead times.
Orders can be filled more quickly, and prompt deliveries will impress clients.
This helps businesses enhance their reputation and build consumer loyalty.
4 Strategies Logistics Businesses Can Navigate Infrastructural Challenges Across Africa
There are four ways logistics businesses can overcome these challenges we talked about earlier.
1. Embrace Tech Solutions
Embracing tech solutions is probably the best way to go. Despite the criticisms, African businesses have done well despite minimal tech solutions implementation.
Now, imagine what these businesses can do by simply embracing tech solutions.
Tech solutions like route optimization software, GPS tracking, AI, and ERP systems can help logistics businesses track, monitor, and analyze routes, maintenance, and vehicle utility.
By embracing tech solutions, businesses can streamline operations and reduce order processing errors, therefore improving customer satisfaction.
Now, there is the issue of capital, especially for small businesses, which brings into question the financing regulations and accessibility to funds for these small businesses.
However, businesses that can get the capital should seriously consider integrating tech solutions into their logistics process because it has a great ROI.
A simple GPS tracker can reduce the loss of vehicles by up to 80%. Which, by all accounts, is a great win.
2. Preventive Vehicle Maintenance
Vehicles are built to last a long time, but not without conditions. Whether it is using it properly or changing the oil periodically, small operational habits can ensure your vehicles last.
However, the poor roads across Africa are bad for most vehicles, from tyres to engine shocks.
Bad roads put unnecessary pressure on the vehicle, subjecting its part to much faster wear and tear. These need to be replaced for the vehicle to function optimally.
This is where maintenance comes into play.
There are two major types of vehicle maintenance. The preventive and the reactive.
The reactive is mostly a response to a fault that has broken down the vehicle, but this is counterproductive because it will cause delays and disruptions in the logistics and supply chain.
However, with preventive maintenance, it works differently. You want to get ahead of the problem before it escalates into a major issue that breaks down the vehicle.
Implementing preventive maintenance makes the repair cost cheaper, and the supply chain doesn’t suffer downtimes due to unnecessary breakdowns.
3. Collaboration
Collaboration is a great strategy for cost reduction. It also helps build resilience and agility for logistics businesses in Africa in the face of infrastructural challenges.
Collaborating with 3PL businesses can help reduce the cost of operations for supply chains.
These logistics businesses cater to various customers, allowing them to consolidate and reduce costs.
Crowdsourced logistics is also on the rise across Africa. This allows logistics businesses to partner with locals who are each responsible for their own vehicles.
It also streamlines the operation of these businesses, allowing them to focus solely on order processing while these local partners focus on order delivery.
By partnering with other entities or platforms, logistics businesses can reduce the cost of their operation. They can also reduce operational baggage, leading to an increase in efficiency.
4. Intermodal Transportation
It may shock you, but the road is not the only mode of transportation in Africa.
The seas and rails are equally available. Especially when moving large quantities of goods.
For large quantities of goods, water and rail are great modes of transportation; however, they can be quite slow, which may necessitate proper planning to be able to take advantage of them.
Logistics businesses can use rail and water alongside road for full impact but it reduces the cost of road transportation.
As much as businesses need to explore these options, it is also on governments across the continent to ensure the availability and proper maintenance of these options.
By deregulating these industries, they will thrive, and businesses can enjoy lower costs.
5. Invest in Cheaper Energy
As energy becomes more expensive on the continent, it is important for logistics businesses to find cheaper alternatives.
Solar has emerged as a great option, but geothermal and hydropower are also on the rise.
Although investing in electric-powered vehicles may be too expensive with unverifiable ROI on the continent, these businesses can use alternative energy sources to power their facilities.
Examples are distribution centres.
Conclusion
Although it is important not to undervalue the potential advantages of excellent infrastructures, the Logistics industry in Africa must be robust and creative in the face of significant infrastructural challenges.
These issues, which include inadequate transportation systems, unreliable power supplies, and security concerns, have persisted for far too long, hindering economic development and productivity across the continent.
Logistics organizations can use the strategies outlined in these articles to traverse these infrastructure difficulties successfully.
Obinabo Tochukwu Tabansi is a supply chain mastro and writer with a decade of experience working in different facets of the supply chain. Today he is living his passion for writing on all things supply chain. His blog, Supply Chain Nuggets, is Africa’s fastest-rising supply chain blog, helping professionals, business owners, and curious minds navigate the supply chain complexities on the continent.
