Logistics businesses in Africa suffer unique pain points due to the unique circumstances surrounding the continent and its economy.
It is one of the foundational pillars of the African economy. It serves as the bridge that connects products to consumers all around the continent.
With logistics, products manufactured in China can make their way to a village in Nigeria, and products manufactured in Cote d’Ivoire can make their way to a city in Senegal.
As the African economy grows, the logistics industry will continue experiencing exponential growth. It is already on its way to reaching the $500 Billion mark.
However, logistics businesses suffer through pain points that could potentially derail the development of the industry.
They are responsible for the shutdown of many businesses because they did not understand what they were getting into. However, we believe understanding helps prepare your business for success.
So, what are these pain points, and how can businesses tackle them?
1. High Cost of Operations
Whether it is the fuel cost needed to power the vehicles or the maintenance of these vehicles, there is no shortage of costs logistics businesses have to endure.
Although this is typical globally, the fuel cost across the continent seems to be skyrocketing recently, and businesses are finding it difficult to transfer this cost to their clients.
But that is not all they have to endure. Infrastructure is an issue on the continent. Necessary transportation facilities like roads and seaports are less than ideal.
Did you know that only about 48% of roads on the continent are paved? This slows down transportation, but worse than that, it directly contributes to vehicle damage, ensuring businesses spend more than the global average on vehicle repairs.
This particular issue has forced businesses to go the corrective maintenance path.
Compared to preventive maintenance, it only worsens things, but temporarily, it helps these businesses reduce costs. The thinking is because of the roads, there will always be something to work on.
The Seaports are riddled with delays and slow processes directly resulting from government regulations and policies.
To get over these issues, there must be direct government interference, especially because the success of these businesses will directly contribute to the exchange of goods and services, which is beneficial to the world economy.
2. Security Challenges
This may be the most dire of the logistics pain points these businesses face in Africa. Across the continent, many countries are exposed to terrorism, violent extremism, and, in many other cases, political instability.
In Central and West Africa alone, there have been about ten military coups. And the affected countries have been thrown into chaos, jeopardizing the operations of many logistics businesses.
In other regions across the continent, businesses have to worry about corruption and little to enforcement of law and order, leading to theft of transported goods.
To mitigate these issues, many businesses are forced to limit their movements and, in some cases, limit the location where they deliver goods and services.
These businesses also have to spend more money to hire private security to ensure the safety of these goods. But how sustainable is it?
Considering the recent slowdown of the economy, consumers are not willing to pay for these extra measures, ultimately impacting the profitability of the businesses.
This is another issue governments have to step up on. When the security of a state is not certain, anything can go wrong, and businesses suffer. You can expect the economy to follow suit when that is the case.
3. Late Orders From Customers
Logistics businesses often have to deal with late orders from customers who expect them to jump through hoops just to get the orders to them.
This approach doesn’t help anyone. Not the business and definitely not the customer.
From our research, businesses are having difficulty meeting customer’s demands because they do not place the order on time or with ample notice.
For instance, a customer needs a set of raw materials shipped to their facility to help with production. The issue is that they often request these products too late, impacting delivery and their logistics business rating.
On their part, the logistics business can help curtail these by working closely with their customers to establish better reorder points and communicate them immediately.
When communication is managed better, it can do a lot to curb order fulfilment delays and ensure all parties get what they want from the transaction.
4. Manual and Slow Order Processing
Of the logistics pain points these businesses face in Africa, this is the one that is self-inflicted.
So many businesses have yet to integrate technology into their operations. In the long run, this has become a major pain point for many logistics businesses in Africa.
One of the ways this lack of inclination to technology impacts these businesses is in their order processing.
When orders are processed slowly, the logistics operation that should be in place to kickstart delivery doesn’t begin on time. In part, this could be a major contributor to issues raised in pain point number three.
Traditional order processing entails every order going up the chain of command while stopping for several approvals. This is prevalent in small logistics businesses.
The way to combat these is simply through the application of technology. Logistics businesses can automate, integrate, and optimize processing with tech solutions.
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.
