Demand for logistics services in Africa - PwC study


Published Date : Nov 06, 2013

According to an in-depth research report by PwC, South Africa remains at the apex in terms of transport and logistics, whereas, countries in both East and West of Africa are striding in improving their overall infrastructure in order to gain greater shares of the market. 

 

Several companies are keenly looking towards Kenya in East Africa as their most preferred entry point, while countries like Ghana and Nigeria are of popular interests in the west. 

 

Klaus-Dieter Ruske, the global industry leader in transport and logistics at PwC says that, there are not many transport and logistics companies that focus on Africa. However, Africa is home to about 1-billion people who are inclined to becoming consumers, and thus this aspect is set to change as various growth prospects on the continent improve and progress for the better. It will also require different goods and services to be delivered to them. Hence, one can see the immense potential for transport and logistics companies in Africa.  

 

Today, massive international logistics companies tend to set up their agencies in the region as opposed to subsidiaries. However, a few South African companies like Grindrod and Imperial have expanded its horizon and entered into the continent to capitalize on this particular demand. This aspect will specifically accelerate the rough road and virtually nonexistent railway networks especially in West Africa where Nigeria is investing an amount of $2bn to reconstruct about 2,000 km of railway lines. 

 

Africa also has several standing plans to build and expand the five major ports in the east at Musoma in Tanzania and Lamu in Kenya, and in the west at Barra do Dande and Lobito in Angola, and Lekki in Nigeria. 

 

The roads in Africa have remained as the key to the transport of freight in Africa, and very little investment has been made to maintain this overall network, adds Andrew Shaw, PwC’s associate director for infrastructure and capital projects in South Africa. 

 

According to PwC’s investigation report, there has been an adequate absence of railway network in Africa, rather very little co-ordinated railway investment plans. Hence, today, the road maintenance is taken up as an alarming challenge as more and more freight moves by heavy truck and transportation in comparison to the railway network.   

 

It is seen that Africa’s transcontinental highway network plan looks much better on paper than on the ground. This business plan has many investments in the network too. According to Mr Shaw, one such route is the Beira-Lobito corridor that connects Angola and Mozambique. At present, this stretch of road is not a viable freight route as some sections are still unfinished and others are often subject to flooding. 

 

In addition, due to the security concerns, transporting air freight and air infrastructure remains difficult and underdeveloped. Nonetheless, the two new international airports that are planned for a set up in Angola’s capital, Luanda, and in Abuja, Nigeria, are likely to address this issue.