Why Freight And Logistics Companies Make Such a Killing In Africa

Why Freight And Logistics Companies Make Such a Killing In Africa

Most sub-Saharan Africa countries including Nigeria do not own their own shipping fleets, putting them at the mercy of foreign shipping companies.

Nigeria is working towards creating an enabling environment for public-private partnerships in transport through new policies, legislation and institutional frameworks that support improved trade, according to a report in the NationalMirror.

The CEO of the Nigerian Shipping Council appealed to the governments and people of sub-Sahara to invest in ship building and vessel ownership to promote international trade.

This will help improve connectivity and lower the cost of African transport, said Hassan Bello, CEO of the Nigerian Shippers Council.

“A new premium is being placed on being able to move goods from A to B rapidly, reliably, and cheaply,” Bello said. “Being able to connect to what has been referred to as the ‘physical Internet’ is fast becoming a key determinant of a country’s competitiveness.”

Here’s an idea of how much poor transportation connectivity coats sub-Saharan African countries compared to developed economies.

Transporting goods costs about 3 percent of the value of imports in developed economies and averages about 10 percent in developing economies, according to the NationalMirror.

But in Africa, transportation is estimated to represent about 35 percent of the cost of importing goods — especially in landlocked countries.

Seemingly perennial poor transport connectivity remains a major obstacle to trade in sub-Saharan Africa and prevents countries from achieving their potential in regional and global trade, Bello said.

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Non-oil exporters lose more than 30 percent of their export product value to poor transportation systems in Africa, especially when moving products from rural areas to seaports, according to the Nigerian Export Promotion Council.

Sub-Saharan African countries are paying for poor connectivity, making them less competitive than their peers in developed economies, Bello said at the Sub-regional Workshop on Transport Cost and Regional Connectivity of African Countries organised in Abuja.

Seaports alone are not enough to connect to the markets. Other transport modes, including road, rail, air, inland waterways and inland ports are also essential, said Hadi Sirika, state transportation minister. True connectivity should be national, regional and international.

Sirika proposed a holistic approach to address transport costs and connectivity — one that takes into consideration shipping costs, competitiveness and survival of national and regional operators, efficiency of seaports, availability of coastal shipping services, protection of shippers’ interest and partnership with service providers.

“The government of President Muhammadu Buhari is interested in addressing the lingering challenges in trade and transport sectors of the nation’s economy,” he said. That will include greater emphasis on rail and inland waterways transportation.