Africa Logistics by Construction and Civil Engineering

Africa Logistics

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September-October 2018

Technology in Logistics Aso Inside:

Pharmaceutical cold chain logistics is a $13.4-billion global industry

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EDITOR’S NOTE

Technology and Logistics The functional boundaries between different systems are breaking down as logistics operations evolve into leaner, more agile services. Traditional on-premise/homegrown applications supporting order processing, transportation management and warehouse management are examples of the dedicated solutions that struggle to maintain data and process flows across organisations as they evolve. A new generation of application services will emerge that perform the same functions of existing applications, but as a continuous service. Twenty years ago, the Logistics division of UPS in Europe developed a platform combining order management, inventory management and cross docking along with transportation management. This single system was ‘bonded’ by the Dutch Customs authority under an innovative licensing arrangement that had recently been introduced by the EU, enabling any orders or inventory in the system to be effectively ‘in bond’ irrespective of location, including while in transit. This provided tremendous flexibility for UPS clients who were using the system to support their high velocity supply chains. This was very innovative at the time, but illustrated the value of flexible systems that could rapidly adapt to new processes or functions in line with business demands. As application development technologies have evolved into toolsets that can combine ‘objects’ or blocks of functionality very quickly to assemble new solutions, linking to other systems via standard interfaces or ‘services’ is quite common. Access to the required computing and storage infrastructure available as ‘cloud services’ is both inexpensive and technically straightforward. They are also accessible across almost any computing device from desktop PCs, tablets or mobile phones thanks to the ubiquity of the Internet. he question is, can the organisations wishing to exploit these platforms do so without fundamentally challenging the entrenched (and often inflex-

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ible) process flows preventing them from competing in the market effectively? When Apple introduced the iPhone in 2007, it wasn’t the first smartphone, but it was the most successful implementation of a mobile device that could really exploit the Internet for processing information. Now, again thanks to the Internet, mobile devices will be the primary platform for providing, consuming and manipulating data. Across supply chains this is very powerful, as many of the participants require access to data at almost any point in the chain, at any time. Mobile devices generate data constantly; data related to location, status, and identity are all available and capable of being shared on demand. New applications, or apps, are being developed that can adapt to whatever form factor the recipient’s device requires. The traditional internal data centres operated by large enterprises have had to expose their databases to an unprecedented degree to support the demand for data from managers and trading partners across the supply chain. If they are unwilling or unable to meet this demand, they are circumvented, with users migrating to commercially available alternatives and paying the monthly usage charges on their credit cards. Visibility into and across supply chains is the key to efficient and effective supply chain management. Many of the efforts to provide this transparency in the past have floundered due to either organizational or technical challenges in accessing and sharing the data. As consumer technology has encouraged the development of userfriendly and open interfaces, it is now possible to share information in a similar fashion to that exhibited by social media platforms. The combination of these two developments has addressed many of the technical challenges preventing supply chain visibility in the past. It requires both scale and the interconnectivity of a large population of users across many different and variable organisations. As this trend is exploited, it will become more common to view the entire ‘chain of custody’ as orders move through the supply chain.

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INSIDE

inside ... COVER STORY

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6. CEVA Logistics partners with IBM, Maersk on blockchain technology 6. First Blochchain in Kenya 6. Low demand for airfreigh services 9. Blue economy conference in Kenya 10. Technology in Logistics 10. Work on largest hydropower plant in Tanzania begins July 11. Construction of Sh17bn Western Bypass to begin 12. Rwanda now commits to construct own SGR 14. Air Tanzania increases flights 14. DP World Project 15. Digital revolution challenges and

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The Africa Logistics /September/October 2018 Issue

INSIDE

FEATURE

KENYA SETTING ITS PACE IN THE LOGISTICS RACE

rade explains why the nation has been experiencing the fastest rise in foreign direct investment in the continent. Speaking specifically about the logistics sector, a number of international companies acquiring local players in Kenya is a clear indication of the lucrative nature of the business here, particularly with perishables. That apart, the Kenyan government has initiated a wide number of infrastructural projects to set the

Ways in which mobile technology can boost logistics

Whether you are talking about monitoring movement of goods from the warehouse or monitoring products in transit or enhancing customer experience mobile technologies play a major role in these fronts

32 Water Logistics

Warehousing

The City of Cape Town nearly reached Day Zero in April but was pushed to at least 2019 thanks to the rain and strict use of water.

Bollore Logistics inks deal with Mobius Motors Kenya

DHL Global Forwarding and Ethiopian Airlines have entered into a joint venture a move that is aimed at enhancing Africa logistics.

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CEVA Logistics partners with IBM, Maersk on blockchain technology

CEVA Logistics has partnered with IBM and Maersk on blockchain technology as part of its longterm digitalisation initiative. TradeLens – the joint solution – is based on blockchain technology and increases levels of transparency and visibility along the customers’ supply chain. CEVA constantly reviews, assesses and audits concepts in the market such

as blockchain to determine how they might be applied in the company’s network. Identifying applicable areas in supply chain management in order to increase value for its customers, has always been a key CEVA objective. The new partnership with IBM and Maersk is the first result of this work. CEVA becomes one of more than 90 organisations worldwide involved in the

Demand for Airfreight services depict sluggish growth-IATA Demand for airfreight services barely rose year on year in July, a new report by International Air Transport Association (IATA) has shown. The report shows that demand for airfreight services as measured in freight tonne kilometers (FTKs) flown, rose by just 2.1% year on year in July. Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 3.8% year-on-year in July 2018. This was the fourth time in five months that capacity growth outstripped demand growth. “July demand for air cargo grew at its slowest pace since 2016. We still expect 4% growth over the course of the year, however the downside risk has increased,,” said Alexandre de Juniac, IATA’s

The Africa Logistics /September /October 2018 Issue

TradeLens global solution which also includes more than 20 port and terminal operators, customs authorities and 3PLs. TradeLens enables multiple trading partners to collaborate by establishing a single shared-view of a transaction without compromising details, privacy or confidentiality. It aims to establish strong, connected networks which work to a global standard for all Director General and CEO. IATA cautions that there are indications that slower growth will continue such as the inventory re-stocking cycle, which requires quick delivery to meet customer needs, ended at the beginning of the year. There is also broadbased weakening in manufacturing firms’ export order books. Specifically, export order books in Europe started weakening in February and have fallen in China and Japan in recent months. And Longer supplier delivery times are being reported by manufacturers in Asia and Europe, the top two global trading areas by volume. This typically means that they have less need for the speed afforded by air freight. According to Alexandre de Juniac, IATA’s director

parties. “This strategic partnership with IBM and Maersk provides CEVA’s answer to the untapped potential of blockchain applications in the logistics industry,” says Xavier Urbain, CEO of CEVA Logistics. “We see high potential in TradeLens because of the real-time access it provides to all partners in the supply chain. It is a big step forward toward establishing a market standard for blockchain solutions. With our integrated network in Freight Management and Contract Logistics, combined with our global footprint and state-of-the-art IT capabilities, we will contribute significantly to both our own digitalization strategy going forward and those of the industry,” adds Urbain. Other initiatives are in the pipeline and are currently being evaluated and expected to start delivering solutions in the coming months. In addition to this, the commercial cooperation between CEVA and its anchor shareholder CMA CGM will impact the digitalization efforts of both companies with talks already under way to discuss potential synergies. general, the tariff war and volatile trade talks are rippling the global economy .Trade wars only produce losers, he said. Geographically, all regions reported a growth in demand except for Africa and Latin America. The capacity of airfreight demand has grown and increased by 3.9% in the Asia-pacific area. The Middle Eastern carriers had the biggest yearon-year improvement in air cargo volumes at 5.4%, the capacity increased by 6.3%.latin America experienced a slowdown in demand and the capacity reduced by7.8%. IATA noted that the African countries had the hardest time since the freight demand went down by 8.3% compared to July. The capacity fell by 0.7% year on year.

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Kenya mulls first blockchain cryptocurrency to boost logistics industry

Kenya is ready to launch its first blockchain cryptocurrency in what is set to be a game changer for the logistics industry. The developers believe that the technology will save the logistic business in Africa from the problems in the import and export sector such as price hacks. TMX Blockchain Logistics Chief Executive Officer Anthony Njoroge says the company uses blockchain technology to enhance cargo logistics business to have more open, transparent and democratic process using a decentralised system where users are able to communicate to each other through an open platform. “We get a lot of complains from the import and export industry like loss of property during the process of importation, unaccountability, corruption and illicit trade,” this is what we intend to solve with this technology,” he said. This is achieved by having a decentralized system, where all the users are able to talk to each other on an open platform.” Under blockchain cryptocurrency platform, consumers are able to order their goods online, track down their goods and go through the required documentation individually even before the

trading process begins. The consumer also gets to know the amount of money required throughout the different processes the cargo goes through and the estimated amount of time. Once the cargo successfully goes through a process the system ticks in the system as complete and starts the next process. TMX Blockchain Logistics is a decentralized protocol that uses smart contracts based on Blockchain technologies and solves the problems of both local and international logistics in a much more scaled way. Using a convenient interface, an importer/ customer can find the best online stores from the thousands of options and then choose a suitable freight forwarder to coordinate the cargo shipping. TMX Blockchain Logistics objective is to reduce costs and increase shipping efficiency by integrating information about shipments onto a secure platform accessible to shippers, carriers, freight forwarders and others in the supply chain. To solve the problems of both local and international logistics, the cryptocurrency was initiated in 2017 as a decentralized protocol that uses contracts based on blockchain technologies.

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Kenya to host sustainable blue economy conference Conference will provide a forum to advance the global conversation on the sustainable development of the Blue Economy

From November 26-28, 2018 Kenyan capital Nairobi will play host of High-Level Conference on Sustainable Blue Economy Conference. Speaking during an editor’s breakfast meeting, the Principal Secretary Macharia Kamau, said the conference follows the announcement by President Uhuru Kenyatta, during the Third Session of the United Nations Environment Assembly held in Nairobi in December 2017. The Ministerial Conference will provide a forum to advance the global conversation on the sustainable development of the Blue Economy. “The Blue Economy is a new frontier for development as we move to tap into the productive capacity of our water resources and empower communities in a sustainable way as we build our economy,” said PS Macharia. He noted that historically, great civilisations and empires have been built around and through resources from lakes, rivers, seas and oceans. The theme of the conference is Blue Economy and the 2030 agenda for Sustainable Development, will focus on new technologies and innovation for oceans, seas, lakes and rivers as well as the challenges, potential opportunities, priorities and partnerships. “The conference presents immense opportunities for the growth of our economy especially sectors such as fisheries, tourism, maritime transport, off-shore mining among others in a way that the land

The Africa Logistics /September /October 2018 Issue

economy has failed to do,” said PS Macharia. The conference is anchored on the two conceptual pillars of: Sustainability, Climate Change and Controlling Pollution, and Production, Accelerated Economic Growth, Jobs and Poverty Alleviation. The sub-themes include Transportation and Global Connectivity; Employment, Job Creation and Poverty Eradication; Cities, Tourism Entertainment and Blue Economy; Energy, Mineral Resources and Sustainable Development; Ending Hunger, Securing food supplies, and Promoting good health and dietary practices; management and sustaining of marine life, conservation and sustainable economic activity; climate action, agriculture and pollution free oceans; maritime security and enforcement; people communities and societies: the inclusive blue economy. By hosting the conference Kenya affirms its appreciation of the importance of conserving and sustainably using our oceans, seas, lakes, rivers and marine resources through enabling cooperation for shared prosperity. The PS called on the media as a stakeholder to collaborate with the Ministry in publicising, promoting and positively profiling the conference.

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Bollore Logistics inks deal with Mobius Motors Kenya

DHL Global Forwarding and Ethiopian Airlines have entered into a joint venture a move that is aimed at enhancing Africa logistics. The company, DHL-Ethiopian Airlines Logistics Services Limited will be based in Ethiopia and do business in the entire continent of Africa, enhancing Ethiopia’s logistics infrastructure and connections. Ethiopian Airlines, which assumes a majority stake in this joint venture, will provide regulatory and operational support as DHL Global Forwarding establishes air, ocean, and road freight connections between Ethiopia’s main trade hubs and the rest of the world. Pramod Bagalwadi, a DHL veteran with over two decades of experience in management roles within the logistics industry, has been appointed to lead the new organization. This will be an additional portfolio for Pramod, who currently leads the Industrial Projects Team for DHL in Sub-Saharan Africa and a strategic business partner for the company in the region. Logistics is key to support Africa’s fast economic growth and industrialization drive. Ethiopian has, therefore, partnered with DHL who has a proven expertise and experience in the logistics sector, with a view to avail the right logistics solutions in terms of cost, time and quality. Tewolde GebreMariam, CEO, Ethiopian Airlines Group “With its GDP growth, Africa is stepping into the spotlight as production hub. Recent moves to open up the economy will continue to boost Ethiopia’s position as the fastest-growing economy in Africa, and under Pramod’s leadership, the company will be able to provide a scalable and durable logistics infrastruc-

ture to safely handle the sensitive needs of its core industries”, said Amadou Diallo, CEO, DHL Global Forwarding Middle East and Africa, “Logistics is key to support Africa’s fast economic growth and industrialization drive. Ethiopian has, therefore, partnered with DHL who has a proven expertise and experience in the logistics sector, with a view to avail the right logistics solutions in terms of cost, time and quality. We have had a longstanding and mutually rewarding partnership with DHL, and with this JV we aim to make the country a logistics hub for Africa,” said Tewolde GebreMariam, CEO, Ethiopian Airlines Group. The joint venture is another step in an extended partnership between DHL Global Forwarding and Ethiopian Airlines. Since 2010, DHL Global Forwarding has been supporting the maintenance, repair, and overhaul (MRO) operations of Ethiopian Airlines’ commercial segment, extending various solutions on end-to-end Logistics Services for aircraft parts, engines and mechanical modules to textile, utensils, food and beverages – via air and ocean freight between Europe and Asia. The joint venture will provide muchneeded freight capacity and boost Africa logistics, where soaring economic growth has rapidly driven up demand for international forwarding and handling services. www.theafricalogistics.com

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Technology in Logistics

Customer expectations are changing rapidly, and improved logistics - via technology - can help companies keep up

By Nick Ismail

The logistics industry is a competitive landscape. With a rising number of businesses and consumers demanding their deliveries faster with more flexibility; often at a low or no extra cost! There are several key challenges facing logistics today. Including a lack of transparency, high order processing costs and slow/incorrect orders. So, as a result of rising customer expectation, more and more logistics companies are turning to tech. Because by taking advantage of digitisation, businesses will boost productivity and improve the customer experience at the same time. Increasing process transparency Process digitisation An essential part of maintaining high productivity is understanding the business process. And digitisation gives logistics companies this transparency. With real-time information at every single step of their process. All the way from the order creation to product delivery. Increased transparency also helps with the customer service side too. Businesses are able to identify urgent orders as soon as they arrive. Responding to order status enquiries fast and with confidence. So, no more damaged customer relationships because the company has failed to meet agreements. Businesses can use this information internally, empowering their customer relationship team. Or they can choose real-time data to

The Africa Logistics /September /October 2018 Issue

show to their customers too. Giving customers peace-ofmind and better visibility of the transportation process. So, digitisation improves the customer experience (CX) and empowers customer service teams. Increasing customer satisfaction and helping businesses to create long-lasting relationships. Embracing the IoT in transportation The Internet of Things (IoT) is a major driver of digital transformation. Particularly in the logistics industry. For example, sensors inside smart mailboxes can detect if they’re empty or full. Delivery drivers then know in real-time which mailboxes to focus on. So, the IoT supports logistics business’s transportation process. And lets them optimise their drivers’ schedules. Decreasing delivery times and increasing their efficiency. But these sensors can also improve the customer experience. Because they’re able to automatically trigger push notifications to customers’ phones. This lets them know, in real-time, when their parcel has been delivered. And to further this, there are smart mailboxes that can even keep track of their conditions. Knowing the temperature and moisture levels of the package. This might seem like a competitive advantage right now. But tomorrow’s customer could expect this level of tracking on every one of their deliveries. So, it’s clear to see why 40% of leaders in the industry say the improved use of tech is the main focus for their growtwh. And a key competitive edge in the logistics marketplace. Optimising order processing cost and time Order process automation for efficiency

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The Internet of Things (IoT) is a major driver of digital transformation. Particularly in the logistics industry. For example, sensors inside smart mailboxes can detect if theyâ&#x20AC;&#x2122;re empty or full. Delivery drivers then know in real-time which mailboxes to focus on.

A key challenge faced by the industry is slow or incorrect orders. Slow order processing means shipping delays and unhappy customers. But it also could mean late dispatch penalties too. And order errors will often mean more expenses for re-shipping and restocking. Logistics businesses are then forced to waste valuable time and resources correcting these errors. Both slow orders and errors end up increasing order processing costs. So, fast and accurate order processing is the key to the greatest efficiency. By automating order processing, businesses can reduce their costs by 55%. And increase the accuracy of their orders by a staggering 99.6%! Order process automation eliminates wasted time. It lets companies optimise their workforce and resources. Freeing employees up to focus on improving business processes. Instead of being stuck fixing inefficiencies. Emerging tech Another big cost and strain on businessâ&#x20AC;&#x2122;s time resources in is the task of warehouse picking, which usually accounts for between 55% and 65% of total operational costs. Many companies are turning to emerging tech to reduce these costs. Augmented Reality (AR) is a game-changer for warehouse operations. With many companies using AR to deliver on-screen instructions, graphics and real-time info. This ensures every employee has the essential information they need at all times. All while reducing overall operational costs. For example, Samsung has introduced the technology to their warehouse operations. And

as a result, saw a 22% increase in productivity and a 10% reduction in errors. AR speeds up order processing and reduces the frequency of order errors. This has a huge impact on customer service, helping logistics businesses to build a loyal customer base. And a reputation for excellence within their industry. The logistics industries are undergoing rapid change. To stay at the front of the pack, businesses must be ready to use game-changing technology to improve their processes. Companies in the logistics sector need to take advantage of digitisation, order processing automation and emerging tech. But more importantly, by embracing this tech, theyâ&#x20AC;&#x2122;ll be freeing up resources to focus on process innovation, which helps them not only match expectations but exceed them. Putting them at the front of the pack and at the cutting edge of the logistics industry.

By automating order processing, businesses can reduce their costs by 55%. And increase the accuracy of their orders by a staggering 99.6%! Order process automation eliminates wasted time.

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Digital revolution challenges and opportunities for African cities The rapid expansion of African cities over the past decades has meant an increasing demand for infrastructure, service delivery and jobs. At the same time, African policy makers, urban planners and researchers are clamouring to find innovative solutions to meet these demands. The rapid expansion of African cities over the past decades has meant an increasing demand for infrastructure, service delivery and jobs. At the same time, African policy makers, urban planners and researchers are clamouring to find innovative solutions to meet these demands. The onset of the Fourth Industrial Revolution, which will see a fusion of technologies that blur the lines between the physical, digital and biological spheres, will compound these challenges. Experts need to plan adequately for the disruptions. According to the Emerging Markets Forum, if trends continue, four of the world’s megacities will be in Africa by 2050: Cairo, Lagos, Kinshasa and the Gauteng city region. Alarmingly, 70% of Africa’s urban growth will be in secondary cities with inadequate sanitation, transport and governance infrastructure, according to the UN. By 2030, 15 cities in Africa will have populations of more than 5-million, most of whom will live in informal settlements. In SA, the National Development Plan estimates that the urban population will grow 10% every 20 years. Within a few decades, the urban context will become the primary context for humanity — not only in Africa, but globally. At the same time, Africa’s urbanisation has not been met with the economic gains experienced elsewhere in the world as inequalities have been exacerbated by issues such as infrastructure shortages; colonial urban planning premised on cities as hubs for extraction; neoliberal economic policy as a result of structural transformation policies of the 1990s and 2000s; a lack of decentralised political power at the local level; and, significantly, inadequate planning for the future. Policy makers and urban planners have tried to retroactively tackle Africa’s spatial legacies by, for example, attempting to create better infrastructure linkages within and between cities to facilitate the movement of goods and people, and to improve internal trade. Johannesburg’s Corridors of Freedom project is one such initiative. They have also tried to improve telecommunications networks to allow for better linkages between cities and their external environments — seen in Nigeria and Kenya’s successful information and communications technology sectors — and improve housing and sanitation networks, evidenced by Morocco’s successful slum reduction policies. But merely tackling today’s infrastructure needs may not be enough to gear Africa’s cities for the future. According to the World Economic Forum, the Fourth

Industrial Revolution will bring many opportunities for Africa’s cities, while simultaneously increasing demand for infrastructure and skills. It will change how we view manufacturing as 3D printing and robotics will bring greater efficiency to supply chains, leading to cheap, quality consumer goods. And yet these technologies may lead to disruptions in the global labour force as both skilled and unskilled workers will be replaced by machines. Innovations in data collection, surveillance and monitoring technologies could lead to improved governance and safer cities, but they could also be used to erode democracy by allowing governments to crack down on dissenters and stem the free flow of information. Innovations in the digital economy and e-commerce could lead to greater inclusion of informal sectors by creating market access for small and medium enterprises and entrepreneurs, but they could also deepen existing inequalities with the crowding out of smaller players by large multinationals such as Amazon and Alibaba. The nexus between the digital economy and development is critical for Africa’s cities. African policy makers, urban planners and the private sector must ensure that the prerequisite infrastructure and skills are in place to gear Africa’s cities for the disruption of the Fourth Industrial Revolution — or face the continent’s cities and their inhabitants being left behind as the “digital divide” widens. Africa’s cities need sustainable skills, solutions and infrastructure to leapfrog into the mid-21st century. Skills development, especially for youth and women, must be prioritised. Education is also key and governments need to make an active effort to facilitate educational exchanges between cities so experts can share best practices in meeting digital challenges. It is vital that African cities find solutions tailored to their unique socioeconomic and spatial contexts by, for example, combining solutions from the global North with those from emerging actors such as China, Brazil, India and SA. These countries have cut their teeth in emerging economies and recognise the limitations of western models of urban development. Moreover, they have experience in crafting low-cost solutions to urban challenges due to limited financial resources among citizens and public authorities. SA’s links with the Group of 20 and Brics members Brazil, Russia, India and China make it well suited to leverage these partnerships. It is also important that issues relating to the Fourth Industrial Revolution are taken up in regional forums such as the Southern African Development Community. The recent action plan for the body’s industrialisation strategy recognises that “centres of specialisation” need to be created to provide education, infrastructure and institutions required to build knowledge economies in member countries. It is essential that these centres are set up to cultivate skills related to the Fourth Industrial Revolution. Exactly what the Fourth Industrial Revolution may hold for Africa’s cities is uncertain. Research and data is needed to identify the solutions to these challenges. But it is certain that Africa’s cities will be at the forefront of the revolution’s impact. How they prepare may determine whether the continent’s cities will be sources of instability or engines of prosperity.

• Du Plessis is a researcher in the economic diplomacy programme at the South African Institute of International Affairs. www.theafricalogistics.com

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DP World plans huge logistics hub in Mali

Global port operator DP World has signed a 20-year concession with Mali to build and operate a 1000-hectare modern logistics hub outside of Bamako,CEO Sultan Ahmed Bin Sulayem has said. The multimodal logistics platform, Mali Logistics Hub (MLH), will have inland container depots (ICD) and Container Freight Stations (CFS) that will facilitate the import and export of goods. The Mali Logistics Hub will be located on the main road corridor from Dakar, Senegal to Bamako and close to the Dakar – Bamako rail line and will be capable of handling 300,000 TEU (twentyfoot equivalent unit), 4 million tons of bulk and general cargo. The first phase of the project, with an estimated initial investment of $50 million, will include an inland container depot and container freight station facility that will support the growth of the Malian economy by streamlining the import and export of goods. Construction is expected to start in 2019 and is to take approximately 18 months to complete. DP World will also provide the Republic of Mali with three locomotive trains to boost cargo & passenger traffic along the Bamako-Dakar rail system. Furthermore, the Mali logistics hub will significantly reduce processing times for products entering the Malian market as part of efforts to reduce obstacles to trade and economic development. DP World will also implement its online paperless facilitation platform to accelerate the movement of goods as part of the agreement. The concession agreement was signed in Dubai on Monday by Suhail Al Banna, Chief executive Officer and Managing Director, DP World Middle East and Africa and Moulaye Ahmed Boubacar, Minister of Equipment and Transport, the Republic of Mali, in the attendance of Malian and DP World officials. 14

The Africa Logistics /September /October 2018 Issue

DP World Chairman and CEO Sultan Ahmed Bin Sulayem, said: “The Malian market is expected to grow over the next two decades and is driven by a robust economic and population growth. DP World’s investment will significantly cut processing times for goods and thus facilitate trade. We are committed to enabling trade in the region and helping local businesses and people prosper, and look forward to working together. Sultan Ahmed Bin Sulayem Thus, the Mali Logistics Hub is much needed and will provide the country with a logistics platform that aims to facilitate the import and export of goods via the Port of Dakar, which is operated by DP World. “DP World’s investment will significantly cut processing times for goods and thus facilitate trade. We are committed to enabling trade in the region and helping local businesses and people prosper, and look forward to working together.” Republic of Mali Minister of Equipment and Transport Moulaye Ahmed Boubacar said: “We are excited to partner with DP World on this project. The Mali Logistics Hub will dramatically improve the cost and time of trade for Mali. The project will provide us with a first-class logistics facility comparable to global standards and will be the largest in terms of capacity. “We are confident that with DP World as a partner we will be able to meet the expectations of our people, traders and exporters to have access to more markets and to bring more efficiency and cost effectiveness to international trade. The project also gives the Republic of Mali the opportunity to be connected to global trade lanes, and to speed up access and transport in and out of the country.”

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Air Tanzania begins new east Africa flights in August

Air Tanzania plans to start direct fights to Entebe in Uganda and Bujumbura in Burundi from Dar es Salaam in what is expected to bring cutthroat competition to traditional carriers Kenya Airways and Rwandair. KQ’s dominance at the Entebbe hub could further be threatened if Uganda revives its national carrier by November. Air Tanzania will fly to Entebbe on Monday, Wednesday, Friday and Sunday. A return ticket will cost $363. The carrier will fly to Bujumbura on Tuesday, Thursday and Saturday, with return ticket costing $358. This is less than the average of $390 that travellers pay to get to Bujumbura and Dar es Salaam via either Nairobi, Kigali or Addis, with an additional three to six hours connecting time. Air Tanzania is also planning to increase its domestic flights in the next two years. Air Tanzania Company Limited (ATCL) chief executive Ladislaus Matindi says the new destinations will include Iringa, Mpanda, Tanga as well as Shinyanga. “We are currently operating 10 flights from Dar es Salaam to Dodoma, Mwanza, Mbeya, Songea, Tabora, Kigoma, Bukoba, Mtwara and the Comoros,” he saidTanzania received its first long-range Boeing 787 Last month Tanzania received its first longrange Boeing 787 Dreamliner at the Julius Nyerere International Airport (JNIA) in Dar es Salaam, in what Mr Matindi called a perfect aircraft to

realise “our ambition to connect with the rest of the world through the initiation of intercontinental flights.” But Kenya’s Transport Principal Secretary Paul Maringa believes the plans by Uganda and Tanzania would not affect KQ, saying the airline is being revamped to boost its competitiveness in the region. “We will bank on the service and brand to get an edge over the competition. Kenya Airways remains dominant on most of the routes and the expected flight to the US will give it an edge within the region,” Prof Maringa said.

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FEATURE

The African renaissance of BRICS aviation sector

To most people the “sky is the limit”, but to those who love aviation “the sky” is their home and there is no limit.I was honoured recently to lead the BRICS Regional Aviation Working Group (RAWG) under the South African flag. RAWG is at a dynamic stage of development and at the BRICS Business Forum, the majority of the countries – Brazil, India, China, Russia and South Africa – emphasised the importance of growth and business opportunities in the aviation sector. However, red tape hurdles exist that hinder this sector. Air travel needs to be made easier and more accessible with better visa policies to boost the sector and promote growth. To enable this a united sky policy for BRICS countries is needed with one trade policy, one currency and one passport. BRICS member countries said they were eager to invest in aviation. A milestone was achieved and a Memorandum of Understanding was signed by BRICS transport ministers on July 22 for mutual benefit to bolster the regional aviation sector. An implement framework was designed to support cooperation for BRICS countries to integrate the aviation industry. The resolution was passed by a house full of passionate aviators. Four projects were adopted and divided into BRICS Aviation Working Group countries, where each country will lead one project. A way forward was established. I am most confident that the BRICS Aviation working group will make rapid progress. This confidence comes from knowing that I have a team that is committed and dedicated. We took the first step to a right a direction and it compliments our Open Sky Policy in Africa and free trade zone policies. The BRICS aviation resolution is important to South Af16

The Africa Logistics/September/October 2018 Issue

rica, as it creates a runway for economic opportunities and the creation of jobs to take off. South Africa needs growth levels many times faster than the forecast to meaningfully reduce unemployment, with about a quarter of the labour force currently out of work. The International Air Transport Association forecasts a 5.9percent year-on-year growth in African aviation over the next 20 years as the fastest growing global region, with passengers number expected to increase from 100million to more than 300million by 2026. To create local jobs, the South African Skills Development Act recommends that there should be a continuous platform for youth and training academies as regards the defence and aviation sector. All African airlines need to position themselves to take advantage of this growth outlook and compete more effectively to become profitable. In the coming years we will see more investments coming to South Africa in terms of job creation and Benefit to Benefit Corporations. It sounds like a long walk to economic freedom. But it is said in China: “If you have a thousand mile journey you need to take the first step”. The message from President Cyril Ramaphosa, who is striving to attract $100billion (R1.31trillion) in investment to the country, is to tell the world SA Inc is open for business. But I have no doubt that South Africa will achieve the target before the expected time. Javed Malik is chairperson of the BRICS Aviation Group and co-founder and chairperson of Cobra Aviation Group.

FEATURE

Top 5 technologies every warehouse should have

A warehouse is a very critical component of logistics. As such top notch technology should be deployed in a warehouse to ensure smooth movement of goods but at the same time ensuring the movement is monitored. Demand for warehouses is increasing sharply and so better warehouse technology can be of greater help in the proficient management of warehouses. Here are some of the warehouse technologies that a smart logistics company should embrace: Warehouse management system (WMS) A warehouse management system (WMS) is a software application, designed to support and optimize warehouse functionality and distribution center management. These systems facilitate management in their daily planning, organizing, staffing, directing, and controlling the utilization of available resources, to move and store materials into, within, and out of a warehouse, while supporting staff in the performance of material movement and storage in and around a warehouse. A WMS uses a database configured to support warehouse operations, containing detail describing a variety of standard warehouse elements including: Individual stock keeping units (SKUs) that are handled and stored, e.g., weight, dimensions, case pack, automatic ID labels (bar codes, etc.), and inventory by location with manufacture date, lot code, etc. SKUs may include basic materials, fabricated parts, assemblies, and industrial and consumer finished goods, etc.; Warehouse storage locations, e.g., individual location

number, picking sequence, type of use (picking, reserve storage, etc.), type of storage (each, case, pallet), location size or capacity, storage restriction (flammable, hazardous, high value materials, outdoor, etc.), etc.; Dock doors, e.g., individual number, etc.; and Expected labor productivity rates by function or activity, e.g., cases picked per man-hour, etc Paperless Pick & Pack System Paperless picking systems refers to an array of highly accurate and efficient, software enabled processes designed to expedite the order fulfillment process and increase customer satisfaction by ensuring near perfect order quality. Paperless picking systems utilize a variety of hardware devices to direct operators through tasks such as discrete order picking, case picking, put-based sorting, and packing. Automated Material Handling(AMH) System This system reduces or eliminates the need for humans to check-in, check-out, sort material, or to move totes and bins containing library material. he mechanical equipment used in AMH systems includes check-in machines, sorters, conveyors, singulators, stackers and unstackers, totes, bins, trolleys, and tote carriers. Somewhere in the process there must be a scanner to read the bar code or a reader to read the RFID tag (or both.) Various belts, pulleys, chutes, slides, and laser beams are used to ensure bins donâ&#x20AC;&#x2122;t overflow and to get each item oriented correctly and pushed or carried into the right tote or bin. Self check-out machines are sometimes lumped into the AMH category because they take the check-out step out of the hands of staff. However, they do so by having the patron do it themselves so it is more of a self-service feature than automation. Radio-frequency identification (RFID) Radio-frequency identification (RFID) uses electromagnetic fields to automatically identify and track tags attached to objects. The tags contain electronicallystored information. Passive tags collect energy from a nearby RFID readerâ&#x20AC;&#x2122;s interrogating radio waves. Active tags have a local power source (such as a battery) and may operate hundreds of meters from the RFID reader. Unlike a barcode, the tag need not be within the line of sight of the reader, so it may be embedded in the tracked object. RFID is one method for Automatic Identification and Data Capture (AIDC). RFID tags are used in many industries, for example, an RFID tag attached to an automobile during production can be used to track its progress through the assembly line; RFID-tagged pharmaceuticals can be tracked through warehouses; and implanting RFID microchips in livestock and pets allows for positive identification of animals. Cloud storage Cloud storage is a model of computer data storage in which the digital data is stored in logical pools. The physical storage spans multiple servers (sometimes in multiple locations), and the physical environment is typically owned and managed by a hosting company. These cloud storage providers are responsible for keeping the data available and accessible, and the physical environment protected and running. People and organizations buy or lease storage capacity from the providers to store user, organization, or application data. Cloud storage services may be accessed through a colocated cloud computing service, a web service application programming interface (API) or by applications that utilize the API, such as cloud desktop storage, a cloud storage gateway or Web-based content management systems. www.theafricalogistics..com

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FEATURE

Bollore Logistics inks deal with Mobius Motors Kenya Bolloré Logistics will provide end-to-end logistics services for vehicle assembly equipment for a new generation manufacturing facility of the automaker in Nairobi

Bollore Logistics Kenya has signed a contract to provide logistics services to Mobius Motors, an automotive start-up created in 2011 that manufactures Kenya’s only local vehicle brand. Under the contract, Bolloré Logistics will provide end-to-end logistics services for vehicle assembly equipment for a new generation manufacturing facility of the automaker in Nairobi. In addition, Bollore Logistics will offer Supply Chain logistics design and execution services to optimize their operations. Mobius Motors will procure its automotive parts and accessories mostly from the UK, but also from India, South Africa and China. In UK, Bolloré Logistics’ teams will pick-up shipments from Mobius’ multiple suppliers in the UK and handle the cargo consolidation at Bolloré Logistics’ warehouse in Tilbury. These operations include valueadded services, such as labelling, packing

and Pre-export verification of conformity (PVoC). Once shipped, Bolloré Logistics’ teams in Kenya will handle vehicle storage and customs clearance through their CFS facility Mombasa Container Terminal (MCT), which serves as a gateway CFS to other countries in the region. T hen they will ensure final delivery to Mobius Motors manufacturing facility by trucks. Mobius Motors offers the African market a low-cost rugged vehicle suitable for a wide range of terrains, including rough rural roads. While most of its clients are Kenyans, several pre-order requests have also come from the US, Germany, as well as Uganda and Tanzania. Through this partnership, Bolloré Logistics hopes to support Mobius Motors in realizing its vision to become the mass-market car of Africa. www.theafricalogistics..com

BRIEFS

13 THINGS YOU NEED TO KNOW ABOUT FRE

Freight forwarding is one of the most widely used methods of international transport for both business and personal use. Freight forwarding companies, like Universal Cargo and the International Logistics Centre, coordinate the shipment of goods from one destination to another using a range of carriers, including air freight, ocean freight, road freight and, in some cases, railway freight. The process of freight forwarding might seem daunting, especially if you’re not familiar with the process of freight shipping, but these thirteen facts you need to know about freight forwarding will help you through the process. 1. WHAT IS A FREIGHT FORWARDER? A freight forwarder is responsible for the transportation of goods between one destination and another. Freight forwarding companies specialise in arranging the whole process for their shippers, from the storage to the shipping of their merchandise. They act as an intermediary between the shipper and transportation services, liaising with various carriers to negotiate on price and decide on the most economical, reliable and fastest route. 2. A HASSLE-FREE WAY TO IMPORT AND EXPORT GOODS. Using a freight forwarder to import and export goods can make the whole process much less stressful. Extremely knowledgeable in the elements of supply chain, freight forwarders can assist on all

The Africa Logistics /September /October 2018 Issue

levels, from the packing and warehouse stages to the customs procedure, taking some of the pressure off you. 3. FREIGHT FORWARDERS PROVIDE A RANGE OF SERVICES. Freight forwarders can assist with the supply chain process on multiple levels including: Customs Clearance International export and import documentation Insurance Packing Storage Inventory management 4. ADVANTAGEOUS TO YOUR BUSINESS. Using a freight forwarding company for the transportation of goods to your consumer can be advantageous to your business in many ways. Using their knowledge and expertise, freight forwarders will ensure that your goods will arrive at the correct destination on time and save you money in the process, compared to doing it alone. 5. THEY ARE NOT RESPONSIBLE FOR SHIPPING DELAYS. Freight forwarding companies are not responsible for delays in shipping. These delays often occur due to bad weather, breakdown, port delays or unforeseen route changes. Although shipping delays can be frustrating, it is important to remember that it is out of your freight forwarding company’s hands and that they’re trying to resolve it as quickly as possible.

COVERBRIEFS STORY

UT FREIGHT FORWARDING

6. IT’S IMPORTANT TO MAINTAIN A GOOD RELATIONSHIP WITH YOUR FREIGHT FORWARDER. Your freight forwarder is in charge of your precious cargo, so it’s important that you establish a good working relationship with them. You want to ensure that you choose a company that you can trust and rely on, as well as one with impeccable customer service to ensure that your cargo shipments arrive safely and on time. 7. YOU NEED TO MAKE SURE YOUR PAPERWORK IS UP TO DATE. Before leaving your goods in the hands of your freight forwarder, you need to ensure that all of the paperwork for transporting your goods is completed. Your freight company will be able to help you with this, but it’s an incredibly important step to reduce the risk of your items not being released from customs or the bank refusing to release your funds – neither of which would be beneficial to your business. 8. SHIPPING RESTRICTIONS APPLY TO CERTAIN PRODUCTS. Freight forwarding companies adhere to strict regulations and will not carry certain goods and substances, particularly by air or sea freight. Although the list of prohibited items varies from country to country, freight forwarders are generally restricted on: Dangerous Goods (including flammable liquid and toxic items) Drugs (prescription and recreational)

Alcohol Batteries Perishable items (except for those on special express delivery) Sharp objects 9. ASK YOUR FREIGHT FORWARDING COMPANY ABOUT EXTRA SERVICES. Many freight forwarding companies offer extra services for your shipment, so it’s always worth asking them when receiving a quote. These extra services include warehouse storage, cargo insurance, cargo tracking and dangerous goods handling. Even if you don’t require them, it’s always worth bearing these additional services in mind for future reference. 10. THERE ARE SIX KEY STAGES OF FREIGHT FORWARDING. The freight forwarding process can be broken up into six key stages, including: Export haulage – the transfer of goods from its original source to the freight forwarder’s warehouse. Export customs clearance – the goods receive clearance to leave its country of origin. Origin handling – the unloading, inspection and validation of the cargo against its booking documents. Import customs clearance – the customs paperwork for your cargo will be checked by the authorities. Destination handling – the handling of cargo once it reaches the destination office, including transfer to the import warehouse. Import haulage – the transfer of cargo from the import warehouse to its final destination. 11. YOUR FREIGHT FORWARDER SHOULD PROVIDE YOU WITH A RANGE OF DOCUMENTS. With freight forwarding comes a lot of paperwork, especially when shipping overseas. Your freight forwarder should provide you with all of the relevant documents, including: Commercial invoice Bill of Lading contract Certificate of origin statement Inspection certificate Export license Export packing list Shippers export declaration document It’s essential that all of these documents are provided in order to ensure that your goods reach your customer without any issues arising. 12. THE STRENGTH OF A FREIGHT FORWARDERS’ NETWORK IS VITAL. Well-established freight forwarders will have an incredibly strong network of contacts and experience in the business. Not only will this help you to get the best price for shipping your cargo, but it will also ensure that your goods arrive in a timely manner. Experienced freight forwarders will have encountered a multitude of problems along the way, so they’ll be able to quickly and efficiently deal with any issues which may arise as your goods are transported. 13. DOES YOUR FREIGHT FORWARDER SPECIALISE IN A PARTICULAR CARGO TYPE? Some freight forwarders focus on a specific type of cargo, whereas some other companies accept a variety of goods. Finding a freight forwarder who specialises in what you’re looking to ship is beneficial. Not only will they have a team of specialists in place, but they will also have vast experience in dealing with cargo similar to yours. Doing your research before choosing a logistics company will ensure that your goods get to their final destination in a timely, cost-effective manner. John Stuart works on behalf of internationallogisticscentre.com in outreach and content creation. He creates engaging content that helps businesses connect with their audience and stand out from the crowd.

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COVER STORY

Chinese oil firm Sinopec eyes South Africa amid domestic glut

Sinopec move to go further a field comes in the wake of increased diesel production in China that exceeds demand

Chinese oil firm Sinopec said Monday that is shipped its first 30,000 tonnes of diesel from its Shanghai refinery headed for South Africa, a move that could signal increased competition in China where supply exceeds demand. The company observed that they were using larger vessels to ship the oil in international markets a move aimed at helping the state-run refiner to “save on freight, compete with supplies from other regions and attract buyers in far-off destinations.” “Refinery runs were growing fast but domestic consumption did not catch up. With two more new refineries expected to start soon, the glut is only going to get worse,” Liu Mengkai, fuel products analysts with consultancy Sublime China told Reuters. In such a situation Chinese companies will have to increasingly look at newer destinations beyond Asia, where the scope to grow volumes was limited. Part of new markets would include Europe. Ac-

cording to cargo-tracking company Kpler and data compiled by Bloomberg, at least three newly-built Very Large Crude Carriers have loaded diesel from Tianjin in China and near Singapore to reach as far as Fos Sur Mer in France around June or July. Part of the reason behind the increased Asia-Europe diesel flow is the persistent fuels glut in China,” said Peter Lee, an analyst at BMI Research. The oversupply “has contributed to Asia’s diesel prices under-performing prices in Europe.” But in targeting South Africa, Sinopec would have to contend with competition from the Middle East, the tradition suppliers of oil products to the country. “The Middle East-South Africa is a natural arbitrage sort of movement due to proximity,” says Anthony Okun a shipping expert based in East Africa. But Sinopec could find South Africa a valuable market if it gets cheaper ships for the work, says Mr Okun. South Africa’s monthly gasoil imports averaged 357,493 mt in H1, data from South African Revenue Service showed. The Middle East and India were the biggest suppliers. South Africa’s fuel standards are regulated under Clean Fuels 1 implemented in 2006, which sets a maximum sulfur content of 500 ppm in diesel and also introduced 50 ppm sulfur grade. The country’s Engen Petroleum is also a regular buyer of 10 ppm sulfur gasoil.

Construction & Civil Engineering Journal /September 2018 Issue

COVER STORY

Swiss logistics service provider enters Rwanda

Swiss freight forwarder Fracht Group has opened an office in Rwanda that will also act as its African headquarters. The logistics company’s decision to set foot in Africa has been informed by stellar performance in other countries where it operates including The Americas, Australia,Asia and Europe. “There have been similarities drawn between South America and Africa in terms of opportunities as well as challenges that have prompted the move to venture into Africa,” says Chief Executive Officer and Chairman of the firm, Ruedie Reisdorf. “Rwanda is a landlocked country with people that are hardworking, politically stable. These gave us reason to start our operations in Africa. This is why we have chosen Rwanda as our first place to develop the African continent,” he said. Mr Reisdorf said that Fracht Group will be banking on huge infrastructure projects in Africa to thrive.

“We are witnessing huge infrastructure projects in Africa an indication that the continent in on the way to huge development. We are delighted to have found experienced staff to work with here in Kigali.” The freight forwarder has already started operations in Burundi, Tanzania, DR Congo, Zambia and South Africa. Fracht Group was founded in 1955 in Switzerland. Today the company has has over 1,250 employees in 34 countries with 93. The company works to provide innovative, tailor-made logistics solutions to give customers quantifiable value added services through use of personnel and the latest information technology. It boasts of a wealth of experience in its worldwide featured services including airfreight and sea freight. Rwanda hopes that Fracht Group will bring quality services to the country and help its revenue authority deliver effectively and efficiently.

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COVER STORY

3PL Mahindra buys stake in India logistics tech startup Mahindra Logistics is part of Mumbai-headquartered Mahindra Group, which has a diversified business portfolio, $21 billion in annual revenue, and 200,000 employees in 100 countries.

As India accelerates reforms and digitization programs to eliminate trade barriers and streamline procedures, logistics technology startups have become an attractive investment target for supply chain conglomerates looking to establish a stronger, more competitive footprint in the emerging market economy. Case in point: Mahindra Logistics, one of India’s dominant third-party logistics (3PL) solution providers, Thursday announced it has acquired a strategic stake in Transtech Logistics, a domestic, Bangalorebased tech-driven platform, also known as ShipX. ShipX is a software-as-a-service-based transportation management solutions provider for 3PLs, shippers, and transporters. Terms of the transaction were not disclosed. Mahindra, however, said the deal occurs amid the steady progression of its three-year-old technol-

“Logistics in the future will be more technology driven — both in terms of our own operations, as well as interfaces with our customers and business partners. With our asset-light business model, we are already like a platform,” 24

ogy platform, and that “the acquisition will help the company [Mahindra] increase end-to-end digitization and bring in operational efficiencies.” “Logistics in the future will be more technology driven — both in terms of our own operations, as well as interfaces with our customers and business partners. With our asset-light business model, we are already like a platform,” Pirojshaw Sarkari, CEO of Mahindra Logistics, stated. “The strengthening of our relationship with ShipX opens up a new opportunity to take this to the next level.” Amarnath Kalale, co-founder of Transtech, said the investment fund will support ShipX’s plans to develop more product features and also help to strengthen operations. Mahindra Logistics is part of Mumbai-headquartered Mahindra Group, which has a diversified business portfolio, $21 billion in annual revenue, and 200,000 employees in 100 countries. Taking a cue from Freightos and Flexport Taking a cue from global peers, notably Freightos and Flexport, an array of domestic, tech-driven logistics startups have sprung up in recent years, with Shipwaves, Cogoport, and FreightCrate Technologies leading that category. All of the aforementoned firms essentially highlight price transparency as their core selling point vis-à-vis traditional freight forwarders. Those developments have also prompted major ocean

Construction & Civil Engineering Journal /September 2018 Issue

COVER STORY

carriers and others with substantial stakes in Indian trades, to join the technology bandwagon. In June, Damco, Maersk Group’s logistics and freight forwarding arm, unveiled the launch of its online freight forwarding platform — dubbed Twill — in India. Maersk accounts for roughly 20 percent of India’s total container transportation. Likewise, earlier this year Deutsche Post DHL rolled out a tech-enabled trucking program — branded DHL SmarTrucking — in India, under which the German logistics giant plans to create a fleet of 10,000 trucks by 2028. Industry analysts and other stakeholders generally agree that technology will play a pivotal role in India’s freight industry, as the emerging market economy develops and expands,

Further, those startups that are able to develop a considerable market presence may end up being acquired by bigger firms, analysts generally agree, whereas those struggling to win business and/or attract investors will fade out of the picture or close.

but it’s still too soon to tell how many of these startups will sustain themselves in the long run, particularly in a market that continues to be dominated by traditional freight forwarders, who boast demonstrated business models and longstanding relationships with clients. Further, those startups that are able to develop a considerable market presence may end up being acquired by bigger firms, analysts generally agree, whereas those struggling to win business and/or attract investors will fade out of the picture or close.

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FEATURE

Reverse Logistics: A look at benefits

While many companies consider the return process to be a necessary evil that shouldn’t be noticed, companies that implement an effective reverse logistics workflow can reap several benefits.

The Africa Logistics/September/October 2018 Issue

Reverse logistics refer to monitoring the lifecycle of your products after they arrive at the end consumer. This could include how your product could potentially be reused, how it should be properly disposed of after use, and any other way where your expired product can create value. The reverse logistics that directly impact supply chains the most are the return of products from the end consumer back to the manufacturer. For the rest of the article, we’ll explain more abiut this process, and ways you can use it to your advantage. The Return of Goods Sold Most supply chains will stop measuring the success of their goods once the product is shipped and is delivered on time. While this is can be an accurate measurement of customer satisfaction and profit, it doesn’t account for all

FEATURE

The reverse logistics that directly impact supply chains the most are the return of products from the end consumer back to the manufacturer. For the rest of the article, we’ll explain more abiut this process, and ways you can use it to your advantage. cases. What if your customer receives an incomplete order? What if they feel the item they ordered doesn’t match the product description? Or what if the customer just changes their mind about their purchase? In all three of these likely scenarios, the return of your product qualifies as reverse logistics. Think about the different phases a product return goes through at your company. These could include: The physical shipping of the returned product. Quality testing the returned product to replicate the error or identify the flaw. Documenting any problems with the returned item. The disassembling, repairing, recycling, or restocking of the returned item. Managing the reverse travel of your product back into the supply chain can help you avoid making the same mistake twice and allow you to reutilize as many components of your product as possible. Monitoring the Flow of Reverse Logistics in Your Supply Chain There are four key supply chain analytics that can help you understand the flow of returned products entering your supply chain. They are as follows: 1. Volume. Are the same items being returned over and over? Is this happening in large volumes? Answer yes to either of these questions and you’ve probably got a larger problem than just a few faulty units. You may need to consider a recall or an overhaul of your production process. 2. Percent of Sales. What percentage of your sales are lost to product returns? And how many of these products can be reincorporated into your supply chain via reverse logistics? According to a study by the Aberdeen Group, the average manufacturing company will spend 9% - 15% of total revenue on the returns process. What can you do to minimize these losses of revenue? How can you turn a profit on a loose? 3. Condition the Product is Returned In. Is the product failing after a specific operation? Can you determine any patterns of failure among the returned product? This is where quality assurance (QA) and error reproduction are important. You want to figure out what went wrong so you can adapt and correct the problem before it happens again. 4. Financial Value. Without monitoring and managing your reverse logistics, your company could be losing millions of dollars in potential value. Consider failed electronics that are returned to their manufacturer. According to “Recovering Lost Profits by

Improving Reverse Logistics,” electronics sold in secondary-markets “represent an estimated $15 billion (sold) in the United States.” These electronic companies manage to turn product failure into new profits by utilizing reverse logistics. The Benefits of an Efficient Reverse Logistics Systems While many companies consider the return process to be a necessary evil that shouldn’t be noticed, companies that implement an effective reverse logistics workflow can reap several benefits. Some of these benefits are: Reduced costs. By planning ahead for returns and making the return order right, you can reduce related costs (administration, shipping, transportation, tech support, QA, etc.) Faster service. This refers to the original shipping of goods and the return / reimbursement of goods. Quickly refunding or replacing goods can help restore a customer’s faith in a brand. Customer retention. Dealing with errors is just as important as making sales. If a customer had a bad experience with your product, you have to make it right. Fulfilment blunders can create educational opportunities. Learn how to keep your customers happy and engaged with your company - even after you’ve made a mistake. Reduced losses and unplanned profits. Recover the loss of investment in your failed product by fixing and restocking the unit, scrapping it for parts, or repurposing it in a secondary market. With a good reverse logistics program in place, you don’t have to leave money on the table. Take a product that would otherwise just cost your company money and turn it into an A Pan African logistics firm House of ProcuA

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FEATURE

Pan African logistics firm signs training deal with Kenyan University

Pan African logistics firm House of Procurement (HOP) (HOP) has signed an agreement with Kabarak University a move that will allow setting up of A Supply Chain Business School of Africa at the institution. HOP Group Managing Director Benard Odote said that the school will cater for students and professionals who would like to hone their logistics and procurement skills. “We have witnessed increased demand for logistics and procurement talent. We hope that the school will be able to churn out skilled professionals to match the prevailing demand,” said Mr Odote. He lamented that while there is a considerable number of students studying supply chain management courses in institutions of higher learning in Kenya, the universities do not have enough experts to train them. “We then end up with poorly equipped employees, collapsed businesses and failed Government functions,” said Mr Odote. This he said contributes to at least 70 per cent of all failed business and below standard public services. According to Odote, the key objective of HOP and the new HOP Academy is to demonstrate the critical role played by the Logistics, Procurement and Supply Chain 28

The Africa Logistics/September/October 2018 Issue

A Supply Chain Business School of Africa will be set up at Kabarak University to boost skills in logistics and procurement

(LPS) functions in businesses and governments. This is why HOP has partnered with global international institutions such as Massachusetts Institute of Technology, The European Institute of Purchasing Management, Zaragoza Logistics Center, Singapore Institute of Purchasing and Materials Management (SIPMM), Malaysian Institute of Supply Chain Innovation (MISI) as well as COMPRARA Australia to launch this Business School across Africa. Presiding over the inking of the agreement, Kenya National Chamber of Commerce and Industry (KNCCI) Chairman Kipruto Kittony said that the myriad of infrastructural projects going on in the country, are demanding good procurement and supply chain expertise that an institution like the HOP Academy could offer. “Never since the Americans came up with the Marshall Plan to reconstruct Europe after the Second World War has massive investment in infrastructure occurred like it is currently happening. With this kind of investment, procurement expertise is very critical for the economy,” Mr Kittony said. House Of Procurement is a Pan African logistics company that operates in the region with offices in Kenya, Uganda, Tanzania and Nigeria.

FEATURE

Here is what you need to know about Reverse Logistics A recent survey of Deloitte & Arvato shows that reverse logistics represents a significant part of a company’s cost structure, ranging from 0.1 to 1% of the sales value of a product and averaging 0.5%, leading to an annual cost in the U.S. of 200 billion USD.

In today’s business context, companies can not longer afford to neglect reverse logistics as an integral part of their supply chain strategy and operations. Reverse logistics can be defined as “the process of planning, implementing and controlling backward flows of raw materials, in process inventory, packaging and finished goods, from a manufacturing, distribution or use point, to a point of recovery or point of proper disposal” (source: Reverse Logistics Executive Council, www.rlec.org). A recent survey of Deloitte & Arvato shows that reverse logistics represents a significant part of a company’s cost structure, ranging from 0.1 to 1% of the sales value of a product and averaging 0.5%, leading to an annual cost in the U.S. of 200 billion USD. Compared to the cost of goods sold, an average of 7 to 10% is directly or indirectly attributable to reverse logistics. Next to that,a properly managed reverse logistics flow on average has the potential to reclaim 32% of the original product value. And the significance of the reverse supply chain is growing! Exponentially increasing return volumes due to more complex devices and changing shopping patterns (e.g. online sales), pressure on process efficiency to reduce costs per incident, the impact of environment consciousness on brand perception and reputation are just a couple of challenges that companies need to deal with in today’s business reality. A key milestone in successfully mastering these challenges is the transformation of what used to be a solely cost-driven reverse logistics function into a strategic differentiator and profit center. Current business reality demands an increased managerial focus on the return flow as the final piece of the supply chain puzzle. Some key success factors • Optimize forward logistics – Although it sounds contradictory, minimizing customer returns by implementing the correct strategy within the forward logistics will limit the impact on resources needed to support the reverse flow. Often a reverse logistics process is set up as a necessity in response to hidden mistakes in the forward product flow, such as inadequate packaging, inferior raw materials, poor delivery performance. • Synergies – Merging forward and reverse flows efficiently allows to fully benefit from synergies between both flows. • Product return policy – In a highly competitive environment, companies sometimes tend to encourage the return behavior of their customers by granting e.g. extended warranty time or after warranty service. Equally so, in times of increasing internet sales, companies are sometimes forced into a return culture when the government for example extends the right of return for internet retailing. Product return policies should not only be looked at from a commercial perspective though should be considered from a logistics and operational point of view as well.

try, common to almost all industries are the shorter product life cycles, resulting in faster returns. A successful reverse logistics is agile and allows for a speedy response. • Consolidation of three flows – Similar to the forward flow, the success of a reverse flow depends on the degree of convergence between the financial flow, operational flow as well as the information flow. Pitfalls • Narrow scope – Within a reverse logistics context, companies tend to focus on ad-hoc transportation and storage of returned products. Often, the broader aspects of a reverse supply chain are left untouched, such as designing an effective collection network balancing cost-efficiency (minimal transport expenses and returns inventory) with market proximity (to lower the consumers’ barrier to return products) and availability of valorization options (e.g. recyclers, repair centers, etc.); supply chain cooperation and relationship management; and business process design. • Uncertainty in reverse flow forecasting & planning – The trigger for the reverse flow comes from far downstream the supply chain. Reverse logistics happens in response to an action of a customer or supply chain actor and as such is extremely difficult to anticipate or plan for by a company. Amongst others following product parameters may need to be taken into account: average lifetime of the product, product sales versus expected return areas, capacity of collection infrastructure, etc. • Reverse logistics budgeting – A financially sustainable business needs to account for future reverse logistics expenses. Companies face the difficulty to estimate today what the impact will be on their margin, budgeting, liabilities, and short to long term financial planning. Transport and valorization costs, sales volume, customer take-back behavior, government incentives, reverse technologies, and so forth need to be considered in this exercise.

• Shorter product life cycle – While return rates vary per indus-

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FEATURE

Ways in which mobile technology can boost logistics

Whether you are talking about monitoring movement of goods from the warehouse or monitoring products in transit or enhancing customer experience mobile technologies play a major role in these fronts. The fact that mobile devices have become affordable means that they can be rampantly used. And the availability of apps that integrate and connect directly to business systems have made this better. We look at ways in which mobile technology can benefit logistics industry: Accessibility of Transportation Resources One of the ways in which mobile technology has played a major role in logistics is by boosting enhanced accessibility of transportation resources. Take Amazon or Uber for instance, these are companies that have utilized the power of mobile technology and as such are offering superb service in terms of movement and delivery of goods and services. Precise Location Tracking Virtually every modern mobile device includes an integrated GPS, which means the precise location of each and every truck and shipment can be accurately tracked at any moment. The GPS also allows lost drivers for example to track their location and intended destina30

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tion. Overall this increases efficiency and faster delivery of goods because one is able to monitor traffic jam of a certain area and avoid it. Improved Data Flow & Accuracy Mobile technology has especially improved data entry and the fact that these devices can be carried from place to place a high level of accuracy can be achieved. This have even been made better with mobile systems that integrate with existing bar code and scanning technology. Customer Service & Retail Experience It is not only businesses that benefit from mobile technology, customers have also been a major beneficiary of mobile technology. E-commerce site for example that have been optimised for mobile are reporting mega sales every year. Customers have the ability to order what they need to buy at the comfort of their homes. Companies such as Amazon, Alibaba and Jumia are thriving in this area. 3. Manage fuel consumption and taxes. Using a mobile PC to record mileage or fuel purchases helps improve accuracy since the driver is less likely to forget. That means better cost analysis, including capture of gas taxes. Keeping close track of mileage can help with scheduling fleet maintenance as well, so vehicles will be better maintained and less apt to break down.

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China sets its foot in West African shores The Kribi project also highlights CHEC’s rapid expansion on the continent, where it’s won dozens of contracts and is expanding ports from Guinea in West Africa to Tanzania in the east.

Every day at sunrise, Alain Eko walks half an hour on a footpath cutting through a coastal forest to the edge of what’s to become the biggest deep-water port in central Africa. Eko, 34, is among hundreds of migrant workers who have pinned their hopes on Cameroon’s most ambitious project since independence in 1960 that’s meant to transform the sleepy fishing town of Kribi into an industrial hub. Built and funded by China, the project is helping Chinese companies gain a foothold in Cameroon, whose oil-dependent economy used to be dominated by French firms, and eased access to neighboring Chad and Central African Republic. A university graduate, Eko has offloaded trucks, wedged bricks into hill slopes and shoveled dirt since he moved to southwestern Cameroon to work as a day laborer with contractors for the company building the port, China Harbour Engineering Co., locally known as CHEC. He hopes that one day he’ll earn enough to bring his wife and child from the interior. “It’s an El Dorado for Cameroon,” Eko said as he stood on a beach and pointed at cranes towering on the horizon. “This is the future.” It’s a rare bit of good news for Cameroon’s government, which is facing insurgencies, widespread discontent with President Paul Biya’s 35-year grip on power and a steep drop in oil income. Amid uncertainty over 85-year-old Biya’s health and a rebellion in the two Anglophone regions of the mainly French-speaking nation, the official opening of the port’s first container and multipurpose terminals in March was a bright spot. The project has sparked controversy. Environmentalists raised concerns about its impact on the Congo Basin, the world’s second-largest tropical rainforest, well before bulldozers began clearing trees by the end of 2010. By the time the project is due to be completed in 2035, tens of thousands hectares of jungle will have been cleared for an entirely new city. “Cameroon has been trying to identify an area to build a deep-sea port for decades,” said commercial director Modeste Jocelin Ako’o. “The port of Douala, where most of our industry is located, is completely saturated. We need a port that’s in line with international standards to boost our economy.” Fishermen in nearby Lolabe village, where Eko lives, so far have refused to move to a specially built town where bulbous street lamps stick out like strange insects in a dark green forest. Delays have also plagued the project. Last year’s bankruptcy of the French logistics company NCT Necotrans meant the government had to postpone the opening of the container terminal it was supposed to operate. It’s now run by a consortium of Bollore SA and shipping-services firm CMA CGM SA of France, and CHEC. Since the initial agreement to build the port at Kribi

was signed in 2009, 10 Chinese firms, including CHEC and its holding company, China Communications Construction Co., have obtained concessions to mine bauxite, iron ore and other minerals. Other Chinese companies are constructing office towers in the capital, Yaounde, and stadiums for the 2019 Africa Cup of Nations soccer tournament. The Kribi project also highlights CHEC’s rapid expansion on the continent, where it’s won dozens of contracts and is expanding ports from Guinea in West Africa to Tanzania in the east. In Cameroon, CHEC has the country’s largest projects: the first and second stages of the Kribi complex will cost $1.3 billion, while it’s also building a $453 million highway linked to the port, holds a contract to dredge the port of Douala and has signed an accord for a railway to the Mbalam iron-ore deposit. After a slow start, the port shipped almost 3,000 logs of timber from the Central African Republic by June and handled about 80 vessels by mid-July. Once complete, the area should comprise 20 berths, an oil and gas terminal, a 260 square-kilometer (100 square-mile) industrial zone to process timber, cotton and cocoa, and roads and railways connecting the port to Cameroon’s main cities and mines in the interior. Despite stiff French competition, CHEC managed to persuade Cameroon that it was able to “realize its dream” by carrying out surveys for the Kribi project for free and negotiating funding from the Export-Import Bank of China, Xu Huajing, managing director of CHEC’s central Africa division, said in an interview last year with the Chinese magazine Economic Observer. “The Europeans had been trying to push this project for 20 years, wrote two or three versions of a master plan and conducted eight technical studies,” said Xu, who worked in neighboring Nigeria before Cameroon. “Then, we offered a master plan for free, which left the government speechless.” Despite the sacrifices that local people are having to make, Cameroon needs this kind of development, said Blaise Ivouva, a Lolabe village chief who works for CHEC and helped negotiate compensation for those who are being forced to leave their homes. “Even if our generation won’t see the benefits of this project,” he said, “at least our children will.”

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Poor water logistics and management costs Africa big time? The City of Cape Town nearly reached Day Zero in April but was pushed to at least 2019 thanks to the rain and strict use of water.

Officials had predicted that the city will run out of water on May 11,2018 but that date has since been pushed indefinitely. But Day Zero still remains a threat to watch. Early this year, Cape Town inhabitants were limited to just 13 gallons of water per day per person, while water use for agriculture has been reduced significantly, says Ian Neilson, the city’s executive deputy mayor. Currently, dams supplying the city are over 60% full and the daily water use is being maintained at about 500 million litres per day, which represents a 55% saving in water use compared to January 2015. But while Cape Town continues to grapple with water shortage, experts believe that most African cities are likely to face the same fate. “Cape Town is not going to be the only city on this continent that’s going to suffer significant water shortage,” Says Jean-Pierre Labuschagne, an infrastructure expert with global accounting firm Deloitte. In February this year, Kenya said that it was banking on April long rains to avoid acute water shortage in the capital Nairobi. The city was being supplied with 505,000 cubic metres of water a day, against a demand of 760,000 cubic metres a day forcing the Nairobi Water and Sewerage company to ration water through the equitable distribution programme. “Cape Town is not going to be the only city on this continent that’s going to suffer significant water shortage-Says Jean“–Pierre Labuschagne. The Ghana Water Company on the other hand early January announced that it would ration water in the capital, Accra, and other parts of the country due to insufficient rain and pollution of water bodies. “We are sorry to inform the consuming public that the situation has led to intermittent water supply in most cities and towns in the country,” said Stanley Martey, communications director of the national company. The rate of evaporation of water bodies nationwide has become alarming and there will be consequences for some communities, he said at the time. Water rationing could be a short term measure to manage water crisis in Africa, but for Mr Labuschagne, water infrastructure must be given top priority. “African cities need to better plan and invest in water infrastructure otherwise the situation will continue to be a perennial one,” he says. This sentiment is shared by Shainaz Jamal, director of Wettech Africa a firm that specializes in wastewater treatment and recycling. Read:Rwanda’s Kigali Bulk Water Supply Project gets impetus “Most African countries have not invested substantial resources in water infrastructure. What we have today is basically what our colonial masters left in the

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1960’s,” observes Jamal. Nairobi’s water system for example was planned for a population of about half a million people, but it now has more than 4 million people. Ms Jamal says that high levels of rural to urban migration had made it hard for many cities in Africa to plan well and expand infrastructure fast enough to accommodate increased numbers of people, most of whom ended up living in informal settlements. And with poor water infrastructure, water companies face other challenges in the form of non-revenue water. “A lot of revenue is lost through leakages, illegal connections,poor billing systems and unmetered customers,” says Dr Suraj Dhanani director at Danco Capital a water solution firm based in Kenya. The net effect of these problem is that they deny water companies the much needed revenues to be efficient in their work, he says. A new report dubbed Non-Revenue Water Audit for Water Service Providers (WSPs), confirm Dr Dhanani’s arguments. The report released this month revealed that water worth Ksh256 million is lost yearly in Kenya. “It was found that many of the water production flows were not accurately measured, and System Input was based partly on flows estimated generally from a treatment works design capacity and hours run,” reads the report in part. But expanding urban population means that quick measures should be put implemented to ensure that proper water systems are put in place to avoid a sitiation similar to that of Cape Town. According to Water Resources Group water demand could potentially outpace supply by 2030. “Tackling water loss before reaching consumers whould be the first step of addressing water problem in Africa,” shares Dr Dhanani. “We are encouraging water companies to use HDPE Pipes to connect water to homes. This significantly reduce water loss through leakages as opposed to PVC pipes that are prone to water leakages.” While boreholes can be good source of water for an ever increasing urban population, the problem is that majority of these boreholes are contaminated and cannot provide safe drinking water. This requires that water from boreholes must be treated before consumption. For Ms Jamal, wastewater treatment and recycling coupled with effective water management can be a game changer in Africa. “It means that we can reuse water over and over

again. In the final analysis you will discover that households will only use 10% of fresh water on a daily basis which is a good way of water management,” she explains. Dr Dhanani agrees saying that the issue of waste water treatment should especially be implemented by factories across the country but especially in cities. National environmental watchdog Nema should be given enough resources to ensure that they can make impromptu visits to factories to check compliance, he advises. If wastewater treatment and recycling is the way to go then African countries can learn from cities such as Singapore which meets 40% of its total water demand with highquality treated wastewater. Israel on the other hand may be a desert country with a serious lack of water but the technology of water treatment and recycling has enabled the country reuse 90 percent of the wastewater it generates making it the leading nation in water recycling. For majority of African cities water harvesting from rains can be the most cheap and viable solution to water problems facing the continent.It is common to see flash floods every year in Africa but the water goes to waste. African countries suffering or facing water shortages as a result of climate change have a massive potential in rainwater harvesting, with nations like Ethiopia and Kenya capable of meeting the needs of six to seven times their current populations, according to a United Nations report. Some countries have fronted the idea of building desalination plants to make sea water drinkable but this comes with heavy cost that majority of African countries cannot afford. Still, large-scale infrastructure can often by-pass the needs of poor and dispersed populations. Widely deployed, rainwater harvesting can act as a buffer against drought events for these people while also significantly supplementing supplies in cities and areas connected to the water grid Yet effective water management can help save African countries millions of dollars that can be used in other equally important social economic projects. “I believe the real problem is the management of South Africa’s water which is affecting the entire country’s water system. The Cape Town situation has laid bare the inadequacies in the country’s water management regimes,”says Magalie Bourblanc a senior research fellow at the University of Pretoria. To effectively manage water, African countries must have the capacity to produce highly skilled water professionals. “This describes anyone involved in the management of water. It could range from a person who manages a city’s sanitation services to a hydrologist generating data to help guide national water policies,” says Nelson Odume a Researcher at Rhodes University. For Jamal, over and above enhanced water management African governments must ensure good water Legislation is passed to aid in water policy formulation. Majority of the legislation that can support water development are either not there or are ignored, says Jamal. Little focus on water by most African countries has led to small budgetary allocation to research and development. South Africa invests the most of any African country among the organisation for Economic Co-operation and Development (OECD) countries. But even this is still less than 1% of its GDP, well below most other OECD nations. Indeed, the United Nations observes that the water crisis in Africa is more of an economic problem from lack of investment, and not a matter of physical scarcity. “There is no silver bullet to addressing water challenges in Africa. Every one should be involved and this means involving the government, the private sector and the citizenry,” urges Dr Dhanani.

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US:E-Commerce Driving Need for More Warehouse Workers

Demand for warehouse workers is growing faster than the labor supply, and that could drive up costs for fulfillment center operations as digital commerce becomes a bigger force in retail sales. U.S. warehouses and distribution centers need an additional 452,000 workers in total this year and next, commercial real-estate brokerage CBRE Group Inc. CBRE -2.74% writes in a new report, a steep acceleration from hiring in the sector in recent years. Finding those workers with unemployment at an 18-year low will be a challenge, and will likely draw workers away from other fields, said Spencer Levy, head of research in the Americas for CBRE. “Everybody is holding their breath because employment statistics are so tight these days,” he said. CBRE said in the report released Tuesday that transportation and warehouse employers are on pace to add 226,000 workers in both 2018 and 2019. From 2013 to 2017, the sector averaged 180,300 jobs added annually, according to the real-estate firm. The push for workers could add significant costs for fulfillment operations. CBRE estimates that a $1 increase in average hourly wages for a typical warehouse with 500 employees would raise annual labor costs by more than $1 million. That number is higher for more labor-intensive ecommerce operations, especially during seasonal peaks in shipping activity around the end-of-year holidays. Many operators are searching for new labor pools, whether recruiting workers away from other industries or relocating fulfillment operations to regions where more workers are available. Between 2011 and 2015, the transportation and warehousing sector reported 66% growth in workers coming from other industries, the highest 36

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percentage of any sector, according to the U.S. Census Bureau. CBRE says warehouse operators are expanding into new regions with more available workers and relatively low real-estate costs. Among the most attractive destinations, according to CBRE’s latest analysis, are Memphis, Tenn., Louisville, Ky., California’s Inland Empire, Indianapolis, Atlanta, Nashville, Tenn., and Dallas-Fort Worth. Mr. Levy said e-commerce operations have to weigh workforce considerations against the need to be as close to customers as possible—a key to providing inexpensive and speedy fulfillment for online retail orders. “The bottom line is that being as close to consumers is a critical factor but if you can’t service those consumers [with fully-staffed operations], then you have to move further out,” he said. The labor challenges facing e-commerce are also likely to drive more automation at warehouses and fulfillment centers. North American businesses still lag behind their counterparts in Asia and Europe when it comes to automated shipments, the CBRE report said. “You’re going to see, because of this labor shortage, an acceleration of the automation trend, which is already growing rapidly,” Mr. Levy said. “There’s going to be a reckoning.” CBRE’s estimate of 452,000 new jobs in industrial operations is based on an expected new 452 million square feet of warehouse and distribution space coming online by the end of 2019, and an assumed average of one worker needed for every 1,000 square feet. E-commerce operations have driven record occupancy rates in U.S. industrial facilities, and millions of square feet of new development across U.S. markets in recent years. Mr. Levy said he expects demand for warehouse space to remain strong, even as more distribution centers open, because the robust U.S. economy is driving demand from manufacturing and light industrial businesses along with e-commerce retailers. Source: WALL STREET JOURNAL.

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Kenya Airways set for Maiden Direct Flight to the US

More than 7,000 travelers have also booked seats on Kenya Airways’ nonstop flights to New York ahead of the scheduled launch on October 28th. The bookings are spread across the year. Kenya Airways’ maiden inaugural direct flight to the United States is 80 percent booked, the national carrier has told Business Insider. More than 7,000 travelers have also booked seats on Kenya Airways’ nonstop flights to New York ahead of the scheduled launch on October 28th. The bookings are spread across the year. Kenya Airways opened ticket sales for the maiden flight to JFK International Airport in New York in January to allow passengers plan on their trip ahead of time. A few weeks ago, KQ Chief Executive Officer Sebastian Mikosz had lamented low ticket sales but remained confident that sales would pick up from this month. Already, the airline has sent teams to US cities to chase deals with travel agents amid competition from other airlines flying to Nairobi. Kenya Airways has set aside two Dreamliner aircrafts for the daily flights on the New York route — a night flight from Jomo Kenyatta International Airport (JKIA) and a mid-day one

from New York. Mikosz said a roundtrip Economy Class ticket will go for Sh89,000 while Business Class fliers will part with Sh257,634 roundtrip. The prices are subject to approval by the government. The flight will depart JKIA in Nairobi daily at 11:25 pm and touch the ground at John F Kennedy International Airport in New York at 6:25 am the next day. A return flight will then leave New York at 12:25 pm the same day and touch the ground in Nairobi at 10:55 am the next day. “The move will cut the flight time between the two cities by more than seven hours,” Mikosz said. The plane will carry 234 passengers; 30 at the premium world class and 204 in the economy section. It will have four pilots, 12 flight attendants and 85 tonnes of fuel loaded one way.

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KENYA SETTING ITS PACE IN THE LOGISTICS RACE

Kenya’s growing importance as a global hub for trade explains why the nation has been experiencing the fastest rise in foreign direct investment in the continent. Speaking specifically about the logistics sector, a number of international companies acquiring local players in Kenya is a clear indication of the lucrative nature of the business here, particularly with perishables. That apart, the Kenyan government has initiated a wide number of infrastructural projects to set the ball rolling, Surya Kannoth reports. One of Africa’s most developed nations, Kenya moved up 21 places in the 2017 World Bank report on ‘Ease of Doing Business Index’ to position 92 globally, making it the third most improved economy in 2017. This jump in ranking came following a similar improvement of 21 slots in 2016. This speaks volumes about how the country has emerged from its days of political instability and economic downturn. Initiating a broad range of business reforms, the Kenyan government is leaving no stone unturned to attract more investments into the country. Recently, Nairobi Governor Mike Sonko promised international investors at global forum facilitation to acquire land for setting up special economic zones. The Nairobi County government has announced plans to reduce levies for foreign investors as it seeks to transform the city into a global investment destination. 38

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“The national government in conjunction with my office is working towards ensuring Nairobi becomes a logistics hub for both imports and exports,” he announced. “A lot of infrastructure developments have been undertaken, including major road bypasses, the standard gauge railway, and the upgrade of Jomo Kenyatta International Airport.”A number of multinational freight forwarders are acquiring Kenyan companies to tap into the lucrative perishables market. Recently, the world’s third largest logistics company, Japan’s Nippon Express, launched a subsidiary office in Kenya. Nippon Express has been making use of local agents for the export of home-grown (Kenyan) cut flowers and roses. The firm announced that it will be putting in place a structure to meet the needs of customers in Kenya and the rest of East Africa, where sustained growth is expected. “A standard-gauge railway connecting Nairobi with Mombasa was opened in June 2017 and, with transport by freight train now available, logistics demand is expected to rise due to the reduction in time and cost for transport inland from Mombasa Port,” the firm said in a statement. Meanwhile, Africa Logistics Properties (ALP), a specialist integrated property investment company that develops, acquires and owns class-A industrial and logistics properties in principal cities across Africa, have stepped up the construction of Kenya’s first international standard grade-A logistics warehousing on two sites in Nairobi by drawing in Copia Global, the fast growing e-commerce FMCG distributor that specialises in supplying rural Kenya.

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ALP North, ALP’s first project, is a 50,000sqm logistics and distribution complex at Tatu Industrial Park in Northern Nairobi due for completion in September. ALP West, which is ALP’s second project, is in the process of building road infrastructure on its 49acre site on the A104 highway to Limuru. It has also planned for a 100,000 sqm logistics and distribution warehousing complex. Copia’s ALP North lease will enable the company to operate from ALP’s 12 metres high warehousing and to benefit from the highest pallet densities in the market and therefore the lowest pallet storage costs per square metre. Copia will be able to run thousands of deliveries a day from the e-commerce company’s new central distribution centre to its agent network across the regions. Meanwhile, DOB Equity, a leading Dutch family office, is investing up to $4 million in Africa Logistics Properties Holding (ALP), a developer and manager of modern grade-A warehousing. The investment will allow ALP to build developments in Nairobi. Saskia van der Mast, Investment Manager at DOB said, “We believe Kenya is ideally located as an entry point and hub for Eastern and Central Africa to benefit from the region’s industrialization, growing trade and expanding consumer markets. DOB is investing in a team led by Toby Selman, with extensive emerging market experience in warehouse development, which we believe will be able to execute successfully on this opportunity.” The e-commerce sector is expanding rapidly in Africa with revenues last year of $16.5 billion projected to reach $28.9 billion by 2022, according to international statistics portal Statista. In this, East African e-commerce sales are set to surpass West African e-commerce sales for the first time in the first quarter of this year, according to JLL’s Africa Prime Industrial Report. Thrust on perishables exports According to a recent report, Kenya earned much more from fish exports in the last three years than it paid for imports despite rising volumes shipped in and an outcry over foreign sea food flooding the local market. The country earned Sh8.5 billion from its exports, higher than the Sh4.03 billion paid for imports in the period under review, according to official figures. Export volumes in the last three years stood at 16,429 tonnes compared with 40,991 tonnes imported in the same period. “The earnings from exports were higher compared to imports because of the high value that Kenya’s fish earned in the world market,” said the Department of Fisheries. The country exports frozen Nile Perch, tuna, octopus, frozen whole tilapia and lobsters caught in the lakes and the Indian Ocean notably to the EU. Tapping into the vast potential in the Kenyan perishables market, global freight forwarder and logistics group Panalpina acquired Kenya-based Air Connection last year, this follows Panalpina’s acquisition of another Kenyan perishables forwarder, Airflo, which was completed in 2016. Air Connection’s perishables business has operations near Jomo Kenyatta International Airport in Nairobi and in Mombasa, and is now merged with Panalpina Airflo. With this acquisition, Panalpina Airflo’s combined cold-storage capacity will increase to 4,200 square meters as the combined business expects to handle about 70,000 tonnes

of perishables airfreight per year. The company has also begun construction to increase its cold-storage space in a project that should be completed by 2018, according to the company statement. Green signal for KQ for direct US flights Now that Kenya Airways (KQ) has finally been cleared to make direct flights to the United States, the move is expected to help the airline grow revenues as well as enable local industries increase exports to the American market and boost tourist numbers from the key source market. Direct flights between the two countries will open a window of opportunity, especially to Kenya, with the US being one of Kenya’s largest trading partners. Last year, Kenya exported Sh43 billion worth of goods to the US. In return, America imported Sh47 billion worth of goods. Kenya hopes to increase the amount of goods exported to the US market, especially through the African Growth and Opportunity (AGOA) window, which exempts from taxes, certain goods from some African countries including Kenya. Rail infrastructure gains steam Kenya Railways Corporation, a government-owned rail operator, launched its cargo service on the new Standard Gauge Railway (SGR) in January 2018. The new Standard Gauge Railway (SGR), also called the Madaraka Express, connects Mombasa Port, the largest port in East Africa, and Nairobi. This 472km-long line is the first phase of the SGR project that aims to connect Kenya, Uganda, Rwanda and South Sudan and created around 30,000 jobs during construction. The Mombasa-Nairobi SGR, the heaviest infrastructure project in Kenya in the last five decades, aims to not only shorten passenger travel times from Mombasa to Nairobi but also to substantially improve the effectiveness of the country’s commercial freight service. Indeed, the designed freight carrying capacity of the railway is 22 million tons per annum. There is currently one daily train available with plans to increase to 8 in the future and each train has a haulage capacity of 54 double stack flat wagons carrying 4,000 tons (216 TEUS) with a designed speed of 80 km per hour. As the leading freight forwarding player in Kenya, Bolloré Logistics provided the inaugural commercial consignment of 52 containers transported on the SGR. Since then, Bollore’s teams in Kenya introduced the service to their clients and have transported over 360 containers to date, for export, local imports to Kenya and transit imports to Uganda. Because of the speed and reliability of the SGR, the service is included as a mode of transport in its specialized commodities and exports such as coffee, tea, beans, hides and skins among others. Clearing and documentation services is handled at the main port in Mombasa or at the customs-controlled ICD Facility in Nairobi. The SGR has also been beneficial for both local imports and transit imports, cutting down transit times from Mombasa to Nairobi by 24 hours. Source: Logistics Update Africa

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Risk Management in Global Pharmaceutical Logistics

The globalisation of clinical trials and specialty pharmaceutical commercialisation along with the rise of complex biological-based drug therapies present a host of opportunities for manufacturers — to say nothing of the potential value they hold for patients. However, today’s mobile supply chain also harbors a well of risk; some hidden to the untrained eye, some obvious but overlooked, some wholly new and some yet to be discovered. Regardless of the risk, it leaves manufacturers, investors and an industry worth roughly $1.1 tn exposed to potentially significant loss. While the cost of underestimating risk in logistics is not transparent, the cost of maintaining the logistic supply chain is. Data from Pharmaceutical Commerce’s annual Biopharma Cold Chain Sourcebook reveals that managing the transportation of biopharma logistics cost almost $79 bn in 2016, with temperature-controlled products accounting for almost $13 bn. With a growth rate of 8 to 9 percent year over year, spend on temperature-controlled logistics is predicted to rise to almost $17 bn by 2020, with non-cold chain estimated at $77 bn. That’s a logistics price tag of almost $100 bn. With numbers like this, it’s clear that manufacturers 40

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want to ensure a quality product upon delivery. These numbers might also suggest a need to identify and qualify more strategic investments to mitigate mounting risk. These five trends have been identified as key industry forces influencing current risk management strategies. 1. Globalisation Today, drug makers in the US and other industrialised nations are producing more in emerging markets, as well as selling into more overseas markets. While globalisation has encouraged the development of dual-sourcing of biopharmaceuticals and helped make biosimilars a possibility in some markets, it has also increased security risk to shipments. Global shipping lanes create longer supply routes, challenging transport packaging to maintain temperatures longer and through a number of different scenarios, from extreme climate conditions through various modes of transport (air, ground, ocean and hand). Globalisation also demands acute knowledge of the national regulations of each country. 2. Increased regulations The EU guidelines on good distribution practice (GDP) for medicinal products for human use, extend temperature

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requirements to transportation. They are used as the basis for many countries’ legislative framework throughout the world, not just the EU. After all, transportation is simply a mobile form of storage, with many more variables, and regulations not just limited to the traditional cold chain. GDP guidelines require control of even room-temperature product, which is essentially everything that isn’t refrigerated or frozen. With similar regulations coming to the US, pharmaceutical manufacturers are seeing an increase in the number of products requiring temperature controlled packaging (roughly 80 percent in the EU). This rising number significantly increases the opportunity for loss, should regulations not be understood or their protocols adhered to.3. Product sensitivity The shift from small-molecule drugs to high-value productive intensive biopharmaceuticals is flooding the logistic supply chain with temperature-sensitive product. This trend along with a renewed investment in biotech R&D and a rise in biological clinical trials, including cell and gene therapies, has significantly increased the use of highvalue ingredients. These ingredients have limited lifespans, stricter temperature requirements, and are more often than

not, irreplaceable life-saving medications. These scenarios, especially when paired with global shipping, create complex protocols and add even greater demand for vigilant monitoring, ensuring product stability and security. Product sensitivity is also what’s driving the demand for more advanced transport packaging solutions. 4. Technological advances Risk management strategies are getting an upgrade with innovative technologies designed to automate the management of cold chain logistics, reducing complexities and minimising human error. These tools include improved data mining and mobile cloud solutions that support real-time GPS location and temperature tracking throughout the chain of custody. End-to-end cold chain monitoring solutions not only enable visibility, they can also communicate breaches through automatic alerts, providing actionable intelligence to execute contingency plans. Advances in thermal packaging design have also been integrated into risk management strategies. There are an array of transport solutions on the current market, including passive, active and semi-active containers, using phase change materials (PCMs), dry ice or evaporative cooling. There are a multitude of sizes going from individual-dose packets to carton to pallet, which address a range of temperatures too. Some can even be custom designed and tested to suit a particular product. The newest transport systems on the market also address weight, reducing total shipping costs while ensuring shipment security. Additional innovations that support risk mitigation in clinical trials and direct-to-patient models are just coming into the mainstream, from RFID-enabled refrigerators designed to store product in patient’s homes to information management systems enabling realtime access to protocols and instructions necessary to undertake shipments. It’s important to note these technological advances can bring cost-efficiencies as well as risk mitigation. However, there is frequently a knowledge deficit between which solutions to apply based on the manufacturer’s needs, specifics of the drug program or transport logistics. 5.Transportation cost fluctuations Many factors can influence the types of transportation to be used in a logistic strategy, such as the time allotted between pick-up and delivery, the availability of truck drivers or product sensitivities to temperature, vibration or humidity. However, in the last few years, cost and environmental concerns have created a slight shift in transport mode used for commercial product, moving from truckload to intermodal (truck and rail), and from air to ocean. While intermodal transport is largely being used by pharmaceutical companies that want to reduce their carbon footprint, the increase in sea freight is largely attributed to manufacturers’ attempts to reduce cost and risk to product. Because, while ocean transportation tends to be slower and less useful for clinical trial supplies, it has fewer touch points than air freight, which commands more frequent handling — from loading, unloading and transporting on the tarmac to customs clearance. And whilst sea freight might suit many large, heavy, temperature-stable shipments of active pharmaceutical ingredients (API) or bulk drug product, it seems a lengthy — and ultimately risky — route to take with cold chain products. But data suggests the shift does include temperature-sensitive shipments, though that might refer to those shipped at ambient temperatures.

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Pharmaceutical cold chain logistics is a $13.4-billion global industry The 2017 edition of Pharmaceutical Commerce’s annual Biopharma Cold Chain Sourcebook estimates that managing the transportation of temperature-controlled products (refrigerated and frozen) will total $13.4 billion this year, growing at a 5-6% rate, and representing a moderation of the 8–9%/yr growth rate of the past several years. At the same time, the value of temperature-controlled pharmaceuticals being shipped is projected to grow 10.7% this year (Fig. 1), suggesting that the industry is learning how to manage cold chain costs more efficiently. The growth of temperature-controlled products is continuing at more than double the rate of nontemperature-controlled products, indicating that the cold chain business in biopharma will continue to grow healthily. The Sourcebook estimates 2017 non-cold-chain pharma logistics costs at $66.5 billion rising at a 4–5% growth rate. By 2021, pharma cold-chain logistics will be worth $16.6 billion, and non-cold chain at $76.5 billion (Fig. 2). “There has been only moderate growth, if any, in freight transportation costs across the board in recent years,” notes Nick Basta, editor of Pharmaceutical Commerce, “and since freight transportation comprises roughly 70% of cold chain logistics costs, that moderation is a factor in the slower growth rate in cold chain logistics spending by biopharma.” The global pharma industry today is almost $1.2 trillion, and between 2015 and 2021 is projected to rise by 41% (Fig. 1). Within that, products that require refrigerated storage and transport are worth around $283 billion, and will rise 70% between over the same span, while non-refrigerated products are projected to rise by about 32%. The drivers, of course, are the continuing transition to biologically based products in new product introductions; additional drivers are the tightening requirements for life sciences shipments, combined with the growing internationalization of pharmaceutical trade. Biosimilars introductions are rising throughout the world (the first product was introduced in the US in 2015), and while this will cut into biopharma revenues, it is also expected to expand the market for biologics-based products—a potential growth factor for the cold chain logistics business. Continued strong growth in insulin products and vaccines is also propelling growth, as is the broader adoption of all these products from developed economies to underdeveloped ones, especially in Asia. In past years, there was a clear demarcation between biologics and other products that required refrigeration, and tablets and similar products that did not. With the introduction of Good Distribution Practices (GDPs)—and their requirement for temperature monitoring of all types of pharma products, the lines are beginning to blur. Some CRT shipments employ logistics practices identical to temperature-controlled shipments: insulated containers, refrigerants and temperaturemonitoring electronics. But many CRT shipments still follow traditional practices as pharma manufacturers become adept at analyzing the environmental

The Africa Logistics/September/October 2018 Issue

conditions of their shipments, and documenting the temperature stability of their products (the amount of time a product can be outside its label temperature but remain effective). “The combination of these factors enable some manufacturers to continue to employ conventional logistics practices, while convincing regulators of the safety of those shipments,” says Basta. “However, the noose is tightening around these practices, and manufacturers are shifting to use of such practices as thermal blanketing and temperature monitoring to provide better quality assurance.” Another trend to watch closely is the evolution of a variety of precision medicine innovations, ranging from cellular therapies to biomarker testing or regenerative medicine in the form of stem cells. Some of these therapies involve extracting blood or tissue samples from patients, conveying them to a facility for genetic or other manipulation, and then returning them to the patient. Every step in this process is potentially a cold chain task, with tight constraints on the condition monitoring of the shipment. “There are a lot of new technical requirements to these therapies,” says Basta, “including freezing the biomaterials during transit, and developing new packaging methods derived from the clinical research world.” However, most of these therapies are still in the developmental phase, and the volumes involved, from a pharma logistics perspective, are relatively small. About clinical trial logistics specifically: The Sourcebook also looks at the clinical logistics field (not differentiating between cold chain and ambient, as most trials use temperature controls in some part of the process). Clinical trial logistics involves shipment of products to be used in trials to study sites which may be dispersed around the globe, as well as shipment of medical samples to centralized analytical laboratories. Trial initiations and the scale of trials will generate a logistics volume of around $3.2 billion in 2017 (Fig. 3). Based on estimates of future trial volume, location and industry R&D spending, the Sourcebook forecasts logistics spending growth at about 2% per year, to about $3.4 billion in 2021. Methodology To perform its analysis, Pharmaceutical Commerce starts with the current lists of approved drugs, and what their labels say for storage and shipping conditions. Drugs in the pipeline are also evaluated to the extent possible. That fraction of approved drugs is then compared to measures of overall pharma sales (from organizations like IMS Health and Evaluate Pharma), and overall pharma logistics spend and volumes. Data are broken down according to shipping mode (air, ground, sea) and the spending proportions between transportation, packaging and instrumentation. The Biopharma Cold Chain Sourcebook, now in its eighth year of publication, is available for purchase from Pharmaceutical Commerce. Email info@pharmaceuticalcommerce.com for more information.

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