Kenya banks on Naivasha depot to boost regional trade

Kenya banks on Naivasha depot to boost regional competitiveness

The full operationalization of the Naivasha Container Inland Depot is expected to boost and promote economic potential and business competitiveness within the larger Eastern Africa member states.

Speaking at the site, East African Community PS, Dr. Kevit Desai, said the inland depot holds a huge potential in promoting interconnectivity and shared infrastructure within the member states, while ensuring seamless transportation of cargo from the depot to individual countries’ destinations.

Dr. Desai said the inland depot seeks to achieve and realize economic and social developments in the country and those of individual member states, while also opening opportunities for joint business ventures.

The PS said the construction of the depot by the government aims to enhance business and save time as well as the cost of transporting cargo from the port of Mombasa to other countries, which will promote high level of inter-trade along the Northern Corridor.

He said the depot which sits on an area of 100 acres in Naivasha and served by the newly constructed Standard Gauge Railway, will enhance efficiency and promote high level of manufacturing and value addition of goods that individual countries aspire.

“This depot is part of SGR logistics which brings the Mombasa port closer to by over 500KM in the Eastern Africa hinterland, thereby reducing time and cost of transportation of cargo to and from the port,” said Desai.

The PS said the depot has so far handled 11,000 TUES since the ICD freight operations were launched in December 2019 following the construction of SGR line, adding that the capacity will increase once individual transit countries kick start freight operations at their designated 50 acres of land at the expansive Naivasha Industrial Park.

Additionally, Dr. Desai said economic competitiveness will be promoted through enhanced partnerships and collaborations by the member states as Kenya puts major efforts at the various ports in integrating Customs Management Systems and in automation of systems and processes to enhance efficiency in the verification of pre-arrival and clearance of cargo.

The PS was happy to note that Kenya has already embarked on heavy infrastructure investments including revamped ports, road networks, new railway lines, one stop border points and the upgrade of the Metre Gauge Railway, with the aim of creating seamless interconnectivity and structures to support public-private partnerships so as to ease and promote dedicated services for transport within the region.

By KNA

3 lessons we can learn from marine protection in subSaharan Africa

In 1995, the Kenya Wildlife Service (KWS) established the Diani-Chale marine reserve. This was meant to be a marine protected area (MPA) that would protect and restore marine life, and restrict destructive human activities such as beach seining.

However, many members in the community were opposed to the MPA. One of the Kenya Wildlife Service shelters was set ablaze and mistrust towards the KWS simmered for a long time.

Today, things are changing. The community, county government and KWS are holding talks to jointly decide on how to operationalise the MPA. And across the African continent, we are seeing stories of transformation and hope in marine protection. Gabon has protected 28% of its national waters.

Madagascar is using locally managed marine areas to empower its communities. And the Seychelles has restructured its debt for marine conservation – the first in the world to do so.

Altogether, Africa has now protected over 1.8 million square kilometres, or 12%, of its waters. The future of Africa’s “blue economy” is brimming with promise but this depends on effective management. However, like the Diani-Chale marine reserve, many of the MPAs in this 12% are simply “paper parks” – MPAs drawn up on paper but not effectively managed.

Both the failures and the successes we see across the continent can teach us a lot about how to approach marine protection. Here are three key takeaways:

Conservation must be recognized for its essential role in food security

As the steady stream of overfishing and climate change drowns out the viability of fisheries, many fishing communities have been left desperate. Naturally, any measures deemed to be a further hindrance to fish catch, such as MPAs, are met with hostility.

However, MPAs have been clearly shown to increase the abundance and diversity of fish. Reserving these ocean refuges allows time for fish to grow bigger and reproduce more. And some of these fish will swim outside the MPA, causing spillover effects that benefit adjacent fisheries.

“I think the way we look at MPAs needs to change,” says Dr Arthur Tuda, Executive Secretary of the West Indian Ocean (WIO) Marine Science Association and contributing author to the “WIO Marine Protected Area Outlook” report. “We should see MPAs as an investment. Some investments can take a long time or a short time, depending on what you’re aiming for.

It can take a long time if the system was completely destroyed, so you have to close off the area to wait for restoration, because you won’t get much fish anyway. But if it is a system already providing food, you might want to control the way you harvest. MPAs can be designed as multipleuse areas, they can be zoned where one area is used and another is closed off.”

Community engagement determines success

In the Grand-Béréby region of Côte D’Ivoire, the aquatic species targeted for food were not only fish, but also turtles. In 2020, however, Grand-Béréby became the site of Côte D’Ivoire’s first MPA. Abou Bamba, Executive Secretary of

the Abidjan Convention, highlights one factor that led to this success: trust.

“When we went to the villages, it was important for us to listen to them. They gave us a long list of their needs and, of course, marine protection was not included. They had basic needs like hospitals, roads, safe drinking water, jobs, food and so on,” Bamba says.

“For us to be credible, we need to balance conservation and environmental needs with the socioeconomic needs of the community. We won’t be credible if we go there and say: ‘We’re only here for the turtles, dolphins and whales’.”

For almost 10 years, the Abidjan Convention worked with the Ivorian government, and later with Conservation des Espèces Marine, the University of Exeter and other partners and donors, to gain the trust of the villagers by addressing some of their needs and securing their support.

Today, the hunting of turtles has fallen drastically. The GrandBéréby MPA is now also able to provide employment opportunities in eco-tourism; restrict industrial foreign trawlers from pillaging local waters; promote sustainable, regulated fishing for artisanal fishers; and serve as an encouraging model for the other four MPAs that Côte D’Ivoire is planning to establish.

Communication can change the game

“For most of my time working in marine protection, we’ve communicated the benefits to nature of MPAs. It’s important now that we change the narrative to protecting nature for people,” says Dr Judy Mann-Lang, Conservation Strategist at the South African Association for Marine Biological Research.

Dr Mann-Lang has been working on marine communication for over 20 years. She’s helped organize national campaigns to raise awareness and public pressure to increase MPAs. This included a survey on how visitors of uShaka Sea World perceive MPAs.

“The word that came up most often was ‘no’,” she says. “As in, ‘no fishing’, ‘no diving’, ‘no this’, ‘no that’. If people perceive something as a ‘no place’, they’re not going to support it. However, if we turn that narrative around and start talking about how people can benefit from MPAs, people are far more likely to support it.”

The campaigning and long-term careful research on MPAs worked. On 23 May 2019, the South African government announced the creation of Marine Protected Areas South Africa and increased the percentage of its MPA coverage more than tenfold.

On 1 August 2021, South Africa celebrates its first Marine Protected Area Day. The world observes dozens of environmental awareness days that highlight environmental causes, but none of these days is dedicated to MPAs. Dr Mann-Lang’s dream is for Marine Protected Area Day to become internationally recognized as an official date to highlight the benefits of MPAs for people and planet.

Marine protection must be promoted, designed and evaluated within specific socio-economic, cultural and environmental contexts. One thing is sure, however: it is relevant for all of us, no matter where we are or where we come from.

Conservation, community engagement and communication are key to safeguarding the health of the ocean which ultimately determines our collective future.

Madagascar is using locally managed marine areas to empower its communities. And the Seychelles has restructured its debt for marine conservation – the first in the world to do so.

Astral Aviation and Etihad Cargo sign Pharma Service Level Agreement (SLA)

Astral Aviation Limited and Etihad Cargo, the cargo and logistics arm of Abu Dhabi’s Etihad Aviation Group, have deepened their cooperation into Africa with the signing of a Service Legal Agreement (SLA) to provide reliable and cost-effective airfreight solutions across the continent.

Astral Aviation operates a fleet of 14 freighters out of its Nairobi and Johannesburg hub, which Etihad Cargo will leverage on for increased vaccine distribution across Africa. Both carriers are members of The International Air Cargo Association (TIACA) and Pharma.Aero, whose joint Project Sunrays initiative offers cross-industry collaboration for pharma shippers managing complex vaccine distribution logistics.

The SLA, a first Pharma Interline agreement, ensures both parties are fully compliant with latest GDP and IATA Pharma regulations and standards, and guarantees processes, from booking to handling of such sensitive goods, are standardised and performed to the highest quality.

The agreement defined the steps and responsibilities of each party to ease the transfer between the two airlines, boost transparency and making sure that pharma specific documentation, labelling and messaging are used and shared under a precise order and form.

“In addition to significantly expanding Etihad Cargo’s reach across Africa, this inter-airline agreement ensures complete adherence to the specific requirements of pharmaceutical product transportation. Customers can be reassured that Etihad Cargo partners will expertly maintain cool chain integrity,” explained Martin Drew, Senior Vice President Sales and Cargo, Etihad Aviation Group.

Astral Aviation and Etihad Cargo have committed to shipping and storing pharmaceuticals with passive packaging between the main temperature ranges known as COL (+2 to +8°C), CRT (+15 to +25°C) and ERT (+2 to +25 °C).

“We are honoured to partner with Etihad Cargo and participate in the critical distribution of COVID-19 vaccines to and within Africa. The equitable access and distribution of COVID-19 vaccines in Africa will be enhanced with the help of partnerships and collaborations within the aviation sector, such as the one enacted between Etihad Cargo and Astral, which will offer one-stop solution for the vaccines to and within Africa,” said Sanjeev Gadhia, CEO of Astral Aviation.

This Agreement will provide a timely boost in both the Nairobi and Abu Dhabi hubs positioning as a global logistics hub capable of facilitating vaccine distribution.

Etihad Cargo interlines with Astral and KQ to accelerate vaccine rollout in Africa

Etihad Cargo has signed a pharma interline agreement – officially named ‘Service Legal Agreement’ (SLA) – with Astral Aviation and Kenya Airways (KQ), which will expand its pharma reach in Africa, as well as providing “reliable and cost-effective” airfreight solutions across the continent.

The agreement comes as the global rollout of coronavirus vaccines continues and it is expected to support Etihad Cargo’s Hope Consortium operations.

Etihad Cargo said it is committed to shipping and storing pharma goods with passive packaging between the temperature ranges: ‘COL’ (2 to 8°C), ‘CRT’ (15 to 25°C) and ‘ERT’ (2 to 25 °C).

The terms of the agreement were outlined by Etihad Cargo for its new partners – Astral Aviation and Kenya Airways – to “boost transparency and make sure pharma-specific documentation, labelling and messaging are used and shared under a precise order and form”.

Under the terms of the agreement, Astral Aviation and Kenya Airways will comply with GDP and IATA Pharma regulations throughout the cool chain.

Martin Drew, senior vice president of sales and cargo at Etihad Aviation Group, commented: “In addition to significantly expanding Etihad Cargo’s reach across Africa, this inter-airline agreement ensures complete adherence to the specific requirements of pharmaceutical product transportation. Customers can be reassured that Etihad Cargo partners will expertly maintain cool chain integrity.”

He added: “The World Health Organisation has recently reported that only 2.5% of African citizens are vaccinated against Covid-19 and that millions more doses are required to meet even modest targets.

“Through Etihad Cargo’s ever-expanding portfolio of partnerships and collaborations, the Hope Consortium can play a greater role in meeting vaccine demand.”

Peter Musola, head of cargo commercial at Kenya Airways, added: “Kenya Airways Cargo is excited to join Etihad Cargo in the HOPE Consortium initiative through providing logistical solutions in our home continent.

“With only 2.5% of the African continent vaccinated against COVID-19, this will go a long way toward achieving the Africa Centre for Disease Control and prevention (CDC) to vaccinate 60% of the population by the end of 2022. This is a fundamental need and prerequisite toward aviation recovery in Africa.”

Sanjeev Gadhia, chief executive of Astral Aviation, said: “We are honoured to partner with Etihad Cargo and participate in the critical distribution of Covid-19 vaccines to and within Africa. The equitable access and distribution of Covid-19 vaccines in Africa will be enhanced with the help of partnerships and collaborations within the aviation sector, such as the one enacted between Etihad Cargo and Astral, which will offer one-stop solution for the vaccines to and within Africa.”

Since the pandemic, Etihad Cargo has transported almost 2,500 tonnes of pharmaceuticals to Africa, including 41 dedicated flights on behalf of the United Arab Emirates government.

The carrier currently serves 72 network destinations in the Middle East, Asia, Europe, Africa and the Americas. It’s fleet of 65 aircraft operate 430 weekly rotations, in addition to charter flights, which serve demand at nonnetwork destinations.

Astral aviation serves 15 African destinations out of its Nairobi and Johannesburg hubs with its fleet of 14 freighters.

Both Astral Aviation and Kenya Airways are members of TIACA and Pharma.Aero, whose joint Project Sunrays initiative offers cross-industry collaboration for pharma shippers managing complex vaccine distribution logistics.

DHL Global Forwarding and TotalEnergies partner to develop a solar project

As part of their strategic cooperation agreement, a solar energy project is launched; Over 14,000 MWh of electricity will be produced per year on eight sites; The reduction of CO2 emissions is part of Deutsche Post DHL’s (www.DPDHL.com) Sustainability Strategy.

DHL Global Forwarding, the leading provider of air, ocean and road freight services, and TotalEnergies have signed a contract for a solar energy project in Dubai. It is in continuation with their Strategic Cooperation Agreement signed in 2019. TotalEnergies will solarize eight of DHL’s sites in Dubai to cover the equivalent of over 46,000m² of photovoltaic panels. The solar system will save more than 6,000t of CO2 the first year. The project complements Deutsche Post DHL Group’s sustainability roadmap to achieve zero-emissions logistics from 2050 onwards.

“With an annual average of 8.7 hours of sunshine per day, Dubai has a clear advantage in terms of solar energy. I am all the more pleased that we can use this asset to advance our sustainability goals further”, says Amadou Diallo, CEO DHL Global Forwarding Middle East and Africa. “With TotalEnergies, we have a partner at our side, not only to drive forward the use of alternative fuels but also to optimize our overall energy consumption. In this way, we are going step by step to achieve our ambitious target to reduce all logistics-related emissions to zero by the year 2050.”

The whole solar system will produce over 14,000 MWh per year, enough energy to power over 16,000 homes yearly in the UAE. In addition to supplying the sites with solar power eight electrical vehicle charging stations will also be installed. Thus, DHL Global Forwarding contributes to the Group’s goal of electrifying 60% of its fleet by 2030.

Hamady Sy, Managing Director at TotalEnergies Renewables Distributed Generation Middle East and Africa, declared: “We are delighted to support DHL Global Forwarding with their green initiatives in the UAE of which solar will play an important part, and look forward to helping them reducing their carbon footprint in the region and beyond”.

Not only does the solar system produce more sustainable energy, but the program also includes that 85% of the solar modules are recycled. Furthermore, they are produced exclusively in Landfill Free certified factories. All this contributes to making the entire product cycle more sustainable and saves more than 150,000 tons of CO2 over the contract duration.

In keeping with its policy of “burn less – burn clean”, DHL Global Forwarding is consistently optimizing the carbon efficiency of its transport network, its fleet and its real estate. In order to achieve its sustainability goals, Deutsche Post DHL Group is investing €7 billion in climate-neutral logistics solutions through 2030, by which point at least 30 percent of its fuel needs should be met by sustainable fuels.

“With an annual average of 8.7 hours of sunshine per day, Dubai has a clear advantage in terms of solar energy.

I am all the more pleased that we can use this asset to advance our sustainability goals further

Khato Civils Announces Drive To Mentor Next Generation Of African Firms

The leadership of South Africa based infrastructure development firm Khato Civils (www.KhatoCivils.com) has announced an ambitious programme to mentor a new generation of African firms. After already working on major infrastructure projects in South Africa, Malawi and Botswana, Khato Civils intends to expand into markets such as Zambia, Zimbabwe, Tanzania and Kenya while working with local companies and communities in each infrastructure project it embarks on. As part of its continental growth plan, Khato Civils is making an unprecedented commitment to mentorship of local firms with 30% of the value of projects to be distributed to three partner firms in each market it enters. Khato Civil’s long-term growth plan is to enter 42 African markets. However, Khato Civils is also engaged in a communications campaign to raise awareness of the challenges faced by African entrepreneurs and professionals who seek to play a role in building the continent’s infrastructure. With the majority of major infrastructure works going to multinational firms, and many markets lacking legislation that ensure local subcontracting & supplier opportunities, African entrepreneurs are being locked out of the development of their own nations. Khato Civils is calling for change across the sector and for African firms to lead in Africa’s infrastructure rollout. In a series of interviews with AfricaLive. net, CEO Mongezi Mnyani and Chairman Simbi Phiri announced the mentorship programme and called for Africa’s infrastructure development to be led by African firms, highlighting that: *Only 16% of Construction on Africa’s Infrastructure (https://bit.ly/3laIOsn) build is carried out by local firms. *According to Deloitte (https://bit. ly/3uOLz64), Chinese contractors alone The Africa Logistics

constructed an estimated 30 per cent of all major projects in Africa in 2020. *International financiers will often insist on work going to European or Asian firms, overlooking that African firms have the capabilities to deliver and the understanding of how to work with local communities. *Projects that fail to create local employment and subcontracting & supplier opportunities are at risk of protests, disruption and sabotage from excluded communities. *Khato Civils has highlighted five threats to African development from failing to engage local communities in infrastructure projects: economic threat, threat of instability, social threat, threat to infrastructure and reputational threat.

CEO Mongezi Mnyani Calls For Engagement With Local Communities and Local Firms

Khato Civils CEO Mongezi Mnyani recently worked with AfricaLive to highlight the threat to African economies that the lack of involvement from locally owned firms creates. Mr Mnyani is working to make sure financiers hear the message: engaging with local firms and communities is not only the right thing to do - it makes economic sense.

In the case of the Khato Civils 100km pipeline project in Botswana, recruiting workers and engaging with local leadership along the route of the pipeline resulted in the project being delivered ahead of schedule and under budget (https://bit.ly/3laSRhh). Botswana’s Water Utilities Corporation credited working with Khato Civils as saving them 1.2bn Pula (over USD 100m) as compared to similar large scale water projects.

Mr Mnyani explained “You can’t just undermine what local companies can do. If you show up in these communities biased and not willing to engage, you will fail.

“In Mozambique, for example, we have seen cases of project failure because multinationals had little respect for the locals. It can directly lead to protests, strikes or sabotage of projects.

“You should always have a mindset of working with the locals to avoid animosity. If we are serious about the health of the economy, we must accompany aid with capacity development.

“The mindset of feeling superior to the locals needs to go if projects are to work properly across the continent.

“In Botswana, our approach was to reduce cases of conflict as much as we could. Our recruitment system had to change and become more inclusive.

“We ensured that we had workers from each village where the pipeline was crossing through.

“Consultation with local leadership could mean talking to traditional leaders, councillors, members of national assemblies and community leaders. Consultation can be very complex and time-consuming, but it is all worth it to eliminate any problems along the way. This is our process everywhere we go and we don’t intend to change it.”

The UK based NGO Engineers Against Poverty (http://EngineersAgainstPoverty.org/) are also working to highlight the risk to African

development that overlooking local firms creates, and have stated that “Reliance on foreign enterprises to design and construct facilities often means they are not sustainable as the expertise may no longer be available once the construction is complete.”

Chairman Simbi Phiri Announces Strategy To Mentor Africa’s Next Generation Of Firms

In order to address these risks to African infrastructure, Khato Civils has now committed to an ambitious mentorship programme for local firms. 30% of the value of projects will be distributed to three partner firms in each market Khato Civils enters.

Announcing the plan, Chairman Simbi Phiri said “We plan to expand into 42 African countries and give 30 per cent of each project to local companies.

“We plan to allocate resources to a few local companies in each of those countries to expose them properly. They will come in and see how we work and how we prepare. They will learn from us how to run finance, management and to adapt our model. If we start training three small local companies, at least two should succeed. We made the mistake of allocating 30 per cent of the contract value of the 100km pipeline project to train one local company in Botswana, however, that was managed poorly.

“In future, we will allocate that 30 per cent to three different local companies with each getting 10 per cent. Learning from such experiences is how we can ensure we have a positive impact as we grow.”

Expanding on issues facing Africa’s entrepreneurs, Mr Phiri told the story of his own entrepreneurial journey on AfricaLive.net (https://bit.ly/3uGZfzI) and spoke of his desire to help ambitious Africans from across all sectors, saying “I want to make one thing clear to young entrepreneurs reading this; banks are not the only source of funding.

Outrageous: Infrastructure Costs Increasing $2.3 Billion in a Crisis

The International Air Transport Association (IATA) warned that planned increases in charges by airports and air navigation service providers (ANSPs) will stall recovery in air travel and damage international connectivity.

Confirmed airport and ANSP charges increases have already reached $2.3 billion. Further increases could be ten fold this number if proposals already tabled by airports and ANSPs are granted.

“A $2.3 billion charges increase during this crisis is outrageous. We all want to put COVID-19 behind us. But placing the financial burden of a crisis of apocalyptic proportions on the backs of your customers, just because you can, is a commercial strategy that only a monopoly could dream up. At an absolute minimum, cost reduction—not charges increases—must be top of the agenda for every airport and ANSP. It is for their customer airlines,” said Willie Walsh, IATA’s Director General.

A case in point is found among European air navigation service providers. Collectively, ANSPs of the 29 Eurocontrol states, the majority of which are state owned, are looking to recoup almost $9.3 billion (€8 billion) from airlines to cover revenues not realized in 2020/2021. They want to do this to recover the revenue and profits they missed when airlines were unable to fly during the pandemic. Moreover, they want to do this in addition to a 40% increase planned for 2022 alone.

Other examples include:

Heathrow Airport pushing to increase charges by over 90% in 2022

Amsterdam Schiphol Airport requesting to increase charges by over 40% over the next three years

Airports Company South Africa (ACSA) asking to increase charges by 38% in 2022

NavCanada increasing charges by 30% over five years

Ethiopian ANSP raising charges by 35% in 2021

“Today I am ringing the alarm. This must stop

if the industry is to have a fair opportunity at recovery. Infrastructure shareholders, governmental or private, have benefited from stable returns pre-crisis. They must now play their part in the recovery. It is unacceptable behavior to benefit from your customers during good times and stick it to them in bad times. Doing so has broad implications. Air transport is critical to support economic recovery post pandemic. We should not compromise the recovery with the irresponsibility and greed of some of our partners who have not addressed costs or tapped their shareholders for support,” said Walsh.

Some regulators have already understood the danger being posed by the behavior of infrastructure providers. Regulators in India and Spain successfully intervened on the increases proposed by airports. They provide an example for other regulators to follow. And the Australian Competition & Consumer Commission[1] warned in their recently published report that increasing charges to recover lost profits from the pandemic will demonstrate airports systematically taking advantage of their market power, damaging the vulnerable airline sector’s ability to recover at the expense of both consumers and the economy.

Airlines undertook drastic cost cutting from the outset of the pandemic, reducing operating costs by 35% compared to pre-crisis levels. This was supported by increased commercial borrowing and shareholder contributions. Airlines also sought government aid, the majority of which was in the form of loans that need to be paid back. Of the $243 billion that was made available to airlines, $81 billion supported payrolls and approximately $110 billion was in support that needs to be paid back. As a result, airlines have amassed a huge debt burden of over $650 billion. Any defaults could result in airline failures and the loss of tens of thousands of jobs.

IATA urged airports and ANSPs to apply solutions to address the financial impact of the pandemic including:

Implementing sustainable cost control measures

Tapping shareholders

Accessing capital markets

Seeking government aid

The prospect of easier intra-Africa trade is boosting investments in transport and logistics

Africa’s transport and logistics start-ups are on track to raise more growth funds this year, in deals that could help ignite intra-Africa trade.

Since the outbreak of the Covid-19, there has been a rising shift towards tech-enabled transportation across the continent to overcome movement restrictions, improve efficiencies and grow food chain resilience. The wider growth of e-commerce in Africa during the pandemic has also created fresh demand in the logistics sector, sparking a rise in last-mile delivery apps for food and other goods.

Baobab Network, a social impact technology accelerator, shows that the transport and logistics sector is staring at a startup fund-raising record, following a year in which it raised $217 million.

Over the last eight months alone, the sector has already raised funding worth $200 million.

“Transport and logistics companies are still on track for their best year yet in terms of value raised. This year, transport and logistics companies in Africa have secured $200.77 million over 37 funding rounds,” says Baobab’s transport and logistics sector map 2021.

Of the 37 funding rounds, the majority, 62% are either seed or pre-seed funding rounds, with valThe Africa Logistics

ues averaging $50,000.

Togo’s Gozem and Nigeria’s SEND technologies) were two tech-enabled west African logistic firms that raised over $3 million, while Egypt’s ondemand warehousing and logistics platform, Flextock raised $3.25 million in a pre-seed funding round as the North African country saw increased activity in the sector.

MAGNiTT, a startup data platform for emerging venture markets in Middle East and North Africa, affirms it has been a good year for Egypt with the country breaking its quarterly and half-yearly records in venture capital funding. The country’s start-up funding in the first half of the year was equivalent to 91% of all funds raised in 2020, with a year-on-year growth of 28%. “Out of the top 3 most-funded geographies in MENA, Egypt was the only one to witness an increase in deal volume YoY reflecting a healthy startup space and capital allocation,” according to MAGNiTT

Since the beginning of the year, seven Egypt-

based delivery and logistics startups have raised $42 million in funds.

Baobab network puts the number of Africa’s transport and logistics start-ups at over 430 with 65% founded during or after 2017 with the value range of funding for these startups seen rising beyond $10 million.

“We see investments in the 10M+ range have greatly increased this year, accounting for almost 30 per cent of the investments,” according to the report.

This points to growing investor attraction to this space, possibly to tap into the world’s single largest market-AfCFTA.

Nigeria’s mobility startup, Moove, recorded a big raise after closing $40 million in a debt financing round in May and $23.2 million in a Series A funding round in August.

“It has already been a record year for transport and logistics companies in Africa, with 4 months left to go in 2021. Will funding continue to flow in as the year wraps?” according to Baobab Network.

Pending deals in the more mature transport and logistics market include a July offer by UAE port operator, DP World to acquire South Africa’s listed firm, Imperial Logistics for $890 million. DP World and other logistics companies like South Africa’s Grindrod are also looking to benefit from private participation in a number of South Africa’s harbor operations.

This story was republished with the permission of bird, a story agency under Africa No Filter.

Tips for Logistics contracts management

By Jan Runge Petersen

Patient negotiation is key

“Manage complex logistics contracts very carefully,” is a message often heard at logistics seminars. So you would expect that almost every company does so. And that as a minimum, they review monthly key performance indicators (KPIs) with their suppliers in order to improve logistics performance. But do they?

In practice, logistics contract management that focuses on value optimisation is a difficult process for many companies. The contract management process contains several common pitfalls that can prevent you from getting the most out of the relationship with your logistics service provider (LSP).

We take a look at logistics contract management from both sides of the table: where the most common pitfalls lie in managing the clientLSP relationship, how they can be identified and – more importantly – how to avoid them. 1. Choosing a supplier based on costs alone

“How low can you go?”

Costs are the single most important aspect during contract negotiations. But this means that opportunities for incorporating other aspects often get overlooked. Aspects that can generate a lot more value than the savings made from negotiating a few extra percentages of discount. For example, creating a joint planning process between the logistics service provider and the shipper could potentially yield more value than a 5% discount on storage. Develop a number of concepts where extended services will add direct value to your logistics operation, and consider introducing them during contract negotiation. LSPs are often more open to discussing an extension of the activities than negotiating rock-bottom tariffs. Think in terms of how to create value and include these in the contract. “Price is what you pay; value is what you get,” as Warren Buffett said – let yourself be guided by what you will receive. 2. Negotiating contract terms and KPIs out of line with daily operations

“Things turned out to be quite different in practice”

It often becomes clear, as soon as the contract management phase starts, that the framework has been based on how the negotiators expected the operation would run at the time of contract negotiation, instead of the actual daily operation. In many cases, the defined KPIs are irrelevant or impossible to measure in daily practice and, as a consequence, the quality of the performance cannot be measured or is perceived as bad. Agree to review and revise the cost base and standardisation after a certain time, e.g. 6 months into the contract, to align the initial plan with reality. During this initial contract period, a joint team should be responsible for evaluating the performance quality, terms, conditions and assumptions agreed upon during contract negotiations. Building on the experience gained in this first part of the cooperation will strengthen the contract and boost mutual trust.

3. Strategy mismatch

“We lost each other along the way”

Strategy can be an over-used term, but in a supply chain context, the logistics strategy defines a company’s approach to ensuring the logistics process contributes to the distinctiveness of its offering. In short, how do we differentiate ourselves, or outperform our

competitors, by optimally using our (or our LSP’s) logistics capabilities? An LSP that has no match with your own logistics strategy will at best fulfil its operational obligations at the start of the contract. Soon, however, the discrepancy on where you want to go and the ‘opposing’ strategic direction of the LSP will develop into a serious obstacle for the overall competitiveness and distinctiveness of the entire company. Consider aspects such as the LSP’s long-term plans and investment into areas such as IT landscape, visibility, industry-specific solutions, footprint and product development. Request details of the supplier’s strategy; ask for a thorough explanation by one of the board members and translate this into a specific logistics strategy. Know which standards are needed for the processes in order to outperform the competition. These standards can subsequently be addressed in the logistics contract. 4. Multiple contracts for warehousing and distribution

“Now I have two single points of contact”

Obviously there are instances in which it makes sense to split warehousing and distribution. From a contract management perspective, however, this type of set-up adds complexity. Apart from perpetual investigations into who was to blame, whether the address was wrong or the order was picked too late for dispatch, planning and reviewing is shared among various parties, with the shipper being responsible for orchestrating the flow between the providers. This set-up does not suit all, and there should be a clear business case in favour of separate contracts. The renewal frequency of distribution contracts should be seen as separate, and can be re-negotiated on an annual basis.

5. The buyer is not the user

“That’s not what I agreed to!”

Many buyers, in their role as logistics managers, are not in charge of the budget and therefore are not allowed to make final decisions. Instead, the final responsibility for approving supplier contracts often lies with purchasing departments, who sometimes negotiate unsuitable or different contract terms and specifications. These will only become apparent in the implementation phase, by which point the relationship will likely already be under stress. The end user is best positioned to assess the supplier’s performance during the contract management phase, but is unlikely to be fully informed about the contractual service levels. Even if the end user is involved in the specification phase of the purchasing process, he or she is usually unable to influence the final details of the contract, which are in the hands of purchasers and lawyers. The translation of the operational paragraphs in the contract into daily practice plays a significant role during the contract management phase. Don’t get caught out: create a team that is responsible for the complete process from start to finish and that is knowledgeable about the specifications that are linked to actual daily practice. The team makes all decisions throughout the entire process. This is much more effective and prevents conflicts of interests and misunderstanding in communications.

6. Overselling

“We deliver anything, anytime, anywhere – or your money back!”

Changes in the supply chain are usually heavily scrutinised by the client’s commercial organisation. These changes will often be justified in terms of substantial savings or quality improvements. The exact service level of a new logistics contract is often interpreted differently, or its scope and limitations are not clearly communicated, resulting in the commercial organisation of the client overselling to its end customers. We have seen examples of ‘On Time In Full’ (OTIF) commitments including bonus-malus agreements and liability acceptance at order level. It is very important that the commercial organisation knows what it can – and more importantly what it cannot – sell to its clients. It is vital that the logistics team on the client side proactively communicate the limitations of the logistics operation and Service Level Agreements internally. 7. The lock-in

“You can check out anytime you like…”

The final pitfall is in fact the most common one. There is often an unclear barrier for shippers to terminate a contract and change suppliers. This can be caused by a variety of reasons, such as reluctance to enter into a demanding move project, good relations with the provider, or the fear of service disruption for example. The incumbent logistics provider is familiar with the procedures and methods used by the shipper, and the people involved on both sides know each other well. The more long-standing the relationship, the more disappointing the service needs to become before that relationship is ended. In such a case, it should be clear how the existing contract can be terminated effectively when a fruitful longterm collaboration is no longer viable. Include the exit criteria in the contract. Furthermore, create a step-by-step build-up of the relationship. Let the provider first prove that it can meet the standards that have been set before further integrating the processes and systems.

Contracts are usually regarded as lengthy, bulky and complex legal documents. When contracts are well-structured so that their contents are clearly visible, they become great control instruments. Logistics contract managers from both the shipper and the provider should not need to frequently refer to the legal text and small print, as the basis for daily operations should flow from within the well-defined boundaries of the contract.

Manage your logistics contracts with greater clarity and get the basics right. See our expert insights on how to negotiate logistics services contracts.

About the author

Jan Runge Petersen has been active in the logistics industry for 40 years, during which time he has held various management positions within logistics and freight forwarding globally. He has spent the last 18 years at DSV. He started out as a Division Manager with DSV Road, later as Managing Director DSV Solutions in Sweden and currently holds the position Senior Director Business Development Nordics at DSV Solutions, based in DSV’s Headoffice in Hedehusene.

RAM PICKUPS

RAM 1500 I RAM HEAVY DUTY 2500/3500

- 6.7ltr CUMMINS COMMON RAIL, INTERCOOLED TURBO DIESEL - 6SPD AUTO TRANSMISSIION WITH INTERGRATED EXHAUST BRAKE - UCONNECT 8.4A SYSTEM WITH 8.4” TOUCHSCREEN - DUAL ZONE AUTOMATIC TEMPERATURE CONTROL - AUTO DIMMING REARVIEW MIRROR - EXTERIOR MIRRORS WITH SUPPLEMENTAIL TURNING SIGNALS

*RAM 2500 shown here

SALES ENQUIRIES

Thinus:+27 82 921 4773 Office: +27 35 789 7014 sales@ustrucks.co.za www.ustrucks.co.za

- DRIVER PREFERENCE MEMORY CONTROL - WOODGRAIN INSTRUMENT PANEL - PARKVIEW BACKUP CAMERA - LEATHER-TRIMMED HEATED AND VENTILATED SEAT - KEYLESS ENTRY - KEYLESS START