Africa needs investments to upgrade logistics network

Geopolitical conflicts, including the war in Ukraine and attacks on commercial shipping vessels in the Red Sea, have caused detours and delays, impacting maritime trade to and from Africa.

During a panel discussion at African Energy Week (AEW) 2024: Invest in African Energies, sponsored by logistics and port operations company Africa Global Logistics (AGL), insights were shared on how to mitigate some of the impacts of supply chain disruptions and how to proactively navigate the evolving logistics landscape in Africa.

Ashutosh Singh, Head of Energy Transition, S&P Global Commodity Insights, set the tone of the discussion as the panel moderator. Panelists included Thomas Bonnetain, Oil & Gas Director, AGL; Dennis Malkoc, Business Development Manager, Universal Africa Lines Netherlands; Leonid Shlyakhturov, Executive Director, FESCO Integrated Transport and Björn Larsson, Senior Project Manager, DOF Subsea.

Bonnetain noted a surge in the cost of international transport to bring material into Africa and much longer lead times to bring equipment to project sites. "Disruption of the Suez Canal has led to the rerouting of vessels around the African continent, causing delays at African ports due to a rise in demand for port services. This results in increased project costs and causes project delays in Africa."

Bonnetain added that Africa is in desperate need for investment to modernise its logistics network and build capacity at ports, road and rail. To assist the modernisation of Africa’s logistics infrastructure, AGL has an over $500 million investment plan each year, and is a primary player in public-private partnerships in Africa to help the continent’s much needed transformation, Bonnetain said.

AGL has also invested in the Port of Lobito – the second largest port in Angola – to increase the attractiveness of the terminal and to contribute to the economic and social development of the region. “We are at the heart of African transformation,” Bonnetain said.

Malkoc said that commercial ports owned and operated by local port authorities “are a big concern for us,” citing delays and quay congestion resulting in higher cargo costs. This is due to a lack of investment and organisation at the port, he added.

Offering a practical example of how Africa could reduce supply chain disruptions and make trade more efficient, Shlyakhturov used China and Russia’s cross-continental collaboration as a model that Africa could adopt to improve both regional trade as well as cross-continental trade. He said trade between China and Moscow is supported by five diversified routes between the countries including road, sea, and rail trade routes.

Larsson said the harmonisation of regulatory frameworks along shipping routes, specifically for the movement of equipment, personnel, oil and gas and energy products via sea, would go a long way.