The Future of Eco-friendly Logistics in Africa

The path to eco-friendly logistics in Africa is complex but full of potential. As a continent on the rise, Africa has the opportunity to build a logistics sector that is not only efficient and competitive but also sustainable and inclusive.

As the global focus on sustainability intensifies, the logistics industry in Africa stands at a crucial juncture. The continent, with its vast landscapes and rapidly growing economies, presents both unique challenges and opportunities for implementing eco-friendly logistics practices. According to the IMF’s Regional Economic Outlook for Sub-Saharan Africa (April 2024), economic growth in the region is set to improve from 3.8% in 2024, with a projected rise to 4.0% by 2025. The report also highlighted that sub-Saharan African countries will need additional international support to foster a more inclusive and sustainable future. This could be crucial in addressing the barriers to green logistics.

One of the most significant barriers to the widespread adoption of green logistics in Africa is the lack of adequate infrastructure. Many African countries still struggle with poor road networks, limited rail systems, and underdeveloped ports, making it challenging to implement efficient and environmentally friendly logistics solutions.

Jean-Baptiste Rambaud, Air and Ocean Leader IMEA, CEVA Logistics highlighted the infrastructure challenges faced by companies trying to implement green logistics in Africa, stating, "To have a fleet of green vehicles in Africa, one would require the availability of charging stations. Likewise, ports would need to invest in, such as biofuel charging stations."

Another crucial barrier is the higher initial cost associated with green technologies. Many businesses in Africa, especially small and medium enterprises, find it difficult to justify the upfront investment in eco-friendly vehicles or renewable energy systems, even if they offer long-term savings. Elaborating on the same, Esha Mansingh, Head of Corporate Affairs & Sustainability: sub-Saharan Africa at DP World, mentioned, "The adoption of green logistics also requires significant upfront investment in technology, equipment and training. For many companies in Africa, especially SMEs, these costs are prohibitive, limiting their ability to transition to greener practices. Compatible fuels and green electricity are also required to adopt greener vehicles, and these are not widely available in Africa."

The adoption of green logistics requires significant upfront investment in technology, equipment and training.
-Esha Mansingh of DP World

Mansingh further emphasised the complexities of implementing green logistics across the continent and stated, "Africa's complex and fragmented supply chains make it challenging to implement and standardise green logistics practices across different regions and industries. The reliance on non-renewable energy sources and the lack of stable, green energy infrastructure, further complicate the transition to green logistics."

Notably, the role of governments and policymakers in creating a more supportive environment for green logistics initiatives cannot be overstated. Many industry leaders believe that a combination of incentives, regulations and public-private partnerships is necessary to accelerate the adoption of sustainable practices.

Rambaud of CEVA Logistics highlighted ways in which governments could support the transition to sustainable logistics: He suggested, "A closer collaboration with the private sector and local green tech start-ups that understand the bespoke environment usually creates a healthy environment for green logistics to take off. It starts with simple steps, such as route optimisation, adopting a single maritime window etc, which are both cost-effective and green. Also, using solar power in warehouses where possible is another simple way towards green logistics across the continent."

Mansingh too emphasised the importance of collaboration between the public and private sectors stating, "Governments across Africa are expected to introduce stronger policies and regulations that promote green logistics. These may include stricter emissions standards, incentives for businesses to adopt sustainable practices, and penalties for those that do not comply. Collaboration between the public and private sectors will be key to driving innovation and investment in green logistics. We will also likely see more public-private partnerships focused on developing sustainable logistics solutions, from cleaner transportation options to advanced waste management systems. These partnerships will help bridge the gap between policy goals and practical implementation."

Highlighting the importance of financial incentives, she added, "Offering financial support – such as tax breaks, grants or low-interest loans – is another way that governments can encourage businesses to invest in green logistics. These incentives can help offset the initial costs of adopting sustainable practices and make them more accessible to a wider range of companies."

Some countries are already taking steps in this direction. For instance, the Kenyan government proposed a Finance Bill 2024 that would impose a value-added tax (VAT) on electric vehicles (EVs), buses, and lithium-ion batteries including solar-powered ones. However, more comprehensive and continent-wide policies are needed to create a truly supportive environment for green logistics.

Moreover, technology is also set to play a pivotal role in accelerating the transition to sustainable logistics in Africa. From route optimisation software that reduces fuel consumption to blockchain solutions that enhance supply chain transparency, technological innovations are reshaping the logistics landscape.

For instance, DP World partnered with Woolworths, a retail company in South Africa to launch Africa's first refrigeration trailer featuring revolutionary AxlePower technology, which reduces carbon emissions by using kinetic energy from braking to power the refrigerator.

The Internet of Things (IoT) and artificial intelligence (AI) are also making significant inroads in African logistics. These technologies enable real-time tracking and monitoring of shipments, leading to more efficient use of resources and reduced waste. Emphasising the role of technology in driving sustainability, Rambaud of CEVA Logistics mentioned, "Most of the new technologies have an embedded objective to deliver in some way or a form towards sustainability objectives. Once these types of technology are adopted in full or as a hybrid, companies and communities can start yielding results."

A closer collaboration with the private sector and local green tech start-ups that understand the bespoke environment usually creates a healthy environment for green logistics to take off.
-Jean-Baptiste Rambaud of CEVA Logistics

Mansingh of DP World, further elaborating on the potential of AI in optimising supply chains, stated, "Advanced technologies such as AI and machine learning can be used to optimise supply chains, making them more efficient and reducing waste. For example, AI can predict demand more accurately, leading to better inventory management and reducing the need for excess transportation, which, in turn, lowers emissions."

Looking ahead, the future of green logistics in Africa appears promising, but with challenges. The continent's rapid economic growth, coupled with increasing environmental awareness, is expected to drive significant changes in the logistics sector over the next few years. Many industry players predict a surge in EV adoption for last-mile deliveries in African cities, increased use of renewable energy in warehouses and distribution centres, and more efficient cross-border logistics enabled by improved regional cooperation.

Providing insights into the future of sustainable logistics in Africa, Rambaud noted, "It will be a gradual process. The economic activity of countries in Africa is often dependent on their level of infrastructure. The opportunity is available in many places to develop a more sustainable system of infrastructure from the ground up, instead of modernising existing systems."

Mansingh further shared her vision for the future of green logistics in the continent by adding, "As innovation and investment expands, we can expect to see more widespread adoption of digital technologies for data-driven efficiency improvements, greener transition fuels including gas and biofuels, and greener technologies across the logistics sector. Over time, EVs are likely to become more common, particularly in major city centres, as battery technology improves and charging infrastructure expands. The use of renewable energy sources, such as solar and wind, will become more integrated into logistics operations, reducing the sector's carbon footprint."

Overall, it is important to note that the path to eco-friendly logistics in Africa is complex but full of potential. As a continent on the rise, Africa has the opportunity to build a logistics sector that is not only efficient and competitive but also sustainable and inclusive. The challenges are significant, from infrastructure gaps to financial constraints, but so are the opportunities. With continued investment, innovation, and collaboration, Africa could well become a global leader in green logistics, setting new standards for sustainability in the industry.

This was originally published in the September-October 2024 issue of Logistics Update Africa.