African landscape demands logistics tech to go a layer deeper

Africa, like any other region in the world, has been using the most out of its entrepreneurs and technopreneurs to solve the inefficiencies and hurdles in its logistics. The one way they are growing is by collaborating and leveraging the best from each other.

Logistics technology companies around the world are helping businesses to improve the efficiency and effectiveness of the logistics industries. These tech-based logistics companies streamline and optimise supply chain processes, enabling businesses to effectively manage the movement of goods and materials. And it is the same with the African continent.

However, many African countries lack a robust infrastructure for transportation and logistics, which can make it difficult for businesses to track the movement of goods and materials.

For example, the transport costs in the Northern Corridor, an important transport route in the East and Central African countries of Burundi, Eastern DR Congo, Kenya, Rwanda, South Sudan and Uganda are estimated at $1.8 per km per container, according to a survey carried out by the Shippers Council of East Africa (SCEA), which is significantly higher than international rates. Further studies by SCEA also note that the Covid-19 pandemic has further increased these logistics costs on several fronts making it difficult to move goods in the continent.

Mark Mwangi, founder & CEO of the Nairobi-based digital logistics marketplace Amitruck agrees with the fact that Africa is still lagging slightly behind other regions and markets. “The logistics sector is highly fragmented and requires consolidation in order to make the adoption of new solutions and technologies viable, and solve various issues such as private infrastructure (e.g. Forklifts, Automation etc), public infrastructure (e,g, paved roads, bridges etc) and governance (trade zones, customs, corruption reduction etc),” he said.

Sola-Usidame, founder and CEO of the Nigerian freight management startup OnePort 365 also thinks that the logistics industry in Africa is behind when compared to that of other continents. He pointed out that in India, a similar market, the industry is adapting to digital transformation at a very fast rate.

“The industry at large is gradually getting in on the broader trend of digital transformation, owing to the advent of new platforms and technologies that significantly enhance supply chain visibility and efficiency,” he said.

Due to increased demand for agricultural commodity exports and growing industrialization of certain key markets, Usidame noted that the industry needs a game changer in a few areas: Digitalization of ports and stakeholders, tech advancements like blockchain and adoption of big data.

“Right now we see basic technology used for warehousing, truck aggregation, physical technology such as cranes, forklifts, infrastructure such as roads and good governance as being more important.”
Mark Mwangi, Amitruck

Mwangi thinks that the logistics tech requirements of Africa are no different to other markets. “The issues that we solve elsewhere also need to be solved in Africa as the demands in the economy are the same. Consumers and businesses still want efficient and secure transport services. The only issue is in Africa we sometimes have to solve a layer deeper. For example, it might be more difficult to source transport providers as the market is more fragmented. These search costs can then be further increased by the difficulty of comparing across so many different providers,” he said.

He informed that, with Amitruck, they make sure the transporter can comply with customers' service level expectations, especially for large local and multinational companies. “It can be tricky to solve for those without aggregators such as Amitruck,” he added.

The logistics industry in Africa deals with highly fragmented freight management systems, high costs, complexity, opaque processes and poor connectivity among stakeholders.

To streamline the chaos, Usidame believes that Africa requires a radical systemic transformation focused on the gateway, trucking and logistics facilitation inefficiencies.

“Getting the logistics infrastructure right is critical for an efficient logistics supply chain, as Africa's supply chain networks will be a determining factor of Africa’s global competitiveness in the future,” he said.

“Getting the logistics infrastructure right is critical for an efficient logistics supply chain, as Africa's supply chain networks will be a determining factor of Africa’s global competitiveness in the future.”
Sola-Usidame, OnePort 365

In August 2022, Google, through its $50 million Africa Investment Fund, announced participation in the Pre-Series B round of the African on-demand logistics and trucking company Lori Systems. This is because of the tech giant’s belief in how much the logistics tech landscape and startups in the ecosystem can transform African business and economics. According to Lori Systems Linkedin page, the start-up is tackling a massive issue in Africa. “$180 billion is spent annually on haulage across Africa, which means that up to 75 percent of a product’s cost is due to logistics (compared to 6 percent in the US),” it reads.

Moove, an African mobility fintech, had signed a partnership with Lori Systems to launch in East Africa in 2021. Moove is solving the problem of African entrepreneurs' access to finance through digitation. It is an African-born, global mobility fintech company that provides revenue-based vehicle financing and financial services to mobility entrepreneurs across ride-hailing, logistics, mass transit, and instant delivery platforms.

In June 2022, Moove announced its second trucking partnership in Kenya with Sendy, a Nairobi-based tech company that builds fulfilment infrastructure for e-commerce and consumer brands. The announcement reads. “The Sendy partnership will enable fast, easy, and effective delivery of critical goods within Kenya to and from various destinations, meeting the needs of a diverse portfolio of cargo owners and end consumers.”

Mwangi noted that there are several notable African startups in logistics bringing different solutions to create value in parts of the value chain. Some of the startups he named are: Kobo360 in Nigeria, Trella in the Middle East and North Africa, Jetstream in Ghana and many others. These tech-enabled logistics startups use different technologies including artificial intelligence (AI), machine learning (ML) and Internet of Things (IoT) to achieve the desired results.

However, Mwangi believes that they still need some basics to be in place in Africa before starting to push for those, even though he appreciates the need for deep technology and the amazing benefits it can bring to this market. “Right now we see basic technology used for warehousing, truck aggregation, physical technology such as cranes, forklifts, infrastructure such as roads and good governance as being more important. Once we have those in place and working well we can then argue for the likes of IoT to help track goods and eventually with the data collected from these basics we might be able to progress to AI and Blockchain. There are still a lot of very basic issues to solve,” he said.

One of the other things that make the African logistics tech ecosystem is its willingness to collaborate and strive towards an integrated logistics network with technology. For example, Mobility 54 – the corporate venture capital subsidiary of Toyota Tsusho and CFAO – was one of the companies that invested in OnePort 365 in April 2022 together with one of the biggest Japanese venture capitals Samurai Incubate, Flexport and SBI Investment.

Mobility 54 has been investing in the improvement and digitalization of the in-land logistics sector in Africa through the strategic partnership with Sendy and Kamtar which is also engaged in digital logistics services in French-speaking Africa.

Mobility 54 invested $2 million in OnePort and in the announcement it lists one of its purposes as “To facilitate the collaboration with Sendy and Kamtar whereby Mobility 54 aims to develop a digitally-integrated logistics service for both cross-border and in-land transport.”

Meanwhile, speaking about the new year and the future of logistics tech in Africa, the most practical technology that Mwangi of Amitruck is looking forward to in 2023 is 5G connectivity. He believes 5G will have a deep impact on the information exchanged between various people and systems which will result in better coordination between operators. “There are various technologies that can transform logistics, but it requires time and effort to build professional-grade solutions that truly create value and can easily be adopted. Several technologies have already made their way into businesses such as mobile money, cloud computing, and API,” he said.

This feature was originally published in the Jan - Feb 2023 issue of Logistics Update Africa.