Improving Morocco's logistics infrastructure now a policy priority

Logistics infrastructure and supply chains in Morocco have strengthened considerably over the past decade. According to figures from the Moroccan Agency for Logistics Development (Agence Marocaine de Développement Logistique, AMDL), during the period 2010-16 the segment grew by 3.47% on average per year and directly contributed 24,000 net jobs, representing a share of 9% of all employment creation at the national level.

While its contribution to GDP is still low, at around 2.3%, high levels of public and foreign direct investment over the past decade, coupled with efforts by policymakers to establish industrial and logistics special economic zones (SEZs) and incentivise smallscale businesses, are expected to add value to the segment over the coming years.

Increased Investment

Between 2010 and 2016 the volume of investments in logistics outpaced that dedicated to roads, highways, rails, ports and airports combined, and is expected to expand by a substantial 75% to Dh110bn (€10bn) by 2035. This is due in large part to the implementation of the National Strategy for the Development of Logistics Competitiveness, which was launched in 2010.

“Over the past 10 years logistics have developed exceptionally thanks to the efforts of local authorities and infrastructure development,” Antoine de Mirbek, managing partner at local firm IPSEN Logistics, told OBG. “In 2008 only a few international global players were operational – mainly in the Casablanca area – but now all global players have their own set-up with high standards, including warehouse management systems all over the country.” Active global firms in the international logistics segment include DHL, FedEx and UPS, while the domestic logistics sphere is mainly composed of local players competing with Poste Maroc.

Logistics Zones

The national logistics strategy, which is spearheaded by the AMDL, has five main pillars, namely, SEZs for logistics; competitiveness; laws, policies and regulations; training and development; and optimising supply chains.

Significant progress has already been made under the strategy’s first pillar: as of 2016 the kingdom’s network of logistics SEZs covered 600 ha compared to just a few dozen of ha in 2010, according to the AMDL. The Casablanca and Tangier zones in particular have expanded rapidly. MedHub, the 10-ha SEZ located in the Tanger-Med Port complex, launched a 50-ha extension in 2018, with the first 25 ha set to come into operation in 2019. The zone currently houses approximately 70 international companies. Notable recent entrants include the French sports brand Decathlon and Abu Dhabi-based logistics company Emirates Logistics, which set up shop in the zone in 2018. These two new investments alone represented a total of Dh100m (€9m).

With the ability to ease the flow of goods between the point of production and the ports, SEZs are integral to both Morocco’s logistics and industrialisation strategy. The government’s end goal is to establish 33,000 ha of zones by 2030 in regions across the kingdom, including but not limited to Casablanca-Settat, Tangier-Tétouan-Al Hoceima and Marrakech-Tensift-Al Haouz. The majority – 27,500 ha – will be occupied by private sector companies.

In order to meet this objective, more investment will be needed in the established zones and more consideration will need to be given to securing affordable land access, which remains a notable barrier to development. According to De Mirbeck, land is three to four times more expensive in Morocco than in France or Spain, which contributes to rising logistics costs. In a move that reflects growing confidence in the strength of Morocco’s logistics capacity, in January 2018 the French cold chain logistics firm Sofrilog announced that it had chosen the kingdom as its first international location for a tri-temperature platform. Developed in partnership with Morocco’s Refrigeration and Logistics Company, the platform will support the transport of agri-foods domestically and regionally, and is expected to be completed by 2020.

SME

Another development which could help increase logistics competitiveness in the kingdom was the launch in 2018 of a new agency to facilitate the growth of small and medium-sized enterprises (SMEs). With technical and financial support provided by the SME Logistics Upgrade Programme, an SME agency will provide support to small businesses working in logistics function diagnosis, logistics activity outsourcing, logistics information systems and training in logistics trades.

Regional Strength

Despite the accelerated investment and initiatives to support growth, the kingdom still has a number of key structural issues to address before it can bring its logistical competitiveness in line with other countries in the MENA region. In 2018 Morocco placed 109th in the rankings of the World Bank’s Logistics Performance Index, down 23 places from 2016. This was above Algeria, which came in 117th, but below Tunisia at 105th and Egypt at 67th. The World Bank said that the decline in performance was due in part to a drop in the quality of delivery speed and tracking, and noted that while Moroccan shipments are reported to meet quality criteria by around 82%, airport and port supply chains take more time than is usually necessary when exporting or importing goods.

The Future

Logistics performance is a key factor for attracting new investments to the kingdom. It is also critical for improving overall competitiveness and the development of trade. Ongoing efforts to establish a robust network of SEZs with the capacity to ensure the smooth flow of goods between production points, transport networks and the ports is a key step forward, and will help ensure the future growth of the logistics segment. In the coming years, addressing structural issues should remain an area of priority. Expansion of logistics continues to be hampered by a lack of regulations and large informal system. About half of the companies active in road freight transport operate in the informal economy. The majority of these companies are very small, with only one or two trucks. They provide services below market price, thereby undermining the formal logistics and transport sector.

Digitalisation of logistics systems will go some way towards tackling this issue, as it will improve the tracking of goods, enhance efficiency, reduce delivery times and make it easier to identify issues in the value chain. Customs processes are expected to be digitised in 2019, significantly improving the flow of goods.“What is being done by the Customs administration to enhance their processes through digitalisation is a development that will help modernise the whole sector,” Alexis Rhodas, managing director of logistics firm GEFCO Morocco, told OBG.