New logistics facilities to boost Algeria's trade competitiveness

Customs procedures in Algeria are often associated with high storage costs and bureaucratic constraints that affect distribution, leading to underperformance. Whereas the country possesses 11 commercial ports along its 1200-km coastline, most of them lack storage capacity, and face infrastructural and equipment deficiencies that make them unable to achieve a dynamic flow of freight distribution.

With 95% of Algeria’s trading activity operating through maritime channels, developing modern import-export facilities is of the utmost importance. To that end, a project to improve the performance of commercial activity and gain efficiency in international trade is part of the country’s 2015-19 development plan. In 2016 the government prioritised the need to establish centralised logistics platforms at the main ports – Algiers, Bejaia, Djen Djen and Arzew – to enable effective handling practices.

Storage Capacity

The dry port in Rouiba, managed by state-owned Algerian Intermodal Logistics Centre, has been effectively reducing storage congestion at the Port of Algiers since the facility was inaugurated in May 2016. Boudjemaa Talai, then-minister of transport and public works, highlighted the project as a milestone in the national strategy to develop logistics infrastructure. Connected to the port by rail, the Rouiba dry port has capacity for 100,000 containers, which are managed under a transport-stock-acclimate rolling programme.

Once the Port of El Hamdania begins its operations – expected in 2021 – a large volume of commercial flow is expected to shift to the facility (see analysis). The maintenance of efficient services will be tasked to a 400-ha logistics facility accompanied by sophisticated machinery. The government is also planning to develop dry ports in the south as a way to supply these regions.

Strategic Location

The wilaya (province) of Constantine has a beneficial location, lying to the south of four of the country’s major ports: Annaba, Skikda, Béjaïa and Jijel. It benefits from the crossing of the East-West Highway and various rail connections, and its potential to become a logistics centre has been under study. Work to fulfil this vision was expected to commence in 2017 in form of a new logistics platform to be built in Ouled Rahmoune, in southern Constantine.

When it announced the large-scale project in March 2017, Logitrans, the state-controlled road transportation group, said the project will be developed in stages and spread over 50 ha, of which the facility will comprise 12 ha. The project will comprise space for cargo trailer parking, and refrigerated and dry storage complexes. The facility aims to be energy sustainable, and therefore photovoltaic solar panels will be installed. The completion of the platform will take several years. Nevertheless, Logitrans expects the first phase of the platform, which will primarily focus on accommodating transit goods, to be operational as early as 2020.

Three other logistic platforms are also under evaluation for the near term. Plans for Algiers, Oran and Sétif include the construction of facilities covering areas of 12,000 sq metres, 25,000 sq metres and 30,000 sq metres, respectively. The government has emphasised the importance of connecting the platforms through railway lines and with modern containers to ensure there are no delays in the delivery of agri-food products. Traceability and monitoring throughout the supply chain is also essential to meet health and safety standards.

Shipping Formalities

Shipping costs in Algeria are approximately two-thirds higher than those in neighbouring Morocco. The higher charges have a notable impact on related logistic costs, inflating the overall value of transactions. The Customs inspection process at the Port of Algiers, however, has made progress in recent years. Carried out by both the Customs Office and the Ministry of Commerce, inspection used to be a long process. Now the two practices have been unified, bringing the processing time down to one week, reducing storage costs and facilitating speedier moves to market. Food products or any other goods that must undergo veterinary, sanitary or health inspections are dealt with as quickly as possible. However, the Port of Oran has yet to achieve such improvements. The process there can take up to 15 days, raising freight costs.

Despite the hurdles, some cargo firms feel that the level of bureaucracy at Algeria’s ports is manageable. Adlane Belabdelouahab, managing director of Arkas Algeria, told OBG, “Problems can occur, but firms that know the business well can usually get merchandise out of the ports in four or five days, provided no special permissions are required.” Facilitation of Customs clearance to avoid overcrowding at the terminals is the way forward; the aim is to conclude formalities in three or four days. For imports, the pressure is somewhat lower since the merchandise is already in the country.

However, for exporters, the clearance process is a pressing issue and performing complex bureaucratic processes can be challenging. Going through the customary administrative requirements and arriving on time to “catch the boat” results, in many cases, in ships leaving Algeria empty.

Rachid Ghezlaui, CEO of freight management company TRANSRAFA, told OBG the limitations of the current logistics performance at the Port of Algiers could be improved by investing in new processes. “Investing in a single logistics platform to gather the various Customs and administrative bureaus implies not only cost-effective management and competitive returns, but it also determines Algeria’s status in the commercial spotlight between regions,” he said.

Open For Business

According to a February 2017 article by Euromonitor International, the anticipated growth of the Algerian retail industry – forecast to increase in value by 34% between 2015 and 2021 – is another factor compelling the government to seek more robust logistics management. Major global brands such as Mango, Zara and Aldo already operate in the country, as does French supermarket chain Carrefour, which opened a hypermarket in Algiers in 2015. In addition, large shopping malls springing up in the country, such as the Oran Shopping Mall, are also boosting retail activity, and the need to receive and move products efficiently (see Retail chapter).

Within industry, the Algerian subsidiary of GEFCO Group, a European automotive logistics company, has reported strong results since it began operating in Algeria in 2014, reaching a turnover of €5m in its first year of operations. It benefits from direct trade routes with regions in which GEFCO already had operations.

Global logistics company DHL has also been diversifying. The firm, which began delivering to the market in 1994, has close to 3000 clients. In addition to its express service and a global forwarding service, the company offers a service called the couloir vert (green corridor) to select industrial companies enabling the delivery of urgent industrial inputs.

Updating Systems

The provision of suitable, up-to-date machinery is central to modernisation plans. According to officials from the public General Maritime Society, it takes around one week to unload vessels at the country’s ports – a process that would take 10 hours at other global harbours. Activity ceases on the weekends, and no overtime is performed. Under such circumstances, ports’ operational capacity is limited and development is hindered. Modernisation will ensure better management and help increase capacity to accommodate larger vessels, resulting in less traffic.

With regard to merchandise traceability, automatisation would help reduce informal market activity, and improve economic and sanitary transparency. The parallel market and the presence of fraudulent firms represent a threat to the import bill, as they often inflate figures for personal gain. The implementation of a single logistics platform bringing together Customs agents and centralising administrative formalities will not only speed up the import process, but ensure more reliable information.