Charles Brewer, Managing Director for Sub-Saharan Africa, DHL Express: Interview

Interview: Charles Brewer

Where do transport bottlenecks increase delays?

CHARLES BREWER: Transport bottlenecks occur most frequently at border posts, where freight-carrying vehicles are forced to wait in long queues. We are an express business, and so aviation is our primary form of transport. However, traffic gridlocks and congestion can also cause delays for the local collection and delivery of shipments.

An example where we have managed to successfully counteract this is in Lagos. After considerable effort and negotiations with the Nigerian maritime authorities, we were granted permission to operate a commercial boat as part of our fleet, enabling us to travel between the Lagos mainland and Victoria Island daily and to bypass the three-hour long commute. The boat takes just 18 minutes to go from the Lagos mainland to Victoria Island.

Underdeveloped infrastructure across Africa directly affects the speed at which goods are moved into, out of and across the region. It also drives up logistics costs, and it is estimated that overall supply chain costs are up to nine times more expensive in Africa than in other regions of the world. Frequent delays in the delivery of goods can also result in increased costs for the consumer, who is relying on goods arriving by a certain date.

What are the major challenges facing cross-border trade in sub-Saharan Africa?

BREWER: According to the DHL Global Connectedness Index, Africa’s biggest challenge in terms of realising its trade potential is under-developed infrastructure, but this is slowly improving as several African regions continue to invest large amounts of capital. Across the continent, some of the largest challenges to trade include traffic congestion in major cities, such as Lagos and Nairobi, and Customs inconsistencies with regard to product classifications, and duty and tax exemptions, which can lead to very complex Customs clearance processes.

For example only one country in Africa – Angola – has a formal de minimis rule. And while all other sub-Saharan African countries have informal agreements, the fiscal clearance levels vary greatly. For example, in Tanzania, anything possessing a value greater than $3 will require formal clearance, which creates an additional administrative burden and potential clearance delays, with minimal returns for the government in terms of duty revenues.

The lack of air connectivity is also a major challenge, with over 12% of cities being served by just one flight per week. On the ground, congestion and transport gridlock remains problematic. With that said, the situation is improving and more countries recognise that they need to find ways to make their markets attractive for business.

Given Nigeria’s recent emergence as the continent’s largest economy and bearing in mind its 170m-strong population, businesses are likely to continue seeing a boost in demand for products from the emerging middle class. There appears to be good scope for producers to outsource their freight forwarding needs, as they have limited logistics experience or are unable to commit the time and capacity needed to establish internal logistics capabilities, instead focusing on their core business.

What industries will be key drivers of Nigeria’s future market for third-party logistics?

BREWER: Nigeria’s booming energy industry is expected to continue driving demand for the transport of oil and gas products, as well as associated extractive machinery, which requires highly specialised and large-scale, multimodal transport and shipping solutions from source to port. The emerging middle class is expected to propel demand for fast-moving consumer goods, health care products, retail goods, food and telecoms, among other things.