POST-COVID SUPPLY CHAIN - HELPING EUROPE BOUNCE BACK IN AFRICA?

Expert opinion

Driss JABAR, Founder & CEO, CloudFret
Published on:
Updated on:

Strong growth at the gates of a saturated European market

At a time when many in Europe are wondering how to bounce back in a post-COVID world, Africa constitutes a promising local market both in terms of demographic and economic growth, even if it remains little-known. The emergence of the middle class in urban communities has led to a notable increase in demand for consumer goods and distribution networks.

Demographically, the continent today has nearly a billion inhabitants compared to 670 million in 2000. According to forecasts from the African Development Bank, the population is expected to reach 1.3 billion people in 2030 and 2.5 billion people in 2060, or practically 25% of the world population with an average age of 25 years, as many young workers wishing above all to find a job, consume modern goods and services without having to cross the Mediterranean.

Furthermore, just a few kilometers away, the African economy is experiencing meteoric growth: according to Frost and Sullivan (2019), the volume of trade in sub-Saharan Africa will quadruple by 2030, from 376 million tonnes (2009) to 1.18 billion tonnes (2030), or an increase of 345%.

Beyond preconceptions and fantasies, Africa is progressing (fast!)

While in Europe and more particularly in France we are trying to make peace with the history of colonialism by seeking new avenues of win-win collaboration to renew more serene links with 'MamaAfrica', well, Africa won't wait. She is moving forward. Let's take the example of Morocco (still considered by some as an underdeveloped country) which has been able to administer twice as many doses of anti-COVID vaccine as France today! One of the keys to this astonishing result is the agility of the logistics chain in this northern African country, which could tomorrow be the gateway from Europe to Africa.

Beyond the clichés, aprioris, and judgments which often taint the image and perception of reliability of actors in Africa, the reality is quite different. Yes, there are unreliable companies (but they can be found elsewhere too). Yes, it is a continent that lives largely from an informal economy... but on the ground, we especially see the wealth, quality and mastery of local human resources. Just as passionate, involved, and innovative as elsewhere, and who are the actors of the rapid economic change in the region.

Africa, the new global logistics hub?

A dream more than sixty years old became reality just a few weeks ago, with the activation of the African common market (ZLECA – African Continental Free Trade Area) on the 1stst of January 2021. This common market represents a huge opportunity that will boost the growth of 300%'s intra-African logistics sector over the next 3 years. This will, by extension, have a direct impact on the growth of international trade and more particularly with Europe.

The road freight transport market in Africa represents more than €450 billion of opportunity. However, today it is an inefficient, opaque and very fragmented sector (approximately 600,000 transport companies, including 90 % with less than three trucks). Consequently, this sector is more complicated to understand by the major players in the European supply chain.

With the advent of the internet and mobile phones, and even though the market is far from mature, there are many interesting signs of change. Small players are structuring and organizing themselves to be able to pool transport offers and improve the quality of services. Recent months have notably marked the emergence of success stories African companies that attract Asian investors such as KOBO360 (Nigeria, 30M$) or Lori System (Kenya, 30M$).

On its doorstep, Europe has a real opportunity to seize, in order to economically bounce back post-COVID. One of the keys to being able to develop the European supply chain in Africa is to be able to offer a competitive offer in terms of pricing because Africa remains an emerging market with limited resources. How ?

Sustainable and responsible road transport!

Between price competitiveness and ecological responsibility, there is not necessarily a choice.

Many trucks transit empty every day between the two shores of the Mediterranean. Largely, because they do not have the counters or sales representatives allowing them to find European shippers to Africa. If Supply Chain players in Europe do not want to miss this shift, it seems to me that filling these empty trucks will, in the vast majority of cases, remain more interesting than chartering dedicated transport, as is the case for many traditional players on this Europe-Africa corridor.

This is the subject of my project CloudFret. Today, 1,000,000 trucks pass through empty each year. Our first results demonstrate that offering road transport by optimizing empty journeys can be a relevant and competitive alternative, whether compared to conventional maritime or road transport. For example, an Antwerp-Dakar journey by sea (door to door) will take between 3 to 5 weeks. By road, it only takes 7 days on average. Compared to dedicated road transport, our results demonstrate cost savings of around 20%.

The clear ecological advantage is to limit the kilometers traveled empty by these numerous trucks, making it possible to reduce the carbon footprint of the entire sector, while awaiting the emergence of new technologies (EV, hydrogen, etc.).

Visuel article CloudFret Supply Chain post covid pour le blog de SprintProject
A third of trucks return empty!

Beyond an interesting idea, a significant ecological impact

The optimization of even 100,000 trucks out of the million trucks transiting empty would have a significant impact on the carbon footprint of a sector that is increasingly monitored and which accounts for nearly 24% of global CO2 emissions.

We estimate that filling these trucks would reduce the sector's emissions by 744,000 tonnes of CO2 per year. This is equivalent to:

  • The annual energy consumption of a French city of 63,000 inhabitants, such as Troyes, Quimper, Villeneuve d'Ascq, or Neuilly-sur-Seine,
  • Remove around 600,000 thermal vehicles every year from circulation in Paris
  • 12,000 new electric vehicles on our roads (i.e. the number of new vehicles registered in 2020 in France)

Whether you are shippers, transporters or professionals in the sector, today I am actively looking for partners to act collectively to decarbonize the road freight transport industry. Growing and fundraising, we are also actively recruiting (salespeople, charterers, developers, and talented people)


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