Africa’s integrated logistics - What does the future hold?

So far, the 2020s have been both uniquely challenging and exciting, with unprecedented shocks and rapid developments that open new opportunities. In comparison to the first three years of this decade, 2023 appears to be somewhat more 'normal,' as the world regains its footing following the prolonged effects of the Covid-19 pandemic.

As with any other industry, several trends are expected to shape Africa's transport and logistics industry through 2023, and we highlight a few of them here.

Africa integrated services: expecting the unexpected

According to UNCTAD’s Review of Maritime Transport 2022, international maritime trade resumed in earnest in 2021 following the hard-hitting shocks of the Covid-19 pandemic reaching a total of 11 billion tons, which was still lower than pre-pandemic levels. Despite many countries relaxing their Covid-19 control protocols in 2022, the year was characterized by high levels of uncertainty with geopolitical unrest, rising energy costs, and rising inflation.

All of this points to an increasingly uncertain market that may be unprepared for any additional shocks, such as internal conflicts, further geopolitical unrest, a resurgence of the Covid-19 pandemic, or adverse weather conditions that disrupt movement.

Supply chains will continue to face various challenges and issues, just as they have in the past. Maintaining visibility of potential threats to their business, agility to pivot in the face of challenges, and resilience to weather the storm will be critical for logistics industry.

Infrastructure investment and economic uncertainty

Ports in Africa have recently undergone massive upgrades as the continent prepares to play a larger role in global trade. For the shipping industry, this indicates a potential increase in volumes to and from the continent. Their effectiveness in contributing to regional development will be limited unless intra-continental logistics infrastructure is developed.

Infrastructure development across the continent continues as part of the operationalization of the Africa Continental Free Trade Area (AfCFTA), with large-scale private and public sector investment. In the last six years, the Africa Development Bank has invested approximately USD 44 billion in African infrastructure.

Unfortunately, global economic uncertainty may come to negatively impact infrastructure investment on the continent. The World Bank foresees a slight acceleration in sub-Saharan Africa’s growth to 3.6% this year, up from 3.4% in 2022. The global economic slowdown isn’t likely to spare the continent, however, as the predictions of income growth are expected to be slower than inflation and rising cost of living. Per capita income growth in SSA will be at 1.2%, according to the World Bank.

Slowing infrastructure development is likely to have a significant impact on freight forwarders by slowing growth potential across the continent and negatively impacting demand. Visibility and agility will be critical for the industry as players attempt to weather short-term turbulence while also collaborating with policymakers to implement the AfCFTA vision.