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High road transport costs in Africa as a consequence of imbalanced trade flows

One of the problems that mainly contributes to the high cost of road transport in Africa are the empty trips that are charged by logistics operators to their customers. This is a consequence of the imbalanced nature of trade flows in Africa, as the continent imports much more of what exports, which is common to all the African corridors.

In many cases, cargo arriving at an African seaport needs to be transported in inland destinations that are located sometimes very far from the port, sometimes in a country different from the one where the port of arrival of cargo is positioned. This transport can be arranged by a transport operator registered in the coastal country (where the seaport is located), or by a transport operator in the country of destination.

In the first case, once cargo is delivered at destination, the transporter needs to find return cargo to transport back to the port in order to avoid returning empty and charge the relevant cost to the importer who benefited from the transport on the first leg of the corridor. Conversely, when the transport is arranged by a transport operator in the country of destination, the latter will need to find an export cargo to ship to the port in order to avoid to send his trucks empty for picking up cargo at the terminal of arrival.

In case of containerized cargo, this problem is even more complicated. Indeed, the container needs to be returned as soon as possible at the terminal or deposit where cargo has been picked up in order to avoid the payment of prohibitive penalty surcharges to the shipping line that provided it. In fact, to encourage transporters to move or return containers swiftly, shipping lines set a free time period within which containers have to be returned, and charge detention fees for every additional day exceeding this period. Accordingly, the identification of a return cargo for logistics companies is an operation that has to be planned accurately and in advance in order to reduce transport costs.

In order to rebalance these traffic flows, the use of digital logistics solutions and truck aggregator models are often seen as a solution. To date many e-logistics providers have spread in Africa and developed web-based and/or uber-like apps that facilitate the matching of supply and demand of transport services.

According to a joint report published in 2020 by the International Finance Corporation (IFC) and Google, e-logistics solutions can help reducing poor infrastructure and logistics costs, that according to the report, increase the final price of goods in Africa in a measure ranging from 40% to 60%. Such solutions are increasingly used by logistics operators for optimising truck fleet utilisation through the reduction of empty trips. In Peru, for instance, Efletex offers smart allocation of cargo loads among transporters and cargo owners by facilitating the matching between demand and offer of transport services on the basis of an algorithm that, similar to UBER, identifies transporters according to their proximity to the point of loading of cargo and their vehicle availability. The platform is interfaced with a mobile app that sends notifications to the transporters with transport requests from cargo owners to which they can answer with a quotation of their prices. If accepted, an electronic consignment note is generated by the system that allows the transporter to pick up the cargo and to the cargo owners to track it via GPS until the shipment arrives at destination. This application is reported to have contributed to significantly improve vehicle optimization and reduced avoid empty return trips of transport companies in Peru.

In Africa, some of the most popular e-logistcs providers are Lori Systems, TAI plus, Sendy, Truckr and Kobo360.





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