Given its vast natural resources and strategic location, the African continent has long been an important player in the shipping industry. However, the sector has suffered significant setbacks in recent years, including changes in global commodity prices, rising geopolitical tensions, and the Covid-19 pandemic. These difficulties have had an impact not only on Africa's export market, but also on its ability to import critical goods.
Regardless of the headwinds, the African shipping industry has continued to grow at an impressive rate, demonstrating remarkable resilience. According to a report by the United Nations Conference on Trade and Development (UNCTAD), despite the fact that most of the continent is still recovering from the effects of the pandemic, Africa's maritime trade grew by 5.6% in 2021. For example, even before all movement restrictions were lifted, the ports of Mombasa and Dar es Salaam showed growth in 2021.
Innovation driving increased demand for African goods
One factor contributing to this resurgence is rising demand for African goods, particularly in Asia. China's trade with Africa has been steadily increasing year on year, with an 11% rise in trade value to USD 282 billion compared to 2021. The future of China-Africa trade appears bright, with the Asian behemoth pledging to import USD 300 billion worth of goods from Africa . This points to an increase in commodity exports from African countries to China, such as agricultural products, minerals, and oil. Improved customer service, dedicated teams and digital tools will ease communication, provide real-time tracking and problem resolution will drive this growth but most importantly double down focus on customer needs and offer personalized solutions.
Investment in port infrastructure
Another important factor contributing to the resurgence of the African shipping industry is increased investment in port infrastructure. In recent years, African countries have made significant investments in modernizing their ports to attract more international trade. Countries such as Egypt, Nigeria, and Kenya have launched large-scale port expansion projects to accommodate larger vessels and increase cargo-handling capacity.
Multilateral organizations such as the African Development Bank (AfDB), are encouraging infrastructure investment by providing capital, technical assistance, policy advice, and other services to both private sector stakeholders and governments. This development also provides an opportunity to expand into last mile delivery capabilities to provide customer with end-to end logistics solutions including inland transportation warehousing and distribution enabling customer to fully capitalize on their core business.
Digitalization driving Africa's logistics disruption
The adoption of digital technologies has also been critical in the resurgence of Africa's shipping industry. Many African countries are implementing digital platforms to streamline port operations, increase efficiency, and reduce costs.
Digital transformation extends beyond port infrastructure to include the adoption of digital technologies at all levels of the supply chain. Logistics providers with digitally enabled integrated logistics systems have better end-to-end visibility, allowing their customers to track their shipments, access real-time data, giving their customers the best chance to make informed decisions and react to any changes at each point of the supply chain.
The next trade powerhouse?
Looking ahead, Africa's contribution to global maritime trade is likely to increase due to large-scale investment by governments, multilateral organizations, and foreign investors across the continent. Massive port infrastructure projects, digital technology adoption, and increased demand for the continent's goods are all positive indicators. Furthermore, these developments are good news not only for the African continent, but also for global trade, which will benefit from the continent's rise to become a trade powerhouse.
Promoting sustainable practices
There seems to be a substantial shift pushed by customers and they are requiring a more ambitious Environmental, Social and Governance (ESG) initiatives from business across the globe. Logistics partners have designed ambitious goals to actively reduce greenhouse gas emissions by investing in cleaner vessel technologies, optimizing routes to reduce fuel consumption and exploring alternative fuels. Eco-friendly solutions are also offering the opportunity to promote sustainable practices. Ultimately, these are global issues that will need strong partnerships with stakeholders across the industry including customers, suppliers, and governments, to drive sustainable practices and innovation.