Stakeholders in the logistics sector hope the third Global Logistics Convention, taking place on August 29-30 at the Kigali International Convention Centre, can spur countries to enhance rail and water transport, embrace technology and curb political friction, among others. Local and regional freight forwarders, truckers, sector experts, and others, believe the conference comes in handy as regards finding solutions to challenges in the sector. Abhishek Sharma, TradeMark East Africa’s Senior Director for Transport told Sunday Times that the whole idea has been that the logistics industry needs to come together to discuss issues jointly and improve dialogue with governments in the region. Sharma said: “The main player that invests money in logistics infrastructure is the government. But the main user of the infrastructure is the industry; the freight forwarders, and others. It is very important that when we are planning logistics, there is a constant dialogue between the government and the logistics players.” By and large, however, Sharma said that even though challenges persist in the region’s logistics sector, in the last 10 years, the status of logistics in the region has improved significantly. “The [transit] time and the cost have come down dramatically along both the northern corridor and the central corridor. On the central corridor, for Rwanda, while the average speed of truck on transit was 7 kilometers an hour it has now improved to as much as 14 kilometers an hour, he said.” The World Bank’s Logistics Performance Index – a tool created to help countries identify the challenges and opportunities they face in their performance on trade logistics and what they can do to improve their performance – shows a significant improvement in all EAC countries on logistics. “What it shows is that normally, the logistics performance of a country is correlated to the GDP. So, the poorer the country is, the poorer the logistics performance.” Empty return trips along corridors Regional countries are doing much better but, Sharma said, there are still several challenges. “One is that costs continue to be high because, one, we don’t have enough return cargo from our countries. While import volumes are large we don’t have enough export volumes. So, that creates empty return trips along the corridors.” The other challenge, he said, is that countries have not exploited their “multi-model capability” that much. “We have lakes and rail [potential] but what is happening is that most cargo is moving by road as of now. Those two things are required and we also have to look at the use of technology on logistics in the region.” On the northern corridor, countries use an electronic cargo tracking system all the way from Mombasa to Kigali, which improved efficiency and cargo safety. The other issue, he noted, is that there is a lot of political frictions between EAC countries and that results in the creation of non-tariff barriers. The Convention is an annual freight logistics event of the Federation of East African Freight Forwarders Associations (FEAFFA). The second edition, last year, was held in Kampala, Uganda, following the 2017 inaugural edition in Dar es salaam, Tanzania. Around 700 people from all over the world are expected to attend. Fred Seka, the FEAFFA Chairperson, who also heads the Rwanda Freight Forwarders Association (RWAFFA), said it offers a unique opportunity for professionals in the sector to share best practices, engage policymakers, interact with a wide range of stakeholders as well as learn emerging trends and developments. Seka said: “It will be a good platform for Business to Government partnerships; we shall identify and share challenges in the logistics industry across the region and beyond; and showcase opportunities in logistics technologies. Our firms will meet experts and learn, which is good for their growth.” “It is a good platform to help address our challenges,” Seka said, adding that it will be an opportune moment to also tell the world how Rwanda can be a logistics hub considering all the effort the government is putting in building its infrastructure, from airports to roads and others. Jacky Ingabire, Business Development Manager at Freight Forwarders Rwanda, said discussions during the event, could help solve challenges such as the lack of ample truck parking yards in Kigali. According to Abdul Ndarubogoye, Chairperson of Rwanda Transporters Association (ATAR), “there is always something you can learn from your counterparts,” especially given the advances being made elsewhere. “ATAR members will attend and learn a thing or two and see how we can best upgrade our services.” The conference, he hopes, will find solutions to the continued presence of non-tariff barriers including timewasting roadblocks, bad roads, and corruption along the region’s north and central corridor routes “that at times cost us over and above the expected.” High air transport costs Another issue the event could help tackle is the nagging element of costly air transport, the quickest way of moving cargo and people. According to the International Air Transport Association, a trade association of the world’s airlines, Africa is the region with the greatest aviation potential, but punitive taxes, and high infrastructure and fuel costs are curtailing air transport’s benefits on the continent. The African aviation industry loses $1.50 for each passenger it carries, according to IATA figures, with many airlines struggling to break even. Africa is considered to be a high-cost place for aviation, where taxes, fuel, and infrastructure charges are higher than the global average. Shedding light on why air tickets in the region and the continent at large are still too high, Eric Ntagengerwa, the EAC’s Principal Civil Aviation Officer, told The New Times that there are three main reasons. First, he said, taxes, fees, and charges continue to be the major challenge for African airlines. Ntagengerwa said: “Operating costs are way too high because of the fees, taxes, and charges levied by the respective regulatory authorities and Air Navigation Services Providers (ANSPs) and airports and fuel suppliers.” “This is more pronounced where these service providers are a monopoly controlled by the government. Through the implementation of the African Air Transport Market (SAATM), the African Union Commission (AUC) and African Civil Aviation Commission are working on addressing the matter through enforcement of the ICAO guidelines on taxes and charges to support the reduction of ticket cost.” Blocked funds, Ntagengerwa said, are the other issue. He explained that African airlines are suffering excruciating shortfalls of cash flow due to the fact that the proceeds of their sales revenue are inaccessible in countries that are experiencing foreign currency shortages. He added: “Many countries are still having in place restrictive bilateral air service agreements which prevent the improvement of connectivity and reduction of fares”. editor@newtimesrwanda.com
