SADC on the Move: Logistics capacity comparison across Southern Africa

Earlier this year, we published a report exploring the slow growth of e-Commerce in the SADC region. In that piece most of our analysis relied on profiling the types of people who lived within the region, the profitability of eCommerce ventures and the broader economy within the region and how it impacts digital commerce. What…


Earlier this year, we published a report exploring the slow growth of e-Commerce in the SADC region. In that piece most of our analysis relied on profiling the types of people who lived within the region, the profitability of eCommerce ventures and the broader economy within the region and how it impacts digital commerce. What we didn’t touch on was the logistics part of the equation and this report aims to provide an overview of the logistics sector – heavily relying on the World Bank’s Logistics Performance Index (LPI).

The LPI is a benchmarking tool created to help countries identify the challenges and opportunities they face in their performance in trade logistics and is compiled on the basis of two processes:

  1. A worldwide survey of international logistics operators on the ground (global freight forwarders and express carriers), providing feedback on the logistics “friendliness” of the countries with which they trade.
  2. “granular high frequency” information on maritime shipping and container tracking, postal and air freight activities that was collected and made available to LPI by several data partners.

“The LPI score depends primarily on industry perceptions of relative performance. Even a country that is making improvements can see its score affected by the perceived impact or speed of improvements in other countries.”

2018 LPI Report

It’s important to note that because of this methodology – the data presented later in this article is not necessarily undisputable but instead a solid indicator gathered from informed practitioners within the logistics sector. Beyond this though, the above mentioned components explore the following sectors of Logistics (which this article will also try to mirror closely);

  1. The efficiency of customs and border management clearance.
  2. The quality of trade- and transport-related infrastructure.
  3. The ease of arranging competitively priced international shipments. 
  4. The competence and quality of logistics services. 
  5. The ability to track and trace consignments. 
  6. The frequency with which shipments reach consignees within the scheduled or expected delivery time.

As is usually the case, our focus will primarily be on the SADC region, and we will look at 3 periods across a 10-year span (2014,2018 and 2023) to have a larger sample size to look across.

Customs

In the LPI Index the customs score measures the efficiency of customs and border management clearance.

Of the 8 countries which provided data for all years inspected, only 3 posted outrightly better scores in 2023 than in 2018 (DRC, South Africa and Zimbabwe). The efficiency of customs systems within low-performing countries within the LPI highlighted a lack of border coordination as one of the common pain points for low-ranking countries. Part of this lack of coordination includes logistics operators having to deal with twice as much paperwork when dealing with low performance countries.

Within the documented timespan Botswana is the biggest improver when it comes to customs efficiency and this is on the back of many factors. In 2017 the country implemented an automated customs management system. This system was credited with digitalization of many customs process – with one example including allowing Botswana’s Unified Revenue Service (BURS) to implement online payments which in turn allowed trade items to be cleared and routed onto the next customs process faster than before. This system also allowed multiple border agencies to communicate and share data on a single platform, thus fast-tracking some of the checks that would delay clearance of goods at the border.

Most of the factors that apply to infrastructure are applicable to international shipment ability and so these two elements where grouped together in our analysis

Botswana also introduced a mobile application for currency and baggage declarations which is why it comes as no surprise that the country has made the biggest leap in the perception of their customs and border management clearance.

On the negative end of the table we have Angola which was flagged for having complex and time-consuming customs procedures, excessive paperwork along with inconsistent regulations. The country did perform significantly better on the tracking and tracing score but as you’ll see as we break down the other categories of logistics performance and the overall score – Angola is generally perceived as one of the nations lagging behind.

Infrastructure

“Though still a constraint in developing countries, infrastructure seems to be improving.” – 2018 LPI Report

The data from the logistics score is quite intriguing because it seems conflicting as the report notes that there seems to be improvement in this regard. It could be that this perceived improvement is being experienced beyond the Southern African region or that survey participants do not feel the improvement in this region is happening at a significant level. 6 of the 14 countries have the highest infrastructure score from the year 2014. 

This leaves only 5 countries with their 2023 score as the highest score. From these South Africa is the benchmark. Among all countries, South Africa’s scope of infrastructure ranks highly. 

  1. The country offers multiple seaports (Durban and Cape Town)
  2. South Africa alone had more operational rail lines (21,565km) than West Africa (9,056km), East Africa (6,312km) and Central Africa (4,841km) combined as of 2020.
  3. South Africa’s total road network is estimated at 750,000km, the longest of any African country & the tenth longest in the world.

Beyond this, South Africa is also a pioneer in the region when it comes tracking and monitoring systems and receives more foreign investment than its counterparts – e.g. a road network worth an estimated R2.1 trillion.

Interestingly, Botswana is also highlighted as the biggest improver once again in this category. This could be down to improvements such as the US$260mn Kazungula border post upgrade which converted what was previously a two-stop border to one-stop. The upgrades were praised for i) reducing border transit time ii) increasing intra-trade in the SADC region and iii) improving regional connectivity among many benefits. In this regard, it’s also important to note that the improvement of Zimbabwe in the infrastructure category could also be down to a similar upgrade as the Beitbridge border post was upgraded to the tune of US$300mn. Both Botswana and Zimbabwe have been upgrading airports as well with extensive work carried out at Maun International Airport and Robert Gabriel Mugabe International airport, respectively.

Most of the factors that apply to infrastructure are applicable to international shipment ability and so these two elements were grouped together in our analysis

On the other end of the spectrum, it’s important to closely look at country’s like Madagascar that are perceived as declining in this regard and try to contextualise what could inform that slump. Port closures and congestion have been a rising concern in the country. Of the country’s 17 ports only 5 (29.4%) have been cited as having adequate port facilities: wharves, drafts, land, shops, handlers, allowing commercial loading and unloading of goods at the dock. Port congestion has been cited as rising due to growing cargo volume and limited capacity. This has led to delays in handling and increased cost for shipping companies – perhaps that’s why the country wasn’t as highly regarded in 2023 as it was in 2018 and 2014.

The infrastructure gaps have been noted by the World Bank with the organisation highlighting how the nature of rail operations makes rail less flexible and potentially less reliable than trucking. In our State of SADC Rail report we highlighted the difference in costs between building a km of road (US$500,000-US$1,2mn) and rail (US$1,5mn-$5mn). 

Angola’s low scoring in infrastructure is no surprise. The country dealt with a destructive civil war that meant their transportation infrastructure was severely damaged and will take time to bring up to par. There are plans to solve this problem – e.g. new airport and port construction projects. The road network for the country is particularly dire with only 75,00km and less than 20% of which was paved as of 2020.

“ In some regions like Africa, railways have only a marginal role in most transit freight corridors. Among many constraints, the poor quality of infrastructure, the way the infrastructure costs have been shared between railway agencies (representing the governments) and concessionaires, and the nature of companies that have won the concessions—sometimes largely disconnected from ports, inland container depots, or container terminal operations—have harmed their competitiveness relative to road transport.”

2018 LPI Report

Timeliness

“The most important quality criterion in freight forwarding is delivery within the promised time window. Almost just as important is the absence of errors in cargo composition or documentation. The acceptable quality window is much narrower (and errors much less tolerated) in high-performing countries than in low-performing countries.”

2014 LPI Report

Timeliness scores appear to have taken an almost universal hit when you compare 2023 scores to 2014 (6 countries did better in this regard a decade ago than more recently). An array of reasons have been cited by the World Bank as the reason for the delays.

  1. informal (corrupt) payments,
  2. compulsory warehousing,
  3. maritime transshipment,
  4. dependence on indirect maritime routes

Supply chain predictability issues have been highlighted as problems and where highlighted as being more expected in the lower performing countries than top performers. Beyond timeliness, shipment quality has also been in contention with lower ranked countries reportedly shipping 31% of orders in a state that failed to meet company quality criteria (higher ranked countries only had 13% of such cases by comparison). In all fairness this is data from 2014 which more than likely has since improved. The world bank reported improvement in 2018, though they didn’t go as far as highlighting the exact quantities of improvement for this particular metric.

It’s also important to note that 7 of the 16 SADC countries are land-locked and this comes with its own limitations regarding timeliness. Landlocked countries have been identified as being at risk of facing three types of delays within the logistics:

  1. Longer delays in ports than in corresponding coastal countries. A first explanation might be the additional complexity of organising removal of containers from a distance, as opposed to local removal. Often ports in the country of transit offer longer free time for containers destined for a landlocked country.
  2. Corridor delays (unforeseen disruptions or slowdowns in the movement of goods along specific transportation routes) which reflect the efficiency of the transit system. These affect landlocked countries disproportionately because of dependency on transit countries with ports and higher transportation costs. 
  3. Overall dwell time inland, including at the destination.

So what’s the overall feeling?

From the data presented it feels though perception of effectiveness hasn’t changed much. Only Botswana has moved from an overall score of 2.49/5 to 3.1/5 (12.2% growth). This overall perception of stagnancy could be explained by many variables;

  1. The growth has indeed been slow and in some cases nonexistent,
  2.  Growth has occurred but logistics participants are also exposed to other more functional systems and therefore the improvements made have been negated by improvements away from the continent that are viewed as more impactful or disfunctional

When the World Bank speaks about its LPI Index, they are very hesitant to use the metric as a be-all-end-all metric when analysing logistics. In fact they highlight that the Index has two limitations. First, the experience of international freight forwarders and traditional operators can be very different (especially in the context of Africa) and for smaller countries the LPI might end up reflecting access problems outside the assessed countries.

With all that said though, there are examples of infrastructural projects going on within the region which do suggest that things are on the up and slowly but surely logistics is getting better within the region.

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