The East African Community (EAC) needs to integrate infrastructure development through embracing the technology of automation to increase the efficiency of operations within the region and open more one-stop border points to decongest exiting points.
This is one of the key policy recommendations advanced by John Bosco Kalisa, CEO of the East African Business Council (EABC), during a webinar on the performance of the northern and central corridor trade routes.
Kalisa also noted that the EAC needs to set a market regulation union to enhance logistic competition with foreign firms than individual countries licensing depending on the country’s interest rather than the regions.
“A Covid-19 mitigation plan should be put in place by adopting the role of technology and innovation should be embraced in the logistics sector,” he added.
“Companies need to look at how future technology can be leveraged to reduce physical movements. In addition, adopt welfare support for logistic workers to cushion against any uncertainty in the sector.
Highlighting cost indicators, Kalisa noted that major trade routes still remain expensive. The main drivers of freight costs identified from a recent survey, he said, were fuel prices, the number of NTBs along the routes, and timeliness of clearance at port and border post.
Globally, Kalisa said, the container throughput index, which measures the number of people and goods that pass-through shipping ports daily, declined from 113.3 in January 2020 to 107.7 in May 2020, a decline of 9.5%.
“The Covid-19 pandemic did not spare our very own ports,” Kalisa said.
Regarding cargo throughput at the Mombasa port, a total of 34.13 million tons of cargo were handled in 2020, which is 1.8 million tons less of the target of 35.90 million tons.
Compared to 2019, the Port of Mombasa recorded a marginal decline of 0.9% in total cargo throughput in 2020, a decrease was mainly attributed to disruptions to the supply chain because of global lockdowns imposed due to the raging pandemic.
At the port of Dar-es-Salaam, the total cargo through-put slightly decreased by 1.03% from 16,022,952 Mt in 2019 to 15,857,870 Mt in 2020 as a result of the pandemic.
On transit time, in 2020 Mombasa-Kigali route was the slowest averaging 9.75 days followed by Mombasa-Cyanika (8.38 days), and Mombasa-Mpondwe (8.33 days).
East Africa’s economic freight logistics and the infrastructure gap remains a key constraint to the region’s competitiveness, Kalisa said.
“The lack of efficient, reliable, and sustainable freight logistics links prevents the region from taking advantage of emerging regional and global cross-border trade opportunities,” he said.
“The individual operation of states within East Africa brings silo service delivery impeding the regional trading advantage. This in turn increases the complexity of logistic services and the welfare of logistic providers.”
In EAC, transport costs are estimated at $1.8 per kilometre per container against international best practice of $1 per kilometre per container.
John Mathenge, Managing Director, Viaservice Ltd, said logistics is a business enabler. Mathenge called for a holistic regional approach and vision on competitiveness of the transport and logistic sector in order to reduce the cost of doing business in the region.
He called for an EAC transport and logistics charter or framework to integrate the ecosystem, boost complementarities to enhance efficiency and lower production costs.
SOURCE: THE NEW TIMES