Africa Freight Forwarding Market Outlook to 2023
The report titled “Africa Freight Forwarding Market Outlook to 2023 - By Countries (South Africa, Kenya, Tanzania, Uganda, Nigeria, Namibia, and Botswana), Mode of Freight (Road, Rail, Air, Sea, and Pipeline), By End Users (Food and Beverages, FMCG, Industrial and others) and by Contract Logistics and Integrated Logistics” provides a comprehensive analysis of the freight forwarding market in Africa. The report especially focuses on the freight forwarding market of seven African countries namely Botswana, Namibia, Nigeria, Kenya, Uganda, Tanzania and South Africa with a detailed country profile of each.
Africa Freight Forwarding Market
Contract logistics is known as the driving force for the freight forwarding market and is opted frequently. The market has experienced a growth in its study period resulting in a single-digit CAGR. Food and beverages have been the market’s driving force as most of the consumer spending is towards the same. Future trends in the market focus on Africa having less trade with developed nations and more with developing nations.
Segments of Freight Forwarding Market
By Mode of Freight (Road, Rail, Sea, Air and Pipeline)
Road freight is the dominant mode of freight movement as most of the countries in Africa are landlocked and last-mile deliveries preferred by road. The ports of Africa play an important role in bringing in cargo to the landlocked countries making sea freight second in line after road freight. Intra-regional trade needs funding and improvement with the help of which the overall freight forwarding market would also grow. The state of railways varies from region to region. The significant rail networks are those centered to South Africa and stretching north to Malawi, DR Congo and Tanzania.
By End Users (Food and Beverages, FMCG, Industrial and Others)
The major end-users of freight forwarding services in Africa include the Food and Beverage, FMCG and Industrial sectors. The F&B sector has been in demand due to the slow consumer spending behavior of people in Africa which has also spurred South Africa’s retailers to expand into the sub-Saharan region. With new developments, the industrial sector is also experiencing a lot of potential and it has been estimated that Business-to-business spending in manufacturing in Africa is projected to reach USD 666.3 billion by 2030.
By Contract and Integrated
The Africa freight forwarding market is dominated by contact logistics. The market is dominated by few international players in each country. Without 3PL, the supply chain would be non-existent in Africa. In urban areas, the traditional model of utilizing delivery trucks and contracting 3PL for supplying large retailers is used. In areas that are hard to reach, small-scale 3PLs are used to deliver products to small- scale retailers. Due to infrastructural challenges, big market players prefer to outsource services to local transporters and focus on their core competencies. Companies do not wish to employ their own logistics arm since it involves capital investment and a lot of hassle.
The African freight forwarding market is highly dominated by international players. The road freight market is slightly fragmented in a few countries. The industry is at a growth stage in terms of parameters such as technology, efficiency and service portfolio but not pricing as the logistic cost is too high leading to contraction of manufacturing sector in the GDP. There is also a shakeout happening of smaller firms that are unable to sustain in the competitive environment and a number of mergers and acquisitions are taking place in an effort to increase market shares.
The FMCG, Retail and Automotive industries in the country played a significant role, especially for the domestic market, in the growth of freight forwarding market in South Africa. Road freight was observed to be the most preferred mode of transportation due to the development in the road infrastructure and relatively cheaper prices as compared to the other modes of transportation; followed by rail and sea freight. Asia flow corridor was observed as the largest contributor in terms of revenue in South Africa freight forwarding market.
Kenya has achieved rank 61 in the Ease of Doing Business Index and rank 68 in the Logistics Performance Index. The freight forwarding market has accounted for a double digit growth between 2013 and 2018. Road Transport dominates the freight forwarding market due to the monopolistic demand of road transport for delivery in remote regions, to the landlocked neighboring countries, and for the last mile delivery. The increase in share of Domestic Freight is due to government emphasis on manufacturing, such as the Big Four plan under Vision 2030. The third-party logistics has been dominating the freight forwarding market.
The market of Tanzania has experienced the maximum growth owing to a double-digit CAGR between 2013 and 2018. The country acts as a gateway towards other East and Central African countries, road logistics services are of the highest needs followed by railway and marine. The market is highly concentrated with international players that dominate the international freight segment. The new local companies entering the market haven’t been able to adopt the new technologies and resort to third party logistics.
being a landlocked country, multimodal transportation has gained importance in the country. Food and Beverages is the driving force for logistics. The Gulu town in Northern Uganda is to get a new USD 8.8 million trade logistics hub with money provided by the EU. The market has experienced a single-digit growth between 2013/14 and 2017/18. The railways have been given importance in order to bring down pressure on roadways, which currently contribute the most to the overall freight forwarding market. As most of its cargo comes in from countries that have ports, international freight dominates the market.
the Nigerian freight forwarding market has experiences a double digit CAGR from 2013 and 2018. Sea Transport dominates the freight forwarding market. Lagos Port Complex and Tincan Port Complex are two major seaports in Lagos. International Freight is dominant as Nigeria is import oriented country and export oil and petroleum products. Increasing Nigerian local food products in the country has triggered the demand for logistics and warehousing making food and beverages the leading end-user for freight forwarding. Due to infrastructural challenges, big market players prefer to outsource services to local transporters and focus on their core competencies
The freight forwarding market of Namibia has experienced low single digit growth between 2013 and 2018. Namibia is considered to have one of the best road networks in Africa which also helps the road freight to dominate over the market. The country has offered dry port facilities to Zambia, Botswana, Zimbabwe and others to help the landlocked countries grow and making its international freight more prevalent. Contract logistics has been dominating the market.
Botswana being a landlocked country is highly dependent on the road for the transportation of their goods which also has the highest revenue percentage towards the overall freight forwarding market. The market is dominated by international players and has experienced a single-digit CAGR during 2013-2018. Being a landlocked country and having a large proportion of its cargo coming by sea, multi-modal transportation logistics players in the market prefer to outsource their services to players who are able to provide these services efficiently and at a low cost.
Future Outlook and Projections
The market is expected to grow at a positive single digit CAGR and the key growth drivers would include rising demand intra-regional trade with the development of projects like AfCFTA. The increasing international trade volumes and domestic manufacturing are expected to increase the demand of freight forwarding services. The increasing year on year investment by the government of each state on infrastructural projects such as SGR for railways, and improving the state of road, sea and air transport network is also witnessed to positively impact the market. Due to such reasons, new firms continue to enter the market despite any tariff or trade barriers.