Supply chain costs for logistics businesses have shot up by 83 per cent even as trade volumes reduced.
This is according to a survey that assessed the Covid-19 impact on the logistics key areas such as service provision and distribution, commercial supply chains, humanitarian aid and consultancies.
Dubbed Covid-19 Impact on Supply Chains in East and Southern Africa, the study by Help Logistics, Shippers Council of Eastern Africa and the Inter-Agency Working Group showed changes in supply networks capacity with reductions in transport capacity and operating funds.
It found that cost and lead times increased across the regions with measures introduced to lessen the spread of Covid-19 reducing airfreight and road transport capacity.
Lead time refers to the period that it takes for goods to be delivered after a client’s order.
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Of the businesses polled, 37 per cent reported a decrease in capacity of inventory storage, 14 per cent reported no change while 31 per cent reported increases.
The survey said organisations reduced stock holding levels to attain economic efficiencies by minimising inventory carrying costs, while still meeting demand.
Firms further reported reductions in capacity for road (74 per cent), air (71 per cent), and sea (61 per cent).
Pointing to fallen trade levels, a section of those polled noted reductions in exports at 70 per cent, imports at 59 per cent and 59 per cent in domestic volumes.
“Such significant reductions in the trade and flow of commodities across supply networks confirm the reduced trading environment, with lesser flows in the networks and consequent reductions in trade capital, supply chain development and supply chain effectiveness,” said the survey.