Major disruptions experienced by the logistics industry when Covid-19 hit might not be the last for the sector.
Experts note that industries should take lessons offered by the coronavirus pandemic and prepare for the next major disruption.
“One thing that is constant is change and the vortex of change in supply chain management is gathering the momentum… this makes it exciting and challenging at the same time,” said Carl Lorenz managing director of East Africa for Maersk, adding that players in the industry, as well as industries that heavily depend on supply chain systems, would have to adapt.
He identified three trends that would help players cope.
Among the major disruptions that have come after the Covid-19 hit that has had a major impact in terms of delivery of goods across the world include the Suez Canal blockage in April last year that saw traffic through the canal suspended after the Ever Given ship got stuck and led to congestion in ports across many parts of the world.
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More recent is the Russia-Ukraine crisis that has also disrupted supply chains.
“There are three trends that we see at the moment, supply chains are integrating, digitising and decarbonising. Integrating has caught on and supply chains are getting fairly integrated,” he said.
“Digitisation is super important. Before Covid-19 bit, we used to have 1500 customers coming to our office in Mombasa every week to do basic documentation. We have all these products available online and we promoted them during covid-19 and today, we have reduced the foot traffic to 500. We will continue to do that.”
“On decarbonising, businesses have obligation to support environmental sustainability of our planet and Maersk is fully behind that. We have ordered 12 container vessels that can carry 18,000 containers that will run on green methanol. They will start to be delivered in 2024. They will be carbon neutral.”
Mr Lorenz spoke last week during Standard Group’s Transform Kenya forum.
Maersk has traditionally been in marine transport but in the wake of Covid-19, the firm developed products that enabled it picks products from its customers’ premises. This saved the customers the hustle of having to deliver their products at the port, which Lorenz noted would enable them to focus on their core business.
Among those that benefited from the new arrangement was Sasini, whose chief executive Martin Ochieng noted that the Covid-19 pandemic has offered great lessons to players in the agriculture sector, primarily those focused on exports. He noted that partnerships are key in getting produce to the market on time.
“One of the things that Covid-19 did for our industry where perishability is an issue, it allowed us to think more creatively about how we move to produce and how we get to the market,” he said.
“For instance, avocados are among the products that we grow and you have between 30 and 40 days after picking that fruit to get to the consumer in Europe. The entire process - from picking and packing to shipping it by sea and eventually getting it to the shelf and finally to consumers while it is still fresh – is a science. If you do not get that correctly with a good logistics partner you are doomed.”
Gilbert Langat chief executive of the Shippers Council of East Africa (SCEA), noted that Covid-19 disruptions were costly, noting that the hold up of vessels especially in ports of China as well as the hold up at the Kenyan borders resulted in the cost of shipping products go up and in turn affected consumer goods. At some point, the trucks waiting for clearance at the Malaba border stretched for more than 20 kilometres as the two countries instituted strict measures to ensure the drivers crossing over were not infected with Covid-19.
“The challenge that we faced was that a lot of vessels were held up, especially in Asia. In terms of our supply chain along the Northern Corridor – which serves six countries in the region – at the border stations where our trucks were held, everybody was talking about the delays,” he said.
“There was a huge capacity that was held at the border. With containers held at the border, importers incurred huge costs for delays as they had agreements on the usage of the containers and timelines within which they must return them to the shipping lines,”
“Freight rates went up between $1,000 to Uganda and $2,500 and $3,600 to South Sudan. Some countries really suffered in terms of increased freight costs and that increased the cost of goods.”