SADC Fuel expansion opens Opportunities

New routes for fuel imports to SADC countries are being enabled through the development of several southern African ports. However, energy companies will require local networks of logistics partners to make these imports cost-effective. General manager at logistics specialist Crossroads Distribution, Hennie van Wyk believes there are three vital areas to get right.
Until fairly recently, the southern African fuel industry has been based in Durban, Cape Town and Mossel Bay, where imported oil or locally produced gas from offshore fields is refined into various types of fuel and then distributed throughout South Africa and the SADC region. However, the completed expansion of the facilities at Matola, the port of Maputo in Mozambique, along with the on-going expansion of Richards Bay in South Africa, Walvis Bay in Namibia, and the central and northern Mozambican ports of Beira and Nacala, is facilitating a growing trend of SADC countries buying refined fuels on the global market and importing them directly into different SADC regions, such as Botswana, Zambia and Zimbabwe.

The new ports, with enhanced storage, safety and transportation infrastructure – and the advantage of being a lot closer to various SADC fuel markets – will allow energy companies to serve these markets more cost-effectively. However, in a challenging market that has seen some decline in volumes recently, this cost-efficiency requires a network of both international and local logistics providers to move the fuel from port to distributor. Rail might be useful in transporting fuel from ports to inland depots, but road transport from depots to retail distributors will provide flexibility without the need for multi-modal solutions.

Challenges of Transport Across Sub-Saharan Africa

Even at the best of times there are many challenges that those involved in the road freight and logistics industry must confront when chartering territory in Africa. These challenges create incredible vulnerabilities to delays, non-deliveries, damage of commodities, loss of fleet and higher operational expenses. Unfortunately, these countries also play host to some of the most poorly maintained road systems in the world, widespread political conflict and hostile weather conditions. This is why collaborating with a sound logistics partner is key to ensure your valuable cargo arrives at its destination promptly and in pristine condition. This review analyses some of the challenges of moving goods through often treacherous parts of Sub-Saharan Africa.

A fundamental challenge facing logistics companies is the poor condition of roads due to inadequate maintenance and overloading. The CSIR currently reports that about 60% of the poor road networks that logistics companies endure in SA can be linked to overloading. You would also tend to think that the extensive road network in SADC and Sub-Saharan Africa would make moving your goods relatively seamless, right? Well think again; according to the Southern African Yearbook only a small proportion – approximately 20% – of the road network is actually constructed to cater for heavy-duty transportation. Botswana is considered to have one of the best road networks, yet only about one third of their roads are in a state that allows trucks to travel safely on them.

Another burgeoning challenge is lack of sufficient funding for infrastructural development in Southern Africa. Unavailability of adequate budget, absence of optimum public sector skills and technology, and much slower than anticipated private sector participation, has hindered infrastructural development. This in turn slows down the movement of your goods by road, rail, air and sea! Governments have responded with Public-Private Partnerships (PPP) in countries such as Kenya. However, ineffective regulatory frameworks for enforcement, among other weaknesses, have diminished the success of many PPP ventures.