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Logistics in Africa: Top 5 Growing Trends that are Shaping the SME Ecosystem

September 15, 2023

This piece will uncover some growing trends shaping the SME ecosystem within Africa and beyond. But just before proceeding to the list, it is crucial to mention that the African logistic landscape has since taken a new turn post-COVID pandemic.

It's nearly impossible to think of SMEs in this part of the world without recalling events like Okechukwu, a dispatch rider, coming two hours late to pick up an item, or how a police officer arrested Mr. Kolawole on his way to complete a delivery because he was riding an unlicensed dispatch bike.

Besides, other significant challenges that impede the smooth operation of SMEs include wide disparities in delivery costs, a lack of a database, high shipping costs, and general logistic management, to name a few. However, with cutting-edge technology development, SMEs address these concerns one after the other.

This piece will uncover some growing trends shaping the SME ecosystem within Africa and beyond. But just before proceeding to the list, it is crucial to mention that the African logistic landscape has since taken a new turn post-COVID pandemic. 

Notably, we are beginning to witness an increase in innovative purpose-built solutions that can resist extreme conditions. That being said, the following are five growing trends shaping the SME ecosystems across Africa and beyond. 

Driver Management

1. Driver Management: Just as wind or water is to a turbine, drivers are the lifeblood of any logistic operation. Managing them effectively can improve the overall operations and user experience alike. More so, because they are an inseparable part of logistics, they contribute significantly to the overall success of a supply chain from start to finish. 

Sadly, driver management and retention have also remained a significant challenge among most logistic firms, usually because of the flexibility of operating as an independent contractor. Even with a good salary, incentives, and favorable working conditions, drivers still find it challenging to stay with most logistic companies for personal reasons.  In other cases, demands may exceed the available staffing, making the problem a never-ending circle that needs to be resolved regularly.

Most logistic firms have been addressing this issue by integrating driver management systems into their existing transportation management system. Among other benefits, this system allows most logistic services to establish a pool of independent drivers, track driver workload and wellness, and ensure they are paid what they are entitled to per each successful operation. This approach is equally favorable for independent unlicensed dispatch riders like Mr. Kolawole. He can seize the opportunity to work for a regulated logistic brand while staying clear of law enforcers. 

AI and Warehouse Automation

2. AI and Warehouse Automation (embrace complexity through automation): Warehouse automation is another exciting trend that has been on the rise post-COVID, necessitated by the enforcement of social distancing worldwide. To reduce or eliminate clusters of warehouse workers, some logistic firms have adopted artificial intelligence (AI) technology to aid warehouse automation.

For instance, warehouse automation can be easily accomplished with cutting-edge technologies like automatically guided cars and robotics can easily accomplish warehouse automation. By implementing these AI-powered solutions, the warehousing and distribution of goods become much more organized, timely, and predictable - all while reducing human intervention.

Modern Aggregation and Integration Technology

3. Modern Aggregation and Integration Technology: There has also been an increase in aggregation and integration technology. Before now, most SMEs had to download multiple logistic applications in the hopes of using the one that offered the best benefits-to-cost ratio. 

However, businesses now have access to a one-stop marketplace for multiple logistic services. A famous example, in this case, is Terminal Africa, which in addition to being a logistics aggregation platform, also provides software development kits (SDK) that SMEs can use to integrate their services on their various website and existing software infrastructure. 

Also, by embracing this modern integration technology, businesses can include core services like transportation management, warehouse management, fleet management, finance, and accounting system, which enables them to create a connected ecosystem.

Eco-Friendly Technology

4. Eco-Friendly Technology: Sustainability is critical for all businesses, and this applies to many things, including ensuring that the environment is conducive and habitable years later. Most logistic firms are set to achieve this by replacing their existing fuel-powered vehicles with electric alternatives, drastically reducing carbon emissions while ultimately ensuring a more sustainable ecosystem. 

Lately, there has been a surge in electric two-wheelers and delivery vans for e-commerce deliveries. Logistic service providers see this as an avenue to reduce their carbon footprint.

Less Than Truckload (LTL) Demand

5. Less Than Truckload (LTL) Demand: 

The growing number of small-scale eCommerce players and SMEs alike has necessitated fractionalized delivery, often known as Less Than Truckload (LTL), in the logistics world. 

The premise behind this approach is that most SMEs can’t afford to transport a truckload of products, and if they must, it will require them to wait a more extended period to amass enough orders to fill an entire carrier. Unsurprisingly, most SMEs suffer similar challenges, typically resulting in high demand for faster shipment of smaller units of commodities or LTL.

However, by implementing the LTL approach, multiple SMEs can ship their smaller units of goods faster and more promptly. Technically, various company goods are placed on a single carrier which makes up for an entire career, albeit numerous delivery stops. Regardless, this is a cost-effective and faster approach compared to a situation where a single SME must wait until it gets an order that can fill a carrier. 

Final Thought

The logistics sector is evolving to accommodate all stakeholders, particularly SMEs. Previously, the emphasis was primarily on large-scale organizations. In contrast, with the advent of new cutting-edge solutions, any business, including SMEs, may engage in what can now be described as a leveling playground.