Africa currently boasts the world’s youngest and fastest-growing population, presenting a unique opportunity to develop modern and ground-breaking infrastructure and transport solutions in emerging markets, thereby enhancing its attractiveness for foreign investments.
Generational Shift Creating Challenges
Younger generations have grown up with online shopping and are much more likely to utilise these services as transport and road usage becomes more expensive and challenging.
The pain points experienced by transport and Logistics companies on the continent are however significant and result in higher cost of deliveries and lower levels of service for consumers. This could reduce adoption of digital commerce and decrease overall economic growth.
Some companies in the industry have called the last-mile delivery in its current form a broken system under constant strain.
Christiaan Botha, Director of Operations at FMC Logistics, has recently commented that: “The industry must evolve: optimise networks, invest in security, meet customer demands, and go green”. “The opportunity is there—but it requires serious commitment to real change”. “Without it, businesses will continue to struggle” says Botha.
Last-Mile Delivery Costly with Higher Risks
Last-mile delivery is one of the costliest areas of the supply chain, with the combination of multiple delivery routes, packing and packaging, and dispatch waiting times that saddles ecommerce businesses with prices that, on average, range from R90 to R900 per package.
An additional dimension creating increasing demands on delivery companies, is rising customer expectations such as specified delivery times, that are a challenge to meet due to a wide variety of hurdles .
Problem Areas With Current Systems:
- Security: while companies can invest in security measures like GPS tracking and route planning to reduce security risks, there are still significant risks to both drivers and vehicles in many areas.
- Traffic: Traffic congestion in major cities like Johannesburg Lagos, Cairo and Cape Town can result in delayed deliveries and customer dissatisfaction.
- Infrastructure: lack of proper and timeous road infrastructure maintenance, such as potholes and poor signage, can cause increase in risk to vehicles and higher maintenance and insurance costs and create delivery delays.
- Deliveries to informal settlements: Deliveries to informal settlements remains a key challenge with little or no signage or navigation availability.
- Parking: Parking in many city areas is often difficult and carries higher risks to goods and personnel.
- Cash-on-delivery: Cash-on-delivery transactions are problematic particularly in the case of failed deliveries or refused items.
- Electricity limitations: Electricity availability limitations can hinder the use of electric vehicles, which could offer better environmental benefits and lower vehicle running costs, due to ever increasing fuel prices.
- High delivery costs: High delivery costs can lead to customers abandoning their shopping carts.
- Route planning: Poor route planning can contribute to high delivery costs.
- Centralised co-operative pick and pack warehousing across multiple delivery groups are not yet an established pattern in the industry resulting in multiple delivery companies covering the same areas with fewer parcels which in itself is highly inefficient
- Lack of time specific deliveries: Again this is predominantly created by too many players all covering the same ground in an uncoordinated fashion
Solutions:
Some companies are using advanced technologies and data solutions to streamline operations and improve the customer experience. These solutions include GPS tracking, route optimization algorithms, and real-time tracking systems to enable better efficiencies, monitoring and risk management.
Other players in the market have adopted to current challenges in last mile deliveries by creating pick-up points locally within existing and secure retailer locations and these include code operated lockers that are accessible 24 hours a day and retail shops that facilitate collection points.
Another potential opportunity to create better efficiencies is to rethink the current state of play with too many logistics companies duplicating delivery efforts and routes by running empty trucks or underusing fleets. The assumption that every player must build their own infrastructure is inefficient and costly and there may well be a better approach. There’s an opportunity to harness underutilised capacity and partner with those who have established networks, utilise return routes and to co-ordinate and consolidate shipments. These partnerships could well see significant cost savings with reduced inner–city emissions, all while delivering faster and more efficiently and even looking at the possibility of introducing on-time deliveries.
