The Africa Continental Free Trade Area (AfCFTA), which when complete is set to be the world's largest free trade area by the number of countries, is set to have a number of opportunities available for Africa's expanding transportation industry.
AfCFTA seeks to increase intra-African trade by cutting tariffs by 90% and could unlock significant growth opportunities.
Francis Njiraini, technical director of Seidor East Africa points out that the transport industry is recognised as one of the core enablers of development according to the World Bank and plays a key role in Africa, where development is crucial to address unemployment and poverty.
Planning for future growth is essential, as when these companies suddenly have one-hundred vehicles, they realise that they need better systems to manage their transportation such as Enterprise Resource Planning Solutions.
According to Njiraini, it is no surprise that transport costs affect the price of consumer goods, which can be significantly reduced by companies that opt to use modern transportation management systems. "I’m based in East Africa, where the majority of transportation still happens by road. Goods need to move over large areas and it is important to know where everything is, at any given time, which is where technology-driven solutions, as well as new technology, can help solve challenges."
Transportation management benefits
Njiraini says that while the transport industry in Africa is expanding and offers opportunities for new entrants, these companies usually start off with a few trucks, Excel documents and fragmented accounting systems. Planning for future growth is essential, as when these companies suddenly have one-hundred vehicles, they realise that they need better systems to manage their transportation such as Enterprise Resource Planning (ERP) Solutions.
Njiraini explains some of the benefits of ERP Solutions: "GPS that integrates with SAP Business One Hana can, for example, identify delays to alert other users of road problems and delays at weighbridges and border controls or due to accidents. It can also identify specific problematic routes that should be avoided or improved.
"The performance of trucks especially the profitability of each truck, against established benchmarks can also be measured with a transportation management system to ensure that problems are identified, investigated and resolved. These systems can also measure fuel consumption against manufacturer standards and actual figures over time."
Transportation management solutions are also essential when transporting valuable or flammable goods, such as oil and gas which need to be monitored carefully for safety and tax compliance reasons. Other challenges transportation companies need to overcome are customer demands and delays at borders and weighbridges, as well as lacking infrastructures such as broken bridges or poor road conditions that also cause delays and maintenance problems.
Njiraini explains: "Most of these upcoming transport companies do not have systems to track items such as mileage, fuel, other trip expenses, maintenance costs and tyre use, which could help them to identify problems before they happen. We have also found that only established companies with 500 trucks or more offer training to team members, such as advanced driving skills. Smaller operators do not, which means that they do not have all the necessary safety measures in place, putting them at risk."
Technology investment opportunity
Not only large companies benefit from advanced technology; small to medium-sized businesses (those with 100-500 trucks) can also benefit from and afford transport management solution.
"When comparing the cost of the investment in technology with that of buying a truck or tanker, it is important to remember that the value in efficiency and intelligence will show returns over time. At Seidor, for example, we have seen a return on investment within the first year that equals the cost of the solution in saving on maintenance costs because all expenses are tracked in an integrated system with best-practice business rules applied," says Njiraini.
"Small business owners are often wary of technology because they fear it may be hard to use, but SAP Business One Hana, for example, is easy to understand and use. SAP has made a major investment in research and development to make our solutions user-friendly. Dashboards allow managers to easily see what is going on in the business and in workshops scanners are easy to use to record accurate data, such as parts issued," adds Njiraini
The people who are responsible for the solutions are also important. Njiraini stresses that it is not always about systems or solutions, but also about people with the expertise, understanding and experience of working in the industry and who have the ability to assist growing transportation and logistics businesses with the implementation of a solution that suits their company.
Njiraini is positive about the opportunity investment in technology, combined with infrastructure changes, can have on East Africa specifically. "As transportation directly affects the cost of end-user products, transportation management solutions improvements that will help to save money can also benefit the general public. More regions can also be opened up for inter-trade with the right infrastructure to improve lives."