Logistics Aggregation: A Cost-Effective Model For Moving Goods Across Africa’s Borders

Logistics Aggregation: A Cost-Effective Model For Moving Goods Across Africa’s Borders

By Samuel Ajiboyede

If you’re a small-scale importer in Africa, you may have wondered why after placing an order for a product from China, you wait weeks to receive it, even when flights come to Africa from China regularly. This is not to mention the steep cost of freighting goods by air from China, which has been on the rise recently.

Your importation agent has more to do with these costs and shipping times than you might realize.

The Cost Of Fragmented Logistics

Many of the freight agents used by small-scale importers and retail consumers have small client bases. This means those agents have to wait to accumulate the required volume of orders needed to negotiate a reasonable price with airline operators or flight carriers. Even when they do get the required volume, they are often at the mercy of the flight carriers and might not get the best deal both in the speed of delivery and the price. In turn, the buyer must pay more and wait longer to receive their products.

This might just seem like a problem for the buyer until you take a holistic view of what the absence of a defined logistics system could be costing Africa, and particularly Nigeria, where my digital freight platform and logistics aggregation company is based. Besides importation, there are locally made products that could be in hot demand outside Nigeria but never get there because the hassles of freighting goods outside the country are even higher than those of bringing them in. There also is the possibility of global e-commerce brands doing more business in Africa, but the absence of a defined logistics system frustrates the process. For instance, long wait times and sometimes poor service delivery currently discourage Nigerians from using global retailers.

The Aggregation Model

This is where logistics aggregators come in. These providers allow agents and small-scale importers to simply plug in and play. How does this help the situation? Generally, large aggregators are internationally accredited and have offices in major business cities. Being accredited is the first step to getting better deals with carriers and airlines.

An aggregator, which has the capacity to make complete payment to carriers upfront, is then able to decide the timing of shipments. This cuts shipping time because the aggregator could choose to have the products shipped weekly, while local delivery businesses are left to take the goods to customers’ doorsteps.

Although this model is not yet common in this part of the world, it has the potential to significantly improve logistics for Africa. Aggregator companies could further unify charges and fees for all. A unified system would not only help retailers import with speed and at a lower cost, but they could also get credit facilities from aggregators.

Airlines and carriers could bypass negotiating with unaccredited agents who cannot meet them on their terms and instead carry out such negotiations with the larger aggregators. Small-scale importers could simply attach themselves to the system already in place. Even big brands could have increased penetration into Africa, and customers would be more encouraged to buy with the knowledge they would not have to wait as long or pay more for logistics than the products cost.

This model works both ways and could also encourage exportation out of the country at guaranteed speed and safety, in a cost-effective manner.

What To Look For When Choosing An Aggregator

The aggregator model is still emerging, so it can be difficult to find an aggregator to suit your needs. But generally, there are several key things to look for when choosing an aggregator partner. First, because the aggregation model is complicated, you want to be sure the company you choose has the technological capacity required to effectively execute the aggregation. Research the technology it uses to see how efficient its process is. You also want to find out whether it has the proper insurance, safety regulations and financial framework in place to ensure goods smoothly get to where they need to go.

Although this model is in its early stages on the continent, aggregation shows strong potential for improving and unifying logistics for Africa’s importers and exporters. By cutting down on delivery time and price, consumers and businesses both stand to benefit.

Samuel Ajiboyede
CEO, Zido Logistics

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