Africa Coronavirus Import Logistics Opinion

OPINION: Covid-19 – The New Incoterms

I have spent all my professional life in Africa, and Mozambique has been my sanctuary for learning and acquiring know-how at a very high speed.

For me, now with 20 years of experience in a country that challenges you every day, it is not easy to see the full and immense impact that this pandemic is having and will have for a long time in all our lives.

There is nothing worse than seeing a worldwide disruption of the supply chains. Because when that happens, the multiplying factor is more destructive than a tsunami. It is an explosion. We are still a long way from fully understanding the consequences of this pandemic, but there are some factors we already understand, and which can already be mentioned.

The first conclusion we may reach is that there will be an even faster integration of systems where many tasks will be completely dematerialised. All aspects related to documentation circulation employing human intervention will cease.

Also, the integration of platforms from different suppliers will tend to be “integrated” so that the supply chain process is quicker and cheaper for everybody.

The disruption of the supply chains will generate massive unemployment besides the one that will be a direct consequence of the factors mentioned above, and we will have shortages of sea cargo movement and empty containers with no service, increasing maintenance costs.

The second consequence and one of the victims of this pandemic will be air freight cargo services. Although at this stage the prices of air cargo from China are scarcely believable, two major consequences will be felt:

  1. There will be – in the long term – a lack of trust to use air cargo services due to high price status
  2. Sellers (importers and or producers) will not want to depend anymore on goods and or materials that are far away and at a cost that can become expensive unexpectedly, consequently disrupting their supply chain. It is worth noting that I am not making any reference to the goods being bought that will, at least, maintain or decrease their quality, never increase.

For sellers, due to a slow return to market production, the most important matter will be to produce closer to their selling point, translating into a reduction on the time and cost of their supply chain.

There will be a redefinition of strategy markets where states and or organizations they belong to (EU, SADC and many others) will focus on having the production of all their needs within their geographical area.

For countries with long sea coastlines, for example, there will be very strong support in using sea freight due to cheaper costs for long distances.

Micro logistics will have a significant improvement and online business will increase extensively.

The major problem is to know whether these transformations will translate into a decrease in costs of acquisition of products.

The solutions to these new perspectives of the supply chain will require the best of knowledge from the most experienced ones.

Good luck and keep safe.

PS – This article is dedicated to Manuel José, the best sea freight business developer I have ever met in my professional life.

Pedro Monjardino – Managing Partner of Strategic Consulting and Project Manager from SMC – Mozambican Shipping Company.

1 comment

  1. although I don concur on the air cargo freight prospective view WW, I totally agree on Micro logistics will have a significant improvement most particular MULTIMODAL and online business will increase extensively, it least its my focus for Mozambque, MULTIMODAL AND ONLINE business.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: