Logistics

Kenya, Uganda, Tanzania and all of the Eastern Africa countris in the East Africa Community are net importers. The port of Mombasa in Kenya is the major trade gateway into Kenya, and with Uganda, Rwanda, Burundi, South Sudan and Ethiopia being landlocked, also serves as one of the major gateways into East Africa as a whole.

Import and export cargo through the port of Mombasa as at the end of 2017 stood at 29.3 million Dead Weight Tonnes (DWTs), with 1.2 million twenty-foot equivalent units (TEUs) cleared through the port. As at the end of 2017, the total value of imports into Kenya was KES 1.72 trillion, out of a total cargo value of KES 2.31 trillion.

Out of the total cargo throughput at the port of Mombasa in 2017, containerized cargo accounted for 38.3% against a 38.5% six year average to date. Additionally, conventional cargo and dry bulk accounted for a combined 33.6% in the same period. This is in addtion to motor vehicle imports that peaked 130,000 in 2019.

Construction of the Standard Gauge Railway (SGR) in Kenya completed in 2017 has been a major disruptor in East Africa's logistics industry. The SGR project is one of the infrastructure construction projects under the Northern Corridor Integration Projects (NCIP) aimed at development of a modern, high speed, high capacity railway for passengers and freight within the northern corridor.

In the year 2012, Kenya’s tourism industry earned USD 1.17 billion against the USD 9 allocated to the Kenya Tourist Board for marketing tourism internationally.

In the year 2012, the Republic of South Africa, using a research-based strategy to choose the markets it will invest in, based on core, investment, tactical and watch list markets spent: R407,144 ,000 (USD 41.4 million) on international marketing, R50,000,000 (USD 5 million) in Africa marketing and R40,000,000 (USD 4 million) on domestic marketing, from which it obtained 11.5 million tourists, and USD 2.8B.

Using the industry’s ten-year performance data, funding the Kenya Tourist Board (KTB) at Ksh. 10B (USD 120M), would increase tourist arrivals to over 8 million, and tourism revenues to over 600B (USD 7.1B).

This would have a tremendous knock-on effect on the national economy given the industry’s impact on government revenue in the form of taxes, duties, license fees, entry fees and other charges, the industry’s capacity to stimulate demand for locally-produced goods and services, as well as its ability to promote regional development and the distribution of income.

Currently, Kenya’s tourism product is largely beach and wildlife, and predominantly from the USA and continental Europe, though China, Asia and the middle-East have steadily been growing too.

Diversification of the county’s tourism source markets as well as development of domestic tourism could strengthen the sector and make it more competitive. The increasing diversification of source markets will be served better if the industry can match such diversification with appropriate product development.

The Republic of South Africa, for example, targets to obtain 15 million international arrivals by the year 2020. To achieve this, one of the areas that South Africa is focusing on is the business events industry, in which it has already secured over 200 international conferences, to run over the next five years, bringing to South Africa 300 000 delegates and earning the country an estimated USD 159 million.

In the year 2011, South Africa had 392 000 business travellers, of which 140 000 were Meetings Incentive Conference and Events (MICE) delegates. According to international trends 35-40% of business travellers to any destination are MICE delegates.

The global potential for business meeting and conferences is immense. In 2011, 10 000 Association meetings rotated worldwide. 6,500 of these were regional meetings (European, American, Asian and African Associations) and 3,500 were International Associations meetings.

Africa hosted only 304 (3%) of these meetings, mostly international Association meetings, with South Africa hosting only 86 and still managing to rank 37th globally as a conference and business meeting destination.

While beach and wildlife tourism will likely maintain their positions in the product profile, even the traditional source markets would yield more with increased local product development.

While there continues to exist the need to develop performance in different segments of tourism, development of property and service quality standards is also a key area of concern. For some time now, underinvestment by investors in tourism, coupled with fluid government and industry policies on the classification of properties has led to a steady growth of budget tourism, which is not particularly desirable.

Improved policy guidelines, segmentation and product differentiation should ideally realise the industry's growth within a planned mix of high-end tourism, budget tourism, and domestic tourism.

In Kenya, if more counties in the devolved system of government, for example, should focus on tourism as a key development area, the country’s tourism product has potential for vast diversification. This will, in the short-term, boost domestic tourism and in the long-term complement traditional beach, wildlife and conference tourism through the development of ecotourism, cultural tourism, sports tourism, and other advancements in thematic tourism.

Closely related to product development is the need to develop physical infrastructure related to the tourism experience, including roads to, within and around parks and other other tourism destinations.

Tourism in Africa is for the largest part nature-based, and this makes environmental sustainability a key concern for the industry.

Concern for environmental sustainability in tourism relates in particular to concern for the preservation of ecosystems and wildlife habitats, water sources, and the concern for various other environmental factors that impact on the tourism exerience.

Resource-based human-wildlife conflict, encroachment of wild-life habitats, and the proliferation of developments within parks and national reserves, however, threatens the sustainability of of tourism in many African countries.

Threats to environmental sustainability are in addition to a growing concern for poaching and illegal game hunting, destruction of natural environments and habitats through industrial waste disposal and other instances of poor waste managment, and inadequate investment in environmental restoration.

Apart from the need for stringent government policies relating to sustainable tourism, the tourism industry must itself pursue self-regulation mechanisms, and a collective responsibility for environmental sustainability within its stakeholders.

One of the leading differentiators of East African as a tourist destination is the quality of service. Staff to guest ratios in the region are incomparably higher than they are in most parts other parts of the world, which translates to better service and more personalised attention.

Staff to Room Ratio, for example, can range all the way from 3:1 (3 full time staff for every room available) in East Africa, through a ratio of 2:1 in developing countries like China, India,and in the Middle East, to less than 1:1 in developed countries like the US, UK, Canada and Australia. Added to this capacity for service delivery, the friendly, helpful and inviting culture of East Africa has been a strong differentiator of the region's tourism product.

For a long time, the Kenya Utalii College in Nairobi has produced highly qualified technical staff for the hospitality industry across Africa. Proliferation of tourism training institutions that are not adequately resourced in terms of the necessary capital investment and faculty, or even adequately regulated, however, threatens to reverse the quality of personnel in the industry, and the service they are able to deliver.

The push for advanced degrees in tourism and hospitality driven by the competitive job market forces also threatens to rob the industry of hands-on career hoteliers, on who the industry has for so long depended for the distinguished performance it has achieved.

These and other factors call for review of policy and industry approaches to education, training and and human resource development in the hospitality industry.

Our work within the logistics industry has majorly been in two areas:

• Strategy

In the logistics industry, every day is presents new challenges that must be addressed with pressing urgency. Cut-throat competition, shifting compliance and regulatory requirements, variability of customer requirements and frequent "Acts of God" often make it difficult to sustain focus on key deliverables within the logistics supply chain.

Existence of a solid strategic plan with clear deliverables, and an equally clear process of performance monitoring and review mitigates the ever-present possibility of loss of focus as the business strives to meet day-to-day operational requirements. Through our work in Strategy, in our Advisory division, we work with clients in the logistics industry to develop comprehensive business strategy and support them in implementation and performance review.




• Financial modelling

The varying cost structure of different business lines in the logistics industry, high capital costs and cash-intensive operations make prudent financial planning extremely critical. The ravaging effects of time-sensitive operations when allocated time is exceeded - in the form of storage, dermurage, vehicle and equipment-hire costs further mean that profit is rapidly eroded when the intricate balance of variables on which stability in the logistics industry depends.

We work with clients in the logistics industry in the area of Financial modelling to develop business financial models that shape profit and secure shareholder value.




• Performance management

  Profit performance for actors in the logistics industry in East Africa depends on the delicate balance of container volumes, motor vehicle volumes, loose cargo warehousing volumes, efficiency of yard operations and the level of total business acquisition costs, which are frequently uniquely high in the logistics industry.

  Our Performance management work in the logistics industry has entailed working with Cargo consolidators, Shipping lines, Transporters, Container Freight Stations (CFSs) and other customs agents to develop management structures through which we define role expectations, set performance targets, evaluation criteria for management roles especially, and corresponding reward management systems.