While multimodal logistics presents significant growth opportunities, it also brings complexities in managing stakeholder relationships.
Businesses looking to integrate multiple transport modes must balance efficiency with strategic collaboration to avoid disruptions in the supply chain.
According to aircargonews.net, this was the consensus of a panel session on multimodal logistics at the Air Cargo Africa event in Nairobi last month.
Panel chair Professor Frank Straube, chair of logistics, Berlin Institute of Technology, pointed out that business relationships can be more tricky to navigate for traditionally single-mode transport companies branching out into multimodal transport solutions because companies will be “competing with a lot of former customers”.
Caroline Trefault, intermodal African manager, Mediterranean Shipping Company (MSC), which launched MSC Air Cargo in December 2022, said it had been important for the company to evolve from solely ocean shipping into end-to-end multimodal logistics.
“Because in our mind we don’t just have to do the sea part, we have to deliver directly to the customer. So we build services and explore corridors.”
READ: Aviacargo: Boosting Africa’s Perishable Exports Requires Urgent Logistics Overhaul
Trefault added: “As a shipping line we also link between the origin and the destination, between the seller and the finite customer.”
Trefault said this end-to-end approach is important for people living in landlocked countries. In the case of Africa, this is 25% of the population, she pointed out during the ‘Facilitating trade within Africa, the importance of developing a multimodal roadmap’ session.
Straube asked Trefault whether MSC is stepping into the roles of all stakeholders across the supply chain – airlines, forwarders, handlers and so on, to offer shippers an end-to-end solution?
“Yes,” she confirmed, prompting David Ambrose, director of cargo and mail at TAAG Angola Airlines to suggest that initiatives like this are key to logistics development.
“It’s pretty simple to move stuff from A to B, but to get it to C or D is where the skill comes in,” he said.
Ambridge also suggested that disrupting accepted methods of transport to boost business is something that warrants further exploration.
“But FedEx is, DHL, Amazon, UPS and they go and they steal our business because they go directly to the shippers.
“Sometimes we don’t even know who our customers are because we deal with the freight forwarders and we don’t know if it’s for Boeing or Apple or Samsung unless we go outside and look at the name on the box. So we’ve had this whole conundrum, if you like, for a long time.”
Multimodal obstacles
In the past, integrators like FedEx and UPS were viewed with suspicion because companies were concerned about them gaining too much market share, as Air Cargo News wrote about in its 40th-anniversary round-up of the air cargo industry.
And in recent years there has been much attention on traditional oceanfreight players moving into the airfreight space. During the pandemic, MSC Air Cargo, Maersk Air Cargo and CMA CGM Air Cargo were all launched by their respective ocean shipping parents.
But while the concept of companies moving into different transport modes has not been welcomed by everybody, multimodal solutions are key to supporting economic growth, decided the panel.
“Without end-to-end logistics, growth will not happen,” stressed Straube.
The panel agreed that each part of a multimodal supply chain has its part to play – with airfreight offering unmatched speed.
Lyndee du Toit, chief executive of Air Charter Service (ACS), said: “Logistics is a huge part of what links all our businesses, how we get everyone together, how we connect one end to the other and there is a place in this for everybody – from road to sea to air.”
But there are many hurdles in the way of efficient multimodal development, highlighted the panel.
Straube said that there needs to be more understanding of multimodal logistics, improved infrastructure and a clear roadmap.
Meanwhile, du Toit pointed out that Africa should be more efficiently putting into place the framework for cargo to cross borders.
She said that Africa is faced with flight route diversions and supply chain disruption caused by war zones on both the east and west coasts of Africa and bureaucracy means Africa is not making the most of resources and trade opportunities.
She stated there are many logistics and supply challenges, for example, port and terminal congestion, bureaucracy, border congestion and expensive land transport: “For that, we need to develop public-private partnerships. We cannot do it alone.”
She added that to support growth in Africa “we need to create an efficient corridor for logistics”.
Time-critical services are becoming more common, further added du Toit, but to get over the issues of traffic rights and permits, governments need to intervene and “come up with plans that can integrate us all seamlessly and quickly”.
Ambrose said that because Africa still suffers from protectionism, it is difficult to make cross-border logistics work and it would be useful to look at other regions that have successfully implemented multimodal operations.
He suggested Dubai is a good example of a location that has leveraged multimodal opportunities.
“Dubai is enormously successful and it produces nothing – except sand. But it’s become the transhipment capital almost of the world because it’s connected seafreight to airfreight and to roadfreight and it works seamlessly.”
He noted the deliberate building of the Dubai World Central (DWC) Airport next to Jebel Ali Free Zone and the seaport.
Ambrose added that air cargo and logistics need to communicate with customs authorities, “and explain to them that they need to be trade facilitators and not trade blockers” otherwise cargo will continue to arrive at terminals and not be moved for days.
Traffic rights are also an issue, he agreed, while protectionism has to be removed.
“We’re an African airline. We fly all over Africa, but we have to go and ask for traffic rights at every single country and it may be three or four months for us to get the traffic rights.”
That said, he is optimistic about the free trade agreement in Africa.
Straube added that reducing bureaucracy and corruption is important, in addition to digitalisation and investment.
Concluding the session, he stressed that multimodal should be easier and information sharing between partners should be encouraged not discouraged within the logistics industry.
Speaking about current industry behaviour, he observed: “You like the power of information in your area and you make business out of it.”
But, he said: “You need to share information in order to create customer value.” Particularly in Africa, where logistics is still in development, he added.
