More Links in the Chain to Prosperity

December 16th, 2013 5:10 pm Category: Supply Chain Improvement, Supply Chain Planning, by: Gene Ramsay

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Great strides have been made in transportation infrastructure in the last 150 years; such feats as the construction of the Suez and Panama Canals, and the development of long-distance railroad and highway networks, have reduced cost and fostered trade for the world as a whole. And more changes are coming on line today, or are in the pipeline, including significant additional throughput capacity in Panama in 2015, and the gradual development of added rail capacity connecting Asia and Europe. (For more information on the latter, see the article The New Silk Road by my colleague John Hughes.

Another area where additional transport capacity would greatly benefit trade, and potentially bring a significant improvement in living standards, is central Africa. This area has immense natural resources, such as the copper and cobalt found in the Democratic Republic of the Congo and Zambia, and the coffee grown in Uganda, that require both land and sea transport to reach major manufacturing and consumer areas. A number of projects are under construction or consideration to bring change to the supply chains in that part of the world.

An article in The Economist earlier this year looked at barge and rail transport projects underway in Egypt, Guinea, Ghana and Angola, and profiled plans for future infrastructure improvements by firms such as Citadel Capital of Cairo.

The strategic thinkers at consultancy Stratfor have focused a number of their recent research articles on the different options available to better connect the rich ore in the landlocked central area of Africa to world markets. The South African port of Durban has the best developed cargo handling facilities among the ports in the southern part of the continent, and currently attracts large volumes of minerals, but this requires a long road trip from Katanga in the Congo through Zambia and Botswana to South Africa. Durban is substantially further from the sources than ports such as Dar es Salaam in Tanzania, or Walvis Bay in Namibia, but the road route to Durban is relatively safe and stable, whereas paths to other ports suffer from unreliable or otherwise inadequate infrastructure, or the requirement to switch between rail and truck en route from mine to coast. But that is perhaps just a short term issue – given the potential rewards, several plans to improve these routes are in various stages of planning or development.

As these changes become visible on the horizon, and gradually take place, companies would be well-advised to evaluate their options, and plan for these changes – strategic supply chain planning allows management to keep their firms at the forefront of the business world.

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