DHL Africa is optimistic about air cargo in 2013
Despite the current global economic uncertainty, Africa is likely to record stable growth throughout 2013, according to Charles Brewer at DHL Express Africa.
Brewer claims the growth will be as a result of the traditional oil and energy sector, increased consumer spending and economic activity, which remains the main driver of air cargo traffic on the continent.
“We predict that in Africa, we will see solid single digit volume growth in the short term led by the oil, energy and mining sectors, and solid double digit growth in the medium term as e-commerce grows and manufacturing takes root within the region.”
Brewer predicts that within the Sub-Saharan region, routes between Nigeria, Cote d'Ivoire, Ghana, Kenya, South Africa, Tanzania, Mozambique, Ethiopia and Uganda will grow as a result of major investment into those markets and their positive economic indicators as well as other factors such as oil and gas finds, or regulatory changes.
“In 2013, according to our own data and volume trends, we predict that South Africa’s main trading partner within Africa will be Nigeria, due to the high volume of technology and electronic goods shipped into that country. From a global perspective, Sub-Saharan Africa’s fastest growing partner will be the Asia Pacific region, which has recently instituted new ties with Africa as it looks to secure sources of raw materials to fuel the future expansion of the region.”
According to IATA, global cargo volumes contracted by two percent in 2012 due to low business confidence. According to Brewer, this was not the case at DHL Africa: “DHL Express Sub-Saharan Africa recorded solid single digit growth in 2012, despite high fuel prices and a slowing world economy, and is therefore positive about 2013 going forward.
“It is reported that oil and jet fuel prices are expected to remain around mid-2012 levels or, in some cases, perhaps even decline over the next three to five years, which is obviously positive for the industry as a whole.”
One area Brewer has highlighted as a potential challenge to DHL’s African Operations is South Africa’s current customs laws, due to the significant obstacle of the informal threshold of R500 for duty-free imports which continues to hamper the e-commerce industry, slow clearances and prevent becoming more globally connected.
“South Africa cannot currently realise its e-commerce potential and prevents local consumers from benefitting from internationally competitive prices, as well as the wide choice offered by global retailers,” he said.
One final challenge is the South African labour market. “We saw a major strike in 2012 that crippled most of the transportation industry. While we were still operating, this had a significant impact on our business – the labour environment is a challenging one in Africa, and South Africa is no different.”
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector