The need for
a national logistics agency
The second edition of the International Symposium on Trans Logistics, Transit and Warehousing of Goods (SITTEM) - held on Saturday in Algiers - focused on the theme of exporting to African markets. The participants discussed supply chain weaknesses in Algeria and the ways to address them, particularly with a view to improving the access to African markets for Algerian exports. Insurance companies, such as SAA and CAAT, joined this event as partners, holding technical workshops on the need to support insurers in their efforts to export their services and advice. Other participants included: the Ministries of Trade and Transport (ANAT, Customs, ADA, DGAAT) ; public bodies (Serport Group); public and private companies (LafargeHolcim, Anesrif, Air Algérie Cargo, GITRA, Legal Tech Africa, Seraphin Legal, Sarl Boubenza, Legal Doctrine, Rail Logistique, Geica, SNTF, CRBC - a Chinese company); and a delegation from the Chinese Embassy. This seminar attracted more than 400 logistics experts and operators. Seven thematic workshops were organised: The Efforts of the State in the Development of the Transport Sector: A Vector for National Economic Growth; Logistics Infrastructure in Algeria: A Regional Relay; The Silk Road; Logistics: A Factor for Development in Algeria; Logistic: A Lever for Export Diversification; Digitalization, Procedures and Access to the Law: Accelerators of International Trade and Investment; The Identification of a Company's Risks and Tailoring an Insurance Programme; Motorway Infrastructure as a Lever for Development; Gitra Group’s Development Plan; Rail Logistics; and The Logistical Challenges in Algeria.
All these workshops were led by former Canal Algérie journalist Ahmed Lahri. According to the organizers, the symposium had the following aims: promote Algeria’s logistical infrastructure; identify the economic benefits of Algerian accession to the Silk Road;
highlight the factors of economic development; examine safety and security in transport; and outline a new logistics strategy for exports.
SITTEM also aimed to increase awareness of the assistance and support mechanisms available to Algerian exporters, while providing an opportunity to promote national industry. This professional meeting was dedicated to investment and economic logistics. In their opening speeches, Hind Benghanem (SITTEM President) and Abdelghani Zaalene (Minister of Transport and Public Works) both stated that the objective of the meeting was to "raise awareness" among economic operators regarding the extent of the numerous government initiatives to provide Algeria with a "modern", "efficient" and "safe" basic infrastructure, admired by foreign investors, particularly China, and to build bridges in order to "promote", "encourage" and "support" international trade.
The minister stated that "the cost of freight transport logistics should account for 15% of the product price by 2025, as opposed to the current 35%". This will be achieved by integrating logistics services "into the national economy to reduce freight transport costs, thereby improving the price competiveness of companies." To this end, the minister specified that the central port of El Hamdania (Cherchell), which is scheduled to open in March 2019, "will be supported by the addition of a logistics base and three large industrial zones which will be directly connected to the rail network, the east-west motorway and the No. 1 national road. Lower prices for freight transport logistics should have an impact on consumer prices by 2025.”
The minister emphasised that this event was a "fresh opportunity" for actors in the transport and logistics sector to showcase various achievements, exchange experiences, seek new partnerships across all sectors in order to "reinforce" national capacities and acquire new markets on a continental and international level, with a particular focus on the African market. He pointed out that the transport and logistics sector "is significant in the economic and social life of the world and a very powerful tool to boost economic and commercial activities".
He stated that his department has, in order to improve competitiveness, "drawn up, as part of the government's policy, numerous initiatives which have been put in place to improve service quality and develop this sector, which plays a vital role in the country's economy". He added that a national plan has been drafted to "develop logistics centres and platforms in order to solve the problems encountered in ports, particularly overdue containers and the entry and exit of ships from quays".
Specific instructions have been given to take into account the logistics systems of all forms of infrastructure to "facilitate" the transport of goods at a lower cost. He used the port at Cherchell (Tipasa) as an example. This port will be equipped with a logistics platform and three industrial zones which will be directly linked to a railway line, the east-west motorway and National Road 1. Other platforms of the same type will be built along this motorway. As a result, the cost of Algerian freight logistics "should drop sharply by 2025, the goal being to reduce the final cost of products," the minister stated. The cost of freight transport logistics "should account for 15% of product price by 2025 compared to 35% today." He added that the country's ambition "is to integrate logistics services into the national economy in order to reduce freight transport costs and thus increase the competitiveness of economic operators."
As part of this plan, he explained, "strict instructions" have been issued to integrate logistics activities into the planning for connections to the rail network, motorways, east-west motorways, ports and airports. The objective is to facilitate the transport of goods by reducing delays and therefore the cost of transport, which will have an impact on the final cost of goods traded. The minister took the opportunity to highlight the important role of Logitrans. According to him, this group, is "a vital tool" in the implementation of government policy, whose objective is to develop logistics activity by offering quality services: "Its experience in this field has led the Ministry of Commerce to entrust the Logitrans group - following the example of other specialised public groups - with the transport of goods to Mauritania and non-hydrocarbon export activities". He reiterated the government's commitment to "improving the supply chain as a whole" by inviting Algerian companies and consultancies to take a closer look at what is happening in African countries and to gain entry into this market.
An opening to Africa
The minister believed that existing infrastructure - in particular the trans-Saharan road with its various branches and the opening of a border post between Algeria and Mauritania - provides Algerian companies with sufficient access points to Africa. He stated that the Logitrans group will be equipped with several facilities, enabling it to create numerous logistics platforms in the north of the country (Algiers, Sétif and Oran) and in the south (Tamanrasset and Tindouf) which will facilitate exports to African countries, including neighbouring countries, Tunisia, Morocco, Mauritania, Libya, Mali and Niger. He believed it was now time for a national logistics plan which would "take care of all the problems related to this field and help Algerian companies to access the region's markets, particularly those in Africa."
Mr. Benmeradi acknowledged that there were "certain dysfunctions", particularly in logistics. According to him, these deficiencies, which have a negative effect on the competitiveness of Algerian trade, are characterized at an internal level by "an insufficiently developed rail network" which is not always connected to the main centres of production and packaging, as well as the ports and airports. At an external level, the minister acknowledged the lack of capacity in national shipping. This has meant that foreign ship-owners have imposed prohibitive tariffs for Algeria, the most expensive destination being the MENA region. This is problematic because shipping is the main form of transport for Algerian foreign trade. This failure in the logistics chain is also the product of insufficient port infrastructure. Mr. Benmeradi highlighted other problems in this regard, including higher freight cost for Algerian companies, exacerbated by demurrage owing to lags of up to seven days, administrative and customs delays, the insufficient size of the Algeria’s cargo fleet, and a lack of interconnection between the different modes of transport.
Despite the financial crisis, however, the government has scheduled a spatial planning programme for 2030. The programme includes a number of measures to expand and modernise existing infrastructure via improved logistics to reduce costs and improve delivery times. The minister stressed that "it is time for us to make serious logistical plans to accompany the momentum of the country's economic development, through a synchronization of stakeholders in the national supply chain which now enables the electronic processing of administrative formalities with S.I.G.A.D. [Automated Customs Information and Management System] and through the implementation of a single counter system for both ports and airports."
There are also plans for setting up a regional logistics platform with cold chains dedicated to exports. The president of Sittem, Hind Benghanem, said that the decision to focus this edition of the symposium on Africa "was no coincidence". In this regard, he urged Algerian operators "to take advantage of the various export support facilities provided, including transport support, and to exploit the achievements made in road infrastructure and logistics, in order to diversify their exports, particularly to African countries". The speakers highlighted the need to create a national agency dedicated to logistics to better manage this still embryonic sector in Algeria.
Before the creation of this national logistics agency can be planned, however, there is a need for all industrial areas and ports to be connected to the east-west motorway in order to reduce transport costs. Likewise, speakers reiterated the importance of ensuring that the different means of transport - road, sea and air - interconnect. But rail will be the most important form of transport in the meantime, and should come to play an “important role” due to its low costs. Concerning maritime transport (external trade), 80% of the national market is taken by foreign companies.
On the second day of the symposium, Saïd Djellab, Trade Minister and sponsor of this event, talked about the need to reduce logistical costs of transport in order to increase
the competitiveness of Algerian products on the international market. The minister recommended that the various players in the market focus their efforts on optimising the use of logistics infrastructure in order to receive more goods in better conditions. With this in mind, he advocated a joint effort for the creation of an efficient system, guaranteeing the effectiveness of export operations and the efficiency of systems for logistical coordination and management for freight transit operations.
Regarding the development of Algerian exports, Mr Djellab announced that an official tour of some forty countries had been scheduled for 2019-20, the goal being to promote the country’s products throughout the world and facilitate their entry into foreign markets. A national meeting on export development is due to be held in the next few days, he added. This meeting will bring together all players in logistics, communications, customs and banking, in order to devise a programme dedicated to boosting non-hydrocarbon exports. Turning to the Algerian trade fairs held this year in Washington, Brussels, Doha, Nouakchott, Libreville and Dakar, the minister said they had proved that "Algerian products have a place in these markets". He added that these events also revealed “the vital importance of the logistics and transhipment professions." Moreover, he highlighted the urgent need to "master these professions to ensure that Algerian products are transported to their destination under optimal conditions as required by central purchasing and mass distribution centres." With regard to dysfunctions in the system, several speakers stressed the need for rail terminals and the use of combined rail-road transport to improve the flexibility of rail transport.
Others drew attention to the problem of "end-to-end" transport. The LafargeHolcim group representative talked about the problem of existing loading facilities which do not yet meet global standards. His company finds it very difficult to export in large quantities because the equipment and machinery do not allow it to load sufficiently large volumes of clinker.
What’s more, he proposed "better solutions adapted to the African continent within the framework of export policy", adding that "this Algerian know-how could be exported in the future to Africa". Sid-Ahmed Hamidi, the representative for the Algerian customs service, pointed to the "lack of coordination" between the eleven players in the supply chain: "We have always granted facilities to companies, though the real problem lies in operations relating to customs procedures. But, from 2019, we will put in place our new computerized strategy (NSI) to ensure the success of this operation. We fear, however, there will be some resistance, with some partners refusing to collaborate." He refused to reveal the identity of those who, according to him, “are resisting” change. Mrs Ling Wu, director of Public Relations for the Chinese company CRBC, pointed out that the Silk Road – by its very nature a project of staggering proportions - "is a free trade platform, open to any country, and is much more of an economic than political project". She explained that the Cherchell port project "will provide an interconnection with the Silk Road". According to her, 1500 km of the route have already been completed in Africa – 500km of which are already usable - and the remaining 1000 km will soon be operational. Regarding the Maghreb region, she revealed that Morocco and Tunisia have already signed agreements with the Chinese government. As for Algeria, she hopes to have "developed networks" along the lines of those for Morocco and Tunisia, explaining that "we are waiting for the signature of the agreements with Algeria." The Inspector General of the Ministry of Transport, Boubekeur Ait Abdallah, advocated the development of a logistics strategy: "There is no legal code governing this activity. We must give a legal basis to this logistics project."Finally, CAAT's chief executive, Youcef Benmicia, talked about accidents and damage related to freight transport, revealing some extraordinary figures. According to him, the treasury pays compensation to the tune of 71 billion DA, 20% of which was paid by CAAT. Road accidents account for 60% of this figure. Transport insurance totals 45 billion DA, i.e. 2% of the total turnover. At the end of this symposium, the speakers all stressed the need for “the structuring and pooling of logistics procedures" for export operations. They also highlighted the lack of modern logistics infrastructure and integrated professional services as well as the problem of fragmented transport chains due to poor inter-modal connections. Out of 800,000 units unloaded each day at Algerian commercial ports, there is a potential savings of 12 million euros to be made.
Translated by James A. Pollard