Transforming Last-Mile Logistics in Africa: Challenges and Solutions

Introduction

In today’s rapidly evolving business landscape, last-mile logistics has emerged as a crucial component in ensuring the smooth flow of goods and parcels to the final customers. This article delves into the challenges and solutions within the last-mile logistics sector, focusing on Africa’s unique dynamics.

The Importance of Last-Mile Logistics

Last-mile logistics refers to the commercial activities involved in transporting goods or parcels to customers at the local level. This process demands robust physical and tech infrastructures, a skilled workforce, and efficient routine systems. In the age of e-commerce dominance, last-mile logistics has become the backbone of businesses aiming to thrive in this space.

The Evolution of Last-Mile Logistics in Africa

Even before the COVID-19 pandemic, last-mile logistics had been steadily gaining adoption in Africa. The convenience, affordability, and accessibility offered by e-commerce drove this trend. During the pandemic, the surge in demand for online shopping further accelerated the growth of the last-mile logistics sector.

A Case Study: OwnYourBike (Now 20Fleet)

In January 2019, OwnYourBike, later rebranded as 20Fleet in 2022, entered the logistics industry in Lagos, Nigeria. This business support service startup provided motorbikes and vans to gig workers, including dispatch riders and drivers, enabling last-mile delivery. Their partnership with Jumia as a third-party logistics (3PL) company highlighted the importance of logistics infrastructure.

Last-mile logistics, often overlooked but critically important, has emerged as a linchpin in Africa’s thriving eCommerce sector. In this article, we delve into the significance of last-mile logistics and its role in the continent’s digital commerce landscape. We’ll also explore various challenges faced by the industry and innovative solutions to overcome them.

1. The Cornerstone of eCommerce: Last-Mile Logistics

Before we dive into the specifics, let’s define last-mile logistics. This term refers to the essential commercial activities involved in transporting goods or parcels to local, final customers. It encompasses physical infrastructure, technology, manpower, and well-established routine systems. Without a well-structured last-mile logistics system, eCommerce businesses in Africa would struggle to thrive.

2. The Pandemic Effect: Last-Mile Logistics in the Spotlight

The COVID-19 pandemic accelerated the adoption of last-mile logistics in Africa. As people increasingly turned to eCommerce for its convenience, affordability, and diverse product offerings, the demand for efficient delivery services skyrocketed. Many individuals and businesses recognized the potential in this sector, leading to a surge in newcomers and post-pandemic considerations.

3. Dispatch Riders Recruitment and Skillsets: The Backbone of Local Delivery

Dispatch riders play a pivotal role in ensuring the success of last-mile logistics. However, if not recruited properly or adequately trained, they can hinder the profitability of third-party logistics (3PL) companies and investors. Dispatch riders need to be well-trained, follow industry standards, and operate within a structured system. Professionalism and career development should be encouraged in this field.

4. Innovative Compensation Models for Dispatch Riders

Various compensation models exist for dispatch riders, including salary-based, commission-based, salary-plus-commission, hire-purchase, and rent-to-own. Each model comes with its own set of risks and benefits. Renting out bikes to dispatch riders has proven to be a mutually beneficial arrangement, especially when coupled with a reliable flow of daily jobs.

5. Item Sorting, Volume, and Routing: Keys to Profitability

Efficient sorting, handling large item volumes, and optimizing routing are essential for achieving profitability in logistics. The key to success lies in establishing synergy between these elements. Centralized nodes for order sorting and routing can significantly enhance the capacity of riders, extend the lifespan of delivery assets, and boost daily job deliveries.

6. Niche-Focused 3PL Services

In the vast logistics market, specialization is crucial for customer satisfaction and loyalty. Instead of trying to do it all, 3PL providers should identify niche areas to dominate. Specializing in areas like food delivery, book distribution, clothing, or electronics ensures a focused customer base and encourages referrals.

7. Small Patronage, Vast Potential: Challenges in the Logistics Industry

The logistics and supply chain sector in Nigeria and across Africa holds immense potential. However, challenges such as infrastructure deficits, lack of coordination among stakeholders, unfavorable government policies, poor road networks, unstable electricity, and multiple taxation hinder its growth. Collaboration among 3PL logistics companies is essential to address these issues.

8. The Role of 3PL Asset Investors

Investors can play a pivotal role in bridging the infrastructure deficit in last-mile logistics. By partnering with 3PL companies and financing transport infrastructure and warehouses, they can contribute to the final step of the delivery process, improving the reliability and efficiency of eCommerce logistics.

9. Empowering Gig Workers

Gig workers, including dispatch riders and drivers, form the backbone of last-mile logistics. Offering them asset ownership opportunities through hire-purchase or rent-to-own arrangements can be mutually beneficial. However, it’s essential to mitigate risks, such as default, maintenance, and asset wear and tear, to ensure the success of these models.

10. Fostering Trust in eCommerce

Finally, addressing issues like “What I Ordered Vs. What I Got” and “Product Posted is Out of Stock” is crucial to building trust in eCommerce. By outsourcing deliveries to 4PL (Fourth-Party Logistics) providers and focusing on product management and vendor relations, eCommerce companies can enhance customer satisfaction and reduce disappointment.

In conclusion, last-mile logistics is the linchpin of Africa’s eCommerce growth. By addressing challenges and implementing innovative solutions, the industry can unlock its full potential, driving economic growth and transforming commerce across the continent.

I’m Mo Shafi’i

CEO / Co-Founder 20Fleet.com DeliverTech Limited