Monday June 15, 2020
CMA CGM is betting on the future on logistics in Ethiopia. Here, shipments of personal protective equipment and medical supplies for COVID-19 are processed at Bole international airport in Addis Ababa on May 15, 2020. REUTERS/Giulia Paravicini
CMA CGM is expanding its presence in Africa with the purchase of logistics provider AMI Worldwide, Mathieu Friedberg, CEO of CMA CGM’s CEVA Logistics unit, tells The Africa Report.
Friedberg did not disclose the amount being paid for the majority stake. AMI, a long-term customer of CMA CGM, operates in freight transport, warehousing and project management.
Based in Dubai, it is present in 12 countries in southern and eastern Africa. Existing AMI management will remain in place, said Friedberg.
CEVA’s customers in Asia, Europe and North America are seeking ways into Africa, but are hesitating over logistical difficulties, said Friedberg.
He is betting on AMI’s expertise in trucking and warehousing as a way to develop African logistics corridors.
Friedberg aims to develop land corridors into countries including Burkina Faso, Mali, Chad and the Democratic Republic of Congo. In the future, Friedberg hopes to be able to expand into Nigeria.
Here, the African Union says, transport is the most important obstacle to manufacturing productivity growth in rural areas.
CEVA is also creating a joint venture in Ethiopia and starting operations in Mauritania.
- In April, CEVA agreed to buy a 49% stake in MACCFA, a freight forwarder based in Ethiopia.
- Friedberg predicts that the process of economic liberalisation in Ethiopia will continue. “I have an optimistic nature. It will take some time.”
- The overall expansion will leave CEVA with a presence in 41 African countries.
Free Trade
In May, CMA CGM finalised new bank loans which included a 300m euro refinancing of CEVA.
The AMI purchase was decided before the COVID-19 pandemic, said Friedberg. “COVID does not change our strategy. The African continent is clearly one of the growing areas for the future.”
The CEO expects that the postponed African Continental Free Trade Agreement (AfCFTA) will give impetus to logistics industry by stimulating the free movement of goods. “I don’t know of any free-trade agreement that hasn’t done so,” he says. “We have an extraordinary opportunity to develop inland logistics.”
Non-tariff barriers, according to the International Monetary Fund (IMF), are even more damaging to African trade than tariffs.
- The IMF estimates that improving trade logistics and infrastructure could be four times more effective than lower tariffs in reducing trade.
- The African Union says that even single currency zones do little to improve trade in comparison with improving trade logistics.
According to the World Bank’s bi-annual Logistics Performance Index, last published in 2018, 11 of the world’s 15 most difficult operating environments for logistics are in Africa.
- Somalia had the world’s lowest average ranking between 2012 and 2018.
- Ethiopia’s mean rank for that period is 131 out of 167 countries, while Mauritania is ranked at 157.
- The index measures indicators including efficiency of customs and border management, infrastructure quality, reliability of shipments and the tracking and tracing of consignments.
“You can see the glass as half-full or half-empty,” Friedberg said. “Logistics is about overcoming those difficulties.”
Bottom Line: CMA CGM has a good chance of claiming first-mover advantage in inland African logistics markets.