News #103 - Tread carefully when going multimodal

Adopting multimodal logistics presents significant opportunities, but disrupting traditional transport roles requires thoughtful relationship management with other stakeholders in the logistics ecosystem.

This was a key takeaway from a panel discussion on multimodal logistics held during the Air Cargo Africa event in Nairobi last month.

Navigating New Roles in Multimodal Logistics

Professor Frank Straube, Chair of Logistics at the Berlin Institute of Technology and moderator of the session, highlighted the complexities that arise when traditionally single-mode transport companies venture into multimodal solutions. Such moves often place companies in competition with their former customers, making business relationships more challenging to navigate.

Caroline Trefault, Intermodal African Manager at Mediterranean Shipping Company (MSC), emphasized the importance of evolving from ocean shipping to offering comprehensive end-to-end multimodal logistics solutions.

“In our view, it’s not enough to handle just the sea freight; we must deliver directly to the customer. This requires building services and exploring new trade corridors,” Trefault said. She further explained that MSC’s integrated approach connects origins and destinations, bridging the gap between sellers and final customers—particularly for landlocked countries, which account for 25% of Africa's population.

When asked by Straube if MSC’s expansion into multimodal logistics involves assuming the roles traditionally held by airlines, freight forwarders, and handlers, Trefault affirmed this, prompting David Ambrose, Director of Cargo and Mail at TAAG Angola Airlines, to highlight the value of such initiatives for logistics development.

“It’s straightforward to move cargo from point A to B, but the real expertise lies in delivering it to points C or D,” Ambrose noted. He also advocated for further exploration of unconventional logistics methods to enhance business opportunities.

Ambrose raised a critical point about the industry’s reluctance to disrupt established norms. “Airlines are often discouraged from engaging directly with shippers, yet forwarders are allowed to purchase airplanes and operate as airlines. Meanwhile, companies like FedEx, DHL, Amazon, and UPS approach shippers directly, capturing market share. Why can’t we do the same?” he questioned.

Multimodal Logistics: Challenges and Opportunities

Historically, integrators such as FedEx and UPS faced skepticism due to fears of monopolizing market share. In recent years, traditional ocean freight companies have entered the air freight domain, with MSC Air Cargo, Maersk Air Cargo, and CMA CGM Air Cargo launching during the pandemic.

While some stakeholders remain wary of these cross-modal expansions, the panel agreed that multimodal logistics are essential for fostering economic growth. “Without end-to-end logistics solutions, growth simply will not happen,” Straube emphasized.

Lyndee du Toit, Chief Executive of Air Charter Service (ACS), highlighted the integral role logistics play in connecting businesses and ensuring seamless operations across various transport modes. “From road to sea to air, each mode has its unique role in the supply chain,” she said.

However, the panel also identified numerous hurdles hindering efficient multimodal development, including inadequate infrastructure, bureaucratic inefficiencies, and the absence of clear roadmaps.

Du Toit pointed out specific challenges in Africa, including supply chain disruptions caused by geopolitical conflicts, congested ports and terminals, and expensive land transport. “Public-private partnerships are essential to overcome these barriers. We cannot achieve this alone,” she said.

She also emphasized the need for efficient logistics corridors and called on governments to address issues such as traffic rights and permits to enable smoother integration.

Ambrose noted that protectionism continues to hinder cross-border logistics in Africa, making it difficult to replicate the success of multimodal hubs in other regions. He cited Dubai as a prime example of effective multimodal integration, where the deliberate co-location of Dubai World Central Airport, Jebel Ali Free Zone, and the seaport has created a seamless transshipment hub.

“Africa can learn from Dubai’s success in connecting seafreight, airfreight, and road transport to facilitate global trade,” Ambrose suggested.

The Role of Governments and Digitalization

The panel agreed on the critical role governments play in creating a conducive environment for multimodal logistics. Ambrose stressed the importance of engaging customs authorities as trade facilitators rather than trade blockers to prevent unnecessary delays.

Straube added that reducing bureaucracy and corruption, as well as investing in digitalization and infrastructure, is vital for enabling multimodal growth. “We need better information-sharing practices within the industry to create customer value,” he said.

In Africa, where logistics networks are still developing, Straube emphasized the need for collaboration among stakeholders. “Currently, too much power lies in siloed information systems. Sharing information is crucial for fostering trust and delivering end-to-end value,” he concluded.

Source: https://www.aircargonews.net/supply-chains/tread-carefully-when-going-multimodal/1079808.article

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