Mozambique’s energy boom is complemented by a rapid infrastructure build. Yet transport capacity and logistics remain the biggest challenges in the country. Brazilian mining conglomerate Vale – unable to transport all the coal it mines – has built shipping facilities with British-Australian group, Rio Tinto, to meet the growing needs for their piece of the sector. But once-off projects cannot be the long-term answer.
Small-scale logistics operators make a name moving everything from aluminum to vegetables but lack capital to scale. Companies enter with high hopes. But building up a company is a tiresome process of finding capital, not clients or customers. Bigger players, including transport company Bollore Africa Logistics, entered the sector with high optimism but largely on the higher end of the market. Thus even if you are not serving the likes of American gas and oil company Anadarko or Norway’s Statoil, adds the local worker, there are margins to be captured as everyone is trying to move something. Part of the margins is the costs consumers must pay for storage. Low transport capacity boosts warehousing demand as products can sit idle for days. The challenges of electricity shortages and fuel prices add an extra 10 to 20 percent per kilogram depending on the product.
The growth of nearby landlocked economies, including Malawi and Zimbabwe, will further drive up demand and prices in the sector. Local executives in Zimbabwe and Zambia expect logistics costs to weigh upon their business, a reason for the growing investment interest in both countries themselves. The growing interest of Asian countries also implies more pressure will be placed on the sector to grow beyond its current capacity.
Mozambique’s energy boom is complemented by a rapid infrastructure build. Yet transport capacity and logistics remain the biggest challenges in the country. Brazilian mining conglomerate Vale – unable to transport all the coal it mines – has built shipping facilities with British-Australian group, Rio Tinto, to meet the growing needs for their piece of the sector. But once-off projects cannot be the long-term answer.
Small-scale logistics operators make a name moving everything from aluminum to vegetables but lack capital to scale. Companies enter with high hopes. But building up a company is a tiresome process of finding capital, not clients or customers. Bigger players, including transport company Bollore Africa Logistics, entered the sector with high optimism but largely on the higher end of the market. Thus even if you are not serving the likes of American gas and oil company Anadarko or Norway’s Statoil, adds the local worker, there are margins to be captured as everyone is trying to move something. Part of the margins is the costs consumers must pay for storage. Low transport capacity boosts warehousing demand as products can sit idle for days. The challenges of electricity shortages and fuel prices add an extra 10 to 20 percent per kilogram depending on the product.
The growth of nearby landlocked economies, including Malawi and Zimbabwe, will further drive up demand and prices in the sector. Local executives in Zimbabwe and Zambia expect logistics costs to weigh upon their business, a reason for the growing investment interest in both countries themselves. The growing interest of Asian countries also implies more pressure will be placed on the sector to grow beyond its current capacity.
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