Wednesday, 1 March 2023

Strengthening logistics + supply chains against external shocks

Supply chains, transportation and logistics in focus at IDSC-led brainstorming session: Reducing red tape, improving access to finance and lowering customs clearance times were some of the suggestions to strengthen Egypt’s logistics industry against external shocks made at a cabinet roundtable held last month. The session, held by the cabinet’s Information and Decision Support Center (IDSC), brought together lawmakers, industry experts, and business leaders for a policy discussion on how to mitigate the impact of external disruption to the country’s transportation and logistics networks.

REFRESHER- Prime Minister Moustafa Madbouly tasked the IDSC last month to come up with policy proposals on how to reduce the country’s exposure to external risks. The center is holding a number of sessions with experts on how to strengthen food and energy security, bolster supply chains, boost tourism and manufacturing, and prevent a repeat of the economic crises of 2016, 2020 and 2022.

Efforts to expand Egypt’s maritime fleet: The government began working last year to expand the country’s maritime fleet. Transport Minister Kamel El Wazir held meetings in September with private sector players in the maritime transport sector, and drew up plans to attract Belgian companies to invest in our maritime fleet. Egypt's commercial fleet included around 118 vessels at the end of 2021, according to government data seen by Enterprise.

But the economic crisis is getting in the way of things: Obstacles including global inflation and the FX squeeze have caused these plans to be delayed, sources who requested to remain anonymous told Enterprise. Russia’s invasion of Ukraine has triggered a renewed economic crunch at home, with the EGP losing almost half of its value and inflation surging to five-year highs.

Less red tape: Building up Egypt’s commercial marine fleet will require the government to reduce bureaucratic procedures and make it easier to register vessels, said Nader Metwally, founder and CEO of the transportation company Na Trans Egypt.

But greater regulation: Mohamed Ali, professor of transport economics and logistics, called for a regulatory body to oversee the logistics sector and new initiatives to train workers in line with international standards.

Warehouses are also an integral part of the plan: The government is looking to tender seven warehouses to bolster the country’s food security, said Heba El Sayed, an official at the Internal Trade Development Authority (ITDA). Orascom Construction, Hassan Allam Utilities and Samcrete picked up the contracts for the first four warehouses last year.

Nafeza has made customs clearance easier: Launched in 2021, the government’s digital customs window — Nafeza — speeds up customs procedures, improves border security, and makes it harder for importers to dodge taxes and fees. Through Nafeza, businesses importing goods at ports file shipping documents and cargo data digitally and ahead of arrival via the Advance Customs Information (ACI) system, which is a World Customs Organization (WCO) protocol that runs on blockchain technology.

But more must be done, say industry players: Customs-clearance times need to be further reduced to cut production costs and improve access to markets, said Ayman El Sheikh, a member of the Transportation and Logistics Division in the Federation of Egyptian Chamber of Commerce. Doing this will ultimately reduce Egypt’s exposure to supply chain disruptions overseas, he said. Meanwhile, the acting CEO of Port Said Container & Cargo Handling co. (PSCCHC), Abd El Kader Gaballah, said that he wants to see more customs incentives to boost the transit trade, without going into details.

Financing for cargo ships: Facilitating access to bank financing for the construction and purchase of cargo ships would go a long way in reducing our exposure to external supply chain shocks, said Ibrahim El Desouky, member of the Cargo Manufacturing Chamber at the Egyptian Federation for Industries.

SCZone wants investment: The Suez Canal Economic Zone (SCZone) has developed a study in cooperation with major international consulting offices to attract new investment in 21 industrial and logistical sectors, especially in the field of green hydrogen, said senior SCZone official Mohamed Abu Dahab, without providing further details.

Your top infrastructure stories for the week:

  • NGE to help lay the high-speed rail line: French construction firm NGE and its subsidiary TSO have signed a contract to construct half of the first phase of Egypt’s high-speed rail line.
  • Scatec + Norway-backed Europe electricity link? The CEO of Norwegian renewable energy developer Scatec proposed a new electricity interconnection project between Egypt and Europe in a meeting with Prime Minister Moustafa Madbouly.
  • Regional industrial partnership: Egypt, the UAE, Jordan and Bahrain signed agreements to establish nine joint industrial projects at an investment cost of USD 2 bn.
  • Local auto assembly: Stellantis, Nissan and Al Mansour Automotive could invest a total of USD 145 mn in the nation’s auto industry over the next three years.

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