Network muscle facilitates expansion into Africa market

An expanded African network makes it possible for DSV to help the auto industry seek new markets on the continent, says director Philipp Buechler. “We are going into Africa with the original equipment manufacturers, as well as Tier 1 and Tier 2 suppliers,” he says. The purchase of Swift Freight has given DSV another 15 branches across Africa. “In order to get into the African market Tier 1 and Tier 2 companies need to find a freight forwarder with the right network coverage and the ability to provide supply chain solutions,” he says. International companies often under-estimate the challenges, and supply chains that are easy and straightforward to implement in the United States and Europe are often far more complex in Africa, he told FTW. He believes partnerships with logistics companies help open up the opportunities. The Tier suppliers are outsourcing to 3PL and 4PL service providers. But, for 4PL to succeed in Africa, you need customised tools, he says. Africa has become more attractive due to the stagnation of the European auto market. “Africa is exciting. It is the way to go.” This downturn in demand is making it more difficult for original equipment manufacturers and component suppliers based in South Africa who traditionally supplied the European market. They are also faced with slowing demand in their home market. “Africa definitely offers opportunities in this slowdown. However, African sales are much lower than in Europe, and are therefore unlikely to fully make up the shortfall,” he warns. South African companies have to focus on “bottom line savings” in order to retain profitability and to be competitive in Africa. In addition to the distance to market and complexity of the supply chains, they face the challenges of strikes and skills shortages. These factors pose a medium-term threat to South Africa’s position as a supply hub for the African continent. For the first time South Africa is seeing competition from the rest of the continent. Multinationals are looking at other countries to site their manufacturing and distribution facilities, he warns. CAPTION General Motors named DSV as one of its best global automotive suppliers at an annual awards ceremony held in Detroit in March this year. DSV manages supply chains for General Motors from Europe, Africa and the Near East to production locations and spare parts centres in Europe, North America, South America, Asia and Australia.