The Logistics Sector on the Southern Shores of the Western ... - cetmo

<strong>The</strong> <strong>Logistics</strong> <strong>Sector</strong>on the Southern Shores of the Western Mediterranean October 2010to European ports by feeder lines. <strong>The</strong>y need investment to improve operations and, moreparticularly, to create ocean transit ports like Djen-Djen in Algeria and Enfidha in Tunisia.Industrial and commercial companies carry out their logistics operations in-house.Companies with enough capacity to act as 3PL providers are rare and few Europeancompanies are established in the Maghreb. <strong>Logistics</strong> hubs are too scarce and the logisticsoperatorsector needs regulating.2. Challenges and Competitiveness of <strong>Logistics</strong>-<strong>Sector</strong> OperatorsTo improve the logistics services sector, the countries in the region need to meet a numberof challenges, which implies overcoming the structural market weaknesses discussed inparagraph 1 of this report.<strong>The</strong> fact is that all of these countries show very high logistics costs (around 20% of GDP),along with strong pricing competition in certain markets. This contradiction is due tocompanies carrying out most transport and logistics operations in-house without subcontractingto outside operators, as well as sub-standard, highly inefficient services andadministrative procedures which exacerbate such problems, though they do not cause them.<strong>The</strong> competitiveness of the logistics sector was analysed using Michael Porter's frameworkknown as the five forces model in order to try to evaluate where pressure is being exerted,with a number of common characteristics being noted:• Clients are not generally very demanding as regards the improvement of services, on theone hand because public-sector demand still plays a major role and, on the other hand,because there are economic sectors which have been developed little, or levels of lowincomeend-consumers. In countries with little export diversity like Algeria, Libya andMauritania, foreign trade does not exert much pressure on improving services either.• Suppliers' contribution to competitiveness is more positive, in particular in the domain ofinfrastructure, but suffers from two major shortfalls: the lack of logistics activities zonesand very inadequate specific vocational training, in the opinion of nearly all the peopleinterviewed.• <strong>The</strong> barriers stopping new operators entering the markets are less and less numerous, inparticular in Morocco and Tunisia, both of which have implemented changes in theirlegislation to bring them considerably closer to the European model. Processes ofliberalization have not, however, been accompanied by government strategies aimed athelping private companies, while the number of small operators, which can often onlysurvive by infringing regulations or setting rates below actual costs, has increased, withthe pernicious effects this implies for structured companies.• As for pressure coming from other competing regions to force the competitiveness of thetransport and logistics sector, the prime candidates are countries in Eastern Europe andthe Eastern Mediterranean, notably Turkey and Egypt (along with Libya). Such pressureis relative, however, given the difficulty of controlling domestic traffic, in particular inAlgeria and Libya.• Lastly, the weight of internal rivalry is not enough to increase competitiveness within thesector. On the one hand, independently of their level of efficiency, public operators gainaccess to public-sector contracts more easily. On the other hand, the lack of controlsallows a good number of small companies to maintain their margins without having toincrease their productivity or modernize.CETMO 7