Growing trade volumes have attracted multi-billion dollar investments in Kenya's transport and logistics industry in the past three years, opening a turf war between local and international firms seeking a share of the growing business, reported All Africa.
Investors have spent more than US$91 million since 2008 to buy out local courier firms, set up cargo handling facilities and airline freight routes targeted at the Kenyan market, which also serves as a gateway to the region.
Kenya Airways, Saudi Airlines Cargo, Aramex, Transglobal Cargo Centre, Swissport Cargo Services and DHL are among the big players in the logistics business planning or have rolled out new investments in the sector over the past one year.
In February, Dubai-based logistics firm Aramex acquired two Kenyan courier firms – In-Time Couriers and One World Courier – at an estimated cost of $26.22 million, according to Cairo-based investment bank Alembic HC. One World Courier offers international courier services while In-Time focuses on local deliveries.
Aramex is betting on the two firms to grow its foothold in the local and regional logistics market.
"These two acquisitions in Kenya position Aramex to introduce its full suite of products and services to the wider East Africa region," said Hussein Hachem, Aramex CEO for Middle East and Africa.
Transglobal Cargo Centre, partly owned by Andy Forwarders, recently completed a $21.66 million cargo storage and handling facility at the Jomo Kenyatta International Airport.
The facility, which handles 80 per cent of the 300,000 tonnes of cargo warehoused at JKIA per year, mainly targets fresh produce exporters, including flower, fruit and vegetable growers who sell the bulk of their products to European markets.
Swissport Cargo Services also completed a $11.4 million warehouse at JKIA last year with a capacity of up to 150,000 tonnes per year.
After a long absence, Saudi Airlines Cargo Company made a return to JKIA last December targeting cargo business from the Far and Middle East to Nairobi where it will pick up flower exports.
National carrier Kenya Airways has also announced plans to acquire its first cargo plane with a 19-tonnes per trip capacity in September, targeting cargo volumes from Asian markets.
"There has been growth in cargo to and from the Asian routes and new commodities like meat headed for the Middle East," Sauda Rajab, the general manager at the airline said.
Global logistics firm DHL has announced plans to start a road cargo transport service linking Kenya and Southern African countries, targeting delivery of durable goods like electronics, medicine and textiles.
Aramex said the acquisitions were motivated by the size of Kenya's economy and its regional transport hub status.
The growing cargo volumes coming into or leaving Kenya through the airports and sea ports is providing a huge opportunity for players in the freight, storage, distribution and clearing and forwarding market. Freddie Karura, the chief operations manager at Transglobal Cargo Centre said Kenya's status as a regional investment and transport hub is also a major pull factor for the new investments.
Total cargo volumes, including imports, exports, and goods on transit passing through the port of Mombasa for instance, grew to 18.9 million tonnes last year from 14.4 million tonnes in 2006 while mail traffic handled at the airports grew to 1,609 tonnes from 1,493 tonnes in the same period, according to the 2011 Economic Survey. Data from the Communications Commission of Kenya (CCK) also shows that the number of private courier firms have grown by about 30 to stand at 630, compared to 602 in 2008.
At least six international courier firms have opened shop in Kenya since 2005, raising their number to more than 17 firms.
The growth of investments in the logistics market is a pointer to the vibrant trade activities in the country and a shift in the market where private firms are growing at the expense of the state-owned Postal Corporation of Kenya that had a near monopoly of the international and local courier market in the past.
"Kenya is growing rapidly as a major transport hub in Africa and is the biggest in the continent outside South Africa," said Peter Muthoka, the chairman of Andy Forwarders, one of the largest local logistics firm.
Kenya, East Africa's biggest economy, is seen as offering a strategic location for expanding into landlocked countries like Uganda and Rwanda, and Burundi while acting as a bridge to East Africa and Asian markets such as China and India whose trade with Africa is expanding rapidly.
China, for instance, is now Africa's largest trading partner, with the trade between the two economies growing to over $120 billion currently from $12 million in 1950.
The expansion of logistics services in Kenya is set to heighten competition for the multi-billion market, with consumers enjoying a wide range of services.