Trade in Africa is being hampered by the fact that port-to-port cross-border logistics is expensive on the continent. Jetstream Africa is a young company that launched a platform that brings together farms, factories, customs agents and shippers to make goods move more efficiently at a fair price. Miishe Addy, Jetstream Africa’s founder and CEO, explains to Club Africa how she helps move tons of products such as shea and cocoa across the world.
USA-born Miishe Addy studied Africa’s logistics cost problem when she taught business at Meltwater Entrepreneurial School of Technology Africa in Ghana. With Solomon Torgbor, who taught students supply chain logistics, she set out to find a solution. They found that farmers, cooperatives and factories in Africa are ready and willing to participate in the global trade but need assistance with distribution outside their home market. In 2017, Addy and Torgbor launched Jetstream Africa, a data-driven supply chain platform that makes global logistics easy for African suppliers, and is designed for small-scale farmers, to be part of global export trade markets.
Farmers log into the Jetstream Africa app to sell on an international scale. On the same platform, buyers show their interest to buy, for example, 10 metric tonnes of cocoa powder. Operators of the platform bring together supply and demand, book the order and take care of most of the work, from the export paperwork to actually moving the product to the buyer. Over 5,000 African farmers have been able to export to the US and the UK.
What is the problem with logistics in Africa?
“First, there's little transparency around the cost of moving goods in and out of African countries. The lack of publicly-available data around how much things cost, who is reliable, and who is charging what, combined with a fragmented market for freight brokerage and freight forwarding, means that competition between logistics firms on service quality, reliability and price is not strong. It also means that potential trading partners are not able to quickly assess the landed costs of trade, which adds friction to the process. The transparency problem is made worse in countries where corruption and inefficiency at the port are bottlenecks to trade. A number of African countries, including Ghana, where Jetstream is headquartered, have taken great strides toward eliminating those bottlenecks by digitizing customs clearance.
“Also, supply and demand are mismatched. There are trucks, planes, and shipping containers in Africa that are moving in and out of the continent only partially filled. To cover their very real capital and maintenance costs, companies that own these assets are charging some of the highest per kilometer rates in the world to move cargo. Africa is an SME market, and these high logistics costs cut into margins and impede growth. Some of this is related to imbalanced trade flows, but at least a third could be improved with tech-enabled coordination.”
“There is also lack of formal investment in African SMEs, especially in the area of trade finance. Trade finance is essential to achieving economies of scale on the continent, including in logistics. African businesses that make physical things are using the internet to tap into regional and global markets. They import tools and machinery from these markets and sell their crops or products to these markets. When it's time to export, there can be months' long delay between the time their cargo leaves the port, and the time that a buyer pays them. This is after they've already paid their suppliers and workers. As a result, they are only doing business with importers that can pay quickly, or they are informally extending credit to their trading partners based on trust. That process is hard to scale, and the lack of liquidity slows the value chain. On the flip side, exporters to Africa have difficulty getting letters of credit from their own financial institutions because credit history and risk profiles for African SMEs are a black box. This issue, of course, links back to the need for more data and transparency.”
What is your target market?
“Our target market is mid-sized African businesses that grow and make things. Most of our customers export bulk horticulture or semi-processed agricultural products.
These companies are, and will continue to be, engines of growth for their economies. We lower the costs and hassle of their cross-border trade by aggregating less-than-container-load sea freight shipments, digitizing data collection involved in the trade process, and offering better and more responsive customer care than you typically see in the market. Trade between Africa and other emerging economies is already growing, we are helping to accelerate that process.”
“Our platform is not just for farmers, we also work with manufacturers. A customer logs into his or her account, books a shipment online, and we take care of the rest. From arranging pick up of the cargo from the farm or factory, to consolidation at our warehouse, and customs clearance at the destination port. We link our customers' cargo to the nodes along the cross-border supply chain -- from storage facilities to sea freight carriers and customs agents. By doing so, we deliver cost and time savings to our customers, and insights that they would not otherwise know about their supply chains.”
What is the outlook for Jetstream Africa?
“Our recurring customer base is growing month-to-month. We have positive unit economics, and close to 2MM kilograms of advance bookings for 2019. We are building out our technology to speed customer onboarding, and provide deeper insight into transit times, landed costs, and route plans. Given where we are situated in the supply chain, we are also well-positioned to open up more flexible, more affordable trade finance for our customers.”