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How startups are shaping the future of African shipping

The future of African trade depends on cooperation between traders, freight companies, and tech startups backed by Silicon Valley.

This story was published on our Quartz Africa Member Brief newsletter, A look at emerging industries and companies on the continent.
  • Ciku Kimeria
By Ciku Kimeria

I tell African stories

Published

Hi Quartz Africa members!

In October 2021, wait times for container vessels at ports in Los Angeles, Rotterdam, and Shenzhen ranged from three to 12 days, abnormal delays resulting from a mid-pandemic supply chain crisis. In Africa, however, delays have long been a standard complication of trade.

Take Nigeria. Africa’s largest economy lives off imports of goods large and small, from refined crude oil and Russian wheat to typewriters and Chinese toothpicks.

The problem is not so much what’s imported as navigating the infamously congested Apapa port in Lagos, where it takes more than a month for vessels to enter terminals and be offloaded. Since 2020, moving goods from Apapa into warehouses in the city’s mainland has reportedly cost more than $4,000 per 40-ft. container, about the same price it takes to ship from the US to Nigeria. The ultimate losers are Nigerian households, who pay far more than they should.

Africa also has thriving modern ports, like the deep-water ones in Togo, and Morocco’s Tanger Med. But the situation in Apapa is typical, making wait times to clear cargo on the continent the longest in the world. Fixing Africa’s port inefficiencies would require government investments in port capacity and better roads, but also transparent customs enforcement of stipulated clearing and forwarding procedures.

Governments cannot and should not be the lone problem solvers, which is why the sector is welcoming startups looking to use technology to give African shipping an overdue facelift.

Cheat sheet

💡  The opportunity: Africa’s population of over 1 billion people is a large market for importers and exporters, which means a more straightforward shipping process will greatly increase the flow of goods between the continent and the rest of the world.

🤔  The challenge:  Capacity and culture are two of the most important issues hindering Africa’s competitiveness on global trade. The former requires annual investment of up to $48 billion to close infrastructure gaps, but short-term wins can be achieved on the latter by changing opaque customs processes that engender corruption.

🌍  The road map: Fixing African sea trade begins with ensuring greater transparency in basic aspects of the process, like filing paperwork, cargo inspection, and real-time visibility into how shipments traverse the world. Value-adding services like access to credit and connection to inland truckers will further grease the wheel, but the buck stops with government agencies to enforce accountability across the chain.

💰  The stakeholders: Government regulators at the ports have the main say, but the future of African trade depends on cooperation between traders, traditional freight forwarding companies, and newbie tech startups backed by Silicon Valley.

By the digits

5,000: Abandoned containers at Nigeria’s ports in 2021, a factor in congestion

9 million: 20-ft.-container capacity at Morocco’s Tanger Med port, Africa’s largest port by that metric

132 million: Tons of cargo to be transported through vessels in Africa by 2030

10%: Decrease in shipping tonnage headed to African ports between 2020 and 2021

4%: Africa’s share of global container traffic in 2020

A chart showing container traffic through ports in various global regions.

The case study

A screenshot of a vendor list in the Jetstream app on a mobile phone.

Name: Jetstream Africa
Founded: 2018
HQ: A team of ~40 is based out of Ghana, but Jetstream also operates in Nigeria with agents in South Africa, China, the US, and Europe.
Founder: Miishe Addy and Solomon Torgbor
Latest valuation: Undisclosed

Miishe Addy and Solomon Torgbor began working on the idea that became Jestream when they met at the Meltwater Entrepreneurial School of Technology (MEST) in Ghana. The duo started in 2019 by aggregating data on Less Than Container Load (LCL) shipments—those that aren’t at full capacity—before building supply chain management software for various players in the shipping industry to collaborate transparently.

To create visibility for shippers, Jetstream aggregates customs brokers, freight forwarders, shipping lines, airlines, and container terminals online. Its system enables instant cargo release when the owner pays through mobile money or bank transfer. Jetstream charges for each freight on a per-container or per-kilogram basis, plus a flat fee for customs clearance and a commission on the value of the goods being shipped. “We are building technology that streamlines the entire process to allow automation where possible,” Addy tells Quartz.

Not every aspect can be automated. Customs checks are conducted manually by default, adding to congestion. But Jestream and its competitors are hoping to induce more urgency and professionalism by giving traders tools that speed up the process. The company’s model is to be for cross-border logistics “what Flutterwave is to fintech in Africa,” Addy said after raising $3 million from VCs last year.

Just as Flutterwave is entering the world of lending to businesses, Jetstream is also lending to traders who need money to clear goods, in the grand service of port efficiency. It distributed $5.7 million in loans from August 2021 through March 2022, Addy tells Quartz. The average loan is $28,000 at monthly interest rates of between 2% and 4%, and an average length of 45 days. To continue scaling this finance offering, Addy says Jetstream closed a $10 million debt round last month.

In conversation with

Stylized image of Miishe Addy

Miishe Addy is the CEO of Jetstream Africa. Before co-founding the company, she worked as an instructor and advisor at the Ghana-based entrepreneurship school and startup incubator MEST, and was a strategy analyst at Bain & Company. Here are some choice quotes from our conversation:

📦  On the value Jetstream brings:
“The ability to act faster in processing payments, spotting issues in the supply chain, scheduling warehouse labor at the right time—all of that make a big difference to businesses.”

🌍  On change coming to trade logistics in Africa:
“As Africa invests more in local production and economies of scale in commercial production to enable farms and factories to compete with their counterparts in places like Vietnam and Indonesia, more importers will be able to diversify their supply chains inward, getting cheaper prices and more reliable supply from regional suppliers. I believe that’s going to happen, but not overnight.”

📈  On expansion:
“We will be on every major port on the continent by 2028.”

Logistics deals to 👀

MVX, a Nigerian startup for freight management, raised $1.3 million in an August 2021 seed round. Investors in the company include Kepple Africa, The Continent Venture Partners, Founders Factory, Launch Africa, and Capital Oak. The company launched in 2019 with $100,000 pre-seed funding from Oui Capital.

Sote, a Kenya based startup, raised $3 million in November 2020. It was led by Mac Venture Capital, with the participation of other investors including Acceleprise, Consonance Capital, and Backstage Capital. The company has also received funding from Future Africa, which says Sote is “bringing African trade into the world of software.”

Topship, a Nigerian startup also in the shipping logistics business, raised $300,000 in pre-seed funding in 2021. As a participant in Y Combinator’s 2022 winter batch, the company has also raised at least $125,000 and will get an additional $375,000 from the accelerator when it next raises funding.

More from Quartz Africa

🇪🇹  An Ethiopia-backed port is changing power dynamics in the Horn of Africa

🚢  How logistics startups could make Africa’s largest free trade area work

👭🏽  Female entrepreneurs are tackling Africa’s logistics problems

💸  Import costs into Lagos port are double those of Tema and Durban

🎵  This brief was produced while listening to “I’m So Paid” by Akon ft. ft. Lil Wayne, Young Jeezy (Senegal and US)

Have a highly motivated rest of your week,

—Alexander Onukwue, west Africa correspondent

One 🌷 thing

Kenya and Ethiopia are among the world’s top five exporters of cut flowers, according to the Observatory of Economic Complexity’s 2020 figures. Kenya is fourth and Ethiopia is fifth; the top three spots belong to the Netherlands, Colombia, and Ecuador. Still, one in three flowers sold in the European Union comes from Kenya.

A Kenyan woman packs red roses at the Sher Agencies flower farm in Naivasha in 2006.
Image copyright: Reuters/Antony Njuguna