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Strategic Analysis of the Logistics Market and Contract Logistics in Egypt
Frost & Sullivan, June 2011, Pages: 293
The study provides a strategic analysis of Egyptian logistics market covering about 12 key industries including automotive, engineering goods, cosmetics, pharmaceuticals, apparel, oil & gas, food, electronics and metals. It also provides a comprehensive analysis of the total logistics spend and its breakup by segments such as transportation, warehousing, freight forwarding and value added logistics services for each industry. In addition, the study provides revenue forecasts for the total logistics market and each of the four segments, for each industry. Apart from these the study also provides an overview of competitive structure in the covered industries and key competitors in logistics market of respective industries.
Research Overview
This Frost & Sullivan research service titled Strategic Analysis of the Logistics Market and Contract Logistics in Egypt provides current market size, forecasts, and drivers and restraints for each of the key industry sectors in the country. In this research, Frost & Sullivan's expert analysts thoroughly examine the following end-user markets: transportation, freight forwarding, warehousing, and value-added logistics services (VALS).
Market Overview
Egypt’s Ideal Geographic Position Enables its Logistics Market to Thrive
The Egyptian logistics market is in the growth phase. During 2010, the market revenues touched $17.04 billion, and they are expected to grow at a compound annual growth rate (CAGR) of 12.7 percent between 2010 and 2015. The Egyptian Government has been unleashing initiatives to make the country a global logistics hub and encouraging foreign investment in various sectors. Efforts are ongoing to facilitate business processes by reducing legal bottlenecks and red-tapism. The built-in (established domestic) market provides a broad customer base and variety of opportunities for logistics service providers that are planning to start up in Egypt. “The Suez Canal handles around 10 percent of the world’s maritime trade,” notes the analyst of this research service. “In addition, the growing export and import volumes in Egypt all bring in huge opportunities for logistics service providers (LSPs).”
Egypt is located on a key international logistics route, with close proximity to regional and major export markets. It takes less than one week for ships leaving Egypt to reach the major ports of Europe and the Arab World. The Suez Canal, which is the world’s most important transcontinental passage for ships moving between Asia Pacific, Africa, and Europe, is located in (and owned by) Egypt. About 8-10 percent of global cargo passes through this canal, contributing to a significant share of the country’s economy in the form of passage charges. With the outlook for global trade becoming positive again (after recovery from the recent financial crisis), the Suez Canal’s contribution to Egypt’s logistics market is likely to grow consistently. Egypt has a low-cost, educated, and trained labour force to work in the area of transportation and logistics. Lately, the Government has also started a training program to provide thousands of skilled workers to the industry.
Poor Infrastructure Slows Tempo of Market Growth
In Egypt, the roads are narrow and of poor quality, network capacity is inadequate, and the vehicles used are mostly outdated. The current road transport industry comprises approximately 743,000 trucks, most of which are not capable of carrying containers, thereby hampering port-hinterland container transport. These trucks have also been found unsuitable for carrying specific commodities, mainly agricultural products. Another aspect is the increase in the number of long trailer vehicles, which are not built to standard international specifications and jeopardize road safety. The rail freight sector’s network is also limited and undeveloped. Existing laws do not allow privatization of railway services and have provision only for the private sector to build new railway networks, housing and industrial communities around Cairo and other major cities such as Alexandria. The railway network does not cover new, important origin/destination flow zones. Absence of direct links to dry ports and factories and storage terminals is another hindrance.
Port infrastructure is also weak and suffers from lack of maintenance of equipment, evidence points to inability to meet the requirements of shipping lines due to insufficient space and water depth to accommodate containers. “Speeding up transport infrastructure improvement is a prerequisite for the development of the logistics industry,” concludes the analyst. “Amending the regulatory issues for larger participation of international professional logistics companies in the domestic market is also necessary for fast-track market growth.”
Market Sectors
Expert Frost & Sullivan analysts thoroughly examine the following market sectors in this research:
By End-user Vertical:
- Transportation
- Freight forwarding
- Warehousing
- Value-added logistics services (VALS)
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