Bruno Nalletamby - Trade Disruption in Africa: Can we mitigate it?

Bruno Nalletamby - Trade Disruption in Africa: Can we mitigate it?

[00:00:00] Kingsly: Hi, I am Kingsley and you're listening to Cargo Run Podcast, brought to you by Optimist. Every week I talk to exporters, importers, and industry professionals to uncover some of the most relevant challenges in the shipping and international trade industries. So stay with me for tips and tricks that will help you overcome your everyday transport related cargo damage claims, and be more profitable in your business.

[00:00:29] Bruno: Thank you very

[00:00:29] Kingsly: much for listening to us today. My name is Kingsley and I'm your host on the Cargo Run podcast Today we've got with us. Bruno Nabi and Bruno Nabi will be talking to us today about trade disruption in Africa, and we'll be asking ourselves really whether or not we can mitigate this.

[00:00:48] Kingsly: Thank you very much, Bruno, for joining us. For the purposes of our audiences, can you please tell us your name and a brief introduction into your. .

[00:00:57] Bruno: Okay. Okay. I Kingsley. My name is Bruno Nabi. I come from Mauritius, I dunno if you know it is small island in the Indian Ocean. We are been very well been developing in the insurance side for the 50 years backwards.

[00:01:16] Bruno: And we are on the African market most probably Sep Arian second to South. Just to say on the developing of insurance, our insurance penetration, I think is the first in Africa, and so I've been doing marine insurance for 35 years now, especially cargo, and I would like to maybe to share a bit about my experience and what's happening actually more about what's hap happening actually and will happen in the next year, which I want to share my thoughts.

[00:01:52] Kingsly: Thank you very much for that, Bruno. So today we are talking about tree disruption in Africa but what really is tree disruption? Can you help break that down for the audience and how are we experiencing this on the African continent? Yeah.

[00:02:09] Bruno: To understand trade disruption, we have to go first at trade.

[00:02:12] Bruno: Trade have been something which have been linked to humanity for centuries for centuries. And trade have been done by Greek, by finishing and everything. So international trade, visa. 25 years ACC has exploded. And today, in 20 years, China has gone from more than 20 list on international trade to become the first in international trade.

[00:02:40] Bruno: So we've, China being the, and then Asia being the most developing region in international trade. To over rejo in the world. Obviously there has been much civil 90% of all the trade today is spicy sea, and they have had to go through either Canal or Cape Town, the Cape. and so we can say that now, the international trade form part of our world is essential for everyone.

[00:03:15] Bruno: Every country cannot live with it. I don't think even North Korea can live without some international trade. Disruption. Disruption is simple. It is. Now we, the pandemic, I think everyone now understand what is trade disruption. We have seen and experience the changes in pattern, the of the slowing the condition congestion of container ships.

[00:03:42] Bruno: And Which are being exported and imported, have been disrupted and suppliers who use to, to supply computers, machinery, cars in 30 days, we're now struggling to, to just export in 100 days. So there have been a complete disruption mainly for the, in the developed c. Firstly we've let's talk more about the pandemic.

[00:04:09] Bruno: Because the pandemic has caused a major disruption because we've logged down, we've slowing down in production. Obviously the production adverse supply side, the raw material was not being sent for manufacturing. Because what is happening? Actually, what happen is that most of the raw materials come from either Africa, Asia, and goes to Europe and with developing countries for manufacture and vice versa.

[00:04:40] Bruno: Going also to China and these material are then transformed to be re-exported so obviously if there's a disruption in the raw material, there will be disruption in the production of finished goods. And so this, all this disruption, I think as. Has been one of the major factor of of loss in, in GDP in most countries because they couldn't produce, they couldn't sell, they couldn't buy and the lockdown situation as cause.

[00:05:10] Bruno: Great. Okay. Thank you very, you would I agree with it.

[00:05:15] Kingsly: Yes, I do. Thank you very much for breaking that down for us. Bruno, so from you, you did mention that countries around the world we all depend in one way or the other on international trade. And you also did mention that with the pandemic there has been some impact on international trade.

[00:05:34] Kingsly: But if you can just bring that a little bit on the African continent. The, yes. Africa is a you he's a very broad continent with many countries. I just want to understand. From an African perspective, what has been the impact on, on international trade, especially in the last two years where there has been a limitation in the movement of peoples within Africa?

[00:05:56] Kingsly: There's been a limitation in the movement of goods and within Africa, what has been the impact? I was speaking to some people last week and we're talking about the difficulty of sending goods from South. To, let's say countries like Congo and things like that. In your experience, how much has this pandemic really impacted?

[00:06:18] Kingsly: Im impacted the movement of goods on the African continent.

[00:06:24] Bruno: The fact is that well being in Mauritius and we trade, we have some trade with Af. Africa. Africa, but it's not very much. We bought more from China and export more for in, in European countries. But look a bit outta the figures. And if you look at the figures, Theresa, there has been a shop decline in trade growth by 8%.

[00:06:46] Bruno: Worldwide. Okay. And in, in the second quarter of 2020, the this this this decrease was marked by at least 20%, but in Africa it was a bit less significant for a simple reason that trade is less significant. International trade is less significant in Africa rather than in, in developed c.

[00:07:13] Bruno: Africa is more known to export. Its rawk imports because it's slowly growing from developing underdeveloped to developing countries. So the consumption pattern is still low. So they have not much container ship. They're represent, for example, 10% of the movement of Cade container ship compared to.

[00:07:39] Bruno: Okay. About 5,000 container ship, I think annually instead of 55,000 in, in, in usa. And so the, this disruption has been less marked and then there have been more t mainly the in there have been free port, which have been more resilient, but major port, which is Lagos, Durban, and Tant me, which is the Africa do in Morocco they have been able to cope.

[00:08:06] Bruno: Unfortunately, all Port doesn't have the same facilities in Africa. And if you look at the number of port in the world the, in the 10 bottom less efficient port five come from Africa. So this disruption was already there. So it's has not, I don't think there has been a, a, a. Big impact on the trade disruption in many countries.

[00:08:32] Bruno: But we have to understand that as one third of African countries or landlord, there are not only a need for sea transport. For both the import but also a major factor of land import that is cross border. And with the pandemic been impacting differently in several countries, this has impacted the in land transport.

[00:09:03] Bruno: Okay. Truck took longer time to return to their departure point due to restoration imposed to contain the pandemic by, for example, okay, Mumba support. In Mozambique, there has been some de delays in return. Return of empty containers to report and also we have to understand, but with the pandemic, this has led to more reliance on digitalization.

[00:09:30] Bruno: Okay. And however, in Africa there's still a re what we call a readiness gap in the manif team sector, automation and technology. So they need to, they need to up their game. Okay, so

[00:09:47] Kingsly: If we can just, if we can just park the topic of technology in maritime as we will come to that in a moment.

[00:09:54] Kingsly: And really just focus on the impact, or let me put it this way. Do you see a trend in the types of losses during this? Let's say the last two years, particularly for let's say perishable cargo, an increase in road accidents may be coming as a result of fatigue. With the drivers that are few are far between now and the continent as a result of the restriction in the movement of people.

[00:10:18] Kingsly: Is this something that you are seeing on the continent? Is this something that you can speak to? I,

[00:10:24] Bruno: I, I would tend to say that it's my personal view. Of what I've seen on the pro professional aspect, it depends on countries. Okay. And as I said the landlord countries were more susceptible to have these more losses on the land transit, let's say.

[00:10:42] Bruno: Okay. The sea transit, I think today we can say safely that there was not much problem unless less delay in as for disruption. But if we look at the land transit, It depended on countries. If you look, for example Uganda has got a lost record of 2020 2% lost ratio. That is are not suffering that much.

[00:11:08] Bruno: Okay? But if you look at Zambia, Zambia has been known to have some problem with crack border with many losses in the cross border with all years in land transit. , it depends on the country. And if you look, if it's difficult to have statistic, for example, for r dc or this is one of the, one of the biggest country in Africa, and one of the biggest in raw material also for producing raw materials.

[00:11:34] Bruno: I think the pattern of losses during the pandemic will be not part but deteriorating. Unless on the perishables, but perishables normally comes more on air, and air has been also disrupted, as by. With regards the airlines. But I don't think that the Africa, which. Normally import less perishable, but export more perishable maybe on on the export side, but on which side?

[00:12:08] Bruno: I think Kingsley, you should have more experience than me regarding this with these cases in With your company Still fresh, I think which deals with these recoveries. I have not much encountered problem on the perishable because it's less, there are less insurances, let's say, which are taken and maybe it's more taken on the.

[00:12:35] Bruno: From the buyer side in New Europe and everything. Maybe on this side, maybe you can talk a bit more of on this rather than me. Yeah

[00:12:44] Kingsly: So from our perspective, we have, I mean we speak a lot with exporters on the African continent, so from our avocado exporters in, in Kenya to banana exporters from Ghana and also apple treaters with citrus in, in South Africa and then also in Egypt as well.

[00:13:03] Kingsly: And one thing that kept coming up during this time was delay as a result of shipping lines. Either not skipping a port rolling over or things like that. And our customers have been facing challenges from that perspective. We have not seen a particular rise in these debate claims.

[00:13:23] Kingsly: They're always there. I think this is something that exporters and African continent are always subjected. , but we haven't seen a particular rise. And I thought it would be interesting to see from your perspective, how with over 35 years that you bring to the table, you've been working in the insurance industry.

[00:13:41] Kingsly: I just wanted to follow up this with a short question around your domain of expertise. How far does insurance go to mitigate this risk relating. to treat disruption. Do you think there are some classes of insurance or some types of insurance that traders in the African continent could turn to, to help them to mitigate these risks?

[00:14:04] Bruno: In fact, before going to mitigate , we have to speak of it, taking the insurance, there's the insurance penetration in Africa is very low. Okay? And. And even more in the marine sector. Marine sector. Okay. As I said, one third of African countries or landlock, and they are still convinced that they don't need marine insurance because they treat it as being sea transport only because instead that the cargo insurance is about from the warehouse of the supplier to warehouse of a buyer that is including the land transit there is.

[00:14:46] Bruno: Huge opportunities to do business in Africa because they are not insured so you can look it at either being off empty or off full. For my part, I think there is huge opportunity to do business in Africa. Velo ratio shouldn't be.

[00:15:09] Bruno: And the rate are still very conservative, unfortunately. Been there have been. There has been. And there is still, and there will be unfortunately, a perception that Africa being the continent, Africa is a bad risk for insurance and renters. Okay. We'll be talking about international insurance and this last year where the marine sector have.

[00:15:36] Bruno: Marine cargo sector has been impacted internationally by losses, principally due to fires. Storage claims, Tanin, Durban, fire. The big players have tended to get out of African risk rather than when looking at over opportunities. And as I say, if, Munich, for example, Munich Re or Swiss three, all these big players have gone out of Africa.

[00:16:07] Bruno: Most many are less or less willing to do business in Africa, and I think that's the opportunity for African ranger roads and interest to step up and try and do business in Africa. Unfortunately, fortunately for me, , there are not many skills. In Africa, in the world on, on the marine sector.

[00:16:31] Bruno: There, there are few people having more than 15 years experience, even 10 years experience in Marine. And, but we need to train them to, to train African underwriters to become more knowledgeable about Marine. So what they can do more and more business and I'm sure more profit and.

[00:16:52] Bruno: Secondly, there, there is something which is, which, which would help if Africa is huge. When we talk about Africa, we are talking about 55, 56 countries. So the transport section is, is very huge when you speak of it. And we need to find ways to to be able. To have a control on the on, on the transit.

[00:17:20] Bruno: Okay. And as there are few marine insurers in the world, we are still pure marine servers in the world. They are aging and it's difficult to find environment to. To have them ready ev everywhere. So I think we would love to to go more on digitalization, to find ways of, be able to.

[00:17:47] Bruno: To follow track any shipment and I think in this sense, while I returned the question to you, I think you, we've got good news from you on this side because I know you are working on something which is more about surveying and everything. Something which will help to be able to.

[00:18:05] Bruno: To track the transport of inland of mainly inland. Mainly inland, but even at the departure of the risk, what is at the import side. Could you talk a bit about, a bit more about it, because I know you are. Yeah, tha

[00:18:23] Kingsly: thank you very much for mentioning that, Bruno. So what we are doing at Optimus really is to try and solve some of the pressing problems that we have encountered in say in my 14 years of experience working in this industry.

[00:18:37] Kingsly: What we noticed was that, Often shippers on the African continent would inform us that they have exported their goods to Europe or other parts of the world, and the receiver claims that there have been 15, 20% damage of their cargo transit. And as such, they would want to reduce the, or deduct from the sales price because the shippers dependent on this buyers, they tend to either show that these losses, because they don't want to spend more money to appoint a qualified server in Europe or something like that.

[00:19:13] Kingsly: So African exporters have. Been shouldering these losses for a while and we thought they must, should be a way that we could use technology to, to solve this problem. Not just from an African perspective, but from a global perspective. And come to think about it as you move cargo around the world, one of the major challenges in when it comes to cargo claims against the shipping line, is being able to prove the cause of to first of all to prove the quality of your cargo at Logan before you was interested to the, to.

[00:19:43] Kingsly: To the custody of the shipping line, but also once the container has been delivered on the other side, to completely show that there was damage and the extent of the damage as well. So what we did was to build this web-based mobile application where a shipper or an export on African continent would be able to document.

[00:20:01] Kingsly: Some of the processes that they have gone through to ensure the safe handling and loading of their consignment, of their goods on the African continent. And all of this collected information is then automated into a survey report. . Now we did a study with one of the large spin lines in the world, and what we found was that often if you go through a survey report, standard for standard survey reports are usually statements or facts.

[00:20:28] Kingsly: So they will tell you who is, who are the parties involved, where was the country the country of shipment or contra moving country of discharge or port of D. They'll tell you the number of cargo, the type of cargo diluting pattern and things like that. And if it's perishable, they'll also tell you what was the set temperature, what was the actual temperature and things like that.

[00:20:47] Kingsly: So all of these state, all of these statements are statements or facts. So we started asking ourselves, how can we connect and provide similar objective evidence, but lesser cost? And that is why we turn to this web-based mobile application where food exporters, for example, will be able to use to document a critical.

[00:21:05] Kingsly: All of this is then automated and submitted to the shipping line as a report, which can completely. What the process was at the beginning, before the cargo was entrusted to the shipping line. In the event of damage to the cargo in transit, again, they would use the solution to collect evidence starting from the external conditions of the container.

[00:21:28] Kingsly: Then they would look at the stopping patterns they would look at where. The data logger was within the container and things like this. So why we understand that this may not solve all the problems, or if our intention is not to replace surveyors, but we are saying that we can be complimentary.

[00:21:46] Kingsly: We can help insurance companies to be able to make a quick decision. to decide as to whether or not they need to send out a fiscal surveyor or will the evidence, the objective evidence that has been presented in real time to them, sufficient for them to make a policy coverage decision. But I think we shouldn't spend too much time talking about our solution as we are today focused on tree disruption in Africa.

[00:22:07] Kingsly: The final question, which I would like to ask you today is with the global current crisis, what are some of the opportunities that exist in Africa trade today? Talking about Africa trade, recently there has been the passage of the Africa Free Trade Agreement or the free trade area where we expect to see an increased movement of goods on the African continent.

[00:22:29] Kingsly: Do you think this is a theory? Will this fall all falls just like many other attempts in the past? To bring such conventions or laws on the African continent, or do you see this as a real opportunity where foreign companies, local players can tap into and increase their overall either insurance penetration on the African continent or the continent's GDP as a whole?

[00:22:54] Bruno: Yeah, sure. In fact, most of African if you look at most of the af. East African countries, you will see and Shiran, you will see that most of them have adopted legislation where marine insurance import are compulsory. It is have to be done locally, not compulsory, but have to be done locally.

[00:23:17] Bruno: Okay. Uh, To be done locally and. If we look at the West on, on, on West Africa, which is where you have many French, French, African countries, okay. Francophone. Okay. If Ivo Maso and everything you will and Oh, do see, you will see also that they have adopted most of them through what we call the, called sema, the, they have adopted convention.

[00:23:46] Bruno: Each of them by where they are up. Ensure, not locally, but from the, what we call the Sima from the for region. What is you could, from what I, I know I'm not a specialist in it, but what I know you could, for example, be in Iro Coast and be able to ensure something from Be Faso Okay.

[00:24:06] Bruno: Be being part of all the uh, the SMA region. Okay. But the problem is that it was. Traders, African traders not, do not trust up, do now do not trust African I insurers in the marine side. So they continue to ensure with from the suppliers perspective, that is the supplier, take the insurance up to the port and when they took, they take another insurance to cater for legislation there, the local legislation.

[00:24:38] Bruno: So there, there's ne there. There's. A need for formation for training and development. And I know what, for example, you've got some rain insurers, African Rangers, the big ones who have step up or doing in marine courses, but it's goes more than only doing courses you have to.

[00:25:00] Bruno: Somehow take their end and show them how to do marine insurance, how to market it to clients, how to convince the African traders that e even on the export, if you look at the export side, Africa is one of the, one of the. He's one of the biggest grand gra of the world with cobalt, with all the minerals that they have.

[00:25:25] Bruno: And I'm not saying about the perishable which you say banana cocoa and everything. They are world leaders, but. They re only a small portion of this o of their labor on, on, on these raw materials. They should at least ensure they export, keep the control. But it's a long short I know it's a long short if we, it'll take time, but I'm sure that we've training, developing the training and also like you said with your with your app, which, More for me, not about insurance, but.

[00:26:05] Bruno: Keeping the control of what's happening. Unity, what, what's happening of your product? Okay. Insurances marine insurers have been for decades have been I know that they have lost the control. They don't know where a claims come. The goods arrive, you open the container, you don't know where.

[00:26:23] Bruno: Click . That's true. That is true. So if you have a mean, just to know where it came from what would help. So all of this, I think is going to help help and technologically. Even if African countries are not but maybe as modern in their port and everything, but if we look at the phone on the mobile phone.

[00:26:47] Bruno: They are they are at port with anyone, everyone has a mobile phone. In Africa, every trader have two or three, four. So if we have some absolutely. Internet they they will be able to do it. So we have to work on it. We have to work on it and.

[00:27:06] Bruno: I, I know that and with. I think the PO will come from within, but within the African countries not from the big players, but is what I call mini Swiss Lord syndicates and everything. I think it'll come from African and we will need I am trying I hope I'll be able to help a bit to form, to train these guys these people in Africa so that they can develop themself and be able.

[00:27:37] Bruno: Govern more, more insurance, more premium and more profit eventually. And even knowledge. I want to my dream is, for example, to have a, a marine academy in Africa in insurance. So you see what's one of my dream

[00:27:52] Kingsly: That is I can testify. I remember a few years ago, both of us, we were in Kenya, we were invited by the o e s.

[00:28:00] Kingsly: For the ion training in Kenya and the feedback was quite encouraging. I hope that as you, you develop further in your career, you'll be able to transfer some of the knowledge that you had in the past 35 years with some of the uprising stars that we have on the continent.

[00:28:19] Kingsly: And I think you have summarized, or you have beautifully brought our conversation to a close by saying that it all has to come from within. And I agree with you. So thank you very much Bruno for spending time with us today and to our fellow listener. This has been Cargo Ran podcast brought to you by Optimist.

[00:28:39] Kingsly: If you've suffered damage to your cargo in transit, Get in touch on Hello at Optimist claims for your digital cargo inspection and claims automation solution. Join us again next week for more tips and tricks from seasoned industry experts. Thanks for listening. I am Kingsley and I've been your host on Cargo Run podcast.