A period of low oil prices gives companies the opportunity to take a step back and analyse the internal structure to optimise operations.


Congo’s opportunity to step back

March 18, 2016

Philippe Chauwin, former managing director of Necotrans Congo, talks to TOGY about the new developments to infrastructure in the Republic of Congo and how logistics companies have adapted to the low oil price environment. Based in France, the company has been in Congo for 16 years and entered into a public-private partnership in May 2014 to develop the port of Brazzaville.

What is the status of infrastructure and transport in Congo?
All ocean freight arriving in Kinshasa comes from Matadi, an expensive harbour with a very narrow draught that cannot accommodate larger vessels. The development of the transport link between Pointe-Noire and Brazzaville will create a much more efficient corridor.
Despite issues with Kinshasa and the recent tensions with the Democratic Republic of Congo, we can expect that trade will recover soon and that about 200,000 tonnes of freight will be moved from Kinshasa to Brazzaville.
Congo is also going to revamp its infrastructure. Roads are planned to be built in the north, to Gabon. With networks of asphalt roads, Congo will become a kind of hinterland, serving as a central freight and logistics centre for the Central Africa Republic, Cameroon, Gabon, as well as for the north of Congo.


How do plans for the development of a network of railways fit into this?
The Chemin de Fer Congo-Océan (CFCO), the operator of the railway connected Pointe-Noire to Brazzaville, is on the right track to increase rail traffic. There is a governmental commitment to increase CFCO’s activities, such as the rehabilitation of the railways and the acquisition of new locomotives, something that is vital to Congo. Connecting Pointe-Noire and Brazzaville and making the most remote areas of the northern region more accessible are part of these efforts. However, the massive size of the CFCO is a challenge for such development.

How have these developments in infrastructure impacted air freight?

Air freight is much safer, more secure and faster than land transportation, but not always possible due to the sheer size of oil and gas infrastructure. The financial revenues and activities of a company will show rapid growth after using air freight, even if volumes are much smaller than other freights.
When the market knows a company is efficient for air freight, potential clients will come to this company. The air freight market is growing in the country.

How has the logistics sector adapted to low oil prices?

Low oil prices have massively impacted oil and gas companies. As a result, companies are implementing a reduction of overhead and many expatriate workers are being sent back. Some fields are not exploited fully. Some are even put on standby for the time being.
Oil and gas subcontractors and logistics companies are also affected by the fluctuation of oil prices. Logistics companies need a strong core of activities they know, upon which they can increase their activities and compete against competitors.
The price of oil will rise again and these core activities will be the base to ramp up freight. Oil and gas companies will return to the country and the logistics sector will be ready to work with them. For now, everyone is maintaining, while seeing how the situation will evolve.

What can logistics companies in Congo do to prepare for 2016?
During a period of fast growth, companies tend to hire too many employees to meet the demands of the market. This can be detrimental to the structure of the company as the market is volatile. A period of low oil prices gives companies the opportunity to take a step back and analyse the internal structure to optimise operations.
The objective in 2016 is restructuring the company, meaning the industry as a whole will reorganise. In the logistics sector, getting customers to pay is often difficult, so companies need to be selective. As a result, it is easier to refuse clients even if activity is decreasing.

For more news and features on the Republic of Congo, click here.

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