•Report by BII, UK government’s development finance institution notes only 85,000 square meters of a total 22.2 million square metres of warehousing in Kenya is Grade A.
•Several manufacturers have already taken advantage of available Grade A warehousing space to enhance their competitiveness in the market.
As Kenya looks to build on her reputation as the gateway to East Africa, her capacity to remain a logistics hub needs to be a priority.
Thousands of businesses across hundreds of industries depend on an effective storage and logistics sector to deliver to their customers and keep the economy running.
For many, finding suitable warehousing is often a tall order.
The traditional go-down-based logistics hubs with easy access to transport routes are congested, and often lack the necessary integrations to make them customisable.
With recovery and growth on the cards following the economic slowdown caused by the pandemic, it behooves businesses to take up warehousing that is designed to fit both current and future needs without major changes.
Grade A warehousing, according to a 2021 report, provides businesses the opportunity to achieve unprecedented operational efficiencies that will drive profit margin improvements, and allow users to scale up while reducing proportionate operational expenditure.
The report by BII, the UK government’s development finance institution, notes that only 85,000 square meters of a total 22.2 million square metres of warehousing in Kenya is Grade A.
Several manufacturers have already taken advantage of available Grade A warehousing space to enhance their competitiveness in the market.
For instance, Twiga Foods, one of the country’s fastest-growing start-ups, operates from the Africa Logistics Properties development in Ruiru.
This was among the first grade A warehouses to be put up in Kenya and is currently enjoying an occupancy rate close to capacity.
Twiga, as a technology-driven business-to-business marketplace for food and food products, relies heavily on effective storage to bring its vendors and customers together.
By doing so, Twiga has good access to arterial roads and major highways, quality infrastructure, and enhanced security that has contributed to a reduction in inventory losses.
Additionally, turnaround times have been reduced from between two and three hours down to 45 minutes due to the improved volumetric capacity occasioned by better vehicle access to the warehouses.
They also enjoy automation provisions for a plug-and-play environment.
Another company, Copia, a mobile commerce company that distributes goods to underserved customers across the country, also operates from a grade A facility.
The departure from primarily manual labour, as the mechanised warehouse allows, has provided Copia employees the opportunity to increase their skills.
This, alongside an environment that promotes workplace health and safety, has allowed Copia to grow its warehouse-based workforce from 60 to 150 people.
Unfortunately, far too few businesses know what grade A warehousing can do for them.
Go down-based storage solutions, even as they begin to become inconvenient and obsolete, still manage to remain the mainstay of Kenya’s logistics sector.
For many, the benefits of grade A warehouses are out of reach due to a lack of knowledge.
For others, it is simply a matter of choosing to stay with what they know.
It is understandable for businesses to insist on sticking to what they know, especially with the outright price differences between traditional and grade A warehouses.
While a go-down in an industrial area might have a cheaper price per square foot, modern warehouses allow for significantly higher stacking that reduces the storage cost per unit of product.
Furthermore, with Grade A warehousing investing in natural lighting, and reducing energy and water usage, tenants get to save on energy and water costs while maintaining productivity and having a lower environmental footprint.
For tenants, these warehouses often prove positive for their businesses by increasing operational efficiency and directly impacting bottom lines.
The operation of multiple businesses from varying sectors within close physical proximity is also allowing exchange of ideas and knowledge between businesses.
For investors, grade A warehousing is an opportunity to get a good return on investment while building a product that will be in use well into the future.
Considering the environmental sustainability baked in ALP’s warehouses, the warehousing market can potentially be a leader in greening the logistics industry.
The author is the Chief Commercial Officer, Africa Logistics Properties