Nairobi — Logistics Firm Bwala Africa plans to set up a state-of-the-art logistics distribution center in Kenya.

Bwala Chief Executive Kennedy Nyabwala says the center that will be located on a 5,000-acre piece of land and will be the single unit biggest warehouse in Kenya.

The facility will cost the firm Sh100 million and will be ready by August 2019.

"2018 has been a great year for us at Bwala Africa and for us to continue serving our customers well, we are planning huge investments that include the warehouse. Our last mile connectivity is also moving to Mombasa next month and Kisumu in January," Nyabwala says.

The firm is planning to raise about $5 million (Sh500 million) for expansion purposes and is in talks with venture capitalists.

According to Nyabwala, the firm sees Kenya growing to be Africa's economic hub with demand for storage expected to rise in tandem.

"We are also expanding to Uganda next year, we have gotten all the necessary requirements and we will open an office in Uganda in February," he added.

Currently the firm has 3,000 square feet in the Industrial Area.

Kenya's demand of warehouses is 23.7million square foot, three times the supply at 6.9 million square foot according to Grit Real Estate Income Group.

The Group in their June report says that average warehouse rentals in the Kenyan market range between Sh375 and Sh484 per square meter a month, figures that are likely to increase in light of the shortage of high-quality space.

A survey by real estate firm, Tilisi Developments Limited earlier this year indicated that warehousing is a major bottleneck to companies in Kenya.

The survey, which polled 52 manufacturing, fast-moving consumer goods, pharmaceutical, logistics, import, export, retail and e-commerce companies indicates that 62 per cent reported that they have experienced some form of warehousing shortage in the recent past.

The companies polled also reported constraints caused by the quality of their warehousing.

Half of the companies polled by Tilisi said they had sought new warehousing facilities, but pharmaceutical and food producers reported a scarcity in warehousing with cold storage, and of temperature-controlled warehousing.

The international logistics companies also reported that modern well-configured logistics space and height was scarce, with most of the Kenya's warehousing currently falling short of international standards and is constructed for small traders rather than large companies.

In September, Bwala Africa secured Sh10 million financing from Stanbic Bank to venture into last mile logistics.


* Container shipping group says Q3 volumes up 5.5 pct

* Says China-U.S. flows still brisk in Q4

* Operating margin improves after fuel cost hit in H1

* 5.26 million twenty-foot equivalent (TEU)


French container shipping group CMA CGM said its third-quarter volumes had outperformed the industry, supported by brisk trans-Pacific activity that suggested no negative impact so far from U.S.-Chinese trade tensions.

CMA CGM’s quarterly volumes reached 5.26 million twenty-foot equivalent (TEU) containers, up 5.5 percent from the same period last year and compared with overall sector growth of 2.5-3 percent, the company said in a statement on Friday.

That contributed to a 6.3 percent rise in third-quarter sales to $6.06 billion.

CMA CGM’s Chief Executive Rodolphe Saade had said he expected a strong third-quarter, helped by brisk China-U.S. shipments, while warning that a full-blown trade war between the world’s two biggest economies could hurt volumes.

Activity remained strong in the fourth quarter, particularly on transpacific routes, a CMA CGM spokesman said on Friday, adding this was contrary to the usual market trend in which volumes ease after peak third-quarter shipments to the United States ahead of the Thanksgiving holiday.

CMA CGM observed that U.S. consumer demand continued to be robust and there was no visible negative effect from the trade row with China that has brought tit-for-tat tariffs, the spokesman said.

The family-owned group is the world’s fourth-largest container shipping line and is also developing a presence in land logistics after becoming this year the largest shareholder in Swiss firm Ceva Logistics.

CMA CGM said profitability had improved from the first half of the year, when a surge in fuel prices raised costs.

Its operating margin was 4.0 percent in the third quarter. This was down from 10.4 percent a year earlier, but up from 1.2 percent in the previous quarter, in line with the group’s previous guidance for an operating margin improvement in the second half.

Net profit reached $103.1 million, down from $323.3 million in the year-earlier period but above the $22.7 million in the prior quarter.

A fuel surcharge for customers announced in May had not fully covered higher fuel costs in the third quarter, however, with CMA CGM’s costs per container rising, it said.

To meet lower international limits for sulphur emissions from shipping fuel, which come into effect in 2020, CMA CGM planned to switch most of its fleet to lower-sulphur fuel, in keeping with a general industry trend, the spokesman said.

The group will also use liquified natural gas on new vessels and fit so-called scrubbers on certain vessels to reduce emissions from standard shipping fuel, and has said it will pass on costs to customers.

Reporting by Gus Trompiz Editing by Bate Felix and Louise Heavens