Kenya faces major warehousing shortage-report

Kenyan companies are reporting a major shortage of warehousing facilities resulting to loses, a new survey has shown.

The survey by mega-city developer, Tilisi Developments Limited indicates that demand for warehousing facilities continue to rise sharply. Out of the  56 companies polled, 16% had sought new warehousing in 2017/2018, with a rising proportion failing to find any solution.

“The search levels represented a sharp jump from the previous year, when 9% of respondents searched for new warehousing, while 5% did in 2015” reads the report in part.

The companies polled spans manufacturing, fast-moving consumer goods, pharmaceutical, logistics, import, export, retail and e-commerce.

Respondents also complained about the quality of warehousing facilities with 60 per cent of users spanning both warehouse owners and warehouse tenants highlighting quality issues.

“Companies highlighted issues such as poorly ventilated spaces, leakages, power shortages, and poor structural planning, which was causing difficulties in accessing goods within the warehouse,”said Kavit Shah, co-CEO of Tilisi Developments Limited.

The report also raises questions as to whether consumer goods such as beverages that reach end users are actually fit for consumption.

Companies reported that due to poor quality warehousing facilities, stock was getting contaminated. Perishable goods such as flowers and food were hugely affected.

Some 43% reported consequent delays in meeting orders, and 29% reported lost sales. A further 14% said the difficulty and longevity of their search for new space delayed their expansion plans.

Manufacturing and pharmaceutical industry were the most hit by the shortage despite the two being key to economic growth of a country.

“By sector, the highest level of dissatisfaction with existing warehousing is in the pharmaceuticals industry at 43 per cent, followed by FMCG/ manufacturing at 38 per cent, and horticulture at 33 per cent,” reported Tilisi.

Companies also reported that access and location to warehousing facilities was a major challenge.

The logistics and FMCG industries have also both been held back by warehousing shortages, with 30% of respondents in both sectors having searched for new warehousing within the last three years.Some 50% of logistics sector respondents reported a more than five year planning cycle on their warehousing and storage needs.

The retail  sector however expressed full satisfaction with storage facilities while 90% of logistics and handling companies were also satisfied with their current warehousing facilities.

Demand for warehousing in Kenya is expected to rise sharply especially with the exponential growth of e-commerce.

A joint report by the Communications Authority of Kenya and the Kenya National Bureau of Statistics found that 27% of Kenyan firms were now selling products online.

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