top of page

eTrade Alliance Webinar Series:

 Reducing logistics costs for MSMEs in developing countries - technology use cases, business models, policy options

Written by Michael Poor and Fareeda Abdulkareem

The fourth installment in the eTrade Alliance’s webinar series focused on examining the logistical cost constraints on MSME ecommerce activity. 

The panel was composed of: 

Moderator: Michael Poor, Manager, and Financial Services Lead, Nextrade Group

Speakers:    Dr. Kati Suominen, Founder, and CEO, Nextrade Group


Edna Oduwo, Gotrade Manager for Sub–Saharan Africa, DHL


Jackie Rajuai, Program Manager – Plus Codes, Google

Maria Luisa Boyce, VP Global Public Affairs, UPS

Michael began the webinar by underscoring the eTrade Alliance’s mission to promote and facilitate MSME ecommerce and cross-border trade in developing economies, with a focus on alleviating logistics constraints as a key element of the Alliance’s development programming. He emphasized that while Covid19 has been a catalyst in transforming logistics, necessitating digitized border processes and paperless trade, many challenges still remain and logistics continue to be an impediment to MSME ecommerce and cross-border trade.

As the opening speaker on the panel, Dr. Kati Suominen supported these points by providing an overview of Nextrade’s extensive research findings on MSMEs’ logistics needs and challenges, the impact of Covid19, and potential solutions.


  • In emerging economies, interest in ecommerce delivery skyrocketed in 2020, triggered by the COVID-19 pandemic.

  • A subsequent challenge emerged in the supply chains of maritime trade and air cargo, and this was evident in Latin America and parts of Africa.

  • Firm-level surveys taken by MSMEs and used in the research repeatedly cited burdensome customs procedures and high logistics costs as a key constraint to exporting their products across borders.

  • Logistical challenges are amplified in rural areas due to a lack of infrastructure and related last-mile delivery issues.

  • There is an inverse relationship between delivery costs and volume shipped— economies of scale in shipping do not exist in developing economies and thus it can be very expensive for MSMEs to ship their products to customers.  

  • High costs associated with logistics often precluded MSMEs from engaging in ecommerce and exporting, because it is not profitable; only MSMEs that sell to price-insensitive consumers or sell differentiated products are able to incur such costs.

  • Technologies pioneered by logistics startups (“logtechs”) offer viable solutions to reducing logistics costs and delivery time, as well as access to logistics services; development programs can support these players and their innovations.

  • Cargo consolidation, whereby MSMEs pool their inventory and ship it in bulk to a major export market at a reduced rate is a potential solution; government policies such as free trade zones and single-window systems also offer solutions.


Watch Kati present Nextrade’s research on the challenges logistics costs impose, preventing MSMEs from engaging in ecommerce and cross-border trade, as well as current solutions here: 

Following Kati’s opening, Edna Oduwo talked about how DHL’s Gotrade initiative, a trade facilitation project focusing on optimizing the people and processes that underpin logistics in international trade, is promoting cross-border ecommerce. She also provided some solutions on how development partners can reduce logistical constraints.


  • The lack of logistics connectivity throughout the world is a major pain point for global trade.

  • Logistical challenges and costs are a major hindrance to the growth of ecommerce sellers in Africa.

  • DHL’s GoTrade program works with customs to streamline cumbersome cross-border processes and ease the movement of people and goods and services across borders.

  • GoTrade also provides training programs for entrepreneurs, MSMEs, and supply chain intermediaries at no cost, with the goal to encourage cross-border trade through awareness and familiarity with processes and procedures.

  • DHL offers logistics solutions to MSMEs in the form of real-time tracking of shipments, advice on de minimis thresholds to keep shipping costs low, and guidance on minimizing product returns.

  • Change management practices and programs are essential to successfully implementing processes and technologies that improve logistics constraints.

  • Reducing operating costs for MSMEs, specifically in logistics, is essential for ecommerce to grow in Africa. 


Watch Edna give a more detailed breakdown of DHL’s Gotrade activities and support for MSMEs engaging in ecommerce and cross-border trade across Africa here:

Jacqueline Rajuai spoke after Edna and presented on Google’s Plus Codes technology solution for logistics connectivity; more specifically, how Plus Codes addresses the lack of formal addressing, which is a significant challenge for MSMEs in the pickup and delivery of their products to customers.


  • Plus Codes is an open-source digital addressing solution that uses longitudinal and latitudinal coordinates to establish precise, formal addresses for properties and locations. 

  • Lack of registered physical addresses is common in developing economies— over 2 billion people globally do not have addresses; 1 billion have nonfunctional addresses that prevent delivery and transaction operations from occurring.

  • The absence of formal addressing where products can be picked up and delivered costs online buyers, sellers, and logistics companies time and money. This deters MSMEs from participating in ecommerce and cross-border trade, which depend on location accuracy to fulfill transactions.

  • Infrastructural barriers like weak road links deepen these challenges.

  • Some countries like Ghana and Ireland have already developed proprietary digital addressing systems, and Google Plans to scale Plus Codes across developing economies to alleviate the logistical costs and support MSME ecommerce.

  • With the support of the eTrade Alliance, Google is partnering with local ecommerce platforms in Kenya to demonstrate use cases for the Plus Codes technology and facilitate MSME ecommerce activity in the country.


Watch Jacqueline present on Google Plus Codes here:

Following Jacqueline’s presentation, Maria Luisa Boyce shared insights on logistics constraints, and UPS’s programs designed to help MSMEs reduce logistics costs and engage in cross-border trade.


  • COVID accelerated changes in ecommerce in a matter of months, which would otherwise have taken years.

  • The growth in digital commerce changed the expectations of the speed and movement of cargo; it also shifted the means by which cargo is moved, i.e., from sea to air. 

  • Capacity constraints on the movement of cargo caused by the increased demand for online purchases raised the costs of shipping products.

  • In a survey, SMEs expressed three primary challenges in logistics: complicated border processes, supply chain disruption, and lack of access to trade compliance information.

  • UPS is helping MSMEs to engage in ecommerce and cross-border trade by initiating training programs focused on customs policies and procedures, and methods of reducing shipping costs through solutions such as cargo consolidation. One such example is their Women Exporter’s Program (WEP). 

  • UPS also advocates for the adoption of favorable trade policies, such as the WTO TFA, and digital technologies to streamline logistics for ecommerce and cross-border trade.


Watch Maria outline UPS‘s solutions and ideas for lowering MSMEs’ ecommerce logistics costs here:

bottom of page