The cold chain gap in Africa is not a single problem but a series of localised failures. Primary ports and capital cities have attracted investment in temperature-controlled warehousing and refrigerated transport, but secondary cities—those with populations between 500,000 and 2 million—remain underserved. For mid-market logistics firms, the cost of building and operating a single cold storage facility in these locations is often prohibitive. The response, emerging across several markets, is a shift towards shared infrastructure: multiple firms pooling capital and demand to build and operate temperature-controlled hubs.
This article examines the business logic behind these shared hubs, the operational realities, and the risks that remain. It is not a forecast of imminent success, but an analysis of a model that is gaining traction and deserves scrutiny.
The Infrastructure Gap in Secondary Cities
Cold chain infrastructure in Africa is concentrated in a handful of economic corridors. Nairobi, Johannesburg, Lagos, and Accra have attracted significant investment, but secondary cities such as Mombasa, Kumasi, or Lubumbashi often lack even basic cold storage. The reasons are well documented: high capital costs, unreliable power supply, and a fragmented logistics market where no single player can guarantee sufficient throughput to justify a dedicated facility.
For mid-market logistics firms, the choice is stark. Either they avoid these markets entirely, or they find a way to share the risk. The shared hub model is a response to this constraint. It allows firms to offer temperature-controlled services without bearing the full capital burden.
The Shared Hub Model: How It Works
A shared temperature-controlled hub is typically a single facility, often located near a major transport node or wholesale market, that is operated by a consortium of logistics firms. Each member commits to a minimum volume of throughput, which provides the operator with a predictable revenue base. In return, members gain access to cold storage, ripening rooms, and sometimes blast freezing, at rates lower than they could negotiate individually.
The model is not new—cooperative warehousing has existed for decades—but the application to cold chain in secondary African cities is a recent development. The key difference is the level of specialisation required. Temperature-controlled storage demands precise monitoring, backup power, and compliance with food safety standards. This raises the operational bar significantly compared to dry warehousing.
Why It Matters
For the logistics sector, the shared hub model represents a pragmatic response to a market failure. It enables mid-market firms to expand their service offering without overextending their balance sheets. For the broader economy, the presence of cold storage in secondary cities can reduce post-harvest losses, improve food security, and open new export opportunities for perishable goods.
The commercial implications are significant. Firms that participate in shared hubs can offer end-to-end cold chain services, which is a differentiator in a market where most competitors are limited to ambient transport. They also gain access to data on demand patterns, which can inform future investment decisions.
Commercial Impact
The immediate commercial impact is on the cost structure of participating firms. By sharing the fixed costs of a facility, they reduce their capital expenditure and operating expenses. The variable costs—energy, maintenance, labour—are also spread across multiple users, which improves utilisation rates. In a sector where margins are thin, this can be the difference between profitability and losses.
There is also a revenue opportunity. Shared hubs can attract third-party users, such as agricultural cooperatives or pharmaceutical distributors, who need cold storage but do not have the volume to justify their own facility. This creates an additional income stream for the consortium.
However, the model is not without its challenges. The most obvious is governance. A consortium of competitors must agree on pricing, service levels, and investment priorities. This requires a level of trust that is often lacking in the logistics sector. The second challenge is operational: maintaining temperature integrity across multiple users with different requirements is complex. A pharmaceutical shipment requires different conditions than a consignment of fresh produce, and the hub must be able to accommodate both without cross-contamination.
Risks and Unknowns
The most significant risk is demand uncertainty. The model relies on a minimum volume commitment from members, but if actual throughput falls short, the hub's economics deteriorate quickly. This is particularly acute in secondary cities where demand for cold storage is still developing.
Energy reliability is another major risk. Temperature-controlled facilities require a constant power supply. In many secondary African cities, grid power is unreliable, and backup generators are expensive to run. The cost of diesel can erode the margin on low-value perishables, making the hub unviable for certain product categories.
There is also the question of regulatory alignment. Food safety standards vary by country, and cross-border cold chain movements are complicated by customs procedures. A hub that serves multiple markets must navigate these complexities, which adds to the operational burden.
FY Outlook
The shared hub model is likely to expand, but not uniformly. It will succeed in cities where there is a clear demand anchor, such as a major agricultural processing zone or a growing pharmaceutical distribution network. It will struggle in markets where demand is too diffuse or where energy costs are prohibitive.
We expect to see more consortia formed, but also more failures. The model is not a silver bullet. It is a pragmatic response to a real problem, but its success depends on execution. Firms that enter these arrangements with clear governance structures and realistic volume projections will fare better than those that treat them as a low-cost experiment.
For investors and operators, the opportunity lies in the ancillary services: monitoring technology, energy management, and cold chain insurance. These are the areas where the shared hub model creates new demand, and where margins are likely to be more attractive than in the core storage business.
Conclusion
The cold chain gap in secondary African cities is a genuine market failure, and the shared hub model is a credible attempt to address it. It is not without risks, but for mid-market logistics firms, it offers a way to expand their service offering without taking on unsustainable capital risk. The model's success will depend on governance, demand accuracy, and energy management. Those who get these right will have a competitive advantage; those who do not will add to the list of cautionary tales.
As the model matures, we will be watching for evidence of its impact on post-harvest losses and on the expansion of perishable trade. The potential is real, but so are the obstacles. The next 24 months will be telling.
