Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
Algeria has a well-developed distribution system with wholesale and retail outlets. State-owned marketing firms sell wholesale imported foodstuffs, pharmaceuticals, and industrial supplies and equipment. Private wholesalers are increasingly active in these sectors as well. Private businesses control retail trade almost exclusively.
Algeria’s current road network extends over 100,000 kilometers, approximately 26,000 km of secondary roads and highways, and 23,000 km of provincial roads. Nonetheless, mountainous terrain, congestion, traffic accidents, and security checkpoints hamper road transportation.
Algeria has 16 international, and 20 domestic airports open for civil air traffic. Before the COVID-19 pandemic, the national carrier, Air Algérie, served 37 destinations in Europe, Africa, the Middle East, Asia, and North America (via a flight to Montreal, Canada). Several international airlines serve Algiers from major hubs, but there are no direct flights between Algeria and the United States. However, international flights to and from Algeria were severely curtailed due to COVID-19, and routine service is only slowly being restored with fewer than 100 flights per week nationwide to only a handful of destinations. Six international express mail delivery services operate in Algeria: UPS, FedEx, TNT, DHL, CourierExpress, and Chronopost.
Algeria has 13 multipurpose ports, three hydrocarbon ports, and two hydrocarbon terminals. The railway network covers mainly the northern and coastal cities and includes 4,200 kilometers of track, of which 3,060 are standard gauge and 1,140 narrow gauge.
Algerian companies are increasingly interested in joint venture opportunities with U.S. partners to modernize their factories or license technology. From 2009 to 2020, however, joint venture activity between Algerian and American companies remained limited due to the 51/49 capital share distribution rule, which required all foreign companies to comply with a 51% Algerian majority-ownership requirement for investment in Algeria. In June 2020, the Algerian government limited the scope of the application of the 51/49 rule to new ventures in the following “strategic sectors”:
- Upstream energy activities and any other activity governed by the law on hydrocarbons;
- Industries initiated by or related to the military governed by the Ministry of National Defense;
- Transportation infrastructure (airports, ports, and railways);
- Pharmaceutical industries, excepting essential and innovative products.
Apart from these sectors, the government permits foreign investment without any obligation to partner with an Algerian entity.
A limited number of express delivery service companies in Algeria specialize in logistics, and most of them are foreign companies, including global leaders such as DHL, UPS, FedEx, and TNT. DHL Algeria controls 75 percent of the market. EMS Champion Post Algeria is the only Algerian company specializing in logistics and operates in more than 198 countries, including the United States. These companies’ services are very reliable and used primarily for sending and receiving documents. Delivery times from the United States to Algeria vary depending on the delivery service used, size, and amount of product. Many of these companies also offer customs clearance services for an additional fee to ensure full compliance with customs formalities and the rapid delivery of goods. Such services help reduce any risk of delays or penalties regardless of the mode of transport (air, sea, or land).
Some market research firms and certified public accountants affiliated with major international companies are present in Algeria. These companies can supply limited credit information on a selective basis. However, it may be challenging to perform due diligence on Algerian banks, agents, and customers. Banks will not provide information on business clients without explicit permission from the clients and may only offer limited details. Credit checks and reports are neither standardized nor readily available.
U.S. companies that require due diligence investigations are encouraged to contact the U.S. Commercial Service in Algeria and inquire about its International Company Profile (ICP) service. The ICP service can provide extensive background information about an Algerian company, including its capital, principals, foreign clients, and market share. Still, the financial details provided by the company’s bank are usually vague.