Friday , September 24 2021

How Uber-style truck companies are changing long-haul transportation in Africa



By Franck Kuwonu

Karim Dembele, a truck driver from Mali, gets out of his truck where he has been taking a nap. He is in the Togolese capital, Lomé, waiting to cross the border into neighboring Ghana and then walk about 720 km to his destination, Abidjan, in Côte d’Ivoire.

Like most drivers waiting on both sides of this road in the Kodjoviakope area, their truck is empty after they have delivered rolls of cement paper (which are used to make cement containers) to a factory operating in an industrial area 10 km away from Lomé.

“I’ve been waiting for two days, but it can take weeks until I get news from my head that it’s time to continue,” Dembele explains. Renewal of Africa.

On this hot, humid May day, only slightly tempered by the Atlantic Ocean breeze, traffic on this road seems unusually light and the surrounding areas very quiet. Street vendors no longer sell their trade as before and the bars splattering the shoreline are empty. Due to Covid-19 restrictions at the time, it was not allowed to cross pedestrian and other vehicle traffic, hence the unusual calm of activity in the area.

Like Dembele, most trucks are empty and have been parked idle for days. Only a few are loaded with goods. Some head to the port of Tema, others to Accra and then to Abidjan to deliver or collect goods.

Although a growing number of trucks cross the continent, a good number of them, once delivered, return empty.

The fact that many of these trucks were parked here empty and that drivers had no information or control over upcoming travel movements demonstrates the logistical challenges truck companies face in many countries on the continent.

A better coordinated network could provide greater efficiency, speed up transit time, and reduce charging costs.

Across the continent, emerging companies such as Lori Systems, based in Kenya, Kobo360 in Nigeria, and a number of others, are stepping in to fill the gap, with the support of international investors.

Kobo360, launched in 2018 in Nigeria, presents itself as a technology company that aims to achieve efficiency: a “company that aggregates end-to-end transportation operations to help freight owners, truck owners, drivers and recipients to achieve an efficient supply chain framework, “according to its website.

According to its co-founder, Obi Ozor, it all started when, as a college student in the United States, he realized how slow-moving land transit times in his country, Nigeria, added a considerable cost to the importation of diapers. , which made such a basic element unbearable for many. .

Logistical inefficiencies add a 40-60% surcharge to the cost of goods across the continent, according to a joint report by Google and the International Finance Corporation (IFC), e-Conomy Africa 2020 released last November.

In East Africa, the goals of Kenya-based Lori Systems are no different. Founded in 2016 before coming into operation in 2019, the company aims to “perfectly connect cargo owners to transport” to “reduce the cost of goods in Africa”.

“As long as we keep the trucks moving and don’t make empty miles, which is costly, we believe prices will continue to fall,” Jean-Claude Homawoo, co-founder of Lori Systems, told CNN Business. .

“We manage a network of tens of thousands of trucks,” he explained, “and we can make them available as needed.”

A truck that suddenly breaks down “isn’t a problem” nor is there a certain load ready. Another truck can be easily shipped in the event of a breakdown or redirected when the load is not ready, Homawoo said.

The company operates primarily in East Africa, while the main network of Kobo360 is located in West Africa.

Efficiency

As the continent’s logistics and warehousing market is projected to reach $ 80 billion over the next two years, these companies are altering old truck business models through the basic use of digital tools to match needs with availability and demand with offers in the best possible ways.

Companies are modeled on a similar approach to Uber, where registered truckers and drivers connect permanently and adapt to demand.

In 2019, Kobo360 was named the “Disruptor of the Year” by the Africa CEO Forum, in recognition of its immediate impact on the long haul in West Africa.

However, as disruptive as the model may be, innovative logistics companies have only just begun to scratch the surface. They need to grow and stay sustainable in the long run. For this to happen, a massive intake of cash is needed. International investors have shown interest.

Collectively, Lori Systems, Sendy, also Kenyan, and Kobo360 have raised at least $ 65 million from IFC and other investors in the past two years or so.

Electronic logistics startups are key to the growth of the Internet economy in Africa, which could be worth an additional $ 180 billion between 2023 and 2025, according to the Google-IFC report. However, according to the report, investment in infrastructure remains short between $ 67 billion and $ 107 billion annually.

Hence the interest of international investors and the promises of expanded operations. Together, these companies operate in less than a third of African countries. And not all truckers are aware of their offerings.

It seems that Dembele, the truck driver from Mali, doesn’t know much about the new truck shapes. While hoping to bring other goods on the road to pick up a new load of cement paper rolls for Togo, he relies on the word of mouth of other truckers on his route to find opportunities.

Enrolling in the services of one of these emerging companies can simplify your transportation. Although, even if you wanted to, he said, you’re not sure how this will benefit you personally.

“I am just a driver. Wherever the owner tells me to go, I usually go. He is the one who knows where the load is and asks me to take it or leave it, ”he said.

It could be said that the market remains untapped and promises of increased trade in the African Continental Free Trade Area (AFCFTA) may be the impetus the industry needs to expand.

This article was first published in Africa Renewal.


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