Busy times AHEAD
What is your competitive advantage, and how do you manage your loyal customer base?
Cadbury, Nestlé, Unilever, Nigerian Breweries, and Guinness are our core customers. It involves doing what you say you will do and not changing contract terms in the middle. We were able to ask our core clients on a weekly basis their raw material requirement and adjust production to fit their needs. They do not need to carry a huge stock, as a huge stock means tying down money. We are also able to give them a single price for a consignment. Therefore, we might import and store their products in the short term; in some cases, clients want product delivered immediately, but in other cases, we have developed an arrangement where we keep the stock and deliver on a just-on-time basis, taking into account the financing and delivery costs. We have over 100 trailers. Our competitive advantage is we carry out every delivery requested. We have many professionals in the business. As the business was developing and growing, we brought in experts from different areas; I just tell everyone to deliver on promises that we have made. In 2014, we were one of the 100 big businesses in Nigeria.
How has the closure of land boarders affected JOF and the logistics service provider industry nationwide?
Up until the border closure, we were taking finished products from Unilever Nigeria to Unilever in Ghana, as Unilever is seen as one company and Nestlé is seen as one company. We would bring stock from these companies via road, and they would sell to their sister companies. Furthermore, we also brought the products they produce abroad that they sell here. If there are raw material issues, we will bring raw materials from their sister company or from other manufacturers or suppliers within ECOWAS, including Ghana and Benin. We are aware there are many things coming into Nigeria for which no duty was being paid. This smuggling is why the federal government shut down the border. As the border is closed, these goods cannot go by road anymore, but they can still go by sea freight. This process is a bit complicated, as the sea route to West Africa is not well developed. If you want to use international freight liners or large shipping companies to export goods from Nigeria, unfortunately products go from West African countries, and then Europe, before they reach Nigeria. It is complicated, and there are many costs associated with it.
What opportunities for diversification has the road deterioration in Nigeria imposed on JOF?
For every problem there is a solution. Because of the road issues, we are using the train to move our cargo from the port. We have also been using barges on the waterways to move our cargo out of the port, which we have found to be effective. Due to this, we have a small port being developed where our barges can go, and, pending that, we use the Ikorudu light terminal for our barge operation. Hence, we bring in the goods by barge. Our trailers then go there, where they load the containers and take them to our clients’ factories.
We intend to complete the building of the small container mini port and terminal where there is a long jetty that can berth a few barges. They can put all their equipment there and offload onto the jetty. We can also make it into a bonded terminal so one does not have to clear the goods. Furthermore, there will be space for customs and other agencies to have their operations. It is a way of decongesting the port; thus, we are working with APMT to make this happen. Our clients have bought into this and are excited about it. ✖
What opportunities did Virgin Atlantic identify when positioning itself in the country over 19 years ago?
When we started, Lagos was seen as a high-risk place to come in terms of doing business in Nigeria. Some companies had tried but did not succeed; however, we entered a market with a fresh innovative product that people were not used to. So, we were immediately successful in the country with a product that people really liked. We grew as a business with a loyal customer base. As a result, the group has been successful and enjoyed profitable growth. We continue to focus on this country as one of the most important in the business. The only thing that stopped us expanding the route is the bilateral agreement between the UK and Nigeria, which does not allow us to operate more flights than those we already operate. Under that agreement’s terms, we are unable to expand more.
How has the aviation sector performed in general in Nigeria, and what were the main challenges for Lufthansa?
Nigeria is highly dependent on oil revenues and the fluctuation in oil prices presented a big challenge. Another challenge was due to exchange rates; the local market was experiencing a shortage of foreign currencies, and since our fares are priced in USD, an increase in the exchange rate led to an increase in prices. We also had issues with repatriating our funds back to our head office. In that light, 2016 and 2017 were years where not just Lufthansa but most international airlines in Nigeria had to be creative, especially because it was the first time we faced some of the aforementioned issues.
How does the Lufthansa group view Nigeria, and how important is the country within its global portfolio?
We operate daily flights from Lagos, Abuja, and Port Harcourt, making Nigeria one of the only markets with three points of origins. Within sub-Saharan Africa, Nigeria is the second-biggest market in terms of revenue generation after South Africa. We have been operating here since 1962, and that shows Nigeria’s importance in Lufthansa’s global portfolio. Moreover, given Nigeria’s population, it cannot be ignored. The global aviation industry is projecting that the majority of growth over the next 20-25 years will come from Africa, as most other markets are already developed and saturated. Nigeria is among the most attractive African markets, and Lufthansa will continue to operate here for the foreseeable future.