From golf caddy to business executive
THE FREIGHT logistics industry is huge. By 2025, the global market is expected to reach more than $15 trillion (R202trln), and so far, the global logistics industry has seemed almost immune to disruption. Companies have certainly leveraged IT to make their internal operations more efficient, but for your average consumer or small business, comparing quotes is still a very opaque process. However, as online shopping and taxi apps continue to change consumer expectations, businesses are unlikely to put up with inefficient service providers for much longer.
Over the past five years or so, the transport industry has seen many innovative start-ups launch into that space. These ventures have aimed to deliver everything from private taxi and public transport services to take-out and grocery drops, and even sought to provide seamless freight logistics solutions for ferrying goods large and small.
As Africa’s ambitious Continental Free Trade Agreement (CFTA) comes into effect, we might do well to review some of the continent’s most promising start-ups in the logistics space.
The CFTA might finally usher-in a golden era of intra-African trade, with some economists expecting volumes to grow from 34.9 million tons in 2009 to 120 million tons in 2030. As the largest and most developed logistics industry on the continent, South Africa potentially has much to gain from adding their signature to the agreement. Improved logistics leads to lower costs and thus more accessible pricing for consumers.
Higher truck and rail utilisation means less carbon emissions for the environment, and it also means that SME’s that may have been previously priced out of economic participation might now enter the fray.
From hype to hard cash
Logistics start-ups have been trendy participants at start-up pitching competitions for a while now, and a few notable ones have succeeded in landing the attention of investors. Case in point, the cargo-transport logistics platform Lori Systems (Kenya) grabbed headlines for winning last year’s Start-up Battlefield Africa, and Twiga Foods (Kenya) won the grand prize at the 1776 Global Challenge Cup.
Before you dismiss the hype of those wins completely, it’s worth noting that last July, Twiga Foods raised an impressive $10.3 million (R138.7m) in series A funding. More recently, the on-demand delivery service Sendy (Kenya) attracted $3m in investment; while direct-to-retail distribution web platform TradeDepot (Nigeria) secured and fleet tracking platform Kobo360 (Nigeria) pulled in $3m and $1.2m, respectively.
Each of these start-ups has very different business models and competitive advantages. After all, even the most basic cross-border shipment can involve dozens of brokers, truckers, customs agents, and delivery personnel. Thus, a dynamic ecosystem of innovators is required.
In South Africa, a number of last-mile delivery start-ups have emerged – including Zulzi, Picup, Rush and, most notably, WumDrop, which Makro acquired last year. FastVan has launched a SAAS (software as a service) platform for in-house logistics, while LineBooker and EmptyTrips now offer online marketplaces optimised trucking utilisation services.
What this means for us all
Aspiring truck owner-drivers might do well to root for platforms like Senga (Kenya) which aspires to becoming the “Taxify of trucking”. Meanwhile, clearing agents might benefit from signing up with Bifasor (Ivory Coast), Africa’s first social networking platform focused entirely on logistics professionals.
Shop owners operating in informal markets might find value in solutions like Spazapp (South Africa) which help streamline day-to-day operations.
Regardless of the market segment, success in logistics requires both customisation to local conditions, and specialisation to a specific niche of buyers and sellers. It is, therefore, no surprise that the largest capital raise referenced in this piece, Twiga Foods, is widely considered an agritech start-up because it focuses specifically on solving logistics issues for rural farmers delivering fresh produce to urban markets.
Similarly, Mastercard’s niche agri-app 2Kuze (Kenya) – launched earlier this year – aims to co-ordinate sales, payments, and logistics for small-scale farmers looking to sell their crops more efficiently. Meanwhile Zipline (US) has chosen to specialise in delivering blood parcels via drones to difficult-to-reach parts of countries like Rwanda and Tanzania, while LifeBank (Nigeria) has opted to do the same via motorcycles. Sendy started out doing lastmile motorcycle parcel deliveries, but now also performs deliveries via minivans.
There will likely be consolidation among these start-ups in the coming years. In some markets, this has already begun. For instance, in 2016, the Nigerian B2B lastmile delivery platform MAX, acquired the take-out delivery app, Easyappetite.
While the continent might be several years away from realising the full potential of the CFTA, if Louis Pasteur’s maxim, “Fortune favours the prepared…” holds true, now might be a good time to start backing African logistics start-ups with some serious cash.
CAIPHUS MOKOTEDI was the first graduate of Ford’s Incubation Programme, launched in 2011. From humble beginnings growing up in the village of Moruleng, just outside the north-east boundary of Pilanesberg National Park, he is now the chief executive of Zig Enterprise, a 100 percent black-owned company which forms an integral part of the supply chain for Ford Motor Company of Southern Africa (FMCSA).
Mokotedi started working at the age of 14, first as a caddy, and later as a barman at Sun City Resort. He also started a family business in Rustenburg, which initially rented videos, and later expanded its scope to become a photo processor, printer, and internet café.
After finishing Matric at the JM Ntsime High School in Mogwase, Mokotedi went on to study Mechanical Engineering at Wits Technikon (now University of Johannesburg), and completed a Trainee Engineer programme at BMW’s Assembly Plant in Rosslyn, before being hired as a Process Engineer for Widney Transport Components, which is part of the PG Group. “I was exposed to design, R&D, process engineering, production engineering, sales and marketing,” he says. “It was an excellent all-round learning experience.”
In 2010, armed with his National Diploma in Mechanical Engineering, MAP (Management Advancement Programme – Wits Business School), and plenty of practical experience, Mokotedi spotted a newspaper ad. It called for aspiring entrepreneurs who wanted to be part of South Africa’s first broad-based black economic empowerment (BBBEE) incubation programme in the brand new, purpose-built Automotive Incubation Centre at Ford’s Silverton Assembly Plant, east of Pretoria.
World-class
A public-private partnership between the Automotive Industry Development Centre (AIDC) and FMCSA, the world-class programme offers incubatees courses in SME management, entrepreneurial flair, self-motivation, effective people skills, sound business ethics, and a three-year National Diploma in Mechanical Engineering.
In 2011, the first intake of carefully screened incubatees – including Mokotedi – were partnered as sub-contractors with established component suppliers, who provided them with the technical assistance they required. These incubator companies worked through the pre-builds of the new Ford Ranger pick-up truck before actual production started. Mokotedi was partnered with Schnellecke SA to provide sequencing and logistics along the Ranger production line.
“In 2012 I registered my company with a name that is partly a tribute to “Zig” Ziglar, the amazing American author, salesman, and motivational speaker – a true entrepreneur,” says Mokotedi.
His big break came in 2015 when Ford and one of their tier one suppliers parted ways and Zig Enterprise was awarded the tender for the carmaker’s new Vehicle Personalisation Centre, situated adjacent to the Silverton Assembly Plant.
“I must say a big ‘thank you’ to Ford and the AIDC for having the vision to introduce the incubation programme. It provided all the necessary assistance I needed to establish my business.”
Various Original Equipment Manufacturers have expressed interest in establishing similar incubation centres, using Ford’s roadmap as a prototype.