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Corporate

Bolloré Africa sees room for growth in logistics

After running logistics in Kenya for nearly five decades, Bolloré Africa is one of the few firms that can tell the full story about doing business in the country. 

The subsidiary of the Paris-headquartered Bolloré Group, which initially launched its operations in Kenya as SDV Transami, got the market talking when it abruptly dropped the established brand for its parent company’s name in November 2012.

The Business Daily talked to the firm’s managing director for East Africa, Jason Raynard, about the brand, business environment and the industry’s outlook.

Until a couple of years ago, you operated in the region as SDV Transami. Then you changed the name to Bollore Africa Logistics. Why would you drop a recognisable brand for one that will require huge investment to get the same level of recognition?

SDV Transami was indeed a well-known brand in Kenya and East Africa having been in Kenya for 46 years. The Bolloré Group had similar successful branded businesses all over Africa, all recognised experts in logistics in their regions of operation but none with a continental appeal.

Uniting all our subsidiaries under one brand was strategic and consolidates our strong presence in 46 countries in Africa.

Rebranding has created synergies that are helping us work together more closely to achieve a common purpose. The move has been beneficial to our multinational customers and stakeholders who can now identify with us in any part of the continent.

The brand Bolloré Africa Logistics not only communicates our focus on Africa, but also our growing strength in the port management sector. We are currently the leading port operator in Africa.         

Kenya’s economy is heavily dependent on international trade. This means people in the logistics business have their fingertips on the pulse of the economy. What is the state of the Kenyan and East African economy?

The general economy has been relatively stable, with a little growth in some areas of import and export. Earlier in the year, we handled a number of major energy projects, one for a wind farm in Ngong and another for a power plant in Athi River, which herald positive developments in the energy sector. The impact of the security situation on the business environment is, however, apparent.

The port of Mombasa is critical in East Africa’s logistics business. How has it served the East African economy?

We believe that the Port of Mombasa has come a long way in adapting to increasing volumes. The challenge is that the facility was never optimised for container operations, yet containerised traffic has grown rapidly.

But recent efforts by KPA (including construction of Berth 19 and additional dredging of the port to allow access for larger vessels) have had a significant impact on efficiency.

The decision to award a concession for the second container terminal to a private operator could take Mombasa port to the next level.

By leveraging on the financial, technical, managerial and social strengths of the private sector, KPA can concentrate on achieving the desired outcomes from the operator while transferring the risks and costs that come from directly managing the container terminal.

President Uhuru Kenyatta has made bold attempts to improve efficiency at the port. What are the key changes you have since witnessed?

In the past 18 months, we have witnessed a significant improvement in the port’s lead time for cargo clearance. Lower demurrage and detention have led to a drop in the cost of moving cargo by almost $900 (Sh80,000) per trip.

The value of the push towards seamless borders is now apparent with the Single Customs Territory enabling a more fluid movement of goods to Uganda and Rwanda.

While it is not yet fully operational, the Single Trade Window will positively impact the clearance process by reducing bureaucracy and lowering administrative costs for local imports, which tend to be raw materials for local manufacturing.

The inefficiency of Kenya’s logistics business has been illustrated in the fact that it costs more to transport a 40 foot container from Mombasa to Kampala than it does to move the same container from Dubai to Mombasa, for instance. Is this still the state of affairs?

The comparison between shipping costs and road transport costs is imbalanced. One vessel has the capacity for more than 5,000 containers at any one time while a truck can only take one container at a time.

Much is being done to cut this cost through reduction of non-tariff barriers and bureaucratic inefficiency along the road transport corridor leading to a decrease of about 20 per cent of the average cost of transport by road.

In 2013, a trip from Mombasa to Kampala took 10 to 20 days. Today the same trip with two road blocks and two weighbridges takes approximately five days, including clearance time. 

Rift Valley Railways (RVR) has also begun investing in the improvement of the existing rail service.

The government is making big investment in a standard gauge railway line. How is this likely to impact logistics operators?

A functional rail network is a more efficient land transport solution for long distances provided that it is run efficiently. Any logistics player would be happy to offer their customer a reliable alternative to road haulage and the standard gauge railway as envisioned should provide an efficient and hopefully, more cost-effective service to absorb the rapidly growing cargo traffic.

What technologies have come into the logistics business and what has been their impact on key performance areas?

The use of GPS tracking of containers has increased the security of our cargo while enabling customers to track the progress of the truck in real time.

The introduction of electronic seals on transit cargo has assured the integrity of the goods from port to destination by alerting authorities if the seal is tampered with or if the cargo diverted. This protects both the customer and customs authority from loss of revenue.

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