After Madagascar and Mozambique, Rogers’ logistics arm has branched further into Africa, taking a significant holding in two Kenyan companies.
photos : rogers image bank | shutterstock
After working on it for a year, last April Velogic completed its investment in General Cargo Services Ltd and General Cargo Transport Ltd in Kenya. The two companies are specialised in customs brokerage and haulage respectively. They currently employ some 200 people and have a combined turnover of US$8 million (about Rs 300 million).
General Cargo Services has a market share of about 3.5% of the 315,000 twenty-foot equivalent units (TEUs) of imports into Kenya. For its part, General Cargo Transport has 45 vehicles involved in the distribution of goods in the country (which has a total fleet of some 15,000 lorries) and occupies 0.3% of the market. Based in Mombasa, the main port in Kenya and indeed in West Africa, they also have an office close to Jomo Kenyatta International Airport in Nairobi for their air-freight activities.
The operation was conducted in partnership with The Kibo Fund, a private investment fund managed by Kibo Capital Partners who are based in Mauritius and Kenya. It is part of the international expansion strategy begun more than twenty years ago. Velogic now has 32 offices in eight countries: Bangladesh, France, India, Kenya, Madagascar, Mauritius, Mozambique and Reunion Island.
SEIZING OPPORTUNITIES OUTSIDE AURITIUS
The further development of Rogers’ logistics activity necessarily involved looking for opportunities outside Mauritius. The prospects within the country when it comes to the movement of goods is currently limited, with an economy increasingly focused on services and only modest demographic growth.
“Organic growth in Mauritius is going to remain modest unless, of course, the port succeeds in becoming a regional transhipment hub,” explains Velogic’s CEO, Vishal Nunkoo. “More interesting opportunities will arise should Port Louis succeed in becoming a logistics hub.” Velogic has turned to Africa, and especially West Africa, for reasons of geographical proximity as well as language, as most of the countries there are English-speaking.
The mainland, of course, has a much larger population than Mauritius, which means opportunities are greater. There is also growing investor interest there because of the growing middle classes. Furthermore the company’s move into Kenya means it can position itself in the vanguard, able to take advantage of any eventual transformation of Mauritius into a regional logistics platform .
Besides Kenya, two other countries, Uganda and Tanzania were initially being considered. The final choice was influenced by the fact that Kenya is more advanced economically and is also a regional logistical hub.
45
vehicles involved in the distribution of goods in the country (which has a total fleet of some 15,000 lorries).
25%
to the country’s GDP, is concentrated on the Mombasa-Nairobi route.
32
Velogic now has 32 offices in eight territories: Bangladesh, France, India, Kenya, Madagascar, Mauritius, Mozambique and Reunion Island.
A HIGHLY FRAGMENTED MARKET
The logistics market in Kenya is very fragmented with 2,500 companies involved in customs brokerage and road haulage. Annual traffic in Mombasa is a million TEUs (twenty-foot equivalent units), including transit movement to and from Uganda, South Sudan and other land-locked countries such as Rwanda, Burundi and the Democratic Republic of Congo, double the volume of traffic using Port Louis. In Kenya, most logistics activity, which contributes 25% to the country’s GDP, is concentrated on the Mombasa-Nairobi route.
DIVERSIFYING AND EXPANDING FURTHER
Mehul Bhatt is responsible for Velogic’s activities in Kenya as Country Manager. “We stand out thanks to a very efficient operations team, a high level of customer focus, special status with the Kenya Revenue Authority and the financial wherewithal to be able to provide a service to major clients. We are now also supported by Velogic’s network which will mean we can expand further.”
Since taking a stake in General Cargo Services and General Cargo Transport, Velogic has been working on establishing governance procedures and on aligning accounting, administration and operational methods with those of its other offices. Once this has been done, in the near future Roger’s logistics arm intends to diversify its services in Kenya, backed up by its 30 years of international expertise in logistics. Velogic also intends to expand further into adjoining countries.
