Disruption drives opportunities, and one thing is sure; Velogic knows how to seize them! Since the company acquired a majority shareholding in General Cargo Services (trading today as GCS Velogic) in 2016, the company has faced numerous challenges. However, thanks to its agile teams, good stakeholder relationships, and advanced technology, Velogic has managed to turn adversity into success.
The acquisition of a logistics company in Kenya
In 2015, Velogic decided to expand its operations into East Africa. Kenya, a mature market with a number of advantages such as direct flights and a legal system based on English law, was a natural choice of territory in which to invest and operate. To achieve this, Velogic partnered with Kibo Capital Partners, a Private Equity Fund headquartered in Mauritius. Together, they found the perfect investment opportunity in General Cargo Services Limited (GCS). This small-tomedium enterprise, established in 1976 by Kirti Shah, was, by 2015, one of the best and most respected logistics companies in Kenya. In March 2016, Velogic and Kibo Capital Partners acquired General Cargo Services, and by October 2019, Velogic also owned a 100% shareholding in Gencargo (Transport) Limited (commonly known as GCT), a truck-owning subsidiary of GCS.
Innovation in the midst of a crisis
The first major crisis occurred in June 2018, when the Kenyan government implemented its railroad project in advance of the due date. This project involved connecting the port of Mombasa, Kenya’s principal port, with Nairobi, the capital and the commercial centre of the country. Of course, the country’s industrial players were not ready for this major change. The infrastructure to launch such a significant project was not in place. Early implementation resulted in a loss of control over the way cargo was managed, major logistics delays, and led to millions of dollars of extra charges being incurred by industry and customers alike.
It was clear that GCS could not continue to do business in the old way. A turn-around committee led by Mehul Bhatt, Chief Strategy & Sustainable Development Executive at Rogers, was set up and a new level of highly experienced middle management was hired to support and grow the business. Very quickly, older issues were brought under control and a new business model that revolved around a combination of bulk and containerised cargo, warehousing, and distribution was put in place. These strategies, along with the adoption of technological solutions and automation, helped the company to gain a competitive edge during turbulent times.
Three clear differentiators were identified – Team, Technology, and Relationships. While the operations of General Cargo Services used to be relatively manual, the management team brought in significant changes and implemented new technology to improve the efficiency of the company. The keystone to this strategy was the creation of a bot that connected the internal IT system with that of the port. Almost half a million data points were collected daily, emails were automatically sent to clients as soon as information was updated on the system, and exception reports were generated instantly, and all of this without any human involvement or cost.
Since automation was brought in, with the resultant streamlining of processes, clearing times have dropped by 50%, which makes GCS Velogic an industry leader in Kenya. With the new, advanced system, the company is now able to show audit trails to stakeholders should an error occur, thus avoiding conflicts and eventual losses.
As a logistics company, even under COVID-19 lockdowns, GCS Velogic is considered an essential service. This meant that, throughout the lockdowns in 2020 and 2021, the company remained fully operational. The COVID-19 pandemic has provided a further testament to the company’s impressive agility and resilience. When the port at Mombasa closed, GCS Velogic’s automation, experienced people, and agile processes provided a great competitive advantage. Customers felt reassured by the daily updates they received, as they could access all the details regarding their cargo and manage their supply chains accordingly.
GCS Velogic did not stop there, however, but adopted an aggressive strategy to defend their market share and strengthen their position. While many companies struggled financially, GCS Velogic managed to expand its customer base. The company achieved a 40% increase in bulk cargo volume and saw its profits rise significantly, compared to the pre-pandemic period.
Turned Towards the Future
The company has put significant resources into digital technology. Through the creation of TrackRight, the company’s first digital offering, GCS Velogic not only optimised their own transportation routing but have also sold the system to other industry players, including competitors. Within the first year, TrackRight had achieved almost US$100,000 of external sales.
Sustainability is at the heart of GCS Velogic’s business, so work is in progress on incorporating a carbon calculator in the TrackRight program, that will monitor the carbon footprint of each and every trip. This addition will enable GCS Velogic to sell their solution to many multinational companies that have committed to a Net Zero Goal.
With their cutting-edge technological advantage and a strong team that builds strong relationships, there is no doubt that an exciting future awaits GCS Velogic in Kenya.