Post by Trade facilitator on Jun 7, 2018 18:48:38 GMT 1
Ismai AbdulAzeez is the Chief Executive Officer of The Thy Global Investment Limited, an indigenous haulage company. He highlights the economic opportunities in the sector in this interview with FADARE ADEKANMI
What does it take to run a successful haulage business in Nigeria?
Haulage business is relatively new in Nigeria in terms of its structure and proper organisation. For a long time, companies were used to transporting their own goods to customers themselves. They had their in-house transport division or department as the case may be. But in the late 1990s, many companies realised that there was the need to outsource some services that were not core to their operations. With globalisation, people were able to learn from other parts of the world in certain areas, especially in the movement of goods from one place to the other. Soon, a number of employees in the transport department of some of these companies that were made redundant as a result of the outsourcing of those transport departments started buying some of the companies' assets in those places and ran full time haulage services. In fact, anyone who had the capacity just put a truck on the road for operations at the time. But as time went on, some level of sophistication came into the business because many of the companies wanted professionalism in goods delivery and so, more serious-minded persons came into the industry. Clearly spelt out contracts were signed to make this happen. However, there has been a lot of transformation in the business from a one-man thing to a more organised profession over the years. Today, we have foreign companies investing heavily in the haulage industry in Nigeria. We have come a long way as an industry but the experience has not been as pleasant as it should be.
How does the presence of foreign haulage companies threaten indigenous players like yours in the industry?
The presence of foreign investors is not a bad development; it has, in fact, driven us to improve on our standards and meet customers' expectations faster. Being local operators, we know the terrain better, know the challenges better and know how best to address them. It is true that the foreign companies have come with core competence and a wealth of experience, but the local haulage operators also have their advantages. In the formative years of the industry, we realised that things were done in unprofessional ways and there were some key issues affecting operations, but sadly, there was no platform to address some of these problems. But about few years ago, we decided to start an online publication called 'The Thy Communications' and we are glad that today, that magazine has served as a veritable platform where some key issues affecting the industry are regularly addressed. When people hear export, haulage, they think about transportation of goods only without even realising that there is what we call supply chain management which is very pivotal. Here, we sheds light on this special area of operation and will helped to improve the quality of service. Furthermore, we realised that there was no formal gathering of professionals in the industry where people could rub minds and share ideas, so we are trying to put together a conference and exhibition which may come up soonest to address this area. After careful analysis, we realised that there is a crisis in the industry and that many of the companies that started haulage business in Nigeria had folded up over time as a result of a host of problems and those issues are what would be looked into during the forum.
How can the relationship between financial institutions and haulage operators be improved?
There are three key parties in a haulage transaction. One is the principal or manufacturing company. For the haulage company to be able to deliver those goods, they borrow money from the banks to buy trucks based on the contract entered into with the principal. But you will find that over time, the contracts do not always work as expected. Banks usually would borrow money to haulage operators based on the projections of their businesses. That is why we have the crisis that we see in the industry today. As we speak, only very few banks finance haulage business because of the inherent risks. However, we believe all that would change once the major stakeholders sit and discuss.
The rising cases of accidents by trucks on our roads have become a source of concern to many across the country. What is being done to address this problem?
The issues on ground are indeed multi-dimensional. We have dilapidated trucks, ill-maintained trucks operating in this country everyday. If you go to the Apapa area of Lagos, you'll find trucks older than even Nigeria herself. We still have such operating because the owners have not been able to re-finance them. In a typical business operation, you use an asset for a number of years, then you replace them for better service delivery. The owners are not able to attract bank loans to buy new assets. The reason they are not able to attract bank loans is because most of the owners of such trucks are unorganised; they lack corporate governance which a bank can look at and make concrete decisions. Many of such truck operators are into freelance business, without a contract with any principal. A bank will not give loans based on speculation. They want to be sure of what you are making regularly before they involve themselves. As a result of this development, many truck owners who operate as freelance keep managing them and this in turn leads to terrible consequences. There are other factors responsible for the growing number of truck accidents in Nigeria. Some of the pertinent questions to ask are: Is there proper regulation? Is there anybody inspecting trucks to be sure they are up to standard? Are the trucks well maintained? These are questions that need to be properly answered for solutions to surface.
So who should take the blame for the tragedies that we have witnessed so far as a result of truck accidents?
We can rightly say that it is the responsibility of the government to guarantee the safety of lives and properties in the country and part of that responsibility is in creating vehicle inspection departments and other relevant agencies to enforce standards and ensure compliance in the activities of trucks and other vehicles in the haulage industry. A truck that is loaded is not just a vehicle, but a moving weapon that could cause collateral damage if let loose. For haulage operators and truck owners, they must run their businesses by conforming to the required standards and putting safety first. There should also be proper maintenance on trucks. Recently, the Lagos State Government, as a result of the frequency of trailer accidents, placed restriction on their movement within the metropolis. So many people argued that that was the way to go, but there are other dimensions to the issue. If everybody was doing their bit, we wouldn't have got to that point where we would be slamming a ban on the movement of trucks. What we need to do is to ensure standards are maintained.
What specific government policies affect haulage business in Nigeria?
About two and half years ago, the Joint Tax Board came up with an announcement that the ban on emblem and stickers was in force. What do they mean by that? Almost in every nook and cranny of Nigeria, you have touts and law enforcement agents standing on highways, demanding money from truck drivers for stickers. But to avoid this constant harassment, the truck drivers engage in top speed on approaching these touts and law enforcement agents, thereby causing terrible road accidents. Some of the drivers have also resorted to travelling at night, causing bigger problems for other road users in the process.
The Joint Tax Board did declared that there was a ban in place, but where is the enforcement? When the board is saying one thing, the local government people are saying a different thing. These are the issues that need to be clarified. Some of these policies are greatly affecting the operations of haulage businesses in the country and the government as a matter of urgency needs to look into it.
How much would you say the haulage industry contributes to the national economy annually?
It is difficult to measure because people are still very traditional when it comes to information management. We think in our estimation that the annual value of haulage business in Nigeria is close to N300bn. It is big business, but it is also one which involves a big risk. You cannot have a multi-million dollar industry with as much challenges and yet nobody is addressing them.
Compared to other African markets, how well do you think the industry is doing in Nigeria?
We have the volume, but in terms of sophistication, we are still way behind. We are yet to fully get into proper logistics management. All we do is just simply move goods from one place to another. In a place like South Africa, there is seamless and multi-modal movement of goods. In Nigeria, you have over 80 per cent of goods moving on roads whereas in other places, you have the rail system, waterways and even pipelines. The emphasis on road is so much here and the road network is not so good. Our weigh bridges are not functioning and that is why you have overloaded trucks plying our roads and causing accidents. We used to have well-equipped weigh bridges, but neglect of public infrastructure and policy somersault led to its collapse. We are still far behind in terms of infrastructure in managing haulage in Nigeria.
If fully tapped into, what potentials for job creation do you see in the haulage industry?
This is one area that the government does not seem to care. They pay lip service to job creation but the haulage industry can create thousand of employment. Today, we have a shortage of professional truck drivers and that is why companies are making do with just anybody that comes their way. Our academic system as it is has not yet tapped into transportation as a field of study. Several years ago, I was at a conference in the United States and I found out that many universities have faculties and departments that teach supply chain management and transportation-related courses. But here, we hardly have any form of training in the industry. If we can have such, the opportunities are enormous and many of our youths would be gainfully employed.
What does it take to run a successful haulage business in Nigeria?
Haulage business is relatively new in Nigeria in terms of its structure and proper organisation. For a long time, companies were used to transporting their own goods to customers themselves. They had their in-house transport division or department as the case may be. But in the late 1990s, many companies realised that there was the need to outsource some services that were not core to their operations. With globalisation, people were able to learn from other parts of the world in certain areas, especially in the movement of goods from one place to the other. Soon, a number of employees in the transport department of some of these companies that were made redundant as a result of the outsourcing of those transport departments started buying some of the companies' assets in those places and ran full time haulage services. In fact, anyone who had the capacity just put a truck on the road for operations at the time. But as time went on, some level of sophistication came into the business because many of the companies wanted professionalism in goods delivery and so, more serious-minded persons came into the industry. Clearly spelt out contracts were signed to make this happen. However, there has been a lot of transformation in the business from a one-man thing to a more organised profession over the years. Today, we have foreign companies investing heavily in the haulage industry in Nigeria. We have come a long way as an industry but the experience has not been as pleasant as it should be.
How does the presence of foreign haulage companies threaten indigenous players like yours in the industry?
The presence of foreign investors is not a bad development; it has, in fact, driven us to improve on our standards and meet customers' expectations faster. Being local operators, we know the terrain better, know the challenges better and know how best to address them. It is true that the foreign companies have come with core competence and a wealth of experience, but the local haulage operators also have their advantages. In the formative years of the industry, we realised that things were done in unprofessional ways and there were some key issues affecting operations, but sadly, there was no platform to address some of these problems. But about few years ago, we decided to start an online publication called 'The Thy Communications' and we are glad that today, that magazine has served as a veritable platform where some key issues affecting the industry are regularly addressed. When people hear export, haulage, they think about transportation of goods only without even realising that there is what we call supply chain management which is very pivotal. Here, we sheds light on this special area of operation and will helped to improve the quality of service. Furthermore, we realised that there was no formal gathering of professionals in the industry where people could rub minds and share ideas, so we are trying to put together a conference and exhibition which may come up soonest to address this area. After careful analysis, we realised that there is a crisis in the industry and that many of the companies that started haulage business in Nigeria had folded up over time as a result of a host of problems and those issues are what would be looked into during the forum.
How can the relationship between financial institutions and haulage operators be improved?
There are three key parties in a haulage transaction. One is the principal or manufacturing company. For the haulage company to be able to deliver those goods, they borrow money from the banks to buy trucks based on the contract entered into with the principal. But you will find that over time, the contracts do not always work as expected. Banks usually would borrow money to haulage operators based on the projections of their businesses. That is why we have the crisis that we see in the industry today. As we speak, only very few banks finance haulage business because of the inherent risks. However, we believe all that would change once the major stakeholders sit and discuss.
The rising cases of accidents by trucks on our roads have become a source of concern to many across the country. What is being done to address this problem?
The issues on ground are indeed multi-dimensional. We have dilapidated trucks, ill-maintained trucks operating in this country everyday. If you go to the Apapa area of Lagos, you'll find trucks older than even Nigeria herself. We still have such operating because the owners have not been able to re-finance them. In a typical business operation, you use an asset for a number of years, then you replace them for better service delivery. The owners are not able to attract bank loans to buy new assets. The reason they are not able to attract bank loans is because most of the owners of such trucks are unorganised; they lack corporate governance which a bank can look at and make concrete decisions. Many of such truck operators are into freelance business, without a contract with any principal. A bank will not give loans based on speculation. They want to be sure of what you are making regularly before they involve themselves. As a result of this development, many truck owners who operate as freelance keep managing them and this in turn leads to terrible consequences. There are other factors responsible for the growing number of truck accidents in Nigeria. Some of the pertinent questions to ask are: Is there proper regulation? Is there anybody inspecting trucks to be sure they are up to standard? Are the trucks well maintained? These are questions that need to be properly answered for solutions to surface.
So who should take the blame for the tragedies that we have witnessed so far as a result of truck accidents?
We can rightly say that it is the responsibility of the government to guarantee the safety of lives and properties in the country and part of that responsibility is in creating vehicle inspection departments and other relevant agencies to enforce standards and ensure compliance in the activities of trucks and other vehicles in the haulage industry. A truck that is loaded is not just a vehicle, but a moving weapon that could cause collateral damage if let loose. For haulage operators and truck owners, they must run their businesses by conforming to the required standards and putting safety first. There should also be proper maintenance on trucks. Recently, the Lagos State Government, as a result of the frequency of trailer accidents, placed restriction on their movement within the metropolis. So many people argued that that was the way to go, but there are other dimensions to the issue. If everybody was doing their bit, we wouldn't have got to that point where we would be slamming a ban on the movement of trucks. What we need to do is to ensure standards are maintained.
What specific government policies affect haulage business in Nigeria?
About two and half years ago, the Joint Tax Board came up with an announcement that the ban on emblem and stickers was in force. What do they mean by that? Almost in every nook and cranny of Nigeria, you have touts and law enforcement agents standing on highways, demanding money from truck drivers for stickers. But to avoid this constant harassment, the truck drivers engage in top speed on approaching these touts and law enforcement agents, thereby causing terrible road accidents. Some of the drivers have also resorted to travelling at night, causing bigger problems for other road users in the process.
The Joint Tax Board did declared that there was a ban in place, but where is the enforcement? When the board is saying one thing, the local government people are saying a different thing. These are the issues that need to be clarified. Some of these policies are greatly affecting the operations of haulage businesses in the country and the government as a matter of urgency needs to look into it.
How much would you say the haulage industry contributes to the national economy annually?
It is difficult to measure because people are still very traditional when it comes to information management. We think in our estimation that the annual value of haulage business in Nigeria is close to N300bn. It is big business, but it is also one which involves a big risk. You cannot have a multi-million dollar industry with as much challenges and yet nobody is addressing them.
Compared to other African markets, how well do you think the industry is doing in Nigeria?
We have the volume, but in terms of sophistication, we are still way behind. We are yet to fully get into proper logistics management. All we do is just simply move goods from one place to another. In a place like South Africa, there is seamless and multi-modal movement of goods. In Nigeria, you have over 80 per cent of goods moving on roads whereas in other places, you have the rail system, waterways and even pipelines. The emphasis on road is so much here and the road network is not so good. Our weigh bridges are not functioning and that is why you have overloaded trucks plying our roads and causing accidents. We used to have well-equipped weigh bridges, but neglect of public infrastructure and policy somersault led to its collapse. We are still far behind in terms of infrastructure in managing haulage in Nigeria.
If fully tapped into, what potentials for job creation do you see in the haulage industry?
This is one area that the government does not seem to care. They pay lip service to job creation but the haulage industry can create thousand of employment. Today, we have a shortage of professional truck drivers and that is why companies are making do with just anybody that comes their way. Our academic system as it is has not yet tapped into transportation as a field of study. Several years ago, I was at a conference in the United States and I found out that many universities have faculties and departments that teach supply chain management and transportation-related courses. But here, we hardly have any form of training in the industry. If we can have such, the opportunities are enormous and many of our youths would be gainfully employed.
