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Case study demonstrates clear advantages October 15, 2014 | Mining Prospectus

In 2014, according to the United Nations Department of Economic and Social Affairs, African economies will see average growth of 4.7%, compared to 1.5% in Western Europe or Japan, or 2.5% in the US

As industrial development continues across the continent, road transport becomes ever more important. Despite accelerating upgrades, the rail infrastructure is not able to handle the volumes of freight being moved to and from ports, not to mention the increasing volumes of intra-African trade.

Up to 80% of goods moved around Africa go by road. In addition to industry and infrastructure, growing African economies have also created a burgeoning and consumptive middle class, increasing retail demand and making supply chains more reliant on road freight.

As road-based logistics experts grab the chance to service this market, some companies have chosen regionalisation and others industry specialisation as their organisational and marketing differentiation. The Cargo Carriers success story is a case study that illustrates how important industry specialisation has been to the company’s growth and levels of customer satisfaction.
Cargo Carriers and its subsidiaries – among them BHL in Zambia as well as Ezethu Logistics and Uzuko Carriers in South Africa – have achieved significant growth in the sub-Saharan African fuel, mining chemicals, and bulk dry powder industries. “It could never have happened without industry specialisation,” says Andre Jansen van Vuuren, Cargo Carriers’ Divisional Marketing Director. “For example, we are seen as one of the leaders in transporting bulk dry cement. That reputation has brought more work our way.”

He believes a strategic overhaul of the company, begun in 2002, opened the way for expansion in a changing market. “First of all, BBBEE [broad-based black economic empowerment] became a factor,” he says. “By introducing innovations like our owner-driver programme, and creating BBBEE-compliant subsidiaries, we have not only improved Cargo Carriers’ BBBEE rating in these subsidiaries to level two, but we are also empowering real transformation.
“The other advantage of acquiring subsidiaries is the local knowledge – both geographic and industry based. Having a local operation, someone who understands the lie of the land better than we do, is vitally important. This, together with our specialist industry knowledge, offers us a springboard into Africa.”

In July 2013, Cargo Carriers acquired a 55% stake in Zambian haulage company, BHL, with an expanding footprint in Zambia, Namibia, the Democratic Republic of the Congo and Angola. Initially focused on the mining and chemical industries, BHL is successfully expanding into the manufacturing and agricultural sectors – having built its reputation in the copper mining industry where reliability, safety and cost are equally important.
“Industry specialisation encourages technical innovations,” Jansen van Vuuren says. “One of the advantages of the BHL acquisition was the unique design of their trailers: they can be reconfigured to carry liquid cargo, bulk dry powder or break-bulk cargo as separate loads, or simultaneously. That’s the sort of specialisation  you get when a haulier knows he might be transporting copper concentrate from mine to smelter, then metal plate from refinery to manufacturer, or sulphuric acid from the smelter back to the mine – the versatile trailer means the vehicles almost never run empty on return trips, which delivers a huge cost saving. If you invest in understanding your customers’ needs, you are more likely to create value-generating new ideas.”

Safety paramount

Safety is probably the most important contribution to the reputation and growth of Cargo Carriers – as important as reliability and cost efficiency. “One fatal accident is going to attract more attention than a hundred years of on-time, in-full deliveries, so safety is paramount,” says Jansen van Vuuren. “Our high standards of safety, health, environment and quality (SHEQ) together with ongoing driver training, vehicles maintenance and other safety requirements, have certainly stood us in good stead.

“Fuel is another example of the value of industry specialisation: you have the same safety concerns as you do with hazardous chemicals, but you also have to have the ability to transport different types of fuel in separate compartments on the same vehicle, and your customer has to be satisfied that you’re delivering precisely the quantities they’re paying for. Our monitoring and proof-of-delivery system is unique in this country, as it allows us to give the client documented proof of all deliveries.”

Share prices don’t lie
In 2001, Cargo Carriers’ shares price on the JSE stood at under R1. Today, they are valued at R22 each – growth that indicates the company’s industry specialisation expansion strategy is working, and that industry specialisation is an effective way to deliver value for money in the supply chain sector. “We’ve come to be seen as leaders in these markets,” says Jansen van Vuuren.
“We are industry specialists and truly understand our markets – be it chemicals, mining, gas, bulk-dry powders, steel, agriculture or fuel. Road freight is going to continue to grow as African development increases,” he concludes. “This presents great opportunities for logistics specialists – but for us, it’s all about focus and industry specialisation. If clients are confident that you understand their business, they will entrust you with their supply chains.” ~ Alyn Adams

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