The Managing Director, Aramex Nigeria, Faisal Jarmakani, speaks on the current trend in the logistics industry in this interview with IFE OGUNFUWA
What is your perception of Nigeria’s air freight?
The air freight market in Nigeria is huge. Nigeria does a lot of import and it also has a lot of export. While there have been a lot of complaints as the prices of oil increase, the sources of funds reduce. It has impacted on the growth of the trade. But as a company, we have to look for opportunities.
What is growing today in Nigeria and in Africa is the e-commerce market. We have got about 25 to 30 per cent growth in that market. Our vision is to focus on areas that are inclusive and see how we can improve the processes and customer experience.
Do we have enough cargo planes to cater to logistics?
No, we don’t have enough planes and routes. Just as Nigeria operates the biggest airport in Africa, Nigeria’s carrier should be the most important passenger and cargo airplane in Africa. There has been discussion regarding Nigeria Air and as a logistics company, we really bank on that to improve the logistics industry.
What has been the impact of international trade on logistics?
Overall, it has been positive for us. E-commerce has grown, Africa has a 30 per cent increase in e-commerce. It is making Nigeria one of the fastest growing e-commerce industries in the world. And the good thing about e-commerce is that it will help the logistics company as well as the delivery agents, e-tailers, and retailers. It is really creating a positive national impact on the economy.
Another thing is the electronic commerce in Nigeria, which is a N255bn industry. Nigeria has a huge mobile penetration and the demand for electronics is high.
We can see that there are huge opportunities; it is just for the logistics companies to know where to position themselves. I think Amazon has positioned itself in a very good way. If you look at the market and identify the growth areas, you will put yourself in a positive place in the market.
We get a lot of imports from China and for Aramex, our largest nations are the United States, the United Kingdom, China and Dubai.
Has the trade war between US and China affected the business in any way?
It has actually affected us but not immediately. We hear about the trade war in the media but really, just like it has affected China and the US, in retrospect, I believe it will help Nigeria because the focus of all these multinationals, who cannot trade with China, is to look at the emerging markets. The most appetising emerging market in Africa is Nigeria. We have seen an increased focus for multinationals to set up business in Nigeria and I believe this will affect the economy positively.
Also, because of what is happening now, Aramex is looking at opening a hub in Nigeria for West African countries and this will enable all the different hubs to send goods to Nigeria and then we transport to Ghana, Ivory Coast, and other neighbouring countries.
Again, we are at the mercy of our local carriers and we are hoping that big changes are made because the demand is there and the passengers are there and it is just to find the right formula that works.
What are the challenges of inter and intra-regional trade?
Airlines are our biggest challenge. We do not have the appropriate airlines to carry the right cargo. The passenger airlines are too small to carry large cargo. As a result, the rates are very expensive for intra-African trade. For example, it is cheaper for us to send a shipment from here to the hub in UK and then from UK to Ghana than sending by the local airline to Ghana.
Another issue is the infrastructure. The infrastructure is not good though I see the Federal Government is doing a lot of work. There is a huge amount of trade intra-Africa but it is just so costly and that is why it affects our export capabilities.
Have you explored alternatives to using airlines?
We have got the airline, the road and the seaport. There is a backlog of containers at the seaport and that is not very efficient. The roads will take a very long time to fix because even if it improved in Nigeria, it is poor in our neighbouring countries. All the signs are leading to airlines. Nigeria Air and local airlines are important for us to succeed in the market.
What are the challenges in the logistics market in Nigeria?
In the 2017 logistics performance index, Nigeria was ranked 2.4 out of 5 and in 2016, it was 2.63.
The main issues are poor infrastructure, the bottlenecks at air and seaports, tracking and tracing capabilities. That is why it is important to invest in technology and the ports and the railway.
Overall, it is a challenging time to invest in logistics Nigeria, and there is a huge potential for growth in the country. We at Aramex believe that Nigeria is the most important market in the world today.
When was Aramex established?
Aramex is a provider of comprehensive logistics and transportation solutions. It was established in 1982 as an express operator and the company was rapidly transformed into a global brand that specialises in domestic and international courier, e-commerce solutions, freight and logistics.
We opened our operations in Nigeria in 2015 at a time when it was completely Greenfield. We had zero setup at a time when the economy was in recession, when oil prices were at an all-time low and forex was scarce.
We agreed that the best time to start was in the recession and that by the time we set up and the economy is stable, we would be ready to operate effectively.
How did you scale through the economic challenges you encountered at that time?
We made smart business decisions; we started small and hired just the number of people we needed. We had a great synergy with Aramex International. Aramex in general is a very strong technology logistics company.
We figured that instead of investing in our own cars upfront, we could sign up with agents, give them our technology and let them help us scale our business through the market.
What has been your success story in Nigeria?
We were able to start at a time that was very challenging. To be able to reach where we are today, some of the biggest success stories for us were the e-commerce agreement we have done with global retailers and e-commerce platforms that are all customer service oriented.
Our model is to take over the market by having our customers enjoy a great experience. We have very flexible service, specific to each sector. For example, we have solutions that are for pharmaceutical and another for e-commerce, and it is not that one company does everything. Most importantly it passing our technology into the local markets through the agents so that we will be able to grow through partnerships.
Can you describe Nigeria as a very competitive market for logistics?
Absolutely! We have major players here. Other than international brands, we have got very good indigenous brands. It is a very competitive market and also very demanding. Unfortunately, we import more than we export and that creates opportunities. If you are able to deliver and meet customers’ expectations, then you will definitely flourish.
You seem to show a lot of interest in robotics. What is the link between the logistics business and robotics?
Today, the logistics industry is dependent on automation. We use automation in all of our operations and to separate all shipments. When the shipments arrive in Nigeria, we automate the process and it transfers each shipment to the desired destinations.
Automation is also very important in warehousing, materials sorting and good planning. Machine learning is used to plan routes and we tell the drivers which route to take in order to get to their destinations as quick as possible.
We do a lot of testing in our warehousing solution by having robots pick up the shipments and deliver them to us. It is still on a small scale but we are using the kids we sponsored for global robotics competitions to research and develop these techniques for our e-commerce and logistics solutions.
Are these robots assembled locally?
We import them, assemble them locally and test them. The operators are all Nigerian workers. We link them to the whole system and there is an interface between the robots, humans and computers.
What technologies are available in other countries that are yet to get to Nigeria?
We see a very large increase in drone delivery and we need to be more focused on the automation of sorting of materials.
Do you think Nigeria is ready for drone delivery?
I think it is ready. The obstacle we have is to be able to get the clearance from the security agencies to deliver. We have great Internet connectivity and huge mobile phone users in Nigeria.
So all we need is to get the approvals that will enable us deliver to local and remote areas. Security clearance is very important. Although, we have not really started catering so much to drone delivery, it is one of the few things that we are looking at.
One of the biggest issues we have today in Nigeria is infrastructure and addressing system. We have weak addressing system. Sometimes, when driving on the road, the house numbers are not arranged properly.
We have partnered with a company called what3words. This system provides an exact simple to learn addressing system. What it does is to zone the world into a 3m x 3m square perimeter addressing system. So at every nine perimeters, there is an address that constitutes three words.
What this does is instead of typing the whole address including the longitude and latitude; it will pinpoint the exact location you want on the GPS. We have done a lot of testing and we have 20 to 30 per cent efficiency in implementing this technology. It is being considered as a national addressing system.
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