Miishe Addy, Jetstream Africa co-founder and chief executive, simply wanted to help small exporters and importers in Ghana send cargo abroad. But after her company commenced operations in 2019, Addy and her co-founder, Solomon Torgbor, who had led a team in the customs unit of the global shipping liner, Maersk, quickly realized that growing a logistics business in Africa meant becoming the financial partner for her customers.

For Jetstream Africa, it meant supporting small businesses with a cash advance of between $17,000 to $100,000 in asset-backed loans. The credit facility helps small exporters complete orders as international demand for quality African products grows. 

When Jetstream started operations in 2019, the hypothesis was that by grouping cargo together, they could reduce the rates each cargo owner had to pay. Miishe’s team thought that doing this would make it easier for SMEs in Ghana to ship anywhere they wanted to around the world. “We were retaining customers [but] their topline wasn’t growing and ours wasn’t either,” Addy told TechCabal. Despite Jetstream’s aggregation, it was still too expensive to sell or buy goods internationally. So the company’s early assumption that simply bundling cargo into container-sized units would reduce costs and spur export growth had to be modified after months of experimentation. “What we discovered is that it doesn’t matter how much you discount freight. If customers do not have enough liquidity to buy and sell goods, the discount is irrelevant,” Addy said in a call with TechCabal.

Unlike other regions, African exporters are forced to take more risks when they sell goods to international buyers. “Folks who are producing goods on the continent probably have the worst payment terms of any trading parties in the world. If they’re selling cargo they don’t get paid until it gets to the buyer. If they’re buying cargo they have to pay a front,” Addy said. Since the cargo moves across great distances and are been imported or exported to people who do not know each other in person. Both parties need to trust that the goods are been shipped, contain what was ordered, and that the payment will arrive when due. 

African banks hesitate to offer loans to SMEs because the typical SME customer in Africa has far fewer assets than what banks are willing to accept as collateral. 

Trade finance—an umbrella term for the different financial arrangements that are used to source for and pay short-term trade loans—is one of the oldest banking functions. According to the World Trade Organisation, as much as 90% of global trade depends on trade financing. But in Africa, the gap between the demand for and supply of trade financing continues to widen. A 2019 estimate by the African Development Bank (AfDB) put the gap at $81.8 billion, analysts say it may have now reached $120 billion a year. A joint study released in 2022 by the WTO and the International Finance Corporation (IFC) on trade finance gaps in the four largest economies of the Economic Community of West African States (ECOWAS) — Côte d’Ivoire, Ghana, Nigeria, and Senegal — claimed that raising the share of trade supported by trade finance in the four countries to the average African level of 40% would result in an extra 8% in trade flows annually. In ten years, the gains would reach $140 billion in additional trade.

Export/import logistics runs on several parallel layers. There are the practical realities of moving a shipment from its point of origin to the port, dealing with customs rules, and warehousing. There is the vagaries of dealing with shipping lines. And the exporter needs the financial muscle to pull all of this off. Said Addy: “There is no type of supply chain that is as complex as a cross-border supply chain where those three things need to not only go well, but they have to be precisely synchronized in order for a shipment to get to B.” 

What is new about Jetstream’s model is that the company wants to bring as many layers in the export/import process as possible under one umbrella. It first started to do this in Ghana when it acquired the licence to handle customs formalities and coordinate with shipping carriers. The industry term is clearing and forwarding. Sales from clearing and forwarding is a small chunk of Jetstream’s revenue, but gross margins from the segment can be as high as 90%, Miishe confided.  For customers, taking Jetstream’s money means they do not have to wait for long to get paid, and can consequently take more orders from international customers. Due to wild fluctuations in the naira’s value relative to the dollar, Jetstream does not offer its financing product in Nigeria.

Adding credit to the core business of moving goods across borders for small businesses and a growing cohort of big enterprise customers means taking on more risk. But since the company is the freight forwarder and customs agent in both countries (it recently acquired a clearing and forwarding licence in Nigeria) it also gives Jetstream Africa the opportunity to hedge its risks. Something that standalone trade financiers and merchant banks struggle with. Whenever Miishe’s company lends (typically only up to 30% of the amount required), they also get to hold 100% of the inventory in leased warehouses in addition to full control over export documents. In the case of exports, buyers make payment to Jetstream Africa which is then disbursed to the seller less loan amount, interest, and fees.

The original goal of the business remained the same. By helping small businesses buy or sell internationally, Miishe and Torgbor hoped to build a venture-scale business. But to do that they needed to take on even more responsibilities. So Jetstream had to become both a freight forwarder and financier. In mid-2021 Jetstream announced a $1 million trade finance program after raising $3 million in seed funding. According to Techpoint, the trade finance program has since reached $9 million. Jetstream Africa which disclosed an additional $13 million pre-series A funding in January 2023 hopes to raise its first growth-stage financing in 2024.

As Nigeria’s small and medium-sized enterprises (SMEs) continue to grow, contributing about 48% of the GDP, Nigerian entrepreneurs face the pressing challenge of delivering goods to customers on time and well.

The logistics challenges range from concrete problems like the absence of infrastructure to abstract ones like lack of trust, or tardiness on the part of delivery companies. Shipbubble, a logistics and e-commerce aggregation company, is solving this problem.

Co-founded by Jordan Ajibola, the CEO, and Ayodeji Abon, the CTO, Shipbubble is creating a  one-stop API integration that allows e-commerce businesses to harmonise all their logistics needs on one platform, eliminating the need for multiple logistics partners. 

The e-commerce industry is projected to reach $3.64 trillion in revenue by the end of 2023. Only $9.02 billion (0.24%) of that amount is projected to be in the Nigerian e-commerce space. With a pressing logistics problem, Nigeria may fall behind, or fail to boost revenue in the e-commerce sector.

Ajibola and Abon sat with TechCabal at our office in Lagos to demonstrate how Shipbubble works. Ajibola was quick to mention that Shipbubble is helping companies “locate the perfect logistics partners based on cost, proximity, and performance, allowing for logistics partner assignment without the hassle of text messaging”.

A 2021 World Bank report notes that the cost of moving goods (per unit distance) domestically in Nigeria is about 5.3 times higher than in the US. Meanwhile, Shipbubble claims its aggregated platform will allow traders to have options to choose from a wide range of affordable companies that have been vetted for quality service delivery by the company, cutting costs and earning trust in the process.

This is in addition to creating a tracking page for each business, allowing traders and customers to follow the goods from start to finish accurately. 

Abon says an easier way to think of what Shipbubble is doing today is to think of Paystack and other payment aggregators, and how they helped e-commerce businesses to sell faster by supporting online stores with instant accounts where payments are validated within seconds. “Shipbubble is like that, but for logistics,” he says.

Shipbubble’s 10,000 steps to expertise

Ajibola and Abon built the Minimum Viable Product (MVP) in 2021, fully transitioning from an earlier version called GetDelivery to Shipbubble by May 2022. The founders then participated in the Startup Wise Guys accelerator program from October 2022 to March 2023, further honing their expertise. Shipbubble has since secured support from angel investors and venture capitalists, including Microtraction, a venture firm that invests in pre-seed startups. As of October 2023, ₦267 million worth of products have been shipped via Shipbubble.

But they’re still far from their destination. 

One of the fundamental aspects of Shipbubble’s approach, according to Ajibola, is “helping businesses scale internationally and having more options”. To do this, they need to onboard more logistics companies internationally; this will need more time and more money. The founders are confident that their product will attract the right funding to scale and bring in more partners.

Esther Ulueme, 28, a Nigerian entrepreneur spends her nighttime tracking orders and her daytime talking to clients for her skincare and perfumery brand, leaving her little space for adequate rest and to scale. Ulueme is optimistic about Shipbubble’s solution. “Putting logistics companies under an umbrella like Shipbubble’s will keep them in check,” she tells TechCabal over WhatsApp. “You won’t have to worry much because you’re sure the logistics companies under Shipbubble would have gone through checks and won’t tamper with or lose your product.” 

Abon assures business vendors like Ulueme that “[Shipbubble’s] streamlined approach means that entrepreneurs can set up e-commerce ventures with ease with Shipbubble, and Shipbubble will handle everything from inventory management to sales and distribution.” He is confident that this approach will help small businesses scale faster with fewer resources.

Ulueme, who is keen on expanding globally, tells TechCabal that knowing that Shipbubble has logistics companies that can deliver outside Nigeria will help vendors sell internationally without stress.

One night in August, Safiya Usman, ordered a ride home on the Bolt app after meeting her friends for drinks. As soon as she got into the Toyota Corolla, the driver asked if it was a card or cash trip, to which she replied, “Card.” After asking how much the trip fare was, he informed her that he would only embark on the trip if they took it “offline”, to which she agreed as she didn’t want to spend more time waiting for another ride.

It wasn’t until the next morning that Usman realised that she had left her purse in the car, and wasn’t able to reach the driver as the trip had been cancelled. Luckily for Usman, her driver was an honest man and returned her purse the next day. But things could have ended badly, as there is no way to trace a driver if one agrees to an offline trip.

Offline trips on ride-hailing platforms like Bolt have become increasingly popular in Abuja since the fuel hike in May. Although fares were increased by about 30–40% after an extended conversation between the drivers and the company, the drivers still insist that the new prices are insufficient to cover operating costs, and have resorted to duplicitous means to avoid remitting the 25% commission to the company.

Safety concerns in Abuja make offline trips a risky venture

In the past few months, cases of “one-chance” kidnappings have been pervasive in Nigeria’s capital. These incidents are perpetrated by criminals who pose as taxi drivers to rob, kidnap or even murder unsuspecting passengers.

For a number of people in Abuja now, moving within the city comes with an added layer of fear, which they try to assuage by opting for ride-hailing apps, as opposed to buses or taxis. Riders can access the names and plate numbers of drivers, and can even share trip details with friends if they feel that they are in danger.

With offline trips, the entire safety point is defeated, according to Precious who works in a restaurant in the city. Since the news of taxi kidnappings and killings spread, she has started to use only ride-hailing apps to return home from work, even if they cost more.

“I don’t bother to use Bolt again because almost every time, the drivers request an offline trip and even go as far as emotionally blackmailing you when you refuse,” she said.“I always refuse though because I don’t see the point. The only reason I’m [opting for Bolt instead] of going to take a bus or taxi at the junction is so that I can report if anything happens or my friends know the details of my car and driver at least,” she concluded.

Lower costs for Bolt rides in Abuja raise questions about equity

Bolt rides are cheaper in Abuja than in other cities like Lagos, which is due to lower operational, regulatory, and taxational costs, according to the company. However, the price of fuel in both cities is the same, forcing drivers in Abuja to question the fairness of the situation.

“Our peers in Lagos are earning way more than us,” Austin, a bolt driver in Abuja shared as we waited for the traffic light to turn red. “I have friends there and know how much they earn per trip. Here, you do a trip of 30 minutes and Bolt charges ₦2,000, out of which I have to give them a commission. How much do you think I spend on fuel in a day?” he asked rhetorically.

According to Charles*, another Bolt driver, conducting offline trips is the only way to earn a profitable income with the ride-hailing app in Abuja.

“After buying fuel at a high rate of ₦630 per litre, and Bolt takes their 25% commission from every trip, amongst other expenses, how much do we have left?” he questioned.

According to him, certain customers willingly opt for an offline trip because they are aware that the job no longer provides adequate earnings for the drivers. However, he has also come across customers who decline offline trips due to concerns about their safety.

“Sometimes, I don’t ask. I have my way of doing it,” says David* when asked about the responses he gets from his customers after asking for an offline trip. “I can run an offline trip without you knowing and it will show on your phone that the trip is still on. Most customers don’t agree to do it because they feel unsafe, so I don’t bother asking,” David shared.

*Names have been changed to protect the identity of anonymous sources.

On Monday, the Lagos state government launched its blue line, a 27km intra-city line connecting Okokomaiko to Marina and the first light-rail system in the city. Governor Babajide Sanwoolu was one of first passengers on Monday on a light rail system that has only been partially delivered after its conception in 2008. Yet the blue line will still have to wait four weeks to be electrified while it is still in testing phase, said the Lagos Metropolitan Area Transport Authority (LAMATA). Presently, the train is pulled across its electric tracks with a diesel locomotive.

LAMATA told TechCabal that the situation is temporary. “What I don’t want us to be saying is that it is not electrified because people may want to run across the tracks,” Abimbola Akinajo, LAMATA’s Managing Director said. “The tracks are currently electrified.” 

While the blue line waits, to be electrified, the 37km red line, which is expected to be operational by the end of the year, will run on diesel. The red line stretches from Agbado to Ebute Meta and connects with the blue line at Marina. 

While the blue line will eventually have eleven stations, only five stations from Mile 2 to Marina, have been launched as phase one of the plan. Akinajo said the second phase of the blue line comprising six stations from Okokomaiko to Festac would be completed in three and a half years. “What we really want to do is add two more stations. We would include Alakija, Festac and bring that into operations in 18 months.” 

The Blue line is not open on both sides but currently operates like a monorail from Mile 2 to Marina. According to LAMATA, the both sides of the railway will work jointly once it is switched onto electric.

Passengers worry about the price point

Three passengers told TechCabal that they love the experience; the average travel time from Mile 2 to Marina is 20 minutes with a last mile provision at Marina to take you into Falomo, TBS  and Victoria Island. However the price point is still a concern. While a ticket from Marina to Mile 2 is N750, the state government is providing a 50% discount until the end of the year. Akinajo said the system must generate enough to sustain itself. “Let’s start with what we have,” Akinajo told TechCabal. “Transportation is important. When we are able to move, the economy of Lagos grows.”

In its unelectrified state, it carries a thousand passengers. The train is expected to carry 175,000 passengers daily with five stations in operation and will 500,000 passengers when the blue line is fully complete.

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In October 2022, ShapShap, an Abuja-based logistics company, won the Supernova Challenge Pitch competition at the Gulf Information Technology Exhibition (GITEX) in Dubai. The competition, one of the biggest pitch competitions in Africa, Asia and the Middle East, comes with a prize money of $8,000, which the startup used to facilitate some of its expansion plans. ShapShap, founded in 2019 by Khalil Halilu, has two offerings: a logistics app for drivers and vendors and an e-commerce app for vendors, with features ranging from delivery logistics to routing and payments. 

TechCabal spoke to Halilu about the challenges of running a logistics startup in Nigeria today and what opportunities for growth exist.

How did you come up with the idea of ShapShap?

KH: Logistics is something that moves everything. I was privileged to experience smooth logistics services while in school abroad. So when I came back to Nigeria, I thought investing in making deliveries easier was essential. There are a lot of SMEs in Nigeria, and commerce, primarily e-commerce, is thriving here. We must build a working system to enable products to move from retailers to consumers as seamlessly as possible. I saw a huge opportunity and threw my hat in the ring.

What have been some of your biggest challenges in four years of operations?

KH: I frequently tell people that I don’t envy anyone in the logistics industry because of the challenges. There are many of them, in terms of poor government policies, operational costs, and infrastructural deficits, but the biggest for us is the human element. By human element, I mean getting people to work effectively with the resources provided because that is within our control. You build a technology, and the riders use it differently or decide not to. We have riders who try to beat the system by bypassing payments, trying to get fake ratings etc. We don’t have the best work ethic here in Nigeria.

Another challenge that rocks the industry is government policies and the lack of regularisation. There are a lot of players in the industry and no clear guidelines on how to enter or operate properly. Anyone can start a logistics business, as all it takes is to buy a bike, open an Instagram page and set prices. These people you’re competing with, and the customers on the other end don’t care. They want the cheapest prices.

What is ShapShap’s strategy for improving the quality of customer experience?

KH: Our unique strategy focuses on our riders and keeping them satisfied. We value our riders because they’re the business drivers, literally and figuratively. We try to make the work attractive in terms of salary, which helps us attract quality staff. We also approach it like any other job, there are growth opportunities, and we incentivise riders with bonuses so that they know that it’s a real job with a future rather than a transit job they’re doing to pass the time.

What do you hope to see in the next few years in the logistics space?

KH: I’d like to see better policies in place. We need better policies to support entrepreneurs because few are currently on the ground. We’re dealing with the effects of the fuel subsidy removal and high exchange rates. All these repel investors from putting their money into the country because they don’t know what they will wake up to the next day.

What are the growth opportunities for ShapShap?

KH: Africa has one of the fastest-growing populations in the world. We also have a booming e-commerce market, which makes last-mile delivery crucial. A lot of upcoming e-commerce platforms are looking for fulfillment partners that are already established, to take the headache of last-mile deliveries off their hands. We have over 400 riders and have completed tens of thousands of deliveries already, so we have the background required.

We also want to collaborate with as many other logistics providers as possible. We’ve collaborated with Red Star, one of the biggest logistics companies in West Africa. We are also working on collaborating with Max to give us access to electric bikes for our riders. Collaboration is one of the fastest avenues for growth, and we don’t play with being able to leverage another organisation’s strength. We’re constantly looking for partners and companies with the same values to expand into other African cities and ride the current economic recession together.

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Governor Sheriff Oborevwori of Delta state, in south-south Nigeria, is forming a committee to explore the use of electric vehicles for mass transportation. This decision comes after the federal government removed fuel subsidies, causing the cost of fuel to almost triple. The subsidies were discontinued because they were becoming too expensive, costing the country about ₦4.3 trillion last year. As a result, transportation costs have risen, increasing commuting expenses, and forcing those who can’t afford it to walk to their destinations in various parts of the country.

Governor Oborevwori announced his intention to form the committee after test-driving two electric vehicles locally assembled by Nigerian mobility technology company, Jet Motors. He said, “The electric vehicles are cheaper; the only thing is that we are still studying this model and we are coming out with our own decision very shortly, to know whether to go in that direction, especially with the present hike in petrol price,” during the announcement.

In February, Jet Motors announced that Nigeria’s federal government, through the National Automotive Design and Development Council (NADDC), had acquired some of its electric vehicles along with their charging infrastructure. According to the Chairman of Jet Motors, Chidi Ajaere, electric vehicles are more affordable to manage. He stated, “The two biggest cost drivers for transportation are the cost of maintenance and cost of fueling but with electric vehicles you eliminate the cost of maintenance and the cost of petrol thereby reducing the cost of transportation by almost 80%.”

The day before Oborevwori’s announcement, Governor Dapo Abiodun of Ogun state, southwest Nigeria,  promised to provide electric-powered motorbikes for those who rely on them for transport. This will be “a way of easing the financial pressure orchestrated by the increase in fuel price,” he wrote in a tweet.

The country’s state governors and its federal government have also introduced palliative measures to lessen the burden of higher transportation costs. Governor Babajide Sanwo-Olu of Lagos state reduced fares of BRT buses by 50% and fares of danfo buses by 25% on all routes. Additionally, President Bola Tinubu secured approval for a ₦500 billion palliative to cushion the brunt of his economic revival measures, including the removal of fuel subsidies. Ironically, this amount is nearly equivalent to the money spent on fuel subsidies in 2019 (₦578 billion).

In  Lagos, a city filled with people and bursting at the seams, food delivery is a difficult process, often hectic and fraught with frustration. Delivery companies and their riders have to navigate terrible road conditions, inaccurate map locations, and worst of all, Lagos’ notorious traffic congestion. For most of the city’s residents, ordering food online and receiving a prompt delivery are not a given. 

“I would say that it has been traumatic and has been a huge test of my patience. Food delivery is terrible. That’s if you ask me,” said Femi Adetuberu, a finance expert and frequent user of food delivery services in Lagos. According to Adetuberu, ordering food online in Lagos has not been easy for him, especially when he is famished and expecting instant food delivery. He strongly believes the reason for this is a disconnect between the restaurant and the delivery personnel. “You meet a delivery person who feels they are doing you a favour or the attitude seems like they are doing you a favour. You get messages like Oga you are the only one eating this kind of thing, anything for your boys? Help us. The amount we get from this job is small. It occurs every time. If I want to order, I already know I will deal with delivery personnel that will be unprofessional,” he said. 

Another Lagos resident, Uzor Gift, has lost all trust in on-time food delivery. “I order when I need it the most. Imagine waiting  two hours for something that should have come in 35 minutes. And you’re hungry,” he exclaimed. All through 2022, Gift refrained from ordering food online and only resumed this year, still unsure of improved service delivery. 

According to QSR Magazine, digital ordering and delivery have been growing 300% faster than dine-in traffic since 2014 and such, timeliness is an important aspect of food delivery patterns.

Data by the National Bureau of Statistics (NBS) revealed that Lagos residents spent N830 billion ($2 billion) eating out in 2019, representing 34% of total food expenditure. Similarly, Jumia Food in its 2020 Nigeria Food Index Report highlighted Lagos and Nairobi as the leading cities in terms of food order volume. However, for many customers and food vendors, the challenge remains prompt delivery and swift turnaround times for food orders. 

The Lagos traffic situation

In 2021, a Lagos-based research institute, Danne Institute for Research (DIR), revealed that the state was losing about ₦‎4 trillion annually as a result of its notorious traffic congestion problem. According to the report titled “Connectivity and Productivity Report”, the economic cost resulted in 14.12 million hours wasted as people commuted to work every day.

The founder and executive director of the DIR, Professor Franca Ovadje, explained that long commutes between home and work, among other factors, are a major cause of unending traffic jams in Lagos.

Ovadje said, “We found that the cost to individuals of traffic congestion is N133,978.68 per annum for those who own their vehicles, and N79,039.40 each year for those who use public transport. The total loss to Lagos is estimated at 14.12 million hours per day, or N3,834,340,158,870 per annum.”  

However, the state commissioner for information and strategy, Gbenga Omotoso, denied this. During a stakeholder engagement in January 2022, Omotoso argued that it was unfair to say that individuals or tourists lost significant man-hours while plying the state roads.

Despite Omotosho’s disagreement with the statistics, the average Lagosian’s experience with food delivery suggests that there is still a connection between the traffic congestion and food delivery time. Patience Lawal, a food vendor, told TechCabal, “For me, I make sure my customers place their order 24 hours before delivery. Oftentimes, it’s the dispatch riders that give us stress. They come late and even if they come on time, they don’t deliver at the stipulated time the customers want.”

Cost issues and lack of communication affect delivery times 

Deborah Johnson, who owns and operates a confectionary business, admits that cost and communication are huge challenges when it comes to food delivery. “My experience with delivery firms generally is bad communication, especially in Lagos. In Lagos, it is terrible and unnecessarily expensive. I get Lagos is expensive itself plus traffic, but bikes can literally enter anywhere so deliveries shouldn’t be so slow. And the prices are ridiculous,” Johnson stated.

She recounted a certain experience where she hired a delivery service to drop off small chops for a customer and the rider was harassed by the police. She explained that she was agitated about the incident as she wanted to deliver good service to the customer and effective communication from the delivery service to her could have fixed that issue.

VisCorner.com estimates deliveries to cost between  ₦700 and ₦10,000 per parcel for items below 5kg. Within Lagos, the deliveries could range from ₦700 to ₦3,000 using a dispatch rider. Adetuberu says the average delivery cost for his meals is pegged at ₦2,500. However he feels the pricing is fair. “The dispatch guys are actually daredevils; they are one of the fastest means of getting things across in Lagos. So, of course the pricing reflects that added advantage,” he said. Operations lead at Eden Life, Presley Tukpe, reveals that the cost of pre-ordered meals with delivery options is ₦3,950. 

Dealing with regulation

In 2020, the Lagos state government prohibited commercial motorcycles, including bike-hailing startups, from operating in specified areas of the state. Several bike-hailing startups including Gokada, ORide, Max.ng, and SafeBoda were affected and had to reconsider their business models. Last December, Safeboda left Nigeria in hopes to deepen its “core transportation offering” in Uganda, its largest market. In a statement made available to TechCabal, it said Nigeria was not economically viable and still required more investment in the bike-ride hailing business. In 2019, OPay put out a similar statement, acknowledging the impact of the ban on its ride-hailing solutions and the pause of ORide, OCar and OExpress. Till date, none of those businesses have reopened. Gokada, on the other hand, laid off 80% of its workforce and pivoted from ride-hailing services to logistics. 

However, some businesses chose to weather the storm. For example, Metro Africa Xpress (MAX.ng) has not completely disappeared from the scene. Last year, it announced plans to raise $100 million by 2023 to deploy its green mobility solutions in ten countries across the continent including Cameroon, Uganda and Egypt. 

Till date, the Lagos State Government has continued the clampdown on bikes, making the operations of delivery services difficult and complicated. The current Lagos state governor Babajide Sanwoolu announced a total ban on the operation of commercial motorcycles in some local governments (LGs) and local council development areas (LCDAs) effective June 1, 2022. According to Omotoso, commercial motorcycles, popularly known as okada, are not in the transportation master plan of the state. 

Pierre, reacting to worries about regulation, said that Glovo has always been in sync with the authorities to avoid any issues. He stressed the desire for the firm to liaise with the Lagos state government authorities in that regard. 

How businesses are turning the tide

Founder and CEO of Glovo, Oscar Pierre, admits that fast delivery is a global want. “In Tokyo, New York, Barcelona, or Lagos, you will find customers that want to get food and products delivered very fast and at a cheap price,” Pierre said. However, he notes that there are teething problems with delivery in sub-Saharan Africa, which stem from underdeveloped infrastructure; poor roads, unstable electricity, and heavy traffic in the region. 

But according to Pierre, all hope is not lost. “None of that stops us from building this value proposition of convenience. In Lagos, a very large majority of orders, close to 80-90%, are delivered below 45 minutes. That is quite convenient even though we can do better. If you go to Barcelona, you see the service works even better. The thing is that the bicycles and motorbikes skip the traffic,” he concluded. 

Proper planning, time management, consumer patterns to the rescue

The recent World of Statistics survey ranked Lagos as the worst traffic city in the world in 2023. Some startups like Eden Life are successfully navigating this situation with clever solutions. Eden operations lead Presley Tukpe recommends planning and understanding consumer metrics as the key to succeeding against the traffic. Delving into the key success factor for Eden, he said sending out all deliveries at least two hours ahead is one way of improving the odds of completing deliveries on time and reducing the risk of running into problems with law enforcement.  

“Ecommerce platforms have vague ideas when orders come in. What we have done at Eden Life is to properly estimate the number of riders needed for pre-orders. For same-day orders, we have been able to estimate when customers order for breakfast, lunch and the location they order to. We have to ensure everything that is needed is cooked, packed and ready to be delivered. Anything that will be delivered by 11 am, we work backwards to know that all the meals are ready by 8am, cooking is done by 6:30, and riders are on their way by 8am. We use the rider going to the farthest distance and most orders and then closest customers,” he explained.

This proves that despite the attendant issues that exist regarding deliveries, business can tweak their models to weather the storm.

According to Google, this feature will save users the stress of following individual tracking links for all their orders, as they will be able to see the status of their deliveries with labels like “arriving tomorrow,” “in transit,” and “delivered today.”

Google is launching this product at a strategic  time, with Black Friday deals and Christmas orders—both of which account for almost 15% of all retail sales in the US– set to begin in a few weeks.

“In the coming weeks, Gmail will show a simple, helpful view of your package tracking and delivery information right in your inbox. For orders with tracking numbers, Gmail will prominently display your current delivery status in your inbox list view and in a summary card at the top of individual emails,” Google said in a post.

“Package tracking will be available across most major U.S. shipping carriers and will provide important details at a glance, such as estimated arrival date and status — like ‘Label created’, ‘Arriving tomorrow’, or ‘Delivered today’.” the post reads. 

Users can opt in to receive logistics tracking updates from their inboxes or in Gmail settings, after which Gmail automatically checks for the statuses of all orders with tracking numbers. A status banner showing the package status and order details is placed in the order confirmatory email—at the top of the message. 

However, this product may not be feasible for users who order through Amazon, the global ecommerce behemoth. Speaking to the Verge, a Google spokesman maintained that Amazon’s email format does not allow Gmail to show the tracking information for orders placed through the ecommerce giant.

According to him, the feature will only be available when a merchant includes the tracking number in the email sent to the customer. This shuts out a wide pool of shoppers from using the Gmail feature as Amazon is the go-to ecommerce site for millions of American adults, 70% of which are Amazon Prime members. 

With this foray into logistics tracking, Google is positioning itself in competition with logistics products that help to track products, such as the Deliveries app.

The disgruntled drivers down tooled and took to the streets of Nairobi to air their grievances, leaving thousands of passengers stranded and forced to pay higher fees as prices surged due to ride scarcity. 

The drivers are accusing the country’s transport regulator, the National Transport and Safety Authority (NTSA), of deliberately slowing down the implementation process of the regulation since it was gazetted in June. Rhayn Kanyandong, chairman of The Digital Partners Society (DPS), a coalition of ride-hailing drivers, blamed the NTSA for failing to implement the regulation for over  90 days since it was enacted. 

The regulation, which was a product of a previous driver’s protest, has been in the works since 2016 and seeks to cap commission charges at 18%. Currently, the ride-hailing platforms in the country, Bolt and Uber, charge 20% and 25% commission per trip respectively. 

The slow implementation process is unsurprising considering that Uber, in a bid to protect its earnings, went to court to annul the regulation.

Uber holds the view that this regulation will derail growth and discourage investments in the country. “The introduction of 18% as the ceiling for allowable commission has the potential to stifle innovation and reduce the petitioner’s economic feasibility of investing in the market,” Uber’s petition stated. 

“Uber is not against the NTSA regulations; we believe that they will be effective in streamlining the sector. However, we are against the capping of the commission. It will cut our revenue and force the company to reconsider its investments into the country,” Uber’s Kenya Country Manager, Brian Njao said in an earlier interview.

Protests by ride-hailing drivers against commission charges are not new on the continent. In August, South African drivers protested for a reduction of Uber’s commission from 25% to 10%.

This places pressure on manufacturers to move their goods at the lowest cost possible, and on cash-strapped truck owners to raise their prices. What’s more? Manufacturing companies wait for days and weeks to book available trucks to move their goods, and even when they do, they have to pay high fees to these truck owners. 

Sehinde Afolayan, an entrepreneur with over a decade of experience in the logistics industry, was operating Astem, a brick-and-mortar commodity trading and haulage business. But soon he realised that the process was tacky and non-profitable. 

“The whole process was tacky. Manufacturing companies source for trucks that will offer them lower costs, which is technically the right thing to do. But, in terms of sustainability of their distribution that has been affected, because they have to wait for a while before they get those kinds of trucks because they’re not readily available,” he told TechCabal. 

Afolayan, who had bought 20 trucks over the years, was constantly being asked to reduce his price by manufacturers then he discovered he wasn’t going to break even in this kind of environment. “The number one challenge that I saw was the demand and supply mismatch. It was very terrible, nobody was actually getting anything. They have to wait 72 hours or up to a week without seeing trucks to move their goods. Truck owners are cash-strapped and on the verge of closing down, because they’re not getting enough revenue,” he recalled. 

After Afolayan discovered this “demand and supply mismatch” he sold all of Astem’s trucks and started thinking about how he could use technology to optimise the process.

Afolayan (now CEO), after brainstorming for weeks with would-be co-founders, Akindele Philips and Toby Obasa, launched Haul247, a digital logistics startup during the pandemic, and started taking orders from FMCGs and manufacturers. They wanted to book trucks to help transport their goods to different locations in the country. Months after launch, the company couldn’t keep up with orders as it was overbooked.

Other manufacturers, such as multinationals Unilever, Nestle, and PZ Cussons, are known to have a 60-80 day payment circle, but by offering them efficient service and ensuring truck drivers get paid within 14 days, Haul247 has created a place for itself in the industry. 

A game-changing warehousing service

In a bid to differentiate itself and optimise profit, Haul introduced warehousing services to its haulage service. By doing so, it has increased its efficiency for manufacturers by allowing them to store goods in different regions in the country before they are ready to be moved again. By bundling its warehousing service with haulage, Haul247 becomes a distribution centre that helps reduce turnaround time and provides a cheaper cost for manufacturers.

Haul247 like every other on-demand logistics company pays its truck drivers an advanced payment of up to 50% or 60%, and when the goods are delivered, it completes the payment.

With its business model including its warehousing service, it has been able to snatch up important customers from its competitors. This is because it is less stressful and cost-effective for manufacturers to use one vendor for both haulage and warehousing services. This also makes the exchange of data on the business needs of the manufacturer for both services seamless. And unlike warehouses that require suppliers to pay for a minimum of six months or a year, Haul247 charges suppliers based on the duration of usage.

Tightening cost

Haul247 has tightened up its vetting process and ensures that trucks are road-worthy and drivers are fit before deployment. Afolayan explained that the company hires logistic analysts who inspect the trucks with mechanics and certify them road worthy. They also operate a database of truck drivers, owners and trucks and other relevant data. After the necessary checks, the company also has a mandatory insurance policy for all drivers on its platform and deducts it from their revenue. 

Haul247 started bootstrapping during the pandemic, but it wasn’t until last June, after raising its pre-seed of $100,000, that it began operations fully. Haul247 business model involves connecting suppliers’ goods to available trucks in the area. This helped reduce the turnaround time and get the trucks to suppliers within 24 hours. 

Delayed payments are one of the issues that logistics marketplaces face, Haul247 is tackling it at the negotiation stage and has maintained a 14-day payment period since launch. 

It’s constantly updating its clients on price changes, especially in the face of rising energy costs. 

Since its launch, Haul247 has been focused on maintaining strong unit economics which has helped it become a growing success. The startup has onboarded 14 big enterprise businesses and over 1,000 trucks.  It also currently possesses Over 150,000 sqm of warehouse space. According to Afolayan, the company has maintained a 20% gross margin month-on-month. Despite having processed over 2,00 trips, Haul247 has had only three insurance claims.

With competitors like Goldman Sachs-backed Kobo360 who have invested $4 million in building an insurance product to extend credit to drivers and cover for defaults, driver misbehaviour and risks of goods-in-transit, Haul247 is not looking at credit financing at the moment, because it can’t gauge creditworthiness. Its CEO expressed that it is simply unable to take such a risk at the moment. 

Haul247’s business model involves connecting manufacturers via its platform to the nearest truck driver. After the order has been accepted by the truck driver and loads the goods, the company’s logistics analyst scans the goods to the platform before the finance team makes an advance payment to the truck driver. Finally, the recipient confirms the delivery of the goods. 

FMCGs and manufacturers can use the platform to request warehouses by selecting the location, the size, the type of product that you want to store, and then the available warehouses around that location pop up. They can either select and then the system picks that and then Haul247 starts working with the request. 

Last month, Haul247 was one of the African startups selected for the Google Startups Black Founders Fund. Haul247 will use Google’s equity-free funds to deepen product development, bring in more talent and altogether remove human interference in its next build. “So instead of any driver being able to carry paper documents, or no, you won’t, you won’t need to do that. Or you just have all while you harm yourself, which is the code is the, you know, the load code.”

Haul247 has concluded a seed raise and is looking forward to announcing it next month. Afolayan hinted that talent acquisition is one of the things that this round will help the company with. 

“All my life, I’ve always been an entrepreneur. The next word for entrepreneurship is “risk”. So, that means that all my life I think I’ve been managing risk. By the grace of God, I’ve been very successful so far. But I think the [recipe for success] will be the idea itself, and the fact that the logistics industry in Africa is still very traditional. If you push the process to be seamless and can be a win-win situation for both the shipper and the transporter,” speaking on building a logistics startup when other startups in the industry are laying off and changing their business model.