Oh No! 1M More Trucks on Nigerian Roads!

As you may know, Kobo hosted the annual Logistics Professionals Conference on Thursday, August 17, 2017, at Villa Angelia Hotel in Victoria Island, Lagos. Being a former Investment Banker, I took the event as an opportunity to analyze the market needs of the logistics industry using the conference attendees as a sample. We were privileged to have close to 253 logistics industry professionals in attendance and we asked if they would be willing to take a brief survey. Of those in attendance, 100 took our survey in which we asked if the company they represented could be classified as in demand for haulage or in supply. We also asked how many trucks their company needed or could supply. Here’s what we found:

So, of 60 companies represented, 63% need haulage services while only 37% can provide these services. As if the 26% gap isn’t enough, the number of trucks needed versus the number of trucks available is just stark! 12,300 trucks needed with only 2,109 trucks available! Only 15% of haulage demand in a room of only 100 professionals can be met! If you expand this out to the whole of Nigeria, you’re looking at putting 1 million more trucks on the roads to meet current haulage demand! With haulage growing at a rate of 37% yearly, by 2020 we will need 2.1 million trucks in Nigeria alone!

Let’s even assume that these 12,300 trucks are needed for just 1 trip per week. At an average cost of N300,000 per trip, we’re looking at revenue of about N14.8B for whoever can meet this demand! These charts clearly show the problem we have in Nigeria logistics – suppliers lack the capacity to meet demand.

We can safely say that Dangote Group probably has the biggest capacity for haulage in all of Nigeria, and currently, they only have about 10,000 trucks. A whole Dangote Group doesn’t have enough capacity to meet the demand for a group of 100 logistics industry professionals! It’s crazy! Which is probably why he signed a deal with Sinotruck to begin assembling trucks in Nigeria, earlier this year. The Dangote/Sinotruck plant will assemble 10,000 trucks per year, but the reality is, if haulage suppliers can’t afford to buy these trucks, the problem with capacity will never be solved. I think there should be a sensible leasing or financing structure in place for the trucks coming out of the plant. If not, you can be sure that Nigerians will find a way to close the capacity gap however they can, and without a solid financing structure, it will mean haulage companies buying used trucks or patching up worn down trucks and endangering the safety of drivers, goods, and the public. I hope this data can convince one or two banks to seize the opportunity to do business in this huge market and ease these pains for my fellow logistics professionals.