Buzeki: A Leading Transport and Logistics Services Provider in Kenya

Interview with Kiprop Bundotich, Founder and Executive Director of Buzeki Logistics

What is your assessment of the transport and logistics sectors in Kenya?

The logistics and transport industry in Kenya is a vibrant and lucrative business, supported by a consistent economic growth, pegged at 5.5% annually and ambitious infrastructural development undertaken by the jubilee government. Economies of the landlocked countries within the Great Lakes region are also expanding exponentially, thus positioning Kenya as a transport and logistics hub.

Growth trend of the industry has been gradual for the last 10 years, but has accelerated within the last 3 years. Several factors could be attributed to this phenomenal growth; construction of Standard Gauge Railway (SGR) and ongoing tarmacking of 10,000Km within the country.

Discovery of oil by the UK-based Tullow Oil within Turkana region has also presented enormous business opportunities for logistics companies. Definitely, Kenya’s transport and logistics industry is on the rise positioning the country as a regional logistic hub.

You founded Buzeki Logistics in 1999 to provide a wide range of transport and logistics services in Kenya and the larger Great Lakes region. Tell us more about Buzeki Logistics.

Buzeki Logistics product portfolio mainly is in bulk cargo discharge and handling, constituting 80% of the total business volume. Our first client, Lafarge offered us a bulk cargo handling assignment, defining our nature of business.

I founded Buzeki Logistics in 1999, literally starting with one truck to our current fleet of 400 prime movers. This would be referred to by many as ‘from rags to riches.’ Shareholders of the company are myself, Daina Bundotich and Evelyn Kiprop Bundotich. Buzeki Logistics is an entire family business offering direct employment opportunities to over 1,200 employees. Buzeki Logistics aspires to be a global logistics leader providing truly integrated supply chain solutions with customer focus, employee participation, technology, innovation and environmental consciousness. We offer solution-driven, creative and innovative corporate cargo transport and hardware solutions in the most efficient ways.

Venturing into transport and logistics business was a deliberate diversification strategy of our milk distribution business, targeting high-value contracts from blue-chip companies and government agencies; global and well-established brands especially those in the cement manufacturing sector e.g. Lafarge, East African Portland, Mombasa Cement and government institutions, for example National Cereals and Produce Board, where we have serviced NCPB contracts in distribution of fertilizer to farmers.

Buzeki Logistics portfolio includes bulk cargo discharge and handling, transfer of loose cargo, containerized cargo and abnormal cargo. Kindly provide an overview of the main areas where the company operates.

Buzeki Logistics product portfolio mainly is in bulk cargo discharge and handling, constituting 80% of the total business volume. Our first client, Lafarge offered us a bulk cargo handling assignment, defining our nature of business. Today, Buzeki Logistics is celebrated as the most preferred bulk cargo handler in Kenya.

Buzeki Logistics has established infrastructure that provides extensive open storage options; storage capacity of 500,000m² in Mombasa and 300,000m² within Eldoret town. Our reputation is founded on developing intelligent and tailor-made solutions for our diversified blue-chip customers by leveraging processes, people, technology and infrastructure, and the strength of our strategic partnerships and alliances with leading technology partners. In addition, Buzeki Logistics delivers intermodal logistics and supply chain solutions, exploiting the optimal transportation mode to deliver in line with our customers’ specific needs.

Our cross-docking efficiency increases delivery speed and reduces storage costs. Buzeki prides itself on its track record in inventory management, which includes hazardous inventory and vendor managed inventory management. We always deliver bulk cargo to your doorstep, as you would love it.

What are some of Buzeki’s most significant success stories, other than being contracted by international companies such as Lafarge?

Buzeki Logistics is a leader in road safety. Lafarge has accredited, recognised and rewarded Buzeki as a safe carrier. Buzeki has been awarded first category award in road safety by Kenya Association of Insurers for 3 consecutive years. Our road safety record and efficiency of our systems has played a role in enhancing branding equity for our clients.

This award is a testimony that Buzeki has created structural efficiencies in its logistic operations which no other transporter, has achieved, that has made us distribute fertilizer to NCPB depots all over the country ensuring farmers receive quality fertilizer on time to support Kenya’s mainly agro-based economy. This role gives us inner satisfaction and ‘a good-feel factor’ we consider as our Corporate Social Enterprise (CSE).

You mentioned fertilizer distribution as a part of your company’s CSE role. Do you undertake any other CSE initiatives?

Our company’s fleet of 400 prime-movers, daily on the road results to massive carbon emissions. To reduce the carbon footprints, Buzeki Logistics have undertaken to plant 1,000 trees annually for the next 5 years, an exercise I personally participate and coordinate. We are the humming bird, when it comes to creating the ‘green economy’.

As a company, we also support bright orphaned students to undertake their studies by offering them financial support and sponsorships. We also support youth sporting programs especially in athletics and football. At Buzeki, we always believe in giving back to the community.

What are the main challenges to be faced by Buzeki Group on a daily basis, as well as the challenges of the transport and logistics sector in general? And what is being done to overcome these challenges?

The industry is not properly regulated: it lacks a regulatory framework to govern the businesses and a multi-stakeholder involvement would be critical in addressing specific industry challenges. A unique trend in Kenya is that most of transport and logistics companies in Kenya are family-owned. There being few policies to regulate businesses, results in foul-play and underhand tactics denying the operators long-term value for their investments.

The industry requires Regulations and a Code of Ethics to achieve self-regulation and governance. Such challenges as random and sporadic transport rates and fragmentation of the industry dilute all the gains the sector has accrued over the years. Operators with no regular clients give one-off poor rates that do not result to profitability, leading to bankruptcy.

The Ministry of Transport in conjunction with Transport Association of Kenya through a multi-stakeholder involvement would be formulating policy to achieve a universal charge card for all operators in Kenya.

Last year, I was elected the Chairman of Kenya transport Association for a period of 2 years and I will be spearheading this process. For new entrants, a basic minimal threshold should to be set up for clients to enjoy economies of scale, greater efficiency and competitive pricing.

So I understand that the Kenya Transport Association has a lot of work to do?

As an association, our in-tray is full and as the Chairman, I will expedite my role within my mandate during my tenure. We will endeavour to accomplish key milestones, such as development of the policy framework and Code of Ethics. With multi-stakeholder participation, these objectives are within reach. Certainly, we have a lot to do.

How would you define your strategy in terms of expansion plans, given that you not only provide services in Kenya, but also in the broader region? What are your plans for the future?

The future of Buzeki Logistics is bright. It may interest you to know that Kenya would be joining the prestigious club of oil producing and exporting countries in 2017. By June, 2017, the first oil tanker would be leaving Turkana by road via Eldoret for Mombasa port by rail. Our strategy as a company is to position ourselves well for this unique emerging business opportunity; transportation of crude oil, a completely new and exciting growth trajectory.

As a company we are focusing on emerging retail distribution that requires specialised and well defined logistics. Global brands, for example Walmarts and Carrefour are penetrating Kenyan market and would be requiring efficient and cost-effective retail distribution transport service provider. Buzeki Logistics comes in handy; we are positioning ourselves to take advantage of this emerging business opportunity.

Are you looking for any kind of partners or investors, in order to implement this strategy?

Finding the right partner for most business venture has always proofed hard, but partnerships and mergers continue to be executed globally. Buzeki Logistics may not be an exception. However, right partner may not necessary inject millions of dollars to the business, but could provide unique technical expertise or bring onboard vast business networks.

In the short-run, our main focus is to maintain Buzeki Logistics as the most preferred logistics service providers within the Great Lakes region. Partnerships, strategic investors, mergers and acquisitions are cards-not-on-the-table at the moment.

Is there anything else that you would like to add that we have not yet talked about?

Let me talk about emerging business opportunities, what I would refer as ‘low-hanging fruits’ within the Great Lakes region that would lead to unprecedented economic growth.

The Lamu Port and the Lamu – Southern Sudan-Ethiopia Transport Corridor(LAPSSET) project will be a game-changer – Kenya remains the originator of trans-boundary transport projects and as Ethiopia having a population of over 90 million people will get connected to the Lamu, any business-conscious transport and Logistics Company must start exploring this emerging opportunity.

There is a real-estate bubble in Kenya; Kenyan skyline is being decorated by skyscrapers at a very high rate, especially in areas within Nairobi County. In Kenya, the construction industry contributes 12% of the GDP. Growth in the real-estate sector in Kenya is projected to remain positive for the next 7 years. Any transport and logistics company worth its salt would be positioning itself to support the growth within construction industry.

Multi-billion-dollar Standard Gauge Railway stretching from Mombasa via Kampala to Kigali, Rwanda is another opportunity to big to ignore. The project presents huge business opportunities to benefit the entire Great Lakes region (Kenya, Uganda, Burundi, South Sudan and Rwanda) with a population of 240 million people and a massive market for our goods and services. Transport and logistics companies within the region must strategically position themselves to reap profits from the accrued benefits of the Standard Gauge Railway.

While the SGR will not deliver goods to the last mile; efficient road transport distribution system should be in place to support the rail network.

Considering some global trends, UK has one of the most modern railway systems but statistics indicate a significant rise of good transported by road. Compared to 2014, 2015 saw an increased in 1.6 billion tonnes of goods transported by UK registered heavy commercial vehicles.

This is a clear indication that even with a well-developed rail system, road transport and logistics system remains vibrant. There is no cause for alarm for sector players within the region, the future is bright. As Buzeki Logistics, we continue to take our rightful role in providing cost-effective and quality logistics and road transport services.