Road Transport Industry in Mozambique: Transportes Lalgy

Interview with Luis Junaide Lalgy, Managing Partner at Transportes Lalgy

Could you give us your view on the transport sector at the moment, as well as your outlook for the future?

First of all, thank you for the opportunity to share some insights with you about the transport industry, especially in this country, but I will go further and talk about the transport industry in the broader region.

Over the last three years, due to the global market situation, the transport sector has unfortunately been significantly affected, especially if we’re looking at large volumes of cargo, such as commodities. Commodity prices dropped, and consequently most of the companies that focused on that sector, by transporting bulk cargo, have been significantly impacted. Particularly inside the country, even if the country is not isolated from what’s happening in the region and globally. Essentially, we have seen how the larger projects have reduced their production, which has translated into lower commodity volumes to be transported.

As you may know, a large project does not only involve what is being produced, but everything related to the project: in terms of providing services to support it, as well as different types of goods to feed the project in question. Reducing production means fewer people working, as well as reducing their demand for services in the market, all of which has had a significant impact on the volume of work.

I would even say that the transport industry in Mozambique has developed a good deal over the past 10 to 15 years, whereas there were previously no real solutions in place, in terms of logistics. We have recently seen companies with the necessary capabilities to service major projects, not to mention being able to provide transit cargo to inland countries. All these companies, with a significant number of trucks and large fleets, have felt the pinch.

Again, the signs are still not good, but that’s the way it is. You can’t expect things to stay on a permanently high note.

Could you give us an overview of Transportes Lalgy? Why should people choose Lalgy instead of another company?

Over the past years, we have diversified the type of services we’re able to offer our clients. Lalgy has four divisions, namely: bulk cargo, a tanker fleet – which transports fuel and vegetable oils –, along with general cargo and the heavy loads of normal cargo. This is probably one of the factors that helped boost our company’s reputation, given that when clients approach us, we’re always able to provide them with ready solutions.

In this regard, we have always sought to follow the country’s growth and needs, in terms of the kind of services required, in order to provide these to our customers; not only in the country, but also in the region. I remember moving huge amounts of fuel over the past few years into the Democratic Republic of the Congo. I would say the fact that we operate in the entire region is one of the reasons why clients find it easier to contact us.

Over the past years, we have diversified the type of services we’re able to offer our clients. Our company has four divisions, namely: bulk cargo, a tanker fleet – which transports fuel and vegetable oils –, along with general cargo and the heavy loads of normal cargo.

Where is the furthest you go?

The furthest point would be the DRC, but we cover transportation to countries like Malawi, Zimbabwe, Zambia and sometimes even Namibia.

Could you give us an idea of the challenges that a company like yours may be facing?

One of the major problems, not just for the company but also for the industry as a whole – and I would go even further: not only in the transport industry, but also as a general common problem – is the human resource issue. Low qualification levels among staff amount to one of the key problems, along with the added problem of people’s mentality. This means you often have to spend a large portion of your time managing the staff, rather than the business. I feel this is not just a problem in this country, but also a regional problem.

There is clearly a global need to invest heavily in human resources, and not just through small educational programmes. We really need some permanent professional training centres, where you can provide staff with updated know-how, in terms of the aptitudes required for the work they normally undertake, in relation to their respective sector or field. Based on this, people could also be placed on a database, which would be very helpful, not only to keep track of every worker’s progress and skills, but also to allow companies to find a good technician, on the mechanical side, or a good accountant, for instance. I’m sure that having such training centres, where all these people could enter a database, with any qualifications achieved, as well as enabling people to update their know-how on a yearly or two-yearly basis, would help a lot.

Among the company divisions you mentioned (bulk cargo, tanker fleet, general cargo and heavy loads), which one do you want to push or develop more over the coming years and place in front of your clients? What is your priority?

All signs point to general cargo, since there are a few projects already in the pipeline. For implementing a project, there are a number of things you need to move, starting with machinery, containers, even pre-fabricated housing, to get the project running. All this kind of cargo is transported on the general flat-deck fleet, so there are some good signs for this sector early next year. But again, everything is intertwined. Such a project would also require fuel, involving some volumes. So that’s my forecast for these two sectors, in the early part of next year.

What would you say is your competitive advantage in the sector? At the end of the day, it’s possible to choose other companies.

Not particularly, because when you start looking at equivalent companies, in terms of fleet size, they all need to have pretty much similar setups; including satellite tracking, proper insurance, professional staff, along with a decent fleet, so all are almost on a par. But again, it’s more about the service you provide to clients, and when a client is used to receiving good service from you, there is obviously no reason to look for an alternative, provided you are also competitive in terms of rates.

Regarding your more recent attempts to do business outside the transport sector, could you tell us what’s the most important part of that, among civil construction, the sale of trucks, etc.?

At this point in time, I would say that most of the other businesses were created to feed the main business, which is logistics and transport. We have a truck sales division, including the sale of parts, which supplies both trucks and parts to the main company. We also have a quarry, which is really a side business, but we sometimes have large road building projects, where clients require aggregates to be transported; therefore, we feel there is an opportunity in supplying them with the aggregates, as well as taking care of the transportation side.

We also decided to open a road construction division, given that we have quite a significant amount of equipment and also normally undertake some earthwork contracts. It’s doing quite well, with a focus on building gravel rather than tarred roads, although it’s a small division.

All these were created mainly to add value to the main business.

Is your company open to international or national investors? Are you interested in partnerships of any sort?

Investment is always welcome and we have always been open to it. We feel that bringing in an outside investor always brings additional value to the company and the business, so we are certainly open to that; especially at this point in time, when we are resizing and reorganizing the company, which is almost at its end stage. In fact, there are already some investors showing some appetite in acquiring some shares in the company.

What kind of investor? Are you talking about financial investors or someone from the transport sector?

It’s a mixture, but mainly international financial investors.

Could you give us your vision for the medium term? If Mozambique gets over the current crisis and if the world economic situation returns to the normal activity we saw recently, where do you want your company to be in three years’ time?

For the past five years, we have mainly paid attention to projects, while losing some market share in the local market for general cargo. We decided to focus all our efforts in servicing large projects, and on that basis we are confident that sooner or later things will change for the better. The country is rich in many resources and many investors already have a footprint here, so we believe they will go ahead with their projects in due course. With this in mind, we are already well positioned to take part in some of the largest projects, where we would provide most if not all of their logistics. We want to be part of their logistics solution, by providing whatever they need in this regard. That’s our focus for the future.

Geographically, we’re already well positioned in three strategic areas at this point in time, namely in Nacala, as well as in Palma, where the gas project will one day go ahead, and we’re also based in Beira. We are therefore well positioned in three major ports with good infrastructure, in order to offer clients a complete logistics solution, by receiving goods in the warehouse and dispatching them to their final destination. We really want to focus on the projects. That is our goal and our vision for the future.

How is the government helping the industry, as well as supporting services and companies in Mozambique more broadly? What would you like to say about that?

I would say that the government is missing a huge opportunity to pay attention to this industry. There is often a mistaken vision when it comes to exports, with a focus mainly on exporting goods, but no thought given to exporting services. Exporting services is among the USA’s largest sources of income.

This country could leverage great advantage from its three strategic ports, especially to move goods into inland countries and export our services. For that to happen, the government needs to provide the transport industry with appropriate support, instead of often harming it with certain rules that work against transporters.

If that were the case, Mozambican companies would not only be able to provide services to the wider region, thereby generating income and tax for the country, as well as employment for the people. Above all, it would raise the country’s reputation as a solution-provider: not only by having the ports, but also complementing that, by being able to deliver goods to neighbouring countries. This is really very important, since our sector would play a key role in the region, in terms of selling services and bringing foreign exchange back, which the country needs a lot of.

With this in mind, I would really like to appeal to the government to pay more attention to this industry and to support our sector. I urge it to analyse the fact that this country is already able to provide all kinds of logistical solutions, and to act accordingly. This is not to say that they should stop any investor who really wants to invest in the sector, but we need to be protected. If this country already has capabilities, I don’t see why companies are given preferences just to come here and grab an opportunity, but they’re gone once a project is over. I don’t see what the country gets back from that in terms of value. This is my appeal to the Mozambican government.