Amitruck, a Kenyan based start-up is betting on transparency and trust to build the next big logistics solutions provider in a market that is projected to grow exponentially in the next decade. We had a discussion with the company’s CEO and Founder Mark Mwangi on the company’s journey and future prospects.
The world’s fastest growing economies by 2030 will be in Africa. This consequently makes the continent the next big e-commerce market. And as this positive narrative continues to place Africa as a top investment destination, the need for advanced logistics systems has become inevitable.
The growth of e-commerce will significantly depend on the quality and efficiency of logistics networks; from intra and cross trade to financial transactions in payment of goods and services.
One of the biggest hurdles holding back the logistics industry in Africa is the inherent inefficiencies in the sector. This, coupled by poor road networks, make it even harder to conveniently deliver products to customers. Consequently, companies have had to rely on fairly descriptive trucking systems. The delivery trucks are also required to keep in constant contact with clients when delivering products, to receive further directions while en-route.
While generally Africa’s infrastructure lags behind that of its counterparts in other parts of the world, it is worth of note that each country has its own value proposition. In 2018, the World Bank’s Logistics Performance Index placed South Africa, Kenya, Rwanda, and Côte d’Ivoire as the top 4 best performing countries in Africa, while Somalia, Sierra Leone, Eritrea and Zimbabwe were at the bottom 4.
In most African countries, the result of the poor road infrastructure is heavy traffic jams that lead to delayed deliveries, cancelled orders for the on-demand services and subsequently loss of revenue and high cost of goods. Providentially, technology has been a boon to the logistics industry.
The Amitruck way
In Kenya, Amitruck, a trucking logistics marketplace is trying to solve the inefficiency in the logistics sector, which is estimated to be worth a whooping US$160 billion in Africa.
Mark says that the original idea to start Amitruck came from the bad experiences and inefficiencies that truck owners and customers in the cement industry were facing in Kenya – and the deeply opaque pricing and cost structures in the value chain.
“It was interesting to find that up to 70% of the final cost of goods is transport and 80% of that is by road and more so on the Kenyan side. When we first had a look at the space, we realized that there are middlemen or brokers and there are deliveries where there can be up to 3 brokers between a cargo owner and the trucker, and they can consume up to 60% of the delivery fee,” said Mark Mwangi, the Founder and CEO of Amitruck, a start-up based in Nairobi, Kenya.
“When we began to look deeper, we realized that there was a complete lack of systems and data. There was no single convenient place where you could go communicate and compare the options you have. The process was manual and was tedious to know which transporter was giving you good value in terms of fair price and good service,” added Mark.
The marketplace CEO added that lack of transparency and security greatly increases the cost and liability of transporting goods and so, they came up with Amitruck which is basically a digital marketplace for transport which connects clients to transport resulting into savings by cutting out the middlemen and allows drivers to bid for work.
On the other hand, the client can also participate in the auction thereby bringing in a competitive nature of pricing and that dynamic pricing has its benefits, meaning that when its busy, a cargo owner can still get capacity and when its quiet, one gets discounted prices and because of that, they have seen customers save up to 40% of their costs.
“The vehicles and drivers on the platform are vetted so we know who owns the vehicle, driver because we have the documentation, and we also provide goods in transit insurance for safety of the goods. Customers therefore have a convenient competitively priced secure mode of transportation, and the driver has control of his livelihood and pay at the end of it.”
Since its launch in February 2019, Mark reveals that they have done over 15,000 transactions and served over 200 business clients. They have seen good uptake on the platform, revealing to Disrupt Africa that the year 2020 was especially a good one for the firm, with revenues tripling and the mobile app was downloaded more than 10,000 times in the January to November period.
Covid-19 pandemic impact
That Covid-19 pandemic hit business hard is not in doubt. While some companies and businesses benefited from the e-commerce boom that rose as a result of the containment measures, for Amitruck the pandemic has offered new opportunities for growth while
“For us, it has been a mixed bag. On one end we saw a lot of business clients especially in 2020. The supply chains were disrupted, issues at Mombasa port, lockdown, confusion on regulatory documents one needed to move, and queues at the border! Transporters asked for higher transport fees because of delays, border crossings, lack of return loads. It was costing them more. We also saw customers asking for lower prices because demand was down,” says Mwangi.
“On the positive side, customers saw Amitruck as a tool to manage the uncertainties and the chaos during the lockdown. Transport as a cost centre has changed during this pandemic, customers are now looking at the advantages of digitizing to the last mile, and the kind of cost advantage they can get. They are also looking at the transporter’s ability to deliver to his/her customer well and the ability to have a flexible supply chain as well,” adds Mwangi.
The CEO added by saying that over the past two years that they have been in operation, they have witnessed some big companies getting convinced about their model and that more are having that discussion at this time of the pandemic. The start-up announced hitting the 200 clients B2B companies in March 2021.
Relevance and growth
In order to stay and become relevant in an ecosystem which lacks systems and transparency, Amitruck says it is focussing on one core issue, which is the high cost of transportation in a fair and transparent manner.
“We are in a market where trust is generally low, doesn’t matter how you look at it, whether B2B or B2C. Even in e-commerce, there has been a struggle to get trust through the system and by having the transparency and giving good experience you can begin to build that trust. We want to continue to do that,” he emphasizes.
Mwangi added that in their tracking so far, they have only lost one load and that was due to a breakdown. He reiterates that this is because they have put processes and mechanisms to run the business in a transparent manner that goes a long way in building trust with its growing list of customers.
Despite their impressive records, the trucking platform still does not have a plan to venture into other markets just yet. “We want to focus our resources on Kenya, solve the problem well, get traction then later on look at other markets. We definitely want to move beyond the Kenyan market but right now we have not figured out how and when.”
Investors and partners come through
For young tech start-ups in Africa, funding raising is one of the major hurdles partly due to lack of proper regulator frameworks. However, Amitruck did manage to receive investments from US-based Dynamo Ventures with participation from Plug n Play Ventures and other strategic angel investors.
The other major investor in Amitruck is GreenTec Capital of Germany, making an undisclosed investment in the firm in April 2020. The investment by GreenTec Capital, which makes small investments in African tech start-ups, enabled Amitruck to join a host of African start-ups in which the company had invested in in recent times, including Kenyan AI startup SuperFluid Labs, Nigerian logistics startup Parcel-it, Kenyan insurtech platform Bismart, Moroccan recruitment service KWIKS, and Ivory Coast-based waste management startup Coliba.
GreenTec Capital’s senior company builder Maxime Bayen said at the time of the signing of the deal that logistics was a significant challenge in Africa, and one which was only emphasised by the COVID-19 crisis. “Amitruck’s solution has the potential to tackle the fragmentation and lack of trust in the sector while enabling capacity growth by increasing driver and truck owner accessibility to the broader market. We are extremely proud to be kicking off this long-term collaboration with Amitruck’s team,” he said.
The investment from GreenTec Capital was expected to boost the start-up’s efforts at gaining a foothold in the East African market, where competition in the space has seen the likes of Sendy and Lori Systems also make their mark.
“We approached 300 different investors, got into discussion with 70 and got into a final with about 5 and of the 3 that invested, 2 actually approached us. We had a success rate of below 1%! Start-ups in Africa lack an ecosystem where local investors are supporting start-ups quite as aggressively as the VCs in the West,” he advices.
Apart from seeking investors, the company has also sought new partnerships that will fuel its growth into the future. In April 2021, Amitruck and e-commerce platform Sky.Garden, announced a partnership that will provide end-to-end digital chain for goods pick-up and deliveries to the last mile, a move that will allow more than 6,000 B2B clients to keep their businesses alive and maintain jobs across many industries they support in Kenya. “We help Sky.Garden just as we help everyone else to deliver their goods from their e-commerce site to their customers,” says Mwangi.
Future prospects and trends
Mark believes that the future is bright for his company, especially as the Covid-19 pandemic has changed the way business is transacted not only in Africa but globally and as E-commerce takes root quickly in the Continent.
“There is a lot of space for companies to increase efficiency within the supply chain by going digital. Companies are beginning to realise that you have to change to innovate and the benefits of digitising to the last mile will cause reduction in human error, increase in flexibility, free up capital to focus more on your core activity and the simplification of all the paperwork,” advises Mwangi.
As the logistics start-up focuses on the future, it was one of the five start-ups selected to join the first cohort of the “NINJA Accelerator” in Kenya, which offers a blend of local, Japanese, and international mentoring, expertise, coaching, and investor relations – customized to meet the needs of each venture over the course of three months with a Demo Day scheduled for July 2021. Organised by the Japan International Cooperation Agency (JICA), the 5 startups will have a chance to take part in an international experience from Nairobi, Kenya, Tokyo, Japan and Silicon Valley, USA.
Mark reveals that he and the team at Amitruck is excited to join these selected few start-ups in the program and that the learnings and connections that will materialise from the exposure will surely raise the profile and prospects of his firm going forward.