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Meet The Shs360bn Logistics Tycoon Of East Africa

Meshack Kipturgo is the Group Managing Director of Siginon Group, East Africa’s largest integrated logistics services provider.

Siginon Group, which was founded in 1985, is a 100% Kenyan entity which began as a small clearing and forwarding company and has since morphed into a $100 million (UShs362.7bn)  (annual revenues)  regional leader in logistics and supply chain management with interests in supply chain logistics, ground handling, container freight stations, clearing & forwarding, trucking, warehousing, distribution and project cargo logistics.

Forbes recently spent time with Meshack Kipturgo at Siginon’s expansive offices in Nairobi where he walked the magazine through the company’s growth story and its ambitions for the future. We reproduce the story below;

What is the origin of the Siginon Group?

The Siginon Group was founded in 1985 at a time where there weren’t many locally owned logistics companies in Kenya.

Most of the successful logistics companies and freight forwarders were foreign companies.

As such, Siginon began as a freight forwarding company owned and managed successfully by Kenyans.

Today, 32 years down the line, I’m glad to say that we’ve succeeded in doing just that. We’ve largely depended on developing indigenous capacity and delivering world-class services benchmarked globally we only just recently employed our first expatriate.

Siginon Group basically started out as a small clearing and forwarding company at the port city of Mombasa.

Siginon Group Truck

As we cleared cargo, we started getting a lot of requests from our customers who wanted their cargo transported from point A to B.

So we bought some trucks to move the cargo to the final destination. Then from there, we had the customer asking us whether we could hold the cargo for them for sometime because they didn’t need the goods urgently; so we started investing in warehouses.

We also went into ground handling because we were putting a lot of cargo into aircrafts and airlines require terminal handling services such as ground handling, ramp handling and air cargo handling. So it’s been one long journey of expansion and growth.

Today, I’m proud to say we are the largest indigenous Source to Doorstep Logistics Company in East and Central Africa.

Walk me through the various businesses of Siginon Group

Our flagship business is Siginon Global Logistics which provides transportation by all modes of transport ie. Sea, air, road, rail.

We move cargo by road within East and Central Africa in 12 different countries.

We also move cargo by rail, sea and by air – through the Port of Mombasa or JKIA Airport to all over the world. We have strategic partnerships with our worldwide agents we are able to collect cargo from all over the world and deliver on a door-to-door basis.

We move cargo by airfreight on a door-to-door basis. We also move cargo by sea on a door-to-door basis worldwide.

Global Logistics also includes clearing, warehousing, and distribution by air, road and sea. So you can bring cargo from Dubai to Mombasa and move it by road through road freight service to Uganda, the last mile – or you can move cargo by rail, and then when it reaches Uganda we can move it by road to Juba in Southern Sudan. We have more than 250 trucks based in Mombasa and Dar es Salaam and we deliver cargo in Malawi, DRC, Zambia, Rwanda, Burundi, Tanzania, Uganda, Southern Sudan and Ethiopia.

We have also invested heavily in warehousing to meet customer demands and have more than 300,000 square feet of warehouse capacity in our Nairobi and Mombasa operations.

Another subsidiary of ours, Siginon Aviation, is the leading provider of ground and air cargo services to the aviation industry located in Jomo Kenyatta International airport (JKIA) in Nairobi and also Eldoret International Airport in Eldoret.

We have invested more than $10million in a state-of-the-art air cargo terminal in Nairobi which includes a 5,000 square metre general cargo warehouse, a 3,000 square meter perishables center, a 2,000 square metre basement parking for transit vehicles and a specialized storage area for dangerous, valuable and temperature sensitive cargo.

Our facilities are capable of handling perishable products such as vegetables, fruit, and flowers that are Kenya’s major exports. We pride ourselves in the first cool corridor in JKIA that ensures that we handle perishable cargo at the prescribed temperatures up to loading onto the aircraft.

Our last division is Siginon Container Freight Station (CFS) located in Miritini, adjacent to the Mombasa Port.

Siginon CFS serves importers and exporters moving cargo that is local or transit containerized cargo as well as vehicular cargo at the Port of Mombasa.

Give me a brief overview of the logistics space in Kenya at the moment

We’re seeing a lot of local logistics companies growing and expanding. This has been driven by the growing demand for logistics services in Kenya due to Kenya’s unique geographical location serving the East Africa and Great Lakes region. Today, we are serving international airlines, humanitarian organizations, vehicle importers, manufacturers, corporates, government institutions as well as individual customers in cargo movement.

In addition, there are quite a number of international companies acquiring local players in Kenya which I guess is an indication of the lucrativeness of the business in these parts. Already, we have seen multinational freight forwarders acquire Kenyan companies to tap into the lucrative perishable market available.

A lot of things are happening; the Mombasa–Nairobi Standard Gauge Railway kicked off earlier this year. From January next year it will start lifting cargo which means lesser transit time because moving cargo by rail from Mombasa to Nairobi was taking 5 days, now it’s taking 5 hours. So I think it’s pretty exciting times and we are gearing up to take up the opportunities and align to meet the challenges that lie ahead.

What are some of the biggest challenges in the logistics space in Kenya today?

For me, one of the biggest challenges is the general unpredictability of the industry. The logistics sector is very dynamic. There is always something new. You can’t say that because I did this yesterday I have to keep doing this the same way. You must be really innovative, proactive and have really good people.

Sometimes getting the right people who understand the dynamics of our business could be very difficult. The industry is so dynamic. Every month there is something totally new in the industry.

So you are planning, and then the Mombasa–Nairobi Standard Gauge Railway (SGR) comes up, and you’re thinking of how you can effectively transition so you can carry cargo by rail and not get left behind.

But when you are looking at that, a new legislation like the Special Economic Zones comes up which presents and opportunity and a threat at the same time. So you always have to be on your toes.

It has been estimated that 70% of the cost of goods is due to logistics. How can the cost of logistics be reduced significantly?

A couple of things: If you look at our main northern corridor from Mombasa to Uganda to Kigali, it’s a single carriageway; it’s not a dual carriageway. What that means is that in some sections you can have traffic jams lasting for kilometers because the road cannot cope with the trucks on the road, and you then find that companies like Siginon we don’t operate at night.

So at night we park the trucks because it is not safe to operate at night because when it’s a single carriageway, you have to wait when there is no vehicle coming this way.

If you overtake at night, you can cause accidents and many fatalities happening at night.

So if there are superhighways or dual carriageways all these trucks that don’t operate at night will start operating at night. Imagine if all Emirates passenger flights were not operating at night, the cost of travel would really go up. That’s what is really happening in Kenya – most trucks are grounded at night and this affects the cost of transporting goods.

If the roads were to become dual carriage you’ll find that all these trucks will operate on 24 hours, so the truckers will be profitable and also reduce cost of transportation.

Also, if you look at most places in Africa, it is one-way traffic in the sense that we are net importers as a continent. So you find that the trucks that leave the ports in Mombasa will go to another country and when they are returning, they are empty.

Even our own trucks – they leave Mombasa, get to Kampala, and then come back empty. Unfortunately, the cost of the truck returning back to the yard empty is borne by the cargo owner.

This can be tackled if Africa plays a more prominent role in cargo exports, then we will have cargo going out and coming in, and the consumer will enjoy the benefits of lower transport costs.

What new opportunities is Siginon Group exploring in the logistics space?

The biggest logistics company in the world today is Amazon. E-commerce is a new frontier for companies like us. There are a lot of innovations that have come up globally and we are aligning to ensure that we take advantage of these developments to deliver value for our customers. At the moment we are tapping into Information Technology with a view to position Siginon Group as the logistics group of the future.

Tell me about your expansion plans for Siginon Group in the near term. Is there a Nairobi Stock Exchange listing for Siginon on the horizon anytime soon?

We are working overtime to expand the Siginon footprint in Africa. We have been doing a lot of studies in Nigeria, Egypt among other markets.

Our Aviation branch is always looking for opportunities within airports in Africa. So if tomorrow an opportunity springs up for us in Togo for instance, we’ll seize it with both hands.

In 5 years we hope to be present in many countries around Africa. We are actively seeking opportunities within and outside East Africa.

We are already very active in Tanzania and Ugandan and we have warehousing, trucking, and distribution facilities in those countries. We will keep expanding. On whether we will list on the NSE sometime soon, only time will tell.

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