Heavylift / Breakbulk
United forces in Africa
There is probably no field of logistics where the availability of experienced specialists is as important as in the breakbulk and project business. Fracht AG and Polytra, two firms with experienced specialist for the copper belt in the Congo and Zambia and which possess the relevant infrastructure, joined forces in mid-2018. Now they are expanding their network in East and Southern Africa.
The succession issue is frequently an existential one, particularly for successful companies. For Maurice Velge, who has been at the helm of Antwerp-based Polytra, a specialist for services in Africa, since 1974, its outcome has been unexpectedly favourable. In an interview with the ITJ, Polytra’s CEO Amaury Luyckx said, with regard to negotiations with the Basel-based firm Fracht AG, that he has “rarely known negotiations to proceed so quickly and so smoothly.”
The meeting between Velge and Fracht AG’s Ruedi Reisdorf, the owner-manager of the Basel-based Swiss company, brought the breakthrough, Luyckx continues. “From the first meeting of the two men in charge, we took less than a year to conclude the transaction.”
In the interview it was intimated that Velge might have taken more for the company if he had split up its assets and sold them separately. But that is the exact opposite of what he envisaged for the product of his life’s work. So since the end of June 2018 the two firms have formed a unit. The name Polytra will remain in existence, and its team will stay on board.
Personnel a crucial factor
One aim was to maintain the tried-and-trusted status of a medium-sized, family-managed traditional company with responsibility for its customers, activities and employees. The establishment of a joint strategy for the two companies, whose plans include the structural integration and expansion of their position as project logistics providers in Africa, was another.
Dominik Keller, director for international business development at Fracht AG, says that in his experience the decisive factor is to have the right people on board. “Our most important assets are our experienced staff,” Luyckx agrees. “Many have been with our firm for 15 or 20 years. Their support is of crucial importance, for we’re selling a service, not handling a special assignment.” Besides the experts present locally, those at company headquarters in Antwerp and Basel are also important, since they have the crucial bird’s eye view of all operations.
A good position in Africa
The names of Polytra and Fracht AG may not be familiar to everybody in the global logistics business, but this certainly does not apply in Africa. “We’re a major player there,” Keller underlines. The companies maintain offices in the copper belt, the mining and industrial region that extends through Zambia and into the Democratic Republic of Congo (DRC) and is one of the world’s biggest copper and cobalt mining areas.
In view of the long distances between mines and ports, the sometimes inadequate infrastructure and the many frontier crossings, the challenges of managing logistics operations there should not be underestimated. Polytra and Fracht AG’s activities centre on project logistics and customs clearance.
Defining his company’s own recipe for success, Luyckx says that “our strength is that we combine experience in Africa with European quality standards.” The company is audited and listed as a service provider by major shippers, including Glencore and Samsung. Only a limited number of competitors have the will and the capabilities to keep up with Polytra and Fracht AG in this rather complex business segment.
Individual assignments are also handled for other players, such as Chinese firms, which “sometimes lack the necessary know-how for the clearing of the goods,” as Luyckx said, alluding to his company’s lead in know-how and experience.
Strategy of five corridors
The production of copper and cobalt is on the threshold of a new upturn. In the last twelve months the price of cobalt has increased from USD 54,500 / tonne to the current level of USD 88,500 / tonne, a gain of more than 60%. In mid-March 2018 the price topped the price of USD 94,500 / tonne. This compares with a figure of around USD 30,000 / tonne just three years ago.
At present Polytra and Fracht AG handle the transport of around 40,000 tonnes of copper cobalt, of which 10,000 tonne goes into export clearing. In view of the rising price of the commodity, the volume mined can be expected to develop dynamically. “We expect the total volume of cobalt produced in the copper belt to reach around 1.6 million tonnes,” says Luyckx in a forecast of coming developments.
In order to enlarge its share of the cake, Polytra / Fracht AG is consistently pursuing a strategy that will enable the areas of production to be reached via five corridors. “We’re present at every important frontier crossing,” Josef Lenherr, Africa expert and advisor to Fracht AG, says with regard to the present situation. The most important corridor passes through the port of Dar es Salaam in Tanzania, which handles almost 80% of exports. In addition, the ports of Durban in South Africa, Walvis Bay in Namibia and Beira in Mozambique are handling points that are served by rail and road. Where the company has no storage facilities or terminals of its own – as in Durban – it liaises with major local stevedoring companies. As a high-value product the bulk cargo is containerised and continuously monitored by GPS, using tracking and tracing solutions. “Security is of vital importance, and it’s something we offer shippers,” Lenherr confidently states.
On the other hand the corridor to the port of Lobito in Angola, which is to be served entirely by rail, is still being built up. Luyckx clearly states his own expectations for the future corridor. “With our own storage facilities and a full handling licence we’re in a strong strategic position and equipped for the future.”
Mastering local conditions
The challenges presented by transport and logistics must not be underestimated. “The distances to the ports are enormous,” Keller says, “and the formalities at the frontier crossings are complex.” In rail transport to Lobito, for instance, the freight trains are subject to a speed limit of 10 km / h and a load limit of 40 t per wagon. Furthermore, in some cases rolling stock is supplied only if freight is available for the return trip.
“We’re working to further develop import business for mines,” Lenherr reports. “Sulphur is one product that is in strong demand.” Other import goods are also under consideration. The new contact office that was established in Johannesburg in September is expected to support this development. There the group of companies has strong infrastructure for project logistics and maintains close relations with local partners, such as South Africa’s Transnet.
Treading new paths in Africa
In addition to the strengthening of existing links, the Fracht AG / Polytra group is endeavouring to open up new markets. As an illustration of the new direction of its thrust, Keller says it recently opened a strategically-important office in Rwanda, which was planned before the takeover. This country could become important as a gateway to the DRC, as could neighbouring Burundi, although this is still a crisis area.
Forecasting new transport routes that will also be important in the direction of Congo, Lenherr said that “a rail link with no break of gauge from Kigali in Burundi to Tanzania will be of great value to us.” Luyckx explained that “a new corridor in East Africa is all the more important for us, because Polytra was recently able to fortify its agency in Rwanda.” Historically the freight link to Mombasa is the main one used in the region, but transport to Dar es Salaam, where the firm has its own terminal, is an option for the future.
The company does not intend to stop there, however. “In the short-term future we want to extend our presence in other countries of this region of Africa by opening new stations,” Keller says.
In this connection he makes it clear that its operations in Africa are primarily asset-based, which means it is necessary to invest in the company’s own terminals in order to acquire new business. This makes particular sense in East Africa where, as Luyckx stresses, “the market is still far from saturated.” In view of the deposits discovered off the coast of East Africa in 2011 and 2012 it may be possible to gain a share of a newly-growing oil and gas business, in areas such as the transport and delivery of supplies for pipelines or refineries.
None of the interviewees makes a secret of the fact that many local problems need to be solved and that sensitive niche markets in Africa need “early-warning system of their own,” as Lenherr put it, in order to be ready for surprises. For instance, work is now in progress to improve capacity utilisation at the terminal in Lubumbashi in the province of Haut-Katanga, in the Democratic Republic of the Congo. The expected economic benefits justify the efforts.
A broad portfolio
There are no limits to the group’s own activities in the African project cargo business. In project transport in Angola, for instance, it is currently involved in the delivery of supplies to new hydroelectric power stations. In South Africa many infrastructure projects are being pushed forward and solar energy is also being promoted, a development that has generated new business for Fracht AG / Polytra. West Africa, where brownfield projects are putting many sites to new use and new industries are being established, has also ceased to be terra incognita. “We have a share in the transport of the whole range of equipment for these projects – big conveyor systems, crushers, bulk loaders, etc.,” Keller states. In Niger, on the other hand, the conglomerate handles the delivery of supplies for big irrigation projects.
There are no doubts concerning the continent’s potential. “Africa will arise even stronger than a phoenix from the ashes,” as Luyckx confidently states. Fracht AG / Polytra will further reinforce its network there, in order to expand the service it offers its clients.