Excerpts from the recent interview Punch had with the Chief Executive Officer of Transnational Haulage Limited, Mr. Akinola Ososanya.

Being a major stakeholder, would you say the haulage sector has grown positively over the years?

Well, it has improved in certain aspects like the use of technology to track the movement of trucks and the availability of mobile phones by which we can reach the truck drivers. This has helped to improve on the turnaround time because we now know when the driver is supposed to get to his destination and when he is supposed to return. If he is not there or being delayed, we can always call the distributor to find out why the driver is not being released on time. That has enhanced performance on the part of the trucks and the drivers.

So what aspect of the sector should have improved presently?

The roads should have been much better because if you don’t have good roads it would affect the lifespan of the trucks, which has always been the case. An average truck can do over a million kilometers but in Nigeria after about 300km to 500km, plying the Benin-Ore Expressway, for example, it may pack up. This is because when it goes into ditches, the shock absorbers and the fenders may just fall apart.

Then the quality of diesel we get in Nigeria is below international standard; this has a negative impact on the nozzles and injection pumps of the trucks. To start with, we have a lot of adulterated diesel in circulation. People cut corners and mix the thing up. That is aside from the fact that the diesel itself is not as refined as what is obtainable overseas. It is like petrol, you have the Premium Motor Spirit and the ordinary one. If you go to a filling station overseas, you get the PMS and the basic one.

The same applies to diesel; the quality we get in Nigeria is a notch below what is obtainable overseas. But then having said that, if we were using that type of diesel without it being adulterated it would have been better. But a lot of transporters in Nigeria now are contending with adulterated diesel and it destroys the injection pumps. That is why you see some trucks smoking because the diesel being used is not good. What I did was to get my own fuel dumps and then I buy from the major marketers instead of filling stations. So now I get fairly good quality diesel.

There is also the problem of security; occasionally our drivers get attacked by robbers especially in the eastern part of the country. Sometimes, they get shot; the robbers would harass them, collect their money. There was one that was killed in the process three years ago. What we have done is to instruct our drivers not to travel at night again. If they do, we would know via tracking.

You won award recently from the Nigerian Breweries Plc? What was it about?

I have been doing business with NB Plc for decades now. My father owned a haulage company which he began in 1974 when NB decided to outsource their logistics department, he was the first Nigerian to get a contract from them. I started working with my father when I was in secondary school right up to the university level. When he passed on in 1991, I stepped into his shoes to continue the business and changed the name of the company to what it is today in 2001. I equally increased the fleet size from 15 trucks to over 200. So back to the award that I won from the NB, it was because of the hard work we put into the business. The Ibadan brewery from where we operate delivered the highest volume of drinks for the company last year.

What would you describe as the major challenge of the industry?

There are two of them actually; the forced sale of emblems by local government authorities and the reluctance of Nigerian banks to fund the haulage sector. The issue of emblems is more common in the South-East. As you move from one local government to the next, you are forced to buy emblems by all manner of thugs. At the end of the day, a truck can have up to 15 or 20 emblems and they are very costly. It is a serious challenge for transporters. The government has proscribed it and declared it illegal but enforcement has been a major issue. If you refuse to buy the emblem, the truck will be impounded and if you complain to the police, you will be advised to comply. Although our association has waded into the matter, I don’t think it is making any headway with that battle. We told our members recently not to buy the emblems anymore but people are still doing so because the thugs will not let you move your truck if you don’t.

You mentioned funding as a major problem for the sector. How do you want it addressed?

I think the government should support the haulage sector through the Bank of Industry so we can access single digit loans. That would make the business profitable. Nigerian banks are reluctant to give out facilities to haulage companies because they think it is a high risk business and it is so. They rather fund a merchant that would quickly sell and return their money as against someone who wants to buy a truck and would run it for five years.

The main reason why the banks have become reluctant is because the principal, that is the company to which the trucks are dedicated to, could start misbehaving in terms of not giving the transporters the required volume needed to sustain the business. It is very common with many blue chip companies in the country and you dare not sue. If you do, the company would terminate its contract with you; that puts you in a worse situation.

It is really unfortunate this is happening because these companies are just cheating the transporters who have borrowed billions of naira to service their business. In developed countries, a transporter is told the volume of goods he will be given and the specification of the trucks needed by the company. So, the arrangement is that you are paid a fixed rate which covers the bank loan and other expenses that the transporter incurs and there is a variable rate which is calculated per kilometre that the vehicle covers. The advantage of that is that the blue chip company does not want to lose his money by leaving your trucks idle, they are forced to use the trucks. By so doing, the transporter is also making money, because when the trucks move, he is paid per kilometre; this is in addition to the fixed rate he receives. As such both the haulage company and his client grow; the volume of the company grows and the bottom line of the transporter also grows. Unfortunately, that is not the situation in Nigeria and this is why we have so many dead and dying haulage companies. You see them coming out big and before you know it, they collapse because some multinational companies whom they have signed contracts with have reneged in terms of giving them the required volume to sustain their business.

So how does a business contract between haulage companies and multinationals work in Nigeria?

They tell you that they cannot guarantee any volume but that the blue chip company will try its best to ensure that you get products to transport. That is why today many banks will not fund the haulage company if you don’t have a fixed and variable contract. The blue chip company might say they need 100 trucks, meanwhile they are not guaranteeing you anything. By the time you go to the bank, the bank would refuse to give you the loan because no volume of goods has been guaranteed.

Today, no bank in Nigeria will give out a loan without volume guaranteed because this has led to the collapse of so many logistics companies. Meanwhile when the blue chip companies see that you are collapsing, they go ahead and bring in another haulage company. This is a difficult issue because many people out there believe trucks are a goldmine.

The haulage sector has become an all comers affair and any money-bag can come in. Since these companies have so many people jostling to haul their goods, they use it to their advantage. The only way to tackle it is through the courts and the multinationals are taking advantage of the very slow legal system that we have. They know most people will not want to go to court especially when they are already indebted to the bank and need business to service their loans monthly.

We need the multinationals to do the right thing in terms of corporate governance. If you need 400 trucks to run your business, don’t request for 800 trucks. They need to strike a balance because if they take more than they need, during the slow period, the trucks will be idle and that may lead to the demise of the haulage company. Those days, it was never like this because people complied with corporate governance. The companies would be transparent enough to tell that this is the number of trucks needed.

Today, they will not even tell you the number of trucks they need, they will just tell you to bring some trucks for them. The ideal thing is for them to tell you the volume they intend moving and the number of trucks that will achieve that; so that during the slow period, the trucks will still be busy. During the slow period, haulage companies operate at 25 to 30 per cent capacity; most of the trucks are parked and nobody is ready to bear the consequence. It is left for the transporter to face the music with the bank. It is a huge problem.

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