Entrepreneurship Zone: 17 July 2023 :: The story behind Nigeria's Airbnb for warehouses and trucks

Mon Jul 17 08:01:32 CAT 2023

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Entrepreneurship Zone: 17 July 2023 ::  The story behind Nigeria's Airbnb
for warehouses and trucks

Bulls 'n Bears Investors Diary: Today's Events

Established in 2020, Haul247 is a Nigerian logistics startup which has
introduced an Airbnb-like model to pair those requiring truck transport and
warehouse storage facilities with available providers. The company's revenue
is derived from a commission on each transaction. Jeanette Clark speaks to
CEO and co-founder Sehinde Afolayan about the strategic decision to target
multinational clients first, the next stage of growth and regional
expansion.

In 2019, Sehinde Afolayan led an agricultural commodities trading company in
Nigeria that started encountering difficulties due to progressively
deteriorating logistics and warehousing services.

"There was one very unpalatable incident in that year where we had already
made a down payment on 60 tonnes of grains and travelled to the northern
part of the country to prepare the shipment," he remembers. Upon opening the
warehouse and beginning to load the product, they quickly realised that only
the first few rows of the stored grain were fit for use. The rest of the
grain was ruined, presumably due to insect infestation during storage, and
had disintegrated into powder.

The experience deeply impacted Afolayan. On the flight home, he wrestled
with the thought of how such post-harvest losses were unacceptable in the
21st century, given all the technology available to prevent them.

Spurred by the incident, Afolayan started researching how to improve the
system and thus, the concept for Haul247 was conceived. He reached out to
two of his friends, Akindele Phillips and Tobi Obasa. Over the next year,
they spent two hours each Sunday brainstorming, methodically crafting a
business model for a platform that would tackle the logistics inefficiencies
Afolayan had experienced first-hand.

The concept was straightforward. A business user would log onto the platform
and look for the necessary service from third-party truck and warehouse
owners who list their assets on the platform. For instance, a user might
need 20,000m2 of warehouse space for grain on the outskirts of Lagos for a
certain date. If it was available, they could place a booking, potentially
including the truck trip needed to transport the grain from the farm to the
warehouse. To bring this concept to life, the team brought in developers to
begin work on a minimum viable product.

However, in early 2020, reports of a concerning virus began to circulate,
capturing the attention of the World Health Organisation. Several countries
started discussing movement restrictions. The friends found themselves at a
crossroads - they could either delay the launch of their company or
audaciously initiate it during a time when efficient logistics services were
set to become even more challenging.

"We were able to speak to one company, Honeywell Flour Mills, explaining our
model to them and they were interested. The logistics manager decided to
give us a shot," says Afolayan. The tech platform was not fully ready at the
time, but the team grabbed the opportunity and manually uploaded the request
details for the client, matching it with available vendors. "He gave us a
trial and we completed it in record time."

And so Haul247 was officially founded in March 2020, right at the start of a
global pandemic.

Finetuning the tech

Haul247 had its first client, but it was still busy finalising the platform
that would grow into what it is today. "We are still building, we're not
there yet," laughs Afolayan. "With a tech platform you never stop building,
it remains an ongoing process."

The team could lean on the experience of co-founder Obasa, a tech
entrepreneur who had been instrumental in the formation of multiple
startups. "Tobi had worked with many excellent developers and could
hand-pick the ones that would add value to our business. We could find the
talent locally, with some additional support now and then from either India
or Poland."

Adding more customers

Haul247 progressively expanded its client base, with Afolayan and his
co-founders leveraging their networks and presenting their solution to
companies they had previously worked with. "It was goodwill and networks and
the fact that we were able to leverage off of those," explains Afolayan,
noting that the company lacked the resources to vie with established
entities through traditional marketing methods.

The strategy was to operate somewhat discreetly, secure some business, and
gradually capture market share. Once they had established a credible client
portfolio, they planned to generate publicity.

Among the significant clients that have been with Haul247 since its early
days include Honeywell Flour Mills; Knauf, a German company with a large
distributor in Nigeria for the supply of gypsum and other building
materials; Unilever; and Cormart, a supplier of chemical raw materials to
manufacturers.

"Unilever was very supportive; they gave us a significant number of trips
and that helped build the network even further. These four companies, amid
Covid, supported us and allowed us to grow."

Focusing on multinationals

The team decided to focus on larger multinationals first, a strategic move
for several reasons, Afolayan explains.

Firstly, establishing a working relationship with the multinationals makes
regional expansion a lot easier. Haul247 would be able to grow into other
countries with these clients.

The second strategic rationale is that large multinational corporations
offer some certainty of timely payment. Haul247 is very selective about the
payment terms it will accept, as working capital limitations can
significantly impact a logistics business. "With our multinational clients,
some of them pay us within 10 days, others even within a week. We cannot
sign any company that won't be able to pay within two weeks, the strain on
our cash flow would be too big."

Securing more favourable payment terms has enabled Haul247 to distinguish
itself and establish a foothold in a competitive industry where other
e-logistics companies like Kobo360 are prominent. Haul247 can ensure that
truck drivers and warehouse owners (who sign up as partners on the
platform), also get paid quickly. Another way in which the company tries to
get ahead of its competition is by bundling warehousing with haulage,
allowing manufacturers to store goods across the country until they are
ready to be moved to the next point.

With a recent round of funding concluded, totaling US$3 million from Alithea
Capital, Haul247 is now ready to expand its services to small-and-medium
enterprises, including import and export companies and agro-businesses.

The platform can integrate into clients' existing systems, making the
booking of warehouse space or a truck seamless. Users are supported through
a mobile app that also provides tracking and logistics management tools.

Today, Haul247 handles over 600 trip requests per month and offers 151,000m2
of available warehouse space. The platform lists more than 1,000 trucks and
has transported a total of 29.2 million kilograms of goods.

Plans for the future

Afolayan aims to enhance asset utilisation for all warehouse and truck
owners that join the platform. For truck owners, this equates to minimising
downtime, while for warehouse owners, it means achieving higher occupancy
rates. The company is even contemplating providing equipment, like
forklifts, to warehouse owners, enabling them to capitalise on vertical
space.

"According to our data, the current utilisation rate for warehousing is
around 65% only," says Afolayan. "We want to boost this up to 97%."

Haul247 is also beginning to automate or digitise steps in the logistics
chain that have traditionally caused bottlenecks or delays. One such
initiative is transitioning to electronic proof of delivery, eliminating the
hassle and potential payment delays associated with the physical review of
printed documents.

Regional growth

The funding from Alithea is earmarked to finance expansion into West Africa.
Afolayan divulges that the company is looking at two more countries by the
end of the year but remains mum on exactly where this will be.

Furthermore, the company is open to growth through acquisition, currently
exploring potential startups in its target countries. "We feel this may be a
shorter, faster route to regional expansion."

Sehinde Afolayan (left) with his co-founders Tobi Obasa (middle) and
Akindele Phillips (right)

-Howwemadeitinaafrica

INVESTORS DIARY 2023

Company

Event

Venue

Date & Time

CBZ

AGM

Virtual

July 21 2023 | 4pm

POSB

AGM

Chapman Golf Club

July 25 2023 |10am

Afdis

AGM

Virtual | St Marnocks, Lomagundi Road, Stapleford

July 26 2023 | 12pm

RTG

AGM

Rainbow Towers Hotel

July 27 2023 |12pm

ZHL

AGM

206 Samora Machel Avenue

July 28 2023 | 10am

Delta

AGM

Virtual | Head Office, Northridge Close, Borrowdale

July 28 2023 | 12:30pm

Heroes' Day

Aug 14

Defence Forces Day

Aug 15

zIMBABWE

2023 harmonised elections

August 23

REST OF AFRICA

Counters Trading Under Cautionary

CBZH

GetBucks

EcoCash

Padenga

Econet

RTG

Fidelity

TSL

FMHL

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DISCLAIMER: This report has been prepared by Bulls 'n Bears, a division of
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