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Couriers cry foul over entry of new players

BUSINESS
By Fredrick Obura | May 27th 2021

A lorry turned into a courier transport service vehicle from Mwea drops sacks of food in Nairobi. [David Gichuru, Standard]

The livid operators claim there is an increased number of quack players who have invaded the sector and are eating into their revenue without following regulations.

The couriers link the growing appetite in the business to the rapid uptake of e-commerce services in the country and movement restrictions due to the effects of Covid-19, which have seen some passenger vehicles converted into cargo buses.

Some of the operators who talked to Shipping and Logistics said unlicensed players have tilted the business environment by offering below-market courier service rates, impacting negatively on the bottom line of genuine operators.

“We are witnessing an improvement in secure logistics business fuelled primarily by the aggressive uptake of e-commerce in the country. This is attracting more people in the industry,” averred Lawrence Okello, G4S Chief Executive Officer, Kenya.

“Our competitive edge remains a wider network spanning the whole country. This has enabled well-established courier entities to offer the last mile connection, which is on a higher demand by e-commerce clients.”

According to Okello, couriers mostly transport books, spare parts for telecom companies, pharmaceuticals and warehouse storage facilities.

Glovo General Manager Priscilla Muhiu said the rapid uptake of e-commerce in Nairobi, Mombasa, Nakuru, Eldoret and Kisumu boosted couriers last year with the trend continuing in 2021.

“The most important e-commerce enablers are the ability to access financial services, digital payment channels and digital infrastructure. These enablers are starting to take hold across. Cash may remain the dominant payment instrument for now, but we are seeing signs that this will eventually change,” she said.

According to Omar Salim, a manager at Mash East Africa, the problem of unregulated operators and the effects of Covid-19 over the past year have proved a challenge to the courier industry.

However, he said traditional operators find a lifeline in their established networks both upcountry and across the region.

“The new development is hurting the industry, we are currently operating at half the capacity,” he said.

Halim Sadia, a senior clerk at the Coast Bus, said the expansive network built over a period of time and corporate clients have been a lifeline to the regulated courier providers.

After the restriction of movement, which grounded a number of vehicles, the passenger service vehicles (PSVs) that ferried passengers into and out of the city devised ways to remain afloat. One of the creative ways was to turn their vehicles into cargo carriers.

But Communications Authority (CA) acting director-general Mercy Wanjau said such a venture was illegal. “Some PSVs and e-commerce market platforms have taken advantage of the coronavirus to offer courier services without being licensed,” she said.

She added that any person who will be caught engaging in the service illegally will be charged in accordance with Section 49 of the authorities Act.

The Act slaps an offender with a Sh300,000 fine or an imprisonment term not exceeding one year. CA warned that it will revoke courier licences of 21 service providers, locking out several bus companies.

The number of letters sent in 2019-20 financial year dropped to 32.2 million from 47.1 million recorded in the 2018-2019 financial year. During the fourth Quarter of 2019/20, the volume of international incoming letters dropped by 35.2 per cent to 1.7 million from 2.6 million posted in the previous quarter.

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