Shift in technology to fuel courier firms’ growth

By Macharia Kamau

Courier operators are gearing up for growth as they expect a radical shift in technology used in the business.

The sector is slowly growing to assume a critical role as a link between firms along the same value chain in the local economy.

It is also looking at the region for growth, with Kenya being key as a springboard into other East African countries.

"In Kenya, we see the sector growing by between 10 and 20 per cent this year," said Samuel Gichohi TNT country general manager.

"We also foresee increased sophistication in terms of technology used in the business. Today, the market is demanding automation and this is where the Kenyan sector has to go."

The technological shift will be in line with global trends where express delivery firms have automated their services.

cost-cutting measures

He added that growth in the sector would also be fuelled by more companies outsourcing non-core functions.

"Many firms are being compelled to adopt cost-cutting and resource optimisation measures and coming to the realisation that contracting experts to handle their non-core aspects are among the more efficient ways to reduce their operating costs," he said.

"Certain departments — like transport — may not be in a company’s line of business and cost them a lot in non-quantified costs running it since it may not have the expertise in these non-core areas."

East African countries tending towards a regional economy also offer the sector opportunities for growth.

TNT is looking at exploiting the strategic location of Kenya to expand its operations to the East African region.

The firm says the prospects for growth in the region are high, given the opening up of borders and expansion of the market and is readying itself to expand its business into EAC and Comesa from Kenya.

"We recently introduced the East Africa road network and now have trucks doing deliveries between Nairobi and Kampala two times every week.

"We will expand this network to cover Rwanda and Burundi in the course of this or next quarter."

He noted that a shift in trading patterns warrants parcel delivery firms to critically look at the region in a different light.

Previously, Kenya used to trade more with Europe, especially because of agricultural exports but this has slowly changed and the country’s trade with the region now accounts for 55 per cent of exports.

Unlicensed operators

"Traffic to Tanzania and Uganda used to account for 20 per cent of our total business, but it has in the recent past grown to account for 35 per cent, which is significant and deserving special attention," he said.

Gichohi, however, noted that unlicensed operators had seen the industry become uneven and posed credibility challenges for the sector that is increasingly linking up many businesses along the value chain.

"There are many unregulated players and as much as it may not be easy for CCK to police them, it is unfair for those that are in compliance with the regulations," he said.

Such included deliveries done unofficially by public service vehicles bound for rural areas, which Gichohi said operated like express companies, but not within the regulator’s loop.

Naming streets

Other challenges the industry faces is the naming and addresses of streets and buildings which is almost non-existent in the residential areas and even where it exists, there is no signage.

The Government announced plans to develop a national addressing system.

During the recent Annual Postal Forum, Information and Communications PS Bitange Ndemo said an inter-ministerial committee has already been set up to undertake the national addressing project.

CCK Director-General Charles Njoroge said the system was critical for the success of postal and courier services through facilitation of efficient and fast delivery of parcels.

He said addresses were one of the bases for national and international communication and trade.