Chinese logistics company weaves fine web in Africa

By Pu Zhendong (China Daily) Updated: 2014-11-10 09:05

CJ Smart Cargo's strategy of integrating overseas resources has already yielded positive returns. Lyu estimates that sales revenue this year will exceed $100 million and is ambitiously expecting $260 million in revenue by 2020.

Last year, the company signed cooperation agreements with South Korean logistics and transportation company CJ Korea Express to boost its delivery capacity.

She says CJ Smart Cargo has separated itself from the competition in Africa by focusing on customized logistics solutions in heavy-lift and break bulk shipping, which has accounted for 85 percent of the company's business operations during the first quarter of the year.

"We realized the necessity to enter a high-end area with a stronger technical threshold instead of being stuck in low-level competitions with thousands of rivals," Lyu says.

The projects that CJ Smart Cargo undertakes usually last one to three years and involve long-distance ocean shipping as well as a series of inland transports, terminal operations and customs clearances in China before goods are shipped to Africa and delivered.

Despite the company's recent success, Lyu says it is "incredibly painful" for Chinese private firms to develop in the African market.

Judging by the company's experience, a lack of efficiency on the part of African governments, public security worries and unfamiliarity with local laws are major challenges at the moment.

"For example, last year in Tanzania, we tried to deliver 120 metric tons of goods from a port to a construction site only 70 kilometers away. But it wound up taking us three months to deliver the goods because of government red tape and unexpected road damage," Lyu says.

"Roads in Tanzania also have weight limits for cargo vehicles. Trucks that are over the weight limit are fined as much as $140,000 for one unit of goods. What's worse, when we were forced to change to ocean shipping, the port lacked hoisting technologies," she adds.

Lyu says the company sometimes feels "powerless" but adds it is also exhilarating to see consistent improvements in Africa.

"Every time I travel to Africa, I can feel that national governments are passionate about developing their economies and that people are working hard to lift their living standards. Efforts from governments to tackle their long-criticized efficiency problems have also made a difference," Lyu says.