Chinese logistics company weaves fine web in Africa

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

Trucks of a delivery team of CJ Smart Cargo Group in Tanzania. The company first stepped into the African market in 2008. [Photo/Provided to China Daily]

CJ Smart Cargo invests heavily to establish an integrated network

Capitalizing on the growing presence of Chinese engineering companies in Africa over the past five years, CJ Smart Cargo Group has grown from a fledging shipping agency that got its start in Qingdao, Shandong province, into a global logistics enterprise weaving its own network on the African continent.

The company, after years of experience working in more than 20 countries on the continent, has been increasing its investment in delivery trucks, local drivers and distribution centers in African countries such as Tanzania, Zimbabwe and South Africa.

"As a provider of door-to-door logistics services, we find that it is imperative to establish our transportation web in Africa, where business is thriving yet infrastructure is lagging behind," says Lyu Cuifeng, CEO of CJ Smart Cargo Group. "If the mountain will not come to you, you must go to the mountain."

Since the 2008 global financial crisis, China has encouraged State-owned enterprises to venture overseas for business opportunities, notably in Africa. These large companies in turn have counted on startups such as CJ Smart Cargo to carry out outsourced logistics operations on the continent.

The company, now headquartered in Shanghai, has 10 branches in China and five overseas offices and employs more than 200. Lyu says the company manager in Africa is taking Swahili lessons to become better acquainted with the local culture.

CJ Smart Cargo first stepped into the African market in 2008 to help run the logistics operations for a project by State-owned iron and steel giant Baosteel Group in Namibia.

After several years of researching markets on the continent with an eye on expanding, the company decided to "plant its roots" in Southeast Africa, a region with political stability and friendly diplomatic relations with China. Now projects in Africa account for roughly 60 percent of the company's annual revenue, Lyu says.

CJ Smart Cargo's regional investment is focused on establishing links to an integrated logistics chain. In Tanzania, the company has established its own delivery teams with trucks purchased from China and drivers hired locally. It also has branches in major cities across the region to help coordinate on issues such as customs and the transportation of goods upon delivery at ports.

"Cooperation with local partners is no doubt important, but there are few qualified local business partners. Thus we often face risks of breaching contracts or being unable to meet deadlines," Lyu says.

"For our clients, logistics support must always run ahead of schedule for an entire project - otherwise, we will be fined heavily for delays," she says.

The company is planning to build a distribution center in Tanzania to cope with the inability of the country's ports to store and transport goods.

"Sometimes delivering cargo to inland countries like Zambia requires us to travel across neighboring countries, where different policies often result in further complications," Lyu says. "In this regard, our investments are aimed at securing an unimpeded transportation route to greatly cut down on costs and reduce risks along the way," she says.

Lyu says the company needs about two years to complete its network in Africa, including improving infrastructure and dispatching personnel.

"But when the hardware is in place and the channels are open, we are expecting a qualitative change, perhaps doubling or tripling revenue each year."