Jude Obi graduated in medicine from the University of Ibadan in the early 1980s and took over from his late father as Managing Director and Chief Executive Officer of Interland Transport Limited (ITL).
He recounts to Assistant Business Editor, KELECHI MGBOJI, how he has been an active player in the haulage industry ever since.
He also explains why it is in the interest of employers to participate in the Workmen Compensation Insurance Scheme to facilitate compensation for industrial accidents.
Viable venture
Investing in truck parks can fetch billions of naira in internally generated revenue (IGR). Such venture is what Lagos requires to decongest the roads of trucks and tankers littering the highways.
Lagos State can make billions of naira yearly by having standard truck parks fitted with communication gadgets linked with all depots such that you don’t leave that depot except the driver receives a signal to come for loading.
Truck parks are commercially viable investments because users pay to be there. And whosoever gets there needs to clean up, something to eat; and if he has to rest, he needs a little sleeping space, a cabin or whatever.
These are all areas of investment which, if the government puts it up, whosoever is there to manage it should allow all these structures to exist.
Beyond making money from the parking of trucks, you also make money through fees and rent. And if it is properly regulated, you can also get your VAT (value added tax) from everything sold there.
Parks at regulated intervals
Some parks came into existence because it was convenient for drivers to stop at those points. That kind of structure will not augur well for the sector.
There is need to put up truck parks along the highways because nobody wants to subject his goods worth millions naira to a risk. It is better for a driver to drive for a certain number of hours, get to a park which is reasonably secure, pay and park, get some rest, and then continue his journey.
This will greatly reduce accidents on the highways. There are times the driver gets weak but because there are no safe points at regulated distances, he stretches himself to carry on, and that is the interval when accidents can occur.
Involvement of private investors
The government has the wherewithal. It can get into such investment, run it awhile and then sell to private investors and make profit.
The build, operate, and transfer (BOT) kind of arrangement will be a profitable venture for the government in this case. When it now establishes the facility, it should insist that stoppages in transit must be in such a park.
When operators in the haulage sector have imbibed this new approach and it is stabilised, they can now sell the facility. There are conglomerates that come into the country, buy moribund establishments, revive them and then sell to investors.
The government can do such a thing. Where it becomes a problem is when the government builds such ventures and continues to run them.
Haulage is capital intensive
The location of an investor’s office and garage is very vital, depending on what services he intends to provide, whether bulk liquid haulage or general goods.
There is need for proximity to the place where his services are required, and that means higher cost of acquiring property in commercially developed places. Reasonable land space is required because of the size of trucks. A truck requires 60 feet by 10 feet to park, and even if trucks are parked in a row, they require equal space to drive off.
An investor may go about 30 kilometres out of town for a cheap property but he will also be driving 30 kilometres back to town.
Competitors who are near will always beat him to it except he stretches himself going at night, and subjecting the vehicles and drivers to risks.
An investor needs adequate space for a refueling facility, an administrative block, a good workshop, and a warehouse to evacuate whatever a customer wants him to move out; and much more.
If you’re considering new trucks for your operations you should be thinking of hundreds of millions of naira.
It is very capital intensive. That is why a lot of trucks are parked on the roadside and the owners don’t have a parking lot.
Managing a logistics company
I have been exposed to logistics services in developed countries where they operate under an organised and predictable environment. In Nigeria, it is a different ball game.
When I joined ITL, we were the only company that employed drivers and their mates, and saw them as staff. The in-thing was to employ the driver on loose grounds and then the driver engaged a mate who was not the responsibility of the company.
Because my late father had relationship with an expatriate, he brought in those organised settings practised in Europe. That was adopted here to set the ground for operating a completely different structure.
Lawlessness of truck drivers
A lot of those who constitute the major arm of our operations are not educated, a lot of them learnt by apprenticeship, and only do what their boss taught them.
They don’t have the structure for self improvement. And due to the wildness and unregulated nature of operation, they hardly can do otherwise.
If we have organised lorry parks along the roads where the activities of drivers are regulated to ensure they don’t get drunk, or get involved in immoral acts and issues that could distract them from their mission along the way, all the rascality will be reasonably reduced.
Why rickety trucks litter the roads
No operator wants to have rickety trucks on the road if it is avoidable. The high cost of funds makes the replacement of vehicles unattainable.
Operators don’t easily recover their funds. You don’t make profit in your operations by running the trucks. Rather you make profit by reducing the risks, losses, and costs.
An articulated truck goes for about N14 million. Going by the current interest rate of about 25 per cent, you have to contend with about N3 million or N4 million as interest every year in addition to repayment of the initial capital invested.
Assuming you have 18 months’ duration for repayment or two years, you have to grapple with a monthly repayment of about a N1 million from your profit.
Can you make a monthly profit of N1 million from a truck in this time? It is not possible. The roads are bad, and the infrastructure is not there.
Consider the gridlock in the Apapa axis of Lagos. It takes two days to pick a load and get out of the ports.
If you are an up country transporter and it takes another four days to do a round trip somewhere in the North or down East, you probably do five trips in a month. And how much do clients pay?
No client will agree to pay up to N300,000 to convey his goods to the East. It is within the range of N250,000 and N280,000. This is the full amount, of which the interest component of that amount may be about N40,000.
How will you build up N40,000 profit per trip to pay for N1 million interest on a loan in a month? It is not possible. So, rickety trucks are bound to litter the roads.
We will need a lot of government assistance by way of soft loans and having facilities in place, good roads, and other infrastructure.
Our association can take up a brokerage of haulage operations, as we see in the maritime industry where what a ship is going to do is organised, and its destination and what it is going to pick at the destination are specified.
Once we have such a structure, only few businesses can beat the haulage sector.
Possibility of such a structure
It is possible but if there is no law backing it you cannot go to another state and impose things. If there is a law backing such a structure, as you are living Lagos to that state you call and say “I am on the way, will I have goods to move to anywhere?”
If such structure is in place, the owner of a truck can comfortably release his truck to the system so that if he is going to Calabar for instance, the vehicle gets to Calabar and if the association has a load for Abuja, he can go.
All I need to know is that the association’s structure will call me to say the whereabouts of the truck.
If it gets to Abuja and it needs to go to Sokoto, there’s a structure in place that will fuel it, and give you the necessary things to move on. It can even take a month before I see my truck but that structure sustains it.
That way I don’t lose money or time and we are not under the mercy of any tout. Touting is another thing that has destroyed our operations. They slot themselves between the service user and provider.
At times they undercut the rates to an unviable level, and because of the desperate situation in the country some people bend to the rate.
Workers’ welfare in ITL
Once the worker is employed and is on the payroll of the company, he is automatically qualified to enjoy government standard, which says beyond the emoluments comprising salary, transportation and housing allowance, the worker is entitled to an insurance premium paid on his behalf, and the contributory pension scheme.
Because they are operating under reasonable risks, there are two insurance covers for workers: workmen compensation insurance, and group life insurance for the entire staff. Once you do that, to some extent they are reasonably covered.
The only difference is to what extent is the value of the insurance cover but that also depends on the resources available to the company.
Workmen compensation used to be handled by insurance companies. But now, there is a law which vests it in the NSITF (Nigerian Social Insurance Trust Fund).
To some extent it is good because if all companies contribute to the central purse, they will effectively handle any issues, unlike when that contribution was segregated among so many insurance companies.
With all the companies in the country moving all their workmen’s compensation contribution to the NSITF funds, they will be more than able to handle any compensation issue that comes up.
It is for an employer’s own good that he provides insurance cover for his employee because in the absence of such cover, he takes 100 per cent responsibility for what happens to the worker.
