In Nigeria, a disruptive model of logisticsFebruary 10, 2021
Seni Edu, CEO of Eko Support Services, talks to The Energy Year about how the crisis has impacted the logistics sector, non-traditional strategies the company is considering to reduce logistics costs and its plans to expand the value and scope of the Eko Support Free Zone. Eko Support Services is a Nigerian-owned logistics company.
In what ways has the crisis impacted the logistics sector and how has activity resumed?
The supply chain never stops. During the peak of the pandemic, especially when we had lockdowns, the port was open, offering services to offshore clients who were still operating. Most products are imported, so as other areas of the world shut down, the impact was felt. Consequently, many projects were suspended or came to a halt. Many service providers, especially specialist providers, are having difficulty now. As a consequence, we might witness another consolidation of the oil and gas service industry.
During 2020, we saw a lot of bottlenecks in road transportation because of congestion from infrastructure deficits and there were major challenges in terms of who was responsible for what. Normally it is NPA [Nigerian Ports Authority] that handles the entrance and exit from the port itself but once the new Presidential Covid task force was introduced, we needed their green light as well. There came a point where the situation became cumbersome as these authorities had overlapping duties.
Today, however, we are witnessing more activity in the hydrocarbons sector through bids, RFQs and meetings with clients or potential clients. We have realised that one needs to be more innovative and flexible, and a contingency plan is always needed. Everyone is in a “wait and see” mode to see how things will pan out in 2021. In any case, it has been a good learning curve and one has to be prepared to push business continuity forward no matter what the situation is. If you can’t work in the way you’re used to, how can you change and adapt? These are the kinds of questions companies ought to ask themselves.
What non-traditional strategies are you looking into to reduce logistics costs?
In Nigeria, the cost of logistics in the total price of a product is around 25%. We are looking at alternatives to reduce this cost. To this end, we are trying to create a system that is disruptive to the traditional model, one that is able to deliver more services with less space as it is all about optimising the space you have. Traditionally you rent space and equipment and the IOCs, for example, rent their own dedicated warehouse and space, which takes up around 100,000 square metres.
What we propose is different. Rather than giving a client X number of square metres, we have to push as much cargo as possible through a certain amount of space. We need them to give us as much data as possible. From here, we try to implement high-tech software and algorithms to manage the inventory more effectively so that the client can predict what they may need and when they may need it. This is done by feeding the system with data on cargo movements, the development stage of a project and production activities.
Although this model is in its early stages, it’s being used for vessel berthing plans. We are doing inventory management and track and trace to assist in reducing the amount of material the client needs while reducing cost. In other words, we are trying to drive more tonnage through square metres and thus be more efficient. In a sense, we are seeking to be more specific and concise with what IOCs or service companies need and move further down the supply chain.
In what ways are you looking to expand the value and scope of the Eko Support Free Zone?
One of the things we are talking about with the Oil & Gas Free Zones Authority is increasing the footprint of our free zone. We use it for our projects and we are even able to do some basic assembly as this adds value. Yet, clients cannot build a factory or assembly plant due to space constraints. For this reason, we have been thinking about adding other locations to attach them to the free zone. These locations would resemble consolidation centres, warehouses or stacking areas and from there we could consolidate. Parallel to this, clients would be able to rent space, take a whole warehouse and from there do fabrication or add on and get free-zone benefits. Eko support would be in charge of the logistics of the products offshore.
How are you delving into the container-moving business?
Due to the drop in oil and gas activities we have looked at other logistics opportunities. There has been a big issue with shipping lines in terms of movement of containers, even empty containers coming back to port. We have been doing a lot of barge offloading of empty containers and trucking these to APMT, the terminal next door. The issue here has been for empty containers returning to APMT for loading onto the vessel to take the empty container out to then be used again by an exporter.
Accordingly, we have developed a booking software system. Different shipping lines have different allocations in terms of empty space to go on the vessels. For example, vessels may have 500 teu for shipping line A but you only want to take empty containers to shipping line A at the time that the vessel comes in. So we have designed a software that allows clients to go online and book a barge slot and we can tell them the date and the amount of teu we can receive for them, so we know we can deliver a certain amount to APMT. The emphasis has been on empty containers this year because it has been a critical issue.
What is your strongest service and project line at present?
Our most consistent business this year has been the services to the shipping lines, and more specifically those for empty containers. The logistics on the oil and gas supply chain are also ongoing but will thrive with the picking up of the sector again in 2021. When it comes to projects as such, our supply base for FPSOs has been ongoing. They have asked us to assist with an even wider scope of business in this space due to the fact that many of their suppliers have been and are struggling with the last-mile logistics.
What client-centric and collaborative approach do you take?
The same way this industry is cyclical, with its ups and downs, one’s clients also go through difficult times. It is then that you need to go the extra mile, trying to help them find solutions and save on costs. We do a lot in the area of logistics planning that is not our responsibility, but it assists us too. Their problems can impact us in terms of vessel stock, for example.
Hence, it is not only about today but more about tomorrow – it is about creating loyalty among one’s clients. If you want to be here for the long run, you have to think long-term. At the end of the day, logistics is about finding solutions to the problems you or your clients might face.
Collaboration is also important. In 2020, we witnessed capacity constraints and infrastructural challenges which can be bridged by collaboration. In the past, companies within the same industry didn’t really want to collaborate. Today, however, alliances seem to work well for all parties. There can be benefits, even if we’re still competing.