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Kenyan Brothers march to success in logistics business

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Mr Brian Muthiani (left) the managing director M & S Logistics Ltd, with his brother, Mr Vincent Muthiani, the company’s executive director.

As fate would have it, Lawrence Muthiani’s one-man-show logistics company collapsed after 26 years of operation.

Having worked in the logistics business in the 1970s, Mr Muthiani rose through the ranks to become the export manager of the company where he worked before venturing out on his own in 1978.

His firm would find the road bumpy and eventually close down in 2004 due to operational difficulties.

But it would take the efforts of his two sons, 33-year-old Brian and 28-year-old Vincent, to turn the dream he had into reality. The two brothers joined hands by establishing two inter-dependent logistics and cargo clearance firms, an investment that has turned out to be a success story.

Interestingly, it is the younger of the two brothers, Vincent, who went first by establishing Bima Clearing and Forwarding Company in 2006. His objective was to carry out customs documentation and clearance both in the country where the goods originated and their final destination.

At the time, Brian was completing a two-and-a-half-year working holiday in the United Kingdom before moving back to Kenya to work forglobal food giant, Nestlé, at a senior level for two years.

As his brother’s business became more and more successful, Brian got interested and quit his plum job to establish M&S Logistics in 2007.

The two brothers had one thing in mind — their two companies would operate like Siamese twins, complementing each other in their line of operations. While one company would do freight forwarding and offer courier services, the other would delve into the customs and clearance business at the port of entry for the same products.

Incredible growth

And today, the two brothers are living their dream, as Brian says: “M&S Logistics handles freight forwarding and courier services, which involves collection of goods from any part of the world and transporting them to the destination country via air or sea.”

“Once they get to the point of entry, say in Mombasa or Jomo Kenyatta International Airport (JKIA), Bima Clearing and Forwarding takes over and carries on with customs clearance. They then hand the goods back to M&S Logistics for transportation to the client or warehouse,” Brian told Money.

So when Brian’s brainchild, M&S Logistics, broke even in the first year of operation, the two decided to incorporate a holding company, M&S Logistics Group, for their two family companies and made their father the chairman.

M&S Logistics started operations with only one pick-up as start-up capital, the only other expenses being fuel and the driver’s salary, says Brian.

They found it hectic for the goods or items they dealt with to be cleared or transported by other companies, right from the point of origin to the destination. This would take time and at times, meant more costs for the customers.

“At any given time, an importer doesn’t have to deal with two different companies. What happens is that an importer deals with one company that deals with freight forwarding, another one to do the clearing, and another one to deal with transportation or storage, but the two companies are each other’s affiliates,” Brian said.

When Brian resigned from Nestlé to join Vincent in the family business, increased trade opportunities saw the number of employees rise from 14 to the current 50, with turnover rising almost six-fold in the five-year period to December 2012. The family business’ annual turnover has risen to over Sh100 million as at December 2012 from Sh15 million in its first year.

Given such success, why did their father’s business collapse?

Getting the right talent

“My father ran the business on the knowledge he had and it was a very manual process. It was almost like a one-man show, so if he wasn’t there, the business would stop. What we did when I joined my brother in the business was to employ talented personnel who had good understanding of logistics, customs clearance, and freight operations,” Brian said.

So, to get things going, the company went on a staff poaching spree, picking talented employees from well-established local and international logistics companies.

“Some of the lines and services we are providing today were actually borne out of the ideas of the talent we poached from our competitors,” he said, adding that the biggest headache is attracting and retaining talented personnel.

There are also cash-flow management challenges that many small or medium-sized businesses experience following expansion or turnaround in their operations.

Investment in robust information technology infrastructure is also a major challenge facing many firms keen on increasing efficiency and having an edge over their competition, given the related costs of such IT equipment.

“In Kenya we have about 900 logistics firms, most of which can deliver the services that we do. The difference is in the one who constantly keeps their clients updated and has a speedy turnaround, something which robust IT infrastructure helps you to achieve,” he said.

The two businesses, which share employees and office space, have banked on the country’s rising import business compared to exports to grow their investment, which broke even much earlier than they had anticipated.

“Kenya is a big importer of goods, so the opportunities are more in importation than export services. Export takes about 15 per cent of our business. The rest is importation. So what we set out to do is to position ourselves to take advantage of the rising imports into the country,” Brian said, adding that they are now preparing themselves to take advantage of the government’s promise to issue laptops to pupils joining Class One from next year by bidding for the supply tender.

Many of their customers are drawn from the information and communication technology industry and the hospitality sector. But with increasing opportunities, both in the export and import areas globally, the family business is looking to expand into the East African region.

The only way to hit the ground running and get it right first time, according to Vincent, is to scout for a well-established international logistics company, several of which they are in talks with, for partnership.

“We found out that there are many costs if you don’t get it right the first time. You can burn your fingers if you get your strategy wrong at the start,” Vincent said.

The two brothers, however, would not name some of the international logistics companies they have approached, only saying that they have initiated talks. However, they ruled out the possibility of a complete takeover.

“We would still want to hold the controlling stake. We are hoping to take advantage of the global network and infrastructure of the potential international partner to be more competitive,” Brian said.

-Nation

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