We speak to Ope Olanrewaju, the CEO of Kennie-O Cold Chain Logistics, a Nigerian company that provides refrigerated transport and cold storage solutions to fresh produce farmers as well as the pharmaceutical industry. The business is based in Ilorin, Kwara State.
1. How did you come up with the idea to start Kennie-O Cold Chain Logistics?
Initially, our business was poultry production. At one stage, we received a call from an industry leader to supply them with frozen chicken. At that time, we supplied small eateries and hotels, so we were excited to get that order for five tonnes of frozen chicken and to deliver at -18°C within two weeks. It was a breakthrough for us.
We went straight to the farm, prepared the chicken and started looking for a cold truck. We found one but it wasn’t in good working order. The chicken was nevertheless loaded onto the truck and we drove for five hours to the delivery point. However, the client did not accept the delivery as the temperature inside the truck had reached 25°C; the floor of the truck was full of water and blood. We lost millions of naira.
That was how Kennie-O Cold Chain Logistics started. We realised there was a gap in cold chain logistics. We started with one truck and customers would pay us in advance so we were able to buy a second one and business picked up.
In Nigeria, over 45% of our fresh food and vegetable production is wasted annually because of the lack of suitable cold-storage facilities. Seventy per cent of Africa’s food is supplied by smallholder farmers and they are losing so much money because of the post-harvest losses in our fresh food and vegetables. We bridge that gap for smallholder farmers by helping them to transport it to other temperature-controlled environments.
2. Explain the company’s business model.
We hire out our trucks and help people to move their products from the farm gate to the final market. We generate further revenue through our cold room facility where customers can store their products. We also have a packhouse where we sort, grade and wash the fresh fruits and vegetables and lease part of our packhouse to people interested in this service.
In addition, we buy produce directly from smallholder farmers and sell to end-users. We have partnerships with major markets, embassies and retail stores – such as Shoprite and Spar – and we also supply to individuals who order directly from us.
3. What pain points are you addressing in the logistics industry?
We use temperature trackers to track our cargo from point A to B. In cold chain logistics, temperature is key. The tracker enables us to monitor the fruits and vegetables from farm gate to the final consumer. At any time, we know their location, temperature and humidity.
We set the temperature depending on the product we are moving and should this temperature change, we receive an alert and can inform the driver.
4. Who are your main competitors?
According to industry estimates, nearly 11 million metric tonnes of fresh fruits and vegetables is moved across cities in Nigeria every year. We would need a minimum of 25,000 trucks to move this volume. Presently, we have fewer than 1,000 cooling trucks.
There is currently very little competition because of the high barrier of entry into cold chain logistics. Demand is high so we collaborate with other players.
5. What are some of the challenges in Nigeria’s logistics industry?
The major challenge is the lack of reliable power. Another hurdle is the training of personnel, particularly technicians to maintain the chillers as cold chain logistics is still in the infant stage in Nigeria.
Government focuses primarily on agricultural production, which is good; however, the more we produce, the more we lose and this is why the cold chain is critical.
The north of the country produces most of the tomatoes, however it needs to be transported to the south where the biggest market is. If this is not transported in cold trucks, it means 50% of the yield could spoil and the price per unit has to increase. With a reliable cold chain, between 90-95% of the produce stays fresh.
Our road networks are another challenge that we face. We have to constantly maintain our trucks to ensure they meet the required standard for transportation.
6. What mistakes have you made in business?
Three years ago, we were transporting ice cream from Lagos to Port Harcourt in the southeast of Nigeria. When the truck arrived at Port Harcourt, the ice cream had melted because the driver did not monitor the cooling unit. We assumed it was working and we lost 14 million naira. Since then, any time we transport ice cream, we ensure the chiller is working perfectly, the right driver is onboard and the truck is working optimally.