Unifreight plans hefty fleet investment
BUSINESS REPORTER
Transport and logistics giant, Unifreight Africa is planning to increase its truck investments starting this quarter and continuing into next year, Business Times can report.
This follows its recent investment in 100 new trucks, which turned around Unifreight’s fortunes after it had always been a loss maker.
In a statement accompanying the company’s trading update for the third quarter, Unifreight CEO Richard Clarke said more trucks ought to be operating in cross border markets to hedge the group’s operations from inflation and economic headwinds.
“During Q4 2023 and into 2024 we aim to further increase our fleet of FAW’s and to allocate additional assets toward the cross-border market.
“For the local Zimbabwean market, we are focussing on investment in smaller FAW28 290hp and FAW8 140hp trucks with volumetric configurations to better serve the local market at lower running costs per kilometer,” Clarke said.
He claimed that this approach is in line with cross-border strategy and cost containment, both of which are showing to be successful models.
The 100 FAWs have been working in the local Zimbabwean market, but according to Clarke, the group has moved some of the fleet onto more lucrative cross-border contracts as a result of low rates/KM.
As a result, third-quarter volumes saw a notable 135% increase, from 50,000 tonnes in 2022 to 120,000 tonnes in 2023.
The primary source of this increase was a capacity investment made by Unifreight in Q1 2023, when they purchased 100 X FAW28-380FT and paired them with AFRIT Taut-liners.
This was amazing cost containment in an inflationary environment, according to Clarke, especially in light of the addition of assets to the fleet.
“The combination of a 135% increase to top line growth and marginal 2% increase in expenditure has resulted in a fantastic year on year turnaround from a loss making position in 2022 to a profit of ZWL$3.4bn for Q3 2023,” he said.
Although the exchange rate has been relatively stable in the third quarter, according to Clarke, the main problem facing the market has been the scarcity of reasonably priced financing.
He said loans denominated in United States dollars could only be obtained for a shorter tenure owing to the expiry of the dual currency law in 2025.
However, the multi-currency system has been extended to 2030, meaning banks can now offer loans with longer terms.
“Another challenge is the forced arbitrage in formal retail where goods were required to be priced in both United States dollars and Zimbabwe dollars, but the exchange rate used was controlled by the Reserve Bank of Zimbabwe, resulting in goods being priced cheaper through the informal market.
“Government, however, can be commended with their most recent Monetary Policy Committee addressing this arbitrage and promoting the use of bank cards through exemption from Intermediated Money Transfer Tax ,” Clarke said.
According to him, this intervention will help the formal retail sector, which Unifreight serves across the nation.
