Mpho Scott learnt three lessons during his four years at fuel giant Chevron - don't take shortcuts with safety; drivers are family and always have a spare ready. Chevron's fleet of some 300 trucks supply fuel throughout
South Africa and it is with this top team that he cut his teeth in the business.
By applying these lessons, he learnt well. His own young business is growing in such a way that the two directors are ready to build cash reserves.
These days, together with Hector Sikhakhane, former legal adviser at Eskom, Scott is a partner of Modirapula Investments, an investment holding company. The company recently formed a subsidiary called Modirapula Transport, a small haulier company, of which he is now director. "Modirapula means 'rain maker' in Setswana, only in our case, the rain is black coal," said Scott.
Emergent operators
With a sound contract in the bag, they were ready to buy ten truck tractors and double-trailers to deliver coal to Eskom's power stations in the Mpumalanga province. With a favourable loan structure they purchased the Actros 2640 truck tractors with the experts at Mercedes-Benz Finance and Insurance in support.
The finance solutions and vehicles selected have been beneficial to both parties. "Mercedes-Benz Finance and Insurance understands
what it takes to survive in the cut-throat haulier market," says Scott. The rand buys more truck per dollar than per euro, but Scott lists the famed durability of the Actros as the selling point.
Synergy in expertise
Both partners brought their own career experiences to bear to make Modirapula a success. Sikhakhane provided the legal background and an intimate understanding of the requirements from both the power stations and the hauliers, while Scott invested his business experience, expertise, networking skills and strict cash flow management skills - in the latter instance, quite literally.
"We did not take any salary for three months which, together with the flexible repayment structure provided in Mercedes-Benz Finance and Insurance package, gave our fledgling business the flow of cash it needed to take off," says Scott.
Modirapula is unique in that its CEO is involved
with the entire coal value chain - Scott is,
among others, non-executive chair of Mashala
Resources, a coal mining company with collieries
in the Ermelo area, as well as Indonsa Logistics,
a plant hire and stevedoring company in Richards
Bay.
"We were already involved in getting the
coal out of the ground and loading it onto
ships. The next logical step was to provide
transport, as the sky is the limit for trucking
in South Africa's coal mining industry," says
Scott. "Geological surveys show South Africa
has five billion tonnes of coal, which will
last at least until 2100 and provide a demand
for trucks to transport coal for the next
century," he laughs.
Diversification
Scott is quick, however, to caution against focusing on serving just one business sector. "Any business needs redundancy - or in plain English, always keep a spare handy, be it in parts, rands or clients. To meet this aim, a business network that is built on solid relationships is as important as good cash flow management," said Scott.
His advice to fleet operators is also to respect their drivers. Any business should be formed on the basis of trust (partners, employees and the client), passion for what you do and commitment to business. In less than a year of operations, Modirapula has quickly built a good name among drivers, and Scott had no problem to double his number of drivers when their trucks started to operate on a 24-hour basis in June - despite the shortage of experienced drivers in the industry.
"Modirapula does not pay per load, which forces drivers to take risks to earn a decent wage. We view our drivers as executive partners in the fleet operation. They get a relatively high basic, with daily bonuses if set delivery targets are met and annual bonuses for taking care of trucks."
No shortcuts
Scott also does not brook any shortcuts with environment, health and safety and has appointed an assistant-supervisor whose sole responsibility is to focus on safety. "We are also investigating how to encourage drivers to test for AIDS as part of a total strategy as agreed by government, private sector and NGOs. This will enable us to look at how to support HIV-positive cases, including looking at sustainable solutions," he says.
Mpho Scott is part of a new breed of truck operators that are fast finding their feet in a transforming haulier industry. His recipe for starting a successful business is simple: understand your market, develop
strong relationships with service providers, clients, and staff; pay better salaries, and make sure that environmental, health and safety issues do not trip you up.
This will ensure that you make fair profit.
Which sounds like the exact reason why truckers
are in business in the first place...
Affording an emerging market
Black entrepreneurs are finding high entry barriers to the transport business despite the fact that opportunities abound in a booming economy
Transformation as in any other sector continues to be one that the transport business grapples with.
The transport sector remains dominated by people with access to capital. Although large companies try to close the gap with owner-driver schemes, there is a need to develop the entrepreneurs in this sector.
With the Mercedes-Benz Finance and Insurance team now putting its considerable might behind structuring
finance in the emerging transport, things are hopefully set to change.
They are taking a whole different look at how and which mobility solutions are required by the emerging transport sector and how to manage the risk in a new way.
After its owner-driver solutions have met with great success, Mercedes-Benz Finance and Insurance now have a finance package that is accessible to a wider pool of transport operators and ensures that start-up businesses can count on a speedy entry into market.
Strategic business development director at DaimlerChrysler Financial Services (DCFS) Aluwani Ramabulana explains that a pilot programme was conducted with some new entrants and a product devised that ensured high sustainability.
"The product essentially provides emerging transport entrepreneurs a lower entry barrier by lowering owner contributions and initial capital outlay. The deposit required is low for the horse and the trailer. We have also allowed them to repay VAT in the third or fourth month, or spread it over six months," he explains. Coupled with a competitive interest rate at prime plus one, cash flow management is eased considerably.
He stresses that the difference between their finance package and others in the market is that a contractor will need to fulfil certain obligations over time. "We strongly believe that transfer of skills is a requisite to improve probability for contracts and operators to succeed in the long term".
"We might not seek a track record from the new entrant, but we do evaluate the applicant's management skills. If we deem it necessary we insist on a contract with an identified management company that can help them with management skills and transfer skills," he elaborates.
During a 12-month period, they will help with scheduling vehicles, assist in planning for a specific market, bookkeeping, assessing and recruiting drivers and negotiating rates. |
