TENGWA AFRICA: Connected in Every Direction

Often, the difference between the good and great logistics businesses is finding the opportunities in the challenges. During tough times, the options are sit back and be overtaken, or choose optimism and accelerate.

Times have been tough on South Africa’s roads. Fuel price volatility, global supply chain collapse, port congestion, infrastructure deterioration, environmental issues, and the Covid hangover continue to blight logistics firms. Add a weak Rand and slack investor confidence and you have a recipe for disaster, but for many there are things happening that are helping to build long-term stability.

Tengwa Africa is a leading provider of transport and logistics services with a strong road transportation business, a rail loading operation; and access to warehousing, freight forwarding, and general logistics management capabilities within the Group. From mineral resources to consumer goods, to industrial products, Tengwa – through a network of partner businesses – has the market covered. 

Wholly owned by Export Trading Group (ETG) – a diverse global conglomerate – Tengwa Africa is looking forward to growing its influence as trade in commodities increases. Despite weak economic conditions across many of the spaces in which Tengwa plays, this relatively young business has managed to achieve significant results that are positioning it as a leading player in essential corridors.

“Tengwa Africa is primarily a road transport business,” explains COO Rupert Schmidt. “The bulk of our business involves road transportation of a range of commodities including fertiliser, coal, magnetite, chrome, and soft commodities including beans and soya. In Africa, we moved a lot of copper and other project cargo to and from the DRC to the Port of Durban. As ETG, we have in country operations in Zimbabwe, Zambia, Mozambique and Tanzania, giving us access to facilities and people on the ground.”

Commercial Manager, Berndt Burger furthers: “We ride on the back of the commodities that move in Africa – chrome, nickel, lithium and other ores used in batteries. We run everywhere in southern Africa, south of the DRC. We are regularly moving products into Namibia, Botswana, Zimbabwe, Zambia, Mozambique, eSwatini, and Malawi.” 

EXCITING TIMES

Tengwa’s offering is all about efficiency. Too often in southern Africa loads are delayed or lost, at the cost of local and international clients alike. Seeing this as unacceptable, Tengwa’s management team has worked relentlessly on redesigned processes and systems, and right-sized operations to ensure true value-add for clients, solving problems through a reliable and consistent approach. 

Recently, the company sold its fleet of 98 trucks and 160 trailers in a strategy change, opting for an asset light tactic. Partnering with fleet owners with whom Tengwa has longstanding relationships, Tengwa now manages a dedicated fleet of more than 500 vehicles across the continent. This enables the company to work across two models – Managed Fleet and traditional Transport Brokerage.

“Tengwa is the client-facing party and manage these relationships with care,” says Schmidt. “Our operations team manages the efficiencies at the loading and offloading points, crossing borders, paperwork flow and vehicle tracking. In summary, we take ownership of efficiencies whilst the fleet owner provides a serviceable and presentable fleet. By performing our respective duties, both parties are able to benefit equally from this partnership. 

“These fleets are made up of vehicles for bulk and break-bulk commodities. A large portion of the fleet is Zambia-registered, enabling Tengwa to service all the major corridors. Major focus is on the copper corridors from northern Zambia and the DRC down to Durban, Dar es Salaam, Beira, and Walvis Bay,” says Schmidt. 

This is where the big volumes are set to grow in the future. By 2035, global demand for copper will reach 50 million tonnes. 25 million tonnes were demanded in 2021 with mines only able to produce 22 million tonnes. This situation has sent the price soaring. The DRC and Zambia are among the world’s top 10 copper producers and African ports ship to China regularly. By 2030, lithium carbonate equivalent demand will surpass two million metric tons. Namibia and Zimbabwe are Africa’s lithium hubs with mining expected to increase in coming years as the element is used in a global green energy transition. 

“It’s an exciting time as we have good flows, good hands on the ground, good African coverage, good African experience, and we are partnering with companies with the same mindset,” explains Schmidt. “We are matching our core capabilities – people, product flows, and facilities – with experienced, locally relevant partners that understands the intricacies of operating a fleet efficiently. The copper market is booming and we expect lithium to be the next big thing. 

Driving efficiencies will come in the careful organisation of routes and clear planning. “The northbound fertiliser and soft commodities will enable bidirectional flows that we need to make us more competitive when compared to others moving along those same corridors,” says Burger.

The UN highlighted, in a recent report, the importance of building strong value chains in Africa’s battery minerals industry. The DRC produces 70% of the world’s cobalt, and southern Africa is well-known as the go-to region for graphite, platinum metals, and more. The global electric vehicle industry, which relies on these minerals, is expected to hit values of $46 trillion by 2050. By investing in value chains to ensure efficiency across the market, Africa can overtake international rivals as the chosen source of eco-friendly minerals. 

“We are expecting lots of positivity on the copper corridor,” says Schmidt. “Those commodities are in huge demand and lithium is only just starting.”

Burger adds that in difficult times, the company has remained resolute and committed to its strategy. “There is a lot of opportunity to be had in a tough environment. The recent demand for coal emanated from energy challenges in Europe. As a significant exporter of coal, South African transport companies experienced an unexpected spike in demand for bulk road transportation to service this demand – Tengwa was well positioned to capitalised on this opportunity. Similarly, copper is booming in China which creates an opportunity to tap into that market. In turn, Tengwa shipped large volumes of fertilizer to Zambia via South African ports – this came as a result of prevailing congestion at other African ports. Our aim is to understand the markets as best we can which allows us to tap into these opportunities.”   

‘NAVIGATE AROUND IT’ 

To access opportunities, there is a need to overcome challenges that very clearly exist on the African continent. Tengwa is no stranger to these bumps in the road and calls on deep experience from its team to navigate complex situations. “The environment we operate in is very challenging,” says Schmidt, highlighting some of the current hurdles.

“As an example, we run to Mozambique and Richards Bay where we export large volumes of coal – these ports are highly congested. Road conditions are not great, ports are congested leading to frustration from drivers emanating from excessive standing time. These bulk commodities are suitable to rail, but due to capacity constraints, most volumes move on road. As South Africans, we have learnt to navigate around these challenges with resilience and positivity. 

Tengwa works hand-in-hand with its fleet partners to understand and avoid costly delays, and it brings expertise across multiple tedious-but-necessary procedures to allow vehicles to remain focused on the road ahead. He adds that this model is not common in South Africa, with many competitors owning large fleets.

Tengwa’s strength was demonstrated in the past year, following a number of upgrades and adoption of tried and tested systems. Schmidt and Burger have helped to install new technology and software that is industry-recognised and streamlined. This is just part of the journey as the company hopes to make use of more technology (currently busy rolling out data analytics and tracking coverage) to add further value to client operations. 

“We are a clear enabler when moving product,” highlights Schmidt. “We move lots of fertiliser locally – we moved more than 30,000 tons from South Africa to Zambia in just the previous season. With magnetite, we moved almost one million tons in a year – that is something we are proud of.

REFRESHING INFLUENCE

ETG has helped Tengwa to become more efficient through access to trade flows from partners across the group. Despite being a large multinational company, ETG has maintained its entrepreneurial spirit, allowing business to make decisions and capitalise on opportunities. 

Burger agrees: “Their biggest influence comes from group flow and volume. ETG owns a large fertiliser organsation and they handle grain and maize trading. When they complete those trades, we get to be involved in some of those movements.” 

Growth for Tengwa is about reinforcing relationships with clients and helping to move more cargo around Africa, while continuing to build a strong base of high-quality systems and processes that deliver regional presence, global reach, for Africa and beyond. 

“It is about getting our operating model and systems right. A key contributor to our success is the ability to plan around uncertainty. A lack of planning leads to clients and suppliers being frustrated and mistakes are costly. We have set the back office up professionally, with proper people and systems – this is an enabler for taking on the big jobs. A backbone that works is key,” states Schmidt. 

He adds that deeper relationships with clients means a holistic understanding of problems, and how Tengwa can deliver solutions. A never-ending desire to learn means that the industry stays exciting. “You understand the dynamics of different industries,” he says. “We get to learn about complex national retail operations, what goes into steel manufacturing, why copper is important and how different types of cargo should be handled. In logistics, the learning process never stops.” 

This is a business excited about the future, not anchored by negativity, but looking beyond the horizon for opportunity. “Tengwa is not the same Tengwa from five years ago. We have gone through a lot of change and we are geared to move big volumes, providing great service, at competitive prices. 

“We have access to flows, we have good clients, and we are bullish and positive,” Schmidt concludes.