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The Thriving Road Business - TELL Magazine

The Thriving Road Business

Transport companies, operating modern buses and offering a bouquet of alluring services, are making a kill in Nigeria despite the bad road infrastructure, and are now extending their frontier to the West Coast.

Associated Bus Company, ABC, one of Nigeria’s luxury bus operators, maintains a firm grip on the nation’s road transport business. Encouraged largely by a deliberate, painstaking strategy of expanding its scope of operation and fleet size, and introducing a number of innovative services to retain the loyalty of passengers, among others, the company has remained a key player in long distance inter-city transport service since 1993 when it commenced operations. For instance, apart from being the first and so far the only transport company to go public by listing on the Nigerian Stock Exchange, NSE, ABC also pioneered services on the West Coast route in July 2004. Since then, the company has been providing services to passengers from Lagos to Ghana, Benin Republic and Togo.
The Lagos–Cotonou–Lome–Accra route is said to be the busiest in the Economic Community of West African States, ECOWAS, region on account of increased trading activities along that corridor and is, therefore, considered a niche market. At the time ABC started operating scheduled luxury coaches on the route, with traders, students and tourists as its clientele, the frequency was one departure per day. But today, on account of the boom in trading activities along the corridor, the company has increased its operation to five frequencies daily on the Lagos–Accra route. This came on the heels of a fleet expansion programme that saw ABC acquiring 24 new coaches in August 2013.
Interestingly, all ABC coaches are equipped with on-board surveillance monitoring camera for security purposes and with speed limiters for speed controls. To make booking easier and more accessible to customers, ABC online ticketing has been enhanced to allow passengers book on-hold and pay later. Other innovations include on-board entertainment and refreshment, use of uniformed driving crew and organised ticketing units. Apart from parading an SMS booking platform, the company boasts vehicle tracking system, modern terminals with spacious lounges and convenience, passenger insurance and customer-reward programmes. It also went a notch higher by offering express courier services, road haulage, hospitality and tourism services to passengers across the country and beyond.
However, the Lagos–Cotonou–Lome–Accra route, which used to be a niche market for ABC, has now become the focal point for other transport companies desperate for a slice of the pie. At least, five well-established transport companies are now operating on the route. E.Ekesons Transport, Chisco Motors, Cross Country, EFEX Transport Limited and Young Shall Grow Motors also ply the route currently.
Cross Country, which commenced operations in 2002 with a fleet of 132 vehicles, has at least five mini-buses deployed on the lucrative route daily. To further consolidate its presence, the company has acquired a set of new luxury coaches for operations along the route. Consequently, Cross Country now has about three luxury coaches operating on the Lagos–Accra route on a daily basis, complemented by mini-buses that also ply the route. For a company that has grown its fleet from 132 to 500 in just 11 years and serving more than 26 destinations in Nigeria before veering into the West Coast route, experts say the company might soon start challenging the established operators along the West Coast corridor. Although, Frank Nneji, chief executive officer, CEO, of ABC Transport, said he is not perturbed by the crowding at the corridor there is, indeed, cause for worry. Already, Cross Country is inching closer to challenging the dominance of ABC in the business in terms of service delivery, as many passengers now have an alternative in Cross Country, which now operates with modern luxury coaches.
E.Ekesons is also gearing up for a slice of the juicy West Coast market. From a fleet of five luxury coaches with two bus stations in Lagos, the company now boasts of 120 operational luxury coaches some of which maintain scheduled transport services to Accra – three times in a week and Abidjan – once in a week, according to Farouk Biniki, its public relations officer. Biniki told the magazine that as the economy improves, making it possible for more people to travel, the company hopes to expand its operations to Cameroon, Mali and even South Africa. He disclosed that the coaches cost between N16 million and N19 million each, while the over 600 Brazilian-made minibuses currently in the company’s fleet, with average lifespan of 10 years, cost between N5 million and N7 million each.

With daily traffic of 25 mini-buses every morning and five coaches every night, conveying passengers to different destinations within and outside the country, Biniki says that the company’s prices are competitive and pocket-friendly. For Lagos–Abuja trip, E.Ekesons charges N4,500 and N5,000 for mini-bus and coach, respectively. Lagos–Port Harcourt attracts N3,500 and N4,000, for mini-bus and luxury coach, respectively. Lagos–Kano, Zaria, and Kaduna attracts N6,500 for mini-bus, while passengers pay N7, 000 for luxury coach. Although E.Ekeson started out with coaches, the company introduced the mini-buses in 2004 to improve on its services to consumers. It was also a response to the growing threat by mini-bus operators, most of who dangle speed as carrot to attract passengers, especially those who are in a hurry to get to their destinations.
One of the mini-bus operators that has emerged a formidable rival to luxury coach operators is Peace Mass Transit, PMT. From just two buses in 1993 when it opened its doors to business, PMT owned and promoted by Sam Maduka Onyishi, an astute businessman from Enugu State, now has a fleet of about 2,000 buses. Interestingly, Onyishi was a driver of one of the two buses despite being a graduate of Community Development. He gave the second bus out. By then they were plying only Enugu to Nsukka until the company began to grow. Currently, PMT covers about 26 states of the federation, according to Okorie Jerry, its regional manager (South-west). The company’s first response to innovation, which is driving the competition in the industry, was to phase out all the made in China buses in its fleet, which had no air-conditioners, replacing them with fully air-conditioned buses from Japan. That was in 2011.
Since then the company has never looked back. Between 2011 and 2012 alone, PMT acquired 700 units of buses from Japan at N6.1 million each. This translates to an investment of about N4 billion on buses alone. The impact of such huge investment on the fortunes of the company was instant and telling. “The customers we lost on account of using buses without AC came back; customers are becoming wiser and more sophisticated than they used to be. That was when the company opted for Japanese Hummer buses and now the customers are back,” Jerry said. The second approach was aggressive diversification, which saw the company branching out from transport business to other ventures. Today, PMT is a group of companies comprising Peace Microfinance Bank, Peace Bureau de Change, Peace Capital Market, Peace Petroleum and Peace Press.

As Jerry explained, “We are at moment canvassing for distributors for our products because we are into blending of oil (Peace Lubricants) such as engine oil, gear oil and other lubricants. We also ventured into Peace Press, that is Peace Printing Press because after a lot of research we found out that close to 10 per cent of the company’s income goes to printing of materials such as tickets and receipts. So because of that the company decided to establish its own printing company.” Although PMT remains the flagship, Jerry disclosed that activities of subsidiaries in the group have generated close to 12,000 direct and indirect employments to Nigerians. He attributed the success of the company partly to its cheap fares and partly to its safety record. “Our price remains the cheapest in the country. “During Christmas while our competitors will be taking N9,000 from Lagos to Enugu, we take N5,000 or even N4,000,” he said, adding that PMT regulated the speed limit of its buses to guarantee the safety of its passengers. “There is no over-speeding because the vehicles are regulated,” he said.
However, PMT is not on the West Coast route yet. As Jerry put it, “Charity begins at home. We have covered only about 25 out of the 36 states in Nigeria. We cannot ignore the provision of good road transport services to our country and begin to go to Ghana. No, we want to explore the country in its fullest before we talk about going outside”. Although, he said that in future the company plans to explore opportunities in that axis, he argued that some of the transporters currently plying the route are merely running away from the heated competition in the Nigerian market. Hear him: “It is no longer business as usual; they (transporters) no longer exploit passengers as they use to because of the presence of PMT. That is why they ran to that place.” He disclosed that after series of enquiries and feasibility studies, it was discovered that the price operators plying the West Coast are charging is exorbitant and exploitive.

Jerry said, for instance, that from Ghana to Lagos, a journey of not more than eight hours should not be more than N3,000 or N4,000, but that those on the route currently charge as high as between N6,000 and N8,000. “They normally call us ‘market spoilers’ because we don’t charge much. So, when we go there maybe from Ghana they will now run to Senegal because we will chase them away; we will bring down the price to maybe N5,000 or N4,500 and then they will now be forced to join the queue when they see that they cannot make it with their exploitative price,” he threatened, noting that the board of PMT is currently looking into a number of proposals it received from many companies to know the best to deploy to run its e-ticketing platform.
But why do customers prefer mini-buses to coaches, a development that appears to give mini-bus operators like PMT, Edegbe, Okeyson, and Greener Line, among others, competitive edge? As Biniki explained, “It is not that passengers prefer mini-buses to luxurious buses; rather the reason they prefer mini-buses for day trip is because they are faster and keep to their schedule. Some people who need to get to their destination on time would surely prefer mini-buses.” He, however, pointed out that coaches are more comfortable for night trips since they have restroom, refrigerator and other conveniences for longer trips. Irrespective of passengers’ choice for either mini-bus or coach, he said that E. Ekesons has a reward scheme to attract and retain customers. Apart from a bonanza whereby 10 tickets fetch a passenger one free ride, while five tickets fetch a passenger half the price for a ride, prices, gift items, and discounts are usually given out to customers during festive seasons.

The experiences of Blessing Nwobodo and Precious Eze, perhaps capture the different factors necessitating travellers’ choice of either a mini-bus or luxury bus. For instance, Nwobodo, a senior media executive at Mediacraft Associates Limited, said that she patronizes the likes of ABC, Ifesinachi and Ekene Dili Chukwu because the luxury buses are safer and more convenient. Although, she regretted that luxury buses sometimes arrive very late at their destinations because they often break down on the road, forcing passengers to sleep at their terminals, she expressed fears that mini-buses over-speed thereby raising concerns over the safety of their passengers. “I would rather arrive late than be dead,” she told the magazine. On his part, Eze, a television content producer, said that small buses are cheaper and more convenient, having travelled with Abia Line three times in the past.

For the mini-bus operators, however, the fear of Chisco Motors and Young Shall Grow, YSG, Transport, two top transporters, is perhaps, the beginning of wisdom. Both of them have been responding to the increasing competition in the industry. Apart from maintaining a formidable presence on the West Coast route, YSG and Chisco, which commenced business in 1972 and 1981, respectively, have been consistently expanding their fleet and acquiring state-of-the-art air-conditioned luxury buses while also introducing innovations to meet the growing demands of customers. Today, YSG is one of the biggest luxury bus companies in Nigeria with fleet of over 500 vehicles traversing all sections of Nigeria and the West Coast. Promoted by Vincent Obiora Obianodo, YSG has since embraced e-ticketing and vehicle-tracking technology to boost its operations.

Consequently, prospective passengers can book online by simply going to the website and paying with their automated teller machine, ATM, cards from the comfort of their homes, phones, and offices. The company’s buses also have sophisticated vehicle tracking devices, allowing monitoring of the speed of its buses from a central control room. By so doing, drivers are deterred from exceeding the company’s approved speed limit. All YSG bus terminals have also been modernised and well equipped, allowing travellers to relax in the lounge while awaiting departure. Upon arrival to their destinations, YSG travellers’ lodges located at major cities provide comfort to passengers. The company, like others, has since diversified into hospitality, oil and gas, property, dredging, real estate, and rural and urban market development.
Likewise, Chisco’s operations are run from modern terminals with comfortable lounges in Jibowu, Oyingbo, Maza Maza, Alafia, Lekki, Alaba, all in Lagos and Abuja, Aba, Owerri, Enugu, Port Harcourt, Onitsha, Umuahia, Nnewi, Amichi and Uyo, among others. Its world-class factory fitted air-conditioned buses fitted with conveniences and entertainment gadgets operate in more than 28 states of the federation including Accra, Ghana. A unit under its operations department is responsible for monitoring and ensuring safe driving and adherence to safety standards. Interestingly, Chidi Anyaegbu, managing director/chief executive officer, MD/CEO of Chisco Transport Limited, did not start business as a transporter. He was first a spare parts and automobile dealer before veering into general importation. Thereafter, he delved into transport business, making a huge success of it.

Other top transporters include Ekene Dili Chukwu Transport, Ifesinachi, Chidi Ebere, Izu Chukwu, G.U.O Okeke Transport Service, Gobison Transport, and Dan Dollars, among others. Of these transport enterprises, ABC appears to have witnessed the most phenomenal growth aside from a sound management and corporate governance structure that guarantees sustainability. Unlike ABC, experts say that many other transporters are faced with the challenge of sustainability on account of weak management and corporate governance issues. An expert who declined to be mentioned, for instance, said that some of the transport companies never learnt anything from the demise of Augustine Ilodibe of the Ekene Dili Chukwu fame. According to him, since 2007 when Ilodibe passed on, the fortunes of the once thriving transport enterprise have nosedived due to lack of proper structure on the running of the company.

The expert further expressed fears that Chisco might suffer a similar fate since, for fear of ownership dilution, the management of the company is solely in the hands of Anyaegbu, its founder and members of his family. While Anyaegbu is the MD/CEO of the company, Obinna Anyaegbu, his brother, is the group business development manager. Other top positions in the company are reserved for members of the family, making it difficult to bring in experts to run various aspects of the company’s operations. Efforts by the magazine to speak with the business development manager were not successful.
Infrastructure challenges, especially the deplorable state of the country’s road networks, inadequate power supply, and security, among others, have made road transportation a business only for the lion-hearted. “The bad roads bring us more wear and tear. Before you know it a brand-new tyre is worn out; before you know it you begin to talk about changing your shock absorbers. Bad road is one of our greatest challenges,” Jerry lamented. The active lifespan of a luxury bus is four years, while depreciation sets in after the fifth year. Most of the buses are built to last for 10 years but because of bad roads, they barely survive for four or five years.

Inadequate power supply has also been a thorn in the flesh of transport companies, as their terminals are run on generating sets. For instance, PMT Beijing, one of the subsidiaries of Peace Mass Transit based in China, specialising in the production of spare parts has since been contemplating coming to Nigeria to start production but could not do so because of the problem of electricity. For now, the company is incurring huge costs to import spare parts from China.

The insecurity in the country, particularly the activities of Boko Haram insurgents in most parts of the North, appears to have worsened matters for the transporters. Most of them have since scaled down their operations or avoid that part of the country, hoping that the security situation and, indeed, other challenges they are facing would be addressed. But the transporters are thriving on the bad roads and riding the numerous challenges, smiling all the way to the bank.

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