No stranger to diversification, Red Star Express which has expanded its logistics services to include the transportation of fresh farm produce from source to market, may have some things to consider.
Notably, the speed of delivery to the market and consumers depends on the quality of transport and clear planning of the scheme of loading to transportation, to the unloading of products. Planning takes into account all possible risks, such as weather and road conditions. Lest one forgets, the landing costs could be high and may cause an increase in food prices.
Regardless, Red Star Express Plc appears to have a large portion of the market share in Agro-logistics solutions in Nigeria.
Red Star Express Plc, is a licensee of Federal Express (FedEx) Corporation and a provider of international delivery solutions. The company has more than 150 offices around the country and a network that reaches more than 1,500 towns in Nigeria, with its more than 200 employees. Under the name Red Star Express Nigeria Limited, the company was established as a Private Limited Company on July 10, 1992, and it started conducting business on October 12, 1992. It became public in July 2007, and on November 14, 2007, its shares were listed on the Nigerian Stock Exchange.
The company has three (3) subsidiaries namely: Red Star Logistics Limited, Red Star Freight Limited and Red Star Support Services Limited with expertise in Express Delivery, Logistics, Freight, Outsourcing, Supply Chain Management, Printing and Packaging, E-Archiving, Business Enterprise Solutions, Agro Logistics and Trade.
Red Star Express Plc’s subsidiary was established in March 2008 and specializes in ground haulage delivery using trucks and vans. Further, in 2021, the company expanded its activities to include general haulage, General Sales Agent (GSA), movement of agricultural products as well as prints & packaging.
Red Star Express Services
- Logistics solution: For light and truckload items, home and office relocation services, integrated warehousing, distribution and inventory management
- Haulage Logistics
- Port Logistics services
- Warehousing services
- Temperature Control Warehousing
- Agro logistics
- Pharma logistics
- House and Office
- Supply chain consultancy
- Project management
- Project Management (Special Projects)
Industry
The logistics industry has made significant contributions to our daily lives, particularly with the growth of eCommerce, which has grown to $13 billion per year and is expected to reach $75 billion by 2025, according to the Federal Government. Despite challenges and problems such as poor infrastructure, levies, vehicle maintenance, new regulations, and the issues facing eCommerce – online payment problems – the logistics industry in Nigeria has a significant value and market size. Due to the fact that the industry is thriving, there are many smaller competitors. The industry is also fragmented, with smaller players like those who provide logistics via motorbikes and tricycles. However, Redstar’s main competitors are: GIG logistics, Fortune Global, ABC Cargo Express, Redline logistics, Confidence Cargo, Aero-logistics, Cross Country.
Achievement
- With investments made to improve its technological architecture, the company acquired a number of assets in February 2021, including 17 trucks (40 and 45 tons) and operational vehicles. These acquisitions were aimed to improve tracking/visibility, automation, and package security.
- Despite the pandemic’s severe effects on the freight sub-sector and the ensuing restrictions on the transportation of products, Red Star was able to thrive due to its diversification strategy and expansion of the company’s logistical services.
- The corporation suffered a loss during the pandemic but announced a full recovery in 2021 after a tumultuous 11 months of dealing with the COVID-19 pandemic’s economic impacts
- The company’s financial performance declined between April and June 2020 as a result of the globally enacted directives, but the festive season of 2021 offered a window of opportunity for recovery, which the company took advantage of. As a result, many deliveries were made, leading to a profitable financial report that obscured the losses.
- Despite the economic difficulties, Red Star did not lay off any employees during this time instead continuing to pay salaries as usual.
- For the fiscal year which concluded in March 31, 2022, Red Star Express Plc had previously reported a Group Profit Before Tax of N413.9 million, an increase of approximately 87%.
- The company raked in N1.3 billion from the sale of 336,855,291 units of its shares through rights issue
- Through its Foundation, the company has awarded scholarships to students and provided palliatives during the COVID-19 pandemic
Board of Directors
Suleiman Barau (OON, fcib, fnim) is the Chairman who took over in 2018.
He has over 18 years working with Iberian Mining Corporation, Nigerian Security Printing and Minting Plc, commercial banks and the CBN. He studied at Ahmadu Bello University, Zaria, the University of Jos and the University of Bradford, where he acquired degrees in Economics, Investment Analysis and Management Research and attended over 3 dozen courses in major institutions.
Babura, Badamasi Auwalu (FCA) is the Group Managing Director/Chief Executive Officer and has served in various capacities, such as leading teams in Finance, Internal Control and Processes Management, Credit Management, and Administration.
Auwalu holds a B.Sc. in Accounting from Bayero University Kano, an MBA in Business Administration from Lagos State University, and a Mini MBA from the London School of Business and Finance. He is also a fellow of the Institute of Directors, an alumnus of London School of Economics and Lagos Business School.
Other Directors are:
- Ejekam, Uche Charles- Group Executive Director, Sales and Marketing
- Koguna, Lawan Sulaiman- Non-Executive Director
- Peter Surulere Aletor- Non-Executive Director
- Sideso Chioma- Non-Executive Director
- Ndu Chukwuemeka- Non-Executive Director
- Akpomuka, Ndidi Frances- head Group, Operations/ Company Secretary
Performance
Significant improvement can be seen in the company’s financial results. For instance, the company grew its profit by a whopping 87% in the year ended March 2022.
Red Star Express Plc’s unaudited June 30, 2022, quarterly report indicates that the Group had a turnover of N3,240,821,000 and profit before tax of N177,442,000. Similarly, the Company, reported a turnover is N1,869,286,000 and a profit before tax of N130,305,000.
As a listed company, it has a market capitalization of N2.577 billion, with its current share price is N2.70, as it closed its trading day on Tuesday, August 30, 2022.
Regulators
The regulators in this industry are: Corporation Affairs Commission (CAC), NIPOST, Lagos State Traffic Management Authority (LASTMA), Federal Road Safety Corps (FRSC), Vehicle Inspection Office (VIO), local government officials, and several others.
News
As at March 2022, a cargo facility at the airport was completed, with two other facilities on the Lagos-Ibadan Expressway under way.
Perception
With the plethora of smaller private logistics companies, Red Star is in competition with others who are perceived to be more affordable. Furthermore, with the entrance of the American e-commerce giant Amazon to Nigeria, the company may face stiffer competition.
Again, as the company has diversified into warehousing and prints & packaging in addition to its other services, one can only hope that the company maintains its portfolio returns without reducing its risks.