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Are you feeling the disruptions in the transport space?

Tuesday September 24 2019

By BANKELELE
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Nairobi was once described as a hotbed of innovation. But the story of disruption and competition is not happening so much in technology hubs, but in real-life business situations.

Kiosks and petrol stations are turning in to drop-off points for parcel and e-commerce companies. The SGR has taken away trucking business on the Mombasa Highway and plans for the Naivasha dry port are leading to an atrophy of Mombasa courier firms.

Instagram is disrupting clothes shops at malls. Supermarkets are disrupting restaurants by offering ready-cooked food based on the amount shoppers want to pay.

Co-working spaces, which disrupted offices, are now being partially replaced by bars that have Wi-Fi, coffee, car washes, and free parking that are all conducive for quiet morning meetings.

But the most interesting developments are in the spaces of food delivery, cargo transportation and matatu commutes.

COMPETING WITH APPS

In food delivery, the companies people used to call to order pizza and burgers are now competing with apps of taxi companies and platforms that they use to pay electricity and water bills.

There are also big opportunities in cargo transportation which accounts for 35 percent of the cost of some goods in Africa. This is partly due to inefficiencies in logistics and so new companies aim to work with truck owners and drivers and pair them with opportunities to make timely deliveries of cargo for other companies, when their trucks would otherwise be idle or running empty on the highway.

Finally, in the area of passenger transport, mega disrupters like Uber and Matatus are themselves being disrupted themselves. Uber, which has replaced old taxis, and matatus, which displaced the Kenya Bus Service now face emerging competition from bus-hailing services.

New tech-savvy transport companies have interesting routes all over Nairobi such as from residential areas like Ruiru, Kitengela or Kahawa Sukari to business hubs such as Westlands and Upper Hill. Traditionally they would have to use two vehicles and walk across the central business district (CBD) which they only pass because it is where most bus routes terminate.

COMFORTABLE SHUTTLES

But now, enticed with the introduction of free rides, they can get to work in half the time, by booking a ride in advance on an app, and paying a flat fee of Sh200 per journey. Some get to ride in comfortable shuttles with Wi-Fi, not the old, creaky matatus, that serve many ‘posh’ areas of Nairobi.

Are all these initiatives sustainable? There are too many players in the space and some consolidations are expected. The government’s Bus Rapid Transit (BRT) plan, if it ever launches, envisions a similar system of rides that bypass the CBD, such as from Kangemi to Imara Daima (Ndovu route) and from Bomas to Ruiru (Simba route).

And already margins are thin or non-existent as companies try and drive their competitors out of business. A few weeks ago there was another round of taxi strikes as drivers complained that the lower-priced tariffs were not making money for them.

Twitter: @bankelele