Tobacco focus provides recession-proof buffer

One way for a logistics company
to insulate itself from an
economic downturn is to take on
commodities whose sales are “recessionproof.”
A steady flow of trucks bearing
one such product, tobacco, has allowed
Aquarius Shipping to weather the
ongoing storm.
“We are a little different from other
logistics companies in South Africa
because we concentrate on fewer
commodities, with tobacco being our
major income source. Therefore, one
could argue that we are controlled by
what happens in the tobacco industry as
well as the logistics industry. But as far
as tobacco is concerned, we were far less
affected by the slump in the economy.
Volumes remained stable out of Malawi
– after a record season in 2009 it has
subsided slightly – but the Zimbabwe
crop has grown substantially despite the
ongoing problems being experienced
there,” said Aquarius Shipping MD
Robert Poverello.
Aquarius Shipping roadhauls about
3 500 FEUs of tobacco out of Malawi
per annum, 2000 FEUs out of
Zimbabwe, 500 from Mozambique and
150 from Zambia along with handling
various customers’ tobacco import
requirements from around the world.
But while tobacco output is stable,
logistics consideration may yet
wreak havoc.
“The biggest challenges we face are
generally from the port operations and
transport operations. Fuel prices and
freight rates are very erratic and the
frequent strikes have to be carefully
monitored. The tobacco we transport
is in its raw state from Malawi,
Mozambique, Zambia and Zimbabwe,
and gets shipped out from Beira
and Durban.
“With special reference to
transporters, the past two years have
been very, very difficult in logistics, not
only from an African point of view but
a worldwide perspective. We have been
very fortunate not to have had layoffs or
working day cut backs because we were
dealing with a product that had not been
greatly affected. In fact, we are looking
at expanding into other agricultural
products, like sugar, tea, cotton, cocoa,
coffee and ground nuts and have made
great strides already. In addition to that
we are looking at extending into East
Africa – Kenya, Tanzania and Uganda,”
Poverello said.