Unifreight chronicles headwinds

ZIMBABWE’S biggest intercity cargo carrier, Unifreight African Limited, has hinted of an imminent crisis stemming from delays in overnight shipments due to unavailability of local dollar-priced fuel.

The bulk of petroleum available on the domestic market is being sold in United States, because under the direct fuel imports (DFI) policy announced about two years ago, firms using free funds to import fuel are allowed to sell the commodity in hard currencies.

The Zimbabwe Stock Exchange-listed logistics outfit, in a trading update, said the that local dollar-priced fuel stocks were constantly running out, and freightliners were spending crucial production time at service stations.

“Fuel is the most critical requirement for Unifreight’s core operation which involves delivering customers’ freight countrywide within 48 hours,” the firm said.

“Its promise to customers is premised on availability of fuel on a consistent basis without vehicles spending productive time in fuel queues.

“The availability of fuel priced in Zimbabwe dollars has diminished and has become a scarce commodity with most suppliers selling their product in United States dollars. The company continues to engage various stakeholders in an effort to find a lasting solution to this challenge,” said Unifreight.

Unifreight, which said in April that it was moving about 700 tonnes of cargo across Zimbabwe per night, controls a significant share on the domestic market.

Interruptions to its operations have far-reaching implications on domestic trade.

Although payment for local services in foreign currency has been allowed by the Reserve Bank of Zimbabwe, Unifreight deals with domestic customers, who mostly pay in Zimbabwe dollars.

The firm said discussions to find a solution to Zimbabwe dollar-priced fuel were continuing.

For now, however, business suffers.

Unifreight defied the crisis during the review period, as volumes increased steadily, while revenues tracked the positive trajectory.

“Despite a challenging trading environment, the group has managed to maintain its course and was able to exceed budget both in revenue and volumes during Q3 2021,” the firm said.

“Total tonnage volumes are up 3,8% on budget and 28% on prior year with historical Zimbabwean dollar sales up 47% on prior year and 5% ahead of budget.

“Despite an increase in historical Zimbabwe dollar sales, United States dollar inflation has been on the increase resulting in reduced margins.

“However, the company remains profitable as profit margins are above industry norms,” said Unifreight.

Unifreight has tapped into several spinoffs unlocked by last year’s acquisitions into agro-industrial dealer, Zimplow Holdings Limited’s businesses.

Chief executive officer Rob Kuipers told NewsDay Business in April that gaining a foothold on a strategic operation like Zimplow had unlocked value for one of Zimbabwe’s largest transport operators.

But the highlight of the transaction that was concluded late last year was that a bull run soon followed, with the decades-old giant’s share price advancing 7 000% in 2020.

The bull run placed Unifreight among the biggest movers on the stock market in the past year.

Under the deal, Zimplow acquired two Unifreight subsidiaries to back its diversification strategy.

These include Tredcor Zimbabwe, where Unifreight controlled 51% and Birmingham Investments, in which the logistics giant held full control.

Unifreight took over 18 399 564 newly-issued Zimplow shares in exchange for its 51% shareholding in Tredcor. It also assumed control of 15 774 446 newly-issued shares in Zimplow in exchange for its stake in Birmingham Investments.-newsday.co.zw