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Rwandan logistics service to reduce agricultural freight cost and increase service reliability

We propose a logistics solution that enables farmers and small businesses to access reliable, high quality transportation networks.

Photo of Chris Creyts
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EXPLAIN YOUR IDEA

Kumwe is a freight brokerage system. It bridges the gap between the fragmented farming community and disorganized transportation network. . The brokerage aggregates volume from many small shareholder farmers, partnering with farming collectives like the Kopacama co-operative, the COPRORIZ rice cooperative in Eastern Rwanda and the COAMV agriculture cooperative in Musanze. Leveraging the opportunity to service this large, consistent volume, the brokerage secures rates with transportation operators and single drivers in Rwanda, creating a linking network between shippers and transporters.
By aggregating volume together, the brokerage pulls two key levers.

First, they create more transparent pricing and competition between providers to service the large volume. Second, the brokerage extends the horizon of the relationship between the transporters and the farmers. Previously, the relationship was transactional. There were no real repercussions for the transporter providing bad service as only one farmer was impacted. In the brokerage model, the incentives are greatly modified for the transporter. Poor service jeopardizes their future business with the brokerage and could cut them out of large portions of the agricultural freight market.

The brokerage is intended to give farmers a more cost effective and reliable way to get their goods to market at an ideal time, limiting spoilage and maximizing farmers’ margins.

WHO BENEFITS?

Small farmers, farming collectives and small businesses looking to ship goods are the main beneficiary of our idea. The idea promotes pricing competition, transparency and reliability in the freight market. Farmers can see past performance of transporters and provide feedback. They can also explore the cost of moving their goods to other markets previously unavailable. Small businesses also benefit. By lowering the cost of moving goods, new growth is stimulated and investment is encouraged.

WHERE WILL YOUR IDEA BE IMPLEMENTED?

A pilot will be conducted in the Rwandan market. The country's unusually high freight costs and fragmented markets, along with its small size and stable political environment make it an ideal candidate for our brokerage in the development context.

ARE YOU IMPLEMENTING IN AN ELIGIBLE COUNTRY?

  • Yes

EXPERTISE IN SECTOR

  • I’ve worked in a sector related to my idea for over a year

EXPERIENCE IN IMPLEMENTATION COUNTRY(IES)

  • Yes, for more than one year.

TELL US MORE ABOUT YOU!

We are a team of 4 MIT Supply Chain Engineers based out of Cambridge, MA who bonded over creating supply chain solutions in the development context.
Our backgrounds are in commercial freight strategy, transportation development (World Bank & Clinton Foundation) and humanitarian response.

Robust transportation services are missing in Rwanda. The lack of logistics and supply chain services is a fundamental, but often overlooked problem, which negatively impacts economic development efforts. These effects are acutely felt by the agriculture industry which employs roughly 80% of Rwandans.

This agricultural sector is highly decentralized with small production units typically owned by families. If they produce beyond subsistence, these farmers normally sell their harvest to local markets. This requires the crops to be transported in a safe, cost-effective, and reliable manner. Faced with a highly fragmented freight and trucking industry that suffers from poor quality and reliability along with high prices, farmers struggle to get their goods to market before they spoil.

Recognizing the tremendous need for logistics services to support poverty alleviation, Kumwe seeks to establish a logistics services platform to capture and accelerate the growing demand for freight transportation, enabling increased economic growth and open access to transport for everyone from smallholder farmers to local businesses and multinationals.

The solution we propose is to establish a freight brokerage system, Kumwe. Instead of searching for trucks through countless informal channels and utilizing local services that can be unreliable, you send one request to a freight broker – either through an online portal, directly through a person, or through your farm collective. You specify the load details – time, pick-up, drop-off, size, cargo type, etc.– and are quoted a fair price from the brokerage. Kumwe vets its partner carriers and provides a feedback method for clients to rate their drivers – when your freight travels through the brokerage, you are using trusted partners that have standing relationships with Kumwe. These longer term relationships incentivize transporters to provide excellent service levels to maintain volume share with Kumwe. Any issues with the transporter are reported back to the broker.

On the back end, the broker is primarily a digital platform. Drivers and their trucks are kept in a database along with agreed to rates for major routes. Upon completion of the job, drivers are rated by the customer based on metrics like on-time pickup, on-time delivery, cargo damages, or shrinkage. After confirming there are no major issues, funds are released to the driver (less a brokerage fee).

Freight transportation brokerage is a practice that is commonplace in markets all over the world. The brokerage pulls two key levers to obtain both cost and reliability improvements. First, by aggregating volumes with carriers to obtain lower pricing and increase competition in the market, brokerages lower the pricing in freight transportation markets. Second, brokerages shift the horizon of the business relationship from one-off transactions with a single farmer (which lack consequences for transporters) to long term partnerships with significant volume that can be jeopardized by poor performance. This shift in the horizon leads to accountability and increased reliability. It’s a fundamental shift in the system.

From simple job boards to formal human brokers, the value proposition and basic function is not new – as we have learned in our prior experiences trying to move agricultural freight in the Rwandan market. However, there are no such services established in Rwanda. With new roads and growing industry, the need is urgent and the time is right for better organization of Rwanda’s ground transport – a backbone to economic growth.

We are a qualified and experienced team capable and dedicated to making this idea a reality. Our team initially met in graduate school at MIT studying Supply Chain Engineering. One of our founders had been profoundly frustrated with his experience working for the Clinton Health Access Initiative in Rwanda trying to purchase large amounts of crops from farming collectives. He had the financing to buy the goods, but no way to secure transportation to actually receive the product they paid for without significant spoilage. He would go on to recruit other team members with commercial freight purchasing experience at a Fortune 500 company and with transportation development experience at the World Bank.

We have deep experience in supply chain management, transportation management, development, and more importantly, experience in Rwanda. We are passionate about this project and are eager to move it forward.

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Photo of Emelia
Team

In a logistics service it is a must that you can provide a reliable service so that the customer will be satisfied and if the customer will be satisfied he or she will refer you to other potential clients. Reducing costing is good also because the clients will be more interested or are very interested when they know that they can reduce costs when they avail the service. Never let your reliability go down and you need to maintain the quality of the services.

Regards,
Emelia Ingram, Logistics
BR International Logistics Services Australia
http://www.brint.com.au

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