In Angola, Shipping And Logistics Thrive Amid Lower Oil

Many countries could not escape the impact of the global drop in oil prices, particularly those on the African sub-continent. The downturn in commodities overall has hit hard, leading to multiple credit downgrades, currency spirals and more. Angola, for example, has worked to compensate for the decreasing demand and lower prices for oil by turning to steel. In December, the OPEC-member producer opened its first steel mill–a concerted effort by the government to keep locals employed and leverage another commodity for the southwest African nation.

Antonio J. Silva Transportes e Logistica, otherwise known as “AJS Transportation,” is one of the most established and fastest growing companies in Angola. Luis Silva is the second generation CEO of this solutions and logistics company in the transportation industry. AJS entered 2016 on strong footing, and has already made strides this year toward strengthening its position as Angola’s leading transportation company. The company has investments in the oil and gas sectors, and this year will launch an investment fund for renewable energy.

A FAMILY AFFAIR

Founded by the elder Antonio J. Silva and his wife during the 1970’s in Angola’s capital, Luanda, the company began with just a single truck. The family was then inspired to create a transportation company during that turbulent time in Angolan history. AJS provided transportation and logistics to areas that many would not venture in to. Having established the company’s position within Angola’s culture and economy, AJS today boasts an extensive portfolio of clients and partnerships while continuing to enter into different sectors in the economy.

So what makes AJS different from other logistical firms in Angola? There are several variables that differentiate AJS from other logistical firms in Angola, Silva tells Emerging Market Views. First, the company “is the only transportation and logistics company in Angola that has more than one logistical base in the country. We currently have four bases in different provinces of the country–Luanda, Lobito, Lubango and Malange. Also, we have small fleets operating in Cabinda, Kuando Kubango, Soyo and Luena.” The reach within Angola is far and wide compared to others in the space. With small, diversified fleets AJS offers the capacity to transport all kinds of products and goods to nearly every corner of Angola.

Low oil, Silva says is part of a cycle. Yes, the sub-continent has been hit hard, but he predicts prices will eventually rise again.

We think it is a cycle and that the price of oil will go up. Low oil prices put a stop to many projects and new investments in the country, which ultimately impact the income potential and business growth for many companies. On the other hand, the low prices of raw materials plays in our favor since we ended up buying the equipment and accessories at a price relatively lower than before.

Lower oil has undoubtedly curtailed investments in a number of sectors, notably within developing economies. “During this time of crisis, most companies have frozen their investment plans. The uncertainty regarding the possible rise in oil is elevated, and ultimately causes a slowdown in investments,” Silva explained. That said, AJS has a “a well-defined growth and regional expansion plan, and we intend to carry it out. We believe that countries in the region are growing and will continue to grow, and the logistics industry will also grow in order to support the growth of these countries.”

Transport and logistics have proven lucrative for many developing nations, as populations surge and consumer demand increases along with it. What makes Angola a unique market for logistics and transport is the pace of the country’s continued growth and its favorable tax rates. The growth will require the aggregate logistics services to support it. Furthermore, the geographical location of Angola gives it unique advantages. Angola is located between the coast ( a gateway for goods by sea) and countries without access to the ocean. “Soon these countries will need access to logistical services in order to receive their imported products and even to carry out their exports,” Silva noted.

Photo Credit: iStockphoto.com/poechri