Interview: Warren Erfmann, CEO of Swift Freight
One of the hottest topics of discussion in the Middle East logistics industry a few years back was the acquisition of Dubai-based supply chain leader Swift Freight by international powerhouse Barloworld Logistics. Already established as a world-class ‘supply chain integrator’ in its home country of South Africa, there was a major focus on Barloworld Logistics expanding its international presence at the time, with millions being invested to bolster its global operations, from the United States and Europe to South-East Asia and the Far East. One of its biggest moves was the Swift Freight acquisition in 2008, designed to capitalise on growth potential in the lucrative Middle East market.
As the chief executive officer of Barloworld Logistics Middle East and Asia, Warren Erfmann was instrumental in the highly-publicised deal. However, little did the industry veteran know that a little further down the line, he himself would be acquiring the majority of Swift Freight’s operations. “When Barloworld was looking to grow internationally, I introduced them to Swift Freight,” Erfmann, now group CEO of Swift Freight, remembers. “I have always been a big fan of Swift, so when the opportunity to personally acquire the company came up, I certainly didn’t need to be asked twice.”
This time around, the Swift Freight acquisition did not involve a straightforward handover of all of the company’s business assets, as Barloworld has retained 30% of operations for its own use. The reasons for this are entrenched in the company’s own global growth strategy. At the core of Barloworld vision for logistics domination was the provision of tailor-made integrated supply chain solutions to corporate clients around the world – and the Swift Freight acquisition enabled the company to smoothly enter the lucrative East to West trade flows.
However, Swift’s real forte lay beyond Dubai’s shores, focusing heavily on the provision of freight logistics solutions specific to the vast and promising African markets. The inside story suggests that even when Barloworld undertook the original acquisition to get a Middle Eastern foothold in the thriving trade lane between East and West, it was already questioning whether Swift’s African segment fitted comfortably with its existing supply chain management strategy.
Not to miss out on such an opportunity, Erfmann leapt at the chance to acquire the lion’s share of Swift Freight. With a passion for the African markets, stemming from his own South African roots, he acquired 70% of its global operations – made up largely of the freight forwarding division dealing with Africa. Barloworld Logistics has kept the rest, which focused more on Dubai operations. “There was a strategic change in direction at Barloworld in terms of what their end game was,” explains Erfmann. “Their customers generally are in the non-Africa sector and that is why they kept the non-Africa freight forwarding operation in Dubai.”
Following the acquisition, the company’s operations were neatly split into those relating to Dubai (Barloworld’s 30%) and those relating to Africa and the rest of the world (Erfmann’s 70%). Swift Freight International LLC is no more. Instead, Barloworld has rebranded its Dubai and Abu Dhabi operations as Barloworld Logistics LLC and Erfmann now trades under ‘Swift Freight LLC’. Now that the deal is all done and dusted, Erfmann is pleased that the split between the two companies has been friendly and professional.
“It’s been an amicable split, partly due to the fact that I have been intimately involved in the businesses since the original acquisition,” he says. “From a split operation point of view, it was quite easy. The operations of Swift and Barloworld are now completely separate – there is no overlapping.” Swift will continue to operate in its existing premises, and Erfmann also keeps the other offices and staff members located in India, China and of course, Africa.
So what was the reaction from the industry of the news, particularly as it followed so closely on the heels of Barloworld’s own acquisition of Swift Freight? Erfmann believes that the response has actually been hugely positive. “Obviously we have had people querying why so soon after the Barloworld acquisition,” he says. “But overall, customers wanting to deal with Swift in Africa feel more comfortable because it is an owner-managed business now rather than a big corporate.”
Erfmann himself has built up quite a reputation in the region and brings with him the confidence of a man who knows the logistics industry rather well. Last year, he found himself on Logistics Middle East’s ‘Power List’ as a key player to watch in the region’s thriving logistics industry. “Freight forwarding has been in my blood for a long time,” Erfmann says. “I like dealing with people, products, commodities, freight lanes and different cultures.”
In 1994, at the age of 24, and with several years in the industry behind him, Erfmann co-founded the South African logistics firm Z.A. Trans. Ten years later, Z.A. Trans was acquired by Barloworld and he joined it as a director with a focus on acquisitions. Thus began his steady relationship with Barloworld Logistics where Erfmann went on to secure the mantle of chief executive officer for the Middle East and Asia division – and played a key role in Barloworld’s acquisition of Swift Freight in 2008.
Swift has built a solid reputation for logistics solutions and services with an international network of affiliates in the Far East, India and, most importantly, Africa. “With over 22 years in Africa and Dubai, the Swift brand is synonymous with these two regions,” Erfmann says. “Customers have known the company for a very long time, competitors know it, everyone knows it.” With a long working history with his Swift Freight predecessor, Issa Baluch, Erfmann is keen to ensure the founder’s “pioneering spirit” is still at the heart of the Africa-centric company today. “Swift has always been about Africa. When Issa Baluch started the company in 1989, everything he did was with Africa in mind,” says Erfmann. “As the company has grown, it has kept its focus on the continent.”
Even Swift’s offices in India and China, he points out, focus on those countries’ business with Africa. “Everything we have ever done, and even before my time, has had Africa as the finish line,” he adds. And it is easy to see why Africa holds such a strong lure for the company. Erfmann cites a recent article which points to an impressive 15 years of consecutive economic growth in the continent – where the average GDP growth over the last ten years has been 5.2% annually, compared to the rest of the world at the 4% mark.
“It represents a largely untapped market from a business opportunity point of view,” says Erfmann. “Companies generally have been scared to venture into Africa, seeing it as a great big hole where you can lose lots of money and fall victim to foul business practices.” Swift, as he points out, has been a fearless pioneer, “treading where others fear to tread”. As a result, the company now has a strong brand and a fantastic infrastructure there, with 22 offices scattered around Africa. “Focusing on Africa and having niche products for the Dubai-Africa markets is what has made us successful,” adds Erfmann.
Swift Freight will continue its wide range of logistics solutions, but focused on an African angle. Additionally, Erfmann hopes to further develop its specific African-centric products such as SPL (Swift Perishable Logistics), SURELINES (NVOCC) and SAM (Sea-Air Model), all of which have been instrumental in propelling the company to become a leading forwarder to, and in, the continent. “SAM is a wonderful solution, particularly to the inter-land destinations in Africa, where the road infrastructure from the ports can be quite bad. It can take a very long time to deliver to those areas,” Erfmann says. “With our network in Africa, we are seeing some great growth rates in this.”
It is this niche, but potentially massive, focus on Africa that has given Swift Freight an enormous two-decade head start on most of its competitors. “Everyone is starting to see the benefits of spreading their services to Africa now, whereas they tended to avoid it before,” says Erfmann. “They are now forced to look at these markets, because their customers are looking to grow and cannot ignore Africa anymore either.”
For those companies taking the tentative step forward into the continent, he warns of a bumpy ride ahead. “Swift has been operating there for 22 years and we have ‘bumped our heads’ many times – in essence, we have paid our ‘school fees’,” he laughs. “We have learnt from experiences, and companies wanting to venture into Africa should know that we are tried and tested in the region and aren’t going to be using them as guinea pigs.”
Erfmann intends to continue making forays into Africa in the future – particularly in those countries where the political climate edges towards stability. “Angola is one of the countries where we are seeing tremendous amount of volume which is necessitating us to look at our own operations there,” he says. “Zimbabwe also will have a fair amount of foreign direct investment once the political situation has stabilised and possibly even changed.”
Erfmann firmly believes that as the political scenarios improve, Africa’s ‘floodgates’ will open, providing many more opportunities for the company. “Without a doubt, the focus for the future is Africa,” Erfmann emphasises. “I want the company to become dominant in Africa, through organic growth, acquisitions, partnerships or strategic alliances. Swift is synonymous with Africa, and it is this position that we need to take advantage of.”