Nigeria’s digital forwarder Topship raises $2.5m in a seed round led by Flexport


African shippers are faced with many challenges when it comes to international shipping, ranging from weak infrastructure to high transport costs which have held back African economic development. To tackle some of the supply chain issues, a new breed of tech-enabled freight forwarders has started to emerge on the continent, promising to make the process of shipping goods smoother through the use of technology.

One of these is Topship, a Lagos-based digital forwarder, which raised $2.5m this week from institutional and individual investors. Flexport is its lead investor. Other investors include Y Combinator-Soma Capital, Starling Ventures, Olive Tree Capital, Capital X and True Capital. 

Nigeria’s Topship aspires to be a ‘Flexport for African SMEs’. It was formed in 2020 after co-founder and CEO Moses Enenwali decided to capitalise on the increased demand for delivering parcels and goods outside of Nigeria. It currently serves 1,500 businesses and moves cargo and parcels from Nigeria to over 150 nations. At the moment, it can only accept cargo deliveries from the US, the United Kingdom and China.

The start-up is looking to generate additional revenue streams, such as trade financing and customs clearing fees. Since January, Topship’s revenue has increased by 50% month over month.

Unlike other tech-enabled newcomers on the continent which provide a mix of air, ocean and trucking services, Topship specialises in air cargo only. The rationale behind this lies in the difficulty to connect the continent with ocean freight due to its underdeveloped port, road and rail infrastructure. Enenwali believes that a business model focusing solely on air cargo has more viability because every country and major city on the continent has a functioning airport, with airlines flying to those airports on a daily basis.

In 2021, merchant groups from Ghana, Tanzania and Kenya invited Topship to assess the possibility of launching in their respective markets. Enewali commented that Topship could use the latest funding to start operations in those countries.

Overall, there is a great potential for tech-enabled logistics start-ups to unlock significant opportunities across the African continent by addressing the long-standing supply chain challenges with the latest technologies and leveraging the continent’s growth potential. The region’s forwarding market is likely to be boosted by the African Continental Free Trade Area (AfCFTA) agreement which came into effect on January 1, 2021. The agreement is expected to boost intra-African trade by around 40%, with substantial benefits to the transport sectors, according to the Economic Commission for Africa (ECA). If fully implemented the AfCFTA is expected to significantly increase traffic flows on all transport modes. The agreement is therefore expected to promote growth within the region’s air and sea forwarding markets. Growth is expected to continue through to 2026, when the region’s air and sea forwarding markets are forecasted to become the fastest growing markets globally according to Ti estimates. It remains to be seen whether newcomers such as Topship will capitalise on these growth opportunities to build out its business. Other players to watch out in the digital freight arena include Kenya’s Sote, Ghana’s Jetstream and Nigeria’s SEND and MVX. All of these are still early-stage start-ups, but investment may only be getting started.

Source: Transport Intelligence, May 17, 2022

Author: Viki Keckarovska