Tue | Oct 27, 2020

$2.5b logistics ‘campus’ for Seprod

Published:Sunday | September 27, 2020 | 12:07 AMNeville Graham - Business Reporter
Richard Pandohie, CEO of Seprod Limited.
Richard Pandohie, CEO of Seprod Limited.

By the time Seprod Limited completes the build-out of its logistics centre, the company would have shelled out at least $2.5 billion to set up the distribution hub, according to CEO Richard Pandohie.

The first tranche of $1 billion has already been spent on new warehousing space at the rear of the Seprod plant at Marcus Garvey Drive in Kingston’s industrial belt. Another $1 billion of financing is currently in hand to continue the development of the logistics hub, which, once complete, will stretch from the intersection of Felix Fox Boulevard to the spot housing Seprod’s plant.

The complex will provide for water harvesting and will use photovoltaic or solar energy to power the operations. Chinese firm BYD Construction has been contracted for the buildout.

“It will be like a self-contained mini-campus,” Pandohie told the Financial Gleaner, in describing the design of the complex.

“It will come complete with our corporate offices on a four-storey building, a training centre, extra parking and a day-care centre. This in addition to a 95,000-square-foot warehouse, bringing the total to 200,000 square feet of space for our logistics centre,” he said.

Seprod is one of Jamaica’s top manufacturing companies that also does distribution. But now the company wants its distribution business to feature more prominently in the group, having acquired the consumer operations of Facey Group less than two years ago. Both Facey and Seprod are members of the Musson Jamaica conglomerate.

Seprod’s growth strategy now rests on three pillars, according to Pandohie – dairy; ingredients, that is, grain, oil and flour; and distribution.

The company, last weekend, took delivery of 15 large delivery trucks for its fleet to do long-haul runs. Without giving numbers, Pandohie said about 30 per cent of the total fleet serving the logistics hub will be Seprod-owned, while the other 70 per cent will be contracted from fleet service providers.

With the expanded fleet, Seprod is aiming for touchpoints with at least two-thirds of the country’s retail network, and to drive down the unit costs for every box of goods moved from the plant to retailers as its distribution volumes expand.

“The ‘universe’ of brick-and-mortar customers, we estimate, is about 12,000. We want to be able to go to about 8,000 and depending on the channel, whether supermarkets or wholesales, some of those can be direct contact,” Pandohie said.

Seprod took control of the assets and brands of the consumer division of Facey Group at the end of 2018 in a $53.8-million deal. Facey Consumer added 11 brands to Seprod’s portfolio, including Eve, Delite, Kraft, Nabisco, Brunswick, and Arm and Hammer.

Pandohie says that since the acquisition period, Seprod consolidated operations at the Seprod main plant and partially closed the former Facey Group facility at Newport West.

“We had to move those persons from those locations. It’s a high-cost area and we’re already beyond the total capacity we had two years ago,” Pandohie said.

The buildout of the logistics ‘campus’ is expected to be finalised by late 2021.