Business model

A unique business model to move everything from cows to coffins in Rwanda

The OX Delivers Rwanda team with the company’s specially designed truck.

OX Delivers is a logistics company operating in Rwanda. The company runs a fleet of purpose-built all-terrain electric vehicles, enabling customers to haul goods through rural areas, reserving space on OX Delivers trucks.

James Torvaney spoke with Simon Davis, Managing Director of OX Delivers, to understand the company’s unique business model and transport-as-a-service opportunities in Africa.

Birth of the OX

In 2013, Mr. Torquil Norman, the British pilot and toy entrepreneur famous for creating the Polly Pocket line of dolls, among other brands, founded the Global Vehicle Trust to provide cost-effective mobility to people in developing countries.

Norman enlisted renowned Formula 1 racing car designer Gordon Murray to design the OX – a simple and practical vehicle designed to help people in developing countries undertake crucial daily tasks, such as collecting food. drinking water and transporting supplies to and from regional markets.

The result was a truck that could be shipped as a flat pack and quickly assembled on site, with interchangeable, easy-to-maintain parts, and features specifically designed to cope with rough dirt roads.

OX as a Service

Over the years, the company has transformed into a service company, which currently operates eight vehicles in Rwanda. Rather than selling the vehicles themselves, OX Delivers sells space on its trucks to market traders and anyone else looking to transport goods from one location to another. “We move everything from cows to coffins,” says Davis.

Each OX vehicle can carry up to 2 tons of goods at a time and travel around 150 km per day, which usually consists of shorter journeys between 3 and 15 kilometers each way, usually to and from markets. Small customers transport around 50 kilograms of goods in a single trip, while large customers can transport more than 100 tonnes per month. The majority of riding time is spent on dirt roads and Davis says the main competition comes in the form of bicycles, which are slow and have limited load capacity, and conventional trucks, which generally require payloads much larger minimums and are often reluctant. to reach more rural areas.

The coordinators, who know in advance the movements of the trucks, go to the markets and speak directly to the customers to reserve space in the trucks. Other customers book directly by phone. Davis explains that “drivers are the most important people in the business – they don’t just drive, but spend a lot of time meeting and talking to customers.”

The OX truck is designed for off-road conditions.

The OX truck is designed for off-road conditions.

Not the traditional automaker model

The company realized early on that the traditional automaker model of selling vehicles would not work in Africa, so it turned to freight transport as a pay-as-you-go service. “It’s a completely different mindset – it allows you to just focus on functionality.”

Davis, who spent 16 years working at Jaguar Land Rover before becoming OX’s first full-time employee in 2019, says in developed markets automakers recoup their large research and development costs by selling new cars to a relatively small and wealthy segment. of the market. “In the west, we were sold this story about how your car is an extension of your personality. Over the past few years, the focus has been on incremental improvements in things like comfort and connectivity.

In African markets, however, the market is very different. “An extremely small number of people buy new cars. The majority of the population simply wants to move things from A to B at the lowest possible cost. The small addressable market and lack of interest in more luxurious, higher-margin features make the market unattractive to most automakers.

Instead, by operating the vehicles themselves and selling carrier space instead of the vehicles themselves, OX can focus on the utilitarian aspects of the business, as opposed to aesthetics. “A bag of potatoes is not a demanding customer,” says Davis. “We don’t need to focus on marketing vehicles to journalists and customers. We just need to focus on improving the efficiency of our vehicles and delivering goods at the lowest possible cost per kilometer. »

A focus on simplicity

“What’s great about our vehicles is the simplicity. Everything is designed to be predictable and easy for us to maintain,” says Davis. “We use the same suspension and the same doors on both sides, which allows us to carry fewer spare parts. The powertrain uses off-the-shelf components from major suppliers that are easy to find.

OX vehicles also use 2WD transmissions, as the added cost and complexity of 4WD outweighs the limited potential benefits. Instead, the OX focuses on features that provide a more efficient return on investment. “The biggest impact on performance is tire size, so we use the biggest tires possible.” The vehicles are also built with high ground clearance and steep ramp angles.

All vehicles use electric transmissions, which are much more efficient and cheaper to run than fuel-powered engines. There are fewer parts to worry about, no oil to refill and no belts to replace. “An electric motor is about 90% efficient, compared to about 40% for an internal combustion engine.”

Unlike personal cars, OX vehicles are not very limited by the electrical infrastructure – every day the vehicles return to the same place, where they can be recharged. There is therefore no need to rely on a distributed network of chargers.

What’s next for OX Delivers?

OX has averaged approximately 45% monthly customer growth over the past year and successfully closed a $3.4 million seed funding round in January 2022. “The focus is currently set on demonstrating the model in Rwanda, before seeking to expand across the continent.”

Davis notes that while there are a number of mobility-as-a-service companies focused on moving people, there is still relatively little competition in the transportation-as-a-service space. “There are still a lot of people stuck with western designs that aren’t designed for this environment.”