Frontier Services Group: Building a Pan African Logistics Provider (A)
In June 2015, Peter Phillips, Chief Operating Officer of Frontier Services Group (FSG), was preparing an update for the board on how operations would support the company’s new strategy. Given the ongoing decline in the price of oil and the extractive industries, the outlook had changed for FSG. His aim was to steer a new course to becoming the leading pan-African logistics provider.
Founded in March 2014 by Erik Prince, a former U.S. Navy Seal and ex-CEO of Blackwater, a private security firm, FSG was a logistics and transportation company listed on the Hong Kong Stock Exchange, with a market capitalization in excess of $200 million. Headquartered in Nairobi, Kenya, the company employed more than 340 staff in its head office and regional subsidiaries in Hong Kong, Beijing, Dubai, and Malta. In addition to traditional logistics solutions like transporting personnel, materials, supplies, and humanitarian aid, FSG provided civil engineering and support services such as in-house construction, facilities management, and workforce accommodation. Its mission was to build and maintain the infrastructure, installations and platforms its client organizations required to operate in Africa.
Although the new approach would open up significant growth opportunities, a number of operational challenges remained. The lack of trained and skilled labor in Africa, coupled with the limited competence of the logistics sector would, if not addressed, impede the future growth of the company.
The case traces the evolution of FSG since its inception in 2014 as a Kenyan air charter and freight services company. It offers an overview of the company’s recent development and current strategy, notably how it handles the logistics needs of customers across the vast and very diverse African continent.
To show how innovative solutions in the distribution of goods and services can be a source of competitive advantage and growth for providers that choose the best path to scale. To expose students to logistics challenges and winning models, as well as their limitations in the context of emerging economies such as those in Africa.