Need to get an urgent package from Sharjah to Tripoli? Aramex is likely to be your best bet. Going where global logistics brands DHL, FedEx and TNT have been slow to tread, the Jordan-based courier has carved out a distinct and lucrative niche.
Moreover, the company is evolving into something the Middle East is in dire need of: a global business champion.
Its branded vehicles, red uniforms and baseball caps are immediately recognisable and its revenues for this year will top $500m – a small fraction of what the global majors bring in, but an eye- catching example of how businesses in the region are showing muscular growth.
A recent report by consultants Booz & Company shows the Middle East’s trade and logistics sector growing 10.2% a year from 2008-12 thanks to growing local demand, the establishment of several large transportation hubs and a location straddling the Europe-Asia trading lane.
For its part, Aramex offers three key core products. Freight forwarding accounts for nearly 40% of revenue, and offers logistics and delivery support for moving consumer goods across the region quickly. International express, which brings in just under a third of the company’s revenue, provides express delivery of small packages across the region and from there across the globe. Then there’s domestic distribution, offering last-mile services for local package and freight delivery.
The company’s biggest opportunity, though, may lie in a product offering that is relatively new to the region: logistical outsourcing. The Booz report points out that the Middle East has roughly half as much logistical outsourcing as the rest of the world – so as the trend for such services grows and large logistical hubs are created in neighbouring Dubai, Abu Dhabi and Qatar, it looks as if Aramex is in an ideal position to profit.
Operating in a region not known for its ease of operations, the company has opted for a unique business model. Unlike its bigger rivals, it is asset-light. Rather than build up its own transportation fleet, it has developed nearly 50 strategic relationships across the region, enabling it to operate without investing significant capital.
Safwan Masri, a professor at the Columbia University School of Business (and director of the university’s Middle East Research Center) says: “I regularly use it as a live case study of how a global supply chain and logistics solutions company is and should be.”
From its Amman HQ, Aramex lets its strategic partners build out their fleets as they see fit. They profit by being part of a larger logistics; it profits by keeping its capital costs low. During the recession, it did not have a fleet of trucks and planes standing idle or needing to be serviced. It was also able to take advantage of reduced airfreight costs as carriers slashed rates to maintain volumes. As a result, while the global majors were suffering in 2008 and 2009, margins at Aramex held steady.
As well as having an atypical business model, the company is unusually proactive and progressive. Women make up 15% of middle and senior management posts and are paid the same as men. Out in the community its sponsorship programmes have helped, among others, students at Cairo University, the Children’s Cancer Center in Lebanon, the Syrian Young Entrepreneurs Association, the Jeddah United women’s basketball team and – appropriately, for a courier – two Jordanian marathon runners.
“Local relationships matter in this region,” says company founder Fadi Ghandour. “Getting goods in and out can be a cumbersome, time-consuming process, and the person best able to do it is someone who knows the local officials.” In addition, many of the strategic alliances have a franchise flavour, which arguably makes Aramex the McDonald’s of Middle Eastern logistics.
While customers deal only with Aramax, a package may pass through the hands of two or three partners before it is delivered. Here’s how it works. A customer will call Aramex for a pick-up.
Its back office will dispatch an Aramex truck or a partner truck and take it to an Aramex spoke. From here, Aramex will then dispatch the package to the final destination, possibly handing it to a strategic partner for delivery.
For Ghandour, the main strength of the alliance model is the network of empowered entrepreneurs it has produced. “We are creating a win-win. Local businesses have every incentive to grow and as they grow, we grow with them. We get the benefits of being a local player and they get the benefits of being part of a global network,” he says.
Professor Vijay Mahajan, former dean of Hyderabad’s Indian School of Business and currently the John P Harbin Chair of the McCombs School of Business at the University of Texas, has visited nearly every country in the region. Now writing a book on the rise of Middle Eastern companies and consumers, he describes Aramex as an “innovative company leading the transformation of the region”, adding: “Their asset-light approach and heavy investment in technology gives them a competitive edge.” By being state-of-the-art in information technology and everything else, he says, “Aramex makes strategic alliances work.”
During a long career, Ghandour has witnessed the region’s ups and downs but sounds a hopeful note about the future. “Middle Eastern governments are reforming the business environment rapidly,” he says. “The change is creating business opportunity.” And the change is certainly needed. Ghandour notes that 100 million young people will need to be employed in the Middle East over the next decade.
The World Bank is aware of this too. In its 2010 Doing Business report, it notes: “Egypt, Jordan, Saudi Arabia and the United Arab Emirates are leading global and regional reformers.” A better business climate will lead to a more dynamic and integrated Middle Eastern market – and that’s all good news for Aramex.
Alongside his day job, Ghandour works for Abraaj, the region’s largest private equity investor. In 2002, he took Aramex private with Abraaj’s help and funding. Three years later Aramex was successfully relisted on the Dubai Stock exchange, making it Abraaj’s biggest and most successful exit. A place on the Abraaj board soon followed.
Using his position to help mentor and grow local companies, Ghandour was a founding partner in the largest Arabic online portal, Maktoob.com (which was sold to Yahoo in 2009 for more then $100m). Scot Gallaher, the former senior private sector development advisor on USAID’s Jordan Economic Development Programme, says: “Fadi was always available for the community. Young entrepreneurs always look upon Fadi and Aramex as examples of how businesses succeed in the Middle East.”
Columbia University’s Masri adds: “What makes Fadi stand out is that he is a true role model and an inspiration to those who are in dire need of strong role models: the young and entrepreneurial.”
Citing Aramex’s extensive CSR programme, he adds: “Fadi is a responsible citizen who has a deep commitment to his culture, country, and to the future. He understands that his dedication to his company is intimately integrated with his commitment to the community and that business cannot thrive without a strong investment in the community within and around it.”
Behind its vibrant chief executive, Aramex is making a run at becoming a global player in the logistics sector. Ghandour says India is the market he is eyeing next but the whole of Central Asia is very much fertile territory. “We like to go where others don’t and the Central Asian republics are big economies with no logistics network. That’s a perfect recipe for Aramex to succeed.” After serving the Middle East and Central Asia, he laughs, operating in developed markets would be a desert breeze.






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