Aramex MEA: the Middle East's biggest courier firm

Global logistics services and transportation company Aramex started life in 1982 as a small, regional player but soon became the Middle East’s biggest courier firm. Hussein Hachem, CEO of Aramex Middle East and Africa (MEA), explains why this “dynamic” and “creative” business is really going places.

“Our employees are our human capital and our main asset so we saw no need to lay any off.”
-Hussein Hachem

Instantly recognisable with its scarlet red livery embossed with bold white lettering, Dubai-listed Aramex is going from strength to strength. Its trucks, vans, motorcycles and boats can be found day and night ferrying goods, packages and documents all over the Middle East and beyond. Headquartered in Amaan, Jordan, Amarex is a top-five player in the world behind in the likes of international household names Fedex and DHL. However, the company’s earnings are soaring – no mean feat amid a global economic downturn and the cut-and-thrust market Amarex competes in. Net profits for 2009 hit US$50 million, which was a 25 percent up over 2008. The trend continued this year with a 10 percent jump in first-quarter profit to US$12.93 million compared to the same period in 2009.

“You have to be on your toes at any given time because that’s how you work in the service industry,” remarks Hussein Hachem, CEO of the MEA region. “We survive to serve our customers and attend to their needs so you can’t switch off.” Hachem says the company’s low asset model that it adopts keeps heavy costs off the books and allows for price and cost flexibility. For instance, unlike rival logistics firms, Aramex doesn’t have the expense of aircraft on its balance sheet, choosing instead to use the services of local airlines. “Our light asset model and the range of services we offer are quite unique. It’s a flat management here with no bureaucracy whatsoever, which makes for a corporate culture that allows people to think creative, have the space to challenge themselves, challenge the market and challenge the customer – it’s a very dynamic environment. And our customers are happy to see a young dynamic company that keeps coming up with new ideas.”

Aramex, which has low debt levels and market capitalisation of more than US$650 million, registered on the NASDAQ in 1997, the first company in the Middle East to take such a step. It returned to private ownership in 2002. Today, the business’ reach stretches to more than 35 markets globally while the number of employees has doubled to more than 8000 in the past five years. The company has a network of 310 offices in 200 major cities although a hunger exists for further expansion with a push into Africa, Southeast Asia, the CIS region and China on the cards. Indeed, China is a market boasting enormous potential for Aramex; the firm already operates in the world’s most populous country through its Shanghai office but is looking to expand in to the capital, Beijing, and Shenjing through a joint venture, CEO Fadi Ghandour told reporters earlier this year. He also said that these lean times were ripe for expansion because Aramex can capitalise on the fact that its rivals are taking an opposite viewpoint.  “Our core markets continue to show a high level of growth,” says Hachem. “However, we see a lot of opportunities in Africa and a lot of opportunities in the CIS countries.”

His company could have a foothold in 10 new markets in Africa and CIS with in two years, analysts predict. “Central Asia is another key area for us because there are lots of oil and gas in landlocked countries,” Hachem reveals. “They have a couple of gateways and ports and we believe that we go there with the right tools we can reshape the logistics industry in Central Asia.” Aramax already has a presence in North Africa but has looking to operate out of Nairobi, Kenya, before establishing a base in South Africa and using this as a springboard to tap into the West Africa market. This is a company that isn’t afraid to take awkward territories, be it operating in Lebanon in the 1980s and 90s with its crippled road network due to the civil war, or being the first company in its field to enter Iraq after the US-led invasion in 2003. Aramax doesn’t shirk challenges, Hachem states.

Human capital

Cost cutting contributed to last year’s record profits but Aramex chiefs are proud of the fact that not a single member of the workforce has been laid off during the economic slowdown. Ghandour “guaranteed” every person’s job, apart from those who didn’t perform. “A measure we took in ’09 was quite simple: we did not hire, we did not increase our salaries and we didn’t lay off any of our employees,” Hachem explains. “Our employees are our human capital and our main asset so we saw no need to lay and off.”

This reluctance to slash the headcount is a philosophy that has served Aramex well down the years. “In the 28 years we have been operating, we never reduced our manpower due to any recession or due to any glitch in the economy. The success of Aramex has always been as a result of combined efforts of our employees across the globe – these people have made Aramex what it is now.” With a strong work ethic and a sense of working towards a collective goal, the business

“Our unique and flexible business model has helped us to weather the storm, big time,” states Hachem. “We are not bound by certain elements like our competitors but we have adopted a couple of measures across the organisation to help us manage and control our costs.” Any downturn throws up opportunities for companies to negotiate better deals with your suppliers. For Aramex, it was with its air freight contracts. “Airlines had the capacity issue during the recession and free space was available so we were able to receive better rates from airlines and thus improve our gross profit margin across the organisation.”

And in this period of belt-tightening, customers looking to snip excess expenditure, Aramex has taken the decision to launch a new ‘Value Express’ service for express shipments in the MENA and South Asia region, allowing customers the option to transport less urgent parcels at economical rates. The service is aimed primarily at SMEs. In the GCC alone, SMEs represent over 75 percent of the aggregate number of operating companies, Aramex states. “We are able to give our customers a quality product where we can move shipments from point A to point B in three working days at a very economical rate,” Hachem reveals. Value Express takes advantage of a soaring low-cost air travel sector across the Gulf.  “We’re probably one of the few people that really looked at budget airlines, although their main line of business is passengers because they don’t offer freight services,” says Hachem. “Air Arabia and a couple of other airlines have hit the market and this opened a window of opportunity for us to capitalise on their belly space. And it’s a win-win situation for all parties: the airline is happy they’re getting extra business and the customer is happy because he or she is getting a good deal.”
Keeping the customer happy and satisfied with the Aramex service is a cornerstone of the business model. Last year, the company launched social networking pages on websites Facebook and Twitter in an effort to further strengthen and cement the brand in their customers’ psyche. Charismatic boss Ghandour has 2282 followers on his personal Twitter page alone. “We use the internet and social media site like Facebook and Twitter allow to communicate with our people and customers at any given time, 24/7,” Hachem explains. “It’s a seamless relationship that will allow customers to become more integrated with us.”

In broad terms, the internet has been a game-changer couriers, particularly with the boon in online shopping. “The internet is a major facilitator of trade,” says Hachem when discussing the profound effect e-commerce has had on this business. “We are very much involved in e-commerce because the internet has obviously been a blessing, which is where we come in as a logistics and transportation solution provider.” And with customers keeping a tight reign on their spending, the online world can offer significant savings over bricks-and-motor shopping – again a boon for Aramex. A popular online service is Aramex’s Shop&Ship, whereby customers can enjoy the benefits of shopping online at US and UK websites as if they actually live there. They receive correspondence and packages such as Internet orders, gifts, magazine subscriptions, bank statements at Shop&Ship fulfilment centres in the UK and US – Aramex then forwards the goods to the customer at favourable rates, alerting them by phone or SMS that the delivery has arrived, which is usually four to six days after dispatch. 

Green is clean

Shipping parcels all over the world comes a cost, especially if you are at the mercy of volatile oil prices; great when the price of crude sunk to US$35 a barrel in 2009, not so great when oil hit a record high of US$147 in the summer of 2008. On top of the fuel costs associated with doing business in this industry comes the pressure to reduce your carbon footprint – something that Aramex has been championing for some time now. With this industry traditionally reliant upon oil to power its vehicles, Aramex has been introducing hybrid vehicles and electric-powered motorcycles to its fleet. Hybrid bikes have been rolled out for its couriers in Lebanon. In some countries petrol has been switched to liquid gas, which is a cleaner fuel. The mountain of packaging the company uses is all biodegradable, recycled water is used where possible and solar panels are installed outside buildings to harness of the sun’s omnipresent rays in the Gulf. The company produced a programme to reduce energy consumption in offices and warehouses and expanded paper and cardboard recycling activities to new countries. In Aqaba, Jordan, 10,000 new trees were planted to offset the business’ carbon footprint. Each tree is expected to compensate 0.8 tonnes of CO2 or 1500 km of executive travel in its 40-year lifetime. “All these initiatives are all designed to reduce our emissions to the environment,” says Hachem says proudly.

Sustainability is a top priority for this company, which is a trailblazer in terms of being the first company in the Arab world to release its own Sustainability Report, in which it has set ambitious an ambitious goal of becoming the first carbon neutral company in its field. Amarex also contributes more than one percent of its profits to sustainability programmes around the world. “From day one, Aramex has been at the forefront of supporting community efforts,” says Hachem. “We always make sure the whole Aramex community is geared and working towards enhancing the community we operate in.”

Following the sustainability trend, Aramex is in the process of delivering an environmentally warehousing and distribution facility at Dubai Logistics City, which is slated for completion in the first quarter of 2011. The US$32.6 million facility, conveniently located adjacent to Jebel Ali Port and Free Zone, will be fitted with energy conservation systems, including an energy-saving water cooling system, the channelling of waste water for irrigation purposes and the installation of sophisticated lighting sensors. The development will boast a footprint of 43,000 square metres with a capacity of more than 40,000 pallet positions.


Other plans on the company’s itinerary include the open a new logistics centre in Cairo, Egypt, as well as joining Dubai Customs and Emirates Airline in implementing the e-freight system, making Dubai the first city in the Middle East to adopt paperless cargo operations. The new e-freight system provides paper-free operations to enhance trade movement by allowing airlines, freight forwarders and customs administrations to exchange electronic information and e-documents. In 2009, Dubai Customs cleared over 2.5 million declarations transported by air. 

One vision

In May, Aramex held its 28th annual leaders conference in Dubai – a three-day event that brought together 280 members of the worldwide management team. Many of the global managers are Jordanians who started their careers at the firm’s headquarters in Amaan. The purpose of the meeting was to discuss growth strategies for 2010 and lessons learned from the economic slump. Other topics included further expansion opportunities and enhancing customer service through technology. Hachen, who was in attendance, says these gatherings are about formulating new ideas to keep the business ahead of the competition in the region. “You have to be innovative and creative to be in this business. What kept us competitive all over the years is our creative approach because we are always looking at our supply chain and how we give innovative solutions to our customers.”

Hachem himself has worked in a variety of roles and different countries during his 20-year journey to his current position at Aramex. “The fact that you rotate around different countries economies means you learn a lot,” he explains. With this industry being very much a 24/7 operation, Hachem freely admits that his BlackBerry is never more than an arm’s length away. However, when asked to describe his management style he coyly skirts around the question. “My management style is similar to the other management styles here because it’s one culture that governs us all,” he says diplomatically. “It’s a culture of creativity, innovation, transparency, playing fair, giving opportunities and trial and error. It’s a beautiful environment that I’m lucky to be working in and I’m sure my colleagues across Aramex enjoy this atmosphere as well.”