Monday, February 15, 2016


Aramex’s new model aims for agile deliveries

CEO Hussain Hachem talks technology, growth markets, expansion and disruption
Andrew Staples, Chief Business Reporter
February 13, 2016
Image Credit: Aramex
DUBAI: Disruption is a word Hussain Hachem uses frequently.
And as the Aramex CEO outlined his vision of the logistics sector of the future — and Aramex’s place in it — it’s clear that he’s not merely repeating the latest buzzword. He has spent a year overseeing a company restructuring aimed at giving the 34-year-old Dubai-listed logistics firm the agility and verve of a tech start-up.
The times they are a-changing, and Hachem wants Aramex at the cutting edge.
“You cannot build your company based on what’s happening now,” he said in an interview after releasing Aramex’s annual figures last week. “You need to build your company and prepare it for what’s going to happen. Technological change in the last three or four years has become very rapid. The cost of technology is going down.
“You have driverless cars and drones and 3D printing and robotics. Five years back we never thought this was reality. We thought this was The Jetsons. It’s happening, and if this is happening now — and the talk is that air travel will become much more efficient — and things are shaking up, we’re building this company for that.”
The core of Aramex’s new business model is a series of apps for courier and customer that will allow crowdsourced delivery and instant customer satisfaction ratings.
“We think our model is scalable, our model is flexible, our model is cost efficient. our model is agile and our model is flash, and I think that’s the excitement,” Hachem said.
The new apps will allow a customer to pay delivery fees electronically, set preferred delivery time, communicate with the courier and rate their satisfaction. On the courier side, the apps will allow a courier to see available jobs, claim tasks and give the courier the client’s current location. The two together will allow digital identification between client and courier.
The crowdsourcing element of the model, already operating in India, is primarily aimed at international markets, although Hachem indicated it could come to the UAE to the extent the labour laws allow.
Mindset shift
“I’m giving the power back,” he said. “I reorganised my operation based on you, the individual. You decide what you want to do, we accommodate. That’s a mindset shift which is happening. This is the excitement.
“We’ve been setting this up for the past year. It’s a massive investment in technology. it’s a shift from delivery performance to happiness.”
Aramex’ crowdsourcing model isn’t aimed exclusively at individuals, but on organisations with delivery capability, such as taxi firms or food delivery firms, that want to monetise slack time. “Every community has networks,” Hachem said. “I’m buying the off-time, the idle time. In that off-time we’re getting very good value.”
In India, Aramex’s largest market, it’s working with two start-ups to ensure tech infrastructure, such as affordable phones that will run its apps, is available to potential couriers.
“You can be a barber for an hour, an Aramex driver for three hours, you can do data entry for another company and a call centre for a fourth. You liberate the job market, and everyone is paid per the job he is called for, the effort that he’s put in.”
Part of the reason for the new model is simply the changing face of the logistics sector. Aramex has found that although its bulk freight revenues and volumes have risen, small packages have become an increasingly important revenue stream.
“There is a shift happening. The small-package business at Aramex now is around 70 per cent. Three or four years back it was 50 per cent small package, 50 per cent freight. The growth in the B2C [business to customer] business is 20 to 25 per cent.”
Emerging markets
While its Shop and Ship programme provides a “good chunk” of the small package revenue, the largest share remains business-to-business services.
With annual revenues of Dh3.8 billion (a little over $1 billion), Aramex is no small fry, but its earnings and volumes pale beside the sector’s top-earning firms such as Germany’s DHL (2014 revenues €13.6 billion), and the US’ FedEx and UPS (2015 revenues $47.5 billion and $58.4 billion respectively).
Hence the second string to its growth strategy: to continue its focus on expanding and developing emerging markets.
“Scaling up out of this region is different from scaling up out of the US or Europe,” Hachem said. “But the globality is there. We’ve got operations in eight countries. We are super ambitious.
“The strategy is growth markets. I’m not going to go to Germany to compete with DHL, or the US. It would be stupid to do that. They are leaders.
“However, when it comes to Nigeria, South Africa, Jo’burg, Kenya, Nairobi, when it comes to Sydney, Hong Kong, Singapore, Dubai, you bet. I’m there, and I’m going to grow much, much bigger than all of them. I understand the market, I’m from that market, I know the region. I’m aggressive enough and adventurous enough to go and scale. These markets I know.”
Part of that strategy is a cash on delivery policy, including Amazon deliveries. With this, Hachem hopes to access people who have previously avoided online purchases either because they distrust online payments or because they do not have credit cards, as is common in the developing markets he is targeting.
“The Amazon programme started here. This is first time ever in Amazon’s history that they have done cross-border cash. It never happened. Now in the UK they have it — it just started last week.
“It has opened up the global market. That’s disruption.”