By Neil Denslow
Following Exel’s takeover of Tibbett & Britten, which was agreed earlier this year, the two companies are now integrating their Middle East operations.
I|~|colin_wain_m.jpg|~|Colin Wain, regional director, Exel Middle East|~|In August, Exel completed the US $620 million takeover of its rival, Tibbett & Britten, the latest in a series of deals signed by the company around the world. The Tibbett takeover was clearly the largest of these deal though, and the two companies are now focusing on integrating their operations both globally and within the Middle East.
At the global level, Exel was a much bigger company than Tibbett & Britten at the time of the takeover, with significant sized operations in most major markets around the world. However, within the Middle East, Tibbett & Britten was the larger player through its long-standing joint venture with Olyana in Saudi Arabia; its UAE-based operation, Al Futtaim Tibbett & Britten, which serves the rest of the GCC; and a joint venture with Bahwan CyberTek, which is operating a five year 4PL deal for Petroleum Development Oman (PDO).
“Exel was substantially bigger than Tibbett & Britten worldwide, but there were a couple of areas where Tibbett had come into the region a little earlier than Exel and grown [including the Middle East],” explains Colin Wain, who was previously managing director of Tibbett & Britten Middle East, but has now been named as regional director for Exel Middle East.
Exel’s operation in the Middle East prior to the takeover mainly comprised of a well-established partnership with the Kanoo Group in Saudi Arabia, and a small but growing freight management business in Dubai. Ultimately, these different businesses will be rolled into the Tibbett & Britten operations, which will then trade under the Exel name. “The intention is to merge the Exel Dubai business with Al Futtaim Tibbett & Britten business,” says Wain. “We would hope to create Al Futtaim Exel, and we would hope to have completed all of that business by year’s end.”
“In the Gulf, there is a fair degree of overlap [between the two companies], which will make it easier to create the synergies and to merge the businesses,” he adds. “In Saudi Arabia, there is very little overlap, but paradoxically it will be more difficulty [to merge the two operations]... because of the legal complexities in Saudi regarding sponsorship.”
Plans are still being finalised for how the different elements of the two companies will be combined in the new business, but Exel has confirmed the set-up for its regional management, which sits above the national level joint ventures [see box]. The plan is now being communicated to Exel staff in the region, and management is aiming to ensure that the workforce remains committed to the new company and feel part of the integration process.
“We rely tremendously on people, and we have to maintain their morale, motivation and engagement… They have got to feel committed to the business,” says Wain. “The next challenge is to continue to delivering the solutions, the services and the promises to the customers, to retain customers, to develop customers, and to find new customers,” he adds.||**||II|~||~||~|The majority of the new Exel’s customers are drawn from its partners in the region. Around 70% of Al Futtaim Tibbett & Britten’s work, for instance, comes from the Al Futtaim Group, which represents the likes of Toyota, Panasonic and Marks & Spencer in the local market. However, the company also has a growing third party business, including supporting Chep’s pallet pool in Jebel Ali, while Exel also worked with a number of different companies.
To keep these customers informed, Exel is holding a series of meetings to explain the new set-up and how it will operate in the region. “They have to understand that this is not a takeover of Exel, but an extension and growth of Exel,” says Wain. “All of the best qualities of both businesses will go forward, and the new business is substantially stronger, has many more tools at its command, and can deliver a better service to them,” he adds.
The benefits of the merger to existing customers of Exel and Tibbett & Britten in the Gulf will mainly accrue from the greater size that the combined company will have. This will allow Al Futtaim Tibbett & Britten, for instance, to access Exel’s global network of freight forwarders and leverage on its greater load size and buying power rather than having to find space itself. “Al Futtaim Tibbett & Britten has its own IATA clearance licence, but what we did not have was a global network, so we were playing locally. With Exel, we are number two in the world in airfreight forwarding, so we now have a superb global network.”
“I think this will result in two things: a much more efficient process and a much greater likely of airfreight getting space… It should [also] help in terms of price,” he adds.
The Gulf operations should also benefit from Exel’s wider global reach in terms of finding new customers. Exel already has relationships with most large organisations around the world, and it will be able to use this access to win business from companies looking to move into the local market. “We will be able to approach customers much earlier on in their thinking process, and say we are here and can provide a solution,” notes Wain.
The merger will also give the company access to a much wide knowledge pool, combining the skills and experience of both Exel and Tibbett & Britten staff. “What Exel gives us is strength in depth and resources,” says Wain. “The combined company is 110,000 employees worldwide, which means there is an awful lot of knowledge contained within Exel that can be deployed within the Middle East.”
Exel will be using this knowledge to focus on seven key sectors globally — retail, consumer, technology, automotive, healthcare, chemical and industrial — and this will be reflected in its regional operations as well. “The sectors we are keen to get into are the complex time-dependent sectors,” says Wain. “We are not terribly keen on just pure storage.”
In terms of facilities in the Gulf, Exel will maintain the warehouses run by Tibbett & Britten’s joint ventures across the region, and it also has plans for expansion. The two companies’ facilities at Dubai Cargo Village, for instance, will be combined and then replaced with a larger site once the airport expansion is complete. The company is also planning to take facilities at the new Jebel Ali airport, once that is built, and it will also expand its warehousing in the free zone, as well as building other warehouses elsewhere in Dubai. “This is just a feature of growth… [but] we are substantially more confident to pull these plans forward and build faster [following the merger],” says Wain.
“We have some very ambitious plans for growth in both the freight management and contract logistics sides of the business. Time will tell if we can achieve them, but we are already settled in the top thee regionally, and it is going to be interesting to see where we are a year or two years’ time,” he adds.||**||