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Mon 30 Oct 2006 04:00 AM

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Logistics franchise

BALtrans Logistics is ready to expand its presence throughout the Middle East. However, instead of using conventional methods, it has attempted a more innovative approach.

|~|Khoury_Jeff_HR2.jpg|~|Jeff Khoury, managing director of BALtrans Logistics in the Middle East|~|BALtrans Logistics was established as a small freight forwarding company in 1982, serving the lucrative Hong Kong market. Although business steadily progressed over the years, the company achieved its biggest breakthrough two decades later, when it acquired Jardine Logistics in January 2003. The deal effectively doubled BALtrans operations and marked its entry into the international league.

The company has since started expanding into additional markets throughout the world. The total number of employees is currently 3000 people in total – a figure that continues to grow every year. “BALtrans plans to become as global as possible, competing with the big logistics players,” says Jeff Khoury, managing director of BALtrans Logistics in the Middle East.

“Some more expansion programmes are currently underway, including a recent acquisition in Scandinavia, which has opened additional markets. Once these are completed, we will operate in approximately 60 countries worldwide.”

BALtrans has flagged the Middle East as a major market for future growth. Previously, the region was served through BALtrans agents, although the company has decided to consolidate these businesses and gain a stronger foothold in GCC countries. “We had 11 agents in Dubai alone, never mind the rest of the region. Everything was very fragmented, because each agent operated separately, so we decided to consolidate these businesses under the BALtrans group.”

For the consolidation process, Khoury and his team reviewed their options. BALtrans could start from scratch in the Middle East and get trade licences from the local governments. Alternatively, it could start a joint venture or acquire an existing operator. “We decided to find a small and solid company, which could provide the foundation for future growth, with its own offices, licences and employees. This would act as a springboard for Middle East expansion.”

After researching the market and considering different companies in Dubai, the list was eventually whittled down to a few contenders. Khoury arranged meetings with employees from each company and after some careful consideration, made his final decision. “We choose Outlook Logistics. They were on the same wavelength as us, in terms of their management style, dedication and loyalty amongst employees. We wanted committed people to help us develop the foundation for the business and Outlook Logistics was the perfect choice.”

Following the transfer of trade licences from Outlook Logistics, BALtrans gained nearly 20 employees from all levels. It also received office space in Garhoud and a warehouse facility in Dubai Cargo Village. “Finding space in Dubai Cargo Village is very difficult, so the fact Outlook Logistics already its own facility there was definitely a bonus,” adds Khoury.

With its base in Dubai now established, BALtrans continued its expansion plan in the Middle East, eyeing opportunities in other GCC countries. “Having one office is nice and Dubai is obviously a great place to start, because of high freight volumes and its reputation as a leading logistics hub,” says Khoury. “However, we wanted to create a presence and brand awareness throughout the region. So we started exploring different scenarios again, such as investing in new operations or looking into joint ventures.”

Although each option had advantages for BALtrans, Khoury eventually decided to try something a little different for the Middle East logistics industry. He opted to franchise BALtrans Logistics to individual GCC countries. This involved seamlessly handling the operational requirements of a BALtrans office and selling the concept to existing forwarders or companies willing to invest in new operations on behalf of BALtrans.

“This is a unique concept for the regional logistics industry, and we were fortunate enough to find a lot of interest in BALtrans. Companies enquired about franchise rights for many reasons, mainly because of our strength in the Far East. After all, the biggest trade link to the Middle East is the Far East, particularly China. So having a company well established in that region adds extra strength to the deal.”

Although BALtrans received interest from various individual parties from each GCC country, it eventually selected one regional investor to cover the whole region. “We choose Premiere Logistics, which is one of the biggest logistics groups in Oman,” says Khoury.

Premiere Logistics Group started operations as Truck Oman in 1978. It has since developed a network through the Arabian Gulf region, with subsidiaries in the United Arab Emirates and Saudi Arabia. The company offers a range of logistics services, such as distribution, cargo haulage, consolidation, warehousing and material handling. “The new franchise will be branded as Premiere BALtrans Logistics, apart from the United Arab Emirates, where we will continue as BALtrans Logistics UAE,” adds Khoury.

By keeping the franchise rights in the UAE, Khoury was able to manage the expansion of BALtrans in the country himself, which is already underway. In addition to the facility in Dubai Cargo Village, the company is almost ready to open new warehousing in Dubai Investment Park. The facility is being constructed on plot of land measuring 250,000 square feet. In the first phase of development, this will include 85,000 square feet of warehousing and 15,000 square feet of office space. “We will be moving into Dubai Investment Park once construction is completed, around December 2006,” says Khoury.

The warehouse will mainly include ambient storage, although the facility is also expected to contain 8000 square feet of temperature-controlled storage. At this stage, the target market for BALtrans is fashion houses and other retail outlets. Of course, plenty of existing logistics companies have already targeted these sectors, but Khoury remains confident about grabbing a share of the market. In addition, he wants to work side-by-side with other players in the market. “We would rather be a company that complements, instead of competes,” he says. “We are a small player with a neutral approach. Instead, we can offer space in our vehicles and warehousing to maximise the overall benefits. This is one of the key aspects of our growth strategy and I am confident it will help BALtrans to develop its own position in the Middle East.” ||**||

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