We noticed you're blocking ads.

Keep supporting great journalism by turning off your ad blocker.

Questions about why you are seeing this? Contact us

Font Size

- Aa +

Wed 20 Jan 2010 12:04 PM

Font Size

- Aa +

Logistics Middle East’s 25 most powerful CEOs-Fadi Ghandour

Logistics Middle East’s 25 most powerful CEOs-Fadi Ghandour

Plenty of companies have seen revenue fall in 2009, but there can’t be many that have also seen net profit actually increase year on year. That, however, is exactly what has happened to
Aramex

, the regional logistics and supply chain giant, in its last three quarters. Over that period, the company has posted net profit of AED134.8 million, representing year-on-year growth of 24%. The secret of the company’s success this year, according to its founder and chief executive officer Fadi Ghandour, is simple. It didn’t fire people.

“At a time when a large percentage of our competitors were laying off people, our morale was very high – we were really very aggressive out in the market,” he states.

Astonishingly,
Aramex

claims that it has not laid off a single person as a result of the economic downturn. In fact, the number of employees has actually gone up and the only people to leave the company are those who did not perform.

“We actually guaranteed everybody’s jobs,” says Ghandour, stressing the word ‘guaranteed’ before adding quickly, “Guaranteed. Write that word! We went to our people and said: ‘No-one in this company is going to lose his job because of the current slowdown. You will lose your job because you’re not performing, not because of the slowdown’.”

The result, he says, is a motivated, dedicated workforce that has gone out and aggressively renegotiated rates with real estate companies, airlines and ocean shipping lines. This has driven down costs and underpinned the increase in net profits, even as revenues fell in line with the rest of the industry. “Airlines and sea line operators were providing us with prices that were just unbelievable,” Ghandour says, grinning. “When there was overcapacity, we took advantage of it.”

It must have also helped, and justified the decision not to make layoffs, that key businesses and geographies held up well this year. “Our business in the Gulf did not go down… Saudi Arabia’s economy did not really shrink. Dubai got hit in the real estate industry, but I’m not dependent on real estate. Our express business, where our highest margins are, had a couple of percentage points growth over 2008,” the CEO explains.

Ghandour is speaking at the groundbreaking ceremony for a new warehouse facility in Dubai Logistics City. He has just taken Sheikh Ahmed bin Saeed Al Maktoum, chairman of Emirates Group, on a tour of the site and briefed him on the company’s development plans.

Aramex

is investing an estimated AED120 million to build the 43,000m
2

warehouse on a 140,000m
2

plot of land. The site is due for completion in the first quarter of 2011. And while the plans are ambitious, for Ghandour they are a bold statement about
Aramex

’s future intentions and reflect his belief in Dubai as a trans-shipment hub.

“85% of our business in Dubai is trans-shipment,” he says. “Whenever we do anything here, it’s based on Dubai being a hub. You can warehouse here and serve clients in the Gulf; a big chunk of our business out of Dubai goes to Saudi Arabia. This is a continuation of that process.”

Such is the company’s confidence about the future, it has reserved another patch of land at the site to allow future expansion. Also with the future in mind, the warehouse will be built to incorporate all the latest energy saving and water recycling technologies.

Aramex

is one of the most high-profile investors in Dubai Logistics City, the warehouse component of Dubai’s new airport development, and Ghandour downplays concerns over the project, again emphasising that his company’s investment there is an investment in Dubai itself. “We’re not viewing DLC as an independent entity; it’s part of our overall expansion and development,” Ghandour explains. “Being next to a potential airport that might be delayed is fine. The services already offered in the city are first class, whether the current airport or Jebel Ali.”

Like all successful companies, and unlike many of the packages it delivers,
Aramex

didn’t arrive where it is overnight. Ghandour founded the company in Jordan in the early eighties by offering local ground transportation services to international logistics firms that didn’t have a presence in the region.

Business took off and
Aramex

became the first Arab company to list on the Nasdaq, in 1997. It passed back into private ownership in 2002 when Rasmala Buyout Fund snapped up the company and it then relisted in 2005 when it floated on the Dubai Financial Market.

Over the years, it has grown from a courier company that challenged government postal services into a one-stop provider of supply chain solutions, including warehousing and sea, air and freight transportation − what is known in the industry as a ‘3PL’.

Aramex

has achieved global reach through an initiative known as the Global Distribution Alliance (GDA). Led by
Aramex

, the GDA brings together 40 independent companies from around the world, giving each company in the network global reach through access to 12,000 offices, 33,000 vehicles and 66,000 employees.

In recent years,
Aramex

has cemented its global position with a number of acquisitions, including the highly-publicised takeover in 2006 of Dublin-based Twoway-Vanguard and the 2005 purchase of UK-based Priority Airfreight.

During the interview, Ghandour confides that
Aramex

expects to make further acquisitions in the next six months. With the downturn driving company valuations down to more realistic levels, the CEO says
Aramex

is actively looking at three geographies − Africa, Central Asia and South East Asia − for potential takeovers targets.

“You will hear us doing more deals in the coming six months in these three areas,” he says.

An idea recently floated by some analysts is that
Aramex

might be acquired, or seek to be acquired, by an international logistics player. It has broad regional reach and its brand is well-known and respected in the Middle East. Asked whether that might happen, Ghandour quickly replies, “We are not available. Even if somebody wants to [acquire us], they cannot afford us.”

After so much growth, so many changes and 28 years at the helm of the company, Ghandour has no thoughts whatsoever of pulling back. Talking to him, it is clear that he has thoroughly enjoyed the challenge of overcoming the economic downturn.

“Why would I want to retire?” he says, seemingly surprised to be asked the question. “There is so much more to do in this industry, in this company. The industry as a whole is so exciting. In crisis, there is nothing better than management. In the past twelve months, the enjoyment of working in
Aramex

was supreme because in crisis, you find opportunity.”

Arabian Business: why we're going behind a paywall

For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.

Read next