Aramex plans to invest EGP 150m over the next two years in order to expand the company’s storage capacity and land fleet.
In an interview with Daily News Egypt, CEO of Aramex Africa Samer Gharaibeh said that the company currently has a storage capacity of 106,000 square metres and hopes to add another 28,000 over the next two years.
What is the nature of the activities that Aramex carries out in the Egyptian market?
Aramex is located in 62 countries around the world and has been operating in Egypt for about 30 years. We are working to provide transport and delivery solutions as well as domestic and international mail services, air, sea, and land transport, and storage, logistic, document storage, and e-commerce services.
What are the most important countries in which Aramex operates?
We work in all centres of global trade, especially in developing countries. We have a presence in the Middle East, Africa, the Far East, Eastern Europe and all European capitals.
What is the size of the fleet that your company owns?
The company does not own an air or naval fleet, but we do own a domestic land transport fleet in Egypt comprised of more than 400 vehicles of various sizes. The fleet also includes rented cars, and in terms of air and sea transport, we are working with airlines and marine shipping on that issue.
What is the volume of the company’s existing investments in Egypt?
Investments executed by Aramex in Egypt starting in 2011 through the last three years amount to EGP 180m. The funds were used to build warehouses as well as highly developed, eco-friendly logistics centres in Borg El Arab and 6th of October on an area of 45,000 square metres. The company’s total storage capacity rose to 106,000 square metres as a result.
What can you tell us about the types of items that you store and companies that you interact with?
We store all types of items, especially food, clothing, raw materials, soap, tea, and shoes. Aramex interacts with major global companies and factories in Egypt. We present integrated solutions to our customers beginning from the stage importing, storing, and transporting raw materials, to exporting the products or distributing them in the domestic market.
Was the company impacted by the increase in diesel prices?
Transportation costs were naturally affected by an increase in the price of diesel, as this essential cost represents about 10% of the total. But the impact on the prices of companies’ final products does not exceed 0.5%-1%, meaning that the impact on price for the consumer is essentially negligible.
Is there a plan to supply new investments in the near future?
The company intends to invest EGP 150m during 2015 and 2016 to add 28,000 square metres of storage capacity to the logistic centre in Borg El-Arab and 6th October, in addition to developing and adding to the land fleet.
How are Aramex activities affected by the domestic road network?
Roads are an essential part of the transportation process and the company is waiting on the government to implement its plan to develop roads and establish a new ones. This will cut the cost of transportation as a result of a drop in maintenance and fuel costs, new routes will be added, and the time it takes to complete one route will decrease as well. This will allow the company to widen both its activities and profits and then hire more employees.
Do you agree with the decision to halt the use of tractor trailers beginning next year?
The company does not own tractor trailers, and the decision is a step in the right direction toward confronting the frequent accidents that these trailers cause. The trailers are often old models that pollute the environment and consume large quantities of fuel.
Are you considering other transportation options, like rail or river transport?
We hope that the government will help us to utilise the rail network in particular, which doesn’t require large investments. A trailer or two could be added to current trains to transport goods, which would decrease the amount of cars on roads and the cost of transportation and fuel consumption.
We have tried for some time to cooperate with the Ministry of Transportation to begin using the railroad and we are ready to jumpstart the process of transporting goods via railway. We have an integrated online system to manage the process. Regarding river transport, this is also important and can be used to transport containers at a lower cost.
How was the company’s work affected over the past three years?
The company’s international transportation work has been affected, although domestic transport was not due to a high purchasing power in the Egyptian market. However, there has been an increase in delivery costs as a result of the rise in insurance costs for goods as well as fees associated with private security firms securing cargo on the roads. The security situation is improving, which lowers these costs… although, for example, the international transport line to Libya and Iraq has completely stopped and these nation represented an important portion of the company’s international transport activities.
What about mail services and competition from the local market?
Aramex has acquired approximately 25% of the local market for all of the services that it offers, although it has a much greater share of e-commerce, which is growing dramatically in Egypt. Mail services have begun focusing on transporting parcels and personal delivery of credit cards, for example, in addition to products that have been sold through e-commerce websites. We deal with e-commerce sites like Jumia, Souq.com, and others. We cover the entirety Egypt through branches located in each governorate and have approximately 2,000 employees. We deliver the product and collect the money as well.
How does Aramex help Egyptian companies access African markets?
Aramex established its regional office in Egypt in order to service Africa, and we have 17 offices across the continent. The problem of transport in Africa is not an issue of bringing the goods into the country, but moving within countries. Even if the products arrive at the naval port in Mombasa, Kenya, for example, there are no domestic transport routes to bring the goods to Nairobi. Egyptian companies can overcome these high transportation costs by utilizing commercial treaties like COMESA and the countries of the Nile Basin to enter the markets without paying customs fees. Egyptian products will be very competitive if these agreements are deployed.
