Interview – Aramex aims to be world's number 5 express operator

Aramex, the Middle East-based independent express company, aims to grow into the world’s fifth-largest express operator through selective acquisitions and by expanding its partner network, a senior executive told CEP-Research.

Although the “Big Four” – DHL, FedEx, UPS and TNT – were clearly “in the premier league”, Aramex wanted to head the “second division” of regional players, Adrian Horsley, Vice-President Express Services, said on the sidelines of last week’s Asia Pacific Mail & Express 2006 conference in Singapore.

The Jordan-based and Dubai-listed company expects its 2006 revenues to grow to US$330 million from USD232 million in 2005, largely due to acquisitions of smaller freight companies in the Middle East and Europe over the last year, Horsley said. In 2005, it generated about 55% of revenues from international and domestic express transport, and about 33% from freight forwarding. The company, whose key markets are the Middle East and India, has some 260 offices in 45 countries in total.

“Our mission is to be recognized as the fifth-largest global distribution player by 2008. With the Global Distribution Alliance, Aramex has a true global international express distribution system that is 95% managed and controlled by us,” Horsley declared.

In 2003, following DHL’s acquisition of US company Airborne Express, Aramex, which had been the latter’s Middle East partner, set up the Global Distribution Alliance (GDA) as a worldwide network of independent express operators, mostly ex-Airborne partners. With some 40 partner companies, the GDA network currently has some 12,000 offices, 66,000 employees and 33,000 vehicles around the globe.

Aramex is now actively looking at China to expand its business and the GDA network. “We will not open our own network there. We are seeking companies with local China know-how that want to partner with us financially,” Horsley commented.

But the GDA network does have gaps in the USA and Europe, Horsley admitted. “The USA is a challenge and we are continuing to look for a viable solution that gives us independence. This could mean working with regional players.” In Europe, where it has a number of nationally-based partners, Aramex might seek cooperation agreements combining a ground-based network in central Europe and several other partners, he added.

One major challenge was the loss of GDA partners due to acquisitions by the leading express operators. Lynx (UK) and Stolica (Poland), for example, were bought by UPS. Aramex was thus being forced to consider financial stakes or joint ventures with its partners to prevent takeovers, he said. “The GDA is still evolving. We are now moving towards longer-term strategic decisions,” he commented.

Meanwhile, Aramex has just expanded its product portfolio in the Middle East with the launch of a new economy service offering deferred delivery within five working days