Fadi Ghandour, Former CEO of Aramex
Date of Interview: April 2013
After three decades as CEO of Aramex, the logistics company he founded in 1982, Fadi Ghandour surprised the business world when he announced he was stepping down. In recent years the company had consolidated its presence in Africa and Asia, acquiring logistics companies in South Africa and Kenya, and establishing partnerships in South Korea and China. Venture caught up with Ghandour in 2013 where he discussed business in the Middle East and what the future held.
From the interview
Aramex recently announced a 21 percent increase in its 2012 revenue and a 300 percent growth in e-commerce in the region. How did you manage to achieve this when so many other companies bowed to the financial downturn, and how do you expect e-commerce to develop in the future?
Primarily because we are a good company. We get a lot of business and we are doing a lot of e-commerce, which is one of the most important reasons. E-commerce is growing massively. And just as the Internet requires broadband as its backbone, e-commerce companies require Aramex as the backbone to deliver. We have built the company in the past five years to cater for e-commerce so when it happened we were there to deliver, and that’s why we’re benefiting from it. Everything is going e-commerce anywhere in the world. So why should the Arab world be any different?
We had no debt when the crisis hit, and we are an asset-light company, which means we are not heavy with assets that need to move with us if there was a downturn. We don’t operate our own planes, and instead we use commercial airlines, so we were perfectly suited for turmoil, just like we were in political turmoil. The organization is built around decentralized, agile, asset-light structures that allow us to move and compete in good times and in bad times.
There was a huge capacity during the downturn when people stopped traveling as much and goods were not moving as much, so airlines and shipping companies had a lot of space which I was able to buy as an organization. So we got to buy at cheaper [prices]. If you look at our results during 2009 you will see a drop of 10 percent in revenue, but an increase of 25 percent in net income. That is because we actually took advantage of the situation.
All this is in addition to our expansion into Africa. Why Africa in particular? Because it is an unexplored continent, there is a lot of space in it for competition and there’s a lot of investment required there. It is opening up, it is maturing, and it is easier to do business there than before.
Does being an Arab company provide you with a competitive advantage over your international competitors?
It’s not a question of being Arab as much as it is about being experienced in this region that is historically turbulent. So yes, we adapt to it. Our view of risk is different than a foreigner’s view of risk. Just like if I want to go and invest in a region that is alien to me, I would worry and would study the political risk situation like everyone else. In fact, for us as a company, we took risk as a competitive advantage because we felt that this was our place and home, and we’re used to it. The fact that our competitors were not coming fast enough to the region because of the political situation was to our advantage, because we were here and we were investing and believing, so the clients became loyal to us just because we were loyal to the territory.
Where do you foresee Aramex’s future?
We can already see the company’s future today in being the premier emerging markets global logistics company. So the world today is no longer about Western companies coming and conquering the world, it is about companies that are indigenous, going global from emerging markets. Aramex is a prime example of a global company that knows how to do business in emerging markets where it feels at home.
What’s happened since?
Aramex continues to go from strength to strength, expanding its global footprint to countries like Australia and New Zealand. The company also recently announced its full year financial results for 2015, with increased revenue reaching $1.044 billion, a 5 percent rise from the previous year. The courier company also recently announced a new business plan tackling the courier system, moving from a fixed-cost model to a variable cost one. As for Ghandour, he continues to support the region’s startups through Wamda, the entrepreneurship enabling platform he cofounded in 2010. He’s also the chairman and managing partner of Wamda Capital, a VC fund that invests in growth stage technology companies.
This is part three of a 10-piece story. Articles in the series of Venture at 10 also include: