DHL: Cheque's in the post

05 August 2005
Only a few global brand names - Hoover, Google - ever reach such a position of market leadership that their name is used as a verb for the service they provide. But with a global customer base of some 4.2 million, a presence in more than 220 countries and territories and shipments in excess of 1,000 million a year, US-based logistics firm DHL, owned since 2002 by Deutsche Post, is gaining that distinction. Customers in the Middle East are 'DHL-ing' their bulky, urgent or sensitive goods in ever-increasing numbers.

'We are by far and away the biggest logistics firm in the Middle East, and in the core DHL Express business - parcels, import express, express documents - our market share is about 47 per cent,' says DHL regional director Phil Couchman. 'What has been particularly successful over the past three years or so is import express, paid for at destination. Because the Middle East is essentially an importing region, services have been tailored to suit. If you make your import products and services good and good value, the Middle East, the UAE in particular, is a good place to be doing business at the moment.'

Many of the inroads made in the region have been in partnership with Danzas Air & Ocean, also part of Deutsche Post. The flagship double act has an automobile spare parts distribution centre at Jebel Ali.

The UAE and Saudi Arabia are the largest revenue earners in the region. 'Across the Gulf we are benefiting from the expansion of infrastructure, with new free zones, passenger terminals and road networks taking shape,' says Couchman. The logistics business is also reaping rewards from the moves towards a closer GCC economic integration, as the customs union in place since 2003 enables goods to be cleared at the first point of entry.

DHL's dual regional bases are both in the Gulf, with an air and road hub in Bahrain for the firm's owned and operated aircraft and truck fleet, and an air hub in Dubai as the main base for third-party carriers. Its scheduled road network extends across the GCC, Yemen and the Levant, and it was recently linked up to Egypt and Turkey.

'One interesting trend in the regional business, which is also affecting the US market, is for the volumes of material carried by road to increase faster than those going by air,' says Couchman. 'This is as connectivity by road increases and, within the Middle East, there aren't all that many places you can't reach next day by road.' Another, parallel, trend in the region is away from DHL's standard express offering towards less expensive second or three-five day delivery, generally by road and consisting of heavier shipments.

While the booming Gulf economies are the mainstay of the company's activities, frontier markets are also on the agenda. 'Iran and Iraq both present very interesting opportunities,' says Couchman. 'We've been in Iran since 1975 but in the last four or five years, growth has been particularly strong. In Iraq, we have a presence at all the major airports, but because of the security situation we haven't rolled out the DHL brand in the country beyond secure sites. The company has been involved in bringing in reconstruction materials, with a ground service operating mainly from Kuwait and an air service from Bahrain. Several features make Iraq a very attractive place for the future - its oil wealth, its fertility, a tired but comprehensive infrastructure and a strong work ethic.'

Growth potential

Finding a motivated and qualified workforce is one challenge Couchman picks out as particular to the region. 'In some countries we have to bring in our own workforce because nationals are not willing to do the kind of work required.' In general, however, the growth potential is alluring, and not only because of the current oil price-driven economic surge. 'In Europe, about 80 per cent of companies which require distribution and logistics

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