Preparing for chance

If one word could describe Agility’s global expansion, it would be ‘aggressive’

Bassem Chbaklo, Deputy Chief Executive Officer, Middle East and Africa, Agility

Mention the name Agility to anyone working in the logistics or freight forwarding business in the Middle East and his or her expression will likely turn to that of half fear, half respect. In the past few years, Agility has developed into one of the top logistics providers in the world, finding itself with over 20,000 employees in more than 100 countries. Its three divisions – Global Integrated Logistics (GIL), Defense & Government Services (DGS) and Investments – bring in almost US$6 billion in revenue each year.

“Agility is an aggressive culture,” says Bassem Chbaklo, Deputy Chief Executive Officer, Middle East and Africa. “In life you have the entrepreneurs who like to start their own companies, and then you have the corporate people who sit in the office wearing suits and are happy to receive their paycheque every month. What I like about Agility is that it combines both of these cultures. It feels like your own company, but you are backed up by a huge six billion dollar corporation with a brand name, systems and technology.”

Chbaklo describes Agility as a “corporate entrepreneur”.

“A lot of our deals are driven by people on the ground, not necessarily the Chairman,” he says.

These deals include a US$23.2 million project to move materials for the Al-Khafji Joint Operation (KJO) Hospital in Al-Khafji, a Saudi city on the border between Saudi Arabia and Kuwait; beating out 11 other bidders for a Kuwaiti Dinar (KWD)5.5 million (almost US$21 million) tender from the Kuwait National Petroleum Corporation (KNPC); forming Agility Kurdistan, a joint partnership with Kurdistan Capital Investment to build warehouses and develop real estate in Northern Iraq; and a mega-contract to distribute assets and equipment from US military bases in Iraq, Kuwait, Jordan and Turkey to locations throughout Iraq.

The company has come a long way from its beginnings in 1979 as the Kuwaiti government-owned Public Warehousing Company (PWC), which rented out warehouses. In 1997, the Chairman Tarek Sultan made the company private.

“Back then, there was no such thing as a 3PL or a huge transport business in Kuwait,” says Chbaklo. “Such companies simply did not exist. People rented their own warehouses or did their own transport.”

Still, Sultan built a 20,000 sq metre warehouse, 12 metres high, with the latest warehouse management technology. “When people saw this happening, they said, ‘Are you crazy? Why do you want to build a 12 metre warehouse in Kuwait?’ The warehouse sat empty for three months and then slowly started filling up.”

Agility’s biggest break, however, came with the US invasion of Iraq. “In 2003, when the US military wanted to set up a warehouse for operations in Iraq, the only option it had was PWC,” continues Chbaklo. He says what the US army was looking for was a full logistics platform to support its operations in Iraq which included warehousing, clearing, shipping and transport, as well as a warehouse in Kuwait.

“Chance favours a prepared mind,” he says, quoting Louis Pasteur. And this quote should perhaps be Agility’s motto.

“We essentially focus on emerging markets,” says Chbaklo. “We are one of the top 10 logistics players in the world and there are players who are much bigger than us, but if you look at emerging markets in the Middle East, we are the largest in terms of assets and people.”

“People are reluctant to invest in the Middle East, Africa and CIS countries,” he adds. “This is where our advantage comes along.”

He says this strategy helped Agility win contracts such as Kraft in Bahrain and Procter & Gamble in Egypt. “We put in the warehouses, we put in the people, we put in the solutions, and the supply followed. We were ready.”

Agility, according to Chbaklo, usually enters a market by outsourcing fleets.

Chbaklo describes Agility as a “corporate entrepreneur”

“This strategy is faster, it’s quicker. It is very difficult to find the trucks and get them registered in a brand new market. As you start executing more projects, you start replacing the trucks with your own. And as you grow, you get more trucks through outsourcing and then you buy more of your own.”

In most countries, “with the exception of Dubai in the UAE”, Agility likes to form partnerships to leverage local knowledge and expertise. “In certain cases we go in and buy a company and in other cases we go in with a joint venture,” says Chbaklo.

He says he especially has his eye on Africa. The company recently signed an agreement to acquire the Kenyan logistics company, Starfreight Logistics Limited, based in Nairobi, and also has a presence in Libya, Egypt and Algeria. Chbaklo also hints that Agility will announce its move into a few more African countries by the end of the year.

“The biggest challenge we face is finding the right people to go to these countries,” says Chbaklo.

Agility is also feeling the crunch of staff shortages throughout the Middle East, as it continues to expand in its home region. It is building a 60,000 sq metre warehouse in Dubai’s Jebel Ali Free Zone, to be ready by the Second Quarter of 2009. It will also have a new 20,000 sq metre facility in Qatar, 40,000 sq metres in Egypt, 15,000 sq metres in Bahrain and 40,000 sq metres each in Riyadh, Jeddah and Amman.

While many logistics companies in the region tend to avoid Iraq, Agility has kept a strong presence, moving more than 100,000 truckloads into the war-torn country. In fact Chbaklo has just returned from a business trip there. “I was in Iraq yesterday,” he says. “We just started operations in Kurdistan this year, leasing trucks from another company. We will start purchasing our own trucks and hopefully by the time those are up and running we will have another contract there.”

Agility is also developing a one million sq metre warehouse, not far from Erbil Airport in Kurdistan.

“Iraq is something very dear to my heart,” says Chbaklo. “It is a two way thing – Iraq is a difficult market, it is a war zone involving life and death. People working for us have lost their lives. But I see us as part of the solution for Iraq. You need Iraqis to have jobs, to have goods on the shelves for them to buy. This is what we do. We are part of bringing life back to normal. I see this as very exciting.”

Chbaklo says Agility will not ignore the safer markets of the west. But, financially, developed countries may not be safer. “In Europe and US it is very easy to set up a business. In a few days you can have a license, a company and an office. If you want to service a client it is easy to find trucks on the market, you can outsource them. But because it is easy, it is also very competitive,” he explains.

“When you look at a place like Qatar, however, it is extremely challenging to set up an office, let alone find people, hire them, set them up and get the licenses you need. This process can take months. But because this is extremely difficult, an advantage comes in. When you own the warehouses and the trucks yourself and you go to clients and say ‘I can guarantee you that delivery will be there tomorrow morning,’ you cannot lose.”

WHAT’S IN A NAME?

Agility held the name Public Warehousing Corporation (PWC) until 2005 when it purchased British-based chemical transport company Agility, taking over not only its services, but also its name.

CASHING IN

Agility earned over US$6.2 billion in 2007, increasing top line growth by 26 per cent. Acquisitions included Leader Group, a freight forwarding and shipping agency services group based in Alexandria, Egypt; WTS Houston Inc.: a global logistics company WTS of Houston and its sister company, World Transportation Services, Inc., (Global Express Line); as well as Guangzhou Runtong International Transportation Company Limited (GRITCL), a South China company primarily focused on ocean freight forwarding services in Guangdong. It also won six new major contracts, including the Qatar – Pearl GTL project, with Transcar Projects Ltd. to cover the global shipping contract for two phases of the Pearl Gas to Liquids (GTL) in Ras Laffan, Qatar; discount store Sultan Centre’s logistics services in Oman and serving the US Air Force Base Service Operations in Kyrgyzstan through a one-year base period and four one-year options, with potential value of the contract being up to US$25.7 million.

This year is bringing in the bucks as well, although shares are not as strong as 2007. Agility’s financial results for the second quarter ended June 30, 2008 included earnings per share of Kuwaiti Fils 33.80 (US$1.30), compared to 36.85 Fils (US$1.40) per share in 2007. During this quarter Agility announced the acquisition of 71 per cent stake in the Denmark based forwarder CF GeoLogistics, increasing its total interest in the company to 100 per cent. It also completed the acquisitions of Kenya-based forwarder Star freight Logistics, as well as French forwarding company Medgroup which expanded its presence in France and helped them foray into Algeria.

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