TBY talks to John Chedid, General Manager of DHL, on market development, profit drivers, and facility expansion.
TBY What is the size of DHL’s operations in Lebanon?
JOHN CHEDID We have 122 employees and our turnover is over €20 million. A few years ago, for our express business, our market share was 55%, but we haven’t done market share research since then. And I say express because a lot of express companies are involved in other things like freight and day-definite-type shipments. It is very hard to tell what is traditional airfreight and day-definite, and so when I am talking about market share it is pure express.
Who are your typical clients?
Our typical customer is anyone who wants a shipment from point A to point B within a specified time or specific number of days, with a specific transit time. Around 95% of our customers are corporate businesses, and they include pretty much any company you find in Lebanon, whether as an inbound or outbound customer. Other than that, around 5% is represented by the retail business and ad-hoc users that come in off the street.
What is the demand for a domestic shipping network?
It was growing up until a certain point. The straight “pick up a shipment and deliver it somewhere else in the world” part of the business was developing quite well. There is not a whole lot of distribution that goes on within Lebanon. One is we don’t deal with domestic shipments. And two is there is not a great deal of domestic distribution in the way that DHL knows it. In Europe, the US, or Turkey you have big cities throughout a big country and you need a distribution network to get goods around. Lebanon is a one-city country, and so the room for local distribution is limited.
What are the needs for regional distribution and having Lebanon serve as a hub?
There is something in that. We go through cycles where at one point in time it was developing quite well. We were involved in the Beirut Free Zone, where we had a small facility. We just upgraded that facility in 2010. However, the opportunities are few and far between and I think that has to do with stability in the area. To do distribution you need a company that is present internationally, or at least area wide, and say they want to set up and do distribution out of Lebanon. We had a few companies that do just that, and we market it very heavily. We sell Lebanon as an alternative to Dubai, and it is a real alternative: it is faster, it can be cheaper, it’s organic, and you have local knowledge and local people. The problem is customers are reluctant to make the leap and set up shop in Lebanon.
What expansion of facilities have you overseen?
We have expanded our airport warehouse facilities, adding 2,500 sqm of bonded area. We have increased our number of service points, which are locations where the customer can drop off or pick up a shipment, and we have increased this number to nine. We increased the size of our warehouse at the port to 1,400 sqm. Our road network hasn’t increased lately, but five years ago we set up a network that went into Lebanon, where today we have a truck for daily departure and daily arrival.
What has an airside facility done for DHL’s operations?
DHL makes it a point to be close to or at an airport. It makes life a lot easier, and we have the volumes that justify such an investment. We have been in this airport facility for around 12 years, but five years prior to that we were planning and doing what we needed to get the approvals to set up. It is very hard to handle the kind of volumes we handle every day if you are not set up like this at an airport. If you take, for example, just the security screening, we have x-ray machines set up for outbound material and a scanner set up for inbound material. If you are not at the airport and you don’t have the space, equipment, and capability to handle that, you end up not doing a very good job. You find you don’t have the time it takes to do the proper checks. We have the luxury here in Lebanon of having our own gateway, where the shipments come in and go out. Our operations and our sales people are in one location. With everyone in one area it makes operations efficient and cost effective.
What is your outlook for DHL and Lebanon in the future?
We have always been positive about Lebanon and continue to be. We wouldn’t have made significant investments if we didn’t see a positive future. And so far 2011 has been good. We are seeing growth and customers are talking about investing again. What is important to know is how great Lebanon is as a distribution point. What the management have done at the port is positive and their future plans are spectacular. The traffic through that port has grown exponentially. There is a lot of transit traffic coming through here. Therefore, it wouldn’t be very difficult for a company to base itself here and distribute here. The shipping lines are now coming direct from China and Europe. The turnaround time at the port is good and the proximity of Lebanon to markets like Syria, Jordan, Iraq, Egypt, and Saudi Arabia make it a prime shipment point. For DHL at least, that is something we sell quite heavily and something we believe in strongly and we have seen it at the free zone. We have signed customers and we know more and more are to come.
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