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Lebanon 2013 | TRANSPORT | FOCUS: LOGISTICS

The demand for shipping and warehouse space continues to grow, in response to increased imports and exports.

While the regional economic climate has detrimentally affected many of Lebanon's main sectors, the logistics sector has shown its staying power. The perilousness of transporting freight overland through Syria, Lebanon's only land transport route, has consequently increased the number of vessels passing through the Port of Beirut by 4.5% year on year in the first six months of 2013. According to a recent Bank Audi report, the processing of containers and the total tonnage of goods rose by 22.2% and 17.4%, respectively. “[The Syrian situation] is good for the shipping sector, because land transit is now quite perilous due to the conflict; freight carriers are all opting for sea transport," said Bernard Gerdy, General Manager of CMA CGM. “This explains the 25% increase in business at the Port of Beirut."

Over 2011, 390,688 tons had passed through the Port of Beirut, rising to 417,463 tons by end-2012. However, even this lofty figure has been comfortably surpassed as of August 2013, hitting 513,076 tons. “In 2013, local cargo import volumes increased by 23% for the first six months," Samir Noaimé, President of Seatrans Agencies (Hamburg Süd), noted of the effect of the conflict. “Exports have increased by 43% in the first six months as well." Some commentators have remarked that the increased traffic is straining the port's capacity; however, with expansion of the port expected to be complete by the year end, such problems will soon cease to be an issue.

However, while the Syrian conflict has brought unintended benefits for logistics companies in Lebanon, there is a clear acknowledgement that the uncertainty the situation brings is not a foundation upon which stable growth can be built. “We can't talk about economic prosperity without a more stable Middle East," said Mourad Aoun, Net Holding's CEO. “If we were to dream of claiming—or reclaiming—the title of distribution or gateway role for our freight transport sector, things have to calm down in our region." More mundane challenges also remain for logistics companies in Lebanon, such as rising real estate costs in Beirut, and the lack of well-defined street names and numbers. It is rare for a simple address to be sufficient to ensure successful delivery of goods to a given location. Instead, companies such as DHL and Agility must rely on more detailed description of a delivery point. “It is not easy and people make extensive use of landmarks," said John Chedid, DHL's Country Manager. DHL has been established in the country for over 30 years, and it and companies like it have become accustomed to the difficulties this represents, which could not be said for new entrants into the market.

It's an issue that Lebanon's national post office, LibanPost, is well familiar with. In 2013, the company licensed Canadian company NAC Geographic Products' Global Postal Code System. Taken from longitude/latitude coordinates, the system assigns a unique 8 to 10 character Natural Area Code to a given location, which can be easily found with a GPS device on hand. LibanPost, while only created in 1998, already has a strong history of innovation, since Khalil Daoud, the company's Chairman and Managing Director, began running operations in 2002. Under Daoud's leadership LibanPost diversified its services to ensure its network of 80 post offices became a one-stop-shop for everyday services, from post and third-party logistics to e-commerce, retail services, and more.

Logistics companies in Lebanon are well placed to succeed with the Port of Beirut's Logistics Free Zone, which was established in 2007. The Zone spans 11,200 sqm and offers 100% foreign ownership, low-cost leasing, customs exemptions and various financial and business incentives. Morad Aoun envisions the Free Zone as a cornerstone in transforming Beirut into a regional trade hub. “We strongly believe that there is a need for a free zone Levant hub serving Syria, Jordan, and Iraq," said Aoun. It remains to be seen whether such ambitions can be converted into realities, but despite the uncertainty cast by the shadow of Syria's conflict, the future looks bright.