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The absence of a public infrastructure in Iraq means business for courier companies

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By  Massoud Derhally Published  August 31, 2003

|~||~||~|You’ve got mail. Well not exactly but its close enough for Iraq. Almost six months on since the fall of Baghdad, courier companies are playing an integral role in Iraq’s reconstruction, linking it with the outside world.

Two weeks after the statue of Saddam Hussein fell at Firdous Square, pan-Arab Aramex International, headquartered in Jordan, delivered its first package in Iraq. DHL followed suit in May and then Federal Express (FedEx) began servicing the Iraqi market in August.

For most of these courier companies, Iraq after the war, is virgin territory. After being cut off from the rest of the world, the Iraq represents a good revenue stream for the companies. While none of the current players in the Iraqi market can project the revenue they can derive from the former Baathist state, they all agree that ignoring the sector would be too high of an opportunity cost.

For FedEx, Iraq is number 215 in the company’s global network and could prove to be a lucrative market. “There are no firms numbers as such,” says Birender Ahluwalia, marketing manager of FedEx for the Middle East, Indian subcontinent and Africa. “We researched the market before taking this step. For any economy that wants to grow fast what it needs is an integrated end-to-end transportation solution. Iraq has the potential [to become] one of the fastest growing economies [in the world] and we expect good volumes. A lot of countries are interested in dealing with Iraq both importing into it and exporting out of it, so we are in a unique situation over there,” explains Ahluwalia.

Mazen Mamlouk president of Falcon Express, which operates in Jordan, Lebanon, Qatar, Syria and Yemen on behalf of FedEx, believes Iraq will be the biggest market for the company in the Middle East. Despite what some might say is a worrying security situation in Iraq, Falcon Express started ground and air services covering Basra, Baghdad, Kirkuk, and Mosul in August. “There is no question that there is a tough business environment over there, but there is nothing that cannot be overcome by insuring connectivity with other markets around the globe,” says Ahluwalia.

DHL, which began its Iraqi operations at the beginning of May and is headquartered at Baghdad International Airport, has 27 workers in Iraq and a fleet of trucks that operate between Baghdad, Kirkuk, Mosul, Khalil, Tikrit and Balad. Although the company hasn’t seen its services disrupted, its taking precautionary measures.
“We only operate during daylight hours and we do not associate with the military outside the bases,” says Peter Toghill, DHL’s Iraq country manager. “We do our business with Iraqis. We do not move in convoys and we also use local contractors to move material.”

As security, warehousing and logistics can prove problematic, most couriers are operating their trucks or flights from neighbouring countries. DHL flies into Baghdad and Mosul out of its main regional headquarters in Bahrain.

For Aramex, customer demand dictates to an extent the points of origin of its operations. The company, which invested heavily in the UAE, is working several routes to Iraq, which include Lebanon, Kuwait and Jordan. It may be surprising, but Aramex’s most important business in Iraq at the moment is the distribution of magazines and newspapers.

“We were the first to deliver the pan-Arab Al Hayat newspaper. We were the first to enter Iraq with the newspaper even [before] people were delivering packages,” says Osama Fattaleh, vice president of the Levant region for Aramex.

The company delivers the newspaper on a daily basis, shipping it from Lebanon to Iraq as well as a number of other magazines and newspapers, a service that no one else offers at the moment. In addition to commercial customers, Aramex also carries diplomatic and personal mail for the United Nations and non profit organisations.

“Our initial service was people telling us to find out if their relatives were alive or not,” says Fattaleh. “There were no phones, not even Thuraya satellite phones. They would give us an address, we would collect a letter from them and take it for delivery.”

The company also has commercial shipments for clients who want to send satellites (a hot seller at the moment in Iraq), personal computers, and satellite phones. When MTC the mobile operator in Kuwait was selling Thuraya satellite phones in Iraq, Aramex delivered them to Baghdad.

For GloCall Middle East, an Inmarsat Service Provider, which has three deliveries a week to Iraq, couriers are the way to go. “At the moment because you don’t have direct secure lines to Iraq the best way for us at the moment is via Kuwait and they [couriers] take care of the logistics to Iraq,” says Danny Wassenaar, commercial director for GloCall Middle East which derives 80% of its business in the region from Afghanistan, Iraq and Iran.

The political situation in Iraq at the moment has defined for all the courier companies the bulk of their business and nature of their clients. DHL’s Toghill says, “Anybody that is operating now within Iraq is going to be doing predominantly military contract type business and the commercial side of the business is going to be quite small in comparison.”

He adds, “If the Americans were to pull out and the economy was to grow organically, then it could be argued that the scenario would be reversed, it would be the commercial entities that would be the opportunity and not the military. As it is, it is the military and the Bechtels of the world that are bringing in all the freight.”||**||

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