Facilitating trade

PWC Logistics is on a roll, entering new markets and posting record financials. Charbel Abou-Jaoude, managing director of logistics operations, outlines the supply chain and logistics solutions company’s objectives and growth plans.

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By  David Ingham Published  October 10, 2004

|~||~||~|PWC is on a roll. Net profit came in at $132.8 million in 2003, a massive jump over $32.6 the year before, and reached US $49.8 in the first quarter of 2004. The company was also included in the first Dow Jones DIFC Arabia Titans 50 Index, an index of the region’s top 50 listed companies.

In June, the company joined IFLN, which gives it access to a global logistics and forwarding network and gives IFLN members access to PWC’s regional warehousing, distribution and supply chain services.

In July, the company entered a joint venture with WJ Towell & Co to provide its full portfolio of services in the Omani market. A new entity, PWC Logistics Oman, will be created and US $22 million will be invested in a 20,000 square metre warehouse facility in Muscat and regional facilities in Salalah, Sohar and Nizwa.

Logistics Middle East sat down with Charbel Abou-Jaoude, PWC Logistics’ managing director of logistics operations, to discuss the company’s progress and future plans.

How has PWC evolved over the years?

PWC is a company that was established in 1979 in Kuwait. It’s always been a publicly traded company on the Kuwait Stock Exchange; for a long while, the Kuwait government had a significant holding in the company.

In 1997, the government sold its controlling stake in the company to the private sector, at which a point a new management came in with the appointment of the current chairman, Tarek Sultan.

A plan was put in place to transform the company from what was traditionally a real estate business — we used to give customers the key to a warehouse that we had built and rent it to them. Over time, the company has gradually transformed itself from this Kuwait-focused real estate driven entity to a regional, full service logistics provider focused on end to end supply chain solutions.

It took a while for the idea of contract logistics to catch on in Kuwait. People were not used to the idea of entrusting their inventory to someone else to manage. It wasn’t without its pains and challenges, but as the idea proved more and more successful more and more companies started coming to PWC for their logistics needs.

As we proved our worth in the Kuwait market, we started to look for opportunities to grow on a regional basis. We are now in Bahrain, Dubai, Qatar, Saudi, Jordan and Oman. We already have a very significant operation in Iraq as well.

The first customers that outsourced their warehousing operations to us were the co-ops in Kuwait. Now we have a very diverse customer base from FMCG firms like Unilever and Nestle to automotive companies, liquids and petrochemicals firms, and government agencies and ministries.

How comprehensive is your regional network?

We started out doing primarily local distribution and now as a regional logistics provider, we manage a network of distribution centres that we connect through transportation links across the region. I can move [product] under bond to anywhere in the region and distribute it, which is unique even for large companies. They might be able to move things at the parcel level, but to be able to do it at the mass volumes that we can, I don’t think anyone in the region can effectively compete with us.

Some of the local players have warehousing capabilities, or transport capabilities or forwarding capabilities. There’s no single regional player that has the full end to end solution… We have a network of [warehouse] nodes, transport capability and freight forwarding capability.

What’s the advantage of having that network of warehouses, rather than being centralised in one large facility?

Each customer has a set of problems that they’re trying to solve and one size does not fit all in logistics. Clearly, you need to tailor the solution to the customer’s requirement rather than trying to force the customer to work around something that suits your own capabilities. You provide the solution leveraging all the assets that your organisation has.

How far does your trucking network reach?

From Southern Turkey throughout the Gulf. We are managing a fleet of about 2,000 vehicles across the region. Close to 50% are owned by PWC. The other 50% are on long term leases and contracted from various local suppliers. We also have a fleet of close to 300 tankers for bulk liquid movement.

How do you move goods out of the Middle East to other parts of the world?

We don’t have our own assets, but like everyone else we put things on a sea liner or an Emirates or BA cargo plane and move it across the world. I would not be revealing a great secret, however, by saying that we have ambitions to take our [direct] operations beyond the boundaries of the Middle East.

We’re focused on solidifying and distinguishing ourselves in the region and then taking the next logical step, which is to go East or West as the opportunities present themselves. We’re very keen on moving to Asia, whether it’s the sub-continent or China. It will be a case of the right opportunity at the right time.

So you have the ability to get products anywhere in the world through agreements with third parties, but the next step is to take control of that for yourself?

Yes, but the name of the game in logistics is service levels, whether it’s accuracy or meeting a time definite requirement. The more you hand over to someone, the more the potential for that service level not to be up to your expectations. The natural thing, therefore, is to have our own infrastructure.

What do you believe makes one logistics company different from another?

It’s all about execution, your ability to deliver the right product to the right place at the right time, at the right cost. It’s not a virtual business, it’s about physically making things happen.

A lot of people think about the Middle East in terms of the hassles, the paperwork and inefficiencies involved. We are the people that can help eliminate the hassle and complexity. Any time you want to move your products in the region, there is a single company that you can come to.

Some companies have done business in one country, but have never extended that to other counties. Our mission is to facilitate trade, to help companies do business without worrying about the hassles that exist across this diverse geography.||**||

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