Hussein Hachem

Hussein Hachem
CEO – Middle East And Africa

Aramex

Hussein Hachem holds a BA from the American University of Beirut and has completed a number of executive development and management programs. He joined Aramex in 1991 as a management trainee then moved up the ladder successfully to fulfil the role of General Manager in Kuwait and Sri Lanka. Hussein later became the Vice President for Oman and UAE, CEO for Gulf Cooperation Council Countries and currently the CEO for Middle East and Africa. Hussein also sits on several boards related to the logistics and transportation industry.

 

Quotes

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

In our federal system each manager on the ground is a CEO. The manager in Bahrain creates his business plan and budget as if he is running his own business.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

In the next couple of years we will see a major change in trade between Western Europe and China when they become connected by rail. I think that it is the most interesting development we are going to see in terms of trading. This will change how European importers behave.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

When I recruit, I recruit internally. There’s no way I can get someone to understand how we operate by bringing someone from outside.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

A new customs union has recently been signed between Russia, Kazakhstan and Belarus, which will eliminate export duties between these countries. This is a massive opportunity. Why? China borders Kazakhstan, and they manufacture for the international market, so there is regional integration in Central Asia and there is connectivity between this newly integrated region and a global hub.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

As a foreigner you need a Kenyan in Kenya, a Tanzanian in Tanzania and Ugandan in Uganda to understand what’s happening on the ground.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

Because of the economic situation in Europe and in the US and because of China as a major trade partner with Africa, people will invest more in Africa so they can capitalise on that trade route. If you are fast enough to move now, you will be able to capture that opportunity.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

I was in Uganda three months back when there was a civil disturbance, but our worry is corruption. I want to make sure that we operate in an environment where we can do business without paying anybody under the table.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

If you look at our footprint we are in key locations that will enable us to offer our customers a global service but we concentrate on our customers based in emerging markets, where we have better margins.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

In the next three to four years we will have at least 20 active operations all over Africa.

Hussein Hachem

Hussein Hachem

CEO – Middle East And Africa, Aramex

Many multinationals are talking about coming to Africa but not many are moving into Africa. I think that will change. Because of the economic situation in Europe and in the US and because of China as a major trade partner with Africa, people will invest more in Africa so they can capitalise on that trade route.

 

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What is your view on the uncertainties in the global economy? How confident are you of growth for your company in this environment?

Uncertainty continues, specifically in Europe, and I think it will continue in the years to come. We are an emerging market company by definition and we are focusing more on expanding our footprint to other emerging markets. We want to position ourselves as the leading logistics or transportation player in these emerging markets.

These emerging markets that we are looking at and focusing on, we are in the Middle East and not Africa by definition. We are in Asia, and we have been there for a long time and we strengthened our operations by a new joint venture in China. But lately we are focusing a lot on sub-Saharan Africa and Central Asia. I think in sub-Saharan Africa, there are a lot of opportunities and here I am talking about East Africa, Southern Africa and West Africa. Africa in total is 52 countries but has had interesting developments that have just happened.

Two to three years back there was the East African Community that has been signed and since then there has been a free flow of goods and movements within East Africa where you have 5 economies; one big Kenya and then you have Uganda and Tanzania, but they play a major supply chain by connecting other African countries through to these hubs and then connecting to the whole world.

Africa is rich in resources; that’s why everybody is going to Africa. 80% of Africa’s economy is on agri-business, agricultural opportunities are massive because Europe survives on the agri-business of Africa. They say Africa is the garden of Europe. And we want to play a part in that segment. Africa is rich in minerals; every mobile phone, every computer has a component of copper or cobalt that goes out of Congo and Zambia and goes to China, and from there finished goods come back into Africa. That’s why we are in South Africa because South Africa is the gateway and then we go to the Southern African region.

Nigeria is a huge economy with Africa’s largest population, 155 Million people, and then next to it there’s Ghana and the Ivory Coast. So West Africa has a lot of trade within Africa itself and with the rest of the world. So if you look at the Middle East, Africa, sub-Saharan Africa, Central Asia and Kazakhstan. We just opened last week in Kazakhstan. Kazakhstan is the size of Western Europe as a country; there are a lot of natural resources of oil and gas in the Caspian Sea. And Kazakhstan borders both China and Russia. The Chinese have started to move slowly and in the next couple of years we will see a total change of trade by connecting Western Europe to China by rail. I think that it is the most interesting development we are going to see on the globe in terms of trading and this will change how European importers will behave and this will have a major impact on trade. Currently a container takes 3 and half weeks to reach Europe by sea while by rail it will take 2 weeks. It is happening, we are involved in this business and you will see us more active.

The margins are different in the emerging markets, even though there is a global slowdown. These markets are highly underserved, highly populated, with a young population. The Internet is coming to them in a big way. There are opportunities for e-commerce and there are opportunities to invest in infrastructure. There is a daily change happening. I go to Africa very often. They are busy putting up ports, airports, roads, hospitals and universities. This will connect countries together and improve their GDPs. Companies like us are trying to facilitate trade. We are trying to create more synergy between us and the public sector so that we have a better understanding of soft infrastructure. Once you put up a port, a road and an airport you also need to eliminate the tariff and non-tariff trade barriers so that goods can flow easily between countries.

How do you think the changes you just described will affect your competition?

Many multinationals are talking about coming to Africa but not many are moving into Africa. I think that will change. Because of the economic situation in Europe and in the US and because of China as a major trade partner with Africa, people will invest more in Africa so they can capitalise on that trade route. If you are fast enough to move now, you will be able to capture that opportunity. We completed our acquisitions in East Africa, West Africa and Southern Africa. In the next three to four years we will have at least 20 active operations all over Africa. Africa has barriers to entry, but we know how to navigate and operate in Africa. We are quite used to working with risk and mitigating risks. You need to work with the local talent and transfer knowledge and not just parachute in expatriates. You need to make sure you have the right partners on the ground so that you understand the business environment and culture. If you are in Kenya, you have, for instance, the Kikuyu and the Luo. You cannot staff your office with just one of those tribes. As a foreigner you need a Kenyan in Kenya, a Tanzanian in Tanzania and Ugandan in Uganda to understand what’s happening on the ground.

I am interested in your view of risks and uncertainty as someone who is a national of an emerging market, who has grown up in the Middle East.

I have grown up in a civil war. A bomb here or a political threat there is not going to scare me. I am not going to change my travel plans. At one time I was meeting with a customer who said, ‘What is your evacuation policy?’ I said, ‘What? I am from here.’ But he said, ‘What about your competition?’ I said, ‘Well, my competition - they are foreigners. They will go to Canada, or the US, or Australia. I am not going to go anywhere.’ I was in Uganda three months back when there was a civil disturbance, but our worry is corruption. I want to make sure that we operate in an environment where we can do business without paying anybody under the table. In our business, you can move and clear shipments on time without paying if you have the proper documents.

Where do you see the opportunity for Aramex in this environment of uncertainty, of challenges globally and locally in your markets, whether in Middle East or Africa?

The opportunity is that we are going where our competition hasn’t. We decided to go to Africa a year and a half or two years back. Now we have completed five or six acquisitions. If my competition wants to go to Africa, the legal due diligence will be at least a couple of years. We also travel much lighter than an American or European company. I just sent three people to Ghana for a meeting. They did not need a security escort and insurance. They went and mingled quickly. We send a lot of Indians to East Africa where there is a large Indian community, and Egyptians do not need visas in Africa. So we are by far faster than our competition. Secondly we are not parachuting expatriates into these markets. We are buying companies that have local talent and local management. They retain their 30-40% shareholding and then we work on expanding their talent pool. In Kenya, we currently have 220 employees. By next month we will have around 500. In South Africa, we are doing an acquisition next week and have a 1,000 people on the ground. Our management team there is local. We are expanding their knowledge base and working to make sure that our corporate culture prevails – the culture of transparency and firm trust.

Are the governments here in Dubai or elsewhere helping you?

We don’t tend to lobby separately from our operating units for government approvals. Aramex have a federal model. In Dubai we are an Emirati company, in Kuwait we are Kuwaiti, and in Uganda we are Ugandan. We take the local identity of that country and work accordingly through them. We are not viewed as an UAE investor or an Arab investor expanding in a foreign market. Most of the time we don’t take 100 per cent ownership; we retain 60 to 70 per cent, and keep 30 per cent with the locals, operating as a joint venture.

Do you see your strategy over the coming years being more about connecting emerging markets to one another or connecting those markets to Europe, the US and the developed countries?

If you look at our footprint we are in key locations that will enable us to offer our customers a global service but we concentrate on our customers based in emerging markets, where we have better margins. You cannot do business without connections to Europe or the US. You have global hubs in emerging markets, in Dubai, in India, but at the same time you cannot ignore Amsterdam. Amsterdam is a global European hub so you have to go there. We are not going to compete on trade lanes with the UPSs, the FedExes, and the TNTs of the world. They are by far bigger than we are. We look for developments on the ground that will allow us to create customised solutions that cater to regional and individual markets. For example, in the next couple of years we will see a major change in trade between Western Europe and China when they become connected by rail. I think that it is the most interesting development we are going to see in terms of trading. This will change how European importers behave. Currently a container takes three and half weeks to reach Europe by sea. By rail it will take two weeks. We are involved in this business and you will see us more active in it in the future. There is also a lot of regional integration happening in Africa, the Middle East and Central Asia. The political systems are changing. Since the East African Community created a common market (in 2010) there has been a free flow of goods within East Africa and those economies play a major role in the supply chain by connecting other African countries through their hubs to the whole world. A new customs union has recently been signed between Russia, Kazakhstan and Belarus, which will eliminate export duties between these countries. This is a massive opportunity. Why? China borders Kazakhstan, and they manufacture for the international market, so there is regional integration in Central Asia and there is connectivity between this newly integrated region and a global hub.  Similarly, I am not going to be dragged into competition within Asia Pacific. But for movement between Asia and Africa, I have a solution. I have a solution out of Hong Kong to South Africa or Kenya, Kenya to Uganda, Uganda to Sudan, et cetera. My competition on the other hand is heavily dependent on Europe and the US. We have said we are going to invest 100 million dollars in Africa where the return on investment and margins are much better for us than the margins in other markets, such as Europe and the US. From that perspective we think investments in emerging markets make a lot of sense. That’s why we are moving fast.

Looking forward, what is the one risk to your growth that you are most concerned about? Why and how are you preparing for it?

Talent. People are crucial. What will differentiate Aramex from other companies is our workforce. I need to make sure that we keep attracting and investing in talent so that talent will stick around. I need to help their career path. A talented employee or graduate is looking for an environment where he can think freely and be creative. We have to create an environment where trial and error can happen – an environment that does not punish mistakes. Aramex need to accept new ideas because young people challenge our thinking, our processes. That’s why we have been changing a lot. We want people to come in and say, ‘Okay, you are doing this but that is the right way to do it.’ People want a good salary but it’s not about the money at the end of the day. They want to work for a company that has high corporate values, high ethical values, and a high contribution in society. They want to work for a brand that they can add value to and be part of its success story.

We have been acquiring young talent and Aramex have been involved in entrepreneurship from day one. We have a lot of development programs. This year we sent 30 of our talented people to executive courses at INSEAD, IMD, Oxford and Cambridge. We send them to the World Economic Forum meetings. We have another program in the UAE where we send 60 employees to a two-week customised course. We have something called a growth expansion team that sends people from here to go train in our growth markets. We send them out of this comfort zone in Dubai to work in different countries so that they understand the culture of that country. If you don’t keep talented people busy and engaged, they are very quickly disengaged. All of what you see happing around this company comes from this young pool of talent. All the management are in their early 30s.

How is the process of Emiratisation and Saudiisation coming? In other words, are you attracting local talent in the GCC?

In the UAE, it has been a challenge - to be very frank - to attract Emiratis to work for a service company. We work with deadlines. It’s not a job from nine to five. You can attract more women to the call centres, but I am talking about the entire management spectrum. In Saudi Arabia we have had more success. The pool of talent is larger and we are able to attract some really talented people who have been leading and working for us for quite some time.

If you look back over the last five years and then you look forward over the next couple of years, how different are the talent challenges from market to market?

In the past, companies went to Africa with a colonial mentality. They never really transferred knowledge. We have just entered Africa so we are looking at participating in leadership initiatives. Next year in Kenya, for example, we will bring a group of our employees to a two-week program that connects the public and private sector. We are trying to transfer knowledge to our people in Africa. We are going to build on their technical knowledge and train them in our culture and give them the skills to lead.

But are those challenges in Africa different from the same sort of challenges you are facing in Central Asia for example or even in the Middle East? 

In Central Asia, the workforce is used to the communist system of taking orders and accepting things as they are. If you are running a company with that sort of management, nobody is going to challenge you. It’s top to bottom. That’s not what Aramex is about. My challenge is to introduce the culture of saying no. If you think that whatever is being done on the ground does not make any sense, I want you to change it and improve it. I am in a management position because I have accumulated certain experience, but life is a journey where I learn from you and you learn from me. We engage in a civilised conversation and if it makes sense I accept your opinion.

How does that compare to Africa?

The education level is higher in the UAE and in the whole of the Middle East, compared to Africa and Central Asia. There is definitely domestic education in Africa, but not to the standard that you want. You need to take people out of the top universities there and then give them more training and more education. They have to be exposed to more of the world because people generally have less opportunity to travel. A Kenyan may have spent all his life in Kenya.

Here in Dubai the talent is more demanding because it’s more worldly-wise. The talent we are attracting here has a higher educational background. They come from the US, Canada, or this part of the world. You need to keep engaging them. Otherwise they’ll migrate. I am not the only player here. I compete for talent with the Nestlé’s, the Unilever’s, the Proctor & Gamble’s of this world. Aramex is not the largest and we don’t pay more. We offer a unique package. If you come to this organisation, you have the opportunity to be very creative. You have the opportunity to learn and we have the opportunity to learn from you. You can challenge the process and we can build this company together. Your career path is faster than at those other organisations because we are far smaller. We are also entering new markets and there is an opportunity to go and experience those markets.

Do you have visibility into your existing talent pool?

At Aramex, we grow from within. I have been 21 years in this company, and all the people around us are our own breed. We do hire people from outside, I’m not saying no, but when I recruit, I recruit internally. There’s no way I can get someone to understand how we operate by bringing someone from outside. We tend to learn from our competition, we tend to mark and to see because I don’t want to be blindfolded and say ok, that’s our way, but basically growing within is quite interesting and that’s how people stick around. If you look at our management, our Manager in Dubai which is one of our big stations, used to be our manager in Bahrain, our manager in Abu Dhabi was a team leader in Dubai and was a Sales Manager in Lebanon. Our manager in Qatar now is just in his mid 20s he was in Jebel Ali, our manager in Iran he graduated in the UAE five years back now is in Iran. Our manager in Abu Dhabi was in Saudi before he was in Jordan. Home-grown.

Clearly moving your talent pool, making sure your rising stars in the company those in their 20s and their 30s spend time in multiple locations, is it equally now that your footprint has expanded to not just to Middle East, North Africa but you have Sub Sahara, Central Asia.

I just moved the regional guy from Qatar, from his comfort zone, beautiful lifestyle, to Tanzania, and he is quite excited. So we are moving around. His duty is to recruit a local Tanzanian to replace him in Tanzania and then he moves to Kenya and he supervises our operations to make sure everything is fine. So he is going to work very much into the training, and the culture issues to make sure that the Aramex story is being told to the community. It’s a new brand in Africa and I just want to make sure that the community in Africa knows who we are, what company we are and what kind of a breed we are.

At the senior level, I can see you are building lots of connections between the different countries and regions, how far down do you have programs to connect the younger people, programs both for their skills and also in terms of connecting them across the organisation.

We have a lot of programs for ground staff. The human resources function plays their part. There are people on the ground continuously communicating with the ground staff and making sure they are fully integrated. You cannot run a company when you have a strategy that just sits around in the minds of the CEO and the people around him. If you talk to me or you talk to anybody across Aramex they will tell you the same story about what we are doing.

The countries that you are present in are growing rapidly and have people with many different backgrounds. Are the things that hold people together a shared purpose and culture?

Yes, I cannot lead if the people in this organisation don’t have a common target, a common vision. The questions we need to ask are where we want to be in the next three to four years, who we are, and what is our purpose? We are a responsible company that pays back to the community that attracts talent and facilitates trade. We want to position ourselves in a leadership position in these emerging markets. That’s why we are like an asset-based company. We talk to our investors and we talk to our customers, but the number one stakeholder is the Aramex employee. He or she is the one adopting this and running with it. We communicate quite effectively internally in multiple languages.

What are the very specific skills you are looking for in your employees to make your strategy successful?

On the senior level, I need people that will come with an open mind. I want people to come and listen to the customer and listen internally. I need people to be hungry for knowledge. I need somebody to look at this company and say I want to build a house, I want to get married, I want to have a career path, and I want to be somebody in this organisation. I need somebody who is very ambitious and challenges the status quo. I need somebody who is a bit stubborn and has high moral values because transparency is important. I need somebody with a leadership vision people will rally around. I need to project these attributes myself and nourish them within the organisation.

Have you ever had to change a strategic objective because you were not confident of being able to get the people that would make it successful?

When we entered Africa I thought we would start building infrastructure and facilities. But we were faced with the reality. I still believe that’s the future and I still believe that Africa needs to consolidate its supply chain into hubs and new routes. I had to change not because of a lack of talent but because of the realities on the ground, such as working with customs regulators. We started with one vision and ended up with a different formula, which is working. We adapted.

From a people perspective, has there been a situation where there was something you wanted to do that made perfect strategic and business sense but you were not able to find the right people to do it? Do you have enough resources?

We have enough resources. Aramex have been in this region 30 years and many of our people started young, at twenty or twenty-one years old. We have accumulated a lot of depth and a lot of experience and we kept on investing in these employees. For our global expansion team, for example, we pull 80 to 90 employees out of the business from around the world and the business continues to run because we know our core markets by heart. Our brand is dominant. Ten years back we were 60 to 70 million dollar company. Now we are an 800 million dollar company, and next year we will be a billion dollar company. We have a lot of talent that needs to go and share their knowledge.

As an Emerging Markets multinational as opposed to an American, or English or European multinational, have an inherited advantage in your people because your people actually come from emerging markets by and large have lived in their countries all their life and to move them is not an issue?

I just sent 2 – 3 guys to Ghana for a meeting. They did everything. They don’t worry. They will not tell you I need security. But when I move there I don’t move the same luggage that an American or European company has to move in. Germans going to Uganda is different than a Lebanese going to Canada. More light. They will go and mingle fast and they will talk and in 3 – 4 months. And there we have an advantage. East Africa is dominated by the Indian community and we have a lot of Indians that go there and work. Egyptians don’t need a visa to Africa being an Egyptian and they just go all across to Africa and Africans love Egyptians. So it just opens for us. We have a bag of talent that was stuck and then they are going all over the place.

What other skills are you looking for?

Nobody comes in as seniors, so these seniors have all come up. You have to define, on the operational side; couriers are couriers, put that aside. Anybody who comes in operations is an industrial engineer by definition, so automatically he has that kind of educational background. However industrial engineers are process oriented - so fine. So I just want to make sure, because they are challenged by the commercial, the commercial will say the customer wants this and this - and that’s a process. For me - fine that’s a process and I just want to make sure I put up a process that will satisfy my customer and give them something. The one that will really define what my process is and how things will work is the customer. So I need to listen to the voice of the customer and design a common process that will satisfy the whole market and making sure that it really works. And I have a lot of industrial engineers that I attract but that will inject the commercial part of the business.

Do you recruit skilled people, for example, industrial engineers locally?

You see in Kazakhstan that profession. You don’t see it in Africa. You don’t see much here by the way. You see it in Jordan, you see a bit of this in Lebanon and Egypt. Industrial engineers in the Arab world are not very common. We are able to attract some from the US, because there is a gap between the university graduates and between what we want as the job market. In our logistics industry there isn’t specialisation in the universities, so the graduate is a business graduate or a marketing or finance graduate. You will not fine somebody specialised in route management for example, or supply chain or logistics. You see courses here and there scattered, so what we do is we bring this and then we send them for courses so that they can go and study.

Do you go one step below and actually started working with specific universities to try and include this in undergraduate courses.

We spoke here to Wollongong (The University of Wollongong in Dubai) - at one time, we spoke to corporate universities, we have something called Aramex Corporate University, and we have internship programs currently up and running.

How does the customer shape your business?

There is continuous communication between the customer and us through our sales force and our local management. Aramex is a federal system. Every station works with a pool of customers, in Kuwait for example or Bahrain or Qatar. All the budgets and the business plans that we generate from the stations are based on engagement with their customers. The customer will say, for example, ‘I want a warehouse. Why don’t you come up with a business model to create a value-added facility here in Bahrain for the Saudi market.’

Is the operating model for a logistics company or transportation company based on having efficiencies of scale whilst catering to the customer – a balance of independent units and common infrastructure?

Yes, in our federal system each manager on the ground is a CEO. The manager in Bahrain creates his business plan and budget as if he is running his own business. I do not say, ‘I want you to grow this much.’ I ask the managers what they project given the current situation and last year’s results. Then I look at ratios. I look for gross profit margins, growth, capital expenditures and return on investment. I ask him for the logic behind the numbers. I look at historical trends. It is a formal budget exercise but it is not a bureaucratic exercise. That’s the difference. 

So that is your innovation model as well?

The innovation model comes from the people on the ground. They say, ‘I want to try this process, I want to attract this customer, and I want to attract this segment.’ Then we move. There is a lot of trial and error in Aramex. We fail a lot and through failure we learn. You cannot get it right through research. One of our employees suggested we look at the top selling items from our warehouses, like iPhones, and put in them in an ‘e-commerce van’ for online sales. You are the customer, you buy online, automatically the order will come to us and we deliver to you in two hours. Currently the process for everybody is a process of going and retrieving the item from the warehouse. So I told him, ‘It’s a brilliant idea. Go ahead and do it.’ We will start with one or two vans. If we fail, we fail. But we may hit the jackpot. These are the kind of ideas that I am talking about – small but very innovative. People look at the services environment that we have to operate in and think out of the box. This does not come from the management. It comes from the people that we have on the ground.

Do you actually monitor some of the carbon footprint? Do you do an audit on that?

In December 2011, we released our 1st carbon foot print report, the 1st carbon footprint report by a corporation from the Middle East and North Africa Region. The report, which has been developed using the Greenhouse Gas (GHG) Protocol calculates, measures and presents our global greenhouse gas emissions. The data, which has been independently audited and assured, will be adopted as the baseline for setting targets and assessing our progress in reducing carbon emissions in the future.

How much are environmental and social concerns becoming more a feature of the way you think of about your company, your strategy, and your costs or growth expectations?

In Dubai, all of our facilities are Leadership in Energy and Environmental Design certified. They are sustainable and certified to the highest standards, in terms of solar energy, irrigation, and the materials we use. We are running our trucks with recycled oils and we use a lot of hybrid vehicles.

Do you want to be a local partner for your customers?

Talent wants to come to a company that is responsible. Every Aramex manager does volunteer work. Fadi Ghandour, our Founder, is very active in our Ruwwad Initiative, which just received the 2011 Humanitarian of the Year Award from Arabian Business. We also work with Injaz. In terms of monetary value, two to two and one half per cent of our net profit goes into these initiatives. It’s a global exercise. Every Aramex employee is aware of the social and environmental issues that affect us. We believe we are part of the community and we need to add value to the community. We need to engage with schools, with the young, and with entrepreneurs. We leverage our infrastructure to support this. In order to encourage entrepreneurs to enter e-commerce we subsidise rates. A lot of startups come to us and we give them help and consultancy free of charge. We want them to start working businesses. We believe it’s about making money responsibly. Then we rally the private sector along with us so we are not alone. We want a sustainable business model.

Are you making sure that the values which you built up so strongly in the Middle East get fully imbedded in Africa, Sub Saharan Africa and Central Asia?

Our chief sustainability officer is just doing his rounds now. I am going to Cape Town and meeting with somebody who is working to supply computers to the townships.