The Innovators: Logistics Entrepreneurs

Disenchanted with job opportunities and inspired by rags to riches stories, the entrepreneurial spirit in the logistics industry is alive and well. Helen Gaskell takes a look at the market leaders from around the Gulf

It seems that almost on a monthly basis a new e-commerce service providers, or app-based delivery services are coming to the market, with start-ups disrupting the trillion Dollar logistics market.
With numerous multi-national distributers, warehouses, brokers, packing companies and freighters competing for customers, logistics could be seen as one of the most difficult sectors to successfully penetrate, however with a demand for ease, available funding and government backing, the logistics start-up ecosystem is growing and changing the industry as it shifts from a focus on large, family-owned companies to more agile SMEs.
Last year, the UAE Government declared 2015 the “Year of Innovation” and announced a new National Innovation Strategy with the aim of becoming one of the most innovative nations in the world within a seven year period.
“This innovation strategy is a national priority for our programme of development and progress.  It is a primary tool to achieve Vision 2021 and an engine for the growth of distinctive skills and capabilities across the nation.  We have always called for creativity in every field: this strategy is a concrete step to implement that vision.  These initiatives around innovation will enhance quality of life in the UAE and take our economy to new horizons,” said Sheikh Mohammed bin Rashid Al Maktoum at the time.
“We want our public and private sectors to explore new horizons to develop our economy. Innovation is our only way to build a great history of the UAE… the future will be for those who adopt innovation,” he continued.
There are also many accelerator companies and incubators emerging to nurture and fund the Start-ups including: the Khalifa Fund investing in national Emirati businesses; accelerators such as Turn8, Impact Hub Dubai and In5; the government-backed innovation centre that heavily subsidises the licensing and office rent costs for its residents; the government-owned tech fund Silicon Oasis Founders; the tech-focused co-working space Astrolabs; the international accelerator Flat 6 Labs; the emergence of start-up capital funds like Envestors, Emerge Ventures, WOMENA and Venture Souq; crowdfunding websites; and countless start-up-related events like STEP, TIE Dubai and Start-up Weekend.
Omair Shahid, partner at Wizards Island, an e-commerce and supply chain market research and consulting firm, says: “Starting with the trend of World Luxury Expo in Saudi and going ahead from World Expo 2020 in Dubai up to the 2022 FIFA World Cup in Qatar, the GCC has taken centre stage for trade activities.
‘’This has resulted in customers from across borders and an extreme increase of consumption of all imaginable things by people from
in and out of the region, thereby profiting the logistics sector.”
While this statement seems promising across the board, Abdulaziz Al Loughani, vice chair and executive director of the Kuwait National Fund for SMEs Development, states the challenges of starting a business in Kuwait in his blog,
Start-upq8:
He writes: “It is very challenging to start a business in Kuwait as the licensing requirements and procedures are quite complicated, they take a lot of the entrepreneur’s time to start and maintain rather than focusing on the business 100%.’’
He also points out that Attracting and maintaining talent is hindered by the strong benefits that the government offers; Government business penetration is very challenging and is predominantly taken by large corporations and family offices, with access to private finance limited.
While there are a few in other sectors, Truelines, is the stand-out logistics Start-up in Kuwait.
As previously mentioned, Dubai has far more to offer in terms of incubators and accelerators to help and encourage people start their business. Turn8 is a Dubai based Start-up accelerator supported by DP World, one of the largest marine terminal operators in the world.
The Government played a large role in inspiring DP World to launch Turn8, Yousif Al-Mutawa, CIO at DP World says: “There’s a big drive from the leadership to foster the entrepreneurship ecosystem in UAE.”
TURN8’s seed accelerator program is designed to encourage innovative entrepreneurship worldwide, but starting with Dubai. It states on its website: “We look for people with ingenious ideas that can be refined and brought to market through a ‘seed accelerator’, a program that selects start-up teams with marketable ideas and supports them with funding, mentoring and training in exchange for a stake in any resulting business.”
Around the GCC
Bahrain is another country with a burgeoning start-up community and according to a recent survey by Ernst & Young, 70% of young Bahrainis were interested in the idea of starting their own business, twice as many as anywhere else in the Gulf.
This is supported by the success of The Bahrain Award for Entrepreneurship (BAE) which was initiated last year under the patronage of HH Prince Salman bin Hamad Al Khalifa, Crown Prince and Chair of the Bahrain Economic Development Board (the EDB), and aims to recognise the country’s business leaders. This year, the BAE has received 255 nominations, an 8% increase to the previous
year’s edition.
According to the World Bank’s 2016 Doing Business report, released in October 2015, Bahrain ranks second in the GCC region and 65th globally out of 189 economies for ease of doing business.
Also on hand in Bahrain is Tamkeen, part of Bahrain’s national reform initiatives and Bahrain’s Economic Vision, Tamkeen is tasked with supporting Bahrain’s private
sector and positioning it as the key driver of economic development.
Amal Kooheji, COO at Tamkeen said: “One of the biggest issues facing entrepreneurs, particularly start-ups and small businesses, is the availability of funding.”
In September 2008 Tamkeen launched the Enterprise Financing Scheme to help alleviate the risk associated with new ventures and SMEs. The scheme provides 50% of the interest of funding provided by a bank to a business, in addition to providing a 50% guarantee to the lending bank.
Similar to Kuwait though, while there are many Start-ups in other sectors, logistics is lacking, with a very small number of stand out start-ups.
Qatar is another country where a budding entrepreneur could perhaps fill a void and make a fortune, however in Qatar the trend seems to be doing away with logistics companies altogether and cutting out the middle man.
According to the Qatar News Agency, Qatar’s state postal service recently announced that it has launched a new service that will allow shoppers to buy items online and get them delivered directly to their homes or to a “smart locker.”
Announcing the new “Connected by Qatar Post” service, the organization also said it is planning doorstep drone delivery for some packages.
Also, Qatar based Start-up, Egrab delivers groceries but says it has “no inventories or logistics on the logistics side.”
Saudi Arabia has over 40 incubators but a start-up advisor in the Kingdom writes that the ecosystem of the Kingdom is one of the main challenges.
“The Saudi ecosystem is made up of smaller ecosystems that don’t have much in common apart from market dynamics and target demographics.
“Some incubators are doing a fantastic job at building a stronger national presence, such as Badir Incubator, which has bricks and mortar operations in five cities and has a consistent, sustainable model to assist start-ups. But the lion’s share of incubators enjoy the comfort of
their own cities.
“Jeddah, Riyadh and the Eastern region ecosystems operate very differently from each other, making them isolated from one another in many areas. This increases the difficulty with which entrepreneurs can collaborate or access the national market.”
The start-up culture in the GCC is strong and support is spurring growth. How this will alter the logistics industry over the coming years remains to be seen; with so many demands from consumers and clients, for on-demand services and adaptable and flexible business models, the space exists for new players to come and revolutionise how things have traditionally been done.
In shipping and delivery specifically, the ability to re-define the client experience is driving demand for, and the success of, agile start-ups. The impact of the sharing economy on things like maritime and road delivery, is also alleviating many of the costs faced by business by brokering smaller, shared spaces, on ships and trucks, to ensure goods go from A to Z with ease and without breaking the bank.
However, the million Dollar question that remains unanswered is how the established and larger companies will compete in this changing landscape and if the strength of innovation in the SME sphere will spur innovation in the large enterprise segment. It wouldn’t be impossible to imagine a future where, after introducing a new way to do business, the smaller entities are acquired by the larger ones, who are hungry for their technology, future visions and, ultimately, success.

Truelines Logistics

Providing a range of logistics services at “competitive special rates for your shipments from any part of the world”

Company mission: “Truelines Logistics is one of the most trusted and reliable logistics, and general trading companies in the State of Kuwait, driven by leaders with bold vision and a strong entrepreneurial spirit.

‘’The operational experience and business acumen gained in the State of Kuwait during this period has provided the confidence and strength to establish the company operations beyond the boundaries of Kuwait. The expanding list of satisfied clients reflects our ability to execute challenging projects, against all odds.

‘’The entire work force has many years of hands on practical knowledge of business operations in the GCC Market in general and of the Kuwait Market in particular.’’

Fetchr

A shipping app designed to make ‘’shipping as delightful as shopping’’

Company mission: To empower all deliveries with technology and overcome the ‘no address’ problem that is prevalent in the MENA region. CEO and founder, Idriss Al Rifai says: “Fetchr overcome this through our proprietary technology. With our app, we use the customer’s GPS coordinates as a delivery address. We remove the inconvenience associated with shipping.”

Ambition: To disrupt the logistics industry through the power of technology and becoming completely customer-centric.

Reason for starting the company: “While heading the operations at Marka VIP, I faced several issues with customer complaints about delayed packages or sometimes packages not getting delivered at all, leading to high return rates. I built an in-house logistics department to expedite deliveries. While working on this, I realised the potential impact a customer-centric, technology backed delivery solution could have for ecommerce and all deliveries across the region. I therefore decided to leave Marka VIP and founded Fetchr in 2012 to tackle this problem,” says Rifai.

Performance/ Success to date: To date, Fetchr is the only firm in the Middle East to have raised $11M in Series A funding, backed by New Enterprise Associates, a top tier Silicon Valley VC firm and now operates in U.A.E, KSA, Bahrain, Egypt, with more to be named by 2016-end.

LoadMe

An online freight-exchange platform that enables transporters to find loads for trucks that would otherwise be travelling empty.

Company mission: Leveraging technology and information for matching trucks and loads across the Middle East to help transporters to increase their loaded miles and brokers, forwarders and load owners to ship their freight effectively.

Ambition: To fulfill this mission, LoadMe has established the following goals: to develop the first load board in the Middle East; build a mobile app to support the users interaction on the move; combine the power of internet with GPS tracking and smart phones apps to connect transporters with load owners in real time; grow the network fast and aggressive with loyal companies; get the a big market share to have a powerful position when competition will come; and  expand its operations to all the countries from the Middle East. Once this is achieved the aim will be to establish partnerships with governmental institutions to promote the idea over their networks and reduce the backhauling empty of the trucks by 10% in GCC over the next 2 years. The ultimate ambition is to have 30,000 companies registered and active on the network.

Reason for starting the company: The idea started in 2014, when Sebastian Stefan, a sales manager for a major transporter from UAE, was struggling to increase efficiency and reputation for his team but the communication problems in the market slowed him down. As a problem solver, Stefan looked for solutions in other markets and he was shocked to find out that everywhere else in the world they have the load board for road transportation but here in the Middle East is not available.

In a discussion with his friend and colleague from university, Sebastian Morar  who is a skilled software developer, they decided to build the first online marketplace for freight exchange in the Middle East. Soon after that Claudia Pacurar joined to lead with branding and image.

Performance/ success to date: “We have now 4,400 companies registered and doing business on our platform. An accumulated fleet of 8,000 trucks which makes us by far the largest transporter in the Middle East. Every day there are between 100 and 200 loads available on the platform and we had 40% growth/month for the last 12 months,” says Stefan.

He continues: “The Middle Eastern transportation industry has serious communication gaps between transporters, load owners and agents. Because of this 50% of the trucks are backhauling empty from their destination and in transportation sales, three out of four orders are refused, because the load does not match the truck. The information about daily loads and fleets is distributed over the phone, in a very inefficient way so we have a market that offers potential chaos for every shipment.”

Transcorp

Providing integrated logistics services for the cold chain and dry distribution.

Mission: To create a distinctive business model by setting the standards of excellence in markets served.

Ambition: according to Rodrigue Nacouzi, CEO  and founder of Transcorp: “Distribution was considered secondary, my ambition is to present this product as a core phase within the cycle. Also, to expand this model to the Gulf Countries in the next three years.”

Reason for starting the company: Nacouzi explains: “Since I landed in this country I had a dream to launch a unique logistics setup and offer a different level of commitment than the market norms. People got fed up of the poor transportation services and of big organisations that favour transactional business over long term relationships, affecting their customer service level and commitment”

Achievement: The company started with two employees and 1 truck in April2014; and is now more than 35 employees and 22 trucks covering the seven emirates and dispatching more than 1,000 packages per week.

Nacouzi adds: “Dubai cold chain distribution industry is underserved and lacks compliant transporter hence the need for professional provider rising. Distribution is an Art for us!”

Extabs

Offering “a wide range of services where we are committed to make a difference in the logistics industry,” focusing on the grocery delivery market.

Mission: To be a company known for dependability, impeccable service, strong and uncompromising commitment to all customers. According to its website Extabs envisions to offer logistics service that offers something different from traditional logistics market with time-based delivery and reasonable cost.

Performance to date: Founder Rahid Kader says that customers simply download the app from the App Store or Google Play Store, choose their products and get them delivered at their doorsteps by a “grabber”.

“Our project works widely on a mobile platform. Customers order on a mobile phone, the grabbers receive orders on the mobile phone and get them delivered utilising the GPS. In order to start lean, we have no inventories or employees on the logistics side.

“Inventories are from the stores like Quality Hypermarket, Lulu, Monoprix, etc, and the drivers are independent limousine/taxi drivers who already have a car, a licence and a mobile phone. We create more business for the stores and more job opportunities for the drivers and save a lot of time for our customers.”