Aramex is a global provider of logistics and transportation services, based in the Middle East. It is unique in the industry as it is an asset-light provider of delivery services that relies on partnerships and technology to compete with global giants in the industry such as FedEx and DHL. It employees 18,000 people and now has 567 offices in 69 countries. It has grown to annual revenues of USD 1.2 billion and a market cap of USD 2.0 billion (listed in Dubai). Very recently Aramex has launched a hybrid delivery product which aims to make post offices relevant again by disrupting conventional delivery systems!
Redefining Last Mile
Digitalization is completely transforming the courier / logistics industry and existing mega supply side systems are ripe for disruption by agile smaller players such as Aramex. However, Aramex must constantly innovate and improve its digital supply chain solutions to have any chance at surviving the likely onslaught from the big players who will defend their turf. Most of delivery system optimization is focused on the setting up and cost minimization of the last mile. It is easy enough to bulk shipments together at the air freight or shipping stage, but at the end of the chain are usually individual addresses and delivery items which need extensive delivery networks. Research on hub & spoke distribution systems  has combined in recent years with reception and delivery boxes  .
To address these trends, in the short-term Aramex has adopted digitalization in its home region by installing central collection boxes that are integrated with their downloadable app for both delivery staff as well as consumers.
Their central data system optimizes delivery routes and groups packages so that staff just follow instructions on an app and face minimal delays with directions and/or end consumers not being present to receive packages. The end users can opt to receive packages at home or at a nearby delivery box, and get automatic notifications and geo-tracking data of their delivery person.
Video of Aramex App in use : Video
Making Post Offices Relevant Again
The real breakthrough for Aramex last year has been their partnership with Australia Post. Mega players in the global delivery space rely on significant capital expenditure in every new geography they want to service to build out warehouses and delivery networks. Aramex realized that this capex is unnecessary as underutilized local post offices exist everywhere in the world and usually have the best delivery coverage and last mile dynamics. The only obstacle has always been that outsourcing last mile to post offices is expensive and inefficient as inter-government laws for most countries require the entire journey to be covered by the post office’s global alliance partners. Aramex has teamed up with Australia Post to combine their respective strengths. Aramex brings in international courier strengths of bulk shipping, preferred air rates, full control over line haul speed, no weight restrictions, and state of the art digital tracking and notification systems. Australia Post brings its global alliance network which delivers to every address in the world at minimal inter-government rates. The hybrid product is cheaper than courier, faster than mail and easily scalable with zero up-front capex. This is a very viable medium-term solution that leverages the power of digitalization by applying it to existing brick & mortar post offices that individually do not find it feasible to develop advanced tracking and app based solutions and had seen declining utility and usage.
Whilst Aramex is banking on digitalization to disrupt existing delivery practices, this is a double-edged sword and reduces barriers to entry for competitors as well. Traditional delivery networks relied on warehouses and in-house delivery vehicles and personnel. The future increasingly looks to be more digital and banks on shared economy. Aramex has rolled out an Uber style delivery app and excess storage space in homes can also be pooled and monetized perhaps. The challenge then is to stay at the forefront of technological advances and to make sure digitalization is a friend not foe.
Will competitors also follow suit and look to set up partnerships with Royal Mail, La Poste and the likes? How sustainable is a business model that depends on partnerships and digitalization as its only value proposition?
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