AURORA: How does DHL Pakistan configure itself in terms of its different businesses?
IMRAN SHAIKH: We have three different businesses. DHL Express, which is the courier business and is the dominant player in Pakistan; DHL Global Forwarding, which primarily deals with domestic trucking, air and ocean freight, and DHL Supply Chain, which deals with warehousing. In Pakistan I head DHL Global Forwarding and DHL Supply Chain and Sarfaraz Siddiqui runs DHL Express. DHL Express has been in Pakistan for over 30 years;
we, on the other hand, are fairly new. DHL Global Forwarding Pakistan is 100% DPDHL owned and we were registered in Pakistan in 2009.
A: What brought about this decision?
IS: DHL as a company sees a bright future in Pakistan. We see our footprint growing, we see that there are 180 million people and whether it is import or export, this business is going to grow.
A: Despite the present economic difficulties?
IS: This is a growing market;
if we are not importing we are exporting, if we aren’t exporting we are importing. DHL felt that operating as a 100% owned company would be more viable; it is easier to make investments when we are the only ones calling the shots. About two and a half years ago we decided to invest nine million dollars in Pakistan over a period of two years. It was a quick decision for the CEOs to make, if you have a partner, you first need to have his consent. If we did not see Pakistan as a growing market, we would not have made that call.
A: Where are you investing these nine million dollars?
IS: Infrastructure mainly; trucking, fleets, training,
IT systems, upgrading our warehouses to make them world class. This is where the money is going and we will continue to invest as needed, because we see a long term future here.
A: Will this investment affect Pakistan’s overall economy?
IS: It will, because we have partners and vendors; smaller vendors become larger vendors as we grow, so we are spreading the money around.
A: How much importance do you give to training human resources?
IS: We have three pillars we stand on; investor of choice, provider of choice and employer of choice. Whether it is about our own systems or general education, we take the training of our employees very seriously.
We have employees who take language classes, go on external training, whether it is at LUMS (Lahore University of Management Sciences) or other universities in Pakistan. We also provide Six Sigma training internally - in and outside Pakistan as well. Six Sigma is a globally recognised programme which is used for process improvement and brings efficiencies and cost reductions not only to us but to our customers as well.
#### Imran Shaikh, Managing Director, DHL Global Forwarding Pakistan, speaks to Aurora about the challenges Pakistan poses to the business of supply chain logistics.
A: Does logistics as a profession attract people?
IS: Today, anything we use in our lives has to come from a supply chain, whether it is exported or imported. Even if it is a very Pakistani organic product, the raw material has probably travelled from one city to another and supply chain logistics are involved; people are seeing that this is one industry that will continue to grow.
A: How difficult is it to work in Pakistan given infrastructure issues?
IS: The infrastructure has its challenges, but which country doesn’t? Even some of the most advanced countries have their own infrastructure challenges. The main challenge is to have efficient roads, because if you have good roads, it brings fuel economy,
it reduces pollution and it has several impacts as you go along. It also involves creating better working conditions for our drivers and operators, such as providing rest areas, proper fuelling and service stations, repair shops as well as the enforcement of highway codes and regulations. We have invested in a large number of new trucks and we work with partners and carriers who are able to provide an efficient supply chain. It is a challenging requirement because we follow health and safety transportation rules. These rules are very important because they don’t protect our employees only; they protect other people as well.
A: In terms of trucks, do you have your own fleet or do you outsource?
IS: We have a fleet of our own, which is owned and operated by DHL, then we have a fleet that is owned by DHL but operated by a third-party provider, we also have contracted fleets from other providers, and this way we are able to help entrepreneurs who want to enter this business, so it is also helping the economy.
A: What about rail?
IS: Rail has its challenges.
We are currently exploring options, but it is not a regular service that DHL provides in Pakistan for domestic transportation.
A: Is this because of the current state of Pakistan Railways?
IS: They have their challenges, so they will not be able to provide a service level that is required by us or our customers.
A: What about air and shipping?
IS: Unfortunately although we are such a large country, we don’t have a reliable or robust shipping line, so goods are primarily moved on carriers that call on our ports, but which may not be Pakistani companies.
We would like to see the government do something about this in terms of attracting investment as well as improving existing ones. We use different ocean shipping, be it APL, Hapag Lloyd or Maersk. For air we work with partner carriers, whether it is PIA, Cathay Pacific, Emirates, Etihad or Qatar.
A: To what extent are you hampered by the absence of cross border agreements with neighbouring countries?
IS: Pakistan is ideally located. Central Asia can be fed through our ports and in the last year or so there has been discussion and dialogue between countries regarding bilateral agreements for cross border transportation, not only for Afghanistan but also beyond. Pakistan could be the gateway to these countries.
A: Apart from infrastructure issues, what other challenges does Pakistan pose in terms of logistics and freight forwarding?
IS: The enforcement of laws to ensure that all players operate from the same platform. However, this is a challenge not only in Pakistan it is also a challenge outside Pakistan for DHL.
A: Are there common platforms where logistic companies can get together to address issues of mutual concern?
IS: There are platforms for both supply chains and freight forwarders, including PIFFA (Pakistan International Freight Forwarders Association).
We are members of IATA and FIATA and we address our concerns to them and they address these to the appropriate government or non-government departments.
A: In broad terms, what would these concerns be?
IS: Mainly issues relating to infrastructure investment. We would like the highways to be much better, so we work with the highway or transportation departments. We also work with the port authorities to improve efficiency. There are also tax issues.
A: Who are your major business partners?
IS: We work primarily with multinationals in the telecom sector, cement, oil and gas.
We have a large footprint with Pakistani textile manufacturers from importing their raw material and machinery to exporting their finished goods.
A: Is this a very competitive business?
IS: It is a very competitive market because there are other multinationals operating and we also have local heroes who compete very well.
A: How do you market your products and services?
IS: Not through massive billboards. We develop customised programmes whereby we understand the customer’s needs and then provide them with a customised solution. Our sales and marketing team work on new products and services and we update our customers through visits, presentations and email updates. Each B2B customer will get a different marketing and sales pitch, depending on their requirements. For example, textile manufacturers import a lot of fashion accessories such as buttons, zippers and stuff like that, and we specialise in this area because it requires speed and efficiency and we have a very specialised customised programme for them.
A: How price sensitive are your customers?
IS: We have to be very competitive; without being competitive we will not survive.
A: Yet there has to be a threshold below which you may not wish to go in order to maintain the quality of your services. How do you deal with such situations?
IS: We have a code of conduct and there are certain things that we will absolutely not do. Our customers are growing companies who are selling to the international market and carbon footprints are the buzz right now among logistic companies. Therefore to offer good transportation with a good carbon footprint is very important to multinationals and our local heroes are supportive of this as well. They don’t want pollution, so if I am transporting something in a newer truck which is fuel efficient, has less carbon monoxide in it compared to someone else, there are customers who are willing to pay for this.
A: Stretching the point further, how do you compete with companies that may not follow the same rules as you do in terms of compliance and good practices, particularly over taxation matters?
IS: First of all, we have a very firm code of ethics and conduct and there is no flexibility there. Secondly, there are local heroes who follow a similar code of conduct to ours and they are doing very well, but yes there can be instances when someone may not be playing by the rules and at times we lose the business, and that’s okay.
A: How stable is this business in the sense of do you work on long term contracts or on a project by project basis?
IS: It is a mix. We have customers with long term contracts, one, two, three, five years and there are customers who work with us on a case by case basis. If they have a shipment today they will ask us to quote for it along with five other forwarders. However, speed is important, so it is not necessary that the most cost effective quote wins; what matters is speed, efficiency and reliability.
A: How much input does DHL Global have over your operations?
IS: They provide the expertise, the infrastructure and the investment and they give us the flexibility to work within the local laws and culture.
A: What about budgets and targets?
IS: We have budgets to meet which are mutually agreed. We understand the market and by how much it will grow over a given time frame. This information is primarily based on customer feedback. If a textile exporter is anticipating a large order, he will require space and he will tell us about it in advance. So my forecasts are based on my customers.
Imran Shaikh was in conversation with Mariam Ali Baig.
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