Stock Aramex courier Dubai
Its greater push into Saudi Arabia will add more fuel to Aramex's growth chances. Image Credit: Antonin Kélian Kallouche/Gulf News

The pandemic had a significant impact on supply chain operations, with road and air freight suffering the most as a result of flight cancellations. As foreign economies begin to ease their restrictions, the sector is recovering.

Pharmaceutical logistics has played an increasingly essential role in the distribution of the COVID-19 vaccines, which will contribute to vertical market expansion. Dubai’s strategic location between Asia and Europe serves both the East and the West, providing optimum trading conditions for the emirate. The best way to take advantage of that advantage is to invest in Aramex.

Aramex, a Dubai-based global logistics, courier, and package delivery service company with a market valuation of Dh6 billion, had net profits of Dh67.81 million in September, up from Dh46.2 million a year ago, which is a 47 per cent gain. However, normalized net profit for the three months fell 70 per cent to Dh29.6 million, compared to Dh99 million last year, eliminating one-off events.

Clipping its growth

Aramex reported a marginal 14 per cent increase in nine-month revenue to Dh4.46 billion from Dh3.91 billion, as the firm benefitted from shifting consumer preferences toward online shopping and recovery in global business activity post-Covid.

Last month, GeoPost, a parcel service firm based in France, purchased 20.15 per cent of Aramex, with the deal value is estimated to be Dh1.4 billion. The acquisition aims to open up opportunities to strengthen both parties’ networks and create a more seamless global network for transportation and logistics services.

The Expo will necessitate additional resources to boost trade and goods flow across logistic networks. International vendors and ports will profit axiomatically as a result. Aramex appears to be well-positioned to take advantage of this opportunity.

Saudi move will deliver

Aramex emphasized its accelerated expansion in the Saudi Arabian market, aided by the kingdom’s ambition to diversify its investment portfolio and be a regional logistics centre. The growing prospects in Saudi Arabia allows Aramex to expand operations to gain a larger proportion of the market.

The pandemic caused supply chain interruptions, which wreaked havoc on the shipping and logistics industries. Nevertheless, these bottlenecks appear to be progressively dissipating. Aramex appears to benefit in this environment, as line haul costs have dropped from their 2020 peak and capacity issues are subsiding, resulting in a slight progression on operating margins and reduced delays in cross-border activity.

Even though Aramex had significant challenges during the pandemic, which limited its growth prospects, the company has seen a near-complete return to its pre-Covid operational environment and seeing a few trends that might shape its growth strategy. Domestic express volumes have begun to rise, owing to a large growth in the number of businesses using online sales platforms.

Rising oil prices and increased activity in the oil and gas industry have prompted GCC governments to increase investment and expenditure in shipping and logistics development to further ease the supply chain bottlenecks.