Aramex

Based in Dubai, UAE, Aramex is a global asset-light provider of logistics and transportation solutions. Their strategic location in the Middle East serves as a logistics connection between East and West, operating in more than 600 cities across more than 70 countries and employing over 18,000 professionals. Aramex continues to be a key player in the Global Distribution Alliance (GDA), a network it co-founded and currently chairs. The GDA is composed of more than 40 independent express operators and is strategically designed to provide extensive global coverage. The Middle East operator has proven that their unique asset-light business model and commitment allows the company to adapt quickly to changing market conditions, implement last-mile delivery solutions, develop new services, or respond to changing customer preferences.

In 2023, Aramex reported a normalized net profit of AED 129 million ($35.1 million), reflecting a 22% decrease from the previous year. Revenue also saw a decline, down 4% to AED 5.69 billion ($1.55 billion). This downturn was primarily driven by increased finance costs and currency devaluations. Despite these challenges, Aramex experienced growth in specific markets, notably in the GCC and MENAT regions, which helped counterbalance the softer economic conditions globally. This regional stability helped support demand for Aramex’s services. Looking ahead, economic forecasts for the Middle East, Aramex’s main market area, are growing increasingly cautious with current geopolitical tensions.

Aramex divides its product offerings into four main categories: International Express Services, Domestic Express Services, Integrated Logistics, and Freight Forwarding. Other services include Healthcare, Information Management Solutions, and Shop & Ship. The latter three segments accounted for 1% of Aramex’s revenue distribution by segment as shown in Figure 1. International Express Services continues to be the company’s core product, with a revenue share of 40%. This segment’s revenues decreased in 2022 by 16% to AED 2,249 million ($607 million) with lockdowns in China due to COVID-19 limiting the amount of desired volume but has since made a slight 2% recovery to AED 2,295 ($620 million) in 2023. Domestic Express which accounts for 25% of the share, revenue decreased by 5% to AED 1,427 million ($385 million) in 2023, down from AED 1,496 million ($404 million) in 2022 due to foreign exchange influence and lower than forecasted volumes, especially in Australia.  Freight forwarding also saw a decline of about 11% to AED 1,495 ($407 million) compared to AED 1,684 ($454 million) in 2022 due to a global rate decline.

Figure 1 also illustrates how the various business segments have changed their revenue share over time. Aramex’s growth has been driven by its international and domestic Express business, which represents about 65% of group revenues, benefiting from e-commerce. Freight forwarding has decreased to about 26% of group revenues, down from 28% in 2022 but up from 22% historically and shows strong revenues. This segment grew in revenue share due to the strategic realignment and increased efficiency in handling sea, air, and land freight, despite global rate fluctuations.  The logistics segment maintained a 7% share of group revenues, bolstered by investments in warehouse expansions and automation projects, ensuring a steady contribution to the overall business.

Figure 1 – Aramex Revenues by Business Segment 2011 – 2023

Figure 2 illustrates the company’s revenue distribution by region, highlighting that its core market, the Middle East & Africa, accounted for 58% of the total revenue in 2023. Despite the Asian region experiencing the highest growth over the past decade, this growth is starting to slow and is now at a 19% share of revenues. At the same time, Europe’s revenue share has decreased from 20% in 2011 to approximately 12% in 2023, while North America’s share has increased from 4% in 2019 to 10% in 2023.

Aramex managed the continued fluctuations in global sea freight and supply chain dynamics well. It has strengthened its logistical frameworks by deploying extensive truck fleets and offering alternative routing solutions through key regional hubs, which has significantly alleviated disruptions caused by the ongoing crisis in the Red Sea. This strategic maneuver has enhanced their service resilience, particularly in facilitating shipments from Asia and Europe. Aramex remains deeply committed to the Oceania market, where it is actively refining its structural and operational strategies. This initiative is primarily focused on extending trade lanes to North America and Europe, aiming to boost cross-border trade efficiency and diversify its service offerings amid challenging economic conditions and persistent market volatility.

Figure 2 – Aramex Revenues by Region 2011 – 2023

In 2023, Aramex reported delivering a total of 123.3 million shipments, marking a slight increase of 1% from the previous year’s total of 122 million shipments. The company’s revenue per shipment saw modest growth, aligning with their strategic adjustments and enhancements in operational efficiency across their diversified service offerings. Figure 3 shows Aramex shipment volumes over time.

Aramex grappled with increased costs per kilo of shipments due to constrained air freight capacity and elevated line haul expenses, with rates notably higher than pre-pandemic levels. Amid these challenges, Aramex started the process of restructuring its long-haul network, particularly in regions like Oceania, to enhance efficiency and manage revenue declines. To adapt to market shifts, Aramex has realigned its operations into Aramex Express for B2C and Aramex Logistics for B2B services, streamlining its focus on diverse customer segments.

Figure 3 – Aramex Revenue per Shipment and Volume Development 2007 – 2023
Figure 4 – Aramex: Corporate Revenue and EBIT Margin 2006 – 2023

Aramex reported a resilient performance in Q1 2024 amid global shipment volume softening. Their revenue for the first quarter was AED 1.53 billion, a 1% decline year-over-year. The MyUS acquisition positively impacted results, with a 14% increase in International Express revenues to AED 646 million and a 19% rise in gross profit to AED 219 million. However, net profit for Q1 doubled to AED 77 million, driven by operational efficiencies and volume growth across segments​.

As of May 2024, Aramex has strategically expanded its operations and embraced innovative technologies. The company opened a new regional headquarters in Riyadh, strengthening its presence in Saudi Arabia and aligning with the Kingdom’s Vision 2030 to enhance its logistics sector​​. Aramex also entered a partnership with Odys Aviation to explore unmanned aerial vehicle (UAV) technology for cargo delivery, aiming to revolutionize its logistics operations in the UAE and Oman and reduce carbon emissions significantly​​.