Aramex plans parcel locker network in Mena region as e-commerce grows

Aramex plans to roll out a network of parcel lockers across the Middle East and North Africa to support the growth of e-commerce.

The logistics giant yesterday said that it had formed a joint venture with Poland’s InPost, which has a parcel locker network across 17 countries worldwide, to establish a parcel network in the Mena region.

The locker network will operate in a similar way to international services such as Amazon Locker and those offered by national postal services in Australia, the US and elsewhere.

The first lockers are scheduled to become active by the end of this year. Aramex did not comment on which countries the service will be rolled out in first, nor on which locations would be used.

The agreement between Aramex and InPost comes on the back of growth in e-commerce services across the Mena region. Online spending in the region is forecast to grow to US$15 billion in 2015 from $9bn in 2012, according to a survey from PayPal and Ipsos last September.

“InPost have a long and highly successful track record in developing world-class products and services in Europe and Asia and we are delighted to now be partnering with them across the Middle East and Africa,” said Iyad Kamal, Aramex’s chief operating officer.

“Across our markets in the Middle East and Africa, we are seeing the rapid growth of the e-commerce industry and our new partnership with InPost will enable us to continue to capitalise on this trend by strengthening our e-commerce services,” Mr Kamal added.

E-commerce in the Middle East is dominated by the UAE, where online consumer spending reached $2.9bn in 2012, according to the PayPal-Ipsos study. This figure is forecast to grow to more than $5.1bn in 2015, according to estimates from Ekos Global.

“Aramex has deep local knowledge of the Middle East and Africa in particular and is a very natural partner for our growth strategy,” said Rafal Brzoska, InPost’s chief executive.

“Having already established an extensive global network, we are excited about the considerable opportunities across the e-commerce sector in the Middle East and Africa and proud to be introducing parcel lockers for the first time to the region.”

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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”