Unlocking Iraq

Air Cargo Middle East & India caught up with Majid Barzanji, director of regional operations for Mateen Express, to find out how the Iraqi express air cargo operator has achieved so much during its brief history.
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Air Cargo Middle East & India caught up with Majid Barzanji, director of regional operations for Mateen Express, to find out how the Iraqi express air cargo operator has achieved so much during its brief history.

Setting up any new business endeavour is bound to prove a daunting task. But when your strategy involves introducing the express logistics and air cargo sector to Iraq, then even hardened industry professionals are likely to baulk at the opportunity, given the manifold obstacles such a venture entails. Not so Majid Barzanji.

In 2001, Barzanji left his job with a British company in the UAE and began studying the art of logistics in order to bring to reality a vision he had foreseen about the future of his native country.

 

 
 
In the early days, virtually every test flight we did was with our own family business, to ensure that the system would work when we expanded our client base.

After the end of the first Gulf War in 1991, the US-led coalition that had removed Iraqi forces from Kuwait imposed a blanket ban on all passenger and cargo aviation in the country, meaning that an entire generation had grown up ignorant of a sector that had seen unheralded growth elsewhere in the Middle East.

"Iraq is a very rich country, but it has been isolated for so long - it has been involved in three wars in the last 35 years," Barzanji explains. "That was how I had my vision; it was obvious that as soon as it became more stable, Iraq would require huge levels of imports, from home appliances to computers, auto spare parts, mobiles, everything. We decided to go for express air cargo, as there are so many other Iraqi companies with interests in sea freight and trucking, so it would take longer for rivals to catch up with us."

Needless to say, the task facing Barzanji was substantial. In order to educate Iraqis about the benefits incurred through airfreight, the new company, Mateen Express, spent considerable time in seminars, trade gatherings and public meetings, and also devoted a substantial advertising budget to the venture.

The message was displayed on billboards nationwide, and supplemented by an extensive radio advert campaign, along with ticker commercials on Iraqi television. In addition, Mateen has circulated over 75,000 copies of a brochure, written in simple terms, that explains in Arabic, Kurdish and English the company's unique selling concept.

Back in the UAE, Barzanji was planning the start of operations. "We looked at the new company scientifically, and researched how giants like FedEx and DHL launched," he smiles.

"So we have not reinvented the wheel, but we certainly learnt good lessons from those who came before us. But it definitely took a great deal of effort. Having been in the UAE for so long, the concepts of logistics were easy for us to handle, but in Iraq it was different."

To Barzanji, it was clear that the sectarian cracks that had been papered over during the reign of Saddam Hussein would re-emerge after he had been removed.

If freight was to be transported by land from the UAE, it would need to travel through Saudi Arabia, Jordan, Syria and Turkey in order to reach northern Iraq, and via Ramadi in the eastern desert if the shipment was to reach Baghdad.

It was immediately obvious that carrying a high-value commodity through a 800-kilometre high-risk area between Ramadi and Baghdad was untenable. So airfreight quickly became the only viable option.

"We had to choose whether to work in the commercial sector or whether we would provide services to the other agencies in Iraq," outlines Barzanji. "If we had gone for the latter option we could have made a considerable sum by now, but we wanted to build a business that could easily last for the next 30-40 years."

Initially, Mateen opted to send express deliveries into Baghdad via a link with Royal Jordanian at Amman's Queen Alia International Airport. From Amman, the company made an arrangement with taxi drivers to take shipments from Jordan to the Iraqi capital, although it was soon deemed that the risk was too great.

So, after around eight weeks on the telephone with the various Iraqi authorities, Barzanji secured a deal whereby he could send commercial freight into Baghdad via one of FedEx's flights.

"That first flight was an enormous development for us," he recalls. "In the early days, almost every test flight we did was with the various branches of our own family business, to ensure that the system would work before we expanded our client base."

In order to extend Mateen's customer portfolio in such a difficult market, Barzanji opted to offer new clients the chance to try out the company's services for small shipments on one or two occasions free of charge.

This is a concept that has served Mateen well, and is also being extended to growing operations in China, where the operator is also experiencing growth. This approach has ensured that the company now has five or six flights every week from Dubai and Sharjah to Irbil (its Iraqi base), Suleimaniyah and Baghdad.
 

In terms of growth, Barzanji sees this as positive, although it will come as no surprise that the success of any Iraqi business is tied closely to the security environment.

"The poor situation in Basra earlier this year hurt our business badly, as it affected mainline communications in the country," he says. "When Iraq is more secure, buying forces are stronger and the market is more active."

Overall, the Mateen executive sees the position in Kurdistan as being much better than elsewhere in Iraq, but is keen to stress that the future is still uncertain. On the upside, the dropping level of violence has been one of the reasons for growth in Mateen's Baghdad market, where the company is generally seeing a strong commercial response. Did he foresee that the country's troubles would last so long? "Absolutely not," Barzanji sighs.

 

 
We are an active rather than a passive player; we go to the customer and we try to create and sell solutions.

"We thought this would take two to three years to settle down. My own personal view was that it would take 10-15 years to return totally to normal because the country was run under one system for so long. Of course, everyone is sad, but for Iraqis, it's especially hard for us to talk about the situation."

But it is not only the concerns specific to Iraq that have hampered Mateen's growth. As with all airfreight operators, the slide of the dollar has affected its market, as has the soaring price of oil.

Given the complexities of winning new business in Iraq, the company was forced to take a hit over the cost of jet fuel. "We are, we believe, almost unique in that it would be almost impossible for us to add a fuel surcharge on top of the security surcharge," remarks Barzanji.

"Our customers wouldn't accept it as it wouldn't fit in with their calculations. So we have taken the impact over the last couple of months and haven't increased rates, or at least only by a few cents, although I am not sure how long we can keep doing this."

Despite the considerable obstacles, Barzanji is happy to confirm that his company has managed to keep to its 2008 growth plan, in terms of volumes, frequencies, new branches and assets, although fuel prices have affected Mateen's bottom line. And the executive's studious approach back in the UAE appears to have paid off, with the company diversifying into major industry sectors.

"We spent money designing specific marketing tools for the oil and gas and healthcare markets and went to a lot of exhibitions showcasing our expertise," he states.

"In January, there was a cholera outbreak in Suleimaniyah province, which required the immediate import of water purification equipment. This would generally take between one and two days, but we were able to source a letter from the Ministry of Health very quickly and were thus able to deliver around 800 units a day to the affected area almost immediately."

One achievement of which Barzanji is especially proud is the recent shipment of a 25-tonne cementing unit to Irbil. The product was originally earmarked to travel to Kurdistan by road, which would have taken three to four weeks, but a face-to-face meeting persuaded the shippers that the item could be modified and transported by air.

However, the options were fairly limited given the product's size. It could either be flown by IL-76, or it could be flown via the larger An-124, although positioning costs due to a lack of availability might prove prohibitive.

"We looked at the unit and thought we might be able to remove the mechanical parts and lay them next to the main body for the flight, before reassembling them in Irbil," explains Barzanji. "Going for the IL-76 was the cheaper option by far, and eventually we managed to convince their engineers that this was the best logistics solution. We took a crew of 14 to help us, although we would normally take only seven, but it turned out that we needed every bit of experience. To aid the process further, we carried out pre-clearance of all the import documentation, so the unit was out of the airport in under an hour."

Not only is Mateen making waves in the energy and healthcare sectors, it has also made some impressive contacts in the auto industry, with clients such as Nissan, Hyundai and KIA on its roster.

"We are an active player; we go to the customer and we create and sell solutions," explains Barzanji.

"We met the Iraqi distributors for Nissan and provided a clear concept about transporting auto parts by air. We ended up signing a contract in 2006 and have helped them to dominance in the market - and they have recommended us to firms like GMC, Humvee and Chevrolet. I would say that all the major brands active in Iraq are to some extent using our services for spare parts."

It is clear that Majid Barzanji is passionate about his company, his industry and his country, and Mateen Express' prospects look to be in safe hands. So what are his hopes for the future?

"Well, the country is rich and the people want a good lifestyle - that's just the nature of Iraqis," Barzanji smiles.

"In fact, though you might not think it, we have seen an increase in the import of fresh flowers into the country recently. In the next five-10 years, I foresee that all types of business will be booming, but for Mateen Express especially - because we are known as Iraqis - we will definitely have an advantage over other commercial logistics carriers flying into the country."

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