Interview - Emirates Post launches international expansion strategy

Emirates Post is scaling up its UAE last-mile delivery operations and embarking on an ambitious international expansion strategy after a rapid business transformation amid the pandemic, CEO Peter Somers told CEP-Research in an exclusive interview.

The postal operator aims to become a major player in the e-commerce parcels market in the wider Middle East region as well as develop the UAE into a gateway for intercontinental flows between Asia Pacific, Europe and North America, he said on the sidelines of last week’s Parcel + Post Expo in Vienna.

UAE goes digital

Addressing the event conference, Somers said that Emirates Post had broadened its activities dramatically in its home market during the pandemic in response to a surge in volumes as a strict three-month lockdown in April – June 2020 forced the population to shop online instead of going to the large shopping malls.

“The whole population went online, the volumes spiked and we were not ready for it,” he admitted. “But we survived and used the pandemic as a lever for our transformation,” he stressed.

Outlining the group’s domestic strategy, Somers explained: “We want to be the number one for last-mile in the UAE. We are going to copy the basics of mature markets, we don’t want to reinvent the wheel.”

More delivery services

In a country with few street addresses and a tradition of mail delivery to PO Boxes, Emirates Post will develop a digital app enabling customers to select their preferred delivery points for parcels and to change deliveries if necessary. “We want to get rid of phone calls (by drivers to customers) and go digital,” he explained.

Among several new services, Emirates Post will launch temperature-controlled deliveries of groceries and pharmaceuticals along with a same-day express delivery service “as the first in the market”.

In addition, the physical network will be expanded massively with more service points, parcel lockers at various retail outlets and new postal branches offering third-party retail products and services. “We want to open up the network, perhaps with DHL counters or bank counters,” he gave as examples.

3-pillar international strategy

Speaking with CEP-Research about Emirates Post’s international growth plans, Somers declared: “My plan is to be a gateway to the UAE, the Middle East and to the world.” The company’s newly opened international parcels hub at Dubai International Airport will play a key role here.

The experienced international postal executive, who took over as CEO of the state-owned postal group in 2019, explained that the group will follow a ‘three-tier’ strategy that the board had already approved before the pandemic and which could now be implemented.

He was upbeat about its potential to play a larger role both in the Middle East region and on intercontinental trade lanes. “No other postal operator in the region has successfully started a similar plan,” he pointed out.

Regional solution

The initial tier of the international strategy focuses on imports to the UAE. “First of all, we want to be able to fill our own (domestic) network with any volume that comes from anywhere. We have the best last-mile delivery network in the UAE,” Somers said.

The second ‘pillar’ will be to create a gateway to the wider Middle East and North Africa (MENA) region, initially by creating a “comprehensive” solution for e-commerce parcels destined to neighbouring GCC countries.

Local postal operators would be “the first choice” partners for such a regional offering, he said. However, this would need to be a tracked solution rather than a low-cost untracked service in order to ensure proof of delivery.

“Anywhere to anywhere”

The third pillar of the strategy would then be to develop a global solution via the UAE, Somers explained. “This could be anywhere to anywhere, where we as a postal operator can play a role.”

Such an international service would largely depend on available air capacity and connectivity as well as Emirates Post’s price positioning based on its terminal dues costs for cross-border parcels, he underlined.

International sales team

To generate volumes from outside the UAE for this international service, Emirates Post is developing sales in several phases. Initially it focused on selling outbound parcel services from the UAE but is now moving to a second phase with business development managers selling more widely.

Next year Somers aims to have international sales staff based locally in markets such as the UK, Europe, the US and Asia Pacific to sell the group’s cross-border services. “These are all the surrounding continents who all have volume to the Middle East. That’s what we want to capture,” he commented.

Looking further ahead, he continued: “Potentially, a phase three approach is setting up our own companies outside the UAE or (making) acquisitions to feed the network.”

“Massive potential”

Despite the impact of Covid-19 on business, Emirates Post signed up its first international customers in July 2020. Some of these customers are based in the UK, China and Hong Kong. “Since then, we have seen a huge increase in customer volumes,” he confirmed.

Somers concluded: “Today we are only scratching the surface. It’s a $10 billion market, the potential is massive.”