“We have about $100 million invested in such ventures. With respect to Queen’s Gambit, we consider this an opportunity for us to do our part in identifying new and emerging technologies that are ready to go public, especially those that are related to sustainability, or even emerging medical technologies. While we look to generate a very positive return for our shareholders, we’re also looking to identify technologies that can help us have add value in our core business, to our major stakeholders.”
How did such ventures add to the bottom line? “We don’t see the bottom line on day one with such early-stage investments, but we do expect that over time some of these technologies could revolutionize some of our revenue streams. We’re not there, yet but that’s exactly the point [of] early-stage technologies.”
Meanwhile, as COVID-19 vaccines become available for distribution across the world, Agility has taken a pioneering position in vaccine and pharmaceutical logistics as well. “We work globally with all of the major pharma companies, including Moderna and Pfizer, and the other manufacturers, and we’re helping them get those vaccines to markets around the world.”
Agility, which is a part of Hope Consortium, an Abu Dhabi–led public–private partnership delivering large quantities of COVID-19 vaccines globally, has already shipped over 9 million doses of vaccines to Abu Dhabi and has 3 million more scheduled.
However, the lifeline for logistic leaders such as Agility is the oil and gas industry, as a large part of their business comes from oil companies like Saudi Aramco and SABIC. With the rise in renewable energy sources, there is a real possibility that the use of hydrocarbons will drop in the not-too-distant future. But Sultan is not worried.
“We do have a tremendous amount of infrastructure that's related to the oil and gas industry—to help them execute their projects or get their hydrocarbon downstream, distribute them around the world, or to store them. We don’t see the oil and gas business going away. In fact, our research tells that us there’s a future for oil and gas, even up till 2060—perhaps less for transportation, but more for plastic. That’s how our current planning looks at things.”
Despite this outlook, the company is preparing for a zero-carbon world by investing in sustainability. Agility has invested in TVP Solar, a European solar thermal company, that can help Aramco replace hydrocarbons consumed in the refining process with solar technology. Another investment is in AxleTech, which uses natural gas to charge a battery for electric trucks, making them 30 percent more efficient than a diesel truck, and with three times the range of ordinary electric trucks.
“So today we can go to our customers and say, ‘Hey guys, you can have net negative carbon emissions, and you can save money, and you can make the planet better.’ Those sorts of ideas are really going to change the way transportation and logistics works over the next few years because consumers and their preferences are driving changes in the supply chain, and we have to be prepared to offer innovative solutions that meet those requirements.”
The other project close to Sultan’s heart is increasing SME participation in the global economy. He said the disruptions to shipping last year have impacted their ability to ship goods around the world.
“For example, there’s been a shortage of shipping containers available to SMEs. In an environment where the large customers get preference for those resources, SMEs were hit with space shortages and tremendous increases in prices, in some cases, six- or seven-fold for the same period last year.”
On the flip side, there have also been more examples of protectionism, tariffs and other barriers that have been put in place to actually restrict the movement of trade, he said, adding that the company is looking to work with governments to digitize their supply chains and liberalize trade.
“On the cost front, we are trying to get them access to some of our preferential trade lines and prices […] and to try and pass on some of those savings to SMEs.”
Despite having reported a 57 percent drop in net profit for Agility in 2020 due to the pandemic, Sultan is optimistic for this year. His primary logistics businesses are doing very well, and their performance should be very good this year. Others, like freight cargo, warehousing, and e-commerce businesses will also continue to do well, he said.
“Some of the businesses have seen some challenges; for example, ground handling businesses, dealing with airports and passenger flights, have taken a hit. We do see air traffic starting to come back online, especially as vaccine rollouts [are] starting to accelerate.”
Sultan was happy that Tristar, the Dubai logistics company partly owned by Agility, has been able to proceed with its initial public offering (IPO). “It’s not finalised yet; we’re still waiting on the final touches. We’re hoping everything comes together in a way that [is] satisfactory to all parties in the next few weeks.”
(Since the interview, Tristar said it has pulled the IPO, saying that “existing shareholders’ expectations were not met.”)
Another of Agility’s ventures that benefited from last year’s boom in e-commerce is Shipa, a digital-logistics platform. According to Sultan, Shipa’s development has been clearly expedited by the pandemic and has been a growth area for the company.
On the possibility that Agility might float a part of Shipa, Sultan said it was too early. “I don’t think we’re anywhere near where we want to be in terms of being able to position for an IPO or a spin-off.”
About the company’s journey from being a $30-million local warehousing provider in Kuwait with 300 employees in 1979 to a $5 billion company with 26,000 employees, Sultan said, “Sometimes things are clearer in hindsight than they are when you start. We invested early in groundbreaking technologies and infrastructure at a time when those sorts of investments were not mainstream. At the time people said those were failed investments, but in reality, they were formative investments. So despite a few early challenges, we really benefitted down the road because we are at the forefront of technology as it relates to the supply chain.”
(Reporting by Brinda Darasha; editing by Seban Scaria)
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© ZAWYA 2021