Coffee with: Schenker Egypt’s Khaled Morsy

How Egypt can fulfill the potential of its logistics sector + become a leader in the EastMed, according to Schenker Egypt’s Khaled Morsy: Egypt has gone on an overhaul of its logistics sector over the past few years, from modernizing and automating its customs and import/export procedures through Nafeza, to revamping its road and mobility infrastructure. It is also working on expanding its port capacity and boosting efficiency through a massive number of projects. One company that has been involved in many of these projects is Schenker Egypt, the local arm of DB Schenker, a leading global logistics provider with more than 150 years of experience in land transport, air and ocean freight, and contract logistics and supply chain management.

Enterprise Logistics sat down with Schenker Egypt’s CEO, Khaled Morsy (Linkedin), to discuss the company’s plans in Egypt over the next few years, as well as what Morsy thinks the country needs to work on in order for it to become an end-to-end logistics hub for the region. Edited excerpts from our conversation:

The companies’ current priorities in Egypt: Schenker is currently the qualifying operator partner for the Sixth of October Dry Port project, which includes a container yard, customs clearance offices and agencies, and a container freight station linked through a freight railway which links key seaports. The inland dry port can become a model for similar ports in the pipeline, Morsy told Enterprise Logistics, adding that what makes it a crucial addition to Egypt’s port network is that it is a key component and central hub in the integrated ports and logistics network in Egypt, linked to seaports, railways and the new high-speed rail network, which DB Schenker is also operating along with Elsewedy Electric.

It’s also in a PPP with the Supply Ministry on strategic warehouses: Schenker Egypt is working on co-developing one of four of the Egyptian Supply Ministry’s strategic warehouses, Morsy said. The public-private partnership structure is a “key prerequisite for boosting exports and accelerating FDI,” Morsy said. “We believe public-private partnerships (PPPs) are essential to develop the ports and logistics infrastructure network in Egypt,” Morsy said.

And is working on making its operations green: It also plans to expand its use of electric vehicles (EVs) across its fleet from 12 currently to a few hundred over the next few years, Morsy said, adding that it is working on expanding the use of solar power to cover 25% of its warehouse footprint in Egypt over the coming three years, he added.

Recent infrastructure developments make Egypt attractive to investors, Morsy says: The development work that has been done on roads and mobility over the past few years has helped drum up interest among investors, Morsy said. Ongoing expansions to ports — which will see them grow their capacity significantly over the next few years, Morsy said — is also a chief attraction to investors, he notes. These expansions place Egypt as “one of the biggest, if not the biggest, in the East Med,” in terms of port efficiency and capacity, he added.

Another strength is Egypt’s massive potential for transit trade: Many of Egypt’s ports are managed by major global logistics firms like CMA CGM and Maersk, which helps attract a lot of transit trade volumes, Morsy tells us. “This is key to boosting Egypt’s FDI and exports,” Morsy tells us. While Egypt has long been a stop for transit trade for carriers across its transit ports, the country is still “not an end-to-end, transit-friendly location,” Morsy says, comparing it with Jebel Ali in the UAE, which is a benchmark for transit trade.

SOUND SMART- Transit trade is when a country helps facilitate the movement of goods between two different destinations.

That includes the rigidity of transport networks within the country: “Transport of goods in transit within Egypt remains rigid,” he said, explaining that there is currently no way to split cargo and distribute it to other countries, for example. “Full end-to-end transit trade should allow seamless movement of containers between airports and ports, across the transport networks available across the country,” he added.

While the infrastructure developments have been crucial, they do not work alone, Morsy said, emphasizing the need for integration between the country’s different nodes and ports through streamline supply chain and trade compliance processes.

Standardizing and streamlining customs procedures can help address this issue: Customs bottlenecks are among the biggest challenges cited by importers and exporters who attempt to move goods in and out of Egypt, Morsy said. “Our customs laws do not allow this to happen in a seamless way,” Morsy states. “There is a need for clear legislation that makes this process straightforward and does not leave it to different agents’ interpretation,” he added.

Investing in people is another important factor in the making of a logistics hub: Egypt’s workforce is one of its most attractive competitive advantages, Morsy said, adding that workers in this sector are “competitive and competent.”Schenker is co-sponsoring a Logistics Vocational School with El Sewedy Technical Academy, which began operations in 2017, with that in mind. The program, which provides 10 classes across four cities in Egypt and is based on the German vocational training model, qualifies its students to become logistics specialists through training, Morsy said. Some 100 students have graduated and are currently working at Schenker Egypt’s logistics facilities, he added.