'We are focusing on providing a one-window solution to our clients' : an interview with Ali Tariq, Managing Director TAQ Logistics

Ali Tariq is Managing Director of the transportation and logistics solutions unit of the 'The TAQ Organization' - a pioneer in the field of international freight transportation and logistics in Pakistan. Ali obtained his Master's degree from Massachusetts Institute of Technology (MIT), Cambridge, USA and spent several years working in the hi-tech industry in Silicon Valley, in America and then Canada before returning to Pakistan.
At TAQ, Ali has led the technology transformation of the business from legacy systems to a state-of-the-art logistics ERP. Leveraging his technology background further, he led the research and development of various supply chain visibility software and applications for TAQ's customers. Over the past few years he has played a key role in firmly establishing TAQ in the domestic/inland logistics business. BR Research recently sat down with Ali to discuss the logistics industry in Pakistan and the growth of TAQ Logistics over the years.
BR Research: Please walk us through the history of TAQ Logistics.
Ali Tariq: My father founded the company, in 1969 and we initially started out as clearing agents. Over time, my father noticed that there was a gap in the market for airfreight. At the time, airlines were directly booking cargo with shippers, and the gap allowed for the introduction of a cargo agent into the market. Our company was the biggest in the market for many years, and subsequently we expanded into ocean freight- cargo and the import business as well. The company then started receiving projects for setting up telecommunication towers.
From these projects, we began working domestically, in inland projects. We started warehousing this cargo and delivering it to locations across Pakistan, in locations ranging from rooftops, to fields and to hilltops, which gave us lots of experience. When Telenor got set up, they worked through Nokia and Siemens who in turn worked through us. We gained major experience in inland telecom setup and realized that we do not need to stop at telecom, and began looking at domestic logistics for non-telecom companies.
At the same time, Pakistan logistic companies were growing more popular, and the economy was also doing extremely well. As the economy grew, demand for domestic logistics grew as well. We opened a full-fledged division for domestic logistics which catered to everything from warehousing to transport. In addition to this, our company also represents airlines that operate out of Pakistan specifically for cargo handling which makes up almost 20 percent of airline revenue.
What most airlines do is that they do not set up their own offices in foreign countries, instead relying on general sales agents (GSAs). We are the GSA for many airlines that are operating out of Pakistan. In fact, our company is the oldest agent for British Airways as we have been working with them for the past 40 years. They fly to multiple locations in the US, so many Pakistani exporters export through British airways
We are one of the few companies in Pakistan that offer a "one window service" for our customers. So if there is anything you want to do with your cargo, the TAQ Organization can do it for you. We provide end to end logistics solutions that include import, local procurement, sending your finished goods to your distributor in a different city, or even shipping something across the world.
BRR: So how much of your business is domestic?
AT: Our domestic business is about 20 percent, and our international business takes up the remaining 80%. The international business is divided equally between air and ocean freight.
BRR: Where does most of your international business come from?
AT: Most of our work comes from China and some of it from Europe and America as well. However, the majority of business is from China and we have multiple agents in there, all with different strengths, and we rotate them depending on the different needs of the customer. For example one of our customers orders motorcycles from China, which are knocked-down units. Then in coordination with an agent, we move them from the factory to Shanghai port.
The transportation is done by road and after the goods are cleared at the port, they are moved by sea to Karachi. Here, they are cleared, then moved to the client's factory. After the motorcycles are assembled, they are handed back to us, and we transport them to warehouses, and on to their dealers, who number around 300 across Pakistan. Again, this is a good example of the end to end logistics solution we are able to provide to our clients.
BRR: You mentioned warehousing. How long have you been doing that? How much does that constitute of your overall business?
AT: We have been in warehousing for the past 15 years almost but it does not make up much of our business. I would estimate it to be around 10 percent at most.
BRR: Do you plan to increase your presence in warehousing in the future?
AT: Well, currently we are not really too invested in the sector, but it is something that we will look forward to maybe expanding later on. We are currently in the planning stages mostly. Recently the company launched a warehouse in Karachi, of about 50,000 square feet. We expect warehousing to have a lot of potential in regards to CPEC, especially when it comes to cold chain warehousing.
BRR: Your domestic business is about 20 percent now, growing from practically nothing twenty years back. Where do you see it in another ten to fifteen years?
AT: I think our domestic business is going to grow quite significantly, and the reason for this, is that I believe the country's imports are going to grow as well. On average, 100,000 containers are imported into Pakistan every month, in a mix of 20 and 40 ft containers. This number is only going to increase in the future and for us specially, domestic business is going to grow even more than the market, as we are really targeting it quite aggressively. Last year, the company almost doubled its number of shipments and revenue in our domestic segment. Another reason for the growth is the impressive performance of the retail sector in the country over the past several years.
BRR: What are the barriers to entering into the cold chain business?
AT: One barrier is that currently people are not willing to pay for the cost of it, as it is a huge investment. Setting it up, buying land, putting up a warehouse, insulating it and setting up a cooling mechanism incurs a sizeable capex investment. Then there are the operational costs which are quite high as well.
BRR: What do you think about the potential of the e-commerce sector in Pakistan?
AT: I think it is an excellent space to go into, as it has lots of potential and is going to continue to grow tremendously. For us, it is going to be quite an interesting area to expand into. Currently, we are providing warehousing and other services to e-commerce businesses in Pakistan
BRR: So what is your growth been in the past five years, in terms of revenue?
AT: At the beginning period of those five years, our growth on average was about 10-15 percent, which has grown in the past two years, and we are now much higher, at around 20-30 percent. Our margins are still quite consistent, as we are still building up some newer avenues. Besides, pricing in logistics is quite a tough area, due to tremendous competition from all over.
BRR: How many employees do you have now?
AT: We have about 550 contracted employees currently.
BRR: Any plans for an IPO in the future?
AT: None so far. We started out as a private company, and have not felt the need to go public yet.
BRR: What is the succession plan then?
AT: Our goal is to appoint professionals into the company, and not specifically have family members take over. Our culture is to train people through TAQ Institute before appointing them. A lot of our people in senior positions have come in through entry-level ranks, and developed and grown into their current positions. Our company is known to be the training institution for logistics personnel in the industry. We have focused on appointing professional managers who have exposure and training.
BRR: Where do you see the company in the next five years? What kind of businesses are you looking to add on?
AT: We are mainly focusing on providing a one-window solution to our customers. A lot of our competition is only operating in specific segments such as importing, warehousing or exporting. However, due to our size and experience, we are able to deliver the full end-to-end experience. I see a tremendous opportunity for us to grow, because there is such a huge gap in the market for companies like us to fill.