COVID-19 Measure: Read Full Magazine Here. For the past 24 months, Lebanon has been reeling from a wrenching economic crisis.
By the time the crisis erupted in October 2019, the economy was facing four extraordinary challenges. First, public sector debt had reached such elevated levels that a default had become a question of when, not if. Second, the banking sector, having lent three-quarters of deposits to the government, had become functionally bankrupt and increasingly illiquid. Third, the productive economy had experienced virtually no growth for an entire decade — a development with acute socio-political implications. Finally, and perhaps most importantly, the country was politically rudderless. A foreign exchange black market emerged and the national currency, the lira, sharply depreciated. In turn, inflation soared and people’s real wages and purchasing power collapsed. In addition, as if all these woes were not sufficient, a severe COVID-19 crisis hit the country and, most tragically, a devastating explosion took place on Aug. 4, leveling a third of downtown Beirut.
The confluence of these large negative shocks led to the implosion of the economy: GDP is estimated to have contracted by 25% in 2020, with an additional 10-15% decline forecast for 2021. When measured in USD, the Lebanese economy may end up shrinking from $60bn in 2018 to $15bn in 2021. An extreme form of wealth destruction is taking place with the Lebanese de facto losing the majority of their bank savings. Meanwhile, four out of every ten Lebanese are out of work, and half the population is under the poverty line.
But what these numbers do not reveal are the structural scars. Human capital is fast eroding due to a massive brain drain of the young and skilled. Equally worrying is the loss of physical productive capacity resulting from widespread business closures. Much more alarming are the security consequences of the economic implosion. Lebanon’s sectarian history is rife with conflict. An economic collapse provides a perfect habitat for a return of violence.
Since the Beirut explosion: What is the situation now at The Net?
On the 4th of August, a massive explosion occurred in the port area of Beirut, capital of Lebanon, injuring more than 6500 people and affecting the lives of hundreds of thousands. Four months later, a lot has been done but the work is far from finished.
"The explosion was a force majeure. We were not prepared for it. We didn’t envisage an explosion in the port. We were fully stretched by the COVID-19 as well as learning more on COVID-19 awareness and also trying to conceive the demonstrations in various parts of the country. No matter how overwhelmed we might be, we should always be prepared for the worse," explains Mourad Aoun.
Mourad Aoun is the Chairman and CEO of The Net Group who is famed for his perseverance and for lifting The Net from ashes to new heights of growth. He moved to the industry as a young man, where he made his career. Under his leadership, in 27 years, The Net grew from an express courier company representing SkyNet Worldwide Express into a regional group specialized in global Express Courier Deliveries, Domestic and International eCommerce solutions, Freight-Forwarding, Warehousing and other Logistics services, covering the entire supply chain across various industries in the MENA region. Today, it operates a diverse portfolio of unparalleled logistics and freight solutions in over 190 countries across the globe, under one commercial brand: NET.
In addition to being the CEO of NET, Mourad is the CEO of Transforum, promoting a regional ecommerce ecosystem and bringing together the congregating worlds of eCommerce, Logistics, Payments and Retail.
Besides that, Mourad has been the president of the Air Express Association in Lebanon (AXAL) since 2002. He is also a member of the board of the Lebanese Businessmen Association (RDCL) and SkyNet Worldwide Express Global Board of Directors since 2007.
Mourad holds an MBA from USJ and is currently enrolled for a DBA in eCommerce from Toulouse Business School.
Knowing the above about Mourad who has the knack of handling almost any critical situation, it is important to add that the company consolidated all its logistics and freight divisions, namely SkyNet, Net Logistics, Net Critical, Net Express, and Net Projects, under one commercial brand: The Net, bringing its customers one simplified approach to new opportunities and more efficient service solutions.
The Net believes in customer-centric philosophy, fully integrated systems and uses the industry best practices. The Net provides its customers with comprehensive solutions to grow its businesses and achieve operational efficiency in order to save time and money.
Mourad Aoun spoke with BUSINESS LIFE for a cover story about his career, privilege and his perseverance to expand The Net throughout the world.
BL: How did you establish The Net Group since over 27 years?
Mourad Aoun: Net started in 1994, as a small express courier company, and has grown since into a regional group, specialized in global express courier deliveries; first mile to last mile domestic and international e-commerce solutions; air, sea and ground freight-forwarding; warehousing; and other logistics services, covering the entire supply chain across various sectors and industries in the MENA region.
So, from a small express company in Lebanon, we went into the freight business, to then expand into the region by going to Jordan, Iraq, Turkey and Dubai providing services divided into four divisions:
1- The Express division that includes international and domestic express, as well as international e-commerce. 2- The Critical division, our Pharma-logistics business, through which we ship time-critical vaccines and clinical trials to Lebanon and to 18 countries in the MENA region. We have six offices that we own and 12 exclusive agents that work with us on the critical side of the Pharma business. 3- The Net Logistics division, which is our freight-forwarding division present in six countries, handling air freight, sea freight, land freight, warehousing, and customs clearance. 4- And then we have the Projects division for oversized and heavy lift (anything that is not in the container). We handle the transportation of windmills, power plants, oil and gas products (logistics of rigs movement), bridges, etc. mainly in Iraq. However, with the rebuilding of Syria, we'll see more projects coming to Lebanon, Jordan, Iraq and Syria. All these divisions are developed one by one and operate in the six countries we are present in. Yet in 2018, we decided to consolidate all the 4 divisions under one commercial brand The Net, bringing our customers one simplified approach, instead of 4 separate divisions. Since, January 2021, we have been franchising The Net e-commerce services into the region as we continue to innovate through our fully automated e-commerce fulfillment center and our flexible business model, bringing our customers one simplified approach to new opportunities and more efficient service solutions.
With over 27 years of local & global experience, The Net regional network covers more than 190 countries worldwide, providing trusted and reliable solutions.
Today, this is the most interesting part of our business.
BL: What was the impact of Beirut Port explosion on your business?
Mourad Aoun: Before the Beirut Port massive explosion that has rocked the port area of Lebanon's capital, we were impacted by the revolution of October 2019, by the economic crisis, and by COVID-19. All these incidents were serious challenges that tumbled one after the other, with the explosion at the Port of Beirut being the cherry on top of the cake.
I hope it's going to be the end of our disasters. Consequently, we had just moved to our new offices in Karantina in January 2020. We had a brand-new office with a huge facility but it was almost all destroyed by the Beirut Port blast, and we had wounded and injured team, .... it was a disaster. But the biggest disaster was at our free zone offices, where we had 3,500 square meters of warehouses with 500 square meter of offices that were completely destroyed; and we were very lucky because one hour before the blast, we had 80 people on premises. We were blessed that the 80 employees were saved because if the blast happened one hour earlier, we would have lost our 80 employees. God saved our staff! We can rebuild and we can start again and this is how we did things. The biggest challenge was to rebuild all our warehouses and offices with no money because our money was blocked by the banks and we didn’t receive yet any money from insurance companies. How are we managing this dilemma? We are moving funds from place to another. We have rebuilt our offices in Karantina but the biggest and most interesting achievement is the people we work with. Their way of responding to the crisis was amazing. The next day after the blast, our people were back to work: cleaning the office; the customer service agents were working from the parking lot, answering customers phone calls and all the drivers were working on the ground. Thus, in 10 days, we were back to our office, and in one month, we arranged the warehouse. So, by October 1st, we were 100% operational. We have adapted and are perfectly organized to keep the sales and productive service at full capacity.
We are currently rebuilding our warehouses at the Beirut Port free zone and hope to move back in August. And the challenges go on.
In brief, Lebanon’s financial problems predate the coronavirus pandemic, which put the country in lockdown for months, further compounding the crisis. Years of corruption and mismanagement have left Lebanon with depleted resources, while shrinking investment in the war-riddled region. Falling remittances from Lebanese abroad only increased the shortage of foreign capital.
I have an excellent team, and I believe there are always opportunities in every problem. I look at what's happening around me with a positive attitude; I wake up in the morning and say that this is a new day and we are going to start again and this is how we survive and endure.
BL: How much is your insurance claim?
Mourad Aoun: US$ 3.5 million.
BL: When are you expecting to collect your claim from your insurer?
Mourad Aoun: I don’t know.
Insurance companies are always giving promises that are not fulfilled.
BL: Did you inject an increase in capital?
Mourad Aoun: We had to refinance our business to be able to cover part of the incurred damage. We had two options: 1- Either to forget about Lebanon and focus on our operations in Dubai, Iraq, Jordan and Turkey, 2- or to rebuild our business in Lebanon as this is the country where we started our business and this is where we are going to continue and grow. Rebuilding everything was not an easy decision to do, as it required a lot of will and convincing power, because people were either demotivated or they didn't believe that there is a future in Lebanon and there are many people still want to leave the country today. I always tell people it's never greener on the other side. It is only green where you water it. Lebanon is our country and if we water it, it will flourish again. If we are not going to change the situation ourselves, nobody will change it for us. Lebanese people will make the change, and in order to make the change, we need to be positive, have a clear plan and work hard towards it. Change doesn't come without tears, sweat, and sacrifice.
BL: Have you ever thought about moving abroad?
Mourad Aoun: I have a Canadian passport and I can go and live in Canada. But I'm not interested to leave Lebanon.
BL: Are you happy in Lebanon?
Mourad Aoun: I want to build a country where my children will come back and live. I don't want my children to feel that they don’t see themselves living in this country. In order to build a future for them, I have to be an effective change leader through leading by example, being positive, not accepting anything that is destroying this country, motivating people to resist and working hard to make things better.
Lebanon is not a poor country. It has plenty of wealth but it’s badly managed. Lebanese are successful entrepreneurs, they have to take their faith into their own hands, and make the change, because I don't think that the solution will come from anyone else but the Lebanese.
Three requirements are needed to manage our country: ethics, a clear strategy that doesn't change, and hard work. Otherwise, nothing will change.
BL: How can the banking sector be improved?
Mourad Aoun: The Lebanese economy is suffering from the consequences of longstanding development challenges and multiples crises.
I personally think Lebanon has to change its economical strategy. We have to be a productive country. Being a touristic destination is not enough. All kinds of industries are important and need to complement each another for a healthy trade balance. We love Lebanon to be the number one touristic destination, but we want it to attract financial investors.
Lebanon has to be a productive country, and thus we need to have creative industries, agriculture and technology. We need to work towards that purpose.
But we face many problems; first, Lebanese are individualistic people. Alone, we are great, but when it comes to a team, we fail. Why? Because we like to score. It's about “me”, more than about “we”. Second, leaders have to be humble, it's not about the pride of being a leader but about serving the people. The day a leader understands that he is a servant, he will automatically become humble. Third, we don’t work towards building a future for the generations to come. We work to prove that we did it.
BL: Mourad, you started rebuilding your area at Beirut Port, but countries like France or Italy or Germany are interested to rebuild the entire port, if such thing happens, does it mean whatever you have built will be reconsidered?
Mourad Aoun: A very big question. When I decided to rebuild, I didn't wait for them to rebuild the port; I rebuilt my own warehouses. " I was here, I am here now, and I'm staying here."
The port is already a private company, and I strongly believe that it SHOULD remain that way. I do believe in a private-public partnership, where the government will always own the port of Beirut but a private company needs to manage it in an advanced manner, working towards making profit, because when the private company makes profit, the government will profit as well.
BL: How do you see Lebanon and the Net Group by the end 2021? Are you optimistic for the end of this year?
Mourad Aoun: I am always optimistic and I lead the company to weather the storm, rather than hide from it. If we can manage to move forward, when the storm ends, we would be ahead. But that comes with a cost that we have to face.
