A time of rapid changeAugust 17, 2020
Ravi Varrier, CEO of Al Rashed International Shipping Company, talks to The Energy Year about how the company has navigated Covid-19 and the oil price drop and how the dual crisis is likely to reshape the businesses. Al Rashed provides a range of logistics and freight services from ship-to-store transportation to forwarding, Customs clearance and storage.
How has this crisis impacted your operations in Kuwait?
At the moment, Kuwait’s projects are limited. Kuwait Oil Company is coming up with an offshore project, a first for the company in Kuwait. The project was to commence during June 2020 but was delayed owing to Covid-19 and pushed back to October 2020. This is a significant project. The other projects are small ones, but once things start shaping up, they will be building more.
Kuwait has been planning a lot of projects, but because of Covid-19, nothing has moved forward. Apart from ports and Customs staff, most officials who work in government authorities are at home because most of the government offices are working with a skeleton staff. Hopefully, things will improve in the days to come. They have gradually commenced with 50% and are planning for 100% in the next stage (hopefully). Then we will get a better idea of how things will shape up.
Have you faced any difficulties as a result of the safety measures across Kuwait?
Kuwait has done a great job in keeping the Covid-19 spread in check with the available resources. The testing has been ramped up, and the affected are monitored continuously. Government and NGOs are donating free food and aid to a lot of people. They even accommodated one of our employees who suffered from kidney failure in a government guest house.
Our operations were affected as most of the staff was working from home. However, we managed to get things done on the dot.
On the other hand, most companies, including us, have a shortage of staff. The ones on holiday abroad cannot come back to Kuwait. That can cause many issues, but overall the recovery is better than in other countries nearby.
How has this crisis impacted your operations in Iraq?
As far as our operations in Iraq or Kuwait are concerned, we have not dropped anything or cut back on the number of staff. However, people are working from home.
In Iraq, lockdown from time to time and curfews delay the banking system and fund transfers or receiving. Still, business is going on – there are a lot of orders, and the growth funds are available.
Iraq was doing very well project-wise, but then things were shuffled as the oil price went down. Lockdowns have impacted the project in terms of receiving funds in due time. And if you are going to transfer cash to subcontractors or partners, it is challenging from Iraq as banks do require advance notification for the transfer of overseas funds, resulting in limitations on transactions being processed in due time.
Otherwise, shipping activities are moving along very well in Iraq, though the projects are getting delayed. Most of the oil projects are located in the southern region of Iraq, but there is an upcoming one for us in Erbil, which is new – we received the bid for it two days ago. Besides, on the shipping side, we are planning to work with our clients for chartering or booking cargo for the ships owned by Iraqi Maritime Agency.
What are your current projects in Oman and Saudi Arabia?
We have started to work with a large Saudi partner [Khalifa A. Algosaibi Investment Co.], but the procedures involved took a long time. By the time we got the licence, Covid-19 had affected the region, and we only managed to get a few people there. We are doing limited clearance activities and some container movements. It cannot improve very much now with the pandemic looming over the country. However, we are optimistic that we will get back on track very soon.
In Oman, we are in the final stages of setting up our company Crescent Global Shipping & Logistics with our strong partners, Seven Seas Group. With Covid-19, there have been a lot of changes regarding hiring requirements. We have to meet the 70% Omanisation standard, which is a new requirement. Since the pandemic started, I have not been able to travel either to Saudi Arabia or to Oman.
Did you have systems in place that allowed you to mitigate the effect of the crisis in the early days?
I have been closely monitoring what was happening in other countries. I have been working on this system and policies since February 25, 2020. A few of our staff have been affected, but we have managed it. We got permission from the Ministry of Interior to work as usual. Our business was reduced by 20-25% as a result of the crisis, but the impact on us was much less compared to other companies in Kuwait.
We have implemented safety measures like sanitisation and thermal cameras in the office. We also have a mobile application for our customers to book appointments.
Which part of the supply chain has been affected the most in your area?
The most affected area might be transportation and logistics. A lot of people suffered because no passes were issued for truck drivers and only a very few truck companies including us got passes. Despite all this, the flow of cargo in the port has increased during the past few months. These orders were placed a long time back and have not been left idle. Containers, bulk and steel cargo have increased, and now, with China opening up, movement to Kuwait has resumed.
How will this crisis reshape the general dynamics of business?
It will not be like before. People and companies with money in the bank can survive but need to devise a different set of management skills. You cannot apply the old pattern of working and use the old approach to the business. What makes a difference from other companies is how you manage things in such a crisis. The mid-size companies, in particular, have faced a lot of problems.
Do you expect consolidation across your sector due to this crisis?
Big players will most likely consolidate, as they always do in such a crisis. I have read many of the major shipping lines have utilised this as an opportunity and have started seeing profits.
What lessons have you learned from this crisis?
It would be best if you never take anything for granted. The business is changing rapidly, and you cannot be sure it will be the same tomorrow. Do not take your success for granted. Always keep your head on your shoulders and work properly. If you look up, you can see only skyscrapers, but when you look down, you can see the reality of life. Always look down, and you will find something that you can take advantage of.
2020 has been a calamitous year for the world. The world is reeling under Covid-19 and its related economic downturns, and accidents like the one in Beirut that has sadly impacted Lebanon and sent shockwaves around the globe. My prayers are with the affected and their families.
I hope for the world to get back to its former glory. Covid has been an eye-opener for us – a reality check if you may. My heart goes out to the victims of the disease, the survivors and the victims of the economic downturns. May they have the strength to overcome this.
Let us take this as an opportunity to learn to be humble. Let us take this as an opportunity to reflect in life and work to be a better human being.