Logistics and Beyond with Sami Elganbur31. May 2022
The Libyan economy faces significant challenges, such as recurring disruptions in the oil and gas sector, the fragmentation of state institutions and ongoing conflict. However, being a major oil producer in North Africa, Libya – like many countries – needs professional logistics players to help keep the industry moving and the economy going. Security and access constraints are just two of many operational challenges that freight forwarders must keep in mind when operating in the region. Now with the oil prices booming, the stakes are higher than ever. Today we speak to Mr Sami Elganbur, Co-Founder of Al Merfak Oil Service & Logistics Support, our member based in Tripoli, Libya about his personal journey in logistics and the ins and outs of the Libyan market.
In conversation with Sami…
PL-Alliance: Sami, you have always worked in the oil and gas sector, specifically in logistics. What are the trends and changes you noticed since you first started working? How has Al Merfak adapted to the market since you have been involved?
Sami Elganbur: I started working in logistics in 2004 with SAIPEM. Then I moved to Occidental and finally ExxonMobil, where I worked for six years as a Logistics Manager, which was my last job as an employee. Now I am a co-partner at Al-Merfak.
The challenges first started with the civil war and what happened in 2011. That completely changed the game. Before that, the country was booming. There were many construction projects all over the country. It was like a huge workshop full of people working from all over the world. But what happened in 2011 turned the table upside down. All the Companies abandoned the projects as they were and left. It wasn't easy to stay in the market because of the changes, both in terms of security and money. The value of the Libyan Dinar dropped against the dollar, which brought a new set of challenges for us. To continue working, we had to adapt to this situation. In the first few years, we were busy working with a lot of international companies to export the equipment they left behind, then when that was through, we started working more with local companies. So we have tried not to limit ourselves and worked to diversify our market and develop new areas for expansion.
Currently, we are offering many offshore services to our clients, such as chartering offshore vessels and supplying vessels to the oil companies. This has been very successful and we have chartered vessels for over four years now with about 6 million dollars worth of contracts. Besides that, we are taking care of the customs clearance & Shipping agency through our sister company. In addition, a nationwide presence in Libya has also helped us work with the United Nations since they have a more extensive involvement in our country than they used to.
PL-Alliance: How are the current affairs impacting the oil and gas market in Libya, and how is this reflecting in your daily operations?
Sami Elganbur: We have started to see increased demand because the corporations are trying to expand production; they want to produce more and sell more to take advantage of the current shortage. But over the last ten years, the infrastructure was damaged, so it isn't easy. We have started to see some enquiries from companies to develop new offshore projects, and we are trying to leverage that to win new tenders.
In the shipping industry, people were not happy with the new rates. We have noticed some plodding progress on the imports and exports side. I hope this war ends soon since it affects everybody globally, not just in Ukraine and Russia.
PL-Alliance: Libya has long been experiencing civil unrest, which increases risks and causes bottlenecks in logistics. With the scaling up of logistics to support the increased oil demands in recent times, how is the established infrastructure coping with these unprecedented changes?
Sami Elganbur: When we talk about oil and gas, there are dedicated ports and terminals, but our main airport in Tripoli was destroyed, so we use a military base airport. It is better for the cargo to be handled there, but the facility is not like it used to be. Although the government is trying to move forward, they have to overcome many obstacles. The ports need a lot of maintenance, from dredging to installing new cranes. Docks also need an upgrade. Not everything is in its best condition. Some ports can handle certain types of cargo, and others the different types. So we can manage on that front. The roads are in excellent condition, but you have to work with the political issues. You need to preplan the route carefully but always be on alert for last-minute changes in order to deliver the cargo safely. So it is very challenging from this perspective, but it is workable. It is not as easy as it would be at the developed ports and airports, but I do not recall having an issue with receiving any shipment. So it is doable ðŸ˜Š
PL-Alliance: Tripoli, Misrata and Benghazi are the major cities where most logistical operations are concentrated and also house the major ports in Libya. With heavy imports and exports in the country, can you give us an insight into Al Merfak's service capabilities?
Sami Elganbur: So we are fully capable of exporting all kinds of cargo from Libya, this has been one of our core competencies since the establishment of our company in 2010. With the help of our sister company, a shipping agency, we can export / Import all types of goods, either locally manufactured or goods that need to be shipped for maintenance. We can also handle oil equipment or industrial equipment of any size or form. From collection at its original location in Libya, no matter what part of the country, and then chartering and delivering it to the final site in Europe. We also do that for some airlines, for example, Libyan Airlines, where we are one of the main contractors. We handle sea freight for these airline companies. I remember a project where we shipped two Rolls Royce engines for an Airbus A320 using flatracks to the Port of Aqaba. So there is nothing we cannot handle in Libya. Outside, we can also use Tunisia and Egypt for inland transportation and provide logistical support in both these countries.
We are a very agile team. We study the market situation and try our best to adapt and fit, all while maintaining minimum crew members. Today the situation is way more stable than it used to be back in 2014, 2015 and 2016, but it is not the stability that makes for a good environment because we still have political issues. There is no war, but the political problems are crippling our progress. The money, contracts, and funding are all issues we need to solve, but the potential is still there.
PL-Alliance: There are many logistics companies in Tripoli, which indeed make the market very competitive. What sets you apart from the other forwarders in the region?
Sami Elganbur: Right after the war, it was a tough situation for everybody. So we understood the need for clear and open communication with the clients. Reliability and honesty are the keys. We face many problems while working in logistics not only in Libya but all over the world, but if we don't inform the clients of what is happening, the problem will not go away. Also, working at the lowest possible cost is very important to us since insurance for transportation in Libya is extremely expensive. So we pride ourselves on providing the best possible services at the lowest prices possible. Apart from this, we are also trying to expand the services we provide to better control the quality of the logistics services while maintaining a low cost.
PL-Alliance: Talking about service, it is always easier to provide more reliable service when the situation is stable, however when there are constant changes happening in the country, how do you maintain the quality?
Sami Elganbur: Honestly, maintaining high service levels for a low cost is an enormous challenge, especially in the oil and gas sector. The main challenge is the expansion of the company. You don't want to hire people and just let them go when things get complicated. This is the reason why we are busy all the time.
The oil and gas industry is also very particular regarding safety, health and the environment. With the chaos that the country is in right now, sometimes this is very hard. We have to cross this very thin line and maintain a balance between safety and the environment. We have had to enter war zones and bring material out, so it's a very delicate situation, and we are trying to do our best. Libya is not a tiny country. It is about 1.76 Million km2 which is why we always try to employ services from the locals from those regions. They know what is going on and whom to deal with. Through the years, we have developed an excellent network of locals within the country who help us whenever required.
We also aim to stay out of politics since we need to be able to travel and be welcomed everywhere. We do our job and leave the place. Since we also have offices in all the major cities in Libya, we can make last-minute arrangements and changes when required.
PL-Alliance: For a long time, Libya did not have an operational rail system, but many lines existed in the past. The Libyan authorities have been talking about an extensive rail system for some time now. What does the development look like? When is it likely for the lines to be functional?
Sami Elganbur: As you say, the rail system in Libya was very limited, covering only small areas. After our independence in 1951, they kept it running for maybe a couple of years, but the system was ancient, and the government decided to take it apart. After that, our government built a good highway system that connected the country in the 70s. Towards the end of the millennium, the government established plans to develop rail systems connecting Egypt, Libya and Tunisia. They started working on it, invested a lot of money in the infrastructure, and completed about 50-55% of the routes. But in 2011, everything stopped like all the other projects. If you come to Tripoli or Misrata, you can only see construction cranes and unfinished buildings.
Now what is left is not in the best shape because of the lack of maintenance. I don't see this project being completed in the near future. Not at least in the next 10 – 15 years. But I know once things are stable, the sky is the limit for the people of Libya. We can expect lots of development, the expertise is there, and the funds will also follow.
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