How Saudi Arabia’s $18bn logistics industry is reaching out to the rest of the world

RIYADH: Any goods delivery company will have a sinking feeling at the thought of short-term storage, with most warehouse operators insisting on minimum volumes and contracts of at least a few months.

Logexa, an online logistics platform launched by Husam Sendi and his co-founders in September 2021, turned the problem on its head. 

The company was born when the problem interfered with Sendi’s first shot at entrepreneurship.

After graduating from Oregon State University with a degree in supply chain logistics, he cut his teeth in the same sector as a supply chain manager, first with FMCG distributor Unilever and then with Ohio-based industrial packaging firm Greif International.

With that hands-on experience, Sendi launched his first startup in 2013, focusing on repackaging promotional retail items, such as a free bowl with a packet of noodles. His biggest client was his ex-employer Unilever, and that contract folded up when Unilever cut back its operations due to fallout from Brexit.

Sendi then moved into consultancy for transportation companies and, from there, expanded to storage services and solutions for his previous co-packaging clients. However, the business hit the wall when red beetles infected his warehouse.

“I thought that was the end of my business and career,” said Sendi.

Solutions in store

But never one to say die, he continued to serve his remaining clients through his network of warehousing affiliates. That, in turn, gave him the idea to concentrate on storage solutions. However, he was wary of dedicating resources to warehouse space or human resources, both of which can pile up crippling overheads when a business goes south.

“But in 2019, I heard about digital transformation,” Sendi said. “I talked to a few people and explored the idea of digitalizing the current manual warehousing process. How about a program that accepts orders, collects payment and diverts orders to the warehouse?”

His idea quickly gained the recognition of prominent startup accelerators: first King Abdulaziz University, with a prize of SR10,000 ($2,665) and then the Taqadam program of King Abdullah University of Science and Technology, with a grant of SR525,000.

Sendi’s fledgling startup was bolstered by the addition of Husam Sabano, an old Unilever colleague with an academic background in industrial and systems engineering, and Khalid Nagadi, who had a doctorate in industrial engineering and over a decade’s experience in process management. Both of them came on board as co-founders.

Thus Logexa was born in March 2021, with Sendi as CEO, Sabano as CTO and Khalid Nagadi as COO. 

In fact, the COVID-19 pandemic turned out to be a blessing in disguise. Because everybody was confined to their homes, the company avoided the typical startup costs of hiring office-based staff.

“I would say we were lucky that we did not have to mobilize. We were all stuck at home, and all the work was online,” he said.

Sendi invested the KAUST grant into tech development and branding. The company was based on a simple premise: aggregating pallet spaces via tie-ups with warehouse operators, whereby it can offer temporary storage solutions to any entity that needs it — a business model known as third-party logistics.

“We decided to outsource the entire operation, so we have zero assets,” explained Sendi.

Rapid progress

Logexa is an on-demand logistics platform. Many warehousing providers have a problem filling their spaces. But they don’t want to deal with small and medium enterprises that involve too much follow-up and chasing invoices.

“Many SMEs do not have access to proper warehousing because they lack the volume. Nor are they good at negotiating rates. Even if they do so, they will be committed to long-term contracts, which is very costly.

“We serve people based on their needs — people with overflow challenges, small volumes, or small businesses who cannot negotiate deals but require storage solutions at a high standard — through our online platform. It’s a win-win for the warehouse operators and our clients,” he said.

Logexa is now active in Jeddah, Dammam, Riyadh, Khamis Mushait, Qassim and Rabigh, registering a steady growth of 30 percent month over month, starting with 24 pallet positions to over 2,700 today.

“We measure our performance on three aspects: number of pallets we store, revenue and the number of customers,” added Sendi.

The company achieved $40,000 in revenue in March, $30,000 in April and $100,000 in May. In terms of clients, they started with four and now have 75.

The company aims to further expand in terms of services, branching out into transport and last-mile delivery, and geographically, with plans to launch in Egypt, Turkey and South Africa, among other territories.

The company’s rapid progress, coupled with its robust business model, has attracted significant investment. Their first funding round, in September 2021, brought in $300,000 from Riyadh’s Seedra Ventures, with a further soft commitment of $1.3 million from an undisclosed source in a second round that will be closing in June.

Sendi sees Saudi Arabia’s current business climate as ideal for further expansion.

“Logexa enables both SMEs and large companies to have access to quick and flexible solutions,” he said. “Saudi wants to become the logistics hub of the world, and we have a digital solution that will help customers adapt while adding great value to Vision 2030.”