Set course for Baghdad – but it's costly and challenging for air freight shippers

Aramex Iraq freight operation leader Samer Ali and customs broker Mahdi Merza

Steep rates and jacked-up insurance premiums make Baghdad-bound airfreight a costly enterprise, with excessive bureaucracy and unwieldy, old-fashioned clearance processes, leaving forwarders struggling to provide decent services.

“Insuring freight shipments is expensive and traders spend huge amounts of money on both this and freight costs, so they should be expecting a good service, but they’re actually paying a high price for a weak service,” Aramex’s Iraq freight operation leader, Samer Ali, told The Loadstar.

“But our customers know the whole picture, so the ‘stigma’ of shipping to Iraq doesn’t really affect trade.”

Dubai-based Aramex was the first courier company in the Middle East, so it is not surprising that, after two decades in Iraq, today it is one of the top three airfreight forwarders working in the country, alongside FedEx and DHL.

“We target the high-value side of the market. We move anything and everything, including oversized cargo that requires special aircraft. But our main freight is spare parts, electronic devices, cosmetics, and medical equipment and supplies,” said Mr Ali.

With the flexibility to serve countrywide destinations – central Iraq (via Baghdad), northern Iraq (through Erbil, the ‘capital’ of the semi-autonomous Iraqi Kurdistan region) and southern Iraq (through the smaller airport of Basra) – Baghdad is Aramex’s main operation in Iraq.

But while convenient, Baghdad is not the cheapest option. Steep handling rates and tardy clearance procedures are pushing some forwarders to favour Erbil, where rates are around 25% cheaper per kg and processes faster.

And, even with the added costs of onward overland transport and paying bribes often required at the internal ‘border’ between federal Iraq and Iraqi Kurdistan, Erbil is often still cheaper.

But it is slower: truckers driving the 390km to Baghdad face poor road conditions and lengthy waits on the outskirts of cities, rendering Erbil ill-suited to Baghdad-bound high-value cargo.

“Medical supplies in particular, which often need to be temperature-controlled and be delivered straight to the Ministry of Health in Baghdad, require fast transport, so we find it’s better and safer to use Baghdad Airport,” Mr Ali said.

Iraq’s airfreight trade remains a reactive one, Mr Ali explained, with forwarders poised to swiftly respond to unexpected scenarios – political and security-related – placing considerable ‘problem-solving’ demands upon staff.

The 2014 Islamic State (ISIS) seizure of Mosul closed the road between Erbil and Baghdad, affecting overland freight transport. After the defeat of ISIS in 2017, when roads reopened, the fallout from an ill-fated Kurdish independence referendum prompted the federal government to practically assert its technical control over the whole country’s borders and airports.

For the following year, until political rapprochement was reached, Erbil International Airport was rendered temporarily obsolete for freight, with all cargo required to enter federal Iraq.

Despite being viewed as safer than federal Iraq, Erbil is not immune from security issues, being the target of sporadic rocket attacks, prompting all flights to be temporarily rerouted to Baghdad.

Alongside these country-specific challenges is the legacy of the global pandemic, which turned once-reliable aviation scheduling upside-down.

“Our main challenge today remains securing reliable flight booking spaces, as there are still constant schedule changes, sometimes even hours before flight departures, and we are still seeing a lot of cancellations,” said Mr Ali .

Even without such external challenges, high-value shipments of pre-approved cargo destined for Baghdad ministries can take between three to six days to arrive and as many as four working days to complete clearance processes.

Bogged down in bureaucracy 

The Kurdistan regional government has looked to make Erbil more attractive to freight forwarders with faster processes, including in-airport testing centres for liquids and cosmetics, reducing product sample-testing times to just hours.

This contrasts starkly with Baghdad, where downtown laboratory locations have week-long turnarounds, although Aramex now has a work-around, asking customers to send samples for advance testing to reduce final clearance times.

Baghdad forwarders and customers are also at the mercy of excessive bureaucracy and the limitations imposed by the airport’s sole handling company, part of state-owned Iraqi Airways, only working limited hours over a five-day week.

MASIL, the Menzies-Iraqi Airways cargo-handing joint-venture launched last year promising to slash costs and improve services, has apparently yet to have had any significant impact on either costs or handling procedures.

“We try to mitigate delays by ensuring all official documents are in place before facilitating shipments,” said Mr Ali. “But the airport is still using old methods to check shipments and, with no registers or lists of rules to work by that clearly state regulations, it still depends on individual staff to make decisions.”

With Iraq heavily regulating imports – the World Bank estimates that 75% of imports require a special licence – customers face their own set of challenges, especially as regulation changes are not always clearly communicated. Occasionally, pre-approved cargo has even been returned to origin because regulations changed between pre-shipment paperwork being approved and the freight arriving in Baghdad.

Customs broker Mahdi Merza, one of Aramex’s first Iraqi employees, who has worked for the firm for 19 years, is well-versed in how the country’s airfreight systems have stalled. He explained: “Not only has nothing changed but, actually, it’s become more complicated year by year. It was much easier under [former Iraqi leader] Saddam [Hussein] because Iraq had rules, but, since 2003, freight imports have become more complicated.”

Dealing solely with courier bags, Mr Merza spends most of his time at the airport, following complicated bureaucratic processes, including acquiring the 11 different stamps and signatures required before he can proceed with payment processes. As Iraq remains a cash-based society, customs duties, handling fees and government taxes must all be paid in cash and appropriate receipts acquired before parcels can be released.

“There have been some modest improvements in some areas,” insisted Mr Ali, referring to larger freight, but added that systems, “not ancient but still old” equipment and even working methods all needed an overhaul.

“If new scanners and devices were installed and staff trained in modern methods, processes would be better and faster for everyone,” he said. “Iraq has to improve.”

But, despite the challenges, Mr Ali said Iraq remained a good market, with definite growth potential, especially if the import-dependent, oil-rich country could eventually reach a levelling-out of its import and export figures. According to the World Bank, Iraq is one of the least-diversified exporters in the world, with crude oil accounting for more than 99% of its exports over the past decade.

For the country’s market potential to be realised, however, considerable improvements are needed to its airfreight management systems to get them up to industry standards.