GLOBAL SUPPLY CHAIN MARCH 2018 ISSUE

March 2018 Issue 46

ENHANCING THE BUSINESS OF LOGISTICS

CASH AND ITS IMPACT ON YOUR SUPPLY CHAIN

Sustainable aviation fuel Goals set for 2025

Turkish Cargo Future ready

Dubai Trade 10 years of ESEA

WE HAVE EXPANDED OUR FLEET, SO WE CAN THRIVE TOGETHER. 2 NEW BOEING 777F PLANES HAVE BEEN ADDED TO THE TURKISH CARGO FLEET.

Now, you can reach to more countries than any other airline in the world with our long haul 2 new Boeing 777F planes with 102 tonnes capacity.

                                                                  

         

Bespoke Logistics Project of the Year 2017

Domestic Logistics Service Provider of the Year KSA 2017

GCC Supplier Of The Year 2017 KSA Supplier Of The Year 2017

Cash is king?

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Yes. Very. Much. So. In all businesses. It is a no brainer, really. Not enough cash means a standstill to your business operations. Our cover story and the theme of this issue is finance in the supply chain. The cover article features an in-depth look at the best ways to keep the cash flowing in your business’s supply chain operations.

It could be negotiating the right terms with your suppliers, offering the right discounts to your clients for prompt and immediate payments, factoring is another option as is considering getting a business loan.

Talking about factoring, we have spoken with Tawreeq Holdings that offers this solution to SME supply chains in the country and region. Supply chain finance in the regional market is a very niche industry on its own and relatively in its fledgling stage. Enhancing working capital and getting timely access to liquidity at competitive terms is what Tawreeq does best.

Also, Dubai Airport Freezone Authority (DAFZA) has recently launched Goodforce Labs. An innovative startup incubator focused on transforming ethical startups in the fields of Islamic economy and Halal industries into global success stories. The incubator will work to revitalise the Islamic ethical economy utilizing a deep venture building platform. This will be achieved by selecting a group of startups and small and medium enterprises and support them towards a goal of USD 50 million in annual revenues and measurable social impact.

This initiative was launched with support from DAFZA, Dubai Islamic Economy Development Centre and Technolera, a leader in building partnerships and drawing capitals for startups, a global organisation dedicated to enhancing ethical practice in business.

So do let us know your thoughts on all of these varied facets of supply chain finance. And we will see you in April.

Munawar Shariff Managing Editor munawar@signaturemediame.com

MARCH 2018 3

GUEST COLUMN

March 2018 Issue 46

ENHANCING THE BUSINESS OF LOGISTICS

40 Don’t let your supply chain be an afterthought Jeremy Murchland, Vice President, Business Development, ALOM writes about how an effective supply chain or lack of it could mean success or failure

42 UAE’s first Islamic startup incubator DAFZA launches Goodforce Labs, the first Islamic and global social impact themed startup incubator

46 The evolving supply chain of energy Renish Group, a fast-growing company in the oil storage space, is well positioned to address the rising demands in the sector, with a vision to be a global energy organisation

25 06 News 16 Country report Kuwait Transport development strengthens Kuwait Driven by measured governmentbacked investments the Kuwait transportation sector continues to grow

25 Cover How does your cash flow impact your supply chain?

Every business, including manufacturing operations, rely on cash flow to meet important needs like fueling growth and keeping the manufacturing process rolling forward 4 MARCH 2018

30 Turkish Cargo - air cargo’s confident player Turkish Cargo is going from strength to strength each passing year

35 Finance and the supply chain Tawreeq Holdings Group CEO, Haitham Al Refaie shared his thoughts on the role of factoring in the regional supply chain operation

50 A decade of recognising excellence Dubai Trade recently held its 10th E-Services Excellence Awards (ESEA) at the Atlantis The Palm Hotel

55 Sustainable supply chains Supply chain management survey indicates greater pressure on companies to demonstrate sustainability

58 Gulf Navigation floats rights issue Gulf Navigation Holding recently approved the trading of rights issue to its existing shareholders

60 Manafth and Jaheziya sign MOU for cooperation 38 Sustainable aviation fuel The General Authority of Security of flights by 2025 Ports, Borders and Free Zones and IATA has set an aim to fly a billion passengers on flights powered by fuel which is a mix of jet fuel and sustainable aviation fuel by the year 2025

Tawazun Safety, Security and Disaster Management City have joined forces to ensure a robust business environment

Lulu’s new AED 300 million logistics hub at DWSC

From left: Saud Abu Al Shawareb, Abdulla Belhoul, Yousuf Ali MA and Salim MA

Dubai Wholesale City (DWSC) has signed an agreement with LuLu Group International, to set up a AED300 million Central Logistics Hub at the region’s largest fully integrated wholesale hub.

Spanning an area of 1.3 million sq feet, the central logistics hub is estimated to take shape within 30 months and once completed, the modern high-end facility will provide efficient distribution services to meet the consumption requirements of LuLu Group International’s growing network of malls and hypermarkets across Dubai, Sharjah, and Northern Emirates.

The agreement was inked by Abdulla Belhoul, Chief Executive Officer of Dubai Wholesale City, and Yousuf Ali M.A, Chairman of LuLu Group, in the presence of Saud Abu Al-Shawareb, Chief

6 MARCH 2018

Operating Officer of Dubai Industrial Park along with senior executives and associates from both parties.

Abdulla Belhoul said,“Dubai Wholesale City is keeping a close eye on local, regional, and international market needs in order to provide a fully integrated ecosystem through its two components: Dubai Industrial Park and Dubai Food Park. DWSC is set to play a vital role in supporting Dubai’s economic diversification efforts.”

LuLu Group International operates 144 hypermarkets and shopping malls across the region making it a top player in the organized retail sector. According to the recent Deloitte Integrated Annual Report, LuLu Group International is among the Top 50 fastest growing retailers globally with a market share of 32 percent.

The upcoming Central Logistics Hub will benefit from Dubai Wholesale City’s proximity to Sheikh Mohammad Bin Zayed Road and Emirates Road. Just 10 minutes away from Al Maktoum International Airport, the Park is also a 15 minute-drive from the Jebel Ali Free Zone. Notably, the destination is set to provide a range of comprehensive governmental services including customs, clearance, licensing, food safety and supervision all under one roof.

Lulu Group International’s decision to set up a dedicated, state-of-the-art Central Logistics Hub comes at a time when the UAE’s retail sector is projected to grow at a compound annual growth rate (CAGR) of 4.9 per cent and value close to US$71 billion by 2021, as per a new finding released by the Dubai Chamber of Commerce and Industry.

Ford Transit has quickly established itself as the fastest growing van brand in the Middle East by charting an incredible 240 per cent boost in regional sales for 2017.

Key partnerships in Saudi Arabia, the UAE and Kuwait during the year helped fortify the Transit’s foothold in the region, and with a number of new products and innovations expected in 2018, Ford Middle East is expecting to further grow its volumes this year.

“Businesses have relied on Ford Transits to get the job done for over 50 years, and we’re extremely happy that customers in the Middle East are beginning to see the Transit as a versatile and essential business tool,” said Terry Rayner, Commercial Vehicle Director for Ford Middle East and Africa.

Ford - region’s fastest growing van

Versatile operator Ford secured a number of key contract wins across the region in 2017 including significant orders from SOUQ and DHL. At the recent Gulf Food Manufacturing Show last November, Ford debuted its Transit Custom refrigerated van. With a spacious interior, wide opening rear doors and a powerful chiller unit, the van can be specified for chilled or frozen goods delivery.

Emergency vehicles The Dubai Corporation for Ambulance Services (DCAS) was an early adopter of the Transit-based emergency unit, and debuted its “Ambulance of the Future” during the Arab Health Exhibition and Congress in January. DCAS already has a number of Transit-based ambulances on fleet, and the next generation version is safer, both for paramedics and patients, and packed with technology that helps monitor every facet of the vehicle’s use and performance.

Economical solution With the recent rise in fuel prices, interest in the diesel-powered Transit Custom has grown as fleet operations and SME companies look for cleaner and more efficient vehicles.

The Transit’s latest generation Ford 2.2-litre Duratorq turbo diesel engine has been developed with the latest turbocharging, fuel injection, combustion system, structural design

and low-friction technologies to deliver significant improvements in fuel efficiency, performance and operating refinement, while also providing durability and low cost-of-ownership.

With a typical fuel economy of 15 km/ litre and an 80-litre fuel tank, the Transit delivers a full 1,200 km range between fuel stops, with savings in running costs when compared to petrol-powered rivals.

Expanding portfolio Ford’s Commercial Vehicle range will expand to include three new versions of the Tourneo; the Kombi (entry level for employee transportation), mid-series (for hotel/airport shuttle and travel operator use) and Premium (for business executive and luxury transportation use).

The team also plans to announce new vehicles for the region at the Arabian Travel Market Show in April.

Dedicated services Launched in Saudi Arabia and the UAE, the Transit Mobile Service Fleet will continue to grow across the region throughout 2018.

The service is designed to keep customers on the road by providing them with roadside assistance, and it has met with tremendous success since its introduction in 2017.

In the UAE, Al Tayer will launch an industry leading three year, 100,000 kilometre maintenance pack (including brakes) with all Transits sold in the Emirates. This provides a “Gas and Go”proposition which means the customer has total peace of mind and a cost effective ownership experience.

MARCH 2018 7

Globe Express Services opens new office in Peru

DP World Group Chairman and CEO Sultan Ahmed Bin Sulayem, Republic of Somaliland Minister of Foreign Affairs and International Co-operation Dr. Saad Al Shire and company and government officials at the signing of the agreement in Dubai

DP World begins work on Berbera Free Zone The final agreement to develop a greenfield economic free zone in Somaliland to complement the growth of the Port of Berbera has been signed between DP World and its government in Dubai.

DP World expects to break ground on the 12 sq kilometre free zone project this year. Located next to the port, it will support the growth of Berbera as a regional trading hub and generate jobs.

DP World Group Chairman and CEO Sultan Ahmed Bin Sulayem said: “Our vision for Berbera is to make it a regional maritime hub in the Horn of Africa and its development will encourage growth

8 MARCH 2018

for the region’s economy. It’s also a boost for local prosperity – jobs for the people of Somaliland and future generations. We look forward to bringing our global experience here and to help develop the Berbera Corridor, which is key to encouraging regional economic activity.”

The free zone will target a wide range of businesses including warehousing, logistics, traders, manufacturers and other related businesses.

The project is also modelled on DP World’s Jebel Ali Free Zone (Jafza) in Dubai and aims to attract investments, encourage trade, create new jobs and position Berbera as a gateway port for the region.

Globe Express Services (GES) has announced its further expansion into Latin America with the opening of its new office in Peru recently as part of a strategic move to meet the growing demand for logistics services in the one of the region’s fastest growing economies. The opening of GES’ branch in Peru paves the way for the company to pursue long-term plans in the region by leveraging on its cost-efficient express services which involves door-to-door services at highly competitive prices.

Strategically located in the commercial county area of Miraflores – 20 km from the Port of Callao and 18 km from the Lima Airport – the new GES office offers convenient port and airport access while also serving as an operational hub in the Latin American region.

GES will be highlighting its logistics services at the new facility-marking stronger regional presence and an opportunity to sell the new territory.

Liliana Portillo has been assigned as the office’s Operations Manager and she brings extensive experience in the industry, which includes customs brokerage and Foreign Trade.

Mustapha Kawam, President and CEO, GES, said: “It is a bold and strategic move for Globe Express Services to setup our office in Peru at this time and we are confident this is in line with our global expansion initiatives to conquer new markets.”

Solar panels soon on Khazna’s Masdar City Facility Masdar, Abu Dhabi Future Energy Company, a subsidiary of the Mubadala Investment Company (Mubadala), recently announced that it will install a 290-kilowatt (KW) solar photovoltaic (PV) system to serve the facility of Khazna Data Centres (Khazna) in Masdar City.

In the presence of Khaled Al Qubaisi, Chief Executive Officer, Aerospace, Renewables and Information Communications Technology for Mubadala, Mohamed Jameel Al Ramahi, Chief Executive Officer of Masdar, and Hassan Al Naqbi, Chief Executive Officer of Khazna,

signed a collaboration agreement on the project, aimed at further advancing Abu Dhabi’s reputation as a hub for renewable energy and clean technology.

Under the terms of the agreement, Masdar’s Energy Services unit will install a solar PV system on the car park roof at Khazna’s Masdar City facility. The project will serve as a pilot for additional sustainable initiatives at both Khazna facilities in the future.

Khaled Al Qubaisi, CEO for Mubadala Aerospace, Renewables and ICT, who oversees both Masdar and Khazna, said:

“The UAE is committed to building a sustainable nation of the future, and pursuing bold ambitions – aiming to achieve 27 per cent clean energy over the next three years as part of the UAE 2021 Vision.”

Khazna, the only dedicated commercial wholesale data centre provider in the UAE, safeguards mission-critical data using the highest levels of security and operational reliability. They provide industry benchmark levels of power supply and cooling services to better serve the growing need for data centre operations in the UAE and wider region.

MARCH 2018 9

Honeywell launches solutions for the logistics industry

Honeywell recently announced a new hardware and software platform for the next generation of its mobile computers.

The devices are used globally by distribution centers, transportation and logistics providers, and retailers to increase worker productivity and capture critical data.

Targetting the region’s transport and logistics, the Mobility Edge Platform comprises common hardware architecture and a suite of tools on which Honeywell and its partners can build future mobility solutions, which include rugged handheld computers, wearable devices, voice-directed

technology, tablets and vehiclemounted computers.

The platform is designed for Google’s Android Enterprise operating system, which is increasingly becoming the standard for industrial mobile devices. It offers a long product lifecycle by supporting current and future versions of Android OS – more than any competitive offering on the market. Additionally, the common platform provides consistency across Honeywell’s next-generation devices and makes it easier for customers to upgrade current models, manage device refreshes and quickly deploy software applications.

Honeywell also announced the DolphinTM CT60 handheld computer, the first new mobile device to run on the Mobility Edge Platform. The rugged device is designed for transportation, logistics and retail workers and offers an extended battery life, high- performance scanning and other productivity features.

“Honeywell understands the competitive pressures being faced by the region’s

retailers and logistics operators in this space.

Consumers have high expectations that need to be met, including a desire for faster delivery times, and for their online orders to be shipped free of cost. To respond to these increasing demands, Honeywell saw the need for comprehensive and scalable solutions, and has introduced the Mobility Edge Platform as a result,” said Edmond Mikhael, general manager, Honeywell Safety and Productivity Solutions (SPS), Middle East, Turkey and Africa (META).

“Because we built the Mobility Edge Platform with an Android-first mindset, businesses will have the confidence that our devices will support future versions of the operating system without having to make new hardware investments to upgrade their infrastructure. Leveraging a single, unified platform will make adding new devices and testing and deploying business-critical mobile hardware and software easier and faster,” he concluded.

Etihad now flies to Baku Etihad Airways recently launched the first ever scheduled flight linking Abu Dhabi and Baku.

The inaugural flight departed Abu Dhabi carrying a special delegation including diplomats, dignitaries, media representatives, and senior members of Etihad Airways’ management team. On arrival in Baku, the aircraft was greeted with a traditional water cannon salute, followed by the customary display of the Emirati and Azerbaijani national flags from the cockpit windows.

10 MARCH 2018

Peter Baumgartner, Etihad Airways Chief Executive Officer, said,“There is strong demand from both markets for a direct, full-service operation on the route, and we have responded to this increasing customer requirement. The new flights will further boost traffic from the UAE and strengthen the bilateral relations between the two nations. The visa waiver programme introduced for UAE nationals by Azerbaijan in 2015 has greatly stimulated interest in the country, resulting

in a surge of visitors since its implementation.”

Etihad Airways and Azerbaijan Airlines also announced a codeshare partnership.

Etihad Airways has appointed Saeed Mohammad Ahmed as its

Country Manager Azerbaijan. In his new position he will be responsible for the strategic and commercial success of the new route, and for developing business relationships with key Azerbaijani corporations and the travel industry.

Danish eco-friendly packaging firm expands into the Middle East

Field Advice, Scandinavia’s leading supplier of food packaging, has recently signed a partnership with Alpha Sky as part of its international expansion plans in the Middle East and to meet the increasing demand for environmentally friendly disposable containers in the region.

Mark Remmy Sali, Managing Director of Field Advice, signed the Memorandum of Understanding with Ayman Al Hilali, CEO of Alpha Sky, last week in the presence of Denmark’s Minister of Environment and Food Esben Lunde Larsen.

Under the agreement, Alpha Sky and Field Advice will supply nature-based disposable tableware and food packaging to restaurants, airlines, hotels, retail and other businesses

that cater to consumers who prefer on-the-go, speedy, and convenient food services.

Field Advice tableware and packaging products are made out of renewable resources such as bamboo, palm leaf, sugarcane fiber and starch.

The starch-based packaging look and feel like the plastic containers widely used in the food service industry yet are biodegradable and sustainable.

“We believe that our food containers is the answer to the demand for packaging that is sustainable and not harmful to the people and the environment,”Ayman said. He added that everyone should take action to support various government initiatives in the region for responsible waste management and the use of sustainable resources.

KFC’s switch to DHL goes wrong Only rarely does the importance of logistics procurement burst into the open. It has done so for the fast food chain ‘KFC’ in Britain over the past couple of weeks and it has been horrible.

KFC retail sites have either been forced to close or sell a restricted menu due to a shortage of supplies and the company has rid itself of “thousands of tons” of product incorrectly stored. The financial cost is not yet known however the effect on KFC’s business in Britain must be significant.

At the heart of the company’s crisis has been the transfer of an outsourcing contract for the running of their national distribution capabilities from the food processing company Bidvest to DHL Supply Chain.

Bidvest had been operating six distribution facilities supplying food to the KFC retail sites. It is suggested, not least by the GMB Trade Union, that DHL Supply Chain offered to reduce costs for KFC by concentrating operations on one national supply centre in Rugby in the English Midlands.

The proposed concept behind the DHL offer was hardly new, indeed it reflects good practice by concentrating inventory, which ought to both increase stock availability and reduce costs. For some reason this has not happened.

There are clear indications of ‘whiplash’ inventory problems.

Although KFC stores around the country had been running out of food (especially chicken) both last week and this week, KFC’s food suppliers have been attempting to offload excess stocks. In addition, there have been strange reports of containers of chicken being offloaded at the roadside only to be picked up later by what appear to be KFC employees using their own private vehicles.

Now it is reported that the company is faced with having to rid itself of a large quantity of chicken as it has been realised that the Rugby facility is not properly licensed to handle food products.

This episode is not just a problem for KFC. It is hard not to think that DHL Supply Chain emerges badly, although it is hard to know the precise details of the events that have led to the problems. However, handovers from one contract logistics provider to another must be a core competence for a large provider such as DHL and here, for whatever reason, they have got it badly wrong. This cannot be anything other than damaging to DHL Supply Chain’s business in the UK and elsewhere.

Source: Transport Intelligence Author: Thomas Cullen

MARCH 2018 11

Turkish Cargo carried 3,000 tonnes of cut roses to Holland

Region’s first vertical farm opens His Excellency Dr Thani bin Ahmed Al Zeyoudi, UAE Minister of Climate Change and Environment, officially inaugurated Badia Farms, the GCC’s first commercial vertical farm.

Applauding the work of Badia Farms, Dr Al Zeyoudi said: “Badia Farms is an exceptional example of how the UAE’s agricultural industry can thrive while protecting our environment for future generations. The initiative reflects the nation’s commitment to becoming more sustainable and helps us achieve our goal of food security.”

His Excellency added that the farm’s agricultural concept is aligned with the UAE Vision 2021 to work towards a sustainable future and reduce water usage. He further indicated that supporting innovations and latest technologies that enable the agricultural industry to adapt to climate change and ensure food security is one of the main outcomes of the fifth edition of the World Government Summit 2017.

“Sustaining food diversity relies heavily on innovation and the employment of cutting-edge technologies. The Ministry supports all efforts in this field and works on

12 MARCH 2018

enhancing its ties with the private sector to explore potential investment opportunities.”

His Excellency pointed out that hydroponic technology will be a major contributor to agricultural sustainability and food diversity and security, as it enhances crops production and lowers their cost. This is evident in the successful production achieved by Badia Farms in the very short time since its inception in December 2017.“We commend the successful endeavour of Badia Farms, which reaffirms the UAE’s position as a leading incubator for innovation,”His Excellency added.

Omar Al Jundi, founder and Chief Executive Officer at Badia Farms, said: “We set up Badia Farms in the UAE with a vision to provide a sustainable solution for food and to reduce the region’s reliance on imports. Not only can we grow the freshest greens, with no pesticides or chemicals, but we actually do this in the most eco-friendly way possible, using minimal recycled water.”

The eco-system created by Badia Farms uses 90 per cent less water than open field farming and recycles the water it uses. The farm also combats the carbon footprint of food imports that typically travel an average of 3,000 miles to reach restaurants in Dubai.

Turkish Cargo, which has continuously increased its capacity, quality of service and market share as a result of its developments, had scheduled additional 12 flights between 26 January and 12 February in order to satisfy its demand of Valentine’s Day, and carried 906 tonnes of cut roses to the Netherlands from Kenya’s capital city Nairobi.

Turkish Cargo became the air cargo carrier that carried the most flowers from Nairobi between that time with its new Boeing 777F cargo aircrafts. During this period, 234 more tonnes of flowers were carried according to the nearest other air cargo carrier.

With its tropical climate, Kenya stands out with its affordable priced and qualited flower production and flowers are exported to all over the world through Turkish Cargo. Turkish Cargo is operating weekly 5 cargo flights from Nairobi and weekly 3 cargo flights directly from Nairobi to Maastricht, and 340 tons of cut roses are carried per week.

Flowers arrive at the cargo terminal with air-conditioned vehicles that have temperatures regulated between two and eight degrees centigrade. If there are vegetables and fruits in the same shipment, the flowers are seperated so that they are not affected by the ethylene gas which is produced by the fruits and vegetables during the flight and all the necessary precautions are taken.

Dubai non-oil foreign trade with Japan stands at AED 42 billion in 2017 Dubai’s non-oil foreign trade with Japan reached AED 41.82 billion in 2017. Imports totaled AED 38.35 billion, while exports stood at AED 2.69 billion and re-exports at AED 780 million.

According to recent data released by Dubai Customs, in parallel with the UAE-Japan Strategic Business Forum, held by the Ministry of Economy in Tokyo from March 6-7, aluminum tops Dubai’s exports

to Japan at AED 2.519 billion, accounting for 93.69 per cent of the emirate’s total exports to the Japanese market.

Automobiles, on the other hand, lead Dubai’s imports from Japan with a trade share worth AED 18.186 billion, that is 47.43 per cent of its total imports from Japan.

“Japan is one of Dubai’s major trading partners and their bilateral trade is gaining more

and more importance as Dubai advances in the deployment of high-tech technologies, robots and artificial intelligence, an industry where Japan excels as

one of the world’s top producing countries,” said Ahmed Abdul Salam Kazim, Director, Strategy and Corporate Excellence, Dubai Customs.

SAP Enables Middle East’s Smart Cities with Connected Vehicles, IoT, and Telco Launches SAP SE will enable the Middle East’s Smart Cities and smart future of connected vehicles, Internet of Things, cloud, and telecommunications, thanks to innovative digital marketplaces, partnerships, and solutions announced at Mobile World Congress 2018.

“The Middle East is at the global forefront of Smart Cities innovation, with telco transformation enabling autonomous vehicles that can transform government, transport, and logistics sectors,” said Bulent Unsal, Head of Telco – Middle East and North Africa, SAP.“At Mobile World Congress, we have seen strong success in showing how real-time cloud-based data analytics and Internet of Things innovations can transform businesses and daily lives.”

marketplace. New secured and tokenized payment options from MasterCard Corporation, navigation capabilities from HERE and on-demand delivery services from Postmates further expand and enrich the portfolio of services SAP Vehicles Network offers.

Powered by SAP Leonardo, SAP Vehicles Network connects vehicles to intelligent, automated services for parking, fuelling, food, navigation and payment, transforming driving into the ultimate mobile experience.

Through the network, participating members can provide mobility services to drivers and passengers, independent of devices or vehicles. Network members also can offer secure mobility services tailored for business travellers and individual consumers.

SAP Adds MasterCard, HERE and Postmates to Open Network of Connected Vehicles SAP has added new partners and customers to the SAP Vehicles Network solution, an open, standards-based services

Deutsche Telekom and SAP Expand Partnership to the Internet of Things for RealTime Logistics SAP and Deutsche Telekom expanded their partnership to include Internet of Things (IoT) solutions for real-time logistics.

As a part of this agreement, Deutsche Telekom will create a portfolio of comprehensive offerings that will include hardware, connectivity, security, monitoring and operational service at one transparent price.

Data collected and managed

by Deutsche Telekom will be made available to IoT and supply chain management at SAP, including integration to the enterprise digital core with SAP S/4 HANA. Under the agreement, both companies plan to create and certify the interfaces between Deutsche Telekom IoT Platforms and SAP Cloud Platform – their respective workhorses for IoTenabled scenarios.

SAP Introduces First SAP Leonardo Industry Accelerator Package for Telecommunications Companies SAP introduced a new industry accelerator package designed to deliver faster innovation with less risk for telecommunications companies. SAP Leonardo for Telecommunications helps

companies implement nextgeneration business processes to identify margin risk across their operations, gain insights into customers, products and asset profitability, and predict outcomes based on companyspecific performance data.

SAP Cloud Platform Simplifies App Development and Accelerates Customer Innovation SAP announced a new consumption-based commercial model for customers to easily acquire and engage SAP Cloud Platform, the company’s platform as a service (PaaS).

Additional updates include the next-generation SAP Cloud Platform SDK for iOS, which allows customers to easily extend enterprise apps and processesto mobile devices.

SAP Cloud Platform is the foundation of SAP Leonardo, SAP’s digital innovation system.

Together they enable rapid innovation and empower customers to become “intelligent enterprises,” ready for the 21st century.

MARCH 2018 13

Bahri Logistics participated at ‘The Armed Forces Exhibition for Diversity of Requirements & Capabilities’ 2018 Bahri Logistics, one of the six business units within Bahri, showcased its comprehensive range of maritime capabilities and innovation-driven solutions at The Armed Forces Exhibition of Diversity for Requirements and Capabilities (AFED) 2018.

The event was in Riyadh, under the royal patronage of King Salman bin Abdulaziz Al Saud, the Custodian of the Two Holy Mosques, and the directives of HRH Crown Prince, Vice President of the

Council of Ministers and Minister of Defense of KSA, Prince Mohammed bin Salman bin Abdulaziz.

The event saw Bahri Logistics highlight its cutting-edge transportation and logistics solutions to industry peers, clients, and other industry stakeholders.

Ahmed Al-Ghaith, President of Bahri Logistics, said, Bahri Logistics is the exclusive logistics provider for both the Ministry of Defense and Ministry of Interior, and we

remain fully committed to the roadmap outlined in Saudi Vision 2030 to establish the Kingdom as the world’s leading transportation and logistics hub. We own six state-of-

the-art multipurpose vessels capable of handling all types of cargo, and full liner services connecting strategic ports from the Americas and Europe to the Middle East and the Far East.”

Prior to being appointed to his current position, Dietrich has worked at five different commercial nuclear sites over his career, including three years as Chief Nuclear Officer of a multi-

unit energy plant in the USA. Mr. Dietrich joins ENEC from his previous position as Senior Vice-President, Transmission and Distribution, at Southern California Edison (SCE).

The ENEC Chief Nuclear Officer is responsible for ensuring that Nawah receives full support from ENEC and its Joint Venture partner, the Korea Electric Power Corporation (KEPCO), enabling Nawah to maintain focus on operations and the relevant licensing requirements.

In his role as Chief Nuclear Officer, Dietrich will be responsible for a series of leadership programs to support the next generation of Emirati nuclear professionals that will be required to operate the Barakah Plant over its 60 year lifespan.

ENEC appoints Chief Nuclear Officer The Emirates Nuclear Energy Corporation (ENEC) has appointed Peter Dietrich as the Corporation’s Chief Nuclear Officer (CNO). Dietrich brings substantial international industry expertise from his 27year career in the nuclear sector.

The position of ENEC CNO serves a strategic function to the organization in supporting the successful development of the UAE Peaceful Nuclear Energy Program, including assessing the program plan for the delivery of Units 1 to 4 in adherence to the highest standards of nuclear safety and quality.

Eng. Mohamed Al Hammadi ENEC CEO, said: “I welcome Peter to the executive team that

14 MARCH 2018

is leading the UAE Peaceful Nuclear Energy Program and I look forward to working closely with him. He is a respected leader who has extensive experience in the global nuclear energy industry, demonstrating the capacity to continuously improve performance while mentoring and developing the appropriate skills and capabilities in the different organizations in which he has served.”

“The selection of Peter as our Chief Nuclear Officer highlights our objective to embed highly experienced international nuclear experts as part of ENEC’s commitment to the highest standards of safety, security and quality,”added Al Hammadi.

Emirates SkyCargo gets Authorised Economic Operator certification Emirates SkyCargo, the freight division of Emirates has become a certified member of the UAE Authorised Economic Operator (AEO) programme. The certification was awarded to Emirates SkyCargo by the Federal Customs Authority of the UAE government.

The Authorised Economic Operator programme is a voluntary compliance and security scheme that is built on the SAFE Framework of Standards to secure and facilitate global trade outlined by the World Customs Organisation (WCO). The basic aim of the AEO programme is to strengthen security and increase the efficiency of the supply chain in any cross-border transportation of goods.

As an Authorised Economic Operator in the UAE, Emirates SkyCargo will benefit from a number of advantages including faster processing times for cargo in Dubai.

In order to be certified under the UAE AEO programme, Emirates SkyCargo had to undergo a detailed validation process with Dubai Customs. The validation process lasted for over eight months and the air cargo carrier was evaluated against a number of parameters including records of historical and actual compliance with regulations issued

by UAE Federal Customs Authority and Dubai Customs. Other factors that were considered also included the security of physical infrastructure, protection against tampering or manipulation of cargo consignments

Emirates SkyCargo receives AEO certification. (From L to R) Ahmed Mahboob Musabih, Director Dubai Customs; Mohammad Juma Buossaiba, Director General UAE Federal Customs Authority; James J Dullis, Emirates Cargo Systems Analyst; Henrik Ambak, Emirates Senior Vice PresidentCargo Operations Worldwide; Trevor Howard, Emirates SkyCargo Manager, Standards & Operational Safety

and the traceability of shipment records. Following the certification, Emirates SkyCargo’s compliance to AEO standards will be monitored on a continuous basis by customs authorities.

As a result of the AEO certification, customers of Emirates SkyCargo will be able to enjoy faster processing and customs clearance of cargo in the UAE and other countries with which the UAE has mutual recognition for the AEO programme. This includes exports, imports and cargo that is in transit. Faster customs processing times directly translate into faster shipping and delivery times for customers around the world.

Nabil Sultan, Emirates Divisional Senior Vice President, Cargo said: “Emirates SkyCargo is committed to the highest standards of service delivery in meeting the logistics requirements of our customers. For us, the AEO certification is yet another step to ensure that Emirates SkyCargo and Dubai work together to remain at the forefront of the logistics industry as an effective platform for global logistics.”

Emirates SkyCargo is the world’s largest international cargo airline measured in terms of Freight Tonne Kilometres operating a modern fleet of over 260 widebody aircraft including 14 freighters- 3 Boeing 777-Fs and one Boeing 747-F. The air cargo carrier takes a customer centric approach combining innovation and flexibility to constantly evolve its product and service offerings.

Munich Airport and Lufthansa start testing of humanoid robot in Terminal 2 She is 120 centimeters tall, with sparkling, round eyes and a pleasant voice. Now at Munich Airport,“Josie Pepper”the robot will be answering questions for passengers in Terminal 2. Whether they need directions to their gate or want to stop at a certain restaurant or shop – Josie Pepper will look them in the eyes and give them a prompt answer.

With the rollout of Josie Pepper, Munich Airport and Lufthansa are breaking new ground: It is the first-ever test of a humanoid robot equipped with artificial intelligence at a German airport. For the next few weeks, Josie Pepper will welcome travelers to the non-public area of Terminal 2, which is jointly operated by Munich Airport and Lufthansa.

In her initial deployment, Josie Pepper, who speaks English, will await passengers at the top of the ramp leading to the shuttle connecting the main terminal to the satellite building. This test phase will be used to show whether Josie Pepper is accepted by passengers.

Josie Pepper’s“brain”contains a highperformance processor with a WLAN internet access. This creates a connection to a cloud service where speech is processed, interpreted and linked to the airport data. What sets the system apart: When this robot type speaks, it does not just deliver pre-defined texts. With its ability to learn, it answers each question individually. Just like a“real” brain, the system gets steadily better at combining questions with the relevant information to provide more precise replies.

IBM Watson Internet of Things (IoT) cloudbased, artificial intelligence technologies are behind Josie Pepper’s capabilities. Pepper was developed by the French company SoftBank Robotics. The lady robot was given the name “Josie” by the staff of Munich Airport and Lufthansa when she arrived at the airport.

MARCH 2018 15

COUNTRY REPORT - KUWAIT

Transport development strengthens

Kuwait

Driven by measured governmentbacked investments, despite the downward pressure from oil prices, the Kuwait transportation sector continued to grow in 2016-17. Improving connectivity regionally and globally – via air, land and sea links – is viewed as a state priority and a promising mechanism to drive non-oil economic growth. This Oxford Business Group report talks about the development underway on the country’s road, airport, shipping

Public buses at the Bus Station in Kuwait City

16 MARCH 2018

and logistics infrastructure

COUNTRY REPORT - KUWAIT

I

n support of government objectives, such as enhancing local and regional integration, boosting trade volume and creating new job opportunities, several major infrastructure projects are under way in the country, including the expansion of Kuwait International Airport (KWI) and the construction of the Sheikh Jaber Al Ahmad Al Sabah Causeway. These fall under the KD34.15bn (US$117.7bn) Kuwait Development Plan (KDP) 2015-20 framework, which aims to push through major economic reforms, implement a pipeline of bold projects to empower the private sector, and establish Kuwait as a regional trade and financial centre by 2035.

Several huge projects that have experienced delays in the past, including the Kuwait National Rail Road (KNRR) and the Kuwait Metropolitan Rapid Transit (KMRT) system, are showing signs of planning progress. Furthermore, work is well under way on other projects, including major overhauls of road infrastructure and the first phase of development at Mubarak Al Kabeer Port, which will be one of the largest container ports in the Gulf region when complete. Ultimately, these investments will reshape the transport and logistics sectors in Kuwait and position it as a regional transport centre with excellent logistics infrastructure.

Road infrastructure Kuwait is in the process of developing a network of new roads and highways to resolve congestion issues, enhance traffic capacity, and improve access to universities, hospitals and other main government buildings. These projects are generally tendered, implemented, supervised and paid for by the Ministry of Public Works (MPW), in close collaboration with the Ministry of Interior Traffic Department, the Public Authority for Housing Affairs and Kuwait Municipality, which holds the master plan for growth and development in the city.

Major expressway construction projects under way in the country include the Jamal Abdul Nasser Road Project, the Jahra Road Development Project and the Sheikh Jaber Al Ahmad Al Sabah Causeway, which is one of the largest infrastructure projects under development in the GCC region.

Both the KD242.42m (US$801.9m) Jamal Abdul Nasser Street Project and the KD264.76m (US$875.9m) Jahra Road

Development Project aim to transform and upgrade existing streets that run through the downtown area of Kuwait City. The roads had been unable to adequately accommodate traffic and have been under major renovation since 2010, intended to transform them into motorways with a series of complex bridges and elevated highways.

Both projects are now nearing completion. The Jamal Abdul Nasser Road Project was 78 per cent finished in September 2016 with all planned renovation works – including causeways and turning points – on schedule for completion in 2017, according to the Road Engineering Affairs Sector at the MPW.

Large-Scale Road Scheme Work on the Jahra Road Development Project, one of the world’s largest elevated road schemes, began in September 2010.

The project is located in the western region of Kuwait City and extends from the Jahra Gate to the United Nations Roundabout.

In its original state, the road had been one of the core transport routes running through the heart of the city. To ease the flow of heavy traffic and cut down on congestion in the area, the renovation will increase the number of traffic lanes from the existing two to 12, creating a two-level grand unified motorway that separates

Night view of an Industrial Port in Kuwait

MARCH 2018 17

COUNTRY REPORT - KUWAIT

local service traffic from through traffic. A 4-km section of the new road was opened by the MPW in February 2016.

line is one of three licensed public bus services operating in the country, along with private company Citybus, launched by Kuwait-based Boodai Corporation in 2002, and Kuwait and Gulf Link Transport, an operator that came Sheikh Jaber Causeway on-line in 2005-06.

The KD738.75m (US$2.4bn) Sheikh Jaber Public transportation in Kuwait is not Al Ahmad Al Sabah Causeway, links Kuwait regulated by the government. The three bus City from Shuwaikh Port to the Al Sabiyah companies conduct their own route planning, new town area across Kuwait Bay. operating where there is higher demand The causeway is made up of two discrete for ridership, and employ no common or elements: the Main Link, which is a 27-km specific standardisation of bus types beyond marine bridge structure that spans across the obligation to meet GCC standards. The Kuwait Bay between the capital and the Al limited focus of the country’s three operators Sabiyah area and Doha Link, which crosses on areas of higher ridership demand is the south of Kuwait Bay linking Shuwaikh among the most significant problems with Port with the Doha motorway. the public transport network.

Roughly 71 per cent of the Al Sabiyah “You need coverage in areas of the country link had been completed by early January where returns are poor,”Abdulla Naser, 2017, along with 51 per cent of the Doha executive director for transport affairs at KPTC, link. Construction is reported by the MPW told OBG.“We try to cover as much of Kuwait to be proceeding according to the pre-set as we can in terms of operations, but there is timeframe, with a scheduled opening in always a push to concentrate on November 2018. areas with higher demand and The highway is poised Kuwait is in higher ridership to generate a to be one of the world’s higher return. We have updated largest sea bridges, the process studies to cover the whole facilitating the planned country with networks of buses, development of the of developing but it is currently too costly to Madinat Al Hareer (Silk a network of implement. Projected revenues City) urban area in Al would not cover the expenditure.

Sabiyah. It will reduce new roads This is a problem for public the journey to the capital and highways transportation in the country.” from 104 km to 36 km, Only an estimated 5-6 per and from 90 to 30 minutes, to resolve cent of the population uses according to the MPW. congestion issues, public transport. In 2015 the The causeway also three operators in the country supports commercial enhance traffic sold approximately 90m tickets traffic and a growing capacity, and between them, down from transportation network by roughly 100m the year before and connecting to Al Sabiyah improve access 127m in 1989, when KPTC was highway, which leads to to universities, the only operator in the country the Mubarak Al Kabeer the population of Kuwait was Port development. hospitals and other and roughly half what it is today.

The MPW is the The decrease in ridership owner of the project, main government over time is the result of various with South Korea’s buildings factors. Both cars and petrol in Hyundai Engineering Kuwait remain very affordable, and Construction and and the country has among the world’s Kuwait’s Combined Group as the main highest per capita vehicle ownership rates. contractors.

In addition, bus is often perceived as an overcrowded mode of transport that only Public Transportation services certain higher-volume routes.

Kuwait first began promoting public Fleet size and age also varies widely transportation in September 1962 with the between Kuwait’s three licensed operators, establishment of Kuwait Public Transportation as do fleet renewal strategies. Citybus Company (KPTC). Today the KPTC national

18 MARCH 2018

has recently introduced approximately 50 Chinese-made buses with Euro 3 engines, and KGL is on the verge of introducing roughly three times that number. National line KPTC operates 460 Daewoo and Mercedes buses that range in age between five and 10 years old. With a fleet lifespan of seven years, the company has developed a preliminary strategy for the procurement of new vehicles and automated operating systems. By early 2017 KPTC had submitted a budget review and was awaiting direction on fleet renewal from the company’s co-owner, the Kuwait Investment Authority, the country’s sovereign wealth fund. Procurement is unlikely to move forward before 2018.

Challenges in launching a procurement programme at the national bus line include internal financing issues, and uncertainty over the yet-to-be-developed operating requirements of the recently established Transport Authority.

Currently in the process of developing a governance structure and appointing an executive board, the Public Authority for Roads Transportation (PART) is expected to provide increased clarity in the sector over time. Germany-based management consultancy Roland Berger is assisting with development of the authority’s strategic plan, and no major regulatory developments are anticipated before 2018.

Once operational, PART will function as an independent authority similar to the Civil Aviation Authority and the Port Authority, providing regulatory oversight over land transportation, including: public and private licensing; inspection; registration; and the future construction of highways, roads, the metro and the railway.

Rapid Transit System To address the growing congestion on the country’s roads, Kuwait is in early-stage planning for development of the KMRT. At a preliminary estimated cost of KD2.1bn (US$6.9bn), the 160 km-long, 68-station KMRT development is intended to support an integrated rapid transit network and increase public transport mobility in the metropolitan area of Kuwait City.

The project is scheduled to be developed across four infrastructure packages and a systems and rolling stock contract, all of which will be structured as private-public partnerships (PPPs).

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Plans for a metro were first announced in 2006. The Supreme Council for Planning and Development conducted a prequalification for the project in 2010 and expressions of interest were invited in 2012, but the project was subsequently put on hold. New advisers for the planned Kuwait City Metro were appointed in 2016, and a feasibility study prepared by international consultants has since been approved by the state’s relevant bodies.

In late December 2016 PART disclosed that initial studies regarding the metro project had been concluded and noted that a tender for consulting firms to oversee the evaluation of technical offers would be issued in the first quarter of 2017. Senior sources have suggested that the project is likely to be delayed beyond the projected 2018 start date, which would likely slow progress on the National Rail Road connection to the GCC network as a result.

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KNRR The KNRR network is among the country’s key infrastructure development initiatives, intended to link KWI, seaports and other GCC countries with 511 km of two-way tracks.

The vision for the network consists of a north-south line and an east-west line. The first phase will be the north-south route from Al Nuwaisib on the Saudi border to the freight depot, with a branch to a passenger station at Kuwait City, where interchange will eventually be provided with the metro’s Red Line. The north-south line would subsequently be extended to the Iraqi border.

Government objectives for the project include enhancing Kuwait’s regional integration, boosting trade volume and creating new job opportunities.

“We know it’s going to happen. We know we need to provide another means of transportation,”Talal Al Othman, assistant

undersecretary and head of minister’s consultants office at the MPW, told OBG.“The optimistic plan is to link railroad tracks as far north as Basra. If we can link these, that means we have an alternative to trucking everything to Iraq, and also to Saudi Arabia and Oman.”

The KD3bn (US$10bn) project will be executed in build-operate-transfer agreements with the private sector, alongside the Kuwait Authority for Partnership Projects (KAPP), formerly the Partnership Technical Bureau, acting as government lead on service procurement. The six packages will ultimately compromise: design; construction; funding and major maintenance of all infrastructure; a routes and railway system; terminals in Kuwait; and operating the cargo train company.

Progress Report The long-distance railway system was originally scheduled for completion in 2018

COUNTRY REPORT - KUWAIT

Kuwait

but, like other major projects in Kuwait, has experienced delays. The one section of the railway that has been approved and was under way in early 2017 is the Mubarak Al Kabeer Port track.

Since late 2016, KAPP has been busy contracting technical, legal and financial project advisors for the project, and in March 2017 extended the previously announced deadline of the first quarter of 2017, to receive further expressions of interest from companies wishing to take part in the KNRR. A tender for public bidding is currently scheduled for the second half of 2017, with requests for quotations planned in the third quarter and requests for proposals in the fourth quarter. The tender is reportedly being issued to show Kuwait’s commitment to the broader GCC rail project, designed to link all of the Gulf states via a 2100-km rail network.

Future progress on the national project

is closely connected to progress on this international initiative, which in turn is likely to depend on the ability of each state to meet investment goals in an environment of lower oil revenues.

At a meeting of GCC transport ministers in 2016, the original 2018 launch date for the Gulf rail initiative was pushed back three years to 2021.

KWI Expansion Programme To alleviate growing congestion at Kuwait’s main airport and support the goals outlined in the KDP 2015-20, the government is carrying out a comprehensive expansion strategy aimed at both increasing passenger capacity and receiving larger airplanes at KWI. Expediting development of the airport is necessary to address overcapacity issues tied to rising passenger and airline traffic. Official statistics show that total passenger traffic at

KWI reached 10.8m in 2016, up from 4.8m in 2004 and well above total capacity of 7m, according to the Kuwait Central Statistical Bureau. Scheduled aircraft movements over the same period rose from 37,166 to 96,000.

A major driver for the growth in traffic has been the Directorate General of Civil Aviation’s (DGCA’s) Open Skies policy, introduced in 2006 and aimed at liberalising the bilateral arrangements governing air traffic operations with other countries.

The policy is in support of government development strategies for Kuwait, and has prompted several new and existing passenger and cargo carriers to increase flights to and from the country.

The centrepiece of the planned expansion at KWI is a KD1.3bn (US$4.2bn), 708,000-sqmetre passenger terminal that, when complete, will make KWI one of the largest airports in the world.

Terminal 2 has a trefoil design plan, comprising three symmetrical wings of departure gates designed to accommodate all types of aircraft, while increasing the total number of gates at the airport to 51 from the current 21. Terminal 2 will boost annual passenger capacity from 7m in 2016 to 25m upon completion, with room to expand capacity to 50m passengers and 6m tonnes of cargo per year.

Plans to increase the airport’s capacity were first drawn up in 2010, with designs for the project unveiled in October 2011.

Political gridlock postponed progress before Limak Group of Turkey and its Kuwaiti agent partner, Kharafi National, were awarded the contract in 2016.

Under the terms of the contract, Limak was given six years to complete the project, with an additional two-year maintenance contract. This timeline was shortened in early 2017, with Abdulrahman Al Mutawa, the minister of public works, confirming a fouryear schedule to completion.

Work on the passenger terminal is reportedly progressing as scheduled since construction began in December 2016.

The project is managed by the MPW, in cooperation with the DGCA.

Jazeera Terminal In addition to the Terminal 2 development, a second 55,000-sq-metre Support Terminal is being built at KWI and is projected to increase capacity by 5m passengers per year. The terminal, a joint Turkish-Kuwaiti

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COUNTRY REPORT - KUWAIT

KD52.89m (US$173.2m) project, will add 14 gates for departing planes and 10 gates for arrivals, and is expected to be operational in the first quarter of 2018, according to the DGCA. Kuwait-based Gulf Consult will manage operations on behalf of the DGCA alongside the main contractor and subcontractors pursuant to the terms of the build and operate contract.

The smallest terminal under development in the KWI expansion plan is being built by low-cost Kuwaiti airline Jazeera Airways.

The carrier’s plans to build a terminal and ease congestion at KWI were put on hold in 2014, and only in July 2016 did the Kuwait Council of Ministers grant approval for the land needed to build a dedicated terminal as well as parking lots at KWI. The terminal will be built at a cost of KD14m (US$46.3m) and contribute capacity of around 2m passengers per year for Jazeera Airways.

on order. All 10 new planes are due to be in service by the end of the third quarter of 2017, initially serving existing long-haul destinations such as London, New York, Paris and Bangkok.

The aircraft are the first of 35 planes on order that the national carrier believes will make its commercial fleet the youngest in the world by 2021. Other new additions include 10 Airbus A350s and 15 Airbus A320neos, scheduled to begin delivery in 2019.

Maritime Segment

Kuwait has two modern commercial ports at Shuwaikh and Shuaiba, which handle the bulk of its merchandise cargo traffic. A third port for small ships is situated near Shuaiba at Ras Isheirej, and three industrial ports at Mina Ahmadi, Mina Abdullah and Mina Al Zour handle oil industry exports near the country’s refineries.

Kuwait’s secondary commercial port at Shuaiba is located 45 km south of Kuwait City and made up of 20 commercial and Kuwait Airways Expansion container berths, as well as a crude oil export Kuwait’s national carrier, Kuwait Airways, pier operated by Kuwait National Petroleum is among the oldest airlines in the Gulf Company. The Shuaiba container terminal region, and the airline is currently in the is already considered one of early stages of a five-year the more modern container transformation strategy, The six packages terminals in the Gulf, and the which was launched in Supreme Council for Planning September 2016. From a will ultimately and Development was reported service perspective, the compromise: design; in 2017 to have recently carrier’s strategy is focused tendered a project for very on increasing flight construction; early design stage consultants frequency and adding funding and major for a new development and routes to the airline’s extension programme planned network, which expanded maintenance of all at the port. to 36 destinations in The most significant recent 2016, with 26.1 per cent infrastructure; a activity in Kuwaiti maritime more passengers handled routes and railway transportation has been the year-on-year. In addition, delayed launch of a new the airline has turned all system; terminals US$16bn container port project but one of its routes into in Kuwait; and at Mubarak Al Kabeer. The port direct, non-stop flights in an effort to reduce flight operating the cargo is located on the east coast of uninhabited Boubyan Island and connection times for train company and offers road links to Kuwait, its passengers. In support Iraq and Saudi Arabia. Upon of the new developments completion, Kuwaiti authorities envision that at KWI, Kuwait Airways will play a lead the port will serve as the primary container port operating role in Terminal 2, carrying a and main entrance gateway to the northern significant percentage of the passengers travelling through the airport. This figure stood Gulf region and hinterland countries.

A contract for the design and construction at 32 per cent in 2016, up substantially from 11 of the first phase was awarded in 2010 per cent the previous year. to South Korean contractor Hyundai The national carrier has expanded its fleet Engineering & Construction, but progress and by April 2017 had taken delivery of six out of 10 extended-range Boeing 777-300ER aircraft was significantly delayed by sovereignty

22 MARCH 2018

disputes with neighbouring Arab countries.

Work is now well under way, with the first phase expected to deliver four container berths at a combined capacity of 1.8m twenty-foot equivalent units (TEUs), as well as a small boat harbour for the accommodation of pilot boats, tugs and other small craft. On completion of the third and final stage, the port is expected to comprise 18 operational container berths with a combined capacity of 3.6m TEUs per year.

Road and rail bridges providing access across Al Sabiyah Creek, which separates Boubyan Island from the Kuwaiti mainland, have been completed, and preliminary work is under way on construction of a railway track to eventually connect the port to the KNRR and the proposed railway.

Shuwaikh is currently the country’s main commercial port, and was designated in June 2016 to serve as a launch pad for the implementation of GCC Customs Union procedures. Congestion and delays at the port in the past have resulted in operational constraints and higher costs for affected carriers.

COUNTRY REPORT - KUWAIT

“As ship sizes increase to meet growing demand, while bringing costs down at the same time, infrastructure must be expanded to keep pace,” Bader Al Khashti, managing director of Kuwait Oil Tanker Company, told OBG.“This has driven the expansions of ports and shipping lanes globally, with the Suez Canal expansion being a significant improvement in terms of speed of transit, though the depth remains an issue for the largest ships when at full capacity.”

Logistics The importance of foreign trade to Kuwait’s economy, and the opportunity to capitalise on the country’s central location in the Gulf, make the logistics sector a strategic priority in Kuwait’s latest master plan, which seeks to develop the country into a regional transport centre with excellent multi-modal logistics infrastructure.

Logistics services in the country are expected to benefit from the major infrastructure projects initiated as part of the KDP. These key projects include port upgrades, the new Mubarak Al Kabeer Port

development, airport infrastructure upgrades and planned developments on the new national railway.

The growing population of the country, and increasing import and export volumes, underscore the need for investment in warehousing services in particular. Private sector logistics service providers control a considerable part of the supply of inland warehousing space in Kuwait, and reported continued strain on limited facilities in 2016.

Government efforts to increase the supply of new warehousing facilities are expected to gradually expand capacity, while leaving sizeable market space in warehousing and warehousing related value-added services for local and international investors.

For logistics service companies operating in Kuwait, the country is well positioned but lags behind regional logistics hubs like Dubai, where system and process development is focused on improving quality of service and transitioning legacy systems to e-services. By contrast, originals and hardcopies are still required for many Customs transactions in Kuwait.

Outlook Recent developments on delayed transportation infrastructure projects in Kuwait are promising. Though the country has been forced to prioritise certain projects in light of lower oil prices, important development programmes are making progress to alleviate congestion issues on the capital’s roads and at KWI. The economic downturn has also provided an opportunity for the government to rationalise regulation and increase private sector engagement through the PPP programme and privatisation laws.

Though more remains to be done around foreign ownership and regulation, particularly in regard to land transportation, the government has shown every indication of following through with pledged commitments to the country’s strategic transport infrastructure. The impact of cost containment imperatives will be reflected in increased opportunities in other projects for private sector participation. www.oxfordbusinessgroup.com

MARCH 2018 23

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COVER

How does your cash flow impact your

?

supply chain Every business, including manufacturing operations, rely on cash flow to meet important needs like fueling growth and keeping the manufacturing process rolling forward.

Unfortunately, it’s possible for a growing, healthy-looking business to be cash poor. Adam Robinson, Marketing Manager at Cerasis, shares this very insightful article

B

eing cash poor can be disastrous for manufacturers that need to purchase raw materials to produce their products. No raw materials equals no manufactured goods equals no profits.

Every business needs working capital to function, but it’s not as simple as determining whether or not you have cash in the bank at the end of the month.

Your accountant will tell you that working capital is your Current Assets minus your Current Liabilities. To fully understand the formula, Current Assets include the cash

MARCH 2018 25

you have in the bank, your current Accounts Receivable and your inventory. Your Current Liabilities can include your current Accounts Payable and any long-term payables (think small business loans, lines of credit, etc.) your business may have. Your accountant can help you determine what to include in your list of assets and liabilities.

If you divide the value of your Current Liabilities into your Current Assets, you’ll

26 MARCH 2018

come up with a ratio of assets to liabilities.

This is an important formula to have a handle on to avoid negatively impacting your supply chain finances. The goal should be to shoot for a ratio of twice as many assets as liabilities (or a 2:1 ratio), but anything below 1:1 should be a red flag that you have negative working capital and the result will likely be a negative impact on your supply chain finances.

Supply chain finances can be a root cause of your problems RT Custer, the owner and co-founder of Vortic Watch Company, describes the challenge of managing his supply chain this way: “To keep my cost of goods at a manageable level, I need to order hundreds of parts. I’m then restoring hundreds of components of the watches, which is very, very slow. The lead times for all my components are very

COVER

long. Managing my whole supply chain is complicated and the root cause of my cash flow challenges.”

For Custer to successfully manage his working capital needs to accommodate his longer lead times (which can be six to nine months), in addition to his manufacturing processes, he has to pay close attention to his new product development plans and how he manages his inventory of raw materials. As

Factoring your accounts receivable is a popular way for manufacturers in the textile industry (for example) to mitigate cash flow gaps. What’s more, there are several factors that have put the process entirely online

a result, he’s often developing new products while the current products are in production.

“We’ve had so many ideas on how to make the process and products better that sometimes when the new idea gets implemented, and you start making money from it, it’s almost six to nine months later,” he says.“We sold Version 1 of our product for almost 18 months, even though we started developing Version 2 within our first six

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months. It took us over a year to develop.”

This is something many manufacturers face, but can be a big challenge for smaller manufacturers because it directly impacts their cash flow and their supply chain requirements.

Proactively attacking potential cash flow challenges The next step is to take action to minimize and mitigate the impact a cash crunch can have on your supply chain. Here are a few short- and long-term solutions you might consider: Negotiate terms with your suppliers. As a good customer, if you are current with your suppliers, you are likely in the driver’s seat when negotiating. Extending 30-day terms to 60 or 90 days might be a more preferable option for them when compared to the risk of losing your business altogether to someone else who will. And it might make all the difference when managing your cash flow.

28 MARCH 2018

Offer prompt payment discount terms to your customers. To encourage your customers to pay their invoices today rather than wait, you can offer a discount to those customers who pay on receipt or within 10 days.

Although you might not be able to get all of your customers to take advantage of the discount, there will be those that do—which can help your cash flow.

Look into factoring. Factoring your accounts receivable is a popular way for manufacturers in the textile industry (for example) to mitigate cash flow gaps. What’s more, there are several factors that have put the process entirely online, making it easier for companies to factor their invoices—and easier for their customers, too.

Consider a small business loan. Shortterm loan options available online generally make it simple to apply, offer a quick response, and have the money in your account very quickly—sometimes within a couple of days. You might also consider a

line of credit to help minimize the impact of temporary cash flow gaps.

Don’t forget, it’s important to consider the impact these techniques could have on your Working Capital Ratio. Anytime you borrow, whether it’s payment terms or a small business loan, it should be folded into your ratio. This is something else your accountant can help you with. However, if you can get your customers who pay by invoice to pay early, it can positively impact that ratio.

Many small business owners aren’t excited about the accounting process, but having an understanding of working capital, cash flow, and the impact it can have on your supply chain can make the difference between a highly successful business and one that struggles. Fortunately, there are resources (like full- and parttime accounting professionals) to help you successfully manage your cash flow and build a thriving business.

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Turkish Cargo is going from strength to strength each passing year. What are their strategies? Consistent capacity increases coupled with service improvements.

Munawar Shariff chatted with Turhan Ozen, Chief Cargo Officer, Turkish Cargo, to get a clearer picture of it confident business strategy

Turkish Cargo air cargo’s confident player

T

urkish Cargo had a successful 2017 in the GCC as well as other markets. Turhan Ozen, Chief Cargo Officer, Turkish Cargo says,“The end of 2017 was so busy that 2018 January was also much better than the seasonal trend of the end of last year.”The GCC region is an import oriented market which is geographically in the middle of the east and the west. This makes the air cargo industry in this region challenging yet rewarding. Ozen continues,“Providing the service is of utmost importance but improving communications and developing close relations with clients is much more important in this region. We have been growing steadily with long-term planning.

This is why we intend to keep our pace of growth in the future by increasing capacity as well as improving our service.”

The main challenge for any cargo carrier operating in the GCC and wider MENA area are being on the same business perimetres as some of the world`s most professional

30 MARCH 2018

AIR CARGO - TURKISH CARGO

The GCC region is an import oriented market which is geographically in the middle of the east and the west. This makes the air cargo industry in this region challenging yet rewarding

MARCH 2018 31

AIR CARGO - TURKISH CARGO

and aggressive airline companies with each comprising huge cargo capacities. Says Ozen,“Twenty per cent of the cargo movement out of GCC is destined for the GCC, the movement within the region is harder for us to grab. As Turkish Cargo we are flying to 10 stations with freighters along with widebody operations throughout the GCC.” When it comes to expanding their share of the cargo pie, Ozen says they are steadily increasing that year-on-year. According to the WorldACD Market Data report dated November 2017, Turkish Cargo is the second biggest cargo carrier in UAE and third in the Gulf Area. Ozen also adds,“Africa is the developing and promising market that is also in our radar and we are prominently focussing on.”

The carrier recently added two brand new 777 freighters to their flee and an additional three 777 freighters will be acquired this year.

Ozen adds,“We have three boeing 747 on wetlease, nine Airbus 330, three Airbus 310 on wetlease and an Airbus 300 on wetlease.”

Disruptors ot traditional trade is a prominent topic with all cargo carriers. Ozen says,“E-commerce and express shipments are picking

32 MARCH 2018

up pretty fast, special cargoes like pharmaceuticals, live animals and automobiles are also shining products of the air cargo industry.”

“There are real life disruptors like upgraded railroads, specialised road feeder services, hybrid solutions along with projects like drones. And we being a prominent part of the air cargo industry are closely monitoring them all and trying to come up with solutions to stay on the cutting edge for transportation.”

“We are serving more countries than any other airline, 120 countries and more than 300 destinations. This naturally makes Turkish Cargo the best option for online shopping deliveries and shorter delivery times because we fly directly to the destinations for which our other carriers would require road feeder connections.”

E-commerce is so considerable (especially in days like black Friday, Valentine`s Day etc) that even if retail giants such as Amazon entered the cargo business, there would still be more than enough cargo for them as well as other airlines to transport. So everyone is welcome to come and help develop the industry,” concludes Ozen confidently.

AIR CARGO - TURKISH CARGO

MARCH 2018 33

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ENHANCING THE BUSINESS OF LOGISTICS

CASH

ENHANCING THE BUSINESS OF LOGISTICS

ENHANCING THE BUSINESS OF LOGISTICS

OIL AND GAS Diversification is key

AND ITS IMPACT ON YOUR SUPPLY CHAIN

2018’S TECHNOLOGY TRENDS

For the air freight industry

UD Trucks

The region’s sturdiest trucking partner

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Improving connectivity

The value chain

Facilitating business

Roambee

Of precious stones

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Real time solutions

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Sustainable aviation fuel

Turkish Cargo

Goals set for 2025

Genavco’s accolade Celebrating 50 years

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Future ready

10 years of ESEA

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SUPPLY CHAIN FINANCE

Finance and the supply chain Tawreeq Holdings Group CEO, Haitham Al Refaie, spoke with Munawar Shariff and shared his thoughts on the role of factoring in the regional supply chain operation. Here are excerpts from the interview Give us an overview of the current supply chain ďŹ nance market in the region you operate.

Tawreeq Holdings, a group based out of UAE with entities in Luxembourg and Morocco, is a pioneer in offering supply chain finance (SCF) solutions in the MENA region and the first to offer comprehensive Sharia-compliant and technology enabled programs. Tawreeq started its operations in 2014, when SCF in the region was a very niche market, with little development or knowledge. Since then and especially amid dynamic macroeconomic conditions in the region tightening liquidity in the market and strengthening disruptive forces from Fintechs we have gradually seen the rise of interest in SCF and what it can offer to serve corporates, SMEs and financial institutions alike. Tawreeq was a key industry driver and a disruptive force in raising awareness around SCF and the importance of working capital solutions in supporting sustainable business health in the region.

Tell us about the solutions Tawreeq Holdings provides to SMEs in the region.

Tawreeq strongly believes that supply chain finance is a SME friendly solution that is tailored to offer SME suppliers access to liquidity at competitive terms. Tawreeq was capable of structuring many SME friendly solutions, most prominently being InvoiSME our latest solution offered through our subsidiary, Dar Al Tawreeq. InvoiSME is a comprehensive receivables finance solution, known as factoring, which offers SME suppliers an efficient and convenient way to access working capital liquidity through the sale of their approved invoices. The program is offered through the InvoiSME platform where SMEs

MARCH 2018 35

SUPPLY CHAIN FINANCE

36 MARCH 2018

SUPPLY CHAIN FINANCE

efficiently register online and are on-boarded quickly once all their documents are provided and assessed for the suitable solution.

How has the industry changed in the past few years? Where do you see the industry heading to moving forward in the coming years?

The industry remains in its infancy when compared to the development reached in the west, especially Europe and America. The market has expanded strongly in Asia and now is very promising in MENA and Africa. SCF offers a very efficient and convenient solution to channel working capital liquidity to SMEs in particular, serving the region’s economies quite well. Also, it is very prominent in serving trade, where the region is a growing global hub, especially the UAE. Through dedicated platforms and structured programs, invoices of importers and exporters are settled efficiently and at very competitive rates, minimising the lengthy and expensive processes usually required with traditional documentation trade finance products.

How is technology a part of your business solutions?

In general, the SCF industry has flourished globally in the wake of the financial crisis in the past decade with the power of technology. As the name entails, Supply chain finance is a form of short-term finance triggered by events of the supply chain. Since supply chains are global, specialised platforms were very convenient and efficient in cutting down the time gap and extensive efforts of invoicing and payment that is connected to this form of solutions. Tawreeq offers its programs through dedicated platforms, the first of its kind offered with Shariacompliant process flows to match the requirements of the programs.

Tell us more about Open Account Trade.

Open account trade is generally used to refer to the nature of the transactions between buyers and sellers that conclude without the use of third party financial guarantees and goods/services and are usually delivered before due date of the payment that is typically in 30 days, up to 90 days. According to the ICC, most trade today is conducted on open account terms, and therefore enabled through techniques of Supply chain finance.

What are challenges to business?

Businesses are facing a more dynamic and changing future with high uncertainty. Technology and the need to innovate is certainly a constant pressure on any business in any industry, amid high macroeconomic uncertainty in the region and rising risk of resource uncertainty; businesses are feeling their industries change dynamically impacted by the fourth industrial revolution. If we highlight 3D printing, blockchain, enhanced logistics, drone-based delivery and other innovations, they are not only reshaping industries and forcing conversions, they are truly disrupting and transforming the supply chains itself and hence putting more pressure on businesses and their need to perform better. However, amid all this uncertainty, the one certainty that businesses can count on is the realisation that liquidity is of the essence and their working capital is the most important asset.

Businesses do go out of business but not for any of the reasons above; it eventually comes down to insolvency which is mainly why we see that SCF is only going to grow and expand exponentially in the coming years across the region as businesses change and become more agile and cost efficient in the post-oil era.

MARCH 2018 37

AVIATION

Sustainable aviation fuel flights by 2025 IATA has set an aim to fly a billion passengers on flights powered by fuel which is a mix of jet fuel and sustainable aviation fuel by the year 2025

T

he International Air transport Association (IATA) set out an aim for one billion passengers to fly on flights powered by a mix of jet fuel and sustainable aviation fuel (SAF) by 2025. This aspiration was identified on the 10th anniversary of the first flight to blend sustainable aviation fuel and ordinary jet fuel.

On 24 February 2008, a Virgin Atlantic Boeing 747 flew from London to Amsterdam with sustainable aviation fuel in one of its engines. The flight demonstrated the viability

38 MARCH 2018

of drop-in biofuels, which can be blended with traditional jet fuel, using existing airport infrastructure. A flight completely powered by sustainable fuel has the potential to reduce the carbon emissions of that flight by up to 80 per cent.

“The momentum for sustainable aviation fuels is now unstoppable.

From one flight in 2008, we passed the threshold of 100,000 flights in 2017, and we expect to hit one million flights during 2020. But that is still just a drop in the ocean compared to what we want

to achieve. We want 1 billion passengers to have flown on a SAFblend flight by 2025. That won’t be easy to achieve. We need governments to set a framework to incentivise production of SAF and ensure it is as attractive to produce as automotive biofuels,” said Alexandre de Juniac, IATA’s Director General and CEO. The push to increase uptake of SAF is being driven by the airline industry’s commitment to achieve carbon-neutral growth from 2020 and to cut net carbon

AVIATION

emissions by 50 per cent compared to 2005. A number of airlines, including Cathay Pacific, FedEx Express, JetBlue, Lufthansa, Qantas, and United, have made significant investments by forwardpurchasing 1.5 billion gallons of SAF. Airports in Oslo, Stockholm, Brisbane and Los Angeles are already mixing SAF with the general fuel supply. On the present uptake trajectory it is anticipated that half a billion passengers will have flown on a SAF-blend powered flight by 2025. But if governments, through effective policy,

help the sustainable fuel industry to scaleup its production, it is possible that one billion passengers could experience an SAF flight by 2025. The steps needed to deliver this include: Allowing SAF to compete with automotive biofuels through equivalent or magnified incentives Loan guarantees and capital grants for production facilities Supporting SAF demonstration plants and supply chain research and development Harmonised transport and energy

policies, coordinated with the involvement of agriculture and military departments.

Acknowledging that some sources of biofuels for land transport have been criticized for their environmental credentials, de Juniac emphasized strongly the determination of the industry to only use truly sustainable sources for its alternative fuels. “The airline industry is clear, united and adamant that we will never use a sustainable fuel that upsets the ecological balance of the planet or depletes its natural resources,� he said.

MARCH 2018 39

GUEST COLUMN

Don’t let your

supply chain be an afterthought Jeremy Murchland, Vice President, Business Development, ALOM was at the annual Consumer Electronics Show in Las Vegas recently and wondered about the supply chains of the many startup companies at the event. He writes about how an effective supply chain or lack of it could mean success or failure

T

he annual Consumer Electronics Show (CES) in Las Vegas came to a close just about a week ago. Unless you only go to CES to walk the showroom floor, it’s impossible to see everything; however, thanks to the internet and social media you can easily find a fair share of recaps,“top product”articles, opinion pieces, and posts with the hashtag #CES2018.

As a supply chain professional, for each new product that sparked my imagination, my mind immediately tries to visualise the supply chain required for these products to make it to market and be successful.

40 MARCH 2018

This year’s show was dominated by buzzwords like artificial intelligence, augmented reality, robotics, self-driving vehicles, and the Internet of Things (IoT). At Eureka Park alone, there were over 800 startups from all around the world. Many of these start-ups have some very innovative products and services, but yet so many fail to achieve success. In fact, a study from CB Insights suggest 90 per cent of start-ups fail in the first few years. Why? A simple Google search will turn up many articles and blog posts on the subject, but this one from Entrepreneur Magazine summarises seven of them:

1.

2.

3.

4.

5.

6.

7.

Poor cash flow management Too much pride No market need Making the wrong hires Unwillingness to pivot Operational inefficiencies Poor corporate culture Interwoven into several of the above, I would further suggest that poor supply chain performance is a key contributing factor to the failure of many companies.

In fact, did you know that 79 per cent of companies with a high performing supply chain achieve revenue growth greater

GUEST COLUMN

than the average? (Source: http://www. logisticsbureau.com/7-reasons-why-thesupply-chain-matters-to-business-success/) The reality is that poor supply chain performance will contribute to cash flow management issues and operational inefficiencies which both can lead to customer losses and poor corporate culture. And, unfortunately, many startups, early stage growth companies, and even some more mature ones moving into new products and channels don’t know where to start. That is because they are initially hyper-focused on product development and innovation. They are

lacking in experience and knowledge to set an appropriate end-to-end supply chain strategy, design an optimal and scalable network that is going to support future growth, implement the tools and processes that help effectively manage working capital, and drive a high level of supplier performance.

So, what is the solution? Go out and spend millions of dollars working with high dollar consulting firms, implement expensive tools, hire a chief supply chain officer from a Fortune 50 company, and proceed to have other, different cash flow issues? Yes, that’s one option.

Or, there’s another. Work with a proven supply

chain solutions company with whom you can collaborate to help design and manage your end-to-end supply chain needs from sourcing and procurement to channel distribution and fulfillment to reverse logistics and repair.

Supply chain management cannot be an afterthought, and whether you are making your way up the growth curve with the latest technology or launching a new category of products into completely new markets, make sure that your supply chain is an integral part of your business strategy and is prepared to support future business growth. www.alom.com

MARCH 2018 41

INNOVATION

UAE’s first Islamic startup incubator

DAFZA launches Goodforce Labs, the first Islamic and global social impact themed startup incubator.

This initiative fell in line with UAE Innovation Month celebration last month

D

ubai Airport Freezone Authority (DAFZA) announced the launch of Goodforce Labs, an innovative startup incubator focused on transforming ethical startups in the fields of Islamic economy and Halal industries into global success stories. The incubator will work to revitalise the Islamic ethical economy utilizing a deep venture building platform. This will be achieved by selecting a group of startups and small and medium enterprises and support them towards a USD 50 million in annual revenues and measurable social impact.

42 MARCH 2018

The new incubator was launched with support from DAFZA, Dubai Islamic Economy Development Centre, which is responsible for bolstering Dubai’s position as a world capital of Islamic economy; and Technolera, a leader in building partnerships and drawing capitals for startups, a global organisation dedicated to enhancing ethical practice in business.

The Goodforce Labs was launched in a special event attended by Nasser Al Madani, DAFZA’s Assistant Director General; Amna Lootah, Assistant Director General – Finance, Commercial & Customer relations Division

Foster of DAFZA Innovation & Future Unit; Saeed Kharbash, Deputy CEO, Dubai Islamic Economy Development Center; and Rafi-uddin Shikoh, Director of Goodforce Labs and CEO and Managing Director of DinarStandard, along with a group of entrepreneurs, Islamic economy experts, and investors. This launch was in conjunction with UAE Innovation Month.

The incubator seeks to help startups and corporate intrapreneurs in starting, managing and developing their businesses into global social impact driven companies. Goodforce Labs also provides services for companies seeking to start and develop their businesses, including design, marketing, operations management and providing the latest technologies, all in order to achieve the goals of financial growth and social impact.

More than 400 startups have focused on the ethical Islamic Lifestyle Economy proposition that was launched five years ago. Since then, an ecosystem of more than

2,500 companies has been established within this field. Most Islamic economy startups, which are part of this wider ethical market, face many problems and struggle to grow and survive, with the absence of growth in income being chief among the difficulties and challenges facing them.

Commenting on the event, Nasser Al Madani, Assistant Director General of DAFZA, said: “Hosting Goodforce Labs confirms our pivotal role as an essential and active partner in bolstering Dubai’s position as a capital of Islamic economy and enhancing its position as a global hub and a reference point for best criteria and innovations in all its sectors. This incubator will be pivotal in supporting Islamic industries, developing the Halal sector, and spreading the Islamic lifestyle which encompasses culture, arts, and family tourism around the world.” Meanwhile, Amna Lootah, Assistant Director General – Finance, Commercial & Customer relations Division

Goodforce Labs is an innovative startup incubator focused on transforming ethical startups in the fields of Islamic economy and Halal industries into global success stories Foster of DAFZA Innovation & Future Unit, added:“This initiative enhances the goals of DAFZA’s strategy for Islamic economy, which is in line with the ‘Dubai, Capital of Islamic Economy’ strategy, as it seeks to develop the various sectors of its economy to achieve its potentials and support the economic diversification policy of the UAE, in addition to creating an environment that encourages innovation, sustainable investment, and

true development, in order to support the economic principles in the Holy Quran and the Sunnah which govern Islamic economy.”

For his part, Rafi-uddin Shikoh, Director of Goodforce Labs and CEO and Managing Director of DinarStandard, said: “We at Goodforce Labs believe that the Islamic economy’s vision and ultimate purpose aligns with the growing global trend on social impact investment. According to Global Impact Investing Network (GIIN), There were US $22 billion invested in impact investing assets, including early stage startups growing 20 per cent in 2017.

Very little of such investments has occurred in the MENA region. With this context we are introducing a first of its kind incubator with a foundry model that takes a hands on sustained partnership with select startups while focused on global social impact.

We have to thank our strategic partners, mainly DAFZA and Dubai Islamic Economy Development Center, which provide full support and the necessary expertise in the

MARCH 2018 43

INNOVATION

domain of investment and in developing Islamic economy in the region in the world, which boost our confidence and enables us to achieve our goals.”

Abdulla Mohammed Al Awar, CEO of Dubai Islamic Economy Development Centre, said:“The Goodforce Labs initiative complements our strategic efforts in supporting small and medium-sized enterprises (SMEs) and emerging companies with a view to leveraging the growth potential of investments in the Most Islamic Islamic economy. We economy startups, believe SMEs play a pivotal role in stimulating which are part of the economy in general, this wider ethical and their growth is an indicator of Dubai’s and market, face many the wider UAE’s socioproblems and economic development in the post-oil era.” struggle to grow He added: “The success of Islamic economy stems and survive, with from its capacity to attract the absence of emerging companies and entrepreneurs that growth in income specialize in responsible being chief among production, knowledge, science and modern the difficulties technologies. Their and challenges prosperity reflects positively on the Islamic facing them lifestyle sector, drives sustainable development and helps accelerate Dubai’s journey to become the capital of Islamic economy.”

The work of Goodforce Labs covers an assortment of active global ethical economy sectors, mainly from food, finance, education and lifestyle sectors. The incubator, which is the first of its kind in the region and the their capital, and improve productivity, world, will work to overcome obstacles facing including: Growmada, an e-platform startups, allowing them to grow and expand for selling handicrafts from developing in international markets, transforming Islamic countries; Waqf 2.0, an cloud-based platform ethical economy sectors into global sectors for managing Awqaf; Zileej, a company that reach ethical and Islamic markets and specializing in disciplined entertainment are governed by justice, transparency, and products; Rabia Z, which designs modest credibility of products and services. The higher women’s clothing; iWealth, a digital tool for goal of this initiative is enhancing Islamic financial literacy for the youth; and Smart ethical economy startups to become globally Halal, an e-learning platform for Halal and competitive, in addition to transforming local ethical food industry professionals. products into international products with The incubator’s advisory committee significant social impact and influence. includes representatives of the most A number of startups have joined the incubator in order to achieve growth, increase important strategic partners, with DAFZA’s

44 MARCH 2018

upper management being represented

by Amna Lootah, along with Abdulla Al Awar, CEO of Dubai Islamic Economy Development Center, Rafi-uddin Shikoh, Director of Goodforce Labs and CEO and Managing Director of DinarStandard, Amir Nicholas Lodge, an investment specialist, Aamir Rehman, founder and former director of Fajr Capital, and Sayd Farook, strategy and innovation accelerator.

Goodforce Labs is tapping into the opportunity of the fast-growing Islamic economy and its intersection with the global social impact investment space. The

INNOVATION

report on the state of the Islamic economy issued recently by Dubai Islamic Economy Development Center in cooperation with Thomson Reuters and DinarStandard, showed and overall consumer spending market size of $2.1 trillion in 2016 covering Halal food, modest fashion, family-friendly tourism, Halal Pharma and cosmetics and media and recreation. At the same time, global impact investing assets committed in 2016 were $22 billion globally with 48 per cent for venture stage companies driven by opportunities in global health trends, social finance, ethical clothing and cosmetics.

MARCH 2018 45

OIL & GAS

The evolving supply chain of energy T

here are reasons to be optimistic when we talk about the supply chain for the oil and gas industry. Kalrav Dixit, Executive Director, Renish Group, agrees. He says,“Traditional supply chains are not equipped properly to compete in today’s global economy.”They are linear and rigid hence struggle to cater to the customers’ constantly evolving needs.

Companies need new supply chain strategies structured around flexibility and scalability to stay ahead of the competition.“With such strategies, they can unlock their supply chain to be an engine for growth and this is certainly promising in current times and in the near future,”Dixit continues.

The oil and gas industry is expected to become more customer-centric in 2018. The sector will make more room for final mile delivery, on-demand delivery and omnichannel developments, especially in fuel station retail. Supply chain management will begin to be influenced by the shift to automation and energy supply chains will be prompted to be more flexible to meet rising consumer expectations.

Strengthening their supply chain for the year ahead as well as preparing for the years following is important for Renish Group.“We

46 MARCH 2018

Renish Group, a fastgrowing company in the oil storage space, is well positioned to address the rising demands in the sector, with a vision to be a global energy organisation.

Munawar Shariff spoke with Kalrav Dixit, Executive Director, Renish Group about the oil and gas industry and how the company intends to grow and enhance their market share moving forward

OIL & GAS

MARCH 2018 47

OIL & GAS

believe in end-to-end visibility in the supply chain dynamic and create smart data driven insights with deeper understanding of the markets, enabling prediction of opportunities.

We are currently working on our analytic ability to understand the supply chain dynamics, make timely adjustments and take advantage of opportunities as they come, whilst we invest or divest through the supply chain components,”Dixit adds.

Being on the pulse of the requirements of their clients is of paramount importance for Dixit.“Digital transformation is changing the logistics industry with new, digitally-enabled services and business models capturing more value every day. We are working to enhance our models in cost-effective ways to cater to the ever-changing needs of our customers,” he adds. Inventory data and regional demand and supply are impacting shipping globally, indicating value creation by businesses closer to the point of consumption, including downstream refining, chemicals and gas station retail. With the cost of renewables

48 MARCH 2018

attaining uniformity, the competitive entry of wind and solar into the energy mix has begun to challenge traditional energy, prompted by diversification and efficiency.

As the business climate changes, there is an increased focus on unconventional oil and gas, the move from offshore to onshore and the consequent shift away from deep-water countries. Dixit thinks technology that allows oil and gas to be retreived from areas that were once inaccessible is just amazing.“It is interesting to see how different methods

have been developed over time, allowing us to continue drilling for abundant amounts of oil and gas. If this can be done in a costeffective way, it can certainly contribute to the rising energy demands, while conventional drilling remains the cheapest way to extract energy,”he says. Technological advancements are driving the recent shift from high cost of production offshore, to onshore and unconventional energy sources with rapidly dropping break-even costs. 2017 has been the biggest year on record for oil and gas

OIL & GAS

companies in terms of diversification, mergers and acquisition activities. This indicates that the industry players are driving value creation closer to the point of consumption. With diversification and efficiency becoming major drivers, leading players in the international oil and gas sector are shifting their geographical focus while maintaining a strong presence and making developments in the Middle East.

Staying ahead or even on top of trends that indicate the overall health of the industry is important for Dixit. He says,“The oil and gas industry is part of a global supply-chain that includes domestic and international transportation, ordering, inventory visibility and control, with storage and shipping being the most prominent indicators.”

“The demand for oil is expected to grow at the macro level triggering an increase in supply chain activity. Global final investment decisions (FIDs) in terms of new projects, will add to this positive trend. An increase in demand occurs whenever there is a spike

chains are managed. Dixit agrees,“A digital oilfield is meant to achieve a fully integrated business solution that will deliver real-time information allowing for the pursuit of realtime interventions and ultimately leading to innovative solutions to optimise assets’ performance.

As processes typically cover multiple regions and involve substantial capital investments and extended supply chains, the oil and gas industry is poised for digital transformation. Digital technologies ensure increased visibility and clarity, while advanced analytics give executives better insights into operations and increased agility, resulting in better decision-making Renish Group has capabilities. Leading oil and gas grown to become companies have begun to harness a US$ 500 million digital enablers to drive better company in 2016 performance. Besides providing a from US$ 240 better understanding of consumer million in 2012, with habits and preferences, digital assets estimated technologies also help optimise at US$ 30 million. pricing models, and manage Renish storage supply chains more competently. facility, known as in industry activity. A demand Alaska International For instance, Geospatial analytics can help enhance the efficiency of for inventory indicates that FZE, has 22 tanks supply and distribution networks stockpiles are being depleted. with capacities through location planning and This happens when parts ranging from 3,400 needed for exploration, metre cube to 6,500 route optimisation.

Dixit also adds how Renish extraction or downstream metre cube with a Group reuses and recycles refining have been stored combined capacity materials in use in their daily as a result of declining of 125,000 metre operations.“Each year, the oil activity. This unprecedented cube, capable of and gas industry produce more change in the industry calls handling various for sustaining business in petroleum products than 850 billion gallons of waste water. Combining the massive a low-cost environment, and located at the volumes of waste water generated with better procurement strategic port of over the lifespan of the well and systems, increased visibility Hamriyah, in the the millions of gallons of water and improved catalogue UAE. needed to hydraulically fracture management being the each well with growing frequencies, this new norm. More proactive coordination, huge volume of oil and gas waste water that integrating all parts of the supply chain from contains numerous chemicals resulting from pre-procurement to final mile delivery, and operations as well as underground water a greater focus on increasing the customer laden with salt and naturally-occurring experience are making supply chains more pollutants – is being recycled. Lubricants is future-proof,”he opines. the most widely reused and recycled product With technology making oil fields digital, in oil and gas sector,”he concludes. ther has to be a change in how supply

MARCH 2018 49

A decade of recognising excellence Dubai Trade recently held its 10th E-Services Excellence Awards (ESEA) at the Atlantis The Palm Hotel. Dubai Trade is a one-of-its-kind trade facilitation entity that offers integrated electronic services from various trade and logistics service providers in Dubai under a single window

D

ubai Trade, the technology trade solution of DP World, recently honoured winners of its 10th E-Services Excellence Award (ESEA). The annual award recognises companies for their adoption of smart services in trade, shipping and logistics.

Dubai Trade Portal (www.dubaitrade.ae) offers a remarkably seamless business flow and has proven to be cost effective for clients using it as the single window which integrates the online services of DP World, Jebel Ali Free Zone, and Dubai Customs.

The ceremony, held under the patronage of His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai, was attended by Mohammed Al Muallem, Chief Executive Officer & Managing Director, DP World – UAE Region; His Excellency Abdullah Al Saleh, Undersecretary of the Ministry of Economy for Foreign Trade; Ahmed Mahboob Musabih, Director of Dubai Customs; Saed Al Awadhi, CEO of Dubai Export; Hussain Alblooshi, Acting Chief Operating Officer of Dubai Trade; and officials from the business and trade sectors.

50 MARCH 2018

DUBAI TRADE AWARDS

MARCH 2018 51

Representatives of government banking, finance and the logistics sectors, sponsors and partners also attended.

Sultan Bin Sulayem, Group Chairman and CEO, DP World, emphasised the importance of adopting the best global technologies to empower trade and streamline the supply chain, which will allow companies to continue their growth over the next decade. He has noted that DP World and its subsidiaries are committed to providing smart technologies. He said:“The business sector is rapidly changing due to new technological

52 MARCH 2018

developments. Artificial Intelligence (AI) and blockchain will impact trade to ensure sustainable growth and the demands of an increasingly competitive global market. Only those who can adapt will succeed.�He noted that Dubai Trade had completed 19.8 million transactions in 2017, a growth of 4 percent.

The number of companies registered on the portal increased to 142,000, with 15,000 new companies joining last year. The National Fire Fighting Manufacturing company (NAFFCO) won the LogiGate app category, which was launched for the first time in this cycle. Blue

Castle Land Transport won the M-Token Services category with Cititrans International Logistics runner-up.

Danzas AEI Emirates won the Smart Services Award for Free Zone Services with Zero One Trading second. Danzas AEI Emirates won the Smart Services Award for Clearance Services with Schenker DB second.

NAFFCO Shipping & Forwarding won the Smart Services Award for Payment Services with Easy Way Clearing & Cargo second.

Kimoha Entrepreneurs won the Dubai Trade Innovation Award of the Year 2017.

DUBAI TRADE AWARDS

As part of the strategic partnership between Dubai Trade and Dubai Export, two awards were presented to distinguished exporters at ESEA. Indoguna Productions won the New Exporter category while Epoch Cosmetics and Toiletries came second.

Bristol Fire Engineering won the Innovative Exporter category and Falcon Pack Industry came second.

His Excellency Abdullah Al Saleh, said, “Much of the UAE’s leadership in foreign trade, which amounted to AED1.7 trillion in 2017, is due to the excellence

of companies and the business sector across the country. Our country will remain a model for a smart knowledgebased economy and we are committed to supporting the annual E-Services Excellence Award.”

Hussain Alblooshi, Acting Chief Operating Officer of Dubai Trade, said: “Previously, we announced new services once a year through our portal. Now we launch integrated platforms and smart mobile applications for the trade and logistics sector. These efforts support our strategic objectives to enable

global trade, helping customers complete their transactions anytime, anywhere. Dubai Trade will continue to explore and deliver more technologies and innovative payment solutions in the future with more smart apps and services that give companies a competitive edge.”

Alblooshi honoured ESEA sponsors for their support of the event. Al-Futtaim Logistics and TechnoPro Middle East, were gold sponsors; Agility Logistics, silver sponsor. , and category sponsors AMI Middle East and Ports Shipping.

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We believe success doesn’t come as a coincidence.

It comes with vision, grit and teamwork.

- Eng. Khalid Al Khatib

SUSTAINABILITY

Sustainable supply chains Supply chain management survey indicates greater pressure on companies to demonstrate sustainability. Companies are struggling to take efficient action across their supply chains, while facing increased demands from stakeholders.

This www.supplychain247.com article delves deeper into this topic and finds out the gaps that need to be filled

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A

new international survey by DNV GL, a global quality assurance and risk management company, reveals an emerging gap between beginners and leaders when it comes to managing sustainable supply chains.

The survey investigated how companies are approaching supply chain sustainability and how mature they are in their approach, and 50 per cent rated themselves as beginners in this area.

The study was supported by GFK Eurisko and Supplier Ethical Data Exchange (Sedex), a not-for-profit membership organization which operates the world’s largest collaborative platform for sharing responsible

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sourcing data on supply chains. More than 1,400 professionals from Europe, Asia and America responded to the survey, and the findings are compared to an identical survey conducted in 2014.

The survey identifies a set of front-running companies, defined as leaders, which have a more structured approach to sustainability in their supply chain. According to the survey, the leaders have moved away from selfconducted initiatives and penetrate all tiers of their value chains with their actions. They are more active than average companies and apply more structured approaches.

For example, they involve third parties to a much higher extent when auditing suppliers

against their own protocols or recognized methodologies, and 30 per cent provide their suppliers with dedicated training. By implementing sustainability in their supply chain, they say they have gained brand reputation (65 per cent), improved their ability to meet customer needs (58 per cent) and increased market shares (32 per cent).

“Building sustainable supply chains is no longer a voluntary initiative based on unstructured attempts,”said Luca Crisciotti, CEO of DNV GL – Business Assurance.

“Companies that have experienced positive effects from their actions have adopted a more systematic approach. Those able to tackle it in a strategic and holistic way can manage their

SUSTAINABILITY

risks better and reap benefits, while responding to legislative, stakeholder and global demands.”

Overall, companies feel greater pressure to show they have a sustainable supply chain today than in 2014 (86 per cent; +6 per cent). Seventy-six per cent say that customers are the main drivers influencing sustainable supply chain management. Nine out of ten professionals say that supply chain sustainability is key when they are making buying decisions themselves. Nevertheless, pressure comes from multiple direct and indirect stakeholders. Today, companies are expected to proactively manage all tiers of their supply chain and to do so in a way that contributes to the world’s sustainability goals.

Of the respondents, 81 per cent have taken at least one action to improve their supply chain sustainability. However, actions are mainly self-conducted and limited to“tier 1”suppliers, and fewer actions are taken further out in the value chain. A direct audit of some suppliers has been undertaken by 39 per cent of the companies, 36 per cent have required suppliers to provide information and 32 per cent have either had a dialogue with suppliers to address the challenges or implemented a sustainability policy. Only 7 per cent of the respondents say they have reached out to all tiers of their supply chain.

“Managing risks across the entire supply chain can be challenging and requires the

collection of supplier performance data to efficiently create visibility further down the value chain,”Crisciotti said.“However, companies can leverage advancements in big data analytics, data sharing platforms and blockchain technology to help collect and measure supplier performance in a structured and reliable way.”

The study reveals that disclosure of information about sustainability in the supply chain is still in its early stages, despite the opportunities offered by digitalization. Only 20 per cent of respondents, including among leaders, have published information about their supply chain.

-www.supplychain247.com

MARCH 2018 57

SHIPPING

Gulf

Navigation floats rights issue

In a bid to improve its services and increase its fleet size to be on the right path towards keeping up with upcoming contracts and expansion projects, Gulf Navigation Holding recently approved the trading of rights issue to its existing shareholders 58 MARCH 2018

D

uring its meeting held recently, the Board of Directors of the Gulf Navigation Holding (PJSC) approved the trading of the rights issued last February to the company’s existing shareholders, without publicly offering the remaining shares. The company’s capital now stands at AED 919,209,250. The move is in line with the company’s interim strategy to expand its services and gradually increase the size of its fleet to keep up with upcoming contracts and expansion projects, considering its future expansion plans.

Gulf Navigation Holding announced a maximum of AED 488 million in capital increase through trading of the rights issue from 11 February to 1 March 2018 with a total value of AED 367,542,584. The

company’s capital after increase is AED 919,209,250 distributed to 919,209,250 shares at a nominal value of AED 1 per share. The UAE nationals have contributed to 95% of the shares, GCC citizens to 2%, and other nationalities to 3%.

Gulf Navigation decided to settle for what key shareholders have covered because the company has a stage-based operational plan and is gradually increasing its assets and resources. The company’s current revenues have been growing significantly thanks to the wise procedures taken by the new management that have led the company to make profits and grow its assets.

H.E. Khamis Juma Buamim, Board Member and MD & Group CEO of Gulf Navigation Holding Group, said, “We have

developed our strategic plan, which was approved by the Board of Directors, to be gradual in its growth and assets and is implemented in stages. Since we started executing our strategic plan in mid-2016, we have succeeded in achieving steady progress in revenues. Our progress has encouraged our major investors to increase their shares in the company through trading rights issue, which has been conducted successfully. Our shareholders who wanted to increase their shares in the capital achieved their goals and we are thankful for their trust on us.”

“The amount collected in the capital increase is equal to 82%. This is sufficient to cover the company’s interim expansion plans and increase its assets over the short

term. Therefore, The Board of Directors has decided to settle for the amount collected from existing shareholders and not go for public offering. The objective of the public offering was to fulfil the need of major shareholders to increase their share in the company. I am very grateful to all those who participated in the rights issue, especially Tabarak Investment, who expressed their great confidence in Gulf Navigation and its strategic plan. We promise our shareholders to be always up to their trust. Based on the directives of the Board of Directors, the company will continue its expansion and increase its assets,” added Buamim.

Among the key achievements of the company’s new strategic plan was the

full restructuring of the company, the settlement of all previous debts and financial and legal issues, and signing agreements and strategic partnerships to launch one of the largest maritime service companies for the oil and gas sector and maritime services in the region. The company has also developed and expanded its services and business including the geographical area of its business, adding two petrochemical carriers to its assets, and refinancing of the petrochemicals carriers. It also succeeded in enhancing its business portfolio and entering into negotiations to acquire new vessels and large shares in regional and international companies to diversify its sources of income and business.

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PORTS

Manafth and Jaheziya sign MOU for cooperation Safety, security and emergency readiness is of paramount importance to any business.

Especially when it comes to a country’s ports.

The General Authority of Security of Ports, Borders and Free Zones and Tawazun Safety, Security and Disaster Management City have joined forces to ensure a robust business environment

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he General Authority for the Security of Ports, Borders and Free Zones (Manafth) and Tawazun Safety, Security and Disaster Management City (Jaheziya) have signed a Memorandum of Understanding (MOU) for cooperation in training programmes related to safety, security and emergency.

The MOU was signed recently by Jasem Mohammed Alzaabi, General Manager of Manafth, and Ali Mohamed Al Ahbabi, Chairman of Jaheziya, on the margins of the International Exhibition for National Security & Resilience (ISNR 2018) which took place in Abu Dhabi recently.

The MOU provides for future cooperation in the development, and subsequent delivery of tailored training programmes in the fields of security, safety, emergency preparedness and crisis management, as well as the exchange of expertise and joint collaboration to build, sustain and enhance national capabilities in the relevant domains.

Jasem Mohammed Alzaabi welcomed the MOU signing with Jaheziya, saying

that it falls with the Authority’s vision for enhancing national capabilities and readiness to ensure security and safety of the borders, ports and free zones.

“The MOU also serves our goal of building strategic partnerships with the the relevant agencies in the UAE to continue development and integration of safety, security, and emergency preparedness,”he added.

Ali Mohamed Al Ahbabi underlined Jaheziya’s keenness to strengthen cooperation with Manafth, particularly in developing accredited training programs in various fields of emergency response and disaster management.

“The MOU paves the way for a solid and consistent cooperation among the different authorities in the UAE and contribute to reinforcing nation’s resilience and preparedness,” he said.

A subsidiary of Tawazun, Jaheziya provides technical, vocational and professional training for intra-agency, interagency and multi-agency operations in the fields of safety, security, emergency preparedness, and crisis/ disaster management.