Global Supply Chain May 2015 Issue

May 2015 Issue 15

ENHANCING THE BUSINESS OF LOGISTICS

Qatar

On the brink of greater success

IATA’s paperless trail Making the eAWB de rigeur

Stronger together

Oman Air and Cargolux join hands

KEEPING IT FRESH, INSIDE AND OUT How the Gen Z consumer is bringing the change in food packaging

Introducing Temp-Check, the fastest and safest way to get pharmaceuticals across the world.

As the winners of the ‘2014 Air Cargo Industry Customer Care Award’, Etihad Cargo proudly announces Temp-Check, our newest service designed specifically for pharmaceutical cargo requirements. Using the latest technology in temperature-controlled cargo equipment and prioritised ground handling, we ensure product quality and integrity at all touchpoints. And we have invested extensively in training across our global network, so that your cargo reaches its destination in the safest and quickest way possible.

Visit etihadcargo.com for more information.

Responding to a different consumer SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: info@signaturemediame.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven jason@signaturemediame.com Director: Deepak Chandiramani Deepak@signaturemediame.com Managing Editor: Munawar Shariff munawar@signaturemediame.com Art Director: B Raveendran ravi@signaturemediame.com Production Manager: Roy Varghese roy@signaturemediame.com

Printed by United Printing Press (UPP) – Abu Dhabi Distributed by Tawseel Distribution & Logistics – Dubai

Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused.

Articles and information contained in this publication are the copyright of Signature Media FZ LLE & SIGNATURE MEDIA LLC and cannot be reproduced in any form without written permission.

The consumer drives the change in everything … so why not the way their food is packaged. With an ever-growing awareness into saving the planet and being sustainable, food packaging is a big focus when it comes to being eco friendly and not hurting too many of Earth’s resources. What’s more is when fresh produce remains in a sustainable package, it adds to the entire brand experience of purchasing something which is pure, natural and hence very good for you.

As the appeal and magnetism of eating foods in their purest forms and as soon as they are picked from the soil grows so will the ways in which fresh foods are packaged for the end user. An example is say a fruit or vegetable which is plucked from the soil in such a way so as to have its root intact with specific instructions on what tools can be used to best clean, cut and consume it. This and lots more green and innovative fresh produce packaging solution in the cover story on page 21.

Moving on, a dynamic country currently in the midst of a construction boom - Qatar - is one to watch.

Especially when it comes to observing how it executes its vision till the arrival of the FIFA World Cup 2022 and beyond. This is a country undergoing massive change in a very small time frame, it is overhauling its infrastructure, culture, work ethic, all to preserve a fruitful and fulfilling future for its citizens. The main topic on its agenda is diversification from the dependance of wealth from hydrocarbons. Another fascinating read on page 12.

So do let me know your thoughts on this edition and we’ll be back next month. Till then, enjoy the magazine.

Munawar Shariff Managing Editor munawar@signaturemediame.com

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MAY 2015 Issue 15

ENHANCING THE BUSINESS OF LOGISTICS

21 06 News 12 Qatar - A very strong player Qatar is in a strong position to continue its robust economic performance

21 Keeping it fresh, inside and out Anton Steeman takes a look at how the 2015 consumer is demanding a change in the way food is packaged

30 Forging a paperless trail A look at how the air cargo industry is finally coming round to accepting the eAWB

33 Reaping the rewards Safwan Tannir, Chief Freight Officer, Aramex, on how the company has benefitted from IATA’s eAWB initiative

37 Global Energy Transitions – with a focus on Saudi Arabia How do policies, governance and consumption affect energy resources and the vision for a sustainable future? Excerpts from a report by AT Kearney

44 Making the right connections Texture Global Shipping LLC is all for the importance of a reliable supply chain service provider in a growing economy

49 Cutting freight costs Tim Benedict, Senior Director of Transportation at APL Logistics, Arizona, gives Deborah Catalano Ruriani of www.inboundlogistics some tips for reducing freight costs

52 Innovative introductions Kanoo Machinery premiered new forklift trucks for the UAE and GCC market

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54 Facing the challenge Al Majdouie Logistics’ successfully completion of a project cargo movement

55 A deeper understanding Dubai Trade launches its Customs Broker Programme (CCB)

56 Stronger together Oman Air and Cargolux sign JV agreement to develop Muscat International Airport as a logistics hub

58 Oman’s vision for the future The recently held second GCC Supply Chain and Logistics Conference in Oman concluded with a mission to become the global logistics hub by 2040

60 Unwind Excellence = success A chat with Eric ten Kate, Director – Healthcare (Middle East), Hellmann Calipar Healthcare Logistics DWC-LLC

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Emirates sky cargo expands network Emirates SkyCargo, the freight division of Emirates, is set to expand its United States cargo network to 11 destinations, when the airline launches a daily service to Orlando, Florida from September 1st, 2015. The Dubai – Orlando route will be served by a Boeing 777-200 LR, which has a belly-hold capacity of up to 17 tonnes of cargo per flight.“Last year we carried more than 100,000 tonnes of cargo to and from the United States, facilitating foreign trade and opportunities between the world’s largest economy and markets within our network,”said Nabil Sultan, Emirates Divisional Senior Vice President, Cargo.

Emirates SkyCargo expects to carry a range of exports from Orlando including aircraft parts, pharmaceuticals, perfume and colognes and machine parts. Imports are likely to be electronics, garments, automotive spare parts, aircraft spare parts, construction equipment, hospital instruments and equipment.

Catchment areas for both imports and exports moving through Orlando and carried by Emirates SkyCargo are expected to include Miami, Tampa and Atlanta.

The company is also witnessing increased demand for freight capacity from the Philippines, having exported 500,000 kg of tuna to Europe and the Middle East in 2014.

It transported the fish from Manila to various cities - according to the Philippine Statistics

Authority (PSA), tuna exports recorded an annual growth of 24.7 per cent in 2014. Apart from tuna, Emirates SkyCargo listed nearly

MAB Facilities Management to service Abu Dhabi WTC development MAB Facilities Management LLC has been awarded the contract for the provision of hard facilities management services at the Abu Dhabi World Trade Centre. The services will span several buildings in the multi-use complex, including Burj Mohammed Bin Rashid, Abu Dhabi’s tallest tower, as well as the World Trade Centre

6 MAY 2015

Souk, World Trade Centre Mall and basement parking.

As the hard facilities management provider, MAB will deliver the service infrastructure for the management and maintenance of its contracted buildings. In addition, MAB will oversee the mechanical, electrical and plumbing equipment of the

multi-use district. MAB offers facilities management services directly or through subsidiaries to clients in facilities management consultancy service, physical security, integrated electronic security systems, cleaning and janitorial services, waste management, pest control, landscaping and more.

150,000 tons of cargo exports from Manila to various destinations. This number is expected to increase further in 2015.

In other news, Emirates has announced an historic USD 9.2 billion (AED 33.8 billion) deal with Rolls-Royce for Trent 900 engines and a long-term TotalCare package. The engines will be used to power 50 Airbus A380s ordered at the Dubai Air Show in 2013, which will begin entering service in 2016. The deal, which is the largest ever for Rolls-Royce, and one of the largest ever export orders for a UK-based company, is part of Emirates’ ongoing investment into the UK and Europe.

The partnership marks a significant milestone for aviation manufacturing in the region, securing jobs across Rolls-Royce’s supply chain, from Bristol to Scotland. It will further support trade ties between the UK and the UAE.

Madrid service brings more choices for travellers Etihad Airways’ direct non-stop flights between Abu Dhabi and Madrid bring more choice for travellers as the airline connects Spain to its rapidly expanding flight network.

James Hogan, Etihad Airways’ President and Chief Executive Officer, said,“Our new Madrid service gives Spanish business and leisure travellers greater access to the UAE with a total of 2,096 weekly seats on offer.”

The Madrid service is operated four times per week by an Airbus A330-200 aircraft.

From Madrid, travellers can connect on the network of Etihad Airways’ codeshare partner, Air Europa, to eight cities in Spain.

Still more Spanish cities open up a result of Etihad Airways’ recently signed interline agreement with Spanish rail operator, Renfe.

President and Chief Executive Officer of Etihad Airways, James Hogan, addresses the media conference in Madrid

The agreement gives travellers rail transport options beyond Madrid to 28 Spanish cities.

Economic cooperation and investment between the two countries has witnessed considerable growth across multiple sectors including petrochemicals, construction, education, health care, transportation and tourism, and in the small and medium-sized business sector. There are also significant Spanish investments in desalination, water treatment and renewable projects in the UAE. To support the growing trade, Etihad Airways is offering 96-tonnes of weekly cargo capacity to and from Madrid, which allows Spanish businesses increased access to global markets, yielding benefits to the country’s economic output.

From left to right: Jordi Porcel, General Manager Spain, Etihad Airways; James Hogan, President and Chief Executive Officer, Etihad Airways; Her Excellency Dr Hissa Abdulla Ahmed Al-Otaiba, UAE Ambassador to the Kingdom of Spain; and Haitham Al Subaihi, Vice President UAE Sales, Etihad Airways; at the airline’s media conference in Madrid

Swisslog acquires technologies and employees from Grenzebach Automation GmbH Swisslog has acquired a carefully selected portfolio of technologies and employees from Grenzebach Automation GmbH in Karlsruhe, Germany to strengthen its expertise in the areas of automated guided vehicles (AGVs) and logistics robots.

This acquisition dovetails with Swisslog’s strategy of expanding it’s positioning in the e-commerce

and omni-channel segments and pursuing opportunities in the field of production logistics.

Following an existing partnership between the two companies, Swisslog acquired intellectual property from Grenzebach Automation GmbH in April this year. This includes software technology in the areas of AGVS, including the jointly developed

mobile storage and picking system CarryPick®, automated case picking, automated item picking, palletising and de-palletising.

A select team of Grenzebach employees will transfer to Swisslog and form a new Swisslog location in Karlsruhe, Germany, headed by Dr Volker Jungbluth. Swisslog is looking forward to utilising the experience

and exceptional knowledge their new colleagues have in research and development, as well as in application development, solution design and technical sales. The expanded cooperation between Swisslog and Grenzebach as partners means that customers will continue to receive optimal support from a highly qualified team.

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Dubai Customs presents prime experience in furthering UAE competitiveness In the presence of His Excellency Sheikh Nahyan bin Mubarak Al Nahyan, Minister of Culture,Youth and Community Development, the Dubai Global Convention’s 25th World Congress on Leadership for Business Excellence and Innovation was held by the Institute of Directors-India in association with Dubai Customs from April 20th – 22nd, 2015 at The Meydan, Dubai.

Ahmed Mahboob Musabih, Director of Dubai Customs, delivered a theme address at the opening session of the congress, in which he said,“Organisations of today’s fast changing world must innovate to be able to stand out and stay ahead of competition both in the present and into the future.” Speaking around the event’s theme ‘Leading 21st Century Organisation

through Innovation, Creativity & Excellence (ICE)’, he continued,“Dubai Customs views innovation and creativity with utmost attention in pursuance of its strategic vision to be the leading customs administration in the world supporting legitimate trade and its mission to protect society and support economic development through compliance and facilitation.”

Ahmed Maboob Musabih addresses opening session of 25th World Congress on Leadership for Business Excellence and Innovation

Tristar aims for increase in revenue Dubai-based integrated liquid logistics company Tristar is aiming to achieve USD 700 million (AED 2,571 million) in revenues by the end of 2017. This was the commitment made by its senior managers and key performers during the two-day annual Tristar Leadership Summit recently held at the Anantara Dubai – The Palm Resort & Spa. Tristar Group CEO Eugene Mayne encouraged the participants to initiate innovative steps in increasing the revenues of the current business lines and also to create new income streams related to hydrocarbons, lubricants, chemicals and liquid gasses. Tristar has a global presence in 15 countries, with a strong focus on expanding its operations in Saudi Arabia and in the African continent.

8 MAY 2015

Jafza wins Dubai Quality Award 2014

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai presenting Dubai Quality Award to Salma Hareb, CEO of Jafza and Economic Zones World and Ibrahim Mohamed Aljanahi, Deputy CEO of Jafza.

Jafza has once again won the highly coveted Dubai Quality Award in the Service Category. The Free Zone’s excellent service credentials, innovative products, the dynamic eco-system that facilitates seamless growth, and its remarkable achievements as a leading driver for attracting foreign direct investment into the Emirate by continuously offering customers outstanding personalised services, were some of the factors that helped it win the distinctive award in the category.

The Award was presented by His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai to Salma Hareb, CEO of Economic Zones World, the parent company of Jafza, and Ibrahim Mohamed Aljanahi, Deputy CEO of Jafza, at a ceremony attended by His Highness Sheikh Maktoum bin Mohammed bin Rashid Al Maktoum, Deputy Ruler of Dubai and His Highness Sheikh Ahmed bin Mohammed bin Rashid Al Maktoum, Chairman, Mohammed Bin Rashid Al Maktoum Foundation. The event was attended by top government officials, industry leaders and other special invitees.

Jafza’s contribution to Dubai’s GDP stands at 20.6 per cent and it accounts for 23 per cent of all FDI flow into the country (2013). More than 50 per cent of Dubai’s

exports and a quarter of the Emirate’s total non-oil trade are generated in Jafza. By value, Jafza counts for more than 70 per cent of the total free zone trade in Dubai.

Agility’s GCC SERVICES Receives ISO 9001 Certification in Basra Agility’s GCC SERVICES subsidiary in Basra, Iraq has received the ISO 9001 certification , making it the first integrated remote site services company to be ISO 9001 certified in the city. The certificate was awarded to GCC SERVICES with UKAS accreditation by Bureau Veritas Certification, Dubai, following a stringent site audit. The certification demonstrates GCC SERVICES’ commitment to continually improve its process to provide services that consistently meet customers’ needs and expectations.

These services relate to site camps and include facilities management, catering services and life support services, and functions such as Human Resources, administration, procurement and warehousing. GCC SERVICES serves small and large scale projects, and currently operates 33 hard structures, 28 camps and 22 warehouses in remote and highrisk areas of Iraq. The company has also constructed 17 temporary dining facilities, including the largest in Iraq, with over 10,000 meals served every day.

MAY 2015 9

Imdaad recognised for excellence in environment, health and safety Imdaad has been honoured by Trakhees-Ports, Customs and Free Zone Corporation (PCFC) during the 3rd Dubai Environment Health and Safety (EHS) Awards for promoting health and safety at work. Held under the patronage of HH Sheikh Hamdan Bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai, the Awards recognises the achievements of Trakhees-PCFC’s strategic partners for the successful attainment and encouragement of safety targets and performance excellence.

Said Jamal Abdullah Lootah, CEO, Imdaad, “Awards act as an encouragement to carry on with the great work as they appreciate and rewards your efforts. Imdaad has always given priority to the health and safety of its employees while maintaining

environmental sustainability. The high confidence shown by our strategic partners is a great motivation for us to continue to provide innovative, green and safe solutions to our employees, partners and clients.”

Flexible hours and smart working tools big hit among UAE employees Employees in the UAE rate their current employers most highly for the smart tools and flexible working hours they provide, according to new survey findings amongst over 1,000 employees and HR professionals in the UAE. The study, conducted exclusively by YouGov for The Federal Authority for Government Human Resources (FAHR), was commissioned in March 2015 to uncover emerging trends in human capital management in the UAE.

10 MAY 2015

An overriding 64 per cent of employees in the UAE rate flexible working hours, provided by employers based on personal circumstances, as good or very good, which is particularly prevalent amongst Emirati respondents (83 per cent).

Encouragingly, the majority of employees overall (74 per cent), also believe a remote and flexible work schedule increases their productivity, and seven in 10 say they are given the opportunity to work remotely across the UAE today. Of those that do work remotely, 37 per cent work most of the week outside the office.

UAE working professionals rate their current employers second most highly for the availability of smart tools to increase their work productivity (57 per cent). Again, there is a clear indication that the tech-based tools on offer to employees will only expand in future, with 85 per cent of HR professionals claiming their organisations are open to adopting smart technologies in the workplace.

SITA launches community foundation SITA has announced the creation of a new corporate social responsibility initiative, the SITA Air Transport Community Foundation, initiated by the 34-member SITA Council, which will work with charities to deliver educational programmes and technology to communities in need. The Foundation’s initial focus will be in Africa, where it will provide computer labs at schools in Ethiopia and Uganda, and educational grants at a university in South Africa.

Jappe Blaauw, President of the SITA Council, said: “The 34 airline and air transport organisation members of the SITA Council have a plan to invest in the Foundation over the next five years. The way we have designed this reflects SITA’s involvement at a local level and underlines how SITA can provide value to the community by sharing our resource and expertise. With our focus on IT and education, we’ll be supporting skills development and helping students and schools to have access to technology.

Such initiatives have been proven to increase attendance levels and learning and improve student advancement.”

The first computer labs will be rolled out to schools in Uganda and Ethiopia throughout 2015, with students in South Africa being able to benefit from grants from August. The ongoing investment by the Foundation will support student development in science, technology, engineering and mathematics (STEM) education and through the post-graduate scholarship will encourage research and graduate flow into the air transport industry in Africa.

RTA carries four thousand inspections of truck driving standards in 2014 The Roads and Transport Authority (RTA) stated that it carried out 3,960 site inspections of light and heavy vehicles at 11 locations involving 36,868 vehicles last year. Inspection resulted in detecting 14,784 violating vehicles having 24,975 technical faults in driving standards.

Jamal Assada, Director of Monitoring & Enforcement at RTA Licensing Agency, said:“Inspection processes are conducted in the context of verifying the compliance of heavy truck drivers with the prescribed loads, and ensuring that loads are properly distributed to the loading surface of the truck. The RTA is making huge efforts to maintain the security and safety of roads, as well as the urbanised appearance of Dubai by launching surprise inspection campaigns targeting trucks, trailers and light vehicles. Such types of vehicles are key ingredients of the domestic economy; and it is therefore imperative to ensure they comply with the driving standards.”

DHL launches ‘Internet of Things in Logistics’ trend report

DHL and Cisco Systems released a new white paper entitled ‘Internet of Things in Logistics’ at the DHL Global Technology Conference in Dubai. The Internet of Things (IoT) refers to the networked connections of physical objects – not limited computers in the classic sense of network connections, but in all

aspects of the physical world – for example, shoes that can tell its owner the number of steps taken, sensors on parking meters that can inform drivers of available parking lots. In the logistics and supply chain industry, IoT will have game-changing consequences, from creating more last mile delivery

options for customers to more efficient warehousing operations and freight transportation.

Rob Siegers, President, Global Technology Sector, Customer Solutions and Innovation, DHL said: “The DHL Trend Report estimates that less than one per cent of all physical objects that

can be connected to the internet are connected today. By 2020, Cisco estimates that computers (including PCs, laptops, tablets and smartphones) will represent just 17 per cent of all Internet connections – the overwhelming 83 per cent will stem from IoT, which includes wearables and smart-home devices.”

The Trend Report is part of DHL’s ongoing efforts in exploring technology innovations which would revolutionise and positively impact the logistics industry. The IoT enables monitoring the status of assets, parcels, and people in real time and removes operating blind spots throughout the value chain. In addition, new automated processes and applied analytics are expected to optimise how people, systems, and assets work together and to result in lower costs.

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COUNTRY REPORT – QATAR

12 MAY 2015

Qatar A very strong player With sustained, long-term economic growth, the highest per capita income in the world and one of the largest reserves of natural gas just offshore, Qatar today has many advantages. Add in a stable and well-capitalised banking sector and a sovereign wealth fund that is of true global significance, and it is clear that Qatar is in a strong position from which to continue its robust economic performance.

T

he years ahead for Qatar are also set to see one of the world’s largest construction drives in the country, in line with the principles of Qatar National Vision 2030 (QNV 2030) and catalysed by preparations for the 2022 FIFA World Cup. By the time the teams arrive for the tournament, the country will have undergone another transformation on top of the astonishing changes that have taken place already over the last couple of decades. A skyline of towers has sprouted across the capital, Doha, while the country’s population has jumped, from 744,029 in 2004 to over 2m today. There is a palpable sense here that the future is one of great possibility, and that it is arriving fast.

MAY 2015 13

COUNTRY REPORT – QATAR

Economic History The jump in population is not the only exponential increase that Qatar has seen in a short time, either. When the country gained independence from the UK in 1971, its GDP was around $390m, but by the end of 2012 it had reached $183.4bn, according to World Bank figures. GDP per capita thus also rose from around $1303 to some $91,690 over the same period, with this figure hitting $102,200 at purchasing power parity (PPP) in the latter year, according to Qatar National Bank (QNB). This gave the country the highest per capita GDP at PPP in the world for 2012.

also led to these other hydrocarbons sectors increasing in relative value in terms of their contribution to GDP. In 2012 this all added up to reserves of 193bn barrels of oil equivalent, according to figures from QNB. This gave Qatar the highest hydrocarbons reserves – and revenues per capita – of any country in the world that year, with revenues averaging $183,000 and reserves estimated at 724,000 barrels of oil equivalent per Qatari national.

Demographic Changes

One consequence of the gas and oil boom was the arrival in Qatar of a wave of expatriate workers. The development of associated Field Of Dreams industries, such as petrochemicals, added to One of the main reasons for this staggeringly the numbers, while the trickle down into other rapid growth was the discovery, also in 1971, sectors began to lift services and manufacturing. of the vast North Field, the world’s largest The first major wave of immigration, which non-associated natural gas reservoir. The lasted from 2004-09, saw field lies partially under annual average population the north-east corner of the Qatar Peninsula, A skyline of towers growth of 14.9%, according to QNB, peaking at 19.1% then stretches out many has sprouted in 2008. The subsequent kilometres further into global economic downturn the Gulf. In 2005, the across the capital, slowed growth somewhat, government imposed a Doha, while the but then a second wave moratorium on further development of the country’s population of immigration began as Qatar unleashed its huge field in order to create a has jumped, from infrastructure programme. strategy future production.

In consequence, Qatar’s According to the Oil and 744,029 in 2004 population reached 2.01m Gas that helped the country to over 2m today. in January 2014, according recover after its traditional to QNB, following 5.9% foreign exchange earner There is a palpable growth, year-on-year.

– the pearl industry – was decimated by the discovery sense here that the The majority of these people are non-Qataris, of pearl culturing by the future is one of great with nationals making Japanese in the 1930s.

Even with a combination possibility, and that up around 273,000 of the total in mid-2013. Most of fields run by the national it is arriving fast of the expatriates are oil company, Qatar Petroleum, and production-sharing agreements low-skilled or semi-skilled workers, often employed in the construction and services with international oil companies, the country’s sectors – and are mostly young males. oil production has been gradually falling in Figures from the Ministry of Development recent years, with production at approximately Planning and Statistics (MDPS) show 75.6% 730,000 barrels per day (bpd) in 2012. of the total population, including Qatari In addition, around 8.4m barrels of and non-Qatari nationals, were males as of condensates were produced that year, January 2014, while just 24.3% were females. while Qatar has also invested heavily in More than 80% of the total population lived gas-to-liquids technology, which helped in Doha at that time. further sustain its petroleum output. A This creates a great many challenges for moratorium on any further development of a developing economy such as Qatar’s. Yet the North Field which runs until 2015 has

14 MAY 2015

the authorities have long been aware of the need to manage this growth. A clear series of plans has been drawn up over the years and implemented, with the overall strategy known as QNV 2030.

Looking Ahead Published in 2008, QNV 2030 charts a course for Qatar that aims to establish it as “an advanced country capable of sustaining its own development and providing a high standard of living for all of its people for generations to come”.

To achieve this ambition, the plan recognises five major challenges that need to be addressed. One is that of balancing the size and quality of the expatriate labour force.

The other four are seen as: modernisation and the preservation of traditions; the needs of the current generation and those of future generations; managed growth and uncontrolled expansion; and economic growth, social development and environmental management.

Sustainability QNV 2030 also takes as a fundamental starting point the fact that growth based on non-renewable hydrocarbons resources will ultimately prove unsustainable. The welfare of future generations must therefore be a factor in determining how the gas and oil fields are developed – an approach that is clearly behind the current moratorium on the North Field, but also behind a key word in QNV 2030: diversification.

At the same time, the impact on the environment in one of the world’s most delicate ecologies must be addressed, with overall development aiming to balance environmental restoration and preservation with the inevitable impact of population and economic expansion. QNV 2030 aims to manage these challenges by basing its strategy on four pillars: human development, social development, economic development and environmental development.

These principles are common to all of the country’s plans, whether they be short, medium or long term. QNV 2030 can be broken down into a series of five-year sequential steps, or National Development Strategies (NDSs), with the first and current one of these being NDS 2011-16.

COUNTRY REPORT – QATAR

The Human Factor The first QNV 2030 pillar recognises the need for the Qatari people themselves to become the country’s greatest resource. This means establishing“advanced educational and health systems”while simultaneously boosting the numbers of Qataris in the workforce.

On this latter point, MDPS data shows that the country’s labour force – expatriates included – totalled around 1.5m in the second quarter of 2013, with 74% of these in the private sector, and 37% of that total employed in the construction sector – the largest segment. While producing most of Qatar’s wealth, oil and gas accounted for just 7% of the labour force, illustrating the pressing need for new areas of employment and diversification.

Qatari nationals have also traditionally tended to take government jobs. According to the MDPS, 84% of nationals with jobs were public sector employees in 2012, a total made up of 71% government departments and 13% government companies. Just 9% worked wholly in the private sector, with the remainder in the mixed sector.

Higher relative wages and better working conditions, in terms of pensions and other social support, are the usual reasons why Qataris prefer the public sector. Public sector wage hikes in 2011 and 2012 reportedly increased its attractiveness as well. In addition, given that the number of Qatari women that work is quite limited, overall only around one-third of Qatari nationals are in the labour force, according to figures from QNB.

Qatarisation QNV 2030 recognises that improving human resources means building a knowledgebased economy, while balancing the numbers of expatriates with nationals in the workforce also means encouraging Qataris to enter the private sector and existing businesses to hire more Qataris.

Thus, there is a policy of Qatarisation, a strategy begun in 2000 which aims to achieve 50% Qatari national employment in the industry and energy sectors. Many sectors and companies have since exceeded this target, though others are still working towards it. RasGas, for example, announced it had reached 34% Qatarisation by November 2013.

Providing skilled and trained professionals for energy and industry requires a major investment in education. This is under way, with projects such as Qatar Foundation’s Education City bringing in overseas universities, while the government increased education spending to QR26.3bn ($7.2bn) in its 2014/15 budget, a 7.3% rise over 2013/14.

Spending on health – another key element in building human resources – was also increased by 12.5% in the budget, with this covering a major new hospital building and improvement programme.

In the shorter term, nonetheless, there is recognition that expatriates will continue to provide the bulk of the labour force, particularly in the lower-level jobs.

QNV 2030 thus advocates incentives and institutional arrangements to continue to attract workers from abroad, while“ensuring the rights and safety of expatriate labour”.

Workers’ Rights This latter point has recently been somewhat controversial, with concerns expressed over workers’ conditions in the construction sector, now that the international spotlight is on Qatar in the run-up to the 2022 FIFA World Cup. The deaths of several Nepalese workers – although they were not engaged in World Cup projects – made global headlines in consequence, and highlighted other issues with the Qatari labour market.

Sponsorship System For Expatriates

While in many cases workers remain with the same employer, finish their work and return home without incident – and with their earnings a valuable source of remittances for their family and home economy – in some cases, the system lends itself to the exploitation of employees. It also leads to a highly rigid labour market, with bottlenecks regularly appearing. As workers cannot move between projects without great difficulty, fresh visas often have to be obtained and new workers hired for new projects, which can lead to employers being obliged to hire inexperienced employees, while experienced ones have to return home, particularly if their country has already reached its visa quota.

At the same time, leaving Qatar can require an exit visa, leading to some being effectively marooned if they lose their employment. Other market distortions occur as well, with some calls being made – both inside In consequence, and outside Qatar – for Qatar’s population reform of the system, as well as for improved reached 2.01m health and safety in January 2014, conditions for workers.

In late November 2013 according to QNB, Hassan Al Thawadi, the following 5.9% secretary-general of the now-renamed Supreme growth, year-onCommittee for Delivery year. The majority and Legacy, told reporters that the committee of these people are was“working hard”to produce a“sustainable non-Qataris, with system for the long term”.

nationals making up Sustainable around 273,000 of Growth the total in mid-2013 The aim of the second

Expatriate workers for the larger projects are usually hired via agencies that are based overseas, with a quota given for each country. Workers who obtain the necessary sponsorship from a Qatari employer – and pay the requisite fee – can obtain visas and an employment contract to come to Qatar. They thus enter the kafala – or sponsorship – system. This restricts their ability to move from one employer to another, as both their visa and residency are then tied to a particular job.

pillar of QNV 2030 is social development, a recognition of the need to adhere to high moral standards in progressing towards the vision’s goals.

This takes the family as the basis for society, with women taking on an enhanced role as that society develops. Being a just and tolerant country, with a constructive role in international affairs, is also seen as key here. This gives Qatar a principled basis for engagement overseas, in multilateral and bilateral organisations and initiatives,

MAY 2015 15

including its leading role in the main regional economic bloc, the GCC.

International Role Qatar is also a member of the World Trade Organisation, with Doha the venue for the 2001 meeting setting the mandate for the most recent round of global talks.

In addition, Qatar has an important role in promoting investment overseas – through the country’s sovereign wealth fund, the Qatar Investment Authority (QIA), and its subsidiaries, such as its direct investment arm, Qatar Holding – investing in equities, bonds and other projects worldwide (see analysis).

Financial Aid Qatar has offered financial aid to several Arab countries currently in transition. According to the IMF, between 2010 and early 2013 this totalled $3.2bn, composed of $2.5bn in investments and $675.8m in cumulative financial support to Egypt, Jordan, Libya, Syria and Tunisia. Following the military coup in Egypt in July 2013, however, it was unclear what level of support Qatar would continue to give to the Egyptian authorities.

16 MAY 2015

The country also plays an important role internationally in terms of remittances sent home by the expatriate workforce. These are often crucial in emerging markets such as Pakistan, India, the Philippines, and the Middle East and North African states.

The IMF estimates that there was $60bn in outflows via remittances between 2006 and 2012, with 54% of this going to Asia and 28% to other Arab states.

Growth & Diversification The third pillar, economic development, begins with the policy of using Qatar’s current hydrocarbons wealth to leverage sustainable economic development for the future.

Diversification is the central plank of the consequent economic growth strategy, with the stated aim of balancing the budget with non-hydrocarbons-based revenues by 2020.

That growth has been phenomenal in recent years, too. From 2000 to 2011, real GDP grew at an annual average rate of 13.1%, an average that since mid-2005 has outstripped even China. In 2012 GDP grew by 6.2%, down from 13% in 2011 but still one of the word’s fastest rates. Data from the

MDPS showed that growth should pick up to 6.8% in 2014, up from 6.2% in the third quarter of 2013, given the number plans for large infrastructure projects.

Dependence On Hydrocarbons A large part of the reason for slowing growth is the dependency of the country on hydrocarbons – and thus on the vagaries of international oil and gas prices.

Indeed, the hydrocarbons sector was the main driver of growth overall for many years – up until the second quarter of 2011, when the current phase of LNG expansion was completed. At that time, hydrocarbons’ contribution to real GDP had grown 30% year-on-year, according to MDPS data, while the non-hydrocarbons sector saw only around 9% growth.

According to MDPS and QNB figures for 2012, the respective shares of Qatar’s $192bn GDP taken by gas and oil that year were 42.2% and 15.6% – making a total of some 57.8% for the oil and gas sector.

Services accounted for 29.6% of the total, with financial services the largest contributor within this category, at 10.2%. The non-oil

COUNTRY REPORT – QATAR

industry sector then contributed a total of 14.6%, with manufacturing taking 9.8% and construction 4.4%. Thus, the nonhydrocarbons sector took 42.2% of GDP, an amount equivalent to the gas sector’s contribution.

In 2011 the contribution of nonhydrocarbons sectors was similar – around 42% out of a total GDP of $173bn, according to QNB. This was largely made up of financial services, which accounted for around 28% of non-hydrocarbons GDP for the year, and manufacturing, which was responsible for 24%.

Oil & Gas Prices A look at benchmark Brent crude oil shows that barrel prices have fluctuated significantly in recent years – from an average of $97.40 in 2008 down to $61.70 the following year, in the aftermath of the global downturn. Prices then picked back up, to $79.60 in 2010, and then jumped to $111 in 2011. They peaked at $111.70 in 2012, while by November 2013 they had fallen to about $108 a barrel and remained at around that level as of midFebruary 2014. At the same time, gas prices have been decoupling from oil prices, which

they had historically tracked closely. Industry supply capacity of existing liquefaction plants, insiders have expressed concern recently that particularly in Asia and Europe. the development of US shale gas resources, In recent years, then, benchmark Japanese in particular, may drive a further wedge LNG prices have risen steadily, despite between LNG and oil prices, with the former a sharp drop in the wake of the global often contractually indexed to the latter. economic downturn in 2008. In 2012 they Acting as a counter to what could be a long- reached $16.80 per million British thermal term decline in LNG pricing, however, are units (MBTU), up from $12.80 just before the contingent and non-contingent factors that downturn and $4.70 in 2000. Japanese spot have recently been in play. On the contingent market prices also rose steadily until the end side is that after the of 2012, from $10 per MBTU tsunami that struck Japan in January 2008 to a high of in 2011, demand for LNG $18.10 in 2012. Since then To achieve this jumped in one of Qatar’s they have declined, although ambition, the plan primary export markets, they were still standing at as Tokyo shut down its $15.10 at the start of 2013. recognises five nuclear power stations.

At the same time, most of On a more Qatar’s LNG is sold on fixed, major challenges fundamental level, long-term contracts, which that need to be demand elsewhere also protects the country has risen too. While against short-term price addressed. One is LNG accounted for fluctuations. that of balancing around 5% of global gas The net effect of all of this, consumption in 2000, it the size and quality then, has been an overall now makes up around increase in hydrocarbons of the expatriate twice that. Demand is revenues; however, in recent currently exceeding the years, the oil and gas sector’s labour force MAY 2015 17

COUNTRY REPORT – QATAR

share of nominal GDP has been gradually decreasing. The main driver of growth is now the non-hydrocarbons sector, which began to see higher percentage annual increases than oil and gas from late 2011 onwards.

In the third quarter of 2013 nonhydrocarbons growth was around 9.5% year-on-year, while hydrocarbons saw 1.8% growth. This trend is likely to continue going forward, given the current moratorium on new gas developments, and the slow decline in oil output as existing reserves decline.

Also significant for QNV 2030 as well as for the NDS 2011-16 has been the increasing contribution of manufacturing. In 2012 the value of this sector grew by some 11.8%, year-on-year, thanks to projects in petrochemicals, fertilisers, metals and cement. Construction also grew, by 10.6%, primarily driven by government expenditure on infrastructure.

government revenue went up by 25.7% to a record figure of some $76.6bn, while direct oil and gas revenues, and revenues from the state’s investments in the sector, rose by around 18.9%. The rest of the increase was accounted for by corporate and other taxes, Customs revenues and other income sources, demonstrating improved collection by the Qatari authorities, as well as the effect of more revenue-raising activities coming on-stream as the economy grew.

Low Tariffs

At the same time, tax and Customs revenues have never been high. Qatar is generally a low-tariff country, with the majority of import tariff lines at 5% or below. Since 2010 there has been a withholding tax and a corporate income tax of 10% of taxable profits on Qatar-sourced income, unless the corporation is wholly owned by Qatari and/ or GCC nationals, in Surpluses At the same time, which case there is no Meanwhile, the surge in the impact on the corporate income tax revenue has created some payable. Exemptions substantial fiscal surpluses environment in one also exist for those for the government in of the world’s most involved in a number of recent times, particularly as projects, such as Qatar during the last five years an delicate ecologies Science and Technology average of more than 80% must be addressed, Park. There are also no of budget revenues have personal income taxes. come from hydrocarbons. with overall Behind the increase The financial year development aiming to in the surplus was 2012/13 saw a record fiscal the fact that while surplus of $22.6bn, equal balance environmental also revenue jumped, to 11.8% of GDP, according expenditure was to preliminary figures from restoration and left lagging behind.

Qatar Central Bank (QCB). preservation with Total government This was nearly double the expenditure in the $13.2bn fiscal surplus of the the inevitable impact financial year 2012/13 previous financial year. of population and increased by 13.1%, This was largely to $54bn. This was a due to an increase in economic expansion marked change from hydrocarbons production the previous financial year, when expenditure combined with higher global prices. It is had risen by some 21.3%. For the first not uncommon for Qatar to post budget time since 1990, the year saw expenditure surpluses, as the assumed price of oil is below budget, with development spending traditionally set considerably lower than the increasing a marginal 0.5% year-on-year, to market value. approximately $13.9bn.

Current expenditure increased by 18.2%.

Rising Revenues Much of the latter was also taken up by However, oil and gas revenue fluctuations pay increases, with public sector wages are only a part of the story behind the costing 14.8% more in the financial year surplus. In the financial year 2012/13, total

18 MAY 2015

2012/13 than they had done the year before.

Other categories generally declined. The development budget shortfall was largely attributed to delays in the roll-out of government capital projects, highlighting one of the challenges in managing the country’s rapid economic expansion.

According to a report by National Bank of Kuwait, project awards exceeded $8bn in value in the first quarter of 2012, but then declined steadily to less than $4bn by the fourth quarter of the same year. The majority of these projects were in the transport and construction sectors. There are various factors behind this decline. Partly, government fiscal policy itself created an atmosphere of greater prudence in expenditure, a decision taken in light of the generally sluggish performance of the global economy in the financial year 2011/12.

There has also been recognition that budgeting itself needs improvement, with the government planning to move to a threeyear budgetary framework, a move that was welcomed by the IMF. This should ensure more stable medium-term fiscal planning, eliminating short-term volatility, and should also help government agencies more effectively track and distribute funding for major projects.

Beyond these proposed changes, bottlenecks in supply have also sometimes introduced delays, with two key transport sector projects – the new Hamad International Airport and the new sea port – key to easing these. The first is nearly finished and is now due to be operational in 2014, and the latter’s first stage is set to open in 2016. Some suppliers told OBG that, in the meantime, they were accessing the neighbouring Saudi market to bring in materials by road, although Saudi Arabia’s own large infrastructure projects were soaking up capacity there as well.

Key Indicators With hydrocarbons and non-hydrocarbons revenues increasing, Qatar’s current account has long been healthy. In the first three quarters of 2013, it registered a record surplus, at 33.5% of GDP. This was up slightly on the 32% recorded in 2012, and well ahead of the recent low of 6.5% in 2009 after the first impact of the global slump.

The capital and financial account, however, has generally been in deficit in recent years,

COUNTRY REPORT – QATAR

reflecting strong capital outflows. In the first three quarters of 2013, this was recorded as 27.9% of GDP, a drop from the 23.1% posted in 2012 but still an improvement from 2011, when the capital account deficit was 36.5%.

Putting the current and capital accounts together, the resulting balance of payments maintained a surplus of 4.2% of GDP in the first three quarters of 2013, with the QCB reporting a surplus in the first quarter, a dip into the red in the second and returning to the black in the third. This is compared to an 8.4% balance of payments surplus posted in 2012 and an 8.4% deficit recorded in 2011.

Although Qatar’s international reserves dropped by nearly 50% over 2011, down to QR59.3bn ($16.2bn) by the end of the year, they have nearly tripled since then. By the end of 2012, net international reserves had reached QR118.9bn ($32.6bn), growing a further 27.5% over the course of 2013 to reach QR151.7bn ($41.6bn) by December 2013. Import cover stood at 16.5 months, a figure over five times the minimum IMFrecommended level for countries that operate with an exchange rate peg.

Peg Since an emiri decree in 2001, the riyal has been pegged to the US dollar at a rate of $1:QR3.64, with this allowed to fluctuate within a band between QR3.6415 and QR3.6385. While there has been periodic discussion of changing this arrangement in Qatar and among the GCC countries – which are similarly pegged to the dollar, aside from Kuwait – it seems unlikely to occur any time soon. The peg gives the riyal stability, and continues to be well supported by the country’s strong revenues and large overseas investments.

Short-term interest rate policy is thus closely tied to the US Federal Reserve rates.

The QCB has three policy rates – deposit, lending and repurchase – with the lending rate the main mechanism for sending signals to the market. The lending and repurchase rates were reduced from 5% to 4.5% in August 2011, while the deposit rate went down from 1% to 0.75%. They have remained there since.

One other advantage of the large fiscal surplus is that it helps ameliorate gross government debt. This stood at 38.7% of GDP in 2010, according to QNB, falling to 37% in 2011 and then rising a little to 37.8%

in 2012. The main reason for this expansion was a deliberate government policy.

For some time now Qatar has been attempting to develop its capital markets, and the state has embarked on a programme to support the bond market. To do this, it has made a series of debt issuances with the aim of establishing a domestic yield curve. In November 2013, for example, the QCB issued QR4bn ($1.1bn) in Treasury bills.

Secure Banking The country is also blessed with what is widely considered to be a very secure banking system.

This sector is now the third largest in the GCC and showed the strongest asset growth of all six member states in 2013, at 11.4%.

The six commercial banks, four Islamic institutions and one development bank that constitute the local sector control all but around 5% of total assets, with that portion divided among seven foreign banks. By far the largest local bank is QNB, which controlled 48.7% of total assets in December 2013.

Loans The largest share of overall loans is taken by the public sector, which accounted for 42.5% of bank credit facilities in June 2013, down from 45.8% in 2012. Overall loan growth between 2008 and June 2013 was 19.1%, with total credit facilities extended standing at $146bn by June 2013, up on $140bn at the end of 2012 and $111bn at the end of 2011.

In addition, there are some 150 financial services companies operating in Qatar Financial Centre. This offshore facility grants those operating within it special privileges, including the possibility of 100% foreign ownership and full profit repatriation.

The domestic banks have fairly low nonperforming loan (NPL) ratios, with the sector recording an NPL ratio of 1.7% in 2012, up slightly on the 1% of 2011, according to the QCB. The ratio of provisioning to NPLs was 97.5% in 2012, however, up from 87.2% in 2011. Capital adequacy is also high – the sector average for regulatory tier 1 capital to total assets was 12.8% in 2012, up from 12.6% in 2011. The ratio to risk-weighted assets was 18.2% in 2012, down from 19.9% in 2011.

In terms of international ratings, the main Qatari banks all score highly. QNB has an “Aa3”rating from Moody’s, and an“A+”from

Fitch and Standard & Poor’s. Commercial Bank has “A1”,“A”and “A-”ratings with the same agencies, respectively, while Qatar Islamic Bank is rated “A”and “A-”with Fitch and Standard & Poor’s, respectively, as is Doha Bank.

Forging Ahead The banking sector and the government are thus both well provisioned to finance major projects – with a long list of these either already ongoing or in the pipeline.

As hydrocarbons diminish in terms of their share of the economy, project development – particularly of infrastructure – is growing its share, becoming the chief driver of economic expansion. These projects are also increasingly in non-hydrocarbons-related areas, with many focused on the 2022 FIFA World Cup, although with much longer-term legacies.

A report by EC Harris in late 2013 forecast $156.8bn in construction spend up to 2030.

Meanwhile, according to QNB, estimated project spending displayed a compound annual growth rate of 46.3% between 2000 and 2012, with a recent peak in 2008 of $30.8bn. Much of the spend up to then had been oil- and gas-related, however.

Now, infrastructure of a different kind is taking the lion’s share, with QNB figures showing construction accounts for 46.8% of all current project spending and transport 34.9%. Some $29.1bn in project spending is scheduled for 2013, with this rising to $41.8bn in 2018, equivalent to a 7.5% compound annual growth rate over the five years.

Spending Programme For the financial year 2014/15 as well, the government has announced an enormous spending programme. According to local press in March 2014, the QR225.7bn ($61.82bn) budget as approved by the Emir is 2.5% larger than it was for 2013/14. A QR7.3bn ($1.99bn) surplus is projected, with spending of QR218.4bn ($59.82bn). But the actual level of spending is likely to be higher still.

The estimates are based on an assumed oil price of $65 per barrel, but with barrel prices at about $100 in March 2014, government revenue is likely to be higher. The budget allocates a 54% share to education, health, infrastructure and transportation, with QR75.6bn ($20.71bn) going to infrastructure

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COUNTRY REPORT – QATAR

projects alone. The allocation represents a 22% increase in spending for infrastructure over the 2013/14 budget to enable the expansion and completion of projects for the 2022 World Cup.

Inflationary Pressures Naturally, with such a large injection of government spending, inflation is a concern.

Excess structural liquidity has been an issue in Qatar for some time, due to the high revenues from hydrocarbons exports and the booming economy. QCB data shows that inflation has been creeping up recently, too. The consumer price index stood at 1.87% in 2012 on average, but in the last two quarters it rose to end the year at 2.65%. By December 2013 QNB reported the figure at 2.7%, year-on-year. The M3 money supply went from QR442.5bn ($121bn) in 2012 to QR576.8bn ($158bn) in the fourth quarter of 2013, according to the QCB.

Housing Prices One of the main sources of inflationary pressure has traditionally been housing, with this in shorter supply in the early part of the last decade, as Doha’s population expanded more rapidly than new-built residential property could come onto the market – all at a time of both high liquidity and credit growth.

Recently though, the market was somewhat looser, with land prices even falling slightly in the third quarter of 2013. This drop was likely only a temporary situation, however, with the population set to expand ahead of the 2022 FIFA World Cup due to the influx of workers

needed for construction projects (see Real Estate chapter).

Already, the QCB’s real estate price index, which hit an all-time high of 192.2 in 2008, stood at 157.2 by the end of 2012, then a high of 189.8 in December 2013, showing a generally upward trend.

The completion of new housing projects should ease this to some degree, but bottlenecks are expected to continue to appear, and are likely to make pricing volatile. These may also occur in the supply of materials to the country’s many infrastructure projects, causing price hikes there, too.

While there is some debate among economists on the issue, inflation therefore seems likely to continue to be a factor in the country going forward. Bottlenecks in supply – rather than excess liquidity – are generally thought likely to be behind any future price hikes, with measures such as the development of bond issuances and the management of the reserve requirement and loans-to-deposit and liquidity ratios for local banks all helping in this regard. In June 2013, the MDPS forecast inflation for both 2013 and 2014 would come in at around 3.6%.

Outlook With such robust fundamentals, it is no surprise that Qatar consistently ranks high in the international ratings agency standings.

Moody’s had the country at“Aa2”, not on watch, for long-term risk in November 2013, with its outlook rated stable. Standard &

Poor’s had it at“AA”, with a stable outlook, for the same period. Looking at credit default swaps, the country’s spreads are among the lowest in the region, at around 66 basis points above US Treasuries for a five-year bond as of February 2014.

In terms of competitiveness, Qatar also scores well. The World Economic Forum’s“Global Competitiveness Report 2013-14”placed it 13th out of 148 countries, and top within the GCC region. The World Bank’s“Doing Business” survey, meanwhile, ranked Qatar 40th in the world and third in the GCC, reflecting the survey’s emphasis on regulatory factors (see analysis). This gave added weight to issues such as gaining access to credit and starting a business – concerns that the government is anxious to address as it attempts to provide greater support for business start-ups (see analysis). It is to the area of private sector growth, beyond the oil and gas business, that emphasis is now being given, with a recognition that this segment is vital to the success of QNV 2030 – and to the country’s long-term prosperity.

Looking at the QNV 2030’s four pillars, balancing the country on these will be both the challenge and the potential opportunity for investors, domestic and international, as the country heads towards a much greater global presence in the years ahead.

Originally published by Oxford Business Group (OBG) in The Report: Qatar 2014, published in April 2014, Economy Chapter. For economic news about Qatar and other countries covered by OBG, please visit http://www. oxfordbusinessgroup.com/economic-news-update

MAY 2015 20

Keeping it fresh, Anton Steeman (www. bestinpackaging.com) takes a look at how the 2015 consumer - the Gen Z and the Millennial, who is anxious to follow a fresh, healthy and sustainable lifestyle, is demanding a change in the way food is packaged. It has to be sustainable inside and out 22 MAY 2015

T

he 2015 consumer (Millennials and Gen Z) are in many ways more demanding than previous generations of consumers and they expect products to be fresh, healthy and sustainable throughout the full value chain. This is a strong message not only to offer the products as fresh as possible, but also to use sustainable packaging from natural and/or renewable sources.

A new viewpoint report from Stora Enso shows that Millennials are more prone to purchasing eco-friendly products than older generations.

Four out of five Millennials consider packaging as important when making purchasing decisions and 85 per cent of Millennials consider packaging material as a part of the brand experience, compared to 71 per cent among non-Millennials.

Furthermore the report concludes that 44 per cent of Millennials

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inside and out

are willing to pay a premium for products with sustainable packaging, and they consider fibrebased packaging materials to be by far the most sustainable packaging material choice.

There are now a whole range of recent innovations in fresh produce packaging, in terms of eco-corrugated boxes, shelf-life extending lidding, liquid absorbers, laser labelling of fruit and more.

Some of them include:

Nurture: Living Fruit Basket

Designer Hyunhee Hwang from London writes about this project on his website -“The ‘Nurture’ is a concept of living fruit basket packaged for fresh nutrition and consumption for health-oriented consumers. This project began with a curiosity of the meaning of the term ‘fresh’ in the food industry. Based on research, people highly attentive to a healthy diet tend to expect high quality nutrition from their fresh food consumption.

In order to satisfy them with genuine health benefits from fresh produce, the Nurture suggests a daily harvest of Superfruits that are wellknown for high nutritional value, such as Acerola cherries, berries, and figs.

However, they are difficult to transport due to their fragility, have a short shelf-life, and issues with storage.

The aim of Nurture is to provide the freshest nutrition consumption to fulfil the recommended daily allowance equivalent to health supplements in

MAY 2015 23

the most natural format. The fruits in Nurture are designed to be nestled within their own roots in the form of a basket in order to keep them alive and fresh efficiently till the time of consumption.

Consumers can buy them weekly, and nurture them with minimal moisturising in order to ingest specific nutrients. Also provided are kitchenware tools that are specially designed, with instructions on preventing nutrition loss from the process of picking, washing, and drying of the fruits.”

Tomatoes packaged in own stalk The Greenery from Holland had a real world first at the FruitLogistica 2015 - a paperboard packaging made from fibres from tomato stalks was presented. Duijvestijn tomatoes are packaged in the bio-based box. Not unrelated, this Greenery grower was chosen as the winner of the Tomato Inspiration Award 2015 at the fair.

24 MAY 2015

According to The Greenery, it is an innovation that came so as to turn a discarded plant into a high value product.

The stalks are used to produce the boxes, and the leaves for smaller packaging. There is also a plan to extract raw materials from the plant juices for bio-plastics. The box is a development by Biobased Westland, and is produced by Smurfit-Kappa. The development with bio-based packaging will cause a revolution in the packaging industry.

The technical properties of this packaging are no less than those of a conventional box.

Because tomato fibres have been used, the box can be recycled multiple times, even more than a standard carton box, which increases the sustainability factor even more.

Clementines FruitPack Ripe-to-You, specialising in distinctive citrus, is located in the Central San Joaquin Valley

of California, an area with a long history of agriculture. Its new Clementines FruitPack, manufactured by Graphic Packaging Intl, is a breakthrough design, offering a new way to package produce.

Whereas less-sustainable packaging solutions for produce generally lack billboard space, this folding carton features a large billboard, allowing for attractive graphics that increase visual impact and appetite appeal.

Furthermore, its built-in handle makes for easy carrying, stacking, and displaying at retail. It also works with existing distribution processes, leaving current supply chain systems undisturbed.

This FruitPack Graphic Packaging took the Eco Award, which identifies it as a potentially ‘game-changing’ packaging, as it’s expected that it will replace less sustainable substrates

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such as fish-net plastic mesh or plastic film, with renewable, recyclable paperboard.

Although consumers know that fruits and vegetables are good for them, this knowledge has not translated into increased sales over the past years. With this in mind, produce growers are finally reconsidering their packaging strategies by looking to packaging materials that will more readily impact consumers. And here is where paperboard comes in.

First, as the Stora-Enso report concludes, as compared to other substrates, paperboard’s green, sustainable ethos is not only in perfect alignment with the ideas of the consumer, but also underscores the obvious nutritional benefits of fruits and veggies.

Second, not only do paper-based substrates provide excellent billboard space and rich visual and tactile stimulation that encourage appetite appeal, but paperboard’s flat surface is also ideal for displaying QR

codes and augmented reality, value-added components that provide consumers with additional information, such as recipes or place of origin information.

Apple Baguette Packaging Budelpack from Holland recently got involved actively with the packaging of agricultural products. The first step was the development of an on-site packaging line able to pack fruit and vegetables. The process of getting acquainted with the packing of fresh produce led to innovative packaging for fruit, resulting in the ‘baguette’.

The ‘baguette’ package was initially developed for apples, but at a later stage, will also be used for other fruits.

The paperboard packaging offers more

protection to the apple, as well as more communication space.

There were several ideas, but this particular design was chosen because of its natural look, the innovative design, the stacking ability of the packaging and the printing options. The ‘baguette’ provides protection to one or more apples, which are stored in separate compartments. For a variety of sizes, the diameter of the package can be adjusted.

Big Slice Kettle-Cooked Apples Designed by HOSS Creative Intelligence, these kettle-cooked apples are sealed in square stand-up pouches. The printed graphics are a clear patterned apple, while a leaf sits atop, with a playful adjective transcribed onto it.

APRIL 2015 25

COVER STORY

Big Slice Apples started out making big chunky apples slices, slowly cooked in their own naturally sweet sauce, and then had a ground-breaking idea, ie, package the kettle-cooked apples in a shelf-stable ‘onthe-go’ pouch.

The main goal of the packaging was to capture all that rich, natural taste and flavour of Grandma’s authentic Heritage Recipe, inviting its way into the hearts of consumers craving to enjoy delicious cooked apples while on the run.

The product is a marriage of modern taste and old-fashioned quality. Small batches are produced with only the finest ingredients. Indulgence, but still under 100 calories, 100 per cent natural, non-GMO.

Fruit halves revolutionising the market Spanish retailer El Corte Inglés launched a new range of fresh fruits sliced in halves and packed under modified atmosphere conditions by the Valencian company Vicente Peris. Melons, watermelon, pumpkin, and the like usually weigh an average of three to four kilos, and often end up wasted. That’s why in Spain and many Latin American countries, it’s a cultural aspect to expect the fruit traders to slice the fruit (if too large to buy a whole one) in half or even less at the store. Consequently, many retail chains and greengrocers are selling half pieces of melon and watermelon sliced on their own premises, without complying with food safety regulations regarding handling and storage, and that could lead to problems with salmonella or listeria.

This is very different in the other European countries, where consumers only see advantages in this concept whenever prices do not vary much with respect to those of conventional products. And so, Vicente Peris created a new packaging format, adapting its product size to the consumer trends of current households, which tend to be smaller.

Peris is the only European brand that packages its products in a protective

26 APRIL 2015

atmosphere, including its Piel de sapo (frog skin) Melon, Galia Melon, Watermelon, Pumpkin and Valencian Butter Bean. Without breaking the cold chain, the company achieves stable and hygienic quality, leading to a shelf life of up to 10 days, depending on the product.

Resealable Belgian endive box Tomatoes and cucumbers are the frontrunners in the organic segment, as there is definitely an increasing interest in organic cultivation. More and more growers are making the switch. Belgian endive is, despite some problems in the start-up phase, not a niche product anymore.

The shelf life for Belgian endive is mainly limited by light and temperature. Light is the most important factor, turning the endive green. Green Belgian endive won’t be sold.

To prevent the Belgian endive from turning green, supermarkets now often use plastic covering sheets. But customers don’t leave them in place with all consequences.

To combat loss of Belgian endive, a vulnerable product, in supermarkets, Eosta partnered with Flemish Smart Packaging Solutions. The companies developed a box

with resealable lid. The box, developed by Smart Packaging Solutions, has a lid that closes automatically, improving the shelf life of the Belgian endive. The box, which was recently introduced on the Belgian market through BelOrta, is now finding its way onto the Dutch and international, organic market.

The boxes are nearly completely made from recycled materials.

The company’s focus is on the Dutch, German, Scandinavian and French market.

Nature and More’s sustainable packaging Nature and More, the international specialist in organic vegetables and fruit, is the first company that has begun to use sustainable packaging derived from sugar cane, on a large scale. The material looks like fine cardboard and beats almost all other materials when it comes to sustainability. It’s easily compostable, 100 per cent GMO free, made of waste material, tree-friendly and

COVER STORY

plastic-free. And on top of this: the market is embracing this new development.

Nature and More has been working for two years to develop these new packaging materials. Now it is selling organic vine tomatoes, pears and physalis packaged in the sugarcane materials. French supermarket chain Carrefour is one of Nature and More’s first clients to have opted for organic fruit and vegetables packaged with the new materials.

Nature and More is now replacing the old trays, tags, labels and stickers with the new materials. The look is clean and natural, and fits perfectly with organic products. It’s plastic free, and it’s made of waste material that would otherwise be burnt, resulting in pollution. Therefore, it doesn’t put a claim on new land.

Nature and More is the ‘trace and tell’ system of Eosta, a leading distributor of organic fruits and vegetables in Europe.

One sees more fresh produce companies using eco-friendly, renewable and natural packaging material in Europe. In the USA, that’s unfortunately still a bit different.

Although organic produce is also in the USA a high-flyer, the material used to package

this organic produce isn’t always, or seldom, organic, compostable or natural.

Three Heart Romaine Stand-Up Pouch with Velcro Closure The packaging, designed by Jennie Freeman from Organic Girl LLC and manufactured by Emerald Packaging, Inc, is a two-layer standup pouch with a handle to make it easier for the consumer to grab it off the shelf.

It features a Velcro closure to make the package easier to close compared to a string zipper. The matte finish adds to the gloss of the package, helping it stand out in the graphic saturated produce section of the grocery store. This package stands up as opposed to the previous clamshell, catching the consumer’s eye. Antifog prevents moisture build-up on the inside of the bag allowing consumers to see the produce.

Potato Starch Film for Potato Bags Like the Organic Girl stand-up pouch, this potato bag also is manufactured by Emerald Packaging, Inc, and designed by Michael Ricon.

This product represents a breakthrough in sustainable films, as the five lb bag is partly

made from a renewable resource: potatoes. The 25 per cent potato resin and 75 per cent polyethylene mixture, developed by Emerald Packaging and Biologiq of Idaho Falls, ID, produces a film that is actually stronger than a 100 per cent polyethylene based film typically used for potato bags, thereby allowing for downgauging of up to 10 per cent. This film has many other possible uses, including as a white sealant and other packaging that does not require absolute clarity.

Green Giant Fresh Brussel Sprouts Robbie Flexibles created for Green Giant Fresh Brussels Sprouts a laminated standup pouch using Expanded Colour Gamut printing. The crisp graphics increase consumer appeal and brand recognition on store shelves and project a high quality product image.

This packaging eliminates the risk of contamination and protects the product freshness through micro-perforations for OTR control.

Let us hope that this focus on the packaging for fresh produce continues and we see more novelties in the future.

MAY 2015 27

‫‪COVER STORY‬‬

‫اليومية املقترحة من املكمالت الغذائية‬ ‫الصحية بطرق طبيعية أكثر‪ .‬صممت الفواكه‬ ‫املستخدمة في التغذية لتكون بجذورها اخلاصة‬ ‫على شكل سلة من أجل إبقائها حية وطازجة‬ ‫أكثر وبكفاءة حتى وقت االستهالك‪.‬‬ ‫ميكن للمستهلكني شراء هذه الفواكه‬ ‫أسبوعيا‪ ،‬وتغذيتها باحلد األدنى من الترطيب‬ ‫من أجل استيعاب العناصر املغذية احملددة‪ .‬كما‬ ‫تتوفر أدوات للمطبخ مت تصميمها خصيصا‬ ‫لذلك الغرض‪ ،‬مع تعليمات واضحة ملنع‬ ‫أي نقصان في التغذية أثناء عملية القطف‪،‬‬ ‫والغسيل‪ ،‬وجتفيف الفواكه‪».‬‬

‫وتستخدم األوراق للتغليف صغير احلجم‪ .‬هناك‬ ‫الطماطم املعبأة في نسق خاص‬ ‫أيضا خطة الستخراج املواد اخلام من العصائر‬ ‫كان اخلضار من هولندا على موعد مع‬ ‫النباتية الستخدامها في البالستيك احليوي‪.‬‬ ‫العالم ألول مرة في معرض ‪FruitLogistica‬‬ ‫تطوير هذه الصناديق احليوية واستخدامها في‬ ‫عام ‪ 2015‬لعرض وسائل التعبئة والتغليف‬ ‫التعبئة والتغليف احليوي سيسبب ثورة في‬ ‫املصنوعة من الورق املقوى املصنوع بدوره‬ ‫صناعة التعبئة والتغليف‪.‬‬ ‫من ألياف سيقان الطماطم‪ .‬تقوم شركة‬ ‫اخلصائص الفنية لهذه التعبئة والتغليف‬ ‫‪ Duijvestijn‬بتعبئة الطماطم في صناديق‬ ‫ليست أقل من تلك التقليدية‪ .‬استخدام‬ ‫حيوية‪ ،‬ومقابل ذلك فازت بجائزة اإللهام في‬ ‫ألياف الطماطم في صنع الصناديق يجعلها‬ ‫دورة ‪ 2015‬من املعرض‪.‬‬ ‫قابلة إلعادة التدوير لعدة مرات‪ ،‬أكثر من علب‬ ‫هذا االبتكار جاء بغرض حتويل نبات يتم‬ ‫التخلص منه إلى منتج عالي القيمة‪ .‬تستخدم الكرتون القياسية‪ ،‬مما يزيد من عامل االستدامة‬ ‫سيقان نبات الطماطم إلنتاج الصناديق احليوية‪ ،‬أكثر من ذلك‪.‬‬ ‫‪28 MAY 2015‬‬

‫‪COVER STORY‬‬

‫اﻟحﻔﺎظ ﻋﻠﻴﻬﺎ ﻃﺎزﺟﺔ‪،‬‬

‫ﻣﻦ اﻟﺪاﺧﻞ واﳋﺎرج‬

‫ﻧﻘﺪم ﻟﻜﻢ ﻓﻴﻤﺎ ﻳﻠﻲ ﻧﻈﺮة ﺳﺮﻳﻌﺔ ﻋﻠﻰ ﻣﻄﺎﻟﺐ اﳌﺴﺘﻬﻠﻜﲔ ﻓﻲ ﻋﺎم‬ ‫‪ ،٢٠١٥‬اﳊﺮﻳﺼﲔ ﻋﻠﻰ اﺗﺒﺎع ﳕﻂ ﺣﻴﺎة ﺟﺪﻳﺪة وﺻﺤﻴﺔ وﻣﺴﺘﺪاﻣﺔ‪ ،‬ﺑﺈدﺧﺎل‬ ‫ﺗﻐﻴﻴﺮ ﻋﻠﻰ ﻃﺮق ﺗﻌﺒﺌﺔ اﳌﻮاد اﻟﻐﺬاﺋﻴﺔ‪ ،‬واﻟﺘﻲ ﻳﺠﺐ ﻋﻠﻴﻬﺎ أن ﺗﻜﻮن‬ ‫ﻣﺴﺘﺪاﻣﺔ ﻣﻦ اﻟﺪاﺧﻞ واﳋﺎرج‪.‬‬

‫عالوة على ذلك‪ ،‬يخلص التقرير إلى أن‬ ‫‪ ٪٤٤‬من جيل األلفية على استعداد لدفع مقابل‬ ‫مالي إضافي للمنتجات ذات التعبئة والتغليف‬ ‫املستدام‪ ،‬ويعتبرون مواد التعبئة والتغليف‬ ‫املﺸتقة من األلياف إلى حد بعيد االختيار‬ ‫األكثر استدامة ملواد التعبئة والتغليف‪.‬‬ ‫هناك اﻵن مجموعة كاملة من االبتكارات‬ ‫احلديثة في التعبئة والتغليف للمنتجات‬ ‫الطازجة‪ ،‬من حيﺚ الصناديق الصديقة للبيئة‪،‬‬ ‫وخيارات زيادة العمر املتوقع على رفوف‬ ‫العرض‪ ،‬وامتصاص السوائل‪ ،‬ووضع العالمات‬ ‫بالليزر على الفواكه والكثير ﻏير ذلك‪ .‬فيما يلي‬ ‫نعرض املزيد منها‪:‬‬

‫الﺘﻐﺬﻳﺔ‪ :‬ﺳﻠﺔ فاﻛﻬﺔ ﺣﻴﺔ‬

‫يغلب على املستهلكني في عام ‪ 2015‬أنهم‬ ‫من نواح كثيرة أكثر تطلبا من األجيال السابقة‬ ‫من املستهلكني ويتوقعون من املنتجات أن‬ ‫تكون طازجة وصحية ومستدامة أكثر‪ .‬هذه‬ ‫رسالة قوية ليﺲ فقﻂ لتقدﱘ منتجات طازجة‬ ‫قدر اإلمكان‪ ،‬ولكن أيضا الستخدام التعبئة‬ ‫والتغليف املستدام من مصادر الطاقة الطبيعية‬ ‫واملتجددة‪.‬‬ ‫‪MAY 2015 29‬‬

‫املصمم هواﱋ هيونهي من لندن كتب عن هذا‬ ‫املﺸروع على موقعه على االنترنت قائال‪» :‬إن‬ ‫’التغذية ‘ هو مفهوم لسلة الفاكهة احلية واملعلبة‬ ‫للتغذية الطازجة واالستهالك الصحي‪ .‬بدأ‬ ‫هذا املﺸروع بفضول دار حول معنى مصطلﺢ‬ ‫'طازج 'ة في صناعة األﻏذية‪ .‬استنادا إلى األبحاث‬ ‫واستطالع اﻵراء‪ ،‬املهتمون بﺈتباع نﻈام ﻏذائي‬ ‫صحي مييلون إلى توقع تغذية عالية اﳉودة من‬ ‫استهالكهم لﻸﻏذية الطازجة‪.‬‬ ‫من أجل إرضائهم بفوائد صحية حقيقية من‬ ‫الفواكه واخلضروات الطازجة‪ ،‬تقترح التغذية‬ ‫أﻇهر تقرير جديد من شركة ستورا إنسو‬ ‫أن جيل األلفية هم أكثر قابلية لﺸراء منتجات احلصاد اليومي للفاكهة السوبر املعروفة جيدا‬ ‫صديقة للبيئة من األجيال األكبر سنا‪ .‬أربعة من بالقيمة الغذائية العالية لها‪ ،‬مثل الكرز والتوت‬ ‫أصل خمسة في جيل األلفية يعتبرون أن التعبئة والتني‪ .‬ومع ذلك‪ ،‬هذه الفواكه السوبر صعبة‬ ‫والتغليف عامل مهم عند اتخاذ قرارات الﺸراء‪ ،‬النقل بسبب هﺸاشتها‪ ،‬وعمرها املتوقع القصير‬ ‫على رفوف العرض‪ ،‬ومﺸاكلها في التخزين‪.‬‬ ‫ويرى ‪ ٪٨5‬من جيل األلفية مواد التغليف‬ ‫الهدف من التغذية هو توفير أقصى استهالك‬ ‫كجزء من جتربة استخدام العالمة التجارية‪،‬‬ ‫ممكن من التغذية الطازجة للوفاء باملعدالت‬ ‫مقابل ‪ ٪٧1‬من ﻏيرهم‪.‬‬

trail s s e l r e p a p a g n i g r o F

Guillaume Drucy, Head, Cargo e-Business Management, IATA Cargo, tells GSC how the industry is finally coming round to accepting the eAWB.

30 MAY 2015

How is the e-Air Waybill (eAWB) going to change the way the global air cargo industry works?

The eAWB is a fundamental change. It is moving air cargo into the digital, modern world.

Pre e-AWB, most of the data that is critical to ensuring the successful transportation of the cargo was contained on paper documents, of which the paper air waybill is the main one, which serves as the contract of carriage by air. If the

air waybill is lost, damaged, or contains incorrect information, which does happen, the cargo is at risk of being stopped. For a mode of transport where speed, quality and reliability are critical, this is a major issue.

In an e-AWB environment, the information is shared electronically between the various parties who take part in the transportation of the cargo (airlines, forwarders, handlers).

One of the key benefits is that it can be validated in advance and any issue in the information can be addressed, greatly increasing the chances of successful, smooth and speedy transportation, on time and as promised. In addition, it is of a more sustainable (environmentally friendly) way of doing business, and it reduces costs for all parties involved, since the cost of handling paperwork and correcting errors in a paper driven environment is higher than the cost of exchanging and managing electronic data.

What are costs involved, and how will revenues beneďŹ t with compliance? What about the carbon footprint?

The costs involve setting up new business processes based on data rather than paper, and investing in systems that can support those new business processes, including the ability to share and communicate information with partners. IATA provides the standards to do this, as well as other support such as training and best practice recommendations, but the actual investment in technology, process change and staff training varies greatly, based on the individual organisations, and the technology solutions they chose. To ensure that technology solutions are available at the most affordable cost, IATA engages with the technology community through various channels, including the IATA Strategic Partnership Programme.

IATA

MAY 2015 31

IATA

How is IATA ensuring the industry complies, and have you met your global incremental targets on the eAWB? After a relatively slow initial start, we are now in full implementation mode, and as of February 2015, 26.9 per cent of the global international air waybills were electronic.

This is about twice the number of a year ago, and the current rate of increase is three to four times that, so we are confident that we will see a continued increase. We are aiming for a global penetration of 45 per cent by end of 2015. The implementation involves mostly the following actions: - ensuring the regulations and governmental processes around the world - defining local e-AWB procedures that take into account all the local specificities in each airport and country - implementation of the new processes by airlines, forwarders, and handling companies IATA plays a key role in the first two elements above, but of course, the ultimate success is based on the actual implementation by the industry players themselves.

What challenges has this initiative faced, and how are they being overcome?

Initially, the national regulatory environment, and the local customs procedures in particular, did not support moving to electronic air waybills. After a considerable effort to engage with governmental agencies around the world, this situation is changing, and there are more and more trade lanes where a

Global penetration - February 2015

paperless process is possible, even for the interaction with governmental agencies.

However, much still needs to be done in this area, and we continue our efforts.

A second key issue was the definition of standards that apply to the digital world.

The industry knew how to transport freight using paper based processes, but we had to redefine the way to work, and address key challenges such as the legal aspects, in an electronic world.

Finally, of course, we had to convince all players that this would lead to a better air cargo industry in the future.

The key to address all three challenges is really to build a collaborative environment where issues can be shared and joint solutions and action plans identified.

While IATA is the overall project lead, we involve as many parties as possible in the design and engagement activities and will continue to do so moving forward.

Collaboration with other parts of the supply chain is very important, such as the forwarder organisation, FIATA, with whom we developed the e-AWB standards and legal agreements, to name just one example.

e-Cargo Buzz March Edition In February 2015, e-AWB global penetration stands at 26.9 per cent, an increase of two per cent month over month. Cathay Pacific Group, Emirates and Air France - KLM Group are leading the way as the top three carriers in e-AWB volume. KLM Cargo has demonstrated the strongest growth between January and February with an increase of 5.8 per cent, reaching 29.4

32 MAY 2015

per cent e-AWB penetration.

From a forwarder perspective, SDV Group have increased by 3.3 per cent between January and February bringing them up to 35.2 per cent e-AWB penetration. A significant increase has happened following the opening of Shanghai (PVG) airport with an increase of 10 per cent in just four months. There was more good news from Shanghai

when the 9th IATA World Cargo Symposium (WCS) was held earlier this month.

Some of the key outcomes from the WCS included: • Industry confirmed their collective commitment to deliver the 2015 target of 45%. The focus in 2015 will be on the top e-AWB capable airports, e-Airports, to reach a target of 55% at each of these e-Airports. • Industry agreed on the need to focus on e-freight

as a whole, not just e-AWB. • Industry acknowledged 100% migration to Cargo-XML is vital to the industry transformation Industry collaboration at local, regional and global level is key to accelerate e-AWB adoption.

An excellent example of this happened at WCS where key stakeholders jointly cooperated to promote e-Freight in Shanghai with the signing of the letter of initiative (LOI) on 10 March 2015.

ARAMEX

R

g n i p a e

e r the

s d r a w

Safwan Tannir, Chief Freight Officer of Aramex, tells GSC how the company has benefitted from IATA’s eAWB initiative.

A

ramex has recently upgraded its systems to be a part of IATA’s eAWB initiative. Says Safwan Tannir, Chief Freight Officer of Aramex,“As the leading global logistics and transportation solutions provider, we recognise that the benefits of the eAWB initiative can make a positive impact on both the freight industry and our company. This has led us to be part of the global trend towards e-freight.”

One of the key reasons why Aramex has chosen to be part of IATA’s eAWB initiative is the impact it is making in terms of sustainability. Continually innovating and enhancing their services to become a more sustainable business is a key priority for Aramex. The initiative, for example, can reduce freight transfer time by 24 hours, increase accuracy by eliminating manual entry errors, and help reduce industry cost savings of up to USD 4.9 billion (AED 17998435000 ) annually when

MAY 2015 33

fully implemented. E-freight, for example, can eliminate the need for more than 7,800 tons of paper documents, the equivalent of 80 Boeing 747 freighters filled with paper. This is obviously an important and hugely impactful shift towards achieving a more sustainable freight business.

Aramex also became a member of Cargo 2000, an IATA interest group that creates and implements quality standards for the global cargo industry. In 2009, In the Middle Aramex joined Cargo 2000 so that they could East, most of the connect electronically GCC countries to several big carriers worldwide. This is a huge were quite benefit for their freight operation. prepared to work “We can now exchange electronically shipment details with carriers electronically and with all regional receive direct, automatic carriers and updates from airlines.

It also enables us, as a customs bodies forwarder, to be notified to ensure smooth of any change in the proposed timeline of operations. the shipment, giving us the opportunity to communicate this back to our clients. These benefits in particular have helped us to increase our visibility and control over Aramex’s freight forwarding operations,”explains Tannir.

Aramex was one of the first freight forwarders to participate in the multilateral agreement with IATA in 2013. Since then their business goal has been to become a 100 per cent e-freight company. Consequently, they are working towards moving all their stations globally towards e-freight.

“Additionally, over the years, we have been making efforts to connect electronically with most, if not all carriers, and other entities involved in the freight process. Being a member of the IATA in particular helps us to achieve this goal. It also reinforces our dedication to

34 MAY 2015

ARAMEX

becoming paperless and reducing our carbon footprint,” he adds.

Overall, e-freight makes Aramex’s services faster, more reliable and more accurate. It has helped them reduce costs and become more environmentally friendly by eliminating paper handling. Adopting e-freight has also helped them gain visibility and control through electronic documentation, which allows online tracking and functionality tracing.

Says Tannir,“The combination of these benefits has geared us up to provide our clients with a more efficient, effective and transparent customer service.”

“While working and implementing this initiative globally, we saw some differences in the way different regions reacted. For example, in the Middle East, most of the GCC countries were quite prepared to work electronically with all regional carriers and customs bodies to ensure smooth operations.

In the Levant, it took a bit more time to streamline processes and introduce electronic systems and procedures.

We need to remember that this is a big project with many parties involved, some of which include freight forwarders, customs, carriers, ground handlers, airport authorities and shippers. To get all parties to coordinate can be a challenge,”explains Tinner.

As for the Europe and North America regions, it was much easier to adopt the initiative. Authorities and carriers were fully prepared and used to electronic systems and procedures so implementation was quick and seamless.

“We’ve certainly already witnessed some savings since we adopted this initiative. For example, we reduced our cost of buying actual paper air waybills, and we drastically reduced the cost of paying air waybill fees to carriers. This is, of course, in addition to the nonnegligible cost of paper stationary. We have also witnessed higher efficiency within our operations team since they have less paper to worry about,” concludes Tinner.

MAY 2015 35

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June 2 – 4, 2015

A must-visit for every business that runs on wheels.

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ANALYSIS

T Saudi Arabia Global Energy Transitions – with a focus on How do policies, governance and consumption affect energy resources and the vision for a sustainable future? Excerpts from a report by AT Kearney

he energy transition has been the prominent issue for political discussions in Germany since the beginning of the decade. However, the energy world is largely intertwined - incidents and developments in one large economy will have direct or indirect effects on another one. Almost all large economies have defined long-term targets and implemented strategies to balance their energy needs: providing security of supply, remaining competitive, environmentally sustainable and socially acceptable. Hence, there is a growing body of experiences and solutions that will help to overcome the challenges energy transitions are facing.

Eventually, every country will benefit from the policy experiences, the innovations in technologies and the new business models devised around the world.

This study sets out to shed some light into a number of global energy transitions to help understand the differences and similarities in these developments, for the benefit of all.

Study objective - An energy transition is defined here as a fundamental structural change in the energy sector of a certain country, like the increasing share of

MAY 2015 37

renewable energies and the promotion of energy efficiency combined with phasing out fossil energies. This article provides a comparison of a number of energy transitions as being implemented in some selected countries. The focus of our comparison will be on selected key themes: 1. Motivation and objectives: We would like to understand what motivates changes in the energy sector against the background of the overall energy supply and demand situation of a given country. Possible motivations are supply security, competitiveness, environment and public acceptance. Also, we would like to understand what specific policy targets exist in policy fields such as energy efficiency and renewable energies for each of the countries.

2. Drivers and governance: We would like to explore how changes are promoted in the respective energy sectors. Possible drivers are government policies, technical innovation, customer demand and energy player

38 MAY 2015

strategies. In addition, we would like to find out how the energy sector is managed by the government, for example, whether decisions are made at state or federal level, and if its actions are deemed successful.

3. Challenges and opportunities: An understanding of which challenges exist and how they can be overcome might help to generate key take-aways from the comparison that are helpful as lessons for other countries. The same is true for dealing with opportunities. From the comparison of country case studies, we derive insights with regard to global energy transitions and offer conclusions for the international energy debate.

Scope and key sources The geographic scope of our analysis aims to cover a range of different examples from various regions while keeping the scope manageable. We chose Brazil, China, Germany, Saudi Arabia, South Africa and

the United States as our examples for comparison. Key sources used in the country analyses are official policy documents and energy sector development plans adopted by the national governments, supplemented by country specific statistics and analyses conducted by renowned international organisations. This desk research is supported by a set of background interviews with energy sector representatives and experts in each of the countries analysed. While the views of the interviewees provided valuable inputs, the analysis and conclusions presented here are those of the authors alone and do not necessarily reflect the views expressed by the interviewees.

We have selected a number of key energy indicators to illustrate the most important trends regarding energy transitions in the countries of interest. The following analysis provides an overview of past dynamics and a starting point for the country-specific discussions in the section that follows.

ANALYSIS

Total final energy consumption and final energy intensity A look at the Total Final Energy Consumption (TFEC) reveals important differences in the sample of countries analysed. In 2012, China had the largest TFEC with 1.892 Mtoe, and had surpassed the United States during the first decade of this century. In the other countries of interest, namely Brazil, Germany, Saudi Arabia and South Africa, recent TFEC is six to 26 times smaller in relation to China and the United States.

Due to rapid economic growth, Saudi Arabia and China are characterised by a very high compound annual growth rate (CAGR) of 5.8 per cent and 4.6 per cent respectively, enjoyed between 1990 and 2012. In Brazil and South Africa, dynamic growth ranges from two-three per cent per annum, whereas for Germany and the United States, TFEC is decreasing in absolute terms. In Germany, this trend has been stable since 1990, while the United States did not turn the curve until more recently, with

2012. Saudi Arabia also showed high growth only 1.458 Mtoe in 2009, the year after the financial crisis. Due to economic recovery, TFEC rates for the industry sector with a CAGR of 5.9 per cent, reflecting the country’s strategy has rebounded slightly since then, but is still to increase domestic production of below 2000 levels. petrochemical products. In the The sectorial breakdown transport sector, it was China’s of TFEC allows a more This study sets energy consumption that grew differentiated view of the out to shed most dynamically at a rate of 8.9 driving factors and current per cent per annum, followed dynamics. In 2012, China some light into

by Saudi Arabia at 4.2 per cent was the largest consumer a number of and Brazil at 4.1 per cent. In the in terms of total final households and services sector, energy in the industry global energy Saudi Arabia had by far the sector (981 Mtoe) and transitions to highest CAGR at 6.2 per cent. in the households and The development of Final services sector (544 Mtoe), help understand Energy Intensity reveals that the whereas the United States huge growth in demand in China was the largest energy the differences was accompanied by a strong consumer in the transport and similarities increase in energy efficiency, sector (573 Mtoe). measured as the amount of Industrial consumption in these energy used per US$ of economic increased most in China developments, for value created. While exchange with a CAGR of 6.1 per cent between 1990 and the benefit of all. rate effects are always an issue MAY 2015 39

ANALYSIS

40 MAY 2015

ANALYSIS

with such parameters, the trend shows that 2012 was 7.9 per cent, by far the highest China achieved significant progress while still growth rate among the countries analysed in not reaching the energy efficiency levels of the this study. other countries in our focus.

The developments in Germany, the Electricity and fuel prices United States and South Africa imply an The end consumer price for electricity improvement in energy efficiency, while expressed in purchasing power parities Brazil’s energy intensity increased slightly, (ppp) of the year 2005 was highest in Brazil, although the level is still comparable with Germany and China at around 17-19 USc05/ that of the United States. Saudi Arabia kWh in 2012, followed by the United States represents the striking outlier in this and South Africa at about half that price. comparison. The country has significantly The price for motor fuels is relatively high increased its energy in South Africa, China and intensity, clearly an indicator Germany at roughly 1.6-1.8 of its deliberate strategy US$05/l. In the United States From the to use more energy, for and Brazil, motor fuels can be comparison of domestic value creation in purchased for half the price. the petrochemical industry.

Due to subsidies, Saudi country case Arabia has very low prices Electricity studies, we derive for electricity (1.90 USc05/ kWh) and motor fuels (0.13 consumption insights with US$05/l). Between 1990 and In 1990, the United States 2012, prices for electricity and was the largest consumer regard to global motor fuels in China increased of electricity with 2.924 energy transitions annually by 4.3 per cent and TWh. By 2012, China 15.1 per cent, respectively. In (4.276 TWh) consumed and offer our other countries of interest, more electrical energy than conclusions for prices for electricity were the United States (3.820 TWh). China also had the the international relatively stable, whereas the price of motor fuels increased highest growth rate of energy debate. by two-three per cent per year, electricity consumption except in Saudi Arabia where at 9.9 per cent between the price decreased by 6.1 per cent per year 1990 and 2012, followed by Saudi Arabia between 2000 and 2012. at 6.2 per cent. Of the countries in our While comparing average prices in ppp analysis, the United States had the highest terms is useful to get an idea of the costs electricity consumption of households to end consumers, it tells us nothing about 4.376 kWh/cap in 2012, followed by Saudi the consequences for industry stakeholders.

Arabia and Germany, whereas China’s A comparison of industrial electricity household electricity consumption was the prices showed that the prices are higher lowest – ten times lower than in the United in Germany than in the other countries States. However, due to China’s recent analysed in this study, and that they have industrialisation, electricity consumption even increased in the past few years. increased by 15.9 per cent per annum In South Africa, prices are increasing as between 1990 and 2012. well, however from a lower base, whereas The share of renewable energies in total electricity consumption in 2012 was very high prices are decreasing in China. Noticeably, the price level in Brazil is relatively high, in Brazil at 83 per cent, due to its traditionally whereas prices in China, the United large share of hydropower, followed by States and South Africa are clearly lower.

Germany at 24 per cent and China at 21 per Price differences can be compensated by cent. For the other countries in this analysis, differences in energy intensity; however, a renewable energies made up less than 20 per factor of five between prices in Germany cent of their total electricity consumption. and subsidised prices in Saudi Arabia So far, Saudi Arabia does not use significant cannot be counterbalanced by different amounts of renewable energies for electricity. energy intensities.

In Germany, the CAGR between 1990 and

MAY 2015 41

ANALYSIS

Saudi Arabia Saudi Arabia has almost one-fifth of the world’s proven oil reserves, is the largest producer and exporter of petroleum liquids in the world, and maintains the world’s largest oil production capacity. Saudi Arabia also has large natural gas reserves, although production remains limited so far.

As the country does not import or export natural gas, all consumption must be met by domestic production.

In 2012, almost 60 per cent of total primary energy was oil-based, with natural gas accounting for most of the rest. Currently, Saudi Arabia consumes 30 per cent of its own oil production; however, this is forecast to rise to 80 per cent in 2032, owing to increased value creation in the country.

As Saudi Arabia wants to reduce oil usage for electricity generation, the country is seeking alternative energy sources, such as renewables and nuclear power. So far, Saudi Arabia’s share of renewable energies is very low, and despite its high potential for solar power, only 12 MW of capacity are installed. In terms of nuclear energy, Saudi Arabia aims to have its first reactor operational by 2020 and wants to build 16 reactors by 2030, which would then cover 20 per cent of the country’s electricity needs.

Motivation and objectives Saudi Arabia’s final energy consumption has increased by 5.8 per cent per annum between 1990 and 201256, mainly due to population growth, industrial development and a subsidy

regime encouraging wasteful consumption.

In order to meet the rapidly growing demand for energy, the country’s chief motivation for energy transition is to ensure the security of supply. Moreover, Saudi Arabia wants to diversify its energy production by expanding its natural gas, refining, petrochemicals, and electric power industries. In addition, subsidised electricity and motor fuel prices may be removed to limit demand growth.

According to the Energy Efficiency Report of 2005, the government is targeting a 30 per cent reduction in electricity intensity by 2030 and a 50 per cent reduction in peak demand growth by 2015, compared with the increase between 2000 and 2005. Despite these targets, energy intensity actually increased between 1990 and 2012 by 7.8 per cent per annum.

As a result, the government set up the Saudi Energy Efficiency Centre (SEEC) in 2010, which is mainly responsible for the development of energy efficient technologies.

The main short-term target of this centre is to raise the minimum energy efficiency ratio for windows and air conditioners. In the long term, their vision is to match the global average energy intensity by 2020.

Furthermore, energy efficiency can also be increased by encouraging the use of smart metering to create awareness about energy consumption and efficiency among the population. Another motivation for energy transition is an increasing awareness of environmental issues. A Royal Decree of April 2010 founded the King Abdullah

City for Atomic and Renewable Energy (KACARE) in Riyadh, and could prove to be the most groundbreaking step toward a more sustainable energy sector. The City is fully funded by Saudi Arabia’s government and in charge of drafting policies for renewable and nuclear energy deployment plans. KACARE has recently set a total target capacity of 54 GW by 2032: 41 GW of solar, nine GW of wind, two GW of biomass, two GW of geothermal, and 17 GW of nuclear power.

Drivers and governance In Saudi Arabia, two ministries share responsibility for the energy sector, the Ministry of Water and Electricity and the Ministry of Petroleum and Mineral Resources, both organised under the Kingdom of Saudi Arabia. The SEEC and KACARE programmes mentioned above could become the main drivers of change in Saudi Arabia’s energy transition. Moreover, the economic development of the country’s petrochemical industry represents another important factor.

Challenges and opportunities One of the major challenges Saudi Arabia faces is to reverse the long period of low prices and vested interests and to manage the transition to higher prices. In addition, energy policies must become more coherent and effective, a challenging goal under the current bureaucratic structure, with little connection between ministries, agencies and the business sector. Finally, awareness of the impacts of energy consumption must be raised among the public, which is mainly concerned about local air pollution but not about GHG emissions.

A key opportunity is the energy efficiency and renewable energy potential that provides Saudi Arabia with the possibility to free up significant amounts of its domestic oil and gas use for exports or as feedstock for the country’s growing petrochemical industry.

The current system of artificially low energy prices that do not reflect the true costs needs to be changed in order to spark private investment in energy efficiency as well as solar and wind-based power generation.

Solar power, in particular, offers a huge opportunity given the significant irradiation and availability of space in the country.

- Authors A T Kearney’s Jochen Hauff, Dietrich Neumann, Florian Haslauer, Anna Bode

42 MAY 2015

PROFILE

Making the right connections Wajeehuddin Ahmed, Executive Director, Texture Global Shipping LLC, talks to GSC about the importance of a reliable supply chain service provider in a growing economy

44 MAY 2015

T

exture Global Shipping LLC boasts of an operation that consists of handling a volume of more than 500 shipments per month, meaning 32,500 cubic mts. Their shipments operate mainly on the North American and European trade-lanes from Jebel Ali.“The requirement of these operations include timeliness and operational excellence, which we provide,” says Wajeehuddin Ahmed, Executive Director, Texture Global Shipping LLC. Their warehouse is sized at 25,000 sq metres, and they offer temperaturecontrolled storage, distribution and re-export facility within the GCC. Says Ahmed,“Internationally, we operate in 191 cities across the world, which has boosted

PROFILE

customer confidence. We handle 25 customs clearance entries per day, and this is through our in-house customs house brokerage, with whom we can provide one-stop-solutions, covering freight, customs clearance and door delivery.”

Texture Global Shipping LLC caters to all kinds of business models, whether it is retail, oil and gas, textiles, electronics, or FMCG sectors. At the base level, the typical supply chain solution is the same, no matter what sector it is for – it requires competitive pricing, fastest transit time and excellent service.

For example, the FMCG sector requires Dry and Reefer containers. The supply chain needs to be ready on time, meeting all the quality standards set by its retailers. And

then the transit time needs to be short as the material needs to reach the outlets at the earliest. The logistics provider comes in when the 3PL has to arrange the transportation, and ensure that the container placed at the factory is properly inspected. Another example is of the retail sector, the goods are ready quicker, but the inspection of quality is done by the consignee’s representative.

The oil and gas sector moves undimensional cargo, which requires that proper health and safety standards are met, and proper handling experience is necessary among the team and service provider.“We have adequate knowledge and expertise to handle such business models. Supply chain solutions can, at times, become a bit complex, depending on the business models, from

movement of raw material, procurement of freight from carrier and airline, multicountry consolidation programme, garmenton-hangers containers, and technological advanced visibility tool,”explains Ahmed.

The UAE is the hub of the Middle East region, and as the country’s economy prospers, there is an increase in the number of logistics companies here. The annual datadriven ranking of 45 emerging economies found that the UAE led in connectivity, ranking ahead of Malaysia, China, Oman and Saudi Arabia, in infrastructure and transport links.“In my view, our strong market share in freight is in the North America and Europe sector, and this is due to the fact that we provide operational excellence and cost efficiency to our customer’s supply

MAY 2015 45

PROFILE

46 MAY 2015

PROFILE

chains. We have given our customers utmost importance, which enables us to understand their requirements and expectations, which, in turn, helps us increase the market share for Texture in the longer run,”says Ahmed.

Supply chains of all business models require lot of integration. But when we talk about global supply chains of franchising, it makes the equation more complex because multiple parties are involved. For example, Brand is selling the goods to the franchisee.

Brand and franchisee both have to work hand in hand to make sure the goods reach the outlet in a timely manner. Texture specialises in handling and managing such complex supply chains.

Since the brand is based in USA or Europe, and those goods are being sold to the

franchise in the UAE or Middle East region, then, as a logistics service provider for both brand and franchisee, Texture has to manage the entire documentation, operational, financial and information flow.“The purchase order approval required by the franchisee, not by the Brand, makes it more complex, as does managing suppliers in various locations of the world. As the logistics service provider, Texture has to coordinate and educate the suppliers of the new developments from time to time, as franchisees work with their own vision, which can be different from the Brand,”explains Ahmed.

Living in the UAE, one can see the growth of the franchisee business all around as more and more brands open more stores in the country.

The key advantage to franchising in this part of the world is Dubai’s strategic location – at the centre of the Far East and Europe. The UAE has the world class infrastructure, and winning the bid for World Expo 2020 has given it a boost.

Besides, the country also has various airport and seaport options.

“The only challenge I see is cultural and consumer acceptance. Local competition and legal consideration timeframe. The estimated franchise market in the Middle East is valued at around USD 30 billion (AED 110 billion).

With over 70 shopping malls in Dubai and estimated 850 local and international brands, the potential is huge. A report from Dubai FDI shows that UAE’s retail sector is estimated to grow around 32.9 per cent, from AED 114 billion (USD 31 billion) in 2012 to reach AED 151 billion (USD 41 billion) in 2015,”states Ahmed.

According to him, current trends indicate that this year will have more solid growth, and the next five years will see a lot of major brands entering the UAE market, leading to a lot more best practices implemented in this part of the world.

“In my view, technological advancement in managing any complex supply chain is mandatory, and another key would be integration between all stakeholders. This region has the strong appetite of expansion and potential of accepting more international and local brands. To be superior in providing excellent operational service requires the right tools, like supply chain visibility, and offer solutions for most complex supply chains,”he concludes.

MAY 2015 47

UNWIND

Y A D O T E IB

R C S SUB

May 2015 Issue 15

ENHANCING THE BUSINESS OF LOGISTICS

Qatar

On the brink of greater success

IATA’s paperless trail Making the eAWB de rigeur

Stronger together

Oman Air and Cargolux join hands

PLEASE FILL IN ALL FIELDS IN BLOCK CAPITALS Name: Company Name:

KEEPING IT FRESH, INSIDE AND OUT

Position: PO Box: City: Country:

How the Gen Z consumer is bringing the change in food packaging

Telephone: •May 2015_Cover.indd 1

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P. O. Box 49784, Dubai, UAE, Tel: 04 3978847/3795678 Email: info@signaturemediame.com

5/4/15 17:41

STRATEGY

Cutting freight costs Tim Benedict, Senior Director of Transportation at APL Logistics, Arizona, gives Deborah Catalano Ruriani of www.inboundlogistics some tips for reducing freight costs Transportation prices have risen over the past year, but shippers can cut those costs through smart planning.

1. Don’t wing it. Electing to use international air instead of expedited ocean for the majority of hot shipments could leave a boatload of savings on the table. Consider time-definite ocean shipping ≠ it typically costs 75 per cent less than air, and is often just as reliable.

2. Ship air-sea or sea-air. Even when circumstances require the use of international air, don’t rule out ocean shipping. Depending on when your goods are due to be delivered, it may still be possible to fly them a portion of the journey, then load them onto an ocean vessel for the rest.

The result is fewer miles for your products to travel, and lower freight bills.

MAY 2015 49

3. Let transportation drive your warehouse selection. Choose your distribution centres (DCs) for their transportation efficiency rather than their attractive leasing rates or tax incentives.

If a low-cost location adds too many miles or hand-offs to your supply chain, higher shipping bills will offset any location savings.

6. Fewer trailers equal more savings.

Trailer cube utilisation tools are only as good as the dimensional data being entered. Double-check the accuracy of your measurements by gathering highly specific information about the contents of the latest outgoing truckloads. Use the refreshed data to run improved trailer cube utilisations.

4. Take advantage of DC bypass. If your company sources globally, but only operates DCs hundreds of miles inland, consider a deconsolidation centre near your ports of entry to direct-ship products to nearby customers. This will reduce redundant transportation expenses.

5. Seek savings a la mode shift.

Typically, companies that use LTL instead of truckload will pay 10 to 30 per cent more. It is beneficial to negotiate with customers who consistently require multiple small deliveries to see if they will switch to less frequent delivery schedules.

50 MAY 2015

STRATEGY

7. Go back to class.

Many companies overlook that they might be shipping their cargo via outdated, and more costly, classifications.

If your business has experienced a substantial change in products or packaging, find out if you can qualify for a less expensive product class.

8. Take control of inbound transportation. A top priority for suppliers is providing products—not negotiating the best shipping rates or encouraging collaboration. When possible, take responsibility for optimising your inbound deliveries yourself, or find an engineering-savvy third-party logistics provider that can do it for you. Make sure you have the final say about which carriers handle your company’s products.

10. Analyse. Asking logistics personnel to participate in lean transportation

9. Centralise transportation procurement. A singular, focused transportation procurement effort paves the way for analytical, strategic, and relational advantages that a more decentralised approach can’t touch. Advantages include better optimised transportation, an improved ability to track costs, and an enhanced ability to negotiate more favourable volume discounts.

projects or analyse shipping patterns may feel like a luxury your company can’t afford. But it usually winds up paying for itself in the form of improved insights that lead to greater potential economies. Some of the biggest transportation savings can come from logistics teams doing their homework.

MAY 2015 51

Innovative introductions Kanoo Machinery premiered a new range of Hyster and UTILEV forklift trucks equipped with the latest innovations and accessories into the UAE and GCC market

K

anoo Machinery held multiple events in Dubai and Abu Dhabi recently for the launch of their new range of Hyster and UTILEV forklift trucks. Which are equipped with the latest innovations and accessories.

Titled The Materials Handling Event, Kanoo Machinery showcased their range of premium, standard and lower cost utility ICE forklifts in a ground demo in front of guests, suppliers and customers from the region. These three levels of products help customers select the best equipment suitable for their specific requirements in almost any type of business according to price, intensity, environment, service requirements, dimensions and many other factors.

Kanoo Machinery, which is the authorised Hyster and UTILEV distribution partner in Saudi Arabia, Bahrain, the UAE, Oman and Qatar, pulled out all stops. They took to centre stage with two series from Hyster — the Hyster Fortens for premium, feature rich forklifts; and the new Hyster TX for tough, self-service and lower cost forklifts in five capacities of 1.5-3.5 tonnes, with engine options covering diesel, LPG, petrol or dual fuel to meet a wide range of applications requiring streamlined solutions, from logistics to manufacturing, agriculture and building products.

Deon Klerck, Divisional Manager, Kanoo Machinery, said,“Modern-day forklifts provide one of the most critical components in today’s fast growing logistics industry that depends on material handling equipment to

52 MAY 2015

achieve efficient storage and handling. The concept of the best maintenance provider is rising to the top of agenda. Our commitment to excellence guarantees the ultimate customer experience for every customer.”

In addition, Kanoo Machinery also featured a lower intensity, utility range from UTILEV, a sister NMHG brand.

NACCO Materials Handling Group (NMHG) is a leading global designer, engineer and manufacturer of materials handling equipment that is among the most comprehensive in the industry since 1989.

NMHG provides global product support for Kanoo Machinery as the Hyster dealer in the Middle East.

In 2011, NMHG began introducing the UTILEV range of affordable forklift trucks, which deliver reliable and cost-effective materials handling solutions for applications through several industries, particularly where users require equipment without advanced functionality or attachments. James Newman, Area Business Director – Middle East & Africa, NMHG, said, “Our mission is to deliver high-quality, application tailored lift trucks, offering the lowest cost of ownership, outstanding parts and service support and best overall value to customers all around the globe.”

Said Klerck,“With this very dynamic market, we at Kanoo Machinery ensure that we provide innovative products tailored to the needs of our customers, on top of

PRODUCT LAUNCH

our extensive network in the UAE and the region that provides after sales service from our specialised technicians and a fleet of mobile workshop vehicles. Most importantly, we offer an effective maintenance programme that can extend the lifetime and value of forklifts for customers to save money, increase uptime and maximise productivity.”

Michael Phelan, Territory Manager, Middle East & Africa, NMHG, introduced three Tiered ICE Forklift truck offerings across the GCC. He explained,“With three levels of products, we now have a solution to suit every business in the region, allowing us to match a truck’s ability to customer requirements exactly.”

The products The Hyster Fortens - Premium Forklifts The Hyster® Fortens is widely regarded as one of the toughest and most advanced forklifts in the world, featuring highly developed electronics. Fortens Advance models feature electronically controlled DuraMatch transmission, with one and two speeds respectively, providing: Auto Deceleration System (ASD), controlled power reversal and controlled roll-back on ramp; Fortens Advance+ models feature a DuraMatch Plus2 transmission, providing: throttle response management, dynamic auto deceleration system, auto-speed hydraulics with automatic inching control; first gear with increased draw pull for use on gradients, and second gear for maximum efficiency for longer travel distances. The operator compartment features class-leading ergonomics to maximise driver comfort and productivity. It is the fastest and easiest lift truck to service. With proven reliability in extreme 24/7 operations, the Hyster Fortens is packed with many features that help optimise driver performance and deliver a low cost of ownership.

New Hyster TX – Standard Forklifts Described as ‘Hyster, pure and simple’, the TX series is built to deliver reliability and strength, combined with straight-forward servicing, at an attractive price to suit the majority of businesses in the region.

As tough as any Hyster product, the new TX series is an essential truck for the Middle Eastern market with an excellent package

of core features such as proven reliability in high ambient temperatures and demanding environments found in the Middle East. The trucks feature uncomplicated electronics, making them ideal for many customers with self-service requirements.

The 1.5-3.5 TX series is manufactured to ISO standards at the NMHG state-of-theart manufacturing plant in Obu, Japan. It has features such as ergonomically designed operator compartment, swing down gas tank, counterweight, engine cover, hydrostatic steer axle, advanced dash display, hydraulic controls, Hyster Vista Mast, steer column, hassle-free hydraulics, integral side shift, heavy duty drive axle and removable floor plate.

The Hyster TX has 2-stage and 3-stage mast options of up to 6580mm, are J-hook mounted for less wear and easier maintenance. It features Hyster Stability Mechanism (HSM), which reduces truck sway during turns, thus improving lateral stability and ensuring confident travel over uneven surfaces. The truck can be customised to suit a vast range of applications with optional integral side shift carriage and

various front end attachments. A power shift transmission, with heavy duty clutch plates and a full floating heavy-duty drive axle, gives enhanced dependability for a longer service life. Self-adjusting brakes provide an excellent inching and stopping power, and the hydrostatic steer axle gives excellent steering control for easy manoeuvring in any busy operation. The Hyster TX is a tough and simple truck for the standard market place.

UTILEV – Utility Forklifts - The UTILEV range of forklift trucks deliver reliable and cost-effective solutions for applications across many industries, particularly where users require equipment without advanced functionality or attachments. Simple to operate and easy to maintain, UTILEV forklifts use proven, high quality, robust components, and have excellent cooling.

They are ideal for operations where the truck is required to work for limited periods in the working week. The UTILEV IC counterbalance forklift trucks are designed to meet the needs of light-to medium-duty operating environments while keeping your operating costs low.

MAY 2015 53

PROJECT CARGO

Facing the challenge

M

Al Majdouie Logistics successfully completed a challenging move. Here is a brief description of the difficulties are how they were overcome. Experience makes all the difference

54 MAY 2015

arking their 50 years in the industry, Almajdouie Logistics Co (MLC) took on a new challenge.

They took on the job of handling three transformers, weighing 450 tonnes each, and a 395 tonnes generator, from Jeddah Port to the Jeddah South Power Plant, near MLC Khumra Terminal.

MLC are specialists in handling and transporting large and heavy cargo, and providing services of freight forwarding and terminal and warehousing.

MLC works in partnership with leading contractors, transporting cargo from vessels arriving at Saudi shores across highways and deserts to project sites.

The challenge in this job was to find an innovative solution to move the cargo. The current bridge, which was within the premises of a Naval Base, has a load capacity of 300 tonnes, and the cargo and trailer weight exceeded it by far. The solution was to build another pathway

over the canal by installing steel plates and beams, while the water was flowing underneath the steel structures, which could be removed after the entire cargo passed through safely.

The success of the project demonstrated MLC’s ability to meet the deadlines on time, despite the challenges faced.

MLC’s combined expertise, its partnership with the project owner and the support of the municipality for approving the required permissions, resulted in successful completion of the project. Hyundai Heavy Industries, in charge of the Engineering, Procurement & Construction, and the project proponent, Saudi Electric Company, commended MLC’s efforts.

Safety considerations are always at the top of MLC’s priorities for such projects, and in everything they do. With the launch of a brand new safety identity, named ‘Amaan’, the management seeks to further embed this safety culture in the work and professional front.

TRADE

A deeper understanding Dubai Trade launches Customs Broker Program (CCB) for trade and logistics community, enabling participant to get a better understanding of Customs laws and regulations in Dubai

P

rofessionals in the trade and logistics community have reason to rejoice. Dubai Trade, the single window to the online services of the major trade and logistics operations of DP World, Dubai Customs, and Economic Zones World, has launched the Certified Customs Broker Program (CCB).

This new, professional programme gives people an insight into the Customs laws and regulations in Dubai for customs brokers, freight forwarders, traders, manufacturers, free zone companies and logistics and transportation service providers.

The purpose of the programme is to familiarise the community with the laws and

procedures needed to using the Mirsal 2 platform on the Dubai Trade portal, and much more. Says Eng Mahmood Al Bastaki, CEO of Dubai Trade,“The programme saves time for traders. It also provides guidance on the Customs Tariff & Harmonized System (HS) Codes and improves understanding of international conventions and delivery terms.

Knowledge of these procedures helps eliminate unnecessary fines and errors, ensuring smoother transactions between clients and government authorities, making Dubai an even more businessfriendly city for imports and exports.”

Candidates can enrol in the CCB Programme by visiting ccb.dubaitrade. ae. They earn the certification on the completion of five modules over 40 working hours, spread over five days, and after passing a final examination.

The modules include: Introduction to Dubai Trade and Customs; Customs Law; Incoterms and Trade Related Documents, HS Code and Customs Related Procedures and Dubai Customs e-Services.

The participant testimonials below highlight the value of the course: Sudesh Chaturvedi, Manager of Projects and Special Services, GAC Dubai Freight Services,“The Compliance and Regulatory framework is growing more stringent, making customs regulations more elaborate. This course brings all the details together in an organised manner, enabling us to complete processes quickly and accurately. It’s a must attend course for all Customs Brokerage professionals.”

Mohit Rai, Head of Operations, DAMCO ME,“The CCB bridges the gaps when it comes to the complex variations involved around custom brokerage procedures.”

Geeta Bathija, AGM of Customer Service & Customs Compliance, Hellmann Worldwide Logistics LLC, “The learning, experiences and ideas we shared on the course have proved invaluable. It will go a long way in embedding knowledge of the regulations in the industry.”

MAY 2015 55

Stronger together Oman Air and Cargolux sign JV agreement to develop Muscat International Airport as a logistics hub for air cargo between India, China, Africa, Europe and the US

O

man Air has signed a Joint Venture agreement with Luxembourg-based Cargolux Airlines International SA, Europe’s leading freight carrier and one of the top 10 freight carriers globally, that will help create new opportunities for both companies in markets around the world. The agreement was signed in Muscat last month, and immediately followed by the arrival of the first Cargolux flight to operate under the agreement.

The Joint Venture will enable Oman Air and Cargolux to jointly access new freighter destinations and contribute to

52 MAY 2015

the development of Oman’s logistics hub.

In addition, it enables Oman Air to further expand its cargo operation and build on the range of cargo initiatives and innovations the airline has introduced over recent years. Furthermore, the agreement will provide Cargolux with access to the belly capacity of Oman Air’s fleet and create new opportunities for freight transportation from Oman’s modern port facilities. It is also anticipated that the Joint Venture will deliver significant benefits for the economy of the Sultanate of Oman.

The signing ceremony itself was elaborate, held on board the carrier’s B747 Full

INVESTMENT NEWS

Freighter, which was located in front of Muscat International Airport’s VIP building.

The CEO of Oman Air, Paul Gregorowitsch, and the CEO of Cargolux Airlines International, Dirk Reich, were joined

by VIPs like His Excellency Darwish bin Ismail bin Ali Al Balushi, Oman’s Minister responsible for Finance and Chairman of Oman Air, His Excellency François Bausch, Luxembourg’s Minister for Sustainable Development and Infrastructure, Paul Helminger, Chairman of Cargolux Airlines International, and Dr Juma bin Ali Al-Juma, Chairman of Oman Airports Management Company (OAMC).

Said Gregorowitsch, “This will be the first full freighter service to have been launched from Oman, and it will enable us to jointly deploy significant and commercially attractive freighter capacity throughout Oman Air’s network. In doing so, it will provide significant support for the expansion and development of Oman Air’s cargo operation. Our product advantages include the carriage of project cargo, livestock, cargo aircraft-only freight, odd size cargo, vehicles and aircraft engines.

Oman Air has considerable experience of safely shipping such freight to locations around the world.”

Reich added,“We believe that this new Joint Venture will enable us to proceed with our planned expansion of air freight services in 2015 from Oman to China, Europe, Africa and the United States. Furthermore, the Joint Venture will give Cargolux the opportunity to utilise Oman Air’s experience of flying to 11 destinations in India, as well as to East Africa.”

“And, vitally, this Joint Venture will bring significant economic benefits for the Sultanate of Oman, building on Oman Air’s already considerable social and financial contribution to the nation,”concluded Gregorowitsch.

MAY 2015 53

Oman’s vision for the future

The recently held second GCC Supply Chain and Logistics Conference in Oman concluded with a mission to become the global logistics hub by 2040. Here are highlights from the event

58 MAY 2015

T

he 2nd Oman GCC Supply Chain and Logistics (GCCSCL) Conference, organised under the auspices of His Highness Sayyid Shihab Bin Tariq Al Said, Advisor to His Majesty the Sultan, has set a clear vision to become the global logistics hub by 2040.

The tone for this vision was reiterated in the welcome address, delivered by HE Dr Ahmed Al Futaisi, Minister of Transport and Communications, when he spoke eloquently on ‘Accelerating the Sultanate of Oman’s Logistics Strategy’. The four pillars he spoke about in his address were the key session themes of the conference. The GCCSCL Conference 2015 is organised by Ministry of Transport and Communications, with the technical support of Al Nimr Conferences – Oman’s leading conference and exhibition Management Company.

The Ministers speech was followed by a keynote presentation by Kim Fejfer, Chief Executive Officer of APM Terminals. The speech was titled ‘Oman - Positioned to win in a dynamic world’. APM Terminals operates a global terminal network of 20,600 employees on five different continents, which includes 64 operating port and terminal facilities in 39 countries and 135 Inlands Services operations in 40 countries.

Following the opening ceremonies, the Markets Panel Discussion was held, which was a discussion on the challenges and opportunities for Oman to become the next potential logistics hub in the Gulf region and the Indian Ocean. The discussion held was between a distinguished panel of industry leaders, comprising HE Dr Ahmed Al Futaisim, Minister of Transport and Communications, HH Sayyid Faisal bin Turki Al Said, Director General, Marketing

STRATEGY

and Media, ITHRAA, Kim Fejfer, CEO, APM Terminals, Dr Allard Castelein, CEO, Port of Rotterdam Authority and Dirk Reich, President & CEO, Cargolux Airlines International SA. The panel was moderated by celebrated TV presenter and journalist Tim Sebastian, founder of the New Arab Debates.

The conference also featured an exhibition that provided a unique opportunity for participating companies in the supply chain and logistics industry to develop new networks and to showcase their latest products, projects and other services related to the sector.

The conference had a full programme, which included addresses by Paul Gregorowitsch,

CEO of Oman Air, on Oman Air’s Journey: Network Expansion and Cargo Plans; Karl Michael Mohsen, CEO, TxLogistik AG, who shared the success story of the company in a difficult market environment.

Next came Gunnar Malm, Former DirectorGeneral, Swedish Transport Administration, who shared their experience in establishing the Swedish Transport Administration.

It was then time for a panel discussion by Andre Toet, CEO, Port of Sohar, Eng Saeed Khamis Al Zadjali, Acting CEO, Oman Airports Management Company and John Arthur Lesniewski, Chief Commercial Officer of Oman Rail. The panelists explored the global market as well as the cargo opportunities and key industrial segments in the Gulf and Indian Ocean region in the discussion entitled ‘Oman and Global Market Overview.

The second session tapped on the ‘Human Capital Development and Leadership’ and the speakers for this session included Peder Winther, President- MEA Region, Kuehne + Nagel Management – MEA, who talked on Talent Management in Freight Forwarding and Logistics; Dom McKenna, Group International Director, Freightliner, who shared strategies on Developing Capability and Skills in New Markets, and Jan Steenberg, Chairman of IESC, Chartered Institute of Logistics & Transport International who covered the Professional Development in Supply Chain, Logistics & Transport.

The panel discussion, moderated by Kimble Winter, Global CEO, Logistics Executive Group, followed on the same theme. The panel included the previous speakers and key experts, who debated on a number of interrelated issues on human capital development that also touch directly on Oman’s ability to create new employment opportunities, addressed the skills gap, including the significant employment opportunities in logistics and where these opportunities can best be created. New additions to the panel included Aflah Al-Hadrami, VP for Supply Chain Management of Occidental of Oman Inc, Abdulmalik Al Balushi, General Manager– Support Services, of Oman Shipping Company, and Warith Al Kharusi, Executive Director, Al Safwa Group & Partners and Chairman of OLSCA.

MAY 2015 59

UNWIND

Excellence = success Which school and university did you go to?

The Netherlands Institute for Tourism and Transport Studies.

authority to allow the team and its members to make mistakes and excel and hand credits to those who deserve it.

What was your first job?

Courier at DHL Express

How well do you handle stress? What is your fool proof method of de-stressing?

Don’t let it get to you, put things in perspective there are always worse things in life.

My method of de-stressing is clearing my mind either in the gym or outdoors, sports is my main stress reliever. With a clear mind the world looks completely different and with a clear mind the best ideas come to life.

What do they not teach you in business school?

To improvise if all theories either don’t apply or can’t be achieved, in combination with cultural differences and respective agendas.

Eric ten Kate, Director - Healthcare (Middle East), Hellmann Calipar Healthcare Logistics DWC-LLC has grown his business steadily with an attitude of excellence and a sturdy team of hard working professionals

Who is your role model?

Why? Johan Cruyff, the famous Dutch football player, despite being a gifted player, his determination and persistence made him world class yet remaining humble. He has a healthy sense of perspective,“You have to shoot otherwise you can’t score,”or“Any advantage has its disadvantage,”are some of his famous quotes.

What is your leadership style?

Leading by example whilst empowering people.

What do you think is most important for being an effective manager?

Having a“can do”mentality in combination with interpersonal skills are very important to be an effective manager; take full responsibility whilst delegating

60 MAY 2015

What do you find encouraging?

To see that the path chosen or the solution designed works, seeing the team excel in combination with personal recognition. Moreover the trust from people surrounding you either in private or business life allowing you to build these solutions and build long lasting relationships with them.

How do you spend your free time?

Going out with the family, meeting friends, sports, travelling; enjoying life.

What is at the top of your agenda right now?

Organising the opening of our new facility, in combination with submitting an important RFQ.

Fully Automated multi-temperature and multi-user 3PL logistics solution

of high bay storage facility of fully automated frozen (0 to -30 degrees) pallet positions with state of the art crane & conveyor system

pallet positions of standard racking controlled at +25 degrees for general cargo of mezzanine storage or added value area within the facility metric tons of Bulk Stack

of rentable office area to customers that use the facility INL is a Third Party Logistics Provider (3pl) focusing on food service solutions to the end customer, it has a freight department and custom broker to assist in clearing and delivering shipments to the market. Located at Dubai World Central (DWC) with easy access to road, sea and air ports.

Plots W5, W6, W7 Dubai Logistics City, DWC P.O. Box 3139, Dubai, U.A.E.

Telephone: +971 4 Fax: +971 4 8879195

8160600, +971 4 8160601 info@inl.ae

www.inl.ae

LogiMat® - your ideal storage and picking solution for small parts Working according to the convenient principle of “goods to man”, this automated storage and order picking solution can efficiently reduces the proportion of travel time by more than 70% and increases the commissioning speed by 6 to 10 times. LogiMat® provides efficient space utilisation that helps reduce energy and storage costs, thanks to its extremely compact design. Contact us today for more information.

P: +971/4/8048 100 · E: info@ssi-schaefer.ae · www.ssi-schaefer.ae