Logistics News ME - August 2018

India

Site visit

Viewpoint

Buckling up for digital growth

The Camel Soap Factory: success made by hand

The Big Data revolution

Connecting trade professionals with industry intelligence

Aiming for The skies Saudia Cargo CEO Omar Hariri is on a success-driven path to transform Saudi Arabia’s freight and logistics industry

August 2018

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Bespoke Logistics Project of the Year 2017

Domestic Logistics Service Provider of the Year KSA 2017

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

Contents

Contents

A u g u s t 2018

Website: www.CBNme.com/logistics-news twitter: @logisticsnewsme Facebook: /LogisticsNewsME

August 2018

R e a d a l l t h e l at e s t i s s u e s o n I s s u u

Start 10 | News 20 | Op-ed

The need to digitise the freight industry in the GCC

Features 22 | Cover story

Saudia Cargo CEO Omar Hariri on his goals for the company

28 | Country focus India’s logistics industry is on a rocky but steady climb

32 | Ports

The Middle East’s trade hubs are amongst the best in the world

36 | Site Visit

The Camel Soap Factory smells of oud and success

40 | Viewpoint

Impact of Big Data on multinationals

44 | Interview

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In conversation with Schmidt ME Logistics

48 | Supplier News 50 | Diary Logistics News ME | August 2018 | 3

Regional News

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A u g u s t 2018

E d i to r ’ s L e t t e r

A u g u s t 2 018

A note from the editor

P ar o m i t a d e y @paromitadey1 |

linkedin.com/in/paromita-dey

CEO Wissam Younane wissam@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net

Customer expectations are increasing. And so is changing the way of delivering solutions in the logistics and transportation industry. New technology, new entrants, and new business models are cropping up in the market time and again. The e-commerce sector currently commands a lion’s share in the market – where both individuals and businesses – want their goods to be delivered faster, flexibly, and on time.

Previously, customers booked shipments, received an estimated delivery date, and then were left in the dark, unless they decided to follow up. Today, internet and e-commerce software advances allow customers access to shipping and tracking systems 24/7. Not only does this enhance the user experience, but it saves time and money for the company as well.

According to some recent reports about the growing e-commerce trend in the market, ‘Sharing’ is a big story for logistics now – from Uber-style approaches to last-mile delivery, to more formal joint ventures (JVs) and partnerships at corporate level, the whole sector is

redefining collaboration. But much of this is hampered by inconsistencies in everything like shipment sizes, processes, or IT systems. The physical internet promises great things for the sector, coming along with increased standardisation in logistics operations.

Reports also say that an increasingly competitive environment is another big factor. Some of the sector’s own customers are starting up logistics companies of their own, and new entrants to the industry are finding ways to carve out the more remunerating elements of the value chain by exploiting technology or new business models. These players don’t have asset-heavy balance sheets or cumbersome existing systems weighing them down.

What will the logistics market look like in the next five to 10 years?

That still remains a very open question. The market will have to keep an eye on the key disruptions happening so as to predict the future scenarios.

Paromita Dey Editor

Group Sales Director Joaquim D'Costa jo@bncpublishing.net +971 50 440 2706

Senior Sales Manager Vishvanath Shetty vish@bncpublishing.net

Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net +966 50 328 9818

Editor Paromita Dey paromita@bncpublishing.net Reporter Mehak Srivastava mehak@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Marketing Manager Mark Anthony Monzon mark@bncpublishing.net Photography Shameem Sha

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Opinions expressed are solely those of the contributors.

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Regional News

Regional News A n u p d a t e f r o m ar o u n d t h e r e g i o n Technology

Homoola launches road freight loadmatching tech in Saudi Arabia

Homoola announced the formal launch of its digital load-matching service in Saudi Arabia, where it will bring new efficiency to road freight by using technology to pair shippers and trucking companies.

Homoola has been operating in Saudi Arabia since January. Its platform gives trucking companies, including smaller carriers, access to a larger pool of customers and allows them

to make more efficient use of their fleets. Shippers can select from among multiple trucking options that meet their standards for quality and consistency.

Homoola’s load-matching technology addresses the pain points felt by both shippers and carriers. It gives shippers access to capacity at times of peak demand and allows them to optimise the efficiency of their shipments at other

10 | Logistics News ME | August 2018

times. Homoola prevents carriers from driving empty miles or sitting idle waiting for cargo. Agility is a key investor in Homoola.

Ziyad Al Homaid, Homoola co-founder and CEO, said: “Homoola’s goal is to build a platform matching multiple carriers and drivers, based on cost, quality of service, and terms of payment. Homoola allows logistics and trade to be conducted more efficiently and

effectively – in keeping with the Kingdom’s 2030 vision.”

Asim Al Rajhi, Homoola co-founder and COO, said: “The surge of transactions delivered to customers over the past few months reflects the market’s demand for Homoola. Our customers are telling us that they like the real-time and accurate updates on pricing, and also the ability to track their goods at all times.” www.cbnme.com

A u g u s t 2018 Manufacturing

SV Pittie breaks ground on $300mn training facility in SOHAR Freezone

Oman-based SV Pittie Sohar Textiles broke ground on its new training centre for cotton-yarn manufacturing skills development at SOHAR Freezone.

The manufacturing facility, which has already started its construction activity, will be operational in March next year.

Being built with an investment of $300mn, on a 27ha area, SV Pittie’s plant will be equipped with 150,000 spindles and 2,400 rotors,

and will provide nearly 1,500 job opportunities, said the statement from the company.

Financed by Bank Sohar, the plant is targeted to be commissioned later this year.

The training centre facility is key, as it creates a lot of job opportunities for relevant skill-sets in the region.

With the construction of the training centre, SV Pittie will be positioned to have the necessary welltrained, skilled Omani personnel that will help the

company’s manufacturing plant expand, create new jobs, and contribute to the ongoing economic growth of the Sultanate.

The imports of raw material, cotton, will be from the US, Australia, Europe, and Turkey through SOHAR Port.

It will produce finished yarn, which will then be exported to textile markets such as China, Vietnam, Pakistan, and Bangladesh.

The training center together with the initiatives and programs set up by Government of Oman will be able to support the skilled workforce requirements of the Sultanate.

On the new unit, chairman Vinod Pittie, said: “We, at SV Pittie, are delighted to break ground on our training center for cotton-yarn manufacturing skills today, and usher in a new era of progress in manufacturing education in the Sultanate.

The training centre is a fine example of people coming together for the betterment of the community in particular, and the economy at large.”

The data Dubai International Financial Centre (DIFC) DIFC received the ‘International Finance Centre’ award at the WealthBriefing European Awards 2018

2,003

Number of registered companies in DIFC, as of June 2018

1,750

Number of registered companies in DIFC, in 2017

14%

Y-o-Y growth in number of registered companies

614

DIFC registered companies regulated by DFSA*, of which 493 are financial firms Data provided by DIFC *Dubai Financial Services Authority

Quick news

Golden Falcon Aviation, the exclusive aircraft provider of Wataniya Airways, confirmed an order for 25 Airbus A320neo family aircraft for the airlines.

Port of Salalah commissioned the first phase of an agro terminal project, consisting of a 2.5ha facility with the capacity to store 60,000 tonnes of bulk grains.

Ajman Media City Free Zone (AMCFZ) announced a series of customer-friendly, costeffective packages for potential business owners setting up base in the area.

Emirates SkyCargo received the 2018 Carrier Award for Reliability and Excellence (CARE) by DHL Global Forwarding for the transportation of temperature sensitive pharmaceuticals.

Logistics News ME | August 2018 | 11

Regional News

DP World, Zhejiang China to construct trade hub at Jebel Ali Port DP World signed an agreement with the Zhejiang China Commodities City Group, to jointly construct a new ‘Traders Market’ at DP World’s flagship Jebel Ali Port and Free Zone in Dubai on a total build up area of three million sqm, providing further impetus to China’s Belt and Road Initiative.

DP World will be building the Traders Market within the Jebel Ali Free Zone Area located in Jafza South next to the Dubai Expo 2020 site. The market will include clusters of traders from all over the world, offering a wide range of products at one site. They will be divided by sector, ranging from household goods, building materials and food and beverage, to cosmetics and healthcare, energy and power, and engineering and technology.

Apart from promoting the Chinese government’s Belt and Road initiative, the Traders Market will help Chinese, local, and international manufacturers benefit from Dubai’s strategic location as a business and trade hub. It will also enable trade within the GCC, MEA, and Indian Subcontinent, widening market reach for goods and serving as a platform to trade at competitive prices.

The partnership complements an agreement that was signed earlier this year between DP World and the Zhejiang Seaport Investment and Operation Group (ZPG) for a ‘Straight-through Warehouse’ project in Yiwu, China – which is the world’s largest wholesale market for small commodities – for a warehouse that will hold cargo destined for Dubai and the Middle East.

China was Dubai’s number one trading partner in 2017, with total trade between them amounting to AED176.5bn last year.

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14 | Logistics News ME | August 2018

Abu Dhabi Ports subsidiary signs oil-spill service agreement with ADNOC

Hamad Al Maghrabi, Marine Services Operations general manager, SAFEEN, and Abdul Aziz Mohamed Al Zaabi, SVP Services at ADNOC Logistics & Services, during the signing ceremony.

Abu Dhabi Ports announced the signing of a memorandum of understanding (MoU) between its subsidiary, SAFEEN, a provider of integrated marine and port services for Abu Dhabi Ports, and ADNOC Logistics & Services, in the area of oil spill containment, cleaning, and maintenance.

Under the terms of the agreement, ADNOC Logistics & Services will support SAFEEN in handling tier two oil spill incidents through containment, cleaning, and maintenance activities. Tier two oil spills cover a greater area of water and involve more quantities of oil than tier one oil spills, which SAFEEN already is equipped to deal with.

Hamad Al Maghrabi, marine services operations general manager, SAFEEN, said: “SAFEEN has developed an integrated system to ensure health, safety, and the environment are of the utmost importance. The MoU with ADNOC allows

us to further uphold our commitment to the wider port and maritime community, ensuring the seas of the UAE are kept clean and safe.”

The agreement extends to sea areas around all ports owned and managed by Abu Dhabi Ports. Under the new agreement, ADNOC Logistics & Services will have access to Abu Dhabi Ports’ storage facilities, in order to enable a quick response to any tier two oil spill incidents.

Abdul Aziz Mohamed Al Zaabi, SVP Services at ADNOC Logistics & Services, said: “Our agreement with Abu Dhabi Ports will help protect the marine ecosystem against damage caused by any oil spill and reflects ADNOC’s strong commitment, as a responsible energy producer, to safeguard the natural environment. We look forward to working with SAFEEN and making a positive contribution to ensuring any damage done to marine life is minimised in the event of an unforeseen incident.” www.cbnme.com

A u g u s t 2018

Quote We want Expo 2020 Dubai to be a celebration of the latest technologies and innovations so we are delighted that Norway, one of the most forward-thinking countries on the planet, has confirmed its participation.”

Reem Al Hashimy, UAE Minister of State for International Cooperation and director general, Dubai Expo 2020 Bureau, on Norway confirming its participation for Expo 2020 Dubai.

GAC Dubai goes live with specialist storage solution for food quality GAC Dubai Contract Logistics is using heating, ventilation and air conditioning (HVAC) technology to respond to its customers’ needs for specialist storage to prevent tainting between foodstuffs.

Its new 1,700 pallet specialist facility in Jebel Ali is dedicated to goods that emit a strong scent which can affect other foodstuffs. To avoid tainting, the room in which they are stored is sealed air tight and maintained under negative pressure. The facility made its debut to provide storage for chewing gum and candy with a strong peppermint flavour for a long-standing client.

Distribution centre manager, Richard Potts, said: “After significant development in our food storage infrastructure in 2015 and ISO 22000 accreditation in 2017, our investment in this specialist solution to meet our clients’ needs further underpins our continuing commitment to high quality food handling operations.”

GAC Dubai Contract Logistics currently operates 40,000 pallet storage locations for food and beverage operations in the Jebel Ali Free Zone and at Dubai Industrial Park, plus a further 130,000 pallet storage locations dedicated to pharmaceutical, retail and fast moving consumer goods (FMCG) customers.

Sustainability

Aramex installs 3.2MW rooftop solar plant at Dubai facility Aramex partnered with IMG Solar, a daughter company of Jordanian-based Izzat Marji Group, to launch a 3.2MW solar photovoltaic plant for its new logistics facility in Dubai.

As per the company statement, this is the largest single-rooftop solar photovoltaic plant project in the MENA region and one of the largest solar photovoltaic plants connected to DEWA’s grid under its “Shams Dubai” initiative.

Located at Aramex’s logistics facility in Dubai Logistics City, the 3.2MW solar photovoltaic plant uses components from manufacturers like JA Solar, SMA Solar Technology AG, S:Flex GmbH, and Meteo Control GmbH. The plant contains 9,000 solar panels, covered over a total roof area of 3.8ha. The energy yield for the system is around 5GWh per year, contributing to over 3,000 tonnes of emissions avoided CO2 per year.

Additionally, the design was based on optimising the available area while still implementing a modular design, to ease the installation and maintenance of the solar plant.

Raji Hattar, chief sustainability officer at Aramex, said: “We pride ourselves on being a leader in sustainability across the region, and are pleased with our partnership with IMG Solar for the second time.

This solar photovoltaic plant will provide 60% of the power needed to run our logistics facility in Dubai Logistics City for a year. We continuously look for new ways to ensure that we operate as efficiently

and cleanly as possible to safeguard our environment for future generations.

We have a commitment to reducing our expenditure on power, and increasing electricity consumption from renewable sources for our operations. We are currently planning a phase 2 of this project, aimed at increasing the capacity to 7MW upon completion.”

Fadi Marji, general manager of IMG Solar FZE, said: “Our company has executed more than 250 solar photovoltaic plant projects in the UAE, Jordan, and Kuwait, totalling at more than 30MW, including the offering of high quality systems for Aramex, which was lined up with its renowned high standards. We are really proud of our strategic partnership with Aramex.”

In 2017, Aramex partnered with Izzat Marji Group and successfully inaugurated its single-rooftop solar photovoltaic plant in Amman, Jordan.

The plant generates 1.2MW of power, providing sufficient renewable electricity to power the company’s operations in Amman.

Aramex also announced the addition of electric vehicles to its fleet in Jordan.

Logistics News ME | August 2018 | 15

Regional News

Sustainability

DHL Express teams up with Al Nabooda to launch electric delivery vehicles

DHL Express partnered up with Al Nabooda Automobiles to introduce for the first time in the region the allelectric Volkswagen e-Golf for deliveries and collections.

This is in line with DHL’s latest announcement on the Cubicyle, a cargo bike with a specialised container for clean pick-up and delivery. The introduction of sustainable solutions into the business are a leg up towards achieving DHL’s zero emissions target by 2050.

The fully customised 134-horsepower electricGolf car will initially be used for documents’ delivery and collection specifically throughout areas with a reputation of high volume traffic, such as Dubai International Financial Centre and Downtown Dubai, followed by gradual expansion to remaining UAE regions in the near future. Running entirely on electrical current with a 100kW AC electric motor, re-chargeable on standard power supply, it is also the only fully customised commercial vehicle in the UAE with a segregated cargo bay separated from the driver.

With its full adaptation to DHL’s duties, the e-Golf has the capacity to complete a 250km journey operating on just a single charge aswell-as boasting advanced endurance capabilities when exposed to extreme, warm weather climates. The innovative vehicle also uses a regenerative braking system, allowing the conversion of stored kinetic energy to be used to recharge its batteries.

Highlighting the significance of the launch, Geoff Walsh, UAE country

manager for DHL Express, commented: “DHL Express is paving the way towards a green future with the aim of bringing our logisticrelated emissions to zero by 2050. The introduction of e-Golf is an important step towards implementing our vision to protect the environment, and inspire the entire logistics industry in reducing the impact of dayto-day operations. We are confident that this new and advanced method of delivery will contribute significantly

16 | Logistics News ME | August 2018

to a more sustainable way of operating in the region.

Commenting on the partnership with Al Nabooda, Mike Barrett, UAE vice president operations for DHL Express, said: “We are pleased to collaborate with Al Nabooda Automobiles, who supported us in our mission to reduce carbon emissions.

We express our gratitude for their extraordinary efforts in customising the e-Golf electric car into a commercial vehicle. With this launch, our goal is to implement eco-

friendly delivery services across the entire country in the future.”

Thierry Seys, general manager – Volkswagen, expressed: “Al Nabooda Automobiles Volkswagen is thrilled to be associated with DHL for this project aiming at reducing drastically CO2 emissions in the express delivery sector. We will be monitoring closely the activity of these vehicles in search of improving their efficiency as well as increasing the fleet of zero emissions vehicles.” www.cbnme.com

A u g u s t 2018

Almajdouie signs up for Infor warehouse management system Infor, a provider of industry-specific cloud applications, announced that Almajdouie Logistics Company, a logistics service provider based in Saudi Arabia, has deployed Infor SCE to enhance business agility as it poises for further growth.

The project was successfully managed by Infor’s global supply chain partner, SNS, a leading provider of supply chain consulting and software solutions in the Middle East, Africa, and Europe.

“Our customers’ busi-

nesses demand that we keep pace with emerging value-added services. We can provide them with complete visibility about their inventory, enabling

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them to reduce freight costs, optimise service levels, and improve overall operational efficiency,” said Brent Melvin, chief operations officer,

Almajdouie Logistics.

“With Infor SCE, we are now able to make faster and better-informed decisions, improving our customer service, increasing throughput, all while reducing the costs of running our operations.”

Infor’s operating service (Infor OS) platform helps provide integration between the company’s systems, giving a unified user experience, and organisation-wide access into the real-time information required to drive Almajdouie Logistics’ business.

Warehouse

Al-Futtaim Logistics inaugurates second warehouse in Riyadh As part of Al-Futtaim Logistics’ regional expansion plans, it has opened the second warehousing facility in the metropolis city of Riyadh. The local distribution centre now scales up a total of 15,000sqm co-existing with its primary warehouse in Jeddah.

Driven by consumer demand, the two facilities currently handle retail brands with categories including fashion, footwear, hardware, DIY furniture, and home appliances. The distribution centres are an extension of the Al-Futtaim company’s 3PL solutions to bring brands and consumers within close proximity. The facilities are fully equipped with the latest web-enabled inventory technology, providing visibility and reassurance to customers.

Moreover, it has best practice operational processes for

Al Futtaim Logistics’ distribution centre in Riyadh

products stored, palletised, shelved, binned, and bulk commodities.

As per customer preferences, inbounds are arranged via air, sea and/or road options. Both warehouses are Wi-Fi enabled for online scanning which provides an accurate and real-time update on stock transactions. Inventory is distributed either directly to stores (B2B) or homes (B2C).

Logistics News ME | August 2018 | 17

Regional News

A u g u s t 2018

Transport

Emirates Transport selects Oracle to drive digital growth

Fleet

McDonald’s UAE biodiesel fleet achieves 10mn kilometres

Emirates Transport, one of the largest transportation and logistics services companies in the Middle East, will implement Oracle Cloud Applications to drive a major digital transformation across all its core business operations.

The initiative will help Emirates Transport introduce innovative offerings that create new revenue streams, deliver exceptional customer service, and drive operational efficiency.

“The UAE’s transportation sector is experiencing sustained growth on the back of promising economic activities across infrastructure development, government investment, and private sector expansion,” said Faryal Tawakul, executive director of Support Services at Emirates Transport. “These changes have created significant growth opportunities for Emirates Transport and by using the latest cloud technologies to drive expansion and offer unmatched services to our customers, we will be able to establish a huge competitive advantage.”

Tawakul added: “We selected Oracle to support our transformation into a service

focused company and to help establish Emirates Transport as the preferred transportation and logistics partner for the UAE’s public and private sector.

This is our first step towards implementing a more elaborate digital transformation roadmap which, in due course, will also explore the implementation of next gen technologies like Artificial Intelligence and Internet of Things (IoT) to help us drive long term growth.”

With Oracle Cloud Applications, the Emirates Transport leadership team will be able to take advantage of a complete and fully integrated suite of applications to increase business agility and reduce costs. The new cloud applications will provide Emirates Transport with full financial control, simplifying procurement processes, and allowing the management to make data driven investment and business decisions.

The Emirates Transport management team will also be able to run simulations for new services and programs to ensure an exceptional customer experience and high employee engagement.

18 | Logistics News ME | August 2018

McDonald’s UAE announced that its logistics fleet of biodiesel delivery trucks clocked a whopping 10mn kilometres. Since the launch of the McDonald’s UAE Biodiesel Initiative seven years ago, 8,563 tonnes of CO2 emissions have been saved, contributing to improve air quality in the country. The McDonald’s UAE Biodiesel Initiative underscores the benefits of using biodiesel and how it can help enhance air quality in line with the government’s Air Quality Strategy 2017 – 2021.

Since July 2011, McDonald’s UAE’s logistics fleet has been running on fuel made from used vegetable oil from their restaurants in the UAE. The biodiesel is converted

by Dubai-based company Neutral Fuels, a UAE-backed venture that makes use of environment-friendly technology. The initiative is part of Dubai’s green schemes and is a team effort that also incorporates Dubai FDI, the foreign investment promotion arm of the Department of Economic Development.

Rafic Fakih, managing director and partner at McDonald’s UAE, said: “At McDonald’s UAE, we strongly champion the cause of protecting the environment.

This is evident with our various campaigns and our long-running partnership with the Emirates Environment Group (EEG). The Biodiesel Initiative is an example of how McDonald’s UAE is helping improve our communities by contributing to prevent the degradation of air quality in the country. Having covered 10mn kilometres, our logistics fleet has saved as much as 100% of CO2 emissions, thereby helping improve the air we breathe.”

Karl Feilder, founder and CEO of Neutral Fuels, added: “According to the UAE government, transportation represents 20% of our country’s carbon footprint.

When we started Neutral Fuels in 2011, McDonald’s was the very first company to fully adopt this clean, green fuel.

Seven years later, look at the massive reduction in greenhouse gases that we’ve achieved together! Thanks to McDonald’s showing other companies the way, many are now using our biofuel, but the truth is that every company in the world needs to take responsible action now to reduce its carbon footprint at every level. Using biofuel is one of the quickest and easiest ways to do that.” www.cbnme.com

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Op-Ed

Opinion

Jean Salamat and Camil Tahan, principals with Strategy& Middle East (formerly Booz & Company), part of the PwC network, discuss the need of the hour for the freight industry in the GCC

The path ahead A

s the GCC countries diversify their economies to generate sustainable growth, there is an urgent need to digitise the freight transportation and logistics (T&L) industry. T&L is a key driver of economic activity in the region, yet local players are falling behind their global competitors in terms of digitisation. For many local leadership teams, the constant stream of new technologies can be overwhelming. Yet there are three that should be priorities for regional players in the industry: data analytics, on-demand mobility, and blockchain.

At present, the T&L industry in the GCC faces a threat from the slowdown in growth.

A recent Strategy& Middle East study found that while freight revenue in the region grew steadily at an annual rate of about 10% from 2010 to 2014, it has declined roughly 5% a year since then. The region’s slow growth environment has resulted in a decline in imports, businesses scaling back projects, and governments spending less on freight infrastructure such as ports.

Compounding this decline, the region’s T&L industry significantly lags behind its peers in developed markets when it comes to the use of digital technologies. Such technologies offer two key benefits to T&L companies. The first is greater efficiency. Our analysis has found that digital solutions can increase the operational efficiency of T&L companies and reduce operating costs up to 10-30%, while minimising operational risks and breakdowns by 75%. This is critical at a time when the industry is facing financial pressure and lower freight volumes.

The second, and more, transformative advantage of digital is that it allows T&L companies to develop innovative business models to better engage with customers, deliver en-

20 | Logistics News ME | August 2018

Camil Tahan

hanced services, and unlock new revenues.

Despite these benefits, some management teams in the region are understandably hesitant regarding digital. Most T&L executives advanced through the ranks when such technologies did not exist. The flood of new tools and applications entering the market can be confusing, and there is a temptation to chase the latest and greatest offering, or to entertain propositions from any vendor knocking on the door. Unfortunately, many technologies generating headlines are still not fully formed and have a long way to go before they can generate real value for companies.

There are three proven digital technologies that are applicable to the GCC’s T&L industry: data analytics, on-demand mobility, and blockchain. All three are already in use and creating substantial gains for T&L companies in other markets. Notably, all three are

Jean Salamat

reducing costs and powering new business models to create additional revenue. Rather than simply helping companies offer the same service more efficiently, they are enabling new services to customers. The change is as radical as the shift in media from video cassettes to watching television on demand on a smartphone.

The first of the three technologies, data analytics, enables companies to capture and interpret data in greater volumes and with higher levels of detail and accuracy. This yields insights that can dramatically improve performance. Companies can manage information in a way that makes their services smarter, faster, and less expensive. For example, German freight company DHL Express uses big data and analytics along its entire value chain. The company has sensors on delivery trucks, which collect traffic data and send them to a central

www.cbnme.com

A u g u s t 2018

analytics system. The central system analyses these data and uses the resulting information to reroute other drivers. The company also “crowd-sources” pick-ups and deliveries, allowing available drivers to scale up and handle increased volume on their routes, and thus improve fleet utilisation. DHL even sells some of its market-based data to small- and mediumsize businesses, helping those companies improve their own performance.

The second priority technology is on-demand mobility. These are applications to get data securely and reliably into the hands of employees, managers, and executives through smart phones, tablets, and other mobile platforms.

One regional start-up, Load-Me.com, has created a mobile marketplace connecting shippers, logistics professionals, and drivers, giving them real-time information about shipments that need transport, trucks, and other logistics services. By creating transparency and streamlining some of the burdensome processes required to book freight, Load-Me.com has simplified logistics, increased competition, and lowered freight costs — all through mobile platforms.

The third technology is blockchain. Essentially a digital ledger, blockchain allows organisations to record transactions online in a secure way, encrypting them and distributing them across a wide network of computers. In the freight industry, blockchain connects carriers and shippers directly, without the need for distributors or middlemen. A Silicon Valley startup called Skuchain has created a blockchain-based application specifically for T&L. The application tracks shipments securely through each leg of their journey, putting smaller and less-experienced carriers such as those in the Middle East on an equal footing with larger, established players.

All three technologies are extremely powerful, and they introduce new ways of working for T&L companies. Where to start?

Rather than getting dazzled by shiny new tools, companies need to ground technology in real-world applications, by identifying a specific business problem and determining how a specific technology will help them solve it. They also need a clear and comprehensive strategy for implementation.

This means a structured approach that will allow organisations to implement new tools consistently and successfully, regardless of which technology they prioritise.

To that end, before embarking on a digital transformation, T&L companies must first define their digital business strategy and con-

Emerging digital technologies for T&L industry

sider how they might rethink their business model. Next, they need to think about the digital solutions that will enhance their services and customer interactions. They then need to lock down the choice of technology based on their position within the T&L value chain.

Critically, companies also need to invest in upgrading their digital skills, particularly in cybersecurity and data mining. Finally, T&L players need to re-engineer their business and operational processes to capitalise on the new

digital tools, in areas such as cargo-tracking, pricing, and cross-docking.

Digitisation is rapidly disrupting virtually all sectors, and T&L companies in other markets are already capitalising on this trend. Given the pressures facing the local industry, it’s imperative that T&L companies start implementing digital technologies. By doing so, they can put themselves on an equal footing with global competitors—and help support the region’s broader economic aspirations.

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A u g u s t 2018

Saudia Cargo’s newly appointed CEO, Omar Hariri, is confident of the freighter’s capabilities to make significant contributions to Saudi’s Vision 2030

By Mehak Srivastava

A

viation is an undisputable steering force when it comes to developing economies. It remains the quickest mode of transportation to connect cities, countries, and continents, and its role in boosting a nation’s GDP is apparent to all.

The Kingdom of Saudi Arabia has long recognised the aviation sector as means to drive economic growth and talent development, while elevating the Kingdom’s position on the regional and global stage. Saudi Arabia’s Vision 2030 wholly supports the industry and understands the role aviation plays in achieving their goal of an oil-independent country.

The Kingdom’s national carrier, Saudi Arabian Airlines — better known as Saudia—is the third largest airline in the Middle East in terms of revenue. With a market presence of more than seven decades, Saudia has grown from a single twin-engine DC-3 (Dakota) HZ-AAX given to King Abdul Aziz as a gift by then US President Franklin D. Roosevelt, into an organi-

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sation that today boasts of 149 aircraft, including the latest and most advanced wide-bodied jets presently available: B787-9, B777-268L, B777-300ER, Airbus A320-200, Airbus A321, and Airbus A330-300.

In mid-2015, the airline launched a transformation program — the SV Strategic Plan 2020 — which was designed to develop the performance of the national carrier, raising overall efficiency through investment in state-of-the-art modern aircraft, new onboard products, and talent development. The strategy has extended well into the achievements of the airline since 2015, and its freight subsidiary, Saudia Cargo, has followed a similar path of success.

One of the most recent announcements from Saudia Cargo is the appointment of chief executive officer, Omar Hariri, and it seems that Hariri’s go-getting personality is going to translate into major triumphs for the company. Hariri’s vision is well aligned with the Kingdom’s and he values the contribution of technology

and e-commerce to the aviation industry.

“My vision is to fulfill and support the Kingdom’s Vision 2030 to make Saudi Arabia the leading freight and logistics hub in the region,” remarks Hariri. “In line with that, I am determined to make Saudia Cargo reach its full potential in the air freight and cargo handling sectors by becoming the preferred global freight carrier known for speed, reliability, and efficiency — and most importantly, for quality, quality, quality.”

Hariri started in the industry in 2004, as a national sales manager at DHL Express Saudi Arabia. In 2011, he moved to SAF Group of Companies as COO, overseeing its day-today operations. He then returned to DHL as country manager for Kuwait and later as vice president commercial for Saudi Arabia. Prior to his appointment as CEO of Saudia Cargo, he was the managing director at Abdul Latif Jameel Transportation Co. Ltd., which has ties with FedEx.

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Pillars of growth “Saudia Cargo is going through a turning point in its history,” comments Hariri. “The 2020 Strategic Transformation Plan is in line with the Saudi 2030 Vision, which will turn Saudi Arabia into the leading freight hub of the region.”

Hariri explains that as a CEO, his aim is to focus on their five main strategic pillars: safety and security, service quality, people, customer experience, and profitable growth.

“In our safety and security pillar, compliance with external audits and certifications like TAPA & IATA and others was a major step besides aiming to get the ISAGO and BSI for airline and ground handling. We also have ISO 9001 quality, ISO 45001 safety and health management, and ISO 14001 environment management certification.

“With regards to the service quality pillar, we focused on upgrading the cargo IQ performance, the re-engineering process, and introducing new KPIs. We also introduced the HUB control center, launched the new temperature control facility in Riyadh and Jeddah, and reformed the QHSSE department.”

Furthermore, in lieu with the people’s pillar, Saudia Cargo teamed up with Gallup, a global performance-management consulting company, to drive culture change of customer focus and performance.

“We also signed with SACA [Saudia Academy of Civil Aviation] and FHM [The National Training Centre for Facilities & Hospitality Management] to impart training for our employees. We are creating personal KPIs to drive performance and efficiency at each position.

“Customer experience takes our major focus. We have reformed the sales force and the customer service department. We also promote customer centric culture within the organisation besides setting customer journey action plan.

We also introduced new products in line with the customer needs.

“And finally, in the profitable growth pillar, we achieved a healthy increase in yield and implemented new revenue management system, which resulted in nearly doubled growth in net profits in the past few months.”

Saudia Cargo has managed to achieve a decent profit in previous years in the volatile global air freight industry. But for the most part, it has seen growth driven by transportation of ecommerce and pharmaceuticals in particular, as well as the transit role the company plays because of the Kingdom’s strategic location.

For instance, major industries like pharmaceuticals from Europe and then Bangladesh’s garment industry rely on Saudia Cargo’s expertise to transport tonnes of their manufactured products.

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“In Africa, we’re dealing with a variety of sectors to transport their products/high value goods and perishables to different parts of the Middle East and outside of it,” highlights Hariri. “We are trying to focus on what’s right for the business and the customers. We are also focusing on key regions such as Asia, Europe, Africa, and US in order to continue generating decent growth and profits.”

Hariri notes that Saudia Cargo recognises themselves as an important partner in building industries and economies, the very core essence of its existence when the Kingdom first ventured into this type of industry.

“We’re not just hauling cargo, we’re supporting people and economies. Nevertheless, we are relentlessly pursuing restructure of the product portfolio focusing on e-commerce, pharmaceuticals, and special cargo as the core, driving business to new heights.”

Last March, Saudia Cargo hauled in an overwhelming amount of production equipment, including a wrestling ring, from New York City to Jeddah, where WWE’s Greatest Royal Rumble was held in April with a live global telecast for the first time. The widebody B-747-8 was put to use for this mission at the request of the Saudi General Sports Authority. About 50 wrestling superstars participated in the games, including John Cena, Triple H, Roman Reigns, AJ Styles, Braun Strowman, The New Day, Randy Orton, Bray Wyatt, and Shinsuke Nakamura.

“This was a very important event for the Kingdom, not just for the Saudis but for expats as well. We are very proud to have accomplished our mission of delivering their delicate production equipment, including high-value film cameras safely. This demonstrates our people’s commitment and experience in handling special cargoes.”

Infrastructure and technology On being queried if infrastructure development is on the cards for Saudia Cargo to achieve its goal of becoming a regional hub, Hariri emphasises on the company’s heavy investments into their groundwork.

“In June 2018, Saudia Cargo signed agreements totalling an investment of SAR1.4bn, with three major companies to construct a new cargo handling facility at King Abdulaziz International Airport (KAIA). The agreements were signed with Al-Bawani, who will be in charge of construction and implementation of the project; Siemens, which will supply the facility with state-of-the-art mechanical equipment and advanced cargo handling systems; and AECOM, which will act as the supervisor of the new facility’s engineering works.”

The 75,000sqm cargo handling facility has double area of the current one, estimated at 35,000sqm. The first phase of the project commences in September 2018 and is expected to end November 2019, while the second phase be-

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A u g u s t 2018

gins June 2020 and ends December 2021 as per the implementation plan.

The new facility will enhance Saudia Cargo’s handling capabilities for hazardous material, pharmaceuticals, frozen materials, and different goods. The increase in cargo operational capacity will lead to leapfrog transformations in the company’s sectors.

The refrigerated warehouse was opened in conjunction with the launch of FlyPharma, a product designed specifically to meet the growing demand for the pharmaceutical and life sciences sector. The center ships and stores pharmaceuticals using the most advanced technologies along with sophisticated active temperature control containers, which require advanced passive solution technology, especially for products needing transportation between 2oC – 8oC or 15oC – 25oC. The King Khalid International Airport Riyadh’s new facility is also under talks, and the current 23,600sqm will be fully refurbished in phases with special focus on ecommerce handling.

Hariri says: “We are in line with our customers and so we focus on transporting what matters for them— for instance pharmaceuticals, including high value cosmetic products and vaccines/medicines for the African region, perishables such as fruits and vegetables, milk and other dairy products, fresh, frozen or processed seafood, fish and meat, heavy machineries and

various types of equipment, garment products and of course, e-commerce. We also transport human organs as part of our CSR program to help sustain life for those who need it.

“And of course, these products use Saudia Cargo’s state-of-the-art modern freighter aircrafts like B-747-8 and the B-777.”

Hariri believes that technology is a necessary and wise investment for the future.

“With technology, there’s more transparency, speed, and efficiency. It not only involves investing on high-tech infrastructure or equipment, but also ensures training people with up-to-date knowledge and skills in using the technology to enhance our services to our customers. Holistically, we are digitalising the transformation to enhance our customer experience.”

Hariri stresses on the fact that practically all companies engaged in the industry, including the supply chain, are trying to remain ahead in digital world.

“The simplest way is perhaps having a company website, their digital footprint so to speak. Some are doing it on a small scale, others on a larger scale, including having features that enable customers to track their shipment on real time.

“The world has become smaller and is now heavily dependent on technology. Whether we like it or not, the digital age is going to catch up on the air freight industry. It is said that the fourth industrial revolution, better known as

Industry 4.0, is already here. The earlier we embrace technological advancements, the better.”

Last month, Hariri was selected as a member of the Cargo Committee of the International Air Transport Association (IATA). The committee advises the Board of Governors, the director general, and other relevant IATA bodies on all air cargo industry issues including cargo security and safety; cargo technology and automation; cargo handling; cargo distribution; cargo-related regulatory developments, cargo trade facilitation, and agent and carrier relations.

“I am honored to have been chosen to join this esteemed body that represents entities in aviation and air freight industries,” remarks Hariri. “We’re from the Middle East and we have unique geopolitical, socio-economic, and environmental challenges. We hope to be the voice of the region for other carriers and players in the industry.”

Hariri amicably welcomes competition and believes that it only pushes them to do better and explore innovations where possible. He understands that ultimately, the consumers or endusers benefit the most in a healthy competition.

“Saudia Cargo has been in this business for so long you could say ‘we’ve been there, done that’.

We hope to impart our knowledge and experience in this very competitive industry and with that we hope our goodwill efforts to help elevate industry standards would be recognised and appreciated.”

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R e p o rt

Revisiting the approach

Prof. John Manners-Bell, CEO, Transport Intelligence (Ti), delves into alternative propulsion systems for commercial vehicles

T

he demands placed on commercial vehicles are very different, not least, due to the diverse functions which these vehicles undertake, the weight of freight they move, the number of stops they make, and the range they require.

Light commercial vehicles (vans), for example, are likely to make multiple drops, work within urban areas, and carry lighter loads.

Heavier goods vehicles, in contrast, need greater range, will stop fewer times, and obviously carry heavier loads. One of the main

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advantages of diesel power is its versatility; it performs well in multiple roles. This is certainly not the case for alternative powertrains – at the moment, there is no single technology able to supersede diesel (or for that matter petrol) powered engines. As the European Automobile Manufacturers’ Association (ACEA) secretary general, Erik Jonnaert, stated: “Different transport needs require different transport solutions.” Policy must recognise and support this market-based approach.

Another issue for industry is that without

government support or, indeed, environmental regulation, alternative propulsion systems are unlikely to have been developed. The overwhelming operational advantages and the scope for making diesel technology even more efficient would have provided little impetus for investment in sub-optimal technologies. This is important because it has led to the trial of a proliferation of technologies, often subsidised, many of which are highlighted in this document. For a fleet procurement manager, the choices used to be much simpler, based on efficiencies, power, and cost

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A u g u s t 2018

with all van/ truck manufacturers providing similar products. Now the landscape looks set to become much more complex with not only competing manufacturers but competing technologies against a backdrop of shifting government regulation and subsidy.

It is useful to categorise commercial vehicles in order to assess their needs and consequently the likely most appropriate alternative powertrain. For this purpose, the International Energy Agency (IEA) suggests three classifications: • Heavy freight trucks (HFTs) (those with a gross vehicle weight (GVW) of more than 15 tonnes) • Medium freight trucks (MFTs) (those with a GVW of between 3.5t and 15t) • Light commercial vehicles (LCVs) (GVW of less than 3.5t).

HFTs account for the majority of road freight activity not least due to the level of intensity of their use. The IEA estimates that they account for 70% of road freight activity and 50% of truck energy usage.

Light commercial vehicles (which also include passenger) have seen the highest level of growth over the last decade as a result of the surge in e-commerce deliveries. Also, the more regulation of HFTs, the greater the increase in lighter vehicles.

It is also useful to examine the makeup of the global fleet of commercial vehicles to assess the market size for the most appropriate forms of propulsion: • LCVs: 130 million • MFTs: 32 million • HFTs: 24 million.

A model developed by the IEA suggests that there is considerable variance in the distance travelled by the different classifications of vehicles across regions. This is due to the impact of factors such as: • Quality of roads and networks (developing countries have a larger proportion of MFT to HFT due to poor roads) • Urbanisation (more vans) • Geography (large countries with longer distances between cities favour more HFTs).

Although there is no overwhelming consensus on which technology is necessarily right for which vehicle, it seems clear that electric or electric-hybrid technology is being favoured for vans, especially for intra-urban deliveries, although hydraulic hybrids are also being developed.

“If the ‘cargoowners’ are not willing or unable to force adoption of alternatives to diesel then a combination of regulation and subvention is needed.”

John MannersBell, Transport Intelligence The advent of electric-powered heavy goods vehicles is much further off, despite work being undertaken by manufacturers in the US such as Tesla. Indeed, the UK’s National Grid takes a very negative view of the potential for electrically powered HGVs. It says that: “Currently the electrification of heavy goods vehicles is not considered viable and other fuel types are considered more likely for these larger vehicles.” It believes that natural gas will be the fuel of choice.

This is not a view shared by all. Pasquale Romano, president and CEO of ChargePoint, has commented: “The drivetrain debate has ended, and electrification has won out as the propulsion method of choice across transportation categories, as evidenced by the growing interest in electrifying semi-trucks, aircraft and beyond.”

This would suggest he believes that advances in battery technology will reduce the size and weight of the batteries whilst still providing the power to carry large payloads over long distances (as do Tesla).

Return on investment also varies by size of company. Research undertaken in the US

(Schoettle, Sivak and Tunnell, 2016) suggests that small companies with fleets between 1- 20 will only invest in technologies with a payback of six to 36 months (average a year). Larger companies may consider a long payback period (18-48 months) averaging two years. Investment in vehicles using new propulsion systems will therefore be constrained by the levels of fragmentation in the industry. The fact that many logistics providers sub-contract to owner drivers means that levels of adoption will be further suppressed or delayed either from the more limited payback horizon or due to a lack of capital.

Consequently, some believe that the structure of the industry requires government intervention. If the ‘cargo-owners’ are not willing or unable to force adoption of alternatives to diesel then a combination of regulation and subvention is needed. These include higher diesel taxes, higher vehicle duties for the most polluting, and potentially increased tolls (when within a government’s remit). These can be combined with scrappage schemes for older vehicles and support for the purchase of new ones through subsidy of the retail price.

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C o u n t ry F o c u s

Changing times India’s logistics industry continues to lead on a global scale, but certain factors hinder it from achieving full potential

By Mehak Srivastava

I

ndia’s logistics and transport industry has witnessed a rapid expansion and substantial development in the last few years. The logistics market in India comprises shipping, port-services, warehousing, rail, road and air freight, express cargo, and other value-added services.

Transport is a crucial component of the industry, being about half the size of the Indian logistics industry market, followed by warehousing and storage comprising another 25-30% of the total market. The rest of the Indian logistics industry market constitutes value-added and freight forwarding services.

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Road transportation, with over 50% market share, dominates the industry, succeeded by the railways sector at over 30%, water transport at 7%, and air shipment at 1%. The boom in the e-commerce sector and expansionary policies of the FMCG firms have increased the service geography of the best logistics companies in India. The industry has moved from being just a service provider to provider of end-to-end supply chain solutions to their customers.

“The Indian logistics sector has always been crucial to the country’s infrastructure and economic development,” remarks

Kushal Nahata, CEO and co-founder, FarEye. “With the implementation of GST, the Indian logistics market is expected to reach about $215bn in 2020, growing at a CAGR of 10.5%, making it an integral part of the country’s growth strategy.”

It’s a revolution Anil Talreja, partner, Deloitte India, believes that India’s market size plays a significant role in its substantial position in the market.

He says: “India has a very large potential for consumption, anything that is manufactured gets [easily] consumed, and there is surplus.

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A u g u s t 2018

“Globally, organisations are increasingly realising that there are a number of factors that differentiate long term sustainable partnerships, from the one-off transactional outsourcing benefits. Some of these include full menu of specific logistics services and solutions; seamless integration of systems applications; robust ability to support initiatives that help avoid major investments in capital and other resources; reduction in total landed cost and not just operating cost; total quality assurance programs; wide geographic coverage; and risk and security management capabilities.”

Nahata believes that a major portion of the logistics revolution in India is fuelled by the exponential rise in e-commerce.

“India’s e-commerce market is expected to hit $32.7bn this year,” highlights Nahata.

“More and more people are moving to online medium looking for speed and convenience. E-commerce growth is driven by faster and free deliveries, as delivery is the first touch point between the brand and consumer in an e-commerce landscape. This makes logistics as the most important function from consumers to retailers.”

A KPMG report titled E-commerce retail logistics in India supports Nahata’s stance. The report says that strong government initiatives coupled with reducing prices of smartphones and data plans by telecom service providers have led to an increase in adoption of internet amongst new users. Furthermore, a market which has about 80-100 million online shoppers, is growing organically with the increasing employment ecosystem and new shoppers who are already among the 450 million+ internet users in India predominantly from the tier II and below cities and towns in India. The latter are coming in to the online shopping bandwagon due to various digital interventions by e-retailers as well as other ecosystem players.

Nahata continues: “Customer expectations are also evolving rapidly, and global brands are bringing in innovations daily.

Amazon has recently started making deliveries in one of the highest habitable places in India i.e., Ladakh. With changing customer preferences and increasing competition, the industry is moving rapidly towards customer orientation.” Nahata believes that factors like demand spike from tier-II and tier-III cities, options such as same-day-delivery, one-hour delivery, and supply chain security requirements are pushing e-commerce com-

“With changing customer preferences and increasing competition, the industry is moving rapidly towards customer orientation.”

Kushal Nahata, FarEye panies towards a more sophisticated logistics infrastructure. Technology and digital logistics platforms give companies the capability to make their processes efficient, adapt to rising customer demands, gain real-time visibility of the complete delivery cycle, manage operations effectively, create new revenue streams, and make deliveries delightful for their customers by offering personalisation and customisation.

He adds: “Technologies such as artificial intelligence, machine learning, drone deliveries, and offerings such as locker deliveries, click and collect model will be at the core of transforming the online shopping experience for the consumers. With digitalisation, the e-commerce industry will witness the emergence of many new business models that are cost-effective, more engaging, and derive higher value from every interaction with the consumer.

“As traditional information barriers deplete, online sellers will have more opportunities to have meaningful interactions with their customers and provide them beyond ordinary buying experience. However, the mere existence of technology is not enough. The way companies implement it and make them a part of their logistics ecosystem is what will help them win.”

E-commerce retail-focused logistics players as well as captive players are likely to witness an influx of investments in this sector in the years to come. A number of strategic tie-ups with e-commerce retail players may also be on the cards. However, a major share of the market is expected to be captured by the captive players, i.e. the in-house logistics arms of large e-retailers, as they continue to extend their services to other external clients as well.

Trouble is brewing In India, inter-state trade and logistics are considered to be a complex and critical issue, increasing the cost of doing business up to a great extent.

Talreja mentions: “The evolution of the logistics industry in India has been slow.

While India spends around 13-14% of the GDP on logistics which is significantly higher than several developed economies like the US (9.5%) and Japan (10.5%), the sector is today nearly a decade behind when compared with the global logistics industry.”

The lack of sound inland transport infrastructure and the poor state of national and state highways have been hindering the growth of the industry for a long time now, leading to high transit times. Probably one of the most significant challenges faced by the industry today is the insufficient integration of information technology in transport networks, warehousing and distribution processes. Besides, regulations in the country exist at a number of different tiers imposed by national, regional, and local authorities, and

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C o u n t ry F o c u s

may vary from city to city, thus creating bottlenecks in the creation of national networks.

Last-mile delivery for e-commerce continues to be a pain-point, even for the established delivery companies.

“An expanding digital consumer base coupled with inadequate and ill-planned infrastructure facilities has left India trapped between growing demand for logistics services on the one end and a fragmented logistics services market on the other,” notes Talreja. “Already some experiments are being made for adopting digital technologies in the country. But given the potential for

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significantly higher value to be created for the Indian economy, the sector cannot benefit much until a concentrated and collaborative effort is made by each stakeholder, including infrastructure providers, terminal operators, logistics service providers, and technology companies.”

Talreja believes that there is also a lingering talent gap when it comes to the logistics industry in India, a situation shared globally, there is a clear lack of youth in this sector.

“There was a time when people were not ready to work at places like Starbucks and Café Coffee Day, but today they are, with

zero objections. So with time and better awareness, the logistics job market can also pick up pace.”

Despite growing demand, the e-commerce sector is plagued by numerous challenges which include cost pressures, high returns, and poor infrastructure. Further, the sector is still adjusting to adapt to GST and the issues that have arisen on account of it.

Amidst challenges, India’s e-commerce retail logistics sector throws innumerable opportunities. These challenges provide an opportunity to e-commerce retail logistics players for innovation and disruption, but at the

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“The evolution of the logistics industry in India has been slow… [it] is today nearly a decade behind when compared with the global logistics industry.”

Anil Talreja, Deloitte same time it requires attention to execution, and efforts to create long term value. Growth in e-commerce, a burgeoning middle class, and government initiatives are some of the key drivers of the e-commerce retail logistics business in India. E-commerce retail logistics players should continue to introduce new innovative mechanisms as well as focus on improving processes and standardising them in order to reduce turnaround time, decrease returns as well as bring down logistics costs.

However, many changes are said to be taking place rapidly to improve the situation.

“Implementation of GST has accelerated

the modification of informal logistics setups to formal ones and sped up freight movement at interstate borders due the elimination of check posts,” highlights Nahata.

“With global enterprises looking to invest in India, entry of new players, strong focus of the government on improving current policies, establishment of a separate division for logistics under the Ministry of Commerce, and a target to reduce the logistics cost in India from the present 14% of GDP to less than 10% by 2022— the Indian logistics market is at the cusp of a revolution.”

In developed countries, a number of in-

novative last mile delivery mechanisms, such as use of drones, driverless vehicles, secure lockers and pick-up towers have been created. Indian companies should look to adopt such practices to improve last mile delivery. Further, a host of developments involving artificial intelligence (AI), automation (Bots) and use of analytics seem likely to propel the sector to further heights. New business models such as omni channel retailing and delivery through local retailers are expected to become more prominent in this sector in the coming years.

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P o rt s

Photo courtesy APM Terminals

Smooth sailing Trade, technology, and services— the Middle East’s ports are taking an all-rounded approach to the tasks at hand

By Mehak Srivastava

C

ontainerisation and port privatisation have fundamentally changed the market environment that shipping lines and ports operate in. Shipping lines seek dedicated container terminals in ports, with the aim to support their objective of widening their scope in the supply chain.

Mark Hardiman, managing director, APM Terminals Bahrain, says: “It leads to vertical integration between shipping lines, port operators, and indeed also, and very importantly, our landside customers. A true

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partnership between these parties ensures simplification of supply chains from a customer’s perspective, resulting in cost reductions and efficiency improvement.”

All of the GCC countries have been investing heavily in ports and logistics facilities, with Expo 2020 in Dubai, Saudi Vision 2030, and Oman Vision 2040 viewed as key drivers, and these have caught the attention of international investors, in particular, China.

“If we take China, about 60% of China’s exports to regional markets pass by the UAE,”

notes Ross Thompson, chief commercial and strategy officer, Abu Dhabi Ports. “The country is the UAE’s second largest trading partner and the biggest exporter to the UAE. Taking this into account, we have signed several agreements with leading Chinese companies to reinforce Abu Dhabi and the UAE’s prime position as part of the Chinese Belt and Road initiative.

These partnerships have paid off.”

In July 2017, Abu Dhabi Ports signed an agreement with the Jiangsu Provincial Overseas Cooperation and Investment Company

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A u g u s t 2018

Limited (JOCIC) for the latter to occupy and develop approximately 2.2sqkm of the available free zone space in Khalifa Port Free Trade Zone. A total of 15 companies have since signed lease agreements for land with investments totalling $1bn.

Thompson adds: “We want and are following the same direction with other partners such as India, Pakistan, and Russia, among others, through a wide range of activities from business roadshows, special promotions, the signature of MoUs aimed at raising awareness about the opportunities offered by KIZAD and KPFTZ, the largest free zone in the Middle East, to participating in key international trade shows.”

Hardiman takes a similar stance: “Asia continues to be the biggest market for imports and exports in the GCC, of which China plays a significant role. This is expected to grow as the GCC countries also are seemingly increasing their cooperation with Asian countries and thereby companies in Asia, leading to increased trade flows. African and Latin American destinations are also key markets of developing trade with the GCC.” Technology From online booking tools to lock scheduling systems, today’s ports have a wide range of these technological tools at their fingertips – all with the goal to improve safety, accessibility, and efficiency. The Middle East’s ports are no different.

“Technology used in APM Terminals continues to evolve to match with the changing operational, safety, and customer needs,” mentions Hardiman. “We have assets in our portfolio terminals which employ a high degree of automation, some being almost fully automated. In Bahrain, we are constantly assessing which of this technology makes sense for us, and indeed some systems have been developed and even pioneered by us locally with global support from our HQ – an example being our Load Collision Prevention System (LCPS) which prevents container knock downs in container yards which has statically been one of the most dangerous places in container terminals.

“Another example is “LIFT”, our new online customer portal, which we are busy launching. APMT Bahrain was chosen as a pilot site for APM Terminals globally. We are in the process of performing final customer testing with this system with full deployment planned for July 2018.”

“We continue to explore opportunities that will help advance our strategy and to add value to our customers.”

- Mark Hardiman, APM Terminals Since the inauguration of Khalifa Port in 2012, Abu Dhabi Ports’ flagship port has been recognised as one of the most modern and technologically advanced ports in the region as well as being a success story as one of the UAE’s world-class infrastructure projects.

“It was, let’s not forget, the first semi-automated port in the Middle East,” emphasises Thompson. “We keep deploying the latest technology to increase the efficiency of our operations. For example, the time that a truck takes to pick up a container and leave the port towards their next destination – port gate au-

tomation – has decreased from 40 minutes in 2012 to just 12 minutes now, thanks to the port automation technology, making the terminal one of the most efficient in the region.”

Maqta Gateway, a subsidiary of Abu Dhabi Ports, offers ports, exporters, importers, shipping lines, customs, and government agencies a single point of contact and real-time information at any time of the day significantly enhancing processing times and communication procedures. The system helps ensuring smooth transport and logistics operations using the latest technologies such as blockchain which

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P o rt s

ed our own form of digital identity. This will eliminate the need for access through passwords which can often be a security risk. This achievement will help to further augment Abu Dhabi’s position as a centre for innovation in logistics and trade. The future of trade will be definitely in harnessing those disruptive trends for the benefit of customers.”

“Digitalisation is without any doubt one of the most important trends that is already shaping the future of our industry.”

- Ross Thompson, Abu Dhabi Ports acts as an open digital ledger that can be used by trade actors to record and extract details regarding transactions with greater security, transparency, and efficiency.

“Digitalisation is without any doubt one of the most important trends that is already shaping the future of our industry,” comments Thompson. “This is especially important if we take into account that our industry is responsible for moving up to 95% of the food we eat, the clothes we wear, and the computers we work with.”

As the shipping and logistics industry rapidly adopts new technologies, disruptive technologies such as blockchain can offer trade community members significant benefits. Ac-

34 | Logistics News ME | August 2018

cording to the World Economic Forum, potential savings range from 20% of the total physical transportation costs, amounting to $1tn addition to global trade.

“Through our subsidiary Maqta Gateway, we are working to get ahead of the curve. We have developed and launched our own blockchain technology – Silsal. Through Silsal, we will be offering the trade community secure and integrated access to blockchain technology, with the added value of cost and time savings through real-time track and trace, reduction in paperwork, and ease in extracting vital information to receive live updates.

“Not only have we introduced our own blockchain offering, but we have also invent-

Worker Safety Cargo handling methods have evolved over the years. Technical developments, including the introduction of increasingly sophisticated cargo-handling equipment with greatly increased capacity and reach, has played a noteworthy part. While many of these changes have resulted in significant improvements for the safety of port-workers, some changes have introduced new hazards and port work is still regarded as an occupation with very high accident rates.

“Reducing the number of incidents and minimising lost productivity is one of our priorities,” remarks Thompson. “This is why we have been putting in place measures that have resulted in Khalifa Port becoming a beacon for health and safety best practice in the region. These initiatives include investing in technologies’ and engineering solutions to automate operations and reduce machinery and human interfaces; employee engagement schemes rewarding employees for proactively spotting potential lost time incidents (LTI) before they ever occur; the introduction of an online portal for employees to suggest new safety measures; and a comprehensive training scheme and video tutorials.”

In 2017 alone, more than 42,000 hours were dedicated to training staff at the port, to help keep them safe and the port fully operational.

As a consequence of these collective efforts, Khalifa Port recently announced that it had recorded over 8.6 million consecutive man-hours of productivity without lost time incident (LTI). Beyond Khalifa Port, Abu Dhabi Ports has delivered a similar reduction in LTIs across its operating units. Since 2014, they have reduced their overall LTI frequency rate by 86% from 1.43 to 0.19.

Hardiman highlights that the APM Terminals team strongly believes that safety is a value rather than a priority which can never be compromised.

“Ensuring safety of our workers and port users are of paramount importance to us.

This is accomplished through extensive ongoing awareness campaigns, safety meetings, learning from incidents around the globe, engagement with various stakeholders, making it part of the objective setting, management safety walks and encouraging incident, obser-

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A u g u s t 2018

Sustainability first The assessment on the area mapped out for Khalifa Port prior to its construction showed that the planned location would have left a footprint directly over the reef. To avoid negative impact on the reef, Khalifa Port was developed on an artificial island that is 4km away from the mainland, using dredged material to protect the environment, thus reducing the ecological footprint and changes in water temperatures. The company invested AED880mn to build an 8km breakwater as well as a trestle bridge in order to not interrupt vital tidal flow across the coral reef.

Photo courtesy APM Terminals

vation, and near miss reporting with a focus on empowering employees.

“We have also, over the last few years, adapted a focus on what we call the “Fatal 5” being the identified key risks in our terminal portfolio. This has helped us to identify and categorise the biggest risk areas and develop mitigation plans which includes learning and sharing from our global portfolio which a focus on man and machine separation and adoption of technology.”

Hardiman adds that APM Terminals has a continuous improvement function that constantly looks for improvements in efficiencies and reducing downtime apart from their crisis management plans which are already in place and gets updated.

“A key pillar of our asset care strategy in Bahrain is total productive maintenance (TPM) which allows us to focus on the whole maintenance management system – for example including operators more in the upkeep of the equipment that they work on.”

Conclusion Thompson believes that Abu Dhabi Ports offers a strategic location for efficient transhipment options and an excellent platform to serve the entire Gulf Region, the Indian Subcontinent, the Red Sea, East Africa, and other neighbouring countries for their partners thus driving investments in and out of the UAE. “We are convinced that the future belongs to those who are capable of offering unrivalled customer services combined with world-class and

tailor-made solutions, investor support and benefits, including business friendly policies such as 100% foreign ownership, no VAT, no restriction on repatriation of capital and profit and duty-free import and re-export, among others.”

Hardiman highlights that with the changing customer demands, APM Terminals intends to further develop our landside customer strategy together with their shipping line customers by creating value for all stakeholders.

“This is accomplished through offering more value-added services to end users or landside customers, which is today performed outside the port adding cost and time. We want to add value to our customers by reducing their costs and simplifying their supply chain.

“APM terminals today have a global footprint which is extensive. We continue to explore opportunities that will help advance our strategy and to add value to our customers.”

Photo courtesy APM Terminals

Logistics News ME | August 2018 | 35

Site Visit

Clean business!

Mehak Srivastava speaks to Stevi Lowmass and Dave Esmonde-White of The Camel Soap Factory, discovering the art and their passion behind handmade soaps

C

ontented work environments are a rarity slowly getting lost in the corporate rush of Dubai. However, step into The Camel Soap Factory, and you will soon be whistling a happy tune as you swing about in the relaxed ambience, amid scents like lavender and oud. But don’t mistake the laidback atmosphere for a simple business; bubbling beneath is a clockwork set of procedures, determined to deliver the perfect product every time. The soaps are handmade by the lot through the cold process technique, and from their humble beginnings in a home kitchen, have today

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evolved into the result of a large-scale production line process.

“I have always been fascinated with natural soaps,” remarks founder and owner, Stevi Lowmass. “My daughter has sensitive skin, and it seemed like the right testing ground for creating natural soaps. I thought it would be a nice idea to see if I could try and create something that utilised the local ingredients — and I thought camel milk would be wonderful.”

Deriving their name from the core ingredient, camel milk, the factory today uses up nearly a tonne of fresh milk every week,

sourced from Al Ain Dairy farms. The milk is stored in the freezer, with batches taken out as per the production requirements. Other key ingredients include lye, olive oil, shea butter, and essential aromatic oils.

Lowmass began selling small batches of the soaps in 2012, starting out from a Christmas market where sales exceeded expectations. It was then that she decided to get into licensed trade and to launch a dedicated soap making factory.

“We firstly got a general trade license, followed by an industrial license in 2014. Our

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A u g u s t 2018

growth has been pretty phenomenal since then, and we’ve doubled in size every year. Our USP is all about Dubai — we love Dubai, we love the country. I really wanted to create a product that reflected a little bit of the UAE, so that tourists could buy something that was not only useful, but also beautiful and gave them something of the UAE to take back. We’ve never looked at manufacturing elsewhere. For us, Dubai is what makes us special.”

On being queried as to why camel milk was chosen as the primary ingredient, Lowmass points out that the resulting properties of the milk make them highly favourable amongst customers.

“Milk soaps are gorgeous. Traditionally, people use goat milk, or even donkey milk.

There is a different molecular structure to cow’s milk. I always thought camel milk would be really interesting to try. It’s an absolutely lovely product and we get a lot of [positive] feedback from people telling us how much they love it on their skin.”

While the milk was initially sourced from Camelicious, a renowned camel milk dairy brand based in Dubai, Lowmass decided to shift to Al Ain Dairy once production requirements grew. Lowmass highlights how on a visit to the farms, she came face to face with happy, pampered camels, which she believes trickles down to the quality of milk they produce.

Lowmass emphasises that the soap-making process is indeed quite simple once all the ingredients are in place. Several of the other ingredients are sourced from outside Dubai — for instance, the olive oil comes in from Spain, while the shea butter is from Africa.

“We try and source the ingredients from as close to Dubai as possible,” remarks Dave Esmonde-White, marketing manager. “It could be from within the UAE or GCC or the Middle East, or in the case of the olive oil, the Mediterranean. We have tried to be cognizant of the fact that we are in the Middle East and we have been experimenting and testing products that have unique ingredients, such as the camel milk, but also other local ingredients.”

The production equipment was previously brought in from the UK from a specialist manufacturer, but Lowmass mentions that recently they were able to find local companies that made the equipment as per specifications.

Lowmass adds: “We buy really high-quality olive oils, shea butter, coconut oil — everything is edible. We don’t use anything low quality or low grade. The next step is to mix the liquids, including the camel milk, with a catalyst. We use sodium hydroxide or lye, which leads to a chemical change in the oil to become soap. It’s as simple as that, and

you can see the reaction take place in front of your eyes.”

The inner workings of the factory reveal exactly that. Workers in overalls, gloves, hairnets, and respirators (“just a precautionary measure, since they breathe in any emitted gases all day,” points out White) bustle around the production space. While a few clean and set up the box-shaped casts for pouring in the soap, another set works on lining the moulds with parchment paper and grease the insides with coconut oil. The production manager gets busy heating the oils on a burner in open pots, al-

lowing solid oils like shea butter time to gently melt, but not enough to boil them.

The lye solution, on the other hand, is mixed with the camel milk in the lye tanks and then the appropriate quantity is decanted into the mixing vats with the oils, in a process known as saponification. Essential oils are added, depending on the requirements of the batch. The resulting liquid is poured into the moulds and set aside for cooling. Once cooled and solidified, the soaps are hand-cut into bars using a specialised cutter, packed into plastic crates, and placed in a ventilated space for cur-

Logistics News ME | August 2018 | 37

Site Visit

(L) Stevi Lowmass and (R) Dave Esmonde-White of The Camel Soap Factory

ing. This part of the soap making process is the one that takes the longest — nearly four to six weeks, which is why customised orders have to be placed well in advance.

“This week alone we made 50 batches,” remarks White. “Which is approximately 16,000 bars of soap—around 1.6 tonnes.” Any excessive remains of the soap, for instance shavings or offcuts post the cutting process, are boxed and later used to make specialised, exfoliating soaps — nearly no waste is produced when it comes to the soap itself. The company has also expanded its product range to include moisturisers and lip balms, all containing camel milk.

The soap is hand-stamped with the company logo (around two weeks into the curing stage). Post curing, the finished soaps are painstakingly hand-packaged, first with shrinkwrap, to protect them from elements, and then into the brand’s signature jute packs. Great attention is paid to how the soaps are packed, and these are then segregated into boxes of 50, which go into boxes of 300 for export.

“A long time ago, when I first entered the market with my soaps, I would pack them in beautiful tissue paper, with a little label on

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top,” reminisces Lowmass. “I went to sell the soaps at a market in a school, and somebody accidentally set the sprinkler system off, and I lost all my stock that night. It wasn’t a lot [of stock] as compared to what I make today, but I was heartbroken all the same because it was everything that I had made. That’s when I realised that I need to change my packaging and I wanted to get packaging that I thought reflected the brand.

“I came across the jute bags from a supplier — who is still one of our biggest suppliers. They’ve been supplying me for over five years now. The bag has evolved. When I started off, it was unprinted and had a square label. We then moved to a printed bag with a square label, and we discovered that the labels often bent during retail sale. We decided to shift to smaller, round labels, which stay more intact. We’ve just moved to an embroidered badge on the back. So, it still looks very beautiful and very natural, but also so much more classy now.”

The company utilises both their own delivery fleet as well as fetchr, DHL, and other freight forwarders for deliveries.

“If we have lots of small orders, we outsource that to companies locally,” notes Lowmass. “For the really big ones, which are meant for our retailers, we deliver those. If we have to ship overseas, we have freight forwarding partners.”

Lowmass takes great pride in her employees and points out that they’ve hardly had anyone leave.

“We have the best team. I take people because I like them and because I feel their work ethics matches what we are. And then, they learn. They’ve all trained on the job. Apart from my head of production, who obviously has vast experience in this field, and Dave here has a lot of experience in marketing, the others – especially in the production area—we bring in people who we can train to do things our way. We are GMP certified, which is an ISO standard, which means you have to have clearly documented processes.”

Lowmass trained with master soap maker Melinda Coss in London, the author of “The Handmade Soap Book”, and she subsequently trained her team in the ways of soap making.

She points out that there isn’t really a school or

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A u g u s t 2018

university to hone the art of soap making.

White adds: “It’s a bit like cooking. You measure your ingredients, you ensure you use quality ingredients, and it’s the same with making soap. We ensure we source the best ingredients and move according to a recipe.

It’s stunningly simple.

“Soap is almost 4,000 years old and is not rocket science. Some people just have a feel for what measurements or what ingredients might work somewhere. Just like cooking!”

The Camel Soap Factory offers customised soaps for wedding and corporate gifts and for hotels, with specific branding. Ever since demand for the product has picked up, the company is focusing more on ready-to-go soaps, with custom orders reserved for older clients.

The company sells its products through market partners and online portals, and has not launched its own brick-and-mortar store yet.

Lowmass is quick to point out that they are not too keen on the idea.

“We’re manufacturers and we sell to whole-sellers and distributors. We’re good at making soap, and the people we sell to are good at selling it further. Setting up a

Camel milk Camel milk is considered closest to a human mother’s milk. As a cosmetic ingredient, it is considered as a natural source of alpha-hydroxy acids, which help keep skin supple and reportedly prevent wrinkles and other anti-ageing signs. Vitamin A stimulates cell turnover, while Vitamin C, a natural anti-oxidant, increases collagen production and improves skin resiliency. Vitamin E protects the skin against cell mutation in the sun and pollution.

Camel milk is a natural source of essential fatty acid linoleic, known for moisture retention. The deeply moisturising lanolin in camel’s milk provides a calming and soothing effect and is beneficial for all skin types, including the most delicate and sensitive ones.

store would prove quite expensive for us, and possibly quite fatal.”

Lowmass is keen on entering the Saudi market, including possibly setting up a manufacturing facility in the thriving nation, which would translate into a major leap for the brand. She is also keen on expanding business in China, plus to continue doing good trade in countries like Thailand and Sweden.

“We’re aggressively looking at Saudi and China, and we are relying to grow organically in our existing markets,” says White.

“We have certain manufacturing capabilities at the moment and we need to manage that kind of growth. We can’t over promise and under-deliver.”

For now, things remain busy at The Camel Soap Factory and demand continues to rise. It is interesting to note how a home-grown brand has created a strong position for itself, not just as an organic product, but as a way of life.

Talks of a bigger factory space emerge during our conversation, but one thing is apparent— no matter the scale of the business, the soaps will continue to bear the loving, hand-touched warmth of the soap makers.

Logistics News ME | August 2018 | 39

Viewpoint

A u g u s t 2018

Big data, bigger remits Carlos Cordon, Pablo Caballero, and Teresa Ferreiro discuss how big data is changing business models at GE, Lego and others

B

ig data is having a fundamental impact on companies’ business models and ecosystems. Digital technology is transforming the consumer experience and purchasing journeys are now more complex as we use relatively new tools along the way like social media, online reviews, and more. Companies are adapting to this evolution through the omnichannel, the concept of using all the channels at their disposal to make the purchasing experience more attractive to the customer.

40 | Logistics News ME | August 2018

Similarly, and as an adaptive response to this new situation, the big data revolution is transforming value chains into ‘omnichains’. As a logical consequence of the omnichannel, the omnichain is an ecosystem in which companies interact and complement each other’s capabilities with a view to delivering the product or service to the customer.

The changes brought about by the big data revolution are making many of the strategies we have been using up until now obsolete.

Pre big data For more than 30 years, industry analysis was one of the key frameworks companies used to formulate their strategies. But it assumes that “industries” are well-differentiated. Today this analysis holds less value because the boundaries that delimit industries have become blurred. For example, which industry does Apple compete in? Is it manufacturing?

Services? Electronics? Or is it part of the music industry (iTunes)?

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Adapting strategy to the new reality The blurriness of traditional industry boundaries and the fact that many companies act as partners to others (not as competitors, suppliers, or customers) make the business environment an ecosystem, a network of organisations involved in the delivery of a specific product or service.

In this environment, it is very difficult to predict which strategy is going to be the winning one, since companies depend very strongly on their partners. For example, the ecosystem of Google News is made up of publishers that feed it with content. In Spain, Google News is not available because no agreement was reached between publishers and the search engine giant about how to share revenues.

In this case, what works for Google in some countries doesn’t work in others because of its different partners.

In this situation, the best way to proceed is for companies to identify a portfolio of strategic initiatives, to test them and pursue the successful ones further. Every company should estimate what extent its business is likely to be affected by the big data transformation. Based on the outcome of this exercise, firms should then develop their portfolio of strategic initiatives.

Future scenarios A useful way to help companies to decide which direction to go in is to define future scenarios and check where they might stand in each one of them. To define the scenarios, we propose using two key indicators: a) the impact big data is likely to have on your customers’ experience and, b) the impact big data is likely to have on your own ecosystem (value chain). The matrix (pictured) then sets out four scenarios: A. ‘Omnichainers’: Customer experience - Low impact; Ecosystem - High impact

42 | Logistics News ME | August 2018

High

Omnichainers

Transmuters

Traditioners

Omnichannelers

Low

High

Ecosystem

To complement the external view of industry analysis, the next development was to look inside the company to understand and maximise its strengths in respect to its competitors.

This view emphasises the core competencies of the corporation. The main objective is for organisations to focus on what they do well, their core competences, and outsource the rest.

Finally, a practical development for implementation is the “Must Win Battles” concept (formulated by Peter Killing, Tom Malnight, and Tracey Keys of IMD). It is a much more hands-on model that proposes that companies identify the key critical challenges or “must-wins” that are indispensable for success and to focus on those battles.

This framework makes the critical link between strategy and implementation.

A u g u s t 2018

Low

Viewpoint

Customer Experience This scenario could become real for companies like General Electric. Thanks to big data, it can have a much better idea how long its machines last and when they might need maintenance. This makes it possible for the company to sell services rather than products, such as selling flying hours rather than engines. GE can provide the engine to an airline and charge by time rather than unit, for example. The customer doesn’t perceive a major change, but it is a big transformation for GE. B. ‘Traditioners’: Customer experience - Low impact; Ecosystem - Low impact This scenario could be the one that a chemical company could face. Big data may help save money by improving some processes and maintenance, for example, but it will not trigger a whole revision of strategy and business model.

C. ‘Omnichannelers’: Customer experience - High impact; Ecosystem - Low impact Organisations that have a strong relationship with their consumers may see their ecosystem change, leading to a need for a full adjustment to the new situation. In these cases, communication channels will change.

To adapt to the new demands of its customers, these companies can create a new virtual world in parallel to their core business, which will enrich their value proposition without dramatically changing their business model or the way they are making their money.

Lego is a good example of this. The Danish firm’s bricks are its core business but in addition, the company is developing new ways to interact with its ecosystem, for example, by

developing digital games similar to Minecraft.

These open new possibilities without leaving behind its traditional product.

D. ‘Transmuters’: Customer experience - High impact; Ecosystem - High impact Some companies will experience major changes to both their value chain and ecosystem due to big data.

For instance, MyLaps began making automatic sports timing systems in 1982. Whereas at the time MyLaps’ ecosystem was restricted mainly to sporting event organisers, today, it includes athletes, racers, and fans. In fact, it has placed these newcomers at the core of its businesses as part of a dynamic value chain that has become an omnichain. The customer experience MyLaps offers fans has little to do with the way we watched sports years ago. Thanks to big data, they now know exactly what’s happening on a racetrack and can monitor in real time how their favorite drivers are doing.

By analysing the impact big data is having on both your value chain and external ecosystem, you can better understand where your company is positioned and get a glimpse of what the future might look like.

Remember, regardless of where your company is placed in this matrix, with big data comes the need to change. It’s time to get ready!

• Carlos Cordon is LEGO professor of Supply Chain Management at IMD, where he teaches on the leading the Global Supply Chain program and is director of the IMD Global Value Chain Research Center (VC2020).

• Pablo Caballero is global lead of capability network operations at Accenture Strategy.

• Teresa Ferreiro is the VC2020 project manager.

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Interview

Doing it right Paromita Dey talks to Schmidt ME Logistics to find out how the German dry bulk logistics giant has had a successful run in the GCC

I

n November 2017, when Schmidt Middle East Logistics, a wholly-owned subsidiary

by Schmidt Heilbronn, inaugurated its new joint venture facility in Bahrain Logistics Zone, it was the company’s moment of pride. The $20mn facility, in a joint venture with Nogaholding, the investment and business development arm of National Oil and Gas Authority (NOGA) in Bahrain, aimed to create around 100 jobs in the logistics sector (directly and indirectly). Located in the Bahrain Logistics Zone, the 15,000sqm facility supported the zone’s expanding operations, particularly in the chemical and petrochemical logistics market.

Joint efforts from nogaholding, Ministry of Transportation and Telecommunications, Bahrain Economic Development Board (EDB), and the Supreme Council for the Environment and Customs Affairs led to the establishment of Schmidt Logistics Bahrain. The Bahrain Logistics Zone offered a competitive set up and operational rates, specialised services for import/export and re-export activities, efficient turnaround times, and close proximity to trans-

portation hubs such as Khalifa Bin Salman Port and Bahrain International Airport. Strategically located in the heart of the Gulf, Bahrain offers international logistics companies an ideal base from which to launch their regional operations.

Dr Wolfgang Hoppmann, CEO, Schmidt Middle East, mentions: “Bahrain was chosen because of its proximity to Saudi Arabia; we can cater to one of our largest GCC market from Bahrain. For Schmidt being a specialist logistics company, we have a lot of companies that we can work with regionally. One of the global customers that we serve is BASF in Europe and elsewhere. Being close to our customers is the key.”

Bassam Ali Ameen Alkhaja, MD, Schmidt ME Logistics, says: “We wanted to make sure that we work with people in the logistics industry that are some of the best local talents in the country. And that was identified in Bahrain as a package with various incentives. All the factors collectively made it more favourable to invest in the facility.

“Also, Bahrain Logistics Zone is right next to

where all our manufacturers are; we are only a gate apart from them. In Bahrain, we have seen a lot of changes in the past two years, mostly to do with border crossing and customs. We have 24-hour support from the Bahrain Logistics Zone and the customs authority, which is critical for our logistics operations to be able to get to our customers.”

Prior to that, in February 2017, the company launched operations of its multi user logistics hub based in Khalifa Port Free Trade Zone (Khalifa Port FTZ) within Khalifa Industrial Zone Abu Dhabi (KIZAD). The multi user chemical and petrochemical dedicated hub offers its services to clients within the UAE and the rest of the Gulf. Schmidt Middle East Logistics leased about 22,000sqm of prime land at Khalifa Port FTZ in order to setup an economical and efficient solution to store, handle, and distribute different bulk materials like polyethylene, polypropylene, catalysts, and additives for the chemical and petrochemical industry.

Dr Hoppmann points out: “The UAE is a key market for our customer base, and our hub in via Shutterstock

44 | Logistics News ME | August 2018

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KIZAD represents a key part of our expansion plans in the GCC to better serve our customers.

Through this facility, we will serve our existing customers for their onsite projects in Kuwait, Saudi, Qatar, and Oman.

“We continue to develop our infrastructure and facilities in the region as part of our commitment to our customers and in order to facilitate the growth and efficiency of their operations in the region. We are confident of the future growth of this sector in the region, and we will continue to offer world-class services we are known for.”

The AED20mn facility allows Schmidt to open the gates for highly specialised logistics in this region, with the UAE playing an important role as a distribution hub for the GCC. Schmidt ME Logistics facility at Khalifa Port FTZ comprises a warehouse providing about 2,000sqm of storage area, a silo battery containing nine silos, a tilting platform, a packaging line, a repair shop, and a service station, as well as offices and social rooms. In addition, the facility offers services such as truck transport and customs clearance. To and from its warehouse and silos bunker storage, Schmidt ME Logistics provides transport services for dry bulk products, packing dry bulk goods into maritime containers, and managing overseas long haul and short sea transport to end user locations.

For Schmidt ME, Alkhaja mentions that Saudi Arabia still remains the company’s biggest market with lots of opportunities. He says: “Saudi Vision 2030 opens up a lot of opportunities. In line with that comes restructuring from our end related to labour laws, tenders, and many other factors. We already have presence, know-how, and existing operations in Saudi Arabia, and along with that, we continue to participate in few tenders in the Kingdom.”

The specialty logistics provider has a joint venture with Abdul Rahman Al Otaishan Group in Saudi Arabia, where all its projects, including the ones which are in the bidding phase with SABIC and ARAMCO, are carried out in conjunction with them.

Alkhaja concludes: “Our competence and expertise fall within the bulk logistics and what we do in it is that it can also integrate bagging so the customer can bring raw materials in bulk and keep it with us. And based on the customer’s requirements, we can mix it, bag it, and ship it in bulk again. There are so many alternatives for the manufacturers that gives them the ability to be efficient and cost-effective. And for us, we support those alternatives.”

Schmidt was established in Heilbronn, Germany in 1948, and is one of the world’s leading dry bulk logistics solution providers.

“The UAE is a key market for our customer base, and our hub in KIZAD represents a key part of our expansion plans in the GCC.” - Dr Wolfgang Hoppmann, CEO, Schmidt ME Logistics

“In Bahrain, we have seen a lot of changes in the past two years, mostly to do with border crossing and customs.”

- Bassam Ali Ameen Alkhaja, MD, Schmidt ME Logistics Logistics News ME | August 2018 | 45

Ta l k i n g p o i n t

Healthy competition Nrupaditya Singhdeo, director, Gulf Pinnacle Logistics (GPL), discusses how competition between courier companies is likely to enhance consumer experience

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A u g u s t 2018

T

he exponential growth witnessed in ecommerce globally has fuelled demand for the last-mile delivery market.

This development comes against a backdrop of an ever-growing number of shipments and parcels by courier companies each day.

Despite the surging demand for deliveries, competition has intensified significantly amongst players. Industry standards for providing delivery services have also evolved due to the consistent technology advancement and innovation.

This trend is replicated globally and the Gulf Cooperation Council (GCC) market is no different.

The GCC e-commerce market is expected to reach $23.7bn in 2022. This represents a growth rate of almost 30% per annum for the years 2017-2022.

As a result, the GCC last-mile delivery market is expected to rise at a compounded annual growth rate of 12% over the same period.

It is estimated that there are 330 million delivered shipments each year valued at $1.9bn.

Almost 200 million shipments arise from traditional couriers, parcels, and light items ordered online. Collectively these shipments are expected to reach 420 million by 2022.

Courier players are consistently finding new ways to fiercely compete to secure shipments from e-commerce platforms, who are the growth engine of the last-mile delivery industry.

There are six major categories of competition whereby e-commerce platforms are choosing a courier provider. These are reliability, pricing, lead time, payback time, coverage, and technology advancement, with the first three being the most critical.

E-commerce platforms are increasingly demanding for efficient pickup and delivery. Reliability and driver flexibility, lower prices, and shorter delivery time are high on the must-have list for these platforms.

Next day deliveries are also rapidly becoming a must in the UAE with same-day and fewhours delivery slot emerging strongly.

In addition, a significant number of online orders are executed as cash on delivery (COD) where the courier company collects the cash on behalf of the e-commerce platforms and pays it back later.

The COD trend is also widely deployed in the GCC. This option provides the customer with the opportunity to reject or return the product in case the advertised product on the platform turns out to be of a substandard quality.

“Courier players are consistently finding new ways to fiercely compete to secure shipments from ecommerce platforms, who are the growth engine of the last-mile delivery industry.”

Nationwide courier coverage with solid technology to track shipments and drivers, optimise routes, integrate payment, and processing platforms are the obvious pre-requisites in today’s world. Whilst technology is an important differentiator in the courier industry, operational excellence in deliveries also plays a very important role.

People management is a hidden challenge in this labor-intensive industry. Firms with significant scale, presence, and the adequate financial resources will be able to thrive in such an industry.

Gulf Pinnacle Logistics, in recognition of the prevailing competitive factors, swiftly invested in Century Express to enhance its competitive position. Today, the logistics solutions provider has grown its market share after registering a higher percentage of successful deliveries. It has also been able to offer competitive prices, shorter delivery times, next-day COD

payback, greater delivery flexibility, and enhanced technology features.

The company is also optimistic about its growth potential. It remains optimistic that the industry’s delivery prices will continue on a decline, which will largely be driven by cost efficiency and consolidation.

Competition is a healthy phenomenon. It drives service providers to become more competitive and more customer-focused.

Based on a survey conducted by a consultant of Gulf Pinnacle Logistics, UAE consumers value primarily faster deliveries while the Kingdom of Saudi Arabia consumers finds free or cheap delivery more important.

In addition, consumers in both countries are currently less satisfied with their current online delivery experience, especially regarding cost and delivery time, highlighting a significant room for improvement.

Logistics News ME | August 2018 | 47

Supplier News

Supplier News

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Up d a t i n g y o u o n t h e r e g i o n ’ s s u pp l i e r s

Volvo CE appoints new purchasing and supplier management SVP

Effective October 1, Volvo CE appointed Peter Jordansson will take up the position on the executive management team (EMT), reporting to president Melker Jernberg.

With more than 20 years of experience in logistics and transport, Jordansson has worked with some of the biggest names in Sweden including Volvo Group, Scania, and most recently, steel company SSAB. His new role will mark his return to Volvo CE after he previously held a management position at the company. In his new position as SVP, he will promote the needs of the supply chain in the company’s strategic discussions.

Jernberg commented: “I

am really pleased to welcome Peter to the EMT. He has had strong track records of managing the full supply chain in different industries, from operational level to strategic level. The supply chain is a critical part of our overall business and we see a need for the purchasing function to get more focus by being directly represented in our strategic discussions.”

Prior to joining Volvo CE, Jordansson’s most recent roles have been at SSAB, where he has been leading its supply chain and purchasing and sourcing development.

He will be based at Volvo CE’s Gothenburg headquarters when he takes up his position later this year.

48 | Logistics News ME | August 2018

DuPont, SkyCell collaborate on pharmaceutical transit development DuPont Safety & Construction and SkyCell, the Swiss-based manufacturer of temperature-controlled containers for food and pharmaceuticals, have announced a formal alliance to collaborate on technical and market development.

Both companies are global leaders in their respective fields and the partnership is expected to lead to transformational innovations in temperature monitoring, shipment tracking, asset management, and ‘smart’ data-driven services.

The combined effort is aimed at maintaining the physical and clinical integrity of pharmaceuticals in transit.

“DuPont is a firm believer in the potential of strategic alliances like this one where each party can leverage its respective strength for powerful solutions,” said Christian Marx, vice president and general manager of DuPont’s Tyvek brand thermal cargo covers and Typar.

“There is a strong strategic fit between DuPont and SkyCell and we see this as an important step in complementing our Tyvek Cargo Covers offering and expanding our market capability with high-performance solutions for an increasingly sophisticated pharmaceutical supply chain.”

The alliance will harness the strengths of two of the strongest names in the

field of pharmaceutical cold chain to better define and meet the needs of customers around the world.

Under the terms of the agreement, DuPont will gain access to SkyCell’s remote temperature-management solutions and expertise and acquire marketing rights to the SkyCell portfolio of insulated shipping containers.

The SkyCell containers will be marketed by DuPont alongside its Tyvek products enabling the market-leader in cargo covers to provide an unrivalled breadth of high-tech temperaturemanagement solutions to discerning customers.

SkyCell, on the other hand, will be in a position to tap into the renowned technical resource of DuPont and will benefit from the DuPont global network especially in emerging markets and the Asia-Pacific region.

“We are excited to be entering into the next stage of our journey by collaborating with DuPont Tyvek, a trusted provider of protection in pharmaceutical logistics,” said Richard Ettl, CEO of SkyCell.

“With a shared vision of better leveraging data in the supply chain of sensitive pharmaceuticals, this partnership will help us play our part in ensuring that medicines, vaccines and other health-related treatments get to the final patients in a safe, sustainable, and timely manner.” www.cbnme.com

A u g u s t 2018

SOHAR signs air quality monitoring contract with Nakheel Solutions

Sohar Port and Freezone (SOHAR), in cooperation with the port community, has signed a contract with the Omani company, Nakheel Environmental & Industrial Solutions, to install, operate, and maintain an Ambient Air Quality Monitoring Network (AQMN) within the industrial port.

According to the news report by the Oman Daily Observer, the signing of the contract is in line with the Ministry of Environment and Climate Affairs’ (MECA) intention to enhance environmental monitoring at Sohar. Mark Geilenkirchen, the CEO of Sohar Port and Freezone, signed the agreement on behalf of Sohar, while Nakheel was represented by its GM, Ali al Hussaini. Installation of the AQMN will start immediately and the system is expected to be operational by Q4 2018.

Commenting on the reasoning behind the project, Geilenkirchen said: “Good environmental management is an essential element to sustain the development at Sohar Port and Freezone, therefore the monitoring of the environmental impact on the surrounding area is very important. In addition, the establishment of AQMN is the actual beginning of the integrated environmental monitoring, which will contribute to protect the environment within and around Sohar Port and Freezone. We are proud to have an Omani

company that is equipped with the required skills, technology, and expertise to provide us with such a solution.”

The AQMN project will consist of a combination of fixed and mobile stations positioned at critical locations surrounding the port and freezone. The location selected carefully using the result from air dispersion modelling by Lakes Environmental Software ‘AERMOD’ which was conducted in coordination with MECA and Sohar Port and Freezone relevant tenants. The AQMN will measure, in real time, the ambient air quality surrounding Sohar Port and Freezone. The AQMN is one of the key projects that will help to ensure that the development of the port and freezone is sustainable and complying with the national and international environmental standards.

The AQMN is part of a long term strategic programme that commenced in 2017 and executed by the SOHAR Port and Freezone, in close cooperation with MECA; which aims to continuously enhance the environmental management in the area.

This programme focusses on environmental permitting, compliance of all port and freezone operations with Best International Practices, and continuous monitoring of the impact of the operations on the environment including water, soil, and air.

DHL signs $4.7bn Boeing freighters purchase agreement

Boeing and DHL announced that the leading international express carrier has placed an order and commitment for 14 Boeing 777 freighters, and purchase rights for seven additional freighters.

The $4.7bn order agreement, at current list prices, was unveiled at the opening of the 2018 Farnborough International Airshow. A portion of the order was previously unidentified on Boeing’s Orders & Deliveries website. When the full order is finalised, it will also appear on the website.

“We are delighted to announce the acquisition of 14 new 777 freighters as we renew part of our long-haul fleet with this best-in-class fuel efficient freighter type that will make a significant step towards DHL’s zero emissions target by 2050,” said Charlie Dobbie, executive president of Global Network Operations & Aviation.

DHL was the first express operator in 2009 to introduce the 777 to perform long-haul time critical services. The aircraft type has proven to be the most reliable large freighter connecting the major markets across the globe, bolstering service quality for DHL’s express customers. The new order will double the size of DHL’s global 777 fleet, allowing more markets and customers to benefit from the uniquely capable aircraft.

“The 777 freighter is an airplane perfectly suited to DHL’s needs, offering an outstanding payload capability, with incredible range to service its extensive intercontinental network and unmatched reliability,” said Boeing Commercial Airplanes president and CEO Kevin McAllister.

Global air freight demand grew by nearly 10% last year with demand growth outpacing capacity growth by a factor of three. Expanding cross-border e-commerce sales for instance will grow to $4.48tn by 2021, which means a growth of 19.2% per year. DHL’s investment in the 777 freighters is a direct answer to the growing demand for global express capacity.

As the largest twin-engine cargo airplane in the world, the Boeing 777 freighter is capable of flying 4,900 nautical miles (9,070km) with a cargo load of 102 tonnes.

Logistics News ME | August 2018 | 49

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The key exhibitions, conferences, a n d s e m i n ar s c o m i n g u p t h i s m o n t h

August

16-18

September

4-6

Transport & Logistics Philippines Manila, Philippines Transport and Logistics Philippines is the region’s leading exhibition of delivery vehicles, trucks, transport system, material handling, and logistics and supply chain equipment. Aside from the exhibition, there will be a conference and various seminars where experts will share the latest trends, advanced technologies, and best practices in the market. The event gathers thousands of entrepreneurs, agents, purchasers, and end-users each year. Also happening alongside is the Transport and Logistics Forum, discussing topics such as paving way for an efficient logistics sector, improving Philippines’ connectivity and efficiency in supply chain, transport & logistics: the role in PH’s economic development, and more.

Transport Compleet Gorinchem Gorinchem, Netherlands The Transport Compleet in Gorinchem is the optimal platform for entrepreneurs of trucks, trailers, and car body industry to establish new business contacts and to exchange with each other. This exhibition focuses on policy makers and representatives from the transport, freight, production, and export companies. The range of products on display include commercial vehicles, trailers and chassis parts as well as batteries and track & trace software and corresponding accessories.

Receiving a footfall of more than 10,000 people, the event has seen several promising deals and contracts signed both on site and post-event.

50 | Logistics News ME | August 2018

September

11-12

September

18-21

Logistiikka Tampere, Finland The event in Finland showcases intralogistics, material handling, and warehousing services. Logistics chain management, 3rd party logistics, data exchange, mobile technologies, forklifts, accessories, and spare parts are some of the focus points at the event.

Logistiikka will provide the visitors with the introduction in the field of provision of comprehensive and provides the latest information from the material handling and logistics inside the availability of skills. Taking place alongside will be the Safety, EuroSafety and Workplace Welfare event, as well as the Occupational Health Convention, which will present a wide variety of products and services for intralogistics professionals.

InnoTrans 2018 Berlin, Germany Organised by Messe Berlin, InnoTrans is the leading international trade fair for transport technology and takes place biennially in Berlin.

Sub-divided into the five trade fair segments: railway technology, railway infrastructure, public transport, interiors, and tunnel construction; InnoTrans occupies all 41 halls available at Berlin Exhibition Grounds. The InnoTrans Convention, the event’s top-level supporting programme, complements the trade fair. A unique feature of InnoTrans is its outdoor and track display area, where everything from tank wagons to highspeed trains are displayed on 3,500m of track. www.cbnme.com

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