Logistics News ME - August 2020

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AIR CARGO, A LIFELINE OF RECOVERY

Logistics News ME take a look at how the air cargo industry performed and provided a lifeline during the COVID-19 pandemic

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CONTENTS

A U G U S T 2020

CONTENTS

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AUGUST 2020

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

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18

10 | NEWS

FEATURES 18 | INTERVIEW 20 | COVER STORY 24 | E-COMMERCE 26 | FREEZONES 28 | TRADE

24 30 | OP-ED

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REGIONAL NEWS

Your business continuity is our top priority.

Our initiatives and remote solutions have got you covered in all situations. du.ae/wegotyourb

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A U G U S T 2020

E D I TO R ’ S L E T T E R

A U G U S T 2 020

A NOTE FROM THE EDITOR KASUN ILLANKOON

CEO Wissam Younane wissam@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Group Publishing Director Joaquim D›Costa

According to a new report released

by KPMG, The UAE ranks among the top 10 countries in the world for the third consecutive year when it comes to readiness to accommodate driverless vehicles, according to KPMG’s 2020 Autonomous Vehicles Readiness Index (AVRI). The third edition of the study, which evaluates the preparedness of 30 countries globally, places the UAE in eighth position, up one place from last year’s rankings despite the addition of five jurisdictions.

The 2020 KPMG AVRI assesses the level of preparedness and openness of various countries to autonomous vehicle technology, adoption and their progress in making driverless cars a reality. The main indicators of measuring a country’s readiness and progress in furthering AV deployment and innovation are: policy and legislation, technology and innovation, infrastructure and consumer acceptance. The UAE ranks ahead

of the United Kingdom and Denmark and after Singapore, the Netherlands, Norway, the United States, Finland, Sweden and South Korea on the AVR Index.

As the world’s most innovative countries continue to make driverless cars a reality, the UAE scored highest among the 30 countries on measures of change readiness for technology infrastructure and mobile data speeds under the infrastructure pillar, as well as the readiness of individuals under the consumer acceptance pillar.

The UAE also scored highly for its government’s overall change readiness and consumer information and communications technology (ICT) adoption (ranked second) in addition to ranking third on a measure of efficiency in their legal system in challenging regulations.

Kasun Illankoon Editor, Logistics News Middle East

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

Editor Kasun Illankoon kasun@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Marketing Executive Aaron Joshua aj@bncpublishing.net Photographer Ahmad Khader

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REGIONAL NEWS

REGIONAL NEWS A N U P DAT E F R O M A R O U N D T H E R E G I O N PARTNERSHIP

ADQ ANNOUNCES ZONESCORP TO JOIN ABU DHABI PORTS ADQ, one of the region’s largest holding companies with a diverse portfolio of major enterprises spanning key sectors of Abu Dhabi’s non-oil economy, announced the merger between two of its portfolio companies. Under a decree by Abu Dhabi Executive Council, the Higher Corporation for Specialized Economic Zones (ZonesCorp) joins Abu Dhabi Ports.

As part of Abu Dhabi Ports, ZonesCorp will benefit from strategic alignment with Khalifa Industrial Zone Abu Dhabi (KIZAD), one of the world’s largest industrial zones spanning 410 square kilometers, which is owned and managed by AD Ports. Together, the group’s industrial portfolio is set to facilitate greater industrial diversification and provide infrastructure support in a cost-efficient manner.

H.E. Khalifa Sultan Al Suwaidi, Chief Investment Officer at ADQ, commented: “As Abu Dhabi continues to grow as a key player in international trade and logistics, ADQ is further reinforcing this value proposition by merging ZonesCorp into Abu Dhabi

Ports. There will now be an even greater opportunity to facilitate industrial diversification and deliver efficient infrastructure support.”

H.E. Falah Mohammed Al Ahbabi, Chairman of Abu Dhabi Ports and Chairman of the Higher Corporation for Specialised Economic Zones, said: “This transition of ZonesCorp to Abu Dhabi Ports is beneficial to all parties involved – partners, employees, and, most

10 | LOGISTICS NEWS ME | AUGUST 2020

importantly, our customers.

Abu Dhabi Ports is an expert in developing the industrial and manufacturing sector and is constantly innovating to operate and maintain an integrated world-class business environment. By grouping economic zones within Abu Dhabi Ports, there will be better related operational alignment, increased expansion and enhanced positioning to attract substantial direct

foreign investment.”

Capt. Mohamed Juma Al Shamisi, Group CEO of Abu Dhabi Ports, said: “By working together more closely, and more strategically, we will leverage our strengths in order to boost the competitive value of our industrial zones within the global marketplace.

Our industrial cluster will be well positioned to deliver even greater investment opportunities to our valued customers who will benefit from easy access to regional markets, increased scale and improved services.”

Abu Dhabi Port’s industrial and economic zones offering now has a combined land area of 554 square kilometres and more than 1,400 customers.

On its own, ZonesCorp’s economic zones currently have over 900 manufacturing and commercial facilities that are home to some of the world’s leading industrial players in a variety of sectors, and have attracted investments of around AED 70 billion. With KIZAD’s investments at over AED 73 billion, the total investments attracted by Abu Dhabi Ports’ subsidiaries currently stand at AED 143 billion.

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A U G U S T 2020

TRANSPORT

ALSTOM-LED CONSORTIUM DELIVERS EXTENSION OF DUBAI METRO RED LINE

Alstom congratulates Dubai’s Roads and Transport Authority (RTA), on the inauguration of the Dubai Route 2020 Metro. This iconic project was ceremonially inaugurated

by H. H. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates, and Ruler of the Emirate of Dubai on 7 July 2020, and was also attended by Henri Poupart-Lafarge, Alstom’s CEO and Chairman of the Board as well as the top management of the ExpoLink Consortium via video conference technology.

The new line project, commenced in July 2016 and carried out by the Alstom-

led ExpoLink consortium, also composed of ACCIONA and Gülermak, consists of a 15km-long line, of which 11.8km is above ground and 3.2km underground, and an interchange on the Red Line.

The extension of the metro has seven stations including Jabel Ali Station and the flagship metro station at the Expo exhibition site. The project is worth a total of €2.6 billion.

As part of the Consortium, Alstom was responsible for the integration of the entire metro system including 50 Metropolis trainsets produced in Alstom’s site in Katowice, Poland, power supply, communication,

signalling, automatic ticket control, track works, platform screen doors and a three-year warranty on the whole system, as well as the enhancement of the existing metro line by upgrading power supply, signalling systems, miscellaneous communication and track works. The trainsets are 85.5 meters long and composed of five cars per trainset, and they will be able to carry up to 696 passengers each.

“We are extremely proud to have delivered the world’s fastest built turnkey metro project. The Route 2020 project shows Dubai’s commitment to offer its

residents and visitors a stateof-the-art rail network system, and we remain committed to providing the RTA with the utmost support in their journey towards greener and smarter mobility”, says Müslüm Yakisan, Senior Vice President for Africa, Middle East and Central Asia at Alstom.

The train offers an excellent level of passenger experience, thanks to wide gangways, large doors and windows, three specific areas for Silver, Family and Gold Classes. Ecofriendly, the train is equipped with a full electrical braking system, LED lighting and other innovations to reduce energy consumption.

LOGISTICS NEWS ME | AUGUST 2020 | 11

REGIONAL NEWS

MARITIME

DMCA STRENGTHENS BUNKERING FLEET IN DUBAI WATERS

Dubai Maritime City Authority (DMCA) has announced the move to strengthen its bunkering fleet in Dubai waters as part of an advanced step towards the path of organizing, facilitating and enhancing maritime activity. The DMCA has increased the number of licensed vessels to 12 ships, for supplying fuel across the emirate’s territorial waters.

The decision was made in conjunction with the move to resume maritime operations in Dubai anchorage areas, including ship repair and maintenance operations and in full compliance with the

controls applied to ensure the highest levels of security and safety of ship crew members and visitors.

Strengthening of the bunkering fleet falls within the framework of the DMCA’s commitment to develop and improve the operational and legal framework–further guaranteeing the growth and development of the marine segment and ensuring the continuous supply of ships with fuel without interruption, especially in view of the ongoing preparations to receive regional and international tourists coming to Dubai.

LOGISTICS

MAF BOOSTS CARREFOUR’S ONLINE CAPABILITIES WITH LARGEST DEDICATED FULFILMENT CENTRE

Majid Al Futtaim, the leading shopping mall, communities, retail and leisure pioneer across the Middle East, Africa and Asia ⁠— has opened its largest Carrefour online fulfilment centre. Located in Dubai’s Al Garhoud area, the facility has been set up to ensure the quick and efficient preparation and delivery of products to online shoppers across the emirate.

The opening of the fulfilment centre was attended by His Excellency, Omar Al Olama, Minister for State of Digital Economy, Artificial Intelligence and Remote Work Applications; Alain Bejjani, Chief Executive Officer at Majid Al Futtaim ⁠— Holding; Hani Weiss, Chief Executive Officer at Majid Al Futtaim ⁠— Retail, and a number of representatives from Dubai’s Supreme

Committee of Crisis and Disaster Management.

Visible from planes landing at the nearby Dubai International Airport, the Al Garhoud fulfilment centre spans 5,000 square metres.

12 | LOGISTICS NEWS ME | AUGUST 2020

The centre was built in five weeks in response to the exponential growth in online shopping following the COVID-19 pandemic.

It handles up to 3,000 daily orders, which will gradually

increase to 5,000 orders per day, and is operational 24/7.

The centre is staffed by over 250 colleagues, fulfilling customers’ needs with a range of over 8,000 essential grocery products.

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A U G U S T 2020

UAE’S COURIER MARKET SET TO GROW BY 7.5% ANNUALLY

The outlook for the UAE’s Courier, Express and Parcel (CEP) Market is bright due to strong demand generated in the wake of the coronavirus outbreak across the globe, industry experts say.

Referring to latest research data released by Mordor Intelligence, they said CEP market in the UAE is expected to post 7.5 per cent compound annual growth rate between 2020 to 2025.

They said growing popularity of e-commerce in the

region and rising international trade will drive the growth momentum in CEP market during next five year.

Shailesh Dash, Chairman of Gulf Pinnacle Logistics (GPL), said CEP market is emerging as a strong segment after the outbreak of coronavirus.

“The CEP segment is growing steadily in the UAE, however strong growth in e-commerce and demand generated in the Covid-19 era bolstered its outlook in the region,

which was valued at $4.5 billion in the region last year,” Mr. Dash said.

Established in 2014, GPL is a Dubai-based logistics and transportation company, which owns majority stakes in four assets involved in warehousing, CFS operations, student bus transportation and courier services.

Referring to the latest research report by Technavio, Mr. Dash said global CEP market will grow at a compound annual growth rate of five percent during 2019

to 2023 to reach $90.63 billion. The Gulf CEP market has no exception and it will also grow in line with the international trend.

“The consumers face challenges with parcel delivery and cost-effective courier services in the UAE and the Gulf region. It includes high cost and long delivery time as the fastgrowing e-commerce exerts more pressure on the existing CEP delivery system and generates more business opportunities,” Mr. Dash said.

LOGISTICS NEWS ME | AUGUST 2020 | 13

REGIONAL NEWS

CARGO

EMIRATES SKYCARGO OPERATED OVER 10,000 FLIGHTS IN THE PAST THREE MONTHS

Between April and June 2020, Emirates SkyCargo has facilitated the movement of essential commodities and other supplies for individual consumers and businesses across the world by operating more than 10,000 cargo flights to destinations across six continents. The flights were a mix of scheduled, ad-hoc and charter operations.

Nabil Sultan, Emirates Divisional Senior Vice President, Cargo said: “As a customer focused organisation, Emirates SkyCargo has innovatively

adapted our cargo operations and offerings over the last few months in line with rapidly evolving market demand.

Starting with deploying our passenger aircraft as freighters to more recently modifying 10 of our aircraft by removing Economy Class to allow for additional cargo capacity, we have been extremely flexible and agile in responding to our customers.

“In keeping with our core value as a global facilitator of trade and economies, we have re-

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grown our network to over 100 destinations with robust flight frequencies to key production and consumer markets. We continue to be able to offer our customers an unmatched reach and connectivity for their valuable cargo and our flight milestones are a validation of our customers’ trust in our service.”

The air cargo carrier also announced that it had operated 500 flights with cargo loaded in the overhead bins, on the passenger seats or on the floor of the passenger

cabin of its Boeing 777300ER aircraft. These flights were operated in the months of May and June 2020 to over 50 global destinations transporting a wide variety of commodities.

During the months of May and June, Emirates SkyCargo operated on an average more than 3,800 flights per month, with the aircraft travelling to over 100 destinations and covering approximately 37 million kilometres, which is the equivalent distance of roughly 50 trips to the moon and back.

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A U G U S T 2020

CAFU MOVES TO FREE DELIVERY AS IT INNOVATES ITS BUSINESS MODEL IN A TIME OF GLOBAL CHANGE

As the UAE transitions into the new normal following the Covid-19 lockdown, Dubai-born CAFU makes a bold and confident move as it rethinks its business model with renewed optimism for a better future for all, by removing its delivery charges.

The innovative start-up which reimagined the vehicle refuelling model, has been delivering fuel to UAE residents anytime, anywhere, since it opened its doors in 2018 as the first

on-demand fuel delivery service in the MENA region.

As the community navigates the challenges of the current global health crisis, CAFU adopts a free-delivery model and extends its support to UAE residents, who can now avail of contactless refuelling at the same price as a petrol station, at no extra cost and without having to physically wait in line at one.

“The Covid era has been challenging for us all. It has changed our way of

life, impacting how we live, work, and socialise, but It has also given us a moment to pause and reflect on how we can do more for our community to try and ease their day-to-day lives”, says Rashid Al Ghurair, Founder and CEO of CAFU. “As a business, we constantly find ways to increase the value we bring to our customers, as we continue to innovate and adapt to serve them better. CAFU has been a key

part of the community and has played an active role in making life better for our customers by bringing to life the idea of fuel on-demand. Now, as we emerge into our new world and return to some normality in our lives, we are investing into the community by removing our delivery charges which will help them save on both time and money, making the process of refuelling their vehicles a hassle free one,” he adds.

LOGISTICS NEWS ME | AUGUST 2020 | 15

REGIONAL NEWS

A U G U S T 2020

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LOGISTICS

AL-FUTTAIM LOGISTICS IS CERTIFIED BY DUBAI CUSTOMS AS AUTHORISED ECONOMIC OPERATOR (AEO)

TOP 5 ONLINE STORIES THIS MONTH

1

Automation enables Mai Dubai to meet soaring demand for bottled water

2

CAFU moves to free delivery as it innovates its business model

3

Tristar Breaks Ground on Construction of Storage Tanks

4

Dubai Chamber Survey: CSR is key to COVID-19 response

5

Emirates SkyCargo operated over 10,000 flights in the past three months

16 | LOGISTICS NEWS ME | AUGUST 2020

Effective 18th June 2020, AlFuttaim Logistics is certified as an Authorised Economic Operator (AEO) by Dubai Customs under the UAE AEO Program.

The concept of Authorized Economic Operator (AEO) is defined by the World Customs Organisation SAFE Framework of Standards to secure and facilitate global trade. AEO is a modern and smart control strategy that fosters security and compliance through moving from transactionbased controls to systembased controls. Processes, procedures, systems, competencies and security measures are verified by Customs at the company level.

As an AEO certified service provider, Al-Futtaim Logistics now can extend value chain

to their customers in Global Trade, especially in the local market. Freight customers will experience faster clearance due to simplified procedures and Customs prioritization. As a trusted partner of Dubai Customs, Al-Futtaim Logistics will benefit from reduced post clearance audits and priority inspections procedures, enhanced by non-intrusive inspection technology.

Raman Kumar, Managing Director of Al-Futtaim Logistics said: “Despite the current market dynamics and in times of supply chain disruption, we continue to pursue opportunities that will complement our customers’ experiences. AEO certification will contribute to how we strengthen our commitments to our customers.”

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A MEMBERS OF EMIRATES TRANSPORT BUSINESS CENTERS:

INTERVIEW

INSPIRING GLOBAL BUSINESS

Logistics News Middle East caught up with HE Saud Salim Al Mazrouei, Director of Hamriyah Free Zone Authority (HFZA), to discuss how the free zone stands out

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A U G U S T 2020

TELL US ABOUT YOUR VISION AND GOALS FOR HFZA Experts agree that free zones play a vital role in supporting the country’s economic development. From strengthening the performance of our national economy to attracting foreign investment, UAE free zones have been turned into incubators of prosperity for local and global companies.

Since its inception in 1995, Hamriyah Free Zone is the second largest free zone in the UAE. It is has grown to become a leading hub for providing logistical services thanks to its strategic location, which facilitates the trading of materials and end products between Asia, Europe and Africa.

HFZA seeks to build long-term relationships with its customers and strengthen its partnerships with global investors by providing a world-class infrastructure offering high quality, value-added services along with unmatched incentives that help businesses take advantage of huge investment opportunities being made available in the free zone.

HOW HAS COVID-19 AFFECTED YOUR OPERATIONS IN THE FREE ZONE? Covid-19 has left grave impact on the global economy as a whole and no sector was excluded. This crisis has created unprecedented challenges. However, seeing the glass half full, this challenge has highlighted an important fact, which is the leading role that free zones can play in ensuring the supply chain remains functional for the business ecosystem.

This is what we have been doing at HFZA through strengthening our logistical networks with global markets to meet the increasing demand for goods and commodities, be it food, medical supplies or even basic commodities.

We are also keen to provide exceptional facilities and additional competitive advantages that helped smoothen the work of businesses, ensured their continuity, and connection with global partners via an interconnected commercial, industrial and investment network.

DID HFZA OFFER ANY EXEMPTIONS TO COMPANIES DUE TO COVID-19?

It goes without saying that enhancing the competitiveness of companies operating in the free zone is an unwavering priority and one of the most important pillars of our vision at Hamriyah Free Zone. Given the tough conditions the world is going through, it has become necessary now more than ever to develop new competitive solutions for our customers to help them survive, grow and flour-

ish despite what we are experiencing.

We have been one of the first entities to respond to COVID-19 and took swift actions to mitigate its negative economic repercussions on operating companies. Besides offering a package of incentives and initiatives, we also exempted all shipping companies and customs clearance agents from bank guarantees required to carry out their activities.

We also exempted businesses from inspection fees, fines for late renewal of commercial licenses, visa fines, along with offering a 50% discount on the fees for transferring shares of companies, and exempting all new companies from license fees.

WHAT ARE THE ADVANTAGES BEING OFFERED BY HFZA TO ATTRACT COMPANIES? The Covid-19 pandemic has proved a significant fact that free zones are the best option for investors looking to expand their businesses and launch into a world of promising opportunities.

Over the past years, the Hamriyah Free Zone has been able to attract more than 6,500 companies from 165 countries around the world, operating in various sectors.

In addition to its advanced infrastructure and modern facilities that support external expansion plans, especially in importing and re-exporting sectors, HFZA provides many competitive advantages, most notably a single window operations that strengthens performance efficiency and facilitates business practice, coupled

with multiple tax exemptions, 100% repatriation of capital and profits, full foreign ownership of businesses, and easy access to regional and international markets, as well as a 14-meter deep water port where the Hamriyah Port is located.

The port was specifically designed to receive giant ships dedicated to petrochemicals and various goods and features berths dedicated to unloading freight loads, in addition to 7 meters deep inner harbour to accommodate small and medium-sized ships. This is why HFZA has become a major destination for marine transportation and shipping from Sharjah to the various global markets.

WHAT ARE YOUR EXPECTATIONS AFTER 2020?

Being a key player within the vital services sectors of the UAE economy, we reassure our customers that we will work on every single effort to guarantee the continuity of their businesses during such turbulent and unstable times.

We will do whatever it takes to provide companies with further commercial and investment opportunities that ensure the sustainability of their businesses, even post Covid-19, so they can benefit from more value-added and, comprehensive services at a lower cost.

Existing or upcoming businesses will certainly find our innovative services helpful and will get them back right on track within an investorfriendly environment conducive to business entry, expansion, and international competition despite all challenges.

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C O V E R S TO RY

Air Cargo, A Lifeline of Recovery Logistics News ME take a look at how the air cargo industry performed and provided a lifeline during the COVID-19 pandemic

I

n the past five months, COVID-19 has dramatically changed the aviation industry. The effect on commercial flights, in particular, was devastating. Cargo, however, still had a lifeline as the world depended on cargo flights to deliver goods and PPE’s. Initially, though, things didn’t look good even for the cargo sector as governments worldwide went into a global lockdown to curb the spread of the virus.

REDUCTION IN GLOBAL DEMANDS The International Air Transport Association (IATA) released data for March air cargo performance, demonstrating a severe capacity shortfall. The initial findings determined there was going to be a capacity crunch in cargo worldwide.

Here were some of the latest results that came out in March that reflected the loss in demand:

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• Global demand, measured in cargo tonne kilometers (CTKs*), fell by 15.2% in March compared to the previous year (-15.8% for international markets).

• Global capacity, measured in available cargo tonne kilometers (ACTKs), shrank by 22.7% in March compared to the previous year (-24.6% for international markets).

• International markets account for 87% of air cargo. Belly capacity for international air cargo shrank by 43.7% in March compared to the previous year. This was partially offset by a 6.2% increase in capacity through expanded use of freighter aircraft, including idle passenger aircraft for all-cargo operations.

Alexandre de Juniac, IATA’s Director General and CEO, said at the time: “At present, we don’t have enough capacity to meet the remaining demand for air cargo. Volumes fell by over 15% in March compared to the previous

year. But capacity plummeted by almost 23%.

The gap must be addressed quickly because vital supplies must get to where they are needed most. For example, there is a doubling of demand for pharmaceutical shipments that are critical to this crisis. With most of the passenger fleet sitting idle, airlines are doing their best to meet demand by adding freighter services, including adapting passenger aircraft to allcargo activity. But mounting these special operations continues to face bureaucratic hurdles.

Governments must cut the red tape needed to approve special flights and ensure safe and efficient facilitation of crew.”

“The capacity crunch will, unfortunately, be a temporary problem. The recession will likely hit air cargo at least as severely as it does the rest of the economy. To keep the supply chain moving to meet what demand might exist, airlines must be financially viable. The need for financial relief for airlines by whatever means

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A U G U S T 2020

possible remains urgent,” added de Juniac.

AIR CARGO, THE ONE BRIGHT SPOT In June, IATA released its financial outlook for the global air transport industry showing that airlines are expected to lose $84.3 billion in 2020 for a net profit margin of -20.1%. Revenues will fall 50% to $419 billion from $838 billion in 2019. In 2021, losses are expected to be cut to $15.8 billion as revenues rise to $598 billion.

Even with those grim stats, cargo remained as one of the shining lights of the aviation industry.

Compared to 2019, overall freight tonnes carried are expected to drop by 10.3 million tonnes to 51 million tonnes. However, a severe shortage in cargo capacity due to belly cargo’s unavailability on (grounded) passenger aircraft is expected to push rates up by some 30% for the year. Cargo revenues will reach a near-

record $110.8 billion in 2020 (up from $102.4 billion in 2019). As a portion of industry revenues, cargo will contribute approximately 26%-up from 12% in 2019.

IATA also sees an uptick in 2021 with the air cargo sector revenues will reach a record of $138 billion (a 25% increase on 2020). That is about 23% of total industry revenues, roughly double its historical share.

HOW DID GLOBAL AIR FREIGHTERS PERFORM? Let’s take a look at how the global air freighters performed during the COVID-19 pandemic. Emirates SkyCargo had around 100 daily cargo flights operated to a destination network spanning more than 65 cities across six continents during the initial stages of a global lockdown.

They also have to be innovative in how they were transporting their cargo and utilising their planes. Emirates introduced additional cargo

capacity by using Boeing 777-300ER aircraft with seats removed from the Economy Class cabin. The measure has been introduced in response to the healthy air cargo market demand for the rapid, reliable, and efficient transportation of essential commodities such as Personal Protective Equipment (PPE), pharmaceuticals, medical equipment, food, machinery, and others supplies around the world.

Emirates SkyCargo operated 10 Boeing 777-300ER aircraft with Economy Class seats removed, allowing for up to 17 tonnes or 132 cubic metres of additional cargo capacity per flight on top of the 40-50 tonne cargo capacity in the belly hold of the widebody passenger aircraft. The modified Boeing 777-300ER aircraft are being deployed on routes to crucial production and consumer markets where Emirates SkyCargo sees maximum demand for movement of urgently required goods.

Nabil Sultan, Emirates Divisional Senior

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C O V E R S TO RY

Vice President, Cargo, said: “Since the start of the Covid-19 pandemic, Emirates SkyCargo has taken very seriously its responsibility of connecting people and businesses across the world with the commodities that they urgently require. To this end, we have been working flat out, first to re-connect a global network of more than 85 destinations and then to introduce capacity options that fit what our customers demand from us including passenger aircraft flying only with belly hold cargo and loading cargo in the overhead bins and on passenger seats. Now, with the Emirates Boeing 777-300ER aircraft with modified Economy Class cabins, we will be able to transport even more cargo per flight, allowing for more cargo to reach their destination faster and for more efficient cargo operations.”

As of July 2020, Emirates operated scheduled cargo flights to 100 destinations across six continents during the month of July 2020 and they continue to grow strong as the months pass by.

Emirates SkyCargo places a strong emphasis on the safety of operations due to Working

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with its partners, including ground handlers.

The carrier has introduced a number of strict guidelines on cabin loading of cargo covering the type of permitted cargo and proper packaging and handling per IATA guidelines.

Saudia Cargo, too were performing above expectations during the COVID-19 pandemic.

In April, Saudia Cargo says it made a record payload-carrying essential food supplies from Lahore to the Riyadh, using a passenger aircraft turned into an all-cargo flight, a new trend that emerged in the ongoing fight against the COVID-19 pandemic.

The record of 65.3 tons of perishables such as meat and vegetables was loaded into the lower deck of a Boeing-777 passenger plane and safely arrived in the Kingdom on April 25.

Saudia Cargo has successfully expanded its freighter fleet since March 23 by using the passenger planes of Saudia Airlines as all-cargo only flights.

At the time, to cope up for the demand, Saudia Cargo expanded its freighter capacity with more than 35 weekly flights. It operated as cargo only passenger aircraft, enabling the air

cargo carrier to serve the Kingdom’s needs for essential food, medical and other supplies during this time of global health crisis.

Apart from notable air carriers, DHL Global Forwarding, the leading international provider of air, sea and road freight services, were able to make their presence felt during the pandemic.

In April, they launched a dedicated 100-tonne weekly air freight service for organizations and governments shipping goods from China to Africa and the Middle East where much-needed personal protective gear will make up the bulk of the cargo. Recently, they announced the delivery of over 65 million personal protective equipment (PPE) such as masks, disposable shoes, and thermometers via several full-chartered planes to Kuwait.

DHL has been working with private healthcare entities, pharmaceutical, and medical distributors to ensure that these supplies are consolidated from across China and delivered to Kuwait City.

DHL’s considerable expertise and experience in humanitarian relief efforts – coordinated mainly out of its Global Competence

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A U G U S T 2020

Center (GCC) for Humanitarian Logistics in Dubai – have been well deployed in the current crisis. Launched in 2019, the GCC leverages Dubai’s strategic location to access several major logistics hubs including the International Humanitarian City, the global hub for humanitarian preparedness and response and a major logistics center for the distribution of humanitarian aid.

At the height of the global airfreight capacity crunch back in mid-April to end June, DHL set up control towers in China (in Guangzhou and subsequently in Shanghai) to manage the consolidation of essential medical supplies and provide data analytics services designed to offer heightened levels of freight visibility. The team then carved out specific routes to transport the shipment to different parts of Middle East and Africa via Dubai. This ensured a steady supply of medical necessities out of China, the world’s dominant manufacturer and exporter of various medical supplies. In the first half of 2020, China reported a 32.4% and 46.4% spike in exports of masks and medical equipment, respectively.

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E-COMMERCE

DIGITAL TRANSFORMATION FACTORY In conversation with Alessandro Carniel, CEO of Triboo ILG

Alessandro Carniel is the CEO of Triboo ILG, the first and only GCC based one-stop solution agency supporting global brands on both fullservice e-commerce management and digital marketing services. In his current role, Alessandro consults clients on how to enable a seamless transition from brick & mortar to ecommerce and make sure online generated revenues have a significant impact on overall sales for B2C and B2B clients. Alessandro sat down with Kasun Illankoon to discuss how Triboo ILG is changing how companies operate and showcase themselves.

OUTLOOK FOR 2020 2020 so far is a sort of a black swan year, and to some extent, we’re all still figuring out what’s next. The coronavirus pandemic has changed the way the entire world operates; in all honesty, from our experience, e-commerce

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has been operating at an all-time high in some cases, with clients breaking sales expectations within the first few weeks of lockdown. An estimated 1.8 bn people worldwide were predicted to shop online this year. The majority of people around the world are locked inside with the internet at their fingertips; it makes sense ecommerce boomed since the lockdown.

Business-wise, I can expect more and more B2C and also B2B companies across many categories looking at how online sales channels should be integrated into their commercial strategy to protect their business and revenues. Realistically, for some businesses we can’t expect e-commerce to compensate for offline sales losses entirely.

We can look at ways to mitigate those losses while helping clients shift from brick and mortar only to a multi-channel or, even better, omnichannel players.

COVID-19 IMPACT It shouldn’t surprise anyone if I’d say 2020 has been so far a very challenging year for most of us. At the same time, as a company that primarily focuses on e-commerce management, we were lucky enough to see our business grow as more and more companies in the region are looking at e-commerce channels to boost sales while brick & mortar is heavily affected.

Whether it’s through full e-commerce or one of the many marketplaces, this region offers plenty of opportunities for businesses looking at online channels. That helps us diversify our offer and make sure we can build a financially sustainable route for every brand.

DIGITAL FIRST We’re a digital-first organisation, and that is instrumental in making sure all our internal and external processes are constantly optimised.

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This applies to the full spectrum of our services and facilities, including warehouse management and logistics, which allows us to be extremely agile. This has a significant impact on the way we manage our client e-commerce’s operations.

E-COMMERCE BOOM The past few years have seen notable growth in e-commerce adoption in the region. Over the last few months, this shift became even more visible, as most of the consumers in the area have significantly changed their shopping habits and made online sales a very familiar practice to almost everyone. Additionally, there has been an increase in the product categories that consumers are now buying online; for example, in the last couple of months, we have seen a significant increase in online grocery sales.

TRANSITIONING TO AN ONLINE BUSINESS MODEL There’s no one fits all formula. Our approach always starts with an in-depth analysis of the client’s initial situation before crafting an operational framework. As the only end to end e-commerce management company in the region, our proposition is unique as we can help our clients throughout the full process from stocking up the goods on our warehouse to managing the entire logistic cycle. On the other end of the spectrum, we can also help them get the right traction by supporting their digital marketing activities through both the upper and lower funnel: from social media management to influencer’s campaigns, from SEO to online ads and everything in between.

STANDING OUT I’d say it’s about finding the right balance in terms of content, context, and time. We need

to reach out to the right target audience with the right piece of content and when they’re ready to consider making a purchase.

Retailers also need to offer a seamless and straightforward e-commerce experience — from browsing to researching, selecting, purchasing, and returning/exchanging. Customers will no longer tolerate sub-par digital shopping experiences as they may have before the crisis.

Retailers have to make sure their sites are mobile-responsive, offer integrated services such as “buy online pick up in-store”, and deliver a consistent, reliable digital experience across devices and channels.

LEADERSHIP I never believed in micromanaging, so it’s all about delegating and making sure everyone in our team feels they are empowered to make decisions as long as they accept accountability.

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F R E E ZO N E S

STRATEGIC WAREHOUSE Ahmed bin Humaid Al Nuaimi, Chairman of Ajman Free Zone (AFZ), launches AED 36 million strategic warehousing project

H.H. Sheikh Ahmed bin Humaid Al Nuaimi, Chairman of Ajman Free Zone (AFZ), launched a strategic project to build a number of warehouses that serve an array of targeted sectors such as health, food and sustainable development. The AED 36 million green project with a total built-up area of 9,070 M2 will consist of 82 units and service blocks that can be used as showrooms, warehouses or industrial facilities.

The size of the multipurpose units starts from 100 M2 and they can be used individually or by combining multiple units to form larger units, depending on the needs of investors or tenants.

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Project to enhance AFZ’s attractiveness & competitiveness as a preferred destination for commercial & industrial activities.

H.H. Al Nuaimi emphasized that AFZ is constantly looking for ways and strategies to add further value to the emirate’s business environment, noting that the latest warehousing project will enhance the attractiveness and competitiveness of AFZ as a destination for business and commercial and industrial activities. He added that the project will also support environment protection initiatives and promote sustainable development by reducing

electricity consumption and carbon emissions.

Furthermore, the project increases the amount of available space to meet the requirements of investors by providing additional units that can be used for several purposes, including chilled storage units and manufacturing facilities. It also provides sustainable options through the qualitative characteristics of storage units, including solar energy technology. Additionally, it is strategically located close to Ajman Port and Customs, ensuring easy inward and outward movement of customers’ products and transport.

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With an aim to contribute to addressing the rising demand for electricity and support the Federal Electricity and Water Authority (FEWA) in this regard, the new AFZ warehousing project will use photovoltaic panels to generate electricity, which will partially address its electric power demand. Apart from the installation of energy saving LED lamps to light up the units, street lighting and outdoor lighting in the premises of the units will be fully powered by solar electrical panels attached to lighting poles.

The facility will raise the insulation coefficient of the surfaces and walls to minimize heat ex-

change, which will in turn reduce the amount of energy required for cooling units.

This strategic project is part of AFZ’s commitment to achieve the goals of Ajman Vision 2021 in terms of enhancing the effectiveness and efficiency of government action in the emirate, accelerating sustainable development, and supporting the green economy. It also forms part of AFZ’s contributions to ensuring environmental protection and increasing the share of clean energy, which are among the priorities of the UAE Vision 2021.

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TRADE

UAE, THE FOOD IMPORT HUB

Arda Cenk Tokbas, General Manager at Pinar Arabia, on the importance of UAE as a food import hub

The impact of COVID-19 was a true stress test of the resilience of food production capabilities and supply chains. As the world entered lockdown earlier this year, there was understandable concern about the resilience of global food supply chains beyond disruption caused by COVID-19 to consider.

Earlier in 2020, there had been stockpiling of rice and grain in some producer nations, panic buying by consumers and devastating insect plagues in East Africa. There were also fears that lockdown-related restrictions on the movement of agricultural workers

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could affect this year’s harvests.

Thankfully, the world has come through this difficult period with only minor disruptions in the distribution and availability of food. In the GCC countries, this ability to ensure the continued supply of food, at affordable prices, is the result of carefully considered national strategies that utilise multiple approaches to achieve food security. These measures include investment in traditional agricultural assets overseas, targeted subsidy programs, open import policies, waste reduction initiatives, stockpiling

of essentials and investment in local production utilising new agricultural technology, or ‘agritech’.

As a result of these multi-pronged strategies, GCC nations are, despite their high dependence on food imports, considered highly ‘food secure’. This is borne out of the countries’ positions in the 2019 Global Food Security Index. The UAE was ranked 21st overall, with the country coming in at fourth in the all-important category of affordability. Kuwait ranked 27th overall and Saudi Arabia 30th.

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Key to the UAE’s high ranking is its openness to food imports, which is reflected in its status as a food & beverage re-export hub.

Emirates Council for Food Security estimated that 3.5 million tonnes of food were imported into the UAE in the first three calendar months of 2020. Around 455,000 tonnes of food were re-exported during the quarter.

The value of the UAE market and projections for growth suggest that it will remain an attractive destination for food importers.

The country’s food & beverage market will be worth US $37 billion in 2020, according

to Frost & Sullivan. The figure represents growth of 6.9% year on year, indicating that the sector has remained resistant to the impact of the COVID-19 virus.

The UAE’s attractiveness as an import and re-export hub is well established. The country has more than ten commercial ports and one of them, Jebel Ali, is amongst the world’s ten busiest container ports.

The UAE is primely positioned to offer logistical access by road to the GCC countries, themselves booming consumer markets. The world-class road network extends beyond the

wider MENA region making the UAE a coveted gateway to regional markets. The UAE also has four international airports (Dubai International, Al Maktoum International, Abu Dhabi International and Sharjah) and three international airlines (Air Arabia, Etihad and Emirates). Each airline operates a comprehensive air cargo services network, with Emirates SkyCargo now able to connect 300+ destinations across 80 countries through the Emirates SkyCentral operations hub at Dubai International Airport (DXB).

Despite recent disruptions, SkyCargo’s responsiveness to the crisis saw it dedicate passenger aircrafts to continue servicing logistical needs. This quick response further cements the capabilities of the UAE in not only facing challenges, but tacking them head on, unexpected as they might be.

There are more than 30 free zones in the UAE, offering 100% foreign ownership and paid-up capital requirements as low as AED 1000. One of the UAE’s newest free zones, Kizad, is a 420 square mile area reserved for warehousing and light manufacturing activities, such as food production.

It is here where Hadaf Foods, built a food production facility, for Pinar dairy products.

Established at an initial cost of US $27 million (AED 100 million), the factory now produces 30,000 tons of cheese per year with plans to double in the near future.

Kizad is directly adjacent to Khalifa Port and offers direct access to international road links. This will be supplemented in the future by a GCC rail network that will pass directly through Kizad.

Another factor that will contribute to growth is the UAE’s National Food Security Programme launched in November 2018.

This ambitious and comprehensive strategy aims to diversify the UAE’s food import sources and establish up to five sources for every major food category. Combined with other measures, the strategy aims to establish the UAE as one of the top ten most food secure nations in 2021 and the leader worldwide by 2051.

Through a range of initiatives and policies, the UAE is well established as a major hub for food imports and re-exports, and remains an attractive country for global manufacturers with a strategic aim to reach wider markets.

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OP-ED

ROAD INFRASTRUCTURE AND TRANSPORTATION Dr. Shereen Nassar, Assistant Professor in Supply Chain and Logistics Management, HeriotWatt University Dubai, on how the road infrastructure and transport sector makes a significant contribution to the economy by bringing about several benefits The transport sector is an important component of the economy and the base for much development. More so in the case of a global economy where economic growth is directly linked to the mobility of people and freight. At the macroeconomic level, road infrastructure and transportation impact the output, employment, and income within a national economy.

For example – studies show that in many developed countries, transportation accounts between 6% and 12% of GDP and logistics costs for between 6% and 25% of the GDP. The United Arab Emirates (UAE) demonstrates a prominent example of best practices in road and transport infrastructure. The UAE

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government prioritizes infrastructure construction and transportation and regards it as the basis of economic and social development.

Since the 70s, the nation has invested heavily in this sector, so as to create a favorable environment for foreign capital to enter Dubai.

Globally, the UAE is considered to have one of the most modern transport systems in the world. In fact, according to the Global Competitiveness Report issued by the World Economic Forum for the year 2019, the UAE occupies the seventh position in the index of road quality. Additionally, the National Agenda highlights the importance of infrastructure and aims for the UAE to be among the best in the

world in the quality of airports, ports, road infrastructure, and electricity.

In this backdrop, Dr Shereen Nassar, Global Director of Logistics Studies, Heriot-Watt University Dubai explains how road infrastructure and transportation has a direct role to play in boosting economies and why governments across the world view this as a critical focus area.

INCREASED PRODUCTION When looking to boost economic growth, the right investments in road infrastructure and transportation can help businesses move freight efficiently and grow in scale. It will mean that access to a broader market base in order to sell and in-

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INCREASED LAND VALUE It has always been noted that land which is serviced by excellent road infrastructure and transport is more valuable. Residents of this area have improved access to a services, retail, employment, services, and social networks, all of which translates into higher land value.

At the same time, there are a few cases where transportation activities can lower land value, particularly for residential real estate. For example, real estate located near airports and highways or other noise and pollution sources, may not be much in demand, resulting in lowered value.

creased productivity from having access to a wider array of raw materials, labor and other input needed for manufacture. The right road infrastructure and transportation will enable the movement of goods over longer distances, help businesses connect with suppliers, customers as well as labour. In turn, this brings about improvements in productivity resulting in increased economic output. In the long run, we can also expect to witness mass production through economies of scale because larger markets can now be accessed.

INCREASED COMPETITION Efficient infrastructure and transportation results in an increase in customers for a product

or service. It also leads to the rise of competition, because of which the customer now benefits from access to a wide range of goods and services as well as best possible prices, quantity, and quality. More importantly, competition boosts innovation. Here it is important to note that road infrastructure and transport cannot be the singular drivers for development; however, their lack can hamper development. It can cause higher transport costs and result in a broken supply chain. Poor road infrastructure and transportation can negatively affect the competitiveness of economies and impact other areas such as economic opportunities, employment and more.

JOB CREATION While it is obvious how road good infrastructure and transportation can lower logistics costs and stimulate growth, there is yet another advantage – that of job creation. Studies find that investment in infrastructure can enable to growth of three types of jobs - direct jobs or those created for the purpose of building infrastructure (examples are road engineers, project officers or transport planner), indirect jobs industries or those with linkages to infrastructure creation (such as industries supplying raw materials to build roads and transport), and induced jobs or jobs created as a result of existing businesses benefitting from new infrastructure (such as increasing customer base or improved transport connectivity due to reliable access to power and water). In the case of public transport creation, authorities offer local jobs that cannot be offshored or moved out of the local area. Similar to other services sector, the public transport industry is labourintensive. Some studies state that labour costs represent 60 to 80% of the total costs of a public transport company and an added advantage is that these jobs are less affected than jobs in other sectors in the event of an economic downturn.

To conclude, the quality of road and transport infrastructure is a principal determinant of the transport sector performance that requires continuous development to gain the above identified benefits which support economic growth. Significant Public expenditure is allocated to build, maintain and develop road and transport infrastructure in response to the growing demand for freight and passenger mobility. Spend analytics is essential to inform decision makers on spending and the outcome achieved from infrastructure spending for the purpose of prioritizing investment that is crucial under tight public budget restraint.

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SUPPLIER FOCUS

IMMEDIATE SUCCESS In conversation with Mohammad Razzaqi, Managing Director at HRAD General Trading LLC TELL US WHAT ARE YOUR EXPECTATIONS FOR 2020?

To give a straight answer, COVID-19 pandemic has affected the whole world economy which has had a great impact on the overall business situation affecting growth in many segments including ours. Government stimulus packages are required to lift demand in the essential & high potential segments to sustain us all in the long run. We have great confidence in the wise UAE Leadership and are happy to be part of the business community in this progressive country, with big hopes to bounce back soon.

Having said that, we are currently focused on lowering our OPEX and remain resilient to face the challenges that are expected in the second half of this year. We are determined to see out this difficult phase and contribute towards rebuilding the growth process.

TELL US WHAT YOUR OVERALL GOALS AND OBJECTIVES ARE WITH HRAD GENERAL TRADING Our experience of over 37 years in the field of Heavy Truck & Equipment business with some of the top brands in the world combined with the strong relationship developed with customers over these years has given us a clear insight and direction to our business approach. As an ongoing program, we have been educating our customers with the benefits and cost effectiveness of using premium quality OE spare parts and components, and to a larger extent the success is noticeably good, as eventually our customer satisfaction is of prime importance, which results in a healthy and well bonded association.

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Having made this grounded approach, we intend to include more value added products and services by closely working with our customers as an ongoing exercise. We hope this will create a firm base for positive results and mutual benefit for us and our customers giving use a preferred partner status.

TELL US HOW YOUR SERVICES BENEFIT YOUR CUSTOMER? First off, we pride ourselves on our immediate response resulting in a greatly reduced down time for the customer asset that needs restoration.

As a one stop shop, we also offer competitive technical services through our associate partners for critical problems and give instant

onsite solutions, which is an obvious added advantage for our customers.

We are always available to discuss, analyze and offer expert solutions to problems through cost effective means. Remember, the lowest cost factor for a product does not necessarily translate to the highest value attainment for a customer.

By offering premium quality products with a replacement guarantee and longer service life, we are directly contributing towards a better return on investment for the customer.

TELL US ABOUT THE LATEST TECHNOLOGY YOU USE TO PROVIDE KEY AUTOMOTIVE SOLUTIONS? It is a humble start and currently our approach is based on past experience and fundamental

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core knowledge of the product with access to latest technology and solutions from our associate partners/suppliers in Germany/Europe and locally.

We are able to leverage these quality products to ensure client requirement is surpassed.

TELL US WHY YOUR AUTOMOTIVE COMPONENTS AND SPARE PARTS ARE OF HIGH QUALITY The products we associate with are world class brands and OE manufactures from Germany/ Europe and around the world with high build quality qualifying and surpassing the prevailing industry standards. These brands often have decades of history providing value for money, and are certified by reputed quality control organizations.

GIVE US YOUR VIEW ON THE OVERALL MARKET HERE IN UAE AND HOW IS IT BENEFITING HRAD GENERAL TRADING In comparison to pre covid-19 times there is a small percentage of slowdown which is realistic given the current circumstances worldwide, but the UAE market to a larger extent has always withstood the test of times, and we attribute this to the wise UAE leadership and governance in monitoring and supporting the overall development of the country. We have confidence the infrastructure and framework established will be able to quickly return us to a positive growth trajectory. We look forward with optimism as long as our customers share our positive outlook we will be able to contribute to the development.

Further our uninterrupted support services, even during the pandemic have brought us close to our customers creating a bonding recognition, which results in assured business.

WHAT ARE THE PLANS FOR THE FUTURE FOR HRAD GENERAL TRADING? It is a humble start and there is a lot to be done as we go forward. We intend to create a single platform for the industry/fleet owners to have access for all their requirements for Parts/ Components together with service solutions as a one stop shop.

We hope to bring our transparency and honest approach to dealing with our customers to an even larger audience across the region as well.

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AV I AT I O N

A U G U S T 2020

AIR CARGO RECOVERY CONTINUES IN JUNE BUT AT A SLOW PACE

The International Air Transport Association (IATA) released data for global air freight markets in June showing improvement, but at a slower pace than some of the traditional leading indicators would suggest.

• Global demand, measured in cargo tonnekilometers (CTKs*), fell by 17.6% in June (-19.9% for international operations) compared to the previous year. That is a modest improvement from the 20.1% year-onyear drop recorded in May. • Global capacity, measured in available cargo tonne-kilometers (ACTKs), shrank by 34.1% in June ( 33.9% for international operations) compared to the previous year. This was on par with the 34.8% year-on-year drop in May. • Belly capacity for international air cargo

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shrank by 70% in June compared to the previous year due to the withdrawal of passenger services amid COVID-19. This was partially offset by a 32% increase in capacity through expanded use of freighter aircraft.

• Global manufacturing demand stabilized in June: - The new export orders component of the Purchasing Managers Index (PMI) rose by 11 points compared to May, the strongest monthly increase since the series began in 1999.

- The PMI tracking global manufacturing output rebounded in June to its highest level since January.

In the Middle East, carriers reported a decline of 19.1% year-on-year in June, an im-

provement from the 24.9% fall in May. International capacity decreased 25.8%, the best of all regions. This was driven by the aggressive operational strategies of some of the region’s carriers.

“Cargo is, by far, healthier than the passenger markets but doing business remains exceptionally challenging. While economic activity is re-starting after major lockdown disruptions there has not been a major boost in demand. The rush to get personal protective equipment (PPE) to market has subsided as supply chains regularized, enabling shippers to use cheaper sea and rail options. And the capacity crunch continues because passenger operations are recovering very slowly,” said Alexandre de Juniac, IATA’s Director General and CEO.

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