Logistics News ME - April 2016

Interview

Case Study

Sector focus

Mustapha Kawam on expanding GES

DAFZA adopts innovation drive

F&B supply chains on the menu

Connecting trade professionals with industry intelligence CONNECTING TRADE PROFESSIONALS WITH INDUSTRY INTELLIGENCE

APRIL 2016 MARCH 2016

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Start 8 | News 16 | News Analysis

A snapshot of the latest mergers and acquisitions and what it means for the business ecosystem

Contents CONNECTING TRADE PROFESSIONALS WITH INDUSTRY INTELLIGENCE

MARCH 2016

Features 20 | Logistics and IoT A look at compatibility and potential threats 24 | Green and smart

How commercial vehicles are driving change

28 | F&B supply chains Tackling the inefficiencies of F&B supply chains 34 | Cover story

How to build a logistics hub fit for the future

40 | Face to Face

Ingo Kloepper, CEO Damco MEA talks to Brian Cartwright

42 | Country Focus:

Qatar The latest news on the country’s burgeoning sector

52 | Under new management Logistics News talks to GES president and CEO Mustapha Kawam

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34 42

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52 Logistics News ME | April 2016 | 3

Editor’s Note Opportunity knocks

T

he idea of the logistics hub is not new, but it is definitely gaining in popularity.

Over recent years the Middle East has been upping its game with almost every major sea-side city announcing ambitions to become a logistics hub, taking advantage of the geographical position of the GCC. But while the opportunity provided by location can’t be denied, the creation of a true hub demands much more.

In this issue we look at what is needed to create a logistics hub and the answers from our interviewees fell on a much wider spectrum that location alone. A true hub needs technology, labour, multi-modal transport and more.

It also needs room to breathe. The number of hubs planned for the GCC seems to be growing at a phenomenal rate and it leads one to question if there is room in the market for each one to be as successful as it needs to be. The stakes only rise when the diversification from oil-based economies is factored into the equation.

There are other problems, too. In Saudi Arabia for example, as our industry commentators from Camelot explain on page 46, the pharmaceutical cluster at KAEC faces skills shortages and a ban on the import of drugs from anywhere that isn’t the original country of origin, under the country’s tight laws.

Granted that once geography – the biggest piece of the puzzle – is on your side, other problems can pale in comparison, these are issues which still require address.

And another such point of consideration is that such plans aren’t exclusive to this region.

Last year it was reported that Jamaica has ambitions to become the world’s “fourth logistics hub”, after Rotterdam, Singapore and Dubai; a brainwave of the Minister of Industry, Investment and Commerce, G. Anthony Hylton.

Hylton was quoted by news outlets at the time as saying: “Sitting at the doorway to the newly expanded Panama canal, Jamaica wants to position itself to join Rotterdam, Dubai and Singapore as the fourth node in the international logistics chain,” It looks unlikely to be the last nation to make such an announcement, however what this demonstrates is that while digitally the world enjoys an almost hyper level of connection, physically there are still dots to be joined. The key is to do it well and avoid a future where an over-competitive environment has either killed the ability to provide the services a hub should provide, or dented the economic potential such mega-projects are designed to capitalise on.

Melanie Mingas Group Editor

Managing Director Walid Zok Walid@bncpublishing.net

Group Editor Melanie Mingas Melanie@bncpublishing.net

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Director Rabih Najm Rabih@bncpublishing.net

Sales Manager Vishvanath Shetty vish@bncpublishing.net

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Art Director Aaron Sutton Aaron@bncpublishing.net

Group Publishing Director Diarmuid O’Malley Dom@bncpublishing.net

Marketing Mark Anthony Monzon Mark@bncpublishing.net

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news

In The NEWS Tristar acquires ESHIPS in $90m deal

DHL and FedEX Express make “Great Place to Work” top 10

UAE-based logistics group Tristar has acquired 100% ownership of Abu Dhabibased Emirates Ship Investment Company, ESHIPS, from Egon Oldendorff GmbH & Co. KG, for $90 million.

As a result of the deal, Tristar has acquired a fleet of seven ocean going chemical tankers which includes two LPG tankers under long term time charter to an oil major. These vessels will be phased into the company’s existing fleet and then fixed out long term in line with company policy.

“This acquisition is a perfect fit to our longer term plans to diversify revenue and make ship owning an integral part of our strategy to build a fully integrated liquid logistics business,” commented Eugene Mayne, group CEO of Tristar.

According to Oldendorff Carriers, the decision to sell ESHIPS is also part of a “strategic decision” to focus on the dry cargo shipping business at the German dry bulk firm.

“Tristar has a long term perspective and will now take ESHIPS forward and develop it as a tanker company.”

Two logistics companies have appeared in the top 10 of the annual Great Places to Work UAE listing.

Both DHL, which took the top spot, and FedEx Express, at number 10 made it into the highest rankings, with brands such as WSP | Parsons Brinckerhoff, Al Ghandi Auto Group and Eros Group making the top 20.

“To be recognized as one of the Top 10 Companies in the UAE to work for is a strong testament to the FedEx culture” said David Ross, regional president, FedEx Express Middle East, Indian Subcontinent and Africa.

“We strive to create a rewarding environment for our team members, who are the heart of our organization. The FedEx philosophy, People-Service-Profit, drives our daily activity. We believe that motivated and happy colleagues have a positive impact on the service we provide to our customers, influencing the success of our business.”

Every year, the Great Place to Work Institute ranks the UAE’s top Great Places to Work based on confidential feedback from employees and a management process audit.

8 | Logistics News ME | April 2016

Eugene Mayne, group CEO, Tristar

stated Peter Bagh, COO Oldendorff Carriers.

This acquisition of ESHIPS and the newbuilding program, together with its existing coastal fleet, will bring the Tristar-owned shipping fleet strength to more than 20 vessels.

In a related move Tristar is

due, from May this year, to start taking delivery of its six brand new 50,000 MT clean petroleum product tankers from Korean builder Hyundai Mipo Dockyard and built at cost of $200 million.

For the latest analysis on the region’s M&A activity, turn to page 16

news

DAFZA publishes 2015 finances, creates female empowerment committee Dubai Airport Free Zone Authority has announced details of its financial performance in 2015, with sales revenue growth of 18%, revenue rise of 7%, an increase of 22% in the number of registered companies and asset growth of 3%.

H.H. Sheikh Ahmed bin Saeed Al Maktoum, Chairman of DAFZA, said: “DAFZA is taking steady steps towards positioning itself as a main player and major driver for economic development and trade growth in Dubai, posting a strong performance and achieving significant growth at the operational level and among the focal sectors in the freezone. Last year’s buoyant financial results are testaments to DAFZA’s high H.H. Sheikh Ahmad Bin Said Al Maktoum potentials and competitive advantages which reflect its pivotal role in attracting foreign investments in the coming months.”

“Our successive achievements drive us to intensify our efforts to implement our ambitious initiatives that we launched in 2015, such as the DAFZA Innovation Strategy that comes in line with the directives of H.H. Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai. We are looking forward to support economic diversification policies which complement the ‘UAE Beyond Oil Strategy.’ We will focus on creating integrated solutions and innovative initiatives that contribute to the achievement of these ambitious objectives and national priorities. We aim to make a positive impact on smart transformation through investments in innovative ideas and projects’ expansion in the Freezone. We will pay great attention towards strengthening the bridges of communication with the international business community, maintaining our status as one of the most premium free zones in the world, and effectively contributing to the economic development in Dubai and the UAE,” H.H. added.

Coinciding with International Women’s Day on 8 March, DAFZA has also launched a new female empowerment scheme to “help advance the cause of women empowerment in the UAE”.

The scheme, Elham, is also initiated in line with the vision of the UAE’s ambitions to enhance the participation of women in the country’s economy.

At DAFZA, a committee will be tasked with studying and analyzing women’s needs and requirements within the organisation. Elham is also expected to take the lead in the benchmarking and adoption of best practices that have been introduced and implemented by known female leaders—embracing the concept of women leadership in the UAE and across the Middle East region.

Members of the committee will regularly meet to discuss ideas and develop recommendations that are aimed towards women empowerment in DAFZA. For the full story on the DAFZA performance results turn to the Case Study on page 58

Almajdouie Holding Company honours long service Almajdouie Holding Company has honored all employees who have dedicated 25 years of continual service, or longer, to the company, during the group’s 50th anniversary celebrations at Holiday Inn Al Khobar Hotel.

More than 32 employees were honored from the group’s affiliates, and awarded a gold medal pendent before a celebratory dinner.

The logistics department employees recognised, were: • Siraj Quadri Abdul Khader - Transportation • Cyprian Sequeira– Fright and Projects • Mohammad Abubakar Qureshi Shahabuddin – Business Development • Tajdin Abdul Aziz -Transportation • Shaukat Ali Shaikh Ahmed - Transportation • Elgailani Eltayeb Elnur - Service Centre • Saturnino Bato Cunanan - Transportation • Mahmoud Ali Ahmed - Transportation • Mohamed Ahmed - Transportation • Abdalla Gasm Elsied Ahmed - Service Centre • Mohamed Said Saleh Almajdouie - Service Centre • Imam Mahabuba patel Patel - Fright and Projects • Abdulla Brek Salim - Service Center • Mohd Mahmood Ali Mohd - Warehouse and Terminal • Abdul Aziz Rubeiya Awadh - Transportation • Muhammad Jawed Khan Muhammad Ismail Khan - Transportation • Falak Sher Alam Sher - HeavyLift • Mohammad Iqbal Karam Ali - Transportation • Mohammad Gulzar Khan - Transportation • Muhammad Altaf Kayamuddin - Transportation • Gulam Mohammad Gulam Ali - Transportation • Ajim Ali Mohammed Barmare - Transportation • Shaik Shamsuddin Shaik Hajimiah - Transportation • Mohammed Kiyas - Warehouse and Terminal • Abdul Aziz Saoud Ahmed Alahmed- Freight and Projects

Logistics News ME | April 2016 | 9

news

DP World Milaha AGM details released profits up 31%

According to a statement released last month, DP World made a profit of $883 million, up 30.7%, in 2015 on the back of 16.3% revenue growth to $3.97 billion.

The results mean DP World, which is one of the world’s largest operators, is on track to boost gross global capacity to 86 million TEUs in 2016 with a target to hit 100 million TEUs by 2020.

The company, which already operates more than 70 marine terminals across six continents, has now pledged to further invest between $1.2bn and $1.4bn in 2016 as part of a strategy of “continued investment in high quality long-term assets to drive long-term profitable growth.”

“By the end of 2016 we expect to have approximately 86 million TEUs of gross global capacity, an increase of approximately 15 million TEUs since 2012, and over 100 million TEUs of gross capacity by 2020, subject to market demand,” it said.

“We expect capital expenditure in 2016 to be between $1.2-1.4 billion with investment planned into Jebel Ali, Jebel Ali Freezone London Gateway, and Prince Rupert in Canada,” it said. The company said it invested around $4 billion in acquisitions including of Dubai’s logistic provider Economic Zones World and Fairview Terminal at Prince Rupert port in Canada.

10 | Logistics News ME | April 2016

Qatar Navigation, Milaha, Q.S.C. held its Ordinary General Assembly meeting on March 16, during which the company’s audited financial results for the year ended 31 December 2015 were approved, confirming an increase in net profit of 4% to QAR1.095bn, up from QAR1.049bn in 2014.

The General Assembly also ratified all the remaining items on the Agenda, including the proposal by the Board of Directors to distribute a cash dividend of 50% of the nominal share value (equivalent to QAR5 per share). Dividend distribution commenced from March 23, through all Qatar National Bank branches.

QNB has been appointed official Dividend Distribution Agent and account administration and other administrative support services to ensure shareholders have easier and more efficient access to their earned dividends.

The General Assembly further approved the appointment of KPMG as external auditors for the year 2016.

During the meeting, HE Sheikh Ali bin Jassim bin Mohammad Al Thani, Chairperson of Milaha’s Board of Directors presented an overview of the company’s activities and financial results for 2015 along with highlights of business plans for the year 2016.

Al Thani said: “2015 was a year of milestones for Milaha as we launched a first of its kind direct shipping service between Qatar and India, secured new contracts, and increased our market share in several sectors.”

Al Thani added: “Despite difficult market conditions, our growth last year was driven by significant improvement in our core businesses – maritime and logistics, gas and petrochem, and offshore services – and this is an indication of the success of our growth strategy as we build a stronger foundation for our future.”

The General Assembly also approved the recommendation to amend several articles in the company’s Articles of Association as per the provisions of the Commercial Companies Law. HE Sheikh Ali bin Jassim bin Mohammad Al Thani, Chairman of Milaha’s Board of Directors

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No matter how you grow, grow smart with Swisslog. swisslog.com/GrowSmart-MiddleEast

news

Gulftainer Registers 4% growth in container volume across global portfolio in 2015

The Khorfakkan Container Terminal operated by Gulftainer witnessed 9% growth in container volume in 2015

Gulftainer, the world’s largest privately-owned, independent port operator based in the UAE, recorded a strong performance in 2015 with an overall growth of 4% across its global portfolio and a 9% spike in container volume, with the company’s UAE terminals in Khorfakkan and Sharjah emerging as the strongest performers.

Khorfakkan set a new record of handling a total volume of 19,561 TEUs for a single vessel during 2015 and in Iraq, Gulftainer’s Umm Qasr Logistics Centre marked another significant milestone notching up one million TEUs which were handled over a five-year period since the commencement of operations in 2010.

In addition to port activities, Gulftainer’s 3PL company, Momentum Logistics, which operates freight forwarding, trucking, warehousing, container repair and contract logistics, also recorded positive growth in 2015.

Flemming Dalgaard, CEO, Gulftainer, said: “The container industry worldwide is witnessing challenges in growth volumes due to a slowdown in the Chinese and European markets. However, Gulftainer’s success in bucking this trend with positive and robust performances across our terminals underlines our ability to adapt to market volatilities and economic fluctuations.

“Gulftainer is currently on a growth path to expand organically as well as through leveraging

12 | Logistics News ME | April 2016

new contracts from 2015. Our outlook for 2016 remains cautiously optimistic. We will continue to invest in infrastructure to meet the requirements of our customers serving newer, larger ships and step up our capacity to handle higher volumes per call. As we steer ahead with this goal, it is encouraging to note that our terminals continue to build credibility both at home and internationally with their above market operational performance.”

Looking ahead, 2016 marks the beginning of Gulftainer’s operations at US Port Canaveral, where StreamLines, part of the SeaTrade Group, started operations with its Blue Stream Service - a weekly container cargo service connecting Port Canaveral to Europe, the French West Indies, and Central America. The Blue Stream Service comprises five ships with 1,300 TEU capacity and 250 reefer plugs that work on a weekly rotation.

Over the next decade, Gulftainer has earmarked an ambitious growth strategy to triple volumes. The company aims to continue expanding operations through investments in infrastructure towards accelerating operational efficiency and benefitting from new opportunities as they emerge. As part of immediate plans, Gulftainer aims to launch its operations in Lebanon.

Gulftainer operations • Khorfakkan Container Terminal (KCT) • Sharjah Container Terminal (SCT) at Port Khalid • Sharjah Inland Container Depot (SICD) • Umm Qasr, Iraq • Jeddah and Jubail, Saudi Arabia • Recife, Brazil • Canaveral, US

news

Customs regulation warning from DHL

DHL CEO Nour Suliman has been quoted by Daily News Egypt as saying that changes in customs regulations are a “hurdle” to the firm’s future in the country.

“The main challenges we face are inconsistencies in customs. We face regular changes on customs regulations and, quite often, the unavailability of custom agents and several different authorities to clear shipments—both inbound and outbound—which causes delays in our process,” he said.

DHLS operates 11 dedicated aircrafts operating in the region and 1,900 vehicles across the MENA region. It also works two main hubs serving the global network from Bahrain and Dubai. In Egypt, DHL operates 96 vehicles in total and 32 service locations.

Fetchr expands to Bahrain

Fetchr, the award winning UAE-based shipping and logistics start-up, has announced it is rolling out its service to Bahrain, where the lack of addressing systems has posed hurdles for businesses in the past.

“Fetchr is committed to the cause of innovation, and believes that Bahrain’s telecoms sector holds massive potential for new ideas beneficial to startups and to the country as a whole. The core of Fetchr’s offering will remain the same: offering superior customer experience using the latest technology in delivering packages straight to the customer›s phone. The value proposition remains intact,” said Fetchr’s CEO and founder, Idriss Al Rifai.

Fetchr’s app enables peer-to-peer transactions while also facilitating business needs, providing superior and faster performance. Fetchr is available for download in the Apple App Store and Google Play.

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SOHAR to innovate through Dutch collaboration Omani and Dutch entrepreneurs discussed the future of logistics at the Business Innovation Forum last month, taking place in Muscat.

The discussion saw pledges from Oman to increase ease of doing business, in order to diversify its economy and a commitment from SOHAR to innovate its operations, with SOHAR committing to use existing Dutch best practice as an outline for its future activities.

SOHAR Port CEO Andre Toet participated in an industry panel discussion on shaping the future of logistics through innovation.

The two-day event, organized in cooperation between the Omani Government and the Dutch Regional Economic Network in the Gulf, was held at the Intercontinental Hotel in Muscat. The forum brought together Oman-based and Dutch entrepreneurs, government officials and researchers in the field of logistics and maritime, and aims to build on the existing close relationship between Oman and the Netherlands as well as creating

opportunities for further collaboration.

Speaking to media during the event, Toet said: “We recently implemented a new port management system which provides shipping agents a platform to access and exchange information; we have also improved our customs services with the implementation of a customs Bayan system. As well as this, our state-of-the-art container terminal, managed by OICT, recently introduced a new automatic truck appointment system to reduce turnaround times, increase efficiency and ultimately reduce the cost of doing business.”

SOHAR Freezone CEO Jamal Aziz added: “The Oman Logistics Strategy 2040 is a key focus for us as the nation looks to diversify its economy and transform the Sultanate into a regional logistics powerhouse. Progressing with our planning is one key to success, but there also needs to be a practical shift right across the board towards ease of doing business, in order for Oman to really excel in this area.”

N e w s A n a ly s i s

Middle East M&A surge on the horizon Larger logistics companies may soon be in a position to pounce on cash strapped competitors.

Jason O’Connell reports

T

he fragmented Middle East logistics sector could be about to witness a wave of consolidation as the economic downturn presents companies equipped to weather the storm with the opportunity to pick up assets at bargain prices, experts say. However market 16 | Logistics News ME | April 2016

uncertainty brought about by current regional geopolitical and economic conditions may be holding jittery investors back from embarking on a shopping spree.

While regional M&A activity is yet to see a surge that could soon change if global activity is anything to go by. Global M&A deals in the transportation and

logistics sector doubled in value in 2015 compared to the previous year thanks to a spike in megadeals valued at $1bn or more, according to a recent report by PwC. Last year closed with $172.7bn worth of announced deals versus the $87bn recorded in all of 2014, the report said. “2015 was the year of headline grabbing megadeals and the

N e w s A n a ly s i s

transportation and logistics industry was no exception as megadeal value increased more than two-fold compared to last year,” said Jonathan Kletzel, U.S. transportation and logistics leader for PwC. “The United States was an especially attractive target for large-scale M&A with eight megadeals, totaling 41% of the overall megadeal value. This increase within the U.S. can be attributed to domestic companies struggling to grow organically and the unprecedentedly low finance rates,” Kletzel adds.

“As strategic investors in fragmented industries such as trucking and shipping continue to follow an inorganic path of attaining growth and scale, we expect consolidation to continue, leading to elevated deal values in the year ahead.”

Transactions involving Asia and Oceania dominated deal activity in 2015, accounting for almost half of the global activity with 120 deals worth $96.2bn, PwC says. However a majority of the deals in this region involved China and were primarily driven by the decelerating Chinese economy as reduced growth projections caused overall softness in valuations and equity markets, leading to an increased number of attractive acquisition targets and industry exits.

North America ranked second with 61 deals worth $83.5bn, including two megadeals worth $34.7bn.

Local deals remained the preference of transportation dealmakers in 2015, representing 59 percent of all deal activity; however, the majority of deal value (51%) was driven by cross-border

transactions. This is a major reversal from the previous year as cross-border deal value increased by more than three times to $114.9bn and deal volume increased by 31%. As large international players within the sector continue to expand their international operations and service offerings in efforts to develop global transportation networks, PwC expects continued interest in crossborder transactions.

The Middle East in focus Could this level of M&A activity begin to trickle down to the Middle East logistics sector? One firm that has been very active on the acquisition trail recently is Dubai-based parcel delivery service Aramex, though the company has focused on expanding its footprint outside the Logistics News ME | April 2016 | 17

N e w s A n a ly s i s

region rather than in and around the Arabian Gulf.

In January, Aramex paid AED 9mn ($2.5mn) for a 25% stake in cross-border mailbox consolidation service provider WS One Investments, which operates out of Ohio, with a view to boosting its e-commerce business. It also added New Zealand-based courier service provider Fastway to its portfolio in January in a deal worth AED 293.6mn ($80mn).

Fastway Couriers’ global network includes 63 regional depots and 1,500 courier franchisees across Australia, New Zealand, Ireland, Northern Ireland and South Africa, though the deal does not include Fastway’s business in Ireland or South Africa. The company transports 16 million parcels globally to 75,000 customers each year.

In 2014, Aramex acquired PostNet South Africa for $16.5mn and Australia’s Mail Call Couriers for $26m. The Middle East now accounts for half the company’s business with 18% in Asia and 15% in Africa. Chief executive officer (CEO) Hussein Hachem says the company is eyeing two-to-three acquisitions this year and investments in up to five start-ups as part of plans to diversify its business into key markets in Africa and Asia.

18 | Logistics News ME | April 2016

DIFC-based Al Masah Capital says we have yet to see a major rise in M&A activity in the wider Middle East logistics sector, though that could change if a prolonged economic downturn puts sustained pressure on corporate earnings, enticing shareholders to slash their asking prices.

The market announced 25 deals in 2015, up from 18 deals in 2014, though the values of those deals have not been disclosed to the public so it is difficult to judge precisely whether M&A activity has risen, remained flat or declined.

Based solely on the number of deals, Q1 2016 is seeing similar activity as that witnessed in the same quarter a year earlier, Al Masah says.

Over the past year, there hasn’t been any single company that dominated the M&A activity in the Middle East logistics space. The transactions remain dispersed across companies and countries. In 2015, the UAE had seven announced transactions followed by Saudi Arabia (6), Kuwait (5) and Egypt (4). However Al Masah says the Middle East logistics sector in general is very fragmented in nature with a lot of small players who are likely to consolidate with time to operate more efficiently. This will drive the number of M&A transactions within this

sector over the next few years.

The freight trucking industry was the most active subsector in 2015 representing 32% of the entire Middle East logistics M&A market compared with 22% a year earlier, Al Masah says.

The number of deals within that subsector are double those of last year’s.

Investors were eying freight trucking businesses as they held the greatest potential in this industry. This subsector is at the heart of the economy acting as the connector between all major industries and services and serves as the bloodstream of the regional countries.

Improved regional economies demand larger quantities of goods and with the absence of railways in the region, freight trucking provides the ultimate exposure to inter-regional connections. In addition, the reduction in global oil prices have helped transport companies move goods at cheaper costs than few years back.

A good time to buy?

Generally speaking, businesses operating in cyclical industries are best acquired during a slowdown, says Al Masah, because that is when their profitability is hovering around its lowest levels in the economic cycle. Profitability that is reduced by pure economic cycle offers

N e w s A n a ly s i s

price bargains for investors who have a long-term payoff horizon and are able to withstand the natural short-term slowdown of business.

“We are starting to witness a slowdown in the activity of a lot of logistics companies in the UAE as a result of a global decline in trade activity,” Al Masah says. “However, we have not yet seen a huge decline in the prices requested by the selling shareholders. As time passes and trade slows down further, the expectations of the selling shareholders are bound to go down. Only when the price in relation to the value of the targeted company is significantly low to justify a purchase will it be a good time for companies to expand through acquisitions.”

Market uncertainty brought about by current regional geopolitics and economic conditions are among factors constraining regional M&A activity, though that could change quickly, says Nadim Kayyali, head of corporate and commercial ME, at law firm Eversheds.

“There is no doubt that that the current increased military spending, combined with the lower oil revenues and general wait and see attitude of many investors has had a significant impact on the overall business and investment environment,” says Kayyali. “Foreign investors are reluctant to deploy in a turbulent market, public spending on infrastructure and other key sectors has dropped and private investors are generally jittery or prefer to wait and see when things bottom out or otherwise diversify their investments by deploying their investments outside the region.

“I am very much aware that logistics providers are investing and expanding in the region but I have yet to see substantial M&A activity in that space.

However the opportunities are there and this could change very quickly. For strategic investors there is no doubt that valuations have dropped and they would be able to acquire valuable assets at good prices. Moreover, consolidation to achieve synergies and efficiencies in

difficult market conditions will also drive M&A activity moving forward.”

Abdulaziz Al-Sahlawi, director of PR at Gulf Warehousing Company (GWC), agrees that economic factors, while causing a stasis in M&A activity for the time being, may soon make some struggling companies vulnerable to takeover by larger competitors. This, he says, is bound to benefit the logistics sector in the long run.

“Mergers and acquisitions have decreased recently, as performance in the market has decreased due to the surrounding economic factors,” he says.

“However, this may change over the coming period, where we might see some companies become no longer capable of maintaining their operations, which would make them prime for strategic acquisitions that would seek to overtake their operations and offer better management. This will ultimately be a boost to the sector, as it will increase the synergy of all parties involved in the acquisition.”

Logistics News ME | April 2016 | 19

TECHNOLOGY

LOGISTICS AND IoT: A PERFECT MATCH?

A

Helen Gaskell investigates the real world advantages and dangers of IoT and asks whether connecting everything will be the logistics industry’s next big thing

s one of the early adopters of Internet of Things (IoT) technologies, it is no surprise that industry experts believe that logistics and IoT are a perfect match. Many of the technologies behind IoT, including sensors, microprocessors and wireless connectivity have been in use in various logistics applications for a number of years already and with millions of shipments being moved, tracked, and stowed by a variety of 20 | | Logistics LogisticsNews NewsME ME | |April April2016 2016 18

machines, vehicles and people each day, the logistics industry is key player set to benefit from the IoT revolution.

Until recent years, the Internet’s development has primarily been about connecting computers, however now it is about connecting objects, but are these “things” ready to connect? What are the risks? And who will benefit?

“The IoT demands an extensive range of new technologies and skills that many organisations have yet to master,” says

Nick Jones, vice president and distinguished analyst at Gartner. “A recurring theme in the IoT space is the immaturity of technologies and services and of the vendors providing them.

Architecting for this immaturity and managing the risk it creates will be a key challenge for organisations exploiting the IoT. In many technology areas, lack of skills will also pose significant challenges.”

Cisco and DHL’s 2015 report, Internet

TECHNOLOGY

of things in Logistics predicted that, by 2020, there will be more than 50 billion devices connected to the Internet.

Diego Tamburini, manufacturing industry strategist, Autodesk says that and once these objects have the ability to connect, manufactures and third parties can deliver more value to their customers, he believes that manufacturers need to wake up to this opportunity and act now.

He elaborates: “Manufacturers can provide software applications to allow their customers to remotely connect to, control and monitor their products.

They can also provide an application programming interface (API) to allow others to connect to it. This of course expands the value of the product by to interact with the product. For example, take Premier Deicers, a Wisconsin-based purveyor of aircraftdeicing equipment. The company’s Guardian Angel Monitoring System provides remote access to 29 functions on the deicers, from fluid pressures to electrical components. Customers can access live readings of applicable functions on the deicers from anywhere with Internet service. They can monitor and keep a detailed record of exactly how much fluid is being used and how much is on hand at all times.”

Neil Enright, regional sales director, Middle East, Rockwell Automation says: “It’s no easy task to align hundreds of processes in a single facility to profitably produce and deliver a high-quality product on time. And it’s exponentially harder to align those processes today with rapidly changing customer demands and global supply chains. It doesn’t have to be this way.”

Rockwell’s Connected Enterprise framework is a solution built to achieve end-to-end supply-chain alignment by linking processes via the Internet of Things and embedded intelligence.

“You can be the most responsive and productive organisation internally, but if you can’t anticipate and manage external factors — such as supplier problems, customer-order changes, and even market events, such as severe weather or a commodities shortage — then you’ve limited your ability to improve,” Enright adds.

It is already possible to track and monitor a container in a freighter in the

and in turn help realise the Qatar National Vision 2030,” says Vodafone Qatar’s CEO, Ian Gray.

While the benefits include things such as improved quality and performance,

QUICK FACT FreightWatch recorded

946

cargo theft incidents across the United States in 2012 and 689 in Europe, 37 with organised crime targeting ports and rest areas.

middle of the Pacific, and shipments in a cargo plane mid-flight but according to the DHL and Cisco report: “We expect IoT to provide the next generation of track and trace: faster, more accurate and predictive, and more secure.

“FreightWatch recorded 946 cargo theft incidents across the United States in 2012 and 689 in Europe, 37 with organised crime targeting ports and rest areas. Theft costs shippers and logistics providers billions of dollars each year, from the impact of inventory delays as well as the cost of stolen goods. Through IoT, logistics providers will gain clear visibility on the movement of goods — metre by metre and second by second — as well as item-level condition monitoring to ensure that goods arrive in time, at the right place, and intact.”

Vodafone also recently launched its global M2M platform in Qatar to ensure that enterprise players in Qatar will now have access to the latest M2M platform and IoT solutions for fleet management and asset tracking with several others to follow over the next few months.

“We’re delighted to bring enterprise customers in Qatar Vodafone’s leading global experience in M2M connectivity and IoT solutions that will optimise business operations. The roll-out of IoT services over our superfast network is an important part of our strategic direction to bring all that’s innovative to Qatar

what are the risks involved? Human error maybe removed but in the Internet of Things, every connected device is a potential threat.

Enright continues: “The threats in industry are becoming more targeted and structured. The cyber underground has been doing it for years, some say to the tune of several billion dollars.

“Up to 94% of those targeted attacks aren’t discovered by the victim until they learn about it through a third-party or learn that some of their information was found on someone else’s server. In all these reported cases, the companies were up-to-date with their anti-virus solutions in place and used industry security practices, but still were compromised. It tells us that our conventional security approach isn’t working for that type of threat. So it’s time to adapt.

“We’re at an inflection point in the have to secure our people first.

Automation engineers have to work with cybersecurity personnel and viceversa to cross-educate their strengths and needs. We don’t want to turn automation engineers into security professionals but this can lead to new approaches to better security.”

Gartner predicts that security will be one of the biggest trends in IoT technology for 2017 and 2018, explaining: “Security technologies will be required to protect IoT devices and platforms from both information attacks and physical tampering, to encrypt their communications, and to address new challenges such as impersonating “things” or denial-ofsleep attacks that drain batteries. IoT security will be complicated by the fact that many “things” use simple processors and operating systems that may not support sophisticated security approaches.”

DEPENDING ON THE UNKNOWN Can technology truly be relied on? What if it breaks down?

Tamburini believes that IoT means less maintenance than traditional Logistics News ME | April 2016 | 21

TECHNOLOGY methods. He says: “In a traditional model we, as the customer, pay for the product initially and pay later for spare parts, as needed. In a more sophisticated model, the customer pays for proactive maintenance services. In this situation, the manufacturer remotely monitors the product at the customer site; uses collected data to know when the product needs maintenance; and schedules and performs service and repairs before the product breaks down, normally during scheduled downtime. Because the maintenance is performed proactively, the customer saves money by avoiding unscheduled downtime for repairs. (And because the manufacturer assumes the risks of breakdowns, it’s incentivised to design more reliable products.) This model can also include upgrades of parts or software that make the product better.”

IoT brings with it Big Data and, as Enright explains: “Big Data and logistics are made for each other, and today the logistics industry is positioning itself to put this wealth of information to better use”.

Data Analytics is another top trend from Gartner, which claims IoT business models can exploit the information collected by “things” in many ways — for example, to understand customer behaviour, to deliver services, to improve products, and to identify and intercept business moments. However, IoT demands new analytic approaches. New analytic tools and algorithms are needed now, but as data volumes increase through 2021, the needs of the IoT may diverge further from traditional analytics.

Enright believes that IoT will be widely adopted in the industry on the whole.

He explains: “Some may say you cannot engineer a company’s culture; it just happens. One thing is certain: Cultural change will happen whether one wants it to or not. Therefore, electing not to make a priority of shaping it, removing cultural obstacles and managing the change leaves one of the most important catalysts of an implementation to chance.”

However, what does this mean for the region?

The Dubai Chamber of Commerce and Industry recently released a study on joint cooperation opportunities in the public sector for smart urban living 20 | | Logistics LogisticsNews NewsME ME | |April April2016 2016 22

between the business communities of Dubai and Hamburg. The study revealed that currently Dubai is on the verge of a new revolution of integrating government services with the Internet of Things in Dubai through owning a state-of-the art interconnected ICT equipment as the emirate’s IoT service provision is in partnership with Etisalat and du, the main telecom providers in the country.

“The Internet of Things will revolutionise decision making – we

know that. By connecting the previously unconnected, we create incredible potential for businesses to improve the speed and accuracy of decision making through the analysis and application of digital information.

It enables dramatically faster cycle times, highly dynamic processes, adaptive customer experiences and, through the ecosystem of people and technology, the potential for breakthrough performance gains,“ concludes Edzard Overbeek, SVP, Cisco Services.

We deliver on Logistics The Rais Hassan Saadi (RHS) Group have been at the very front of the emergence of Dubai as a Shipping and Logistics hub since they started operations in 1910. Now over 100 years later, the company has evolved into the regional powerhouse it is today with diverse interests across the region.

RHS Logistics, the 3PL and supply chain systems integrator, operates from the Middle East, but with a truly global vision. Utilising the latest of technologies, and with a wealth of experience on diversified product handling, in high quality, sophisticated environments, it has cemented its status as an innovative market leader within the Logistics industry.

With cutting edge facilities in Dubai World Central, Jebel Ali Free Zone, Dubai Airport free Zone adjacent to the Sea and Air ports, housing a total of 100,000 pallet locations, RHS have and will continue to invest in first class infrastructure, ensuring they remain leaders in their field.

How can RHS Logistics help your Logistics business?

Call us on (971-4) 8810007, (971-4) 8082300 or visit rhslogistics.com

RHS Logistics represents the 3PL division of the RHS Group of companies operating out of Dubai, U.A.E.

RHS Logistics Established 1910

Transport

Commercial Vehicles: Green and Smart Riad Mannan speaks to vehicle manufacturers about the latest smart innovations to hit the road

S

o long as the majority of logistics journeys in the Middle East are done by road, the need for costeffective and fuel-efficient commercial vehicles will remain. Indeed, as budgets tighten, fleet managers are constantly looking to utilise vehicles that reduce their cost of transporting goods around the region.

They are also looking for environmentally friendly solutions that

24 | Logistics News ME | April 2016

combine the need for reducing their operating costs at the same time as reducing their overall carbon foot print - lower fuel consumption and lower CO2 emissions.

Fleet operators are seeking out the latest commercial vehicles which can help boost their productivity, allowing them to increase uptime and optimise service and maintenance for the duty cycle.

Ognjen Jovanović, body builder product

manager at Mercedes-Benz Trucks points out that: “Fuel efficiency has been gaining importance over the past years in the Middle East and will continue to do so in future, with customers being more and more focused on achieving lower TCO (Total Cost of Ownership) of their fleets, which among other factors means also improving cost-efficiency and lowering fuel consumption.�

However, what options do fleet

Transport

Lars Erik Forsbergh, President, Volvo Trucks Middle East

customers have to ensure their vehicles are both cost-effective and eco-friendly?

Green Fleets There are many viable solutions to making commercial vehicles more fuel efficient and more “green”, not least of all a macro understanding of the intended transport assignments, driving conditions, correct engine sizes and driver training.

For optimal fuel efficiency, it is crucial that a truck is correctly specified for its intended transport assignments and driving conditions. Avoiding unnecessary maintenance and high fuel costs by specifying the correct driveline would be the best viable solution for making vehicles more fuel efficient.

The type of industry and road conditions determine which model is the most suitable for a given business. Dr. Richard Brown, head of after sales and product management at MAN Truck and Bus Middle East and Africa says: “One of the first considerations for fuel efficiency is the detail of where the vehicle is and what it is doing which will provide fleet managers and owners with the information live from a telematics system and after introduction training, can result in considerable fuel consumption reductions.”

Aerodynamic trucks have also been proven to reduce fuel consumption.

Dr. Richard Brown, Head of After Sales Product Management, MAN Truck & Bus Middle East and Africa FZE

According to Lars Erik Forsbergh, president of Volvo Trucks Middle East.

He explains: “Airflow packages alone can offer impressive aerodynamics and consist of air deflectors on the roof and sides, as well as chassis skirts and side underrun protection, which means a fuel saving potential of up to 5%. By making the right choice from the start, fuel consumption can be lowered by more than 10%.”

Driver training is another viable solutions to making vehicles more fuel efficient. Tests have shown that transport companies can reduce their fuel costs by between five and 10% by training their drivers correctly. Eco-driving is all about awareness and planning. By adopting a number of simple techniques, drivers can contribute to cutting both fuel costs and emissions, while also limiting their own stress and body strain.

Another element of environmentallyfriendly vehicles include aspects like environmental production methods and re-usable materials. Mercedes-Benz uses and exceeds international environmental standards in their production process and 85% of all materials used in the Actros model can be re-used at the end of the vehicle lifecycle.

Transmission Technologies From heavy duty trucks to urban lightweight cargo vans, the commercial

Ognjen Jovanović, Body Builder Product Manager, Mercedes-Benz Trucks, Daimler Commercial Vehicles MENA FZE

vehicles industry has gone through a transformation in the last few decades.

Truck manufacturers have been working to develop engines and vehicles that are more fuel-efficient as they recognise that by reducing fuel consumption, exhaust emissions are also reduced.

To highlight this, Forsbergh adds: “Between 1980 and 2001, engine efficiency and the normal fuel consumption of a Volvo FH12 40 tonne truck on the road have improved by 25%.”

In an effort to reduce total fuel consumption and CO2 emissions of commercial vehicles and to enable engines to operate at optimal efficiency over a wider range of vehicle speeds, manufacturers have been continuously improving transmission efficiency. This includes incorporating a higher number of gears and new technologies such as the dual clutch transmission (DCT) and automated manual transmissions (AMTs).

Truck customers are benefiting from using automated transmissions which are improving the fuel efficiency and also increasing road safety and driver comfort.

Jovanović divulged: “The Mercedes PowerShift gearbox offers solutions which are tailored to the road needs of the operators in the Middle East and has proven to provide maximize fuel efficiency under real operating conditions.”

Logistics News ME | April 2016 | 25

Transport

Volvo’s Forsbergh added, “Our innovative Volvo I-Shift automated manual transmission makes every driver more fuel efficient by ensuring the right shift at the right time. The intelligent electronics constantly monitor factors like road grade, speed, weight, and engine load to help keep the truck in the most fuel-efficient gear possible.”

“We are seeing an increasing demand for automated transmission in all fields of transportation, which has the benefit of removing the gear selection decision from the driver resulting in lower cost of operation and fuel consumption.”

Brown stated.

Dashboard Smart Sensors Emerging senor technologies have also been enhancing fuel efficiencies of commercial vehicles for many years.

Smart sensor applications and state-ofthe-art telematics combine to pave the way for fleet operators to have a more holistic view about a journey - in detail and in real-time. This in turn allows for better and more informed decision making and a reduction in operating and maintenance costs.

Smart sensors in and around trucks can alert fleet managers about tyre wear and tear, driver habits, open doors and maintenance requirements.

26 | Logistics News ME | April 2016

As Jovanović points out: “The fleet operator can drill deep down into areas of driver performance and utilise this tool to train and advise the drivers on good/bad driving styles. Real time feedback on the driving style is provided via FleetBoard on the instrument panel of the truck, so drivers are immediately informed about driving behaviour, such as braking, rolling, acceleration etc. This enables the driver to react and adapt immediately and continuously.”

Integrating intelligent sensors, smart phones and telematic systems can allow fleet owners to achieve even greater operational efficiencies whilst at the same time improve driver safety on the roads.

With regards to Volvo, Forsbergh says: “Our Dynafleet system, also available as a free application for smart phones, helps customers reduce wear and tear whilst increasing safety, and maintaining fuel efficiency.”

Brown adds: “Telematics provide the ability to monitor and respond to individual routes, driver or vehicle reports that are causing increased operational costs immediately. Live data streaming and two way communication with the vehicle empowering fleet operators to act.”

Future applications – Bringing it all together Developing fuel efficient commercial vehicles is clearly a growing and challenging marketplace, but the future looks bright. New, smart technologies seem to lead the way to providing more green vehicles to fleet customers in a more holistic package.

As Forsbergh puts it: “The complete offering includes i-shift technology, airflow package, driver training and transport information systems - and this package promises fuel savings of up to 7%.”

Brown adds: “In-vehicle monitoring technologies, for example axle weight and tire pressure monitoring ensure optimization of payload and maintenance of designed rolling resistance values can also help reduce fuel consumption.

Air pressure management to reduce engine load according to actual power delivery requirements is yet another area that can be addressed with increased technology of the vehicle.”

Jovanović states: “Mercedes-Benz will continue to benchmark in the area of “connectivity” by creating new, highly efficient and open logistical networks, making trucks the data node of this logistics network.”

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Sector Focus

The green supply chain

Celebrating one year in the new Dubai Investment Park head office, 4Corners commercial director, Mike Walden, tells Logistics News ME how the green supply chain is helping to reduce the carbon foot print of food supply by up to 90%

O

ver recent years, the delivery of F&B items from warehouse to restaurant or retail outlets has become highly romanticised with the use of wholesome, whitewashed marketing terms such as “farm to fork”.

As a result, consumers and business partners alike have been largely unaware of the inefficiencies of the industry and the wide-ranging impacts, from congested roads to air pollution.

Behind the scenes, the industry is one based on daily drop offs, using multiple vehicles, which are not always fit for purpose.

Dubai-based food supplier 4Corners has made it a mission over recent years to attempt to reverse these trends, while educating the industry on how to increase efficiency and minimize costs. The firm 28 | Logistics News ME | April 2016

even undertook a six month study with the Emirates Academy of Hospitality Management, in order to develop a greater understanding of procurement and delivery and how the environmental impact of these can be reduced.

Now aiming to re-shape the logistics of food supply across the UAE, the findings of the study were used to create a blueprint for a new warehouse and the wider F&B procurement business, with efficiency at the core of the operation.

The firm relocated to the new facility a little over one year ago and now has data to support the claim that it can reduce the carbon footprint of F&B logistics by 90%.

4Corners commercial director, Mike Walden, says: “Our green supply chain is about doing all the right things to minimize the impact on the environment,

whilst ensuring the business operates as safely and efficiently as possible.

“Our business model can remove 90% of the carbon footprint of the majority of food businesses, or non-food, across the UAE. It is a ‘one stop shop’, one order, one delivery, all products, and we operate our supply chain with all multi-temperature vehicles,” he adds.

Today, as one of only two food distributors in the region to have the ISO 22000 accreditation and a Green Globe certification, 4Corners has received support from across the supply chain and industry.

Walden adds: “The response from customers has been amazing, they literally have to see the facilities and the fact that we are doing a professional job to see we are committed to changing the face of the

Sector Focus

supply chain industry for food in the UAE. “The facility and study behind it take into account so many aspects of the supply chain and there is nothing else like it in the UAE at the moment from a green perspective.” behind the initiative Features in the new warehouse include mobile racking, motion sensor lighting, electric-powered forklifts and electronic coding (see box).

Walden elaborates: “Our new facility fully supports the green initiative from our warehouse management systems driving customer’s electronic ordering right through to night time deliveries; our customers can even see ‘live-stock’ of their products on their phones 24/7.”

Investing a “significant”, albeit undisclosed, sum into the bespoke warehouse, Walden reports that there is “room to grow” in the new facilities and that operations will expand further in future.

With 80 people already on the team and over 5,000 SKUs across ambient, frozen and chilled products, 4Corners has recently signed new contracts with 7-Eleven – the largest convenience store chain in the world with over 56,000 stores, for which 4Corners will supply over 1,800 products – Wendy’s and THEATRE by Rhodes at VOX Cinemas.

Walden adds: “We now have over 20 trucks on the road, but we base our business on efficiency not number of trucks. All our vehicles have electronic tracking, are multi-temperature and operate 24/7, so we maximize vehicle utilisation.”

While this initiative has been successful for 4Corners, Walden is still keen to see further advancements in F&B supply chains introduced by other companies. As detailed in the firm’s mission statement, there is a gap in the market to utilize product sourcing and supply chain expertise to the Middle East.

In addition to the focus on sustainability, Walden and his team have also made it a core business value to bring greater transparency to the F&B supply chain, through more stringent procurement methods and business partnerships based on ethics, rather than favours.

Looking towards the future for both this specific business model, as well as the implications for the wider industry,

“What needs to happen next is the operators who can affect the environment, need to start doing something about it” Walden concludes: “What needs to happen next is the [restaurant] operators who can affect the environment, need to start doing something about it. How many times have you seen 30 or 40 lorries queueing up to get into a hotel to deliver products that could arrive on one vehicle?

“We have professional operators throughout our business, and our highly experienced team of quality assurance and warehousing and distribution executives make sure that our teams are educated on all aspects of the business, at all times.”

Integrating the Green Supply Chain Facilities in the 4Corners warehouse include: • Mobile racking • Motion sensor lighting • Recycled plastic pallets instead of wood • Ec-H20 water cleaning system that uses 70% less water • Euro 4 standard, low-emission, vehicles • Electric heating mats in freezers to prevent ice buildup • Electric forklifts producing zero harmful emissions • Electronic barcoding and goods delivery systems, to remove unnecessary paper from the supply chain

Logistics News ME | April 2016 | 29

Sector Focus

Industry 4.0 for more dynamic delivery Population growth, demographic change and evolving consumer behaviour are among the many factors that present new challenges for logistics operations in the food and beverage industry. It has become obvious that the increasing speed and complexity of logistics processes can only be managed with a high degree of automation. Innovative robot and Industry 4.0 technologies in particular promise outstanding potential for the future, writes FrĂŠdĂŠric Zielinski, GM for Swisslog Middle East LLC, Dubai

I

n the past decades, few industries have undergone changes as dramatic as those in the food and beverage (F&B) industry. One reason is the population explosion in some parts of the world, which has created a surge in demand for food and beverage products.

30 | Logistics News ME | April 2016

Closer to home, this transformation is fueled by something more mundane: people are more consumed by their jobs than ever. A large percentage of the working population simply doesn’t have time to prepare meals from scratch. As a result, more and more people rely on

chilled and frozen products or ready-toeat convenience food.

Other changes are evident on supermarket shelves. Instead of just one type of cheese spread or tomato sauce, there are often dozens of different varieties and flavours. In addition,

Sector Focus

What is Industry 4.0?

Deloitte explains Industry 4.0 as an Internet of things, services, data and people that will transform the future of manufacturing. Commentators use the term Industry 4.0 to refer to a fourth industrial revolution with four main characteristics: 1. The vertical networking of smart production systems, such as smart factories and smart products, and the networking of smart logistics, production and marketing and smart services, with a strong needs-oriented, individualised and customer-specific production operation 2. Horizontal integration by means of a new generation of global value-creation networks, including integration of business partners and customers, and new business and cooperation models across countries and continents 3. Through-engineering throughout the entire value chain, taking in not only the production process but also the end product – that is, the entire product life cycle 4. Acceleration through exponential technologies that, while not really new in terms of their development history, are only now capable of mass-market application as their cost and size have come down (e.g. sensor technology) and their computing power has risen massively.

32 | Logistics News ME | April 2016

shopping habits have undergone a fundamental transformation. Consumers don’t just go to the supermarket to simply grab a few items on their shopping list.

Instead, they want to be inspired, they want to discover new things, and they want to have a large selection of products to choose from.

Fast availability a necessity These developments have a profound impact on the way logistics processes are structured. In the past, F&B companies needed logistics systems that quickly and efficiently moved large quantities of products through their distribution centers. Today things are different.

Keeping pace with the trends towards ever smaller lot sizes and delivery quantities as well as ever faster availability and shorter product life cycles requires systems that are highly automated and flexible.

As a result of partnering with leading food and beverage companies, Swisslog’s automated warehouse logistics solutions have undergone major changes throughout the years. When designing and modernizing logistics and distribution centres, the focus has shifted to developing innovative automated logistics systems which not only optimize throughput but also offer a number of additional performance criteria. This includes maximum flexibility – a key factor in the F&B industry where, driven by cost efficiency efforts, fewer and fewer stores are eager to fill their warehouse far in advance.

This means that the F&B industry needs logistics systems designed to deliver increasingly smaller order quantities on a firm, fixed delivery schedule. In addition, to meet the growing demand for frozen foods, speed-optimised logistics processes must be operational at temperatures below 20°C. Swisslog’s solution portfolio for the F&B industry is tailored to meet these exact requirements.

Innovative technology for the TC segment For Apetito, Germany’s leading frozen food company, Swisslog engineered an innovative logistics and distribution centre.

The 18-aisle carton warehouse is designed for fully automated interaction with a 2,192m² picking and shipping area, both of which are kept at a constant -24°C. Another

special feature of the logistics centre is that the system operates without bins or trays.

Between the warehouse and shipping area, the cartons filled with frozen food travel directly on a special conveyor.

Robot solutions on the rise Many Swisslog customers in the F&B industry already rely on automated guided vehicle (AGV) systems in order to automate transport processes between warehouse and shipping. This means that innovative robot technology is already in use in F&B warehouses. The concept of an Automation Powerhouse as envisioned by Swisslog and robot manufacturer KUKA is taking this idea a major step further: Its defined goal is to deploy up to date Industry 4.0 technologies to make the logistics processes in the F&B industry even more dynamic.

While today most products are still shipped to stores on single-SKU pallets, it is conceivable that in the future loading aids mixed with boxes, trays and plastic containers will become the norm. The reason is that delivering significantly smaller lot sizes to stores is possible only if smaller containers are used.

As a result, the challenge currently being tackled by Swisslog as a provider of intralogistics solutions for the food and beverage industry is to find a way to make order-specific picking in individual containers a reality. AGVs will certainly play an important role in this intralogistics concept. However, it is possible that the AGVs will be accompanied by robots which will handle fully automated picking while the vehicle is en route.

Robot solution for reusable containers Swisslog’s solution portfolio already includes a robot-based picking system for the F&B industry. At the heart of this solution is the StarRobot module, a circular shelving system surrounding a robot, that is primarily used for picking and stacking reusable containers. This innovative solution is a sign of things to come in the near future: Swisslog and KUKA engineers are already working at full speed to meet the growing demand for faster product availability on store shelves using smart and futureproof technologies.

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Cover Story

The Middle East has seen the development of a number of logistics hubs, each seemingly bigger and more high-tech than the last. Riad Mannan analysis the key elements needed to create a hub and asks if the region’s growth can support the mega facilities

T

he GCC has been blessed by geography. By being at the crossroads of international trade between Europe and Asia, the northern gateway to Africa and the southern gateway to China, it can play an important role in the movement of goods throughout the world. Additionally, the region in itself has several thriving domestic markets that international traders want to deliver goods to. These two factors have inspired the growth of regional and global logistics hubs to be located in the major cities of the GCC. While the geographic location, providing access to 2 billion people, is an inherent advantage for GCC logistics hubs, organisations setting up hubs have to consider a range of metrics for successful, long term growth.

Not least of these include macro considerations about current and future trade corridors, population growth, emerging trading partners and the growth of e-commerce. These issues cannot be controlled by operations and investors alike but they are key to establishing a hub which will cater for the needs of the industry well into the next century.

Other non-macro (but no less important) considerations revolve around strategic location, local infrastructure, access to air and sea ports, technology enablers, a skilled workforce, warehouse and storage facilities, low taxes and handling charges, efficient custom processes, and the value-add services they can offer in and around the hub.

These considerations will not only determine if the GCC region can host world class integrated logistics hubs, but if they can be competitive and sustainable going forward.

Changing Lanes The last 30 years have seen dramatic changes in the national economies of the Middle East and beyond. The global population has gone from 5 billion to 7 billion, the value of world merchandise exports rose from $2.03tn to over $19.02tn, trade barriers lowered, cargo movements increased and transport networks expanded. The fall of the Berlin Wall revealed Eastern European countries desperate for modernisation and their peoples in need of modern, quality goods.

China rose as an economic superpower and Asian Tiger economies also emerged as viable marketplaces. African countries came into the global economy with growing needs for goods and services.

Industrialisation, modernisation, urbanisation and globalisation occurred.

Despite the recent recession, the long term view indicates that the global economy has improved in the last 30 years and that has led to an increase in the movement of raw materials and finished products – rising exports and imports.

These changes have driven the supply chain and logistics market over that period and the Middle East, led by the UAE, has become one of the most important hubs in the ensuing changing global trading lanes.

The region played to its strength as a strategic location in the middle of trade routes and developed space to enable the handling of goods at sea and airports.

Over the last 30 years also the region itself has grown from a rural landscape to a city scape, with a large middle class population and increased spending on critical infrastructure, schools, hospitals and oil and gas projects – all of which required an increase in the transportation

Logistics News ME | April 2016 | 35

Cover Story

Khalifa Port, Abu Dhabi

of goods into and around the region – driving the domestic logistic market.

Manufacturers set up their regional headquarters and distribution facilities around the region, attracted by the improving transportation links, modern facilities and skilled workforce. Companies specialising in logistics, transportation, freight handling, warehousing, packaging and supply chain management set up their businesses in the region to meet demands.

In recent years, governments across the region have set up Free Zones with in-built logistics infrastructure, providing competitive reasons for using the air and seaports as stopovers for the transportation of goods globally, reducing the time to customers and making it more cost effective.

The concept of logistics hubs was born.

Growth of regional logistics hubs and spokes The current logistics market is huge. With a market value surpassing $4tn, the size of air and sea cargo shipments have significantly increased over the past few years. Logistics, as an industry, is playing an increasing role in a region determined to diversify from oil and gas revenues as 36 | Logistics News ME | April 2016

demonstrated by the logistics sector contributing around 14% of the UAE’s GDP and around 7% of Bahrain’s GDP. As an example of increasing growth, the Jebel Ali Free Zone (Jafza), the flagship free zone entity of Dubai posted 2.2 million metric tonnes (MT) trade volume in 2014 as against 1.9 million MT in 2013. The Top 120 World Container Ports ranking listed Khalifa Port Container Terminal in Abu Dhabi as the third fastest growing container port in the world and the fastest growing port in the Middle East, based on its 26% volume growth in 2014 compared with 2013. Mega events such as the Expo Dubai 2020 and World Cup in Qatar will continue to present tremendous opportunities for the logistics sector and call for logistics hubs to be developed around the region.

It is important to note that there are several kinds of logistics hubs – ones that cater for global trade, ones that cater for regional and inter-regional trade and ones that only cater for logistics demands of a specific verticals – like oil and gas, retail or manufacturing. They also vary in size and capacity handling facilities from small to global standards.

Even though GCC governments have already, and continue to, pave the way for interconnected transport links and facilities to create logistics hubs around the region, there are some key elements to creating a highly efficient logistics hub.

Location, location, location One of the most critical success factors for any logistics hub is the strategic location of it. This may be an obvious statement, but they need to be located as close as possible to airports, seaports, quality road networks and railway terminals.

Global hubs need to be located close to high-quality transport links – like Al Maktoum or Doha International airports and sea ports like Jebil Ali and King Abdulla Economic City – as well as good road networks. For example the recent decision by Al Futtaim Group to build a logistics and distribution facility at the King Abdullah Economic City is predicated on the fact that it is on the Red Sea coast not only offering expansion into Saudi Arabia and the wider GCC via road networks but to international destinations via the sea port.

Whilst currently there are only a few

Cover Story

locations around the region that can handle global bulk cargo movements through a logistics hub, as new airports and sea ports are built and developed, more options will become available.

Abu Dhabi Ports is the master developer, operator and manager of ports and Khalifa Industrial Zone (Kizad) in the UAE, and its ten non-oil ports. Kizad has helped Abu Dhabi to develop itself as one of the premier logistic hubs in the region.

Captain Mohamed Juma Al Shamisi, CEO at Abu Dhabi Ports says: “Kizad, the integrated trade and industrial hub of Abu Dhabi, is located adjacent to Khalifa Port – one of the most technologically advanced ports in the world and the first semiautomated container port in the region.”

In Dubai, logistics has become one of the most important industries in Jafza due to its strategic location between the Jebel Ali Port and Al Maktoum International Airport. Jafza is home to 294 companies from 28 countries that mainly reach the Middle East and Africa region, West Asia, CIS and Indian Subcontinent. To reinforce this, HE Sultan Ahmed Bin Sulayem, chairperson of DP World and of the Ports, Customs and Free Zone Corporation (PCFC) said at a recent forum held for JAFZA customers: “The transport and logistics sector in the UAE is supported by its strategic location, infrastructure of global standards and the absence of bureaucratic procedures. These factors have played a crucial role in the development of this sector.”

Add to this mix the planned 2,100km GCC railway. Even though the current construction delays mean that freight operations could be some years away, the railway will eventually link existing air and seaports to currently under-utilised sites across the region – providing even more location options for hub operators.

“The planned railway linking GCC network is also expected to add a new dimension to regional transport network.

This will have a strong impact on the existing players in the logistics sector. The interconnectivity with Saudi Arabia, the largest market, with ease of online customs processing and competitive pricing with high frequency sea and air services, make Jafza a natural logistics hub,” Bin Sulayem added.

Regional hubs have the advantage of not needing to be close to international transport hubs but at the same time they do need to be close to reliable corridors

“Kizad, the integrated trade and industrial hub of Abu Dhabi, is located adjacent to Khalifa Port – one of the most technologically advanced ports in the world and the first semi-automated container port in the region.”

Captain Mohamed Juma Al Shamisi, CEO at Abu Dhabi Ports that cater to the local marketplace. This may mean more land-based transport via a local or regional road network and smaller regional airports. Vertical hubs, be they global or regional, also have to be closer to their centres of delivery, i.e. near oil and gas centre or retail manufacturing centres.

Creating modern facilities for clients A related consideration to the location of the hub is the existing and future logistics infrastructure and state-ofthe-art facilities. In order to entice companies to invest in and use the logistics hub, operators need to provide value-add functionality which caters to the long-term demands of clients. In addition to the basic cargo handling capabilities, this may also include enough land to grow the hub, chilled storage, warehouse, bulk handling facilities, distribution centres and residential and related service buildings for retail, banking and even healthcare facilities.

The Industrial Valley within the King Abdullah Economic City (KAEC) is one of the fastest growing logistics and manufacturing hubs in the Middle East, offering a wide range of plot sizes ranging from 5,000 sqm to 500,000 sqm and a

dedicated area specifically planned to meet the needs of the logistics industry. The Industrial Valley has already attracted a number of major logistics tenants including third-party logistics companies such as Aramex. Tenants are attracted by the city’s ability to offer a comprehensive, tailor-made solution including flexible plot size and share, commercial office space, worker and executive accommodation and talent support.

The fact that the city is also able to offer a comprehensive array of residential accommodation options is a key differentiator.

KAEC can provide accommodation for every budget, from worker accommodation in The Village through to entry-level homes in al Shurooq and Al Waha and executive accommodation in the Al Talah Gardens, Al Murooj and Bay La Sun communities. The city also has world class education, professional and executive development facilities and state of the art healthcare to make the city a complete environment to live, work and play.

Therefore, whilst location is a key factor, the facilities offered at a logistics hub is no less important. Providing endto-end, value-added supply chain capabilities which imbued norms of a business hub can make the logistic hub very attractive to customers.

Custom and service centres Another important element of any successful logistics hub are the services offered, particularly the customs clearance and brokerage services which facilitate smooth cargo flows. As logistics customers place ever more complex demands, hub operators need to respond, in collaboration with customs authorities, with services that reduce transport time whilst easing business transactions and lowering costs.

Dubai Customs recently called for streamlined trade corridors across the region which would allow trucks to move without barriers but still ensure security and stop illegal trade. Essential to this is the cooperation between customs and noncustoms organisations to streamline formalities and utilise technology to share information across borders to allow for control and inspection.

King Abdullah Port offers a Smart Gate system, integrated with the Port Community system and the Terminal Gate systems to improve operational efficiency Port. The Smart Gate system is also

Cover Story

“The transport and logistics sector in the UAE is supported by its strategic location, infrastructure of global standards and the absence of bureaucratic procedures. These factors have played a crucial role in the development of this sector” HE Sultan Ahmed Bin Sulayem, chairperson of DP World and of the Ports, Customs and Free Zone Corporation (PCFC)

integrated with security and operational processes, creating a more efficient interface between King Abdullah Port gate operations and government bodies such as Customs and Coast Guard.

The Smart Gate system automates security functions, authenticating the identity of the driver, vehicle and cargo, reducing or eliminating the need for human intervention. It also significantly reduces the time needed to handle trucks at the Port gate and speeds up turnaround time in the Port, helping the terminal operator improve productivity.

The integrated services of Khalifa Port and Kizad also offer great opportunities, and long-term competitive commercial advantages, including exceptional supply chain efficiencies to the clients. The access to markets, world-class infrastructure and dedicated investor support offered by Kizad, have already attracted investors from across the globe.

Al Shamisi comments: “The industrial zone has the capability and facilities to host the technologically advanced projects and many businesses have already utilised this opportunity.

Abu Dhabi Ports’ collaboration with Abu Dhabi Customs 38 | Logistics News ME | April 2016

ensures smooth customs clearance for cargo at all ports. Looking at upcoming plans, it has the potential to meet future demands of the industrial and logistics sectors in the Emirate.”

Innovation and state-of-the-art technology In addition to the location, physical infrastructure, facilities and services offered, a logistics hub eco-system must also have strong ICT (information, communications and technology) infrastructure. This should be “futureproofed” as much as possible as the flow of mission critical information and the speed of hub through-put is a key success factor for many clients. Moreover as the traditional supply chain becomes the e-supply chain, so the logistics hubs will have to become e-logistics hubs. As such, the use of technology will become a key differentiator for hubs competing for customers.

A robust network of wireless, fibre cables, hardware and software will need to be in place to enable the sharing of information on an instantaneous basis.

Technologies used to optimise the

warehouse and transportation management systems within and without the logistics hubs will become the norm. In an ever increasing global logistics marketplace, innovative cloudbased technologies will be a game changer for operators and customers alike – one has to invest in it so that the other can take advantage of it.

Solutions which provide greater transparency of cargo movements in realtime and allow hub operators to optimise traffic and goods throughput will continue to drive hub innovations. For example, smart x-ray applications must be in place to enable the examination and inspection of cargo and container through-put with the least amount of disruption and delay.

Indeed, hub operators can use automated processes to provide customers with customised solutions creating efficiencies within the hub and reducing the waiting times for cargo and therefore speeding up through-put, reducing costs at the same time.

The King Abdullah Port Community System is an open electronic platform that enables intelligent and secure exchange of information. Operators can use the Port

Cover Story

Jebel Ali Freezone, Dubai

Community system to book container pickup/delivery appointments, connecting with the Smart Gate system to save time and increase efficiency.

Fully mobile enabled, the system allows users to access information on a wide range of operational data including vessel movements, information on hazardous cargo, container status and consignment events among others.

For Abu Dhabi Ports, Al Shamisi comments: “We have prioritised innovation, the deployment of advanced port technology, and well-planned expansion of infrastructure to keep up with the rising throughput at all our ports. We have ensured that our innovative systems would always keep pace with the fast growing trade volumes.”

Maqta Gateway – the first purpose built Port Community System (PCS) in the Emirates – developed by Abu Dhabi Ports, will transform the port operations. The system offers shipping lines, shipping agents, customs agents, terminal operators and other government agencies a single point-of-access and real-time information across a wide range of services. With the beginning of initial trial operations

following the successful completion of Stage-1 of the overall project development, Maqta Gateway will start full operations from this year.

The implementation of Jade’s terminal operating system, Master Terminal, is set to bring productivity gains of 15 to 20%.

Already implemented at Zayed Port, Khalifa Port and Musaffah Port, the new system will be deployed in five of Abu Dhabi’s ports providing more accurate cargo information before vessel arrival to plan operations well in advance.

Container stacking is another area of innovation that can increase capacity. The overall stacking capacity at Khalifa Port’s container yard for example is expected to increase by 40%.

Future drivers: e-Commerce As the global and regional retail consumer leads the way to buying more items online, so the companies involved in fulfilment will be charged with having efficient processes to deliver on-time. This is true not only for the retailer and logistics companies involved but for the logistics hubs themselves, who will play an important role in bridging the first and final miles.

According to eMarketer, global e-commerce trade is around $1.5tn and is expected to grow exponentially over the next few years with more mobile and tablet purchases going forward. The GCC region will play an important part in that growth.

While the majority of those online purchases are for items like tickets for flights, concerts and accommodation, there is increasing use of the internet to buy physical items like clothes, bulk stationary and even furniture.

The logistics hubs have to modify their offerings in the warehouse and distribution capabilities to match this growing demand for “e-commerce packages”.

As Bin Sulayem stated at the forum: “The logistics industry is rich with new opportunities and a promising future in the long-term due to the increasing intraregional trade and the spread of e-commerce. We attribute this to the incentives and services that Jafza provides; most notably the Logistics Corridor which links sea, land and air. The corridor links Jafza with Jebel Ali Port and Al Maktoum International Airport; thus supporting companies in shipping goods between the port and the airport in record time.”

Increasing competition Different logistics hubs around the GCC are competing to offer cost-effective, fast and reliable options to regional and global customers. The rise of multi-modal global hubs where all of the above elements come together and provide customers with an integrated approach to the movement of large cargo and small packages will increase competition throughout the region. The national and vertical hubs will also face increased competition to provide logistics solutions to an ever demanding customer delivering goods across the region.

King Abdullah Port is already one of the largest facilities on the Red Sea, with a capacity of 3 million TEUs (Twenty Foot Equivalent Units). By the end of the 2016 the port will have a container capacity of 4.5 million TEUs, a ro-ro capacity of 300,000 CEUs and a bulk capacity of 3 million tons, making it a logistics port for container and vehicle freight into the Kingdom and the wider GCC. There are several who are well placed to fulfil the role and more are coming on stream. There have been suggestions that the GCC can’t host many more major logistics hubs, but as long as there is global trade and e-commerce, there will always be a need for hubs that can provide efficient handling of cargo.

FACE TO FACE

THE SUPPLY CHAIN MASTER This month, Brian Cartwright, regional MD for Logistics Executive meets Ingo Kloepper, CEO Middle East area , for Damco to talk competitive supply chains and big data

T

his month I caught up with Ingo Kloepper, CEO, MEA for Damco.

Ingo has been living and working in MEA since 2007 and is an expert in logistics, particularly ocean freight related supply chain management.

He joined Damco in July 2015 having had a long and successful career with another major multinational 3PL. He has already made an impressive impact at Damco since taking on responsibility for their MEA regional business. So I was very interested to meet with him and ask his opinions on the current state of the supply chain in this market and to try to understand just what he is doing to make

his business the edge on the competition.

WHAT IN YOUR OPINION IS A MAJOR AREA THAT COMPANIES STRUGGLE WITH IN THEIR SUPPLY CHAINS ACROSS MEA? I have personally spent eight years in this fast-growing market, and this has repeatedly shown me that our greatest challenge across the industry is limited or incorrect visibility of the full supply chain. There is always a sense that one doesn’t have all the information at hand to make an informed decision at a given time. Limited supply chain visibility, incorrect documentation and delayed receipt of documentation in turn lead to delays and demurrages as well as stock-outs and failure to meet end-customer requirements. This ‘waste’ across the supply chain will 40 | Logistics News ME | April 2016

often add up to millions of Dollars.

Many companies still struggle with purchase order visibility, and this is an area that Damco continues to lead the industry. Turning to documentation, it must be remembered that physical documents are still the preferred mode across the Middle East countries.

Damco has learnt to provide both the e-document as well as the hard paper document, and our e-document capability is arguably the best in the market, and has helped us and our customers tackle this challenge.

WHAT CAN COMPANIES DO TO BETTER STREAMLINE THEIR SUPPLY CHAIN IN ORDER TO DIFFERENTIATE THEMSELVES FROM THEIR COMPETITORS? Increase supply chain visibility, make informed decisions and ultimately take waste out of their supply chains. Making use of a visibility platform alone will not create the desired value as these platforms do not validate or ‘manage’ data – and importantly - do not act or make decisions upon the data that is provided. Companies will still need a service provider, who provides these and many more services. Damco has been involved in supply chain management for more than 20 years, whereas most of our competitors have only added similar activities in recent years. Supply chain management is Damco’s DNA and in

management, inventory management, documentation management, business process management, load and package optimisation and supply chain modeling to name a few.

WHAT WOULD YOU SAY ARE THE MAJOR CHOKE POINTS WHEN MOVING GOODS ACROSS THE GCC COUNTRIES? The six GCC countries move significant volumes of cargo between them. Three major choke points stand out. One, most GCC countries have complex and manual customs clearance procedures.

Second, congested customs borders, and thirdly, there is a limited number of qualified service providers. These three bottlenecks when combined have a significant impact on supply chain and inventory costs. Damco has been operating in the Middle East for many years, and we are constantly advising our clients on the status and requirements of various customs borders, and subsequently any required changes mode if one of them becomes congested.

BIG DATA IS BEING A TALKED ABOUT A LOT LATELY BUT HOW WILL THIS HELP YOU TO BETTER SUPPORT YOUR CLIENTS? Damco will better serve the clients out of the combination of Big Data and our exceptional people. Big Data, advanced analytics and prediction methods make us aware of untapped potentials in the

FACE TO FACE

supply chain, about potential risks towards the critical parts of the value chain of our clients. The combination with our highly skilled people puts Damco into the unique position to design the most robust supply chain, to have proactive supply chain management in place, to react when needed and by that limiting the impact of disruptions and take the customer on a journey to improve the supply chain day by day.

The world is changing fast and the best support for our clients lies in agility, time to market and the capability to reinvent the optimal supply chain every day. Big data is the key enabler for such a journey.

ARE COMPANIES ASKING TOO Not at all. We are professionals in organising and managing global supply chains, taking care of millions of containers across the globe, hundreds of thousands of tons of airfreight, hundreds of thousands of truck loads as well as managing complex logistics operations in warehouses or container freight stations around the globe. It is what we do and we do it well. We are experts in this, and we welcome companies asking for more from their 3PL partners.

ARE YOUR RELATIONSHIPS WITH CLIENTS COLLABORATIVE OR GENERALLY SERVICE PROVIDER VS CUSTOMER? Definitely collaborative. We value our client relationships and have worked to

BRIAN CARTWRIGHT

Brian Cartwright is the Managing Director, Middle East and Africa for Logistics Executive Group, he has partnered exclusively with Logistics News to run a series of interviews with senior executives to uncover the facts and provide real time insight on what’s happening in the SC & Logistics sector across the region.

As a respected thought leader with extensive networks and knowledge of the Supply Chain & Logistics sector, he’s the ideal person to get the inside word on behalf of Logistics News.

nurture strong key account management proficiency. We are extremely proud that we have been able to work together with our customers to develop and improve their business – and our market-leading retention and customer satisfaction

results reinforce this. Our focus with our customers is to see them as business partners, and it is therefore in our best interests to see them achieve growth.

WHAT OTHER AREAS OF THE SUPPLY CHAIN DO YOU THINK COULD BE HANDLED MORE EFFICIENTLY? One of the biggest challenges that many companies face are conflicting priorities and objectives internally within their supply chain. For example, buyers are often measured solely on their purchase cost and they may ignore the impact on the rest of the supply chain – this may manifest in large bulk orders being placed on suppliers. The knockon impact of this will then hurt the warehousing team – who may be stuck with excess stock for many months, logistics managers - who may end up with under-utilized containers and product moving from non-focus origins, and finance managers – who may feel the pinch on their cash flow. This silothinking normally results in sub-optimal performance for the company as a whole.

Damco has worked with our partners to measure the total cost and impact of decisions being made up-stream in the supply chain. We jointly come up with more balanced scorecards for teams, and focus on helping educate and potentially actors within the supply chain. We have minimised losses in working this way.

Logistics News ME | April 2016 | 41

Country Focus

Thinking

Big

Major investment in transport and logistics infrastructure holds the key to diversifying Qatar’s economy as the FIFA World Cup 2022 approaches. Jason O’Connell writes.

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n 21 November 2022, the eyes of the world will turn to the tiny emirate of Qatar as it becomes the first Arab nation to host the FIFA World Cup, the greatest sporting spectacle on earth. Though there are still more than six years to go until a football is kicked, the sheer scale of this event is driving robust economic growth in Qatar just as a slide in oil prices has threatened to put the brakes on progress elsewhere in the Middle East.

The country’s 2016 budget estimates 42 | Logistics News ME | April 2016

revenues of $42.9bn, well below $62bn in 2015, yet total spending for the fiscal period will fall by less than $5bn to $55.6bn this year. As far as Qatar is concerned it’s full steam ahead with its ambitious mid-term goals.

Alongside the obvious investments in stadiums and a 400% expansion in the number of hotel rooms to accommodate the estimated 1 million visitors that are expected to descend on Qatar for the World Cup, the country is investing billions of dollars in huge projects such as

airports, ports, railways and roads.

Government spending on infrastructure has risen from 14% to around 25% of the budget with a strong emphasis on transportation infrastructure which will receive an injection of $140bn over the five years through 2020.

“Qatar has made significant progress in developing its logistics infrastructure in recent years in line with its overall strategic vision, QNV 2030,” says Sam Achampong, GM of The Chartered Institute of Procurement and Supply

Country Focus

(CIPS) MENA. “In addition to the recently completed Hamad International Airport, ongoing development of road infrastructure and a major rail infrastructure project, other examples such as Lusail City and Mesaieed have led to an estimated increase of 35% of development in this area.”

Hamad International Airport (HIA) opened to much fanfare in May 2014, giving Doha the capacity to handle 30 million passengers per year compared to 14 million previously and 1.4 million tonnes of cargo per year. The $15bn project’s existing passenger terminal will soon be expanded to handle 53 million passengers per year by 2020, with an enlarged main building to make room for more check in areas while the addition of two new concourses (D and E) will eventually add 24 new gates. Close to the airport there are plans to build Airport City, a 10m-sq-metre development organised into four zones – including a Logistics District.

Qatar Rail is overseeing construction of an integrated rail network, comprising the Doha Metro as well as the Lusail Light Rail Transit (LRT) and a long distance railway line to connect with Saudi Arabia and onwards to the rest of the GCC. The first phase of the metro is set to be operational in 2019 with three lines and a total of 37 stations. The second phase involving another line entirely underground should be complete in 2026 bringing the total number of metro stations to 100.

Meanwhile, construction is progressing on Lusail City’s LRT system which will comprise four lines totalling some 33km of track and 30 stations. The first three phases of construction have already been completed with the remaining two phases expected to be concluded in January 2019 and June 2020, respectively. The LRT system will be integrated with the Qatar National Railway network, and will also connect to the Doha Metro at its Pearl City station.

A new long-distance passenger and freight railway will link major urban and industrial centres in Qatar to Saudi Arabia and the larger GCC-wide railway system. The Qatar section will consist of five main lines built in four phases with the first consisting of a 140km line to Saudi Arabia. However progress on this

Abdulaziz Mohammed A M Al Sahlawi, GWC Director, Public Relations

project has been slow, not just in Qatar but in the GCC as a whole. The original deadline for completion of a GCC network was 2018 but that now looks highly unlikely with significant work yet to get underway. GCC officials met recently to discuss a more realistic target date for the project but as yet there is no word on the new deadline.

But probably the centrepiece and most critical element of Qatar’s transport and logistics infrastructure is the development of the Hamad Sea Port located in Umm Al Houl near Mesaieed, whose first phase was originally planned to be operational in 2016, but was brought forward and made operational last December. The initial timeline for the completion of the $7.4bn scheme was also brought forwards by a decade – from 2030 to 2020 – on the orders of Qatar’s prime minister.

Meanwhile, the mega project is preparing its second and third container terminal expansion, which will increase the annual handling capacity from 2 million TEUs by the end of 2016 to 6

million TEUs by the year 2020. Tenders for the design contract will be issued soon, and any designs submitted are expected to address three main elements: the shipping terminal, the naval base, and the third Qatar Economic Zone.

Special Economic Zones and Logistics Hubs Integral to these megaprojects as well as the billions of dollars being invested in road networks, is the creation of major logistics hubs and special economic zones. In December the government allocated some 1,654 plots to local companies at a logistics hub covering three separate sites strategically located near Al Wakrah in the south of Qatar close to Hamad Port, Mesaieed Industrial City and the country’s Orbital Highway.

The aim of this hub is to help satisfy the shortage of warehousing and industrial space in Qatar and is particularly targeted at small and medium sized enterprises (SME), the government says.

Companies are expected to invest in excess of $8bn to build a variety of

Country Focus

facilities such as warehousing, showrooms and workshops in the three areas at Al Wakrah, Birkat Al Awamir and Aba Salil. They have until the middle of 2018 to begin operations of their businesses and facilities, the Ministry of Economy and Commerce said last year.

Plots range in size between 1,000m2 to 67,558m2 on 30-year leases starting at QAR40/sqm per year, rising by 5% every three years.

The logistics zone project is operated by state-run Manateq, which is also overseeing the development of Qatar’s Special Economic Zones (SEZ).

“The various projects handled by the Economic Zones Company (Manateq), aim to address Qatar’s needs of logistics infrastructure and economic zones,” says Abdulaziz Al-Sahlawi, director of PR, at Gulf Warehousing Company (GWC). The firm’s footprint in Qatar covers 2 million square meters and includes Logistics Village Qatar, Ras Laffan Logistics Hub and Messaieed Logistics Hub, besides others in the Doha Industrial Area. Its portfolio includes warehousing and distribution centers, open yards, and container yards in addition to maintenance workshops, data centers and staff accommodation.

“Manateq, in cooperation with the 44 | Logistics News ME | April 2016

National Logistics Task Force has been taking swift action to bolster the local economy, most recently by securing QAR 1.8 bn in funding for the logistics areas to be constructed in the south of Wakra.

This is in addition to its previously signed commitments to develop the Jery Al Samur area.

“The aim is to provide the best possible solutions to both the major corporations as well as SMEs and start-ups, the latter in particular are seen as the way forward in the nation’s quest to diversify the country’s economic sectors. The GWC Bu Sulba Warehousing Park is a good example aiming to fulfill a gap in the small and medium enterprises vertical within the logistics arena.”

A special economic zone will be built in Ras Bufontas as a warehousing and logistics hub next to Hamad International Airport. The 4 km2 facility is the smallest of three planned special economic zones, the other two being the 38.5 km2 site in Al Karana and a 33.5km2 site at Um Al Houl near Hamad Port, south of Al Wakrah.

“The construction of the economic zones is the biggest current investment in the logistics sector in the State of Qatar,” explains GWC’s Al-Sahlawi. “The aim of these zones, of course, is to

encourage both the development of Small and Medium Enterprises from within as well as encouraging international direct investment in the country. These projects have therefore had major government support, which sees them as key investments in the nation’s economy.”

With the price of oil having fallen by so much over the past two years, logistics infrastructure is playing a vital part in helping to diversify Qatar’s economy, an effort which is at the heart of the Qatar National Vision 2030.

“With the hydrocarbon industry facing a new reality, it fell upon the nonhydrocarbon industries to make up for the gap, having for the first time surpassed the 50% contribution mark to the GDP of the nation,” says Al-Sahlawi.

“The company is in a strong position to capitalise on the high priority the state is placing on diversifying income sources, and increasing the participation of the private sector in various aspects of economic activity and the overall development of the state.

“The current global trade slow-down can be a challenge toward these mega projects. Nonetheless, the logistics sector will be there to support the country’s initiatives in the short and long-term.”

Vi e w p o i n t

Blooming and Booming: The Pharmaceutical Market in the Gulf Region Melanie Lenhardt, senior consultant, and Mohammed Dayazada, head of performance excellence competence centre, Camelot, write about how a changing situation requires adaption of supply chains in the pharma industry

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ith a projected annual growth rate of 9.2% by 2020 the Gulf Countries are one of the fastest growing pharmaceutical markets in the world. At the same time, the region is battling various challenges such as limited workforce resources, changing regulations as well as limited research and development capabilities.

Local governments, pharma manufacturers and logistics service providers have no alternative but to make decisive changes to their supply chains if they want to capitalise on the significant market opportunities.

This is the result of CAMELOT Management Consultants’ current market report “Blooming and Booming: The Pharmaceutical Market in the Gulf Region�.

The majority of the Gulf Countries, comprising mainly the six GCC states Bahrain, Kuwait, Qatar, UAE, Saudi Arabia and Oman plus Iran, are importers of patented pharmaceutical products, with overall imports contributing around 70 to 85% of total consumption. However, certain markets in the Middle East (e.g.

Jordan, Egypt, and Saudi Arabia) have a generic drugs manufacturing market, which is continually growing along with the changing demographics in the region.

Prevalence of lifestyle diseases such as diabetes and obesity, population growth and rapid urbanisation are just a few reasons why governments of the Gulf Countries are heavily promoting initiatives in the public and private sector to establish an increasingly self-sufficient 46 | Logistics News ME | April 2016

pharmaceutical manufacturing base with the following objectives: Reducing dependency on imports, lowering governmental expenditure on healthcare, providing higher caliber jobs for local citizens, increasing availability and quality of healthcare products and services to the population and the diversification of economy and attraction of foreign direct investments Yet, the local pharmaceutical industry is at a crossroads: limited workforce resources, changing regulations, and limited research and innovative products capabilities are just a few issues the industry is battling in the Gulf Countries.

Consequently, governments, manufacturers and Logistics Service Providers (LSPs) have no alternative but to make decisive changes to their supply chains if they want to successfully overcome these challenges and capitalise on the significant manufacturing and distribution opportunities of this rapidly growing market.

Responding Supply Chain Configurations in GCC States The majority of the GCC pharmaceutical markets are growing at faster rates than in Western Europe and North America, providing opportunities for international companies. Nevertheless, regulatory, economic, and demographic developments create obstacles within the pharmaceutical supply chain which need to be considered before investments into the region are made.

The governments (with regulations and investment in infrastructure),

manufacturers and LSPs are the main stakeholders in the pharmaceutical supply chain with different challenges.

Turning the region into an attractive manufacturing base GCC governments need to attract more foreign investment into the pharmaceutical industry in order to reduce public healthcare costs. The strategy of most GCC states is to reduce oil-dependency by an increasing diversification of the economy. One governmental approach is turning the region into an attractive manufacturing base for national and international companies, which will bring in technological know-how, expertise and resources. GCC governments have established various sponsored incentives schemes as establishment of multiple free zones, beneficial positioning in local and regional governmental tenders and attractive land lease and utility rates, to attract investors for local manufacturing.

For example, Saudi Arabia has a very strong pharmaceutical manufacturing base with 12 major, well-established companies in pharmaceutical clusters in Riyadh, Al Qassim and Jeddah supplying less than a third of the local market. In addition, four major global players including Pfizer and Sanofi have recently completed the construction of production plants within King Abdullah Economic City (KAEC) making it one of the most attractive pharmaceutical clusters for new investors in the region.

However, to capitalise on the economic advantages, the planned pharmaceutical

Vi e w p o i n t

initiatives require a local qualified workforce across different levels, which is currently lacking in the GCC. Several initiatives to reduce this cap and to increase the skill set availability in the pharmaceutical supply chain are taking place, yet at a slow rate.

Logistics infrastructure in the region is moving towards the patient-centric perspective With the empowerment of the pharmaceutical up and downstream manufacturing base in the GCC, several primary and secondary distribution models are present in the region with a trend towards establishing local distribution centers (instead of the traditional distribution model), in which the products are transported from the manufacturer site to a regional logistics hub (e.g. in UAE) before being allocated to the local distributor (e.g. in Oman).

Countries as the UAE and Oman support the establishment of regional logistics hubs. The UAE is seen as a mature market for distribution due to the established governmental initiatives such as free trade zones focusing on logistics, healthcare and manufacturing. In addition, these initiatives are complimented by storage, distribution and manufacturing regulations focusing on quality, safety and security, all of which are important to pharmaceuticals companies.

However, the main challenge is that GCC countries currently cannot be used as distribution hubs for the Saudi market— the largest pharmaceutical market in the GCC—as Saudi health regulations forbid the import of drugs from countries other than the Country of Origin. Therefore, Saudi Arabia is currently not suitable to become a regional distribution hub for pharmaceutical products due to the unavailability of free trade zones which are a crucial requirement as they ensure that no duties are applied on the products until they are received by the final destination.

Nevertheless, over the last four years, the Saudi government has initiated several projects to establish Saudi Arabia as a regional logistics hub for varied industries and improve on the logistics efficiency in the Kingdom. One of the key initiatives is to study the establishment of economic zones in multiple locations with trade, financial and corporate benefits and Logistics News ME | April 2016 | 47

Vi e w p o i n t

About the Authors

Mohammed Dayazada is Head of Performance Excellence Competence Center at CAMELOT Management Consultants MEA and is a regional pharma expert located in Dubai. He gained profound experience within global pharmaceutical companies in the area of supply chain optimization and network design. He had several engagements with governmental institutions to develop pharmaceutical clusters and attract pharmaceutical investors to the region.

Melanie Lenhardt is Senior Consultant at CAMELOT Management Consultants MEA located in Dubai. She gained international consulting and pharma industry experience with focus on supply chain management and planning.

The “Blooming and Booming: The Pharmaceutical Market in the Gulf Region“ study was conducted in cooperation with the Association Supply Chain Management, Purchasing and Logistics (BME), and is available at www.camelot-mc.ae.

48 | Logistics News ME | April 2016

incentives. Another initiative is to revamp the country´s port infrastructure and optimise import and export processes in line with global and regional benchmarks.

Moreover, government-owned industrial city authorities as Royal Commission and MODON are preparing for the upcoming rail connectivity and the establishment of multi-modal logistics hubs across the Kingdom, which will be an enabler for attracting, diversified industries and specialized LSPs. When these initiatives have materialized, Saudi Arabia will capture a significant market share of the pharmaceutical distribution in the GCC and further raise the growth of the pharmaceutical market in the Middle East.

Getting ready for additional value added services by LSPs Increasing cost pressure, regulatory complexity and demand fluctuations require comprehensive modification throughout the pharmaceutical supply chain, which have for years been influenced mainly by the demand for high delivery reliability and high delivery readiness. “Therefore, in the Gulf region, value-added services such as secondary packaging and postponement become increasingly important“, says Mohammed Dayazada, co-author of the study and Competence Center Lead at CAMELOT in Dubai.

Both describe logistics and manufacturing concepts in which a certain level of semi-finished inventory is stored temporarily until a customer order is received, at which point the product is finalized. Within the secondary packaging strategy it is possible to adjust packaging size, leaflets and adding stickers or 2D coding to the product. In comparison, the postponement strategy offers even more customizing and flexibility allowing changes to the product, packaging and labeling at a later stage of the supply chain.

However, beside the benefits from value added services, pharmaceutical manufacturers and LSPs are facing certain obstacles hindering its implementation.

For example, in the GCC postponement strategy is regulated by requiring a Good Manufacturing Practice (GMP) license, which can be difficult to obtain, whereas the regulations behind secondary packaging are changing constantly leading to uncertainties. This means, that only a limited number of LSPs offer these VAS in the GCC. In addition, as VAS are a rather

new offering in the region, the qualification of the workforce and the quality of service has not yet reached a satisfying level.

Therefore, pharmaceutical companies are working closely with LSPs and Health Authorities to close these gaps through knowledge exchange, partnerships and collaborations.

Iranian market will be a game changer in the Middle East region Another key result of the study is that the opening of the Iranian market, which is the world’s 17th biggest economy with a population of 80 million, will be a significant game changer for the region.

“Iran is one of the last untapped pharmaceutical markets in the region.

The Iranian market provides pharmaceutical manufacturers and logistics service providers numerous economic benefits and profitable opportunities“, says Melanie Lenhardt, co-author of the study and Senior Consultant at CAMELOT in Dubai.

With regards to the above mentioned three key components of the pharmaceutical supply chain (manufacturing, distribution and value added services) the question occurs whether Iran offers the right prerequisites to become a leading pharmaceutical market in Middle East. Restrictions on bank payment methods in particular resulted in a shortage of imported drugs and medical equipment. This did lead to the fact, that the existing pharmaceutical companies are out-of-date with less than 5% of the manufacturing plants complying with international standards.

Therefore, the Iranian government announced a new project with the aim to attract foreign direct investments and to highlight the attractiveness of the market: the development of an Industrial Pharmaceutical City on 176 hectares of land only 65km away from Tehran providing benefits including tax exemptions and export facilitation.

In comparison, Saudi Arabia, the largest pharmaceutical market among the GCC states, remains to have restrictive regulations which limit the opportunities for regional distribution and manufacturing. The near future will show whether Saudi Arabia as a rather slowly opening market will offer more attractive opportunities and benefits for investors than the fast opening Iranian market.

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Vi e w p o i n t

The greatest risk in life is to wait for and depend on others for your own security

L

Prakash PK Menon on the value of independence and decisive action

eadership comes with responsibility. This implies taking decisions for yourself and your team. As a leader, people will not only look up to you, but will also depend on you for guidance and assurance. Unless you can meet the needs of your team, they will lose faith in you. Thus a certain degree of self-assurance is needed when you step into the shoes of a leader.

It is when the onus of taking important decisions comes your way that uncertainty and fear begin to hound you. Your judgement gets cloudy and you are no longer sure of yourself. you feel like delegating this task of decision-making to others. However, what you need to remember is that waiting for others and depending on them to take decisions for you is the biggest risk you can take. A leader should never lose complete hold of himself as to put his life in the hands of others. If you are uncertain about the correct course of action, just think about what Brad Henry said: “Believe in yourself and the rest will fall in place. Have faith in your own abilities, work hard and there is nothing you cannot accomplish.”

Hence, you need to be strong and capable to be a good leader. Some ways of achieving this include: • Get rid of self-doubt – Never let self-doubt get the better of you.

Never doubt your abilities or ask if you are good enough. Always keep in mind that you are able, capable and far better than good.

• Consult others – Taking decisions doesn’t mean you steer clear of

50 | Logistics News ME | April 2016

others’ opinions. Consult others, get differing and opposing views just don’t let their views become your perpetual guiding light. Let your own thoughts also have a say.

• Be confident – Sometimes when you are faced with major decisions, your confidence levels tend to sag. Don’t let this happen. Confusion will seep in and you’ll feel others are more capable of taking certain decisions for you. But you shouldn’t succumb to these feelings because as C. Joy Bell C. says: “The only person who can pull me down is myself and I am not going to let myself pull me down.”

• Trust yourself – Whenever

uncertainties come your way, just listen to your conscience. This way you will certainly never falter.

• Be open to taking risks – As a leader, taking risks is part of the job description, so instead of running away from hardships or waiting for relying on others to take a decision for you, take a chance and go with what you believe.

By remembering these things, you will become a leader in the true sense of the term. After all, as Norman V. Peale says: “Without a humble but reasonable confidence in your own powers, you cannot be successful or happy.”

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VIP Interview

Under new management Following his promotion to president and CEO of Globe Express Services, Mustapha Kawam talks to Logistics News ME about management style and the road ahead for the international firm

I

n January 2016, c-suite executives at GES met to plan the firm’s business strategy for the year ahead.

It was the first time that Mustapha Kawam, a 20 year veteran of the company, attended the meeting in the capacity of his relatively new role of president and CEO, following his promotion to the top position in June 2015.

The meeting was attended by 34 GES executives and, in light of recent news announcements from the company (see box), they had much to plan.

Over recent months, GES has been presented with a platinum award from Maersk Line for the fifth consecutive year, opened new offices in Turkey and India and made more than one senior appointment.

What the rest of 2016 could have in store is anybody’s guess.

Kawam says the annual brainstorming session saw the establishment of a business plan “based on market demand that will effectively address the needs of regional and international customers in line with global standards”, through an agenda discussing talent, engagement, leadership, executive intelligence, and global strategy.

He continues: “It helped in the integration of the broad strategies of individual business units with support functions such as planning and budgeting.

“The meeting also revealed useful insights on how to drive business performance by unlocking workforce potential through transformational employee engagement and collaborating with senior-ranking employees to discover innovative and forward-

52 | Logistics News ME | April 2016

thinking schemes to take GES to the next level,” he said.

And it is with this staunch focus on the people, rather than the systems, which run the company that Kawam’s management style comes into focus.

Rising through the ranks from the sales department to the corner office, such stories are still quite rare in management circles.

Kawam takes the helm of Globe Express Services after working for the company for 20 years.

In a statement announcing the promotion, GES said his top three immediate agendas are aimed at maximizing industry opportunities and sustaining GES’ global success. The top most priority is to raise employee engagement as according to him, without a talented, engaged and properly motivated workforce, achieving progress against any of the challenges is impossible.

He also believes, promoting a culture of integrity and trustworthiness throughout the organisation is one fundamental imperative.

He comments: “I am grateful to have enjoyed a steady and successful growth during my time with GES. The road for the past 20 years has not been easy, it has been paved with challenges and adversities, all of which have led me to where I am today.

“Dedication, perseverance and passion played crucial roles in the many milestones I have achieved over the years. However, I am thoroughly grateful for the commitment of my team as well as the culture within GES which has always embraced talented people

VIP Interview

“Throughout my colourful career expansion the most challenging thing has been to not only maintain the same level of performance but also to go beyond and create new benchmarks of excellence” - Mustapha Kawam and provided a conducive environment for people to thrive.”

That doesn’t mean to say the road was a smooth one.

Reflecting on the last two decades, he adds: “Throughout my colorful career expansion, the most challenging thing has been to not only maintain the same level of performance but also to go beyond and create new benchmarks of excellence.”

On the immediate to do list is the maintenance of customer satisfaction and the steady expansion of GES’ business to create new opportunities and establish a positive work environment for all employees.

These themes, prevalent in the annual strategy meeting, give a strong indication of the people-centric leadership style Kawam has adopted.

A man who is focused on “driving business performance by unlocking workforce potential through transformational employee engagement”, he explains: “A team will be dedicated to this task, and they will be responsible for managing and developing a business plan for GES that will emphasise employee ownership and initiative.”

And it isn’t just a determination to cultivate other team memebers within their current roles that defines Kawam’s focus, but the hope that many of those team members can be nurtured into senior roles themselves – providing they have what it takes.

“Passion is a key factor. Aspiring executives should thoroughly apply themselves towards everything that they do within a well-structured organisation as it would allow them to meet their respective goals and achieve the career that they desire.”

New horizons Over recent months GES has opened new offices in Turkey and India, expanded its

LAX warehouse facilities and strengthened releation with Swiss customs authorities to centralise inhouse customs clearance capabilities, regardless of the Swiss border involved with the cargo transit.

The company has grown to currently operate from 56 offices established in 20 countries since the beginning of its operations in 1974 and today, in addition to Turkey and India, there are eyes on Africa and Latin America.

The opening of new branches is part of GES’s expansion strategy into new territories as a multinational organization to cater to the growing demand for logistics worldwide.

“We believe that Africa has strong potential as a lucrative market which we would like to explore in the coming years as part of our strategic expansion plans.

We would also like to enhance our presence in Latin America which we have not developed yet as thoroughly as we would want to.”

In Turkey, which wasn’t traditionally touted as the “next big thing” in logistics circles, GES joins a growing number of global players coming to Turkey’s shores due to the country’s economic growth potential and strategic geographic location. In its bid to become a leading logistics hub in the world and one of the top 10 global economies by 2023, the country has been opening up rail and coastal freight and international highway corridors to support the movement of a greater volume of traffic between neighbouring countries.

According to an industry study, the local sector is expected to be worth between $108 and $140bn by 2017.

Kawam elaborates: “We have maintained good relations with Turkey for several years now and we have developed a strong base and following thanks to a solid human resources

In the hotseat: Mustapha Kawam

Kawam joined Globe Express Services in 1995 and has held a wide range of leadership positions in the company. Since 2009, he has served as Managing Director – Gulf States at Globe Express Services.

Kawam takes the helm of Globe Express Services after working for the company for 20 years. Following his appointment, he has set his top three immediate agendas aimed at maximizing industry opportunities and sustaining GES’ global success.

The top most priority is to raise employee engagement as according to him, without a talented, engaged and properly motivated workforce, achieving progress against any of the challenges is impossible. He also believes, promoting a culture of integrity and trustworthiness throughout the organisation is one fundamental imperative.

department and we had already opened an office in Istanbul in 2006. As part of our expansion plans and in order to accommodate our growing needs we also opened a branch in Mersin this year in line with our commitment to provide the same level of service to our customers.”

However, despite the economic promise, Turkey has and continues to, face issues with its security as a result of the war in Syria, with a string of tragic terror attacks over recent months and a new migrant deal with Greece, all adding pressure.

VIP Interview

COMPANY NEWS HIGHLIGHTS • GES Switzerland and Swiss Customs strike new agreement • Globe Express Services hosted meeting of global C-Level Executives in Dubai on business strategies for 2016 • Globe Express Services opens a new office in Mersin, Turkey to reinforce market presence • GES reinforces presence in India with opening of branch in New Delhi • Amy Cottle takes charge as new Senior Executive Administrator to the CEO

Kawam comments: “Turkey is a functioning market economy and its recent economic performance illustrates both the high potential and the continuing imbalances of the economy. Turkey has a strategic location, including on energy security, and plays an important regional role.

Equally, the EU remains an important anchor for Turkey’s economic and political reforms.

“Our move to open a new office reflects our commitment to strengthen our ties with the business community in Turkey.”

In India, a new office opened in the capital Delhi, adding to the existing premises in Mumbai.

The move, which proves to be timely and strategic, falls in line with GES’ strategic plans and comes as a result of the company’s complementing industry forecasts that India’s logistics market will experience 12.17% CAGR by 2020 as a result of the boom in the manufacturing, retail, fast-moving consumer goods and e-commerce sectors.

On this, Kawam was quoted in a release from the company as saying: “The New Delhi branch will help integrate the country seamlessly into our international network. We are upbeat that it will drive in growth of the company while addressing the demand for specialised logistics service providers in the North India.”

54 | Logistics News ME | April 2016

Gaining ground The achievements and future ambitions are set against a backdrop of growing trade and enhanced global connectivity driving business opportunities. But on the flip side, There has been a level of turbulence in the market recently.

So what is Kawam’s greatest short term concern?

“The freight industry has always been marked by its ever-evolving dynamics.

As such, this requires ongoing progress and development to accommodate changing needs.”

As for the rest of 2016, when the year began predictions from the most prominent industry commentators indicated this would be a year driven by the disappearance of the “tech gap”, as omnichannel logistics remains a leading trend.

They predicted warehouse automation, AI – reaching as far as automated vehicles – and cloud computing would also redefine the boundaries.

The environment will move ever loser to centre stage as more than 50% of Global 1000 logistics organisations will be required to systematically report verified emissions and environmental data.

Gartner named environmental issues, risk and compliance, international flow optimisation and supply chain execution convergence as the key trends to 2020 and in Kawam’s opinion, the coming months

• Globe Express Services appoints Poonam Datta as the new Chief Commercial Officer

About GES Globe Express Services is a fullservice, global logistics services provider. Out-of-gauge services are a core offering of the company’s Project Logistics and Management portfolio. Through its Logistics and Compliance Consulting division, GES offers expertise in creative warehouse design, distribution, supply chain execution and material handling solutions for leading retail, wholesale, and consumer product manufacturing companies. The company’s consultancy service also covers selection and implementation of supply chain execution software, including comprehensive systems for warehouse, asset, transportation, yard and labour management.

will be dominated by technology and value-added services, as he predicts: “This will be evident in the emergence of new applications and programs that will help streamline the operations of companies within the industry.”

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Case Study

Dubai Airport Freezone As DAFZA announces its financial results for 2015, Logistics News ME takes a look at its performance highlights

T

he Dubai Airport Freezone Authority (DAFZA) posted yet another banner year in 2015, achieving an impressive total revenue growth of 7 % and total assets growth of 3 %.

As a gateway connecting the emerging markets in Middle East and Africa, the Freezone grew its number of registered companies by 22 %, with multinational companies in particular rising 9 % as reflected by the growth of new sales revenue by 18 %. The share of GCC and Middle Eastern companies in DAFZA reached 40 %, followed by American and European companies at 36 % and Asian companies at 18 %. The share of companies from other parts of the world collectively reached 6 %.

Reflecting the resurgence of Dubai’s business environment, DAFZA witnessed higher demand for its office packages due to various factors, such as sustained economic growth and eager anticipation over global prospects related to the upcoming 2020 Dubai World Expo.

According to official 2015 statistics, leasable office spaces across the Freezone increased by 11 % over 2014.

Ambitious Strategic Initiatives for Sustainable Growth in the Future DAFZA is developing its Strategic Plan 2017-2021 which will bring added value 56 | Logistics News ME | April 2016

to accomplishments that have placed it amongst the most innovative and competitive free zones in the world. In line with its endeavors to develop a strategy that helps meet future requirements and supports economic diversification policies, DAFZA is currently studying macroeconomic and environmental factors to arrive at a dynamic yet sustainable strategy for 2017 – 2021 aligned with the Dubai 2021 Plan aiming at making Dubai “A Pivotal Hub in the Global Economy.”

Execution: • Add new sectors in order to attract leading companies from the Islamic economic sectors in support of the ‘Dubai - Capital of Islamic Economy’ initiative.

• Enhance efforts to contribute to the ‘UAE Beyond Oil Strategy’ and the positive impact in building a knowledge-based economy driven by technology and innovations.

• Conduct extensive Sales Forecasting and Market Intelligence Studies to ensure it sustains and even exceeds the growth it has achieved over the past five years.

• Pillars to create investment: world-class infrastructure, investment incentives, tax exemptions, and exceptional facilitates.

Awards & Recognitions DAFZA received a number of awards and recognitions last year, including: • “Free Zone Authorities Customer Care Excellence Award” - Middle East Excellence Award Institution • “Emirates Energy Award” - Supreme Council of Energy • “Finance Team of the Year” Excellence Award - Middle East CFO Alliance • “IMA Finance Team of the Year 2015” - IMA, The Association of Accountants and Financial Professionals in Business • Hamdan Bin Mohammed for Smart Government’s “Best Innovation Team” and “Best Innovation Leader” Awards – shortlisted by Executive Council • Superbrands award for the advertising campaign 2015 Innovation in 2015 DAFZA launched its ambitious Innovation strategy during the inaugural UAE Innovation Week held in November 2015, in line with H.H. Sheikh Khalifa bin Zayed Al Nahyan, UAE President’s declaration of 2015 as the ‘Year of Innovation’.

DAFZA’s innovation strategy has three distinct goals: the delivery of value-added best-in-class innovative solutions, the adoption of working styles that inspire

Case Study

Dr. Mohammed Al Zarooni

creative behaviours across the organization, and alignment with and active contribution to the UAE’s National Agenda through innovation.

Execution The strategy focuses on the six key executable Innovation Enablers of Process, Technologies, Governance, Skills, Capabilities and the Culture.

As part of the strategy, the Freezone will set up a dedicated DAFZA Innovation Unit (DIU), embedding and stimulating an innovative work style to adopt ambitious development and implementation plans that ensure the provision of creative services, achieve the objectives of expansion plans, and cultivate a culture of innovation within DAFZA’s operations.

Development and expansion projects To meet the growing demand of regional, international and multinational companies, the Dubai Airport Freezone Authority has launched “DAFZA Square”, a project of over 33,000m² that complies with Leadership in Energy and Environmental Design (LEED)

requirements developed by the US Green Building Council.

The project consists of two office towers with 41 stores, a food court, cafes, a supermarket, a pharmacy, exchange houses, a travel agency, a gym, a business center and branches of Emirates Post, Etisalat and Du. It also includes a multi-purpose auditorium that can accommodate around 250 persons and other additional services.

As part of the expansion plan adopted

by DAFZA to enhance its capabilities and keep pace with the growing demand for multiple services and solutions, the construction of an office building on an area of 10,000 m² was initiated right in the heart of the free zone. The building will house a group of strategic partners to provide a range of premium government services under one roof. The project is scheduled to be completed during the first quarter of 2017.

Smart transformation is at the forefront of accomplishment Among DAFZA’s ICT-related achievements in 2015 are: • DAFZA App compatible with all leading mobile platforms providing

Dr. Mohammed Al Zarooni, Director General of DAFZA, added: “The past year was a successful journey for us as we were able to maintain industry leadership despite the many local, regional and global challenges. It was a particularly successful period for us in terms of further streamlining our finances and operations, expanding our global presence, and supporting the national economic diversification policy to build a future beyond oil by encouraging major global names from various industries to do business at DAFZA. In 2016, innovation will be a strategic focus for us to accelerate our growth and support our efforts to explore the future in line with the wise vision of the UAE’s leadership. Our strong financial results will pave the way for us to reach higher levels of excellence and leadership, especially with the buoyant economic outlook for Dubai which is positioning itself as one of the top investment destinations in the world.”

access to more than 250 DAFZA services as part of the Freezone’s Smart Transformation • Implementation of Happiness Meter in cooperation with Dubai Smart Government • DAFZA Eye for high security level • Online Payment System (Web & Mobile) • Compliance with Dubai Smart Government’s Information Security Regulations • Wi-Fi Expansion and Upgrade (Basements, Parking, New Buildings) Logistics News ME | April 2016 | 57

Case Study Sustainable Development In 2015, DAFZA was the first entity outside of the US to implement the Demand Flow Management system for building cooling, a move that will save the Freezone AED3m in energy costs annually. Its ongoing use of a Treated Sewage Effluent (TSE) and Reverse Osmosis (RO) system has also enabled it to save on potable water and preserve natural recourses. The TSE/RO system reduces cooling tower water usage by 100 %, for annual savings worth AED 1.1 million.

Other sustainability solutions being implemented are Fresh Air Optimization via CO2 sensors. The use of Outdoor LED lighting has reduced Kwh consumption by 66 %.

Such sustainability efforts have helped reduce DAFZA’s power consumption rate from 72 million to 37 million Kwh over the last five years. Water consumption rates registered a significant decline from 69 million gallons to 35 million gallons during the same period as well. Operating expenses related to water and electricity have decreased by 20 % from last year.

These and other key sustainability initiatives have lessened DAFZA’s CO2 emissions by 19 tons annually since 2010 and have resulted in an overall carbon footprint reduction of more than 48%.

Health, Safety & Security Among the most prominent achievements of DAFZA related to security, safety and health: • Reintegration for ISO 28000 (ISO 28000 Security Management System).

• Forming a permanent team to manage crisis and disasters.

• Applying a central system for managing parking for all companies working in DAFZA • Achieving a 0 % accident and injury rate for DAFZA Square and West Building 8 which were recently completed after 3 million working hours.

• Introducing a guide on the use of CCTVs • Smart Permit for DAFZA’s visitors • DAFZA security measures booklet • Smart vehicle for rapid intervention in emergency situations • Signing a NOC agreement with Dubai Municipality for DAFZA’s food courts • Compliance with food health requirements in accordance with Dubai Municipality food health standards 58 | Logistics News ME | April 2016

“With regards to DAFZA’s Emiratization efforts, 71.6% of the target level was hit as of December 2015” Human Capital The human element has been integral to DAFZA’s sustained success and industry leadership. In order to bring even more of the best talents onboard, the Freezone continued its ‘Contractual Offers’ in 2015. It hired expatriates for timebounded contracts on various projects or to support technical business needs. This initiative has helped maintain the Emiratisation percentage as well.

Nationalisation With regards to DAFZA’s Emiratization efforts, 71.6 % of the target level was hit as of December 2015. The internal Recruitment Team continued to seek talented and motivated UAE Nationals through participation in career fairs, organization of workshops, and signing of agreements with a number of universities and colleges to draw interest on promising careers at DAFZA. The Freezone also

facilitated a summer program and student internships to enlighten UAE Nationals on the role of DAFZA in Dubai’s development plans and potential careers they can pursue with the Freezone.

Gender Balance Throughout 2015, DAFZA continued its march of excellence by investing in its female resources and activating the role of women as true partners in the leadership process. The Freezone’s Women’s Empowerment Team successfully promoted the presence of women employees who represented 57 % of DAFZA’s total workforce in 2015. This was a result of the tireless efforts of the team, whose duties are centered on studying and analyzing the needs and requirements of women cadres operating in DAFZA, as well as conducting standardized comparisons with national women leaders and other government entities that adopt the concept of female leadership.

Culture DAFZA has made significant changes in consolidating innovation, excellence and positiveness in the corporate culture. This had a progressive effect in improving operational performance and enhancing employees’ satisfaction rates to 82.6 %.

Logistics News ME | April 2016 | 59

SUPPLIER NEWS Hatem Al Hatu, managing director, H3 Secure

GE launches new energy start-up Current

H3 Secure signs exclusive distribution deal with Blancco H3 Secure has signed an exclusive distribution agreement with Blancco Technology Group to sell its data erasure and mobile diagnostics solutions to enterprise organizations in the Middle East and North Africa, capitalising on a data security industry projected to grow to $13.43 billion by 2019.

Through this agreement, H3 Secure will primarily target businesses in telecommunications, retail, finance, healthcare, utilities and government.

“The digital ecosystem in the Middle East and North Africa is more advanced than most think,” said Hatem Al Hatu, Managing Director, H3 Secure.

“With an increasing number of mobile subscribers and explosive growth in data, servicing the market with the best data erasure and mobile diagnostics technology solutions, such as Blancco 5, Blancco Mobile and the SmartChk diagnostics tools, is important to the 60 | Logistics News ME | April 2016

continued growth of the region. I’m confident that with Blancco Technology Group, we’ll be able to help educate regional organisations on proper data removal methods, mobile device diagnostics processes and industry best practices.”

Pat Clawson, CEO of Blancco Technology Group, added: “As organisations increasingly create, store, transfer and share digital information, it opens the door to operational inefficiencies, security threats, regulatory compliance violations and data breaches. To mitigate these risks, organsations must do more than implement the necessary technology solutions; they must change their entire understanding of and management of data and devices across the entire lifecycle. We see great value in this partnership with H3 Secure and believe it is the best way to address the region’s digital challenges.”

Operators of hospitals, universities, retail stores and cities will receive a boost from a start-up created by GE, which has been created with the remit of “scaling up energy efficiency and diversification”.

With the goal of supporting its partners to scale up energy efficiency and diversifying the energy mix, Current brings together GE’s LED, solar, energy storage and electric vehicle businesses into a holistic offering that is currently absent in the industry today. The business portfolio includes sensor-enabled hardware, software, fulfillment, product management and financing solutions.

Current will reduce energy costs with a comprehensive set Ecomagination certified LED lighting systems and solar, energy storage and gas fired technology options. GE will optimise a solution that reduces energy use, produces power on-site and shifts usage.

It will enable intelligent environments where lighting is networked with sensors that capture usage and energy consumption data to dynamically improve productivity.

Current will also drive grid reliability and resiliency for utilities with solutions to meet the future challenges created by an increasingly distributed electric grid.

To drive the operations, GE has announced the appointment of Peter Lau as Current’s CEO for Europe and the Middle East.

Lau will steer Current toward new efficient energy models that address customers’ goals today and in the future. He said: “Current brings the union of energy-efficient hardware and software to market in a way that will change the face of energy provision forever.”

Supplier news

Sophos Email Appliance adds Sandboxing tech

Mustapha Kawam, president and CEO, Globe Express Services

Globe Express Services receives Platinum Award by Maersk Line Globe Express Services has recently been awarded the Platinum Award by Maersk Line, the world’s largest ocean carrier, for the fifth consecutive year.

The award, in recognition of its services as one of the best performing logistics providers and top customers of Maersk Line, was received by John C. George, branch manager of Jebel Ali Branch, Globe Express Services in a gala ceremony held in Dubai.

Mustapha Kawam, president and CEO, Globe Express Services, said: “In our over a decade-long relationship with Maersk Line, we have continually strived to provide them with competitive, reliable and ultimate service experience. The Platinum Award from Maersk Line for the fifth year in a row reinforces our commitment to deliver comprehensive, robust and innovative logistics services to our customers. It also serves as a strong motivation for Globe Express Services to continue to offer high quality visible, flexible and customized supply chain solutions in the region and the world.”

The Sophos Email Appliance has been enhanced to include Sophos Sandstorm, an advanced sandboxing technology that quickly and accurately detects, blocks and responds to sophisticated, constantly-changing cyber threats.

Sophos Sandstorm is an advanced persistent threat (APT) and zero day malware security technology. To combat elusive threats that target e-mail accounts on multiple platforms and mobile devices, companies need signature-less protection in addition to traditional malware protection.

Threats are now engineered to be “low and slow” to stay under the radar, using polymorphic and stealth techniques to avoid and delay detection. Today’s cybercriminals are also proactively taking steps to target, research and crack an organisation’s specific security measures by sending bespoke malware attached to seemingly-benign email messages.

Sophos Sandstorm uses powerful cloud-based technology to isolate Bryan Barney, SVP and GM, and address these types of threats before they enter a business network. Sophos Network Security Group Information technology managers are provided with detailed reports of threat behavior and analysis for further investigation and action, if required.

“Sophos Sandstorm combines prevention, detection and investigation in one solution to protect against cybercriminals who now use social-engineering tactics with new, notpreviously-known malware to invade company networks,” said Bryan Barney, SVP and GM, Sophos Network Security Group.

“Keeping threats away from the network is a critical first line of defense. Sophos Sandstorm automatically isolates files to determine if they’re safe, providing an instant additional layer of detection and protection. Advanced technologies are often too expensive and require additional security expertise to implement and monitor them. Sophos is changing this by providing all businesses access to advanced protection that’s affordable and simple to deploy.”

Ramco to provide IFMS to RSA Logistics Ramco systems is to implement its Integrated Freight Management System (IFMS), an end-to-end solution suite that addresses the complete process flow of the Shipping and Transportation Industry, for Middle-Eastern 3PL service provider, RSA Logistics.

The agreement with Ramco will comprise of freight forwarding, CRM, Finance, Purchase, Inventory and HR Modules to better manage key freight and logistics operations.

Commenting on the win, Virender Aggarwal, CEO, Ramco Systems, said: “With the onset of technological transformation in the logistics industry, players today are under

significant pressure to deliver near-perfect performances. In such disruptive scenarios, traditional models of transportation and logistics management are proving to be ineffective. The need for complete visibility of operations, capacity and route planning and scheduling is driving organizations to adapt technology. Through multiple client wins in this industry, Ramco has testified its ability to address this industry need. With Ramco’s cloud and mobile-enabled ERP offering, RSA will be able to streamline their functions, thereby improving visibility and enhancing productivity, across all levels of operations.”

The ABB showcase new building solutions ABB showcased the latest solutions for smart homes and intelligent buildings at 2016 Light and Building, in Frankfurt, to demonstrate energy efficiency, reliability and productivity in a range of building types.

Products included Busch-Jaeger, Kaufel and Striebel & John branded solutions. Highlights included enhancements to the ABB KNX portfolio for building automation; the latest engineering design software for building planning, e-Design; and an expanded energy monitoring solution, CMS-700, which can evaluate data from up to 96 sensors.

Logistics News ME | April 2016 | 61

DIARY

THE MONTH AHEAD

Logistics News ME picks the latest and most sought-after exhibitions, conferences and seminars coming up in the industry

ANNUAL INVESTMENT MEETING 2016

11 – 13 April, Dubai World Trade Centre

The meeting gathers the world’s leading foreign direct investment (FDI) experts, investors, business professionals and practitioners to discuss how the FDI landscape has changed dramatically in recent years as well as the new sources of FDI. It will tackle the importance of new forms of investment and discuss the policies that promote and facilitate such investments and best practices therein.

LOGICHEM 2016

12 – 14 April, Antwerp, Belgium

As Europe’s chemical companies continue to invest in efficient supply chains, LogiChem 2016 focuses on how to integrate these supply chains with your business’s commercial needs in order to maximize growth and improve overall operational performance.

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LEADING MINDS SEMINAR - PRACTICAL APPROACHES TO TEMPERATURE CONTROLLED PHARMACEUTICAL LOGISTICS AND STORAGE

12 – 13 April, Brussels, Belgium

Participants will enjoy networking with other temperature control logistics and QA professionals during informal discussions, luncheon and networking evening. The seminar is complimentary (no fee) attendance to pharmaceutical manufacturers.

TRANSRUSSIA

19 – 22 April, Moscow, Russia

TransRussia is the only intermodal exhibition in Russia covering the entire spectrum of the industry and presenting companies specialising in transport services by rail, road, sea and air.