FEDEX
IRAN
ADIPEC
The largest express transport company
Measured ambitions for new era
News from the 2015 O&G show
Connecting trade professionals with industry intelligence
December 2015
SOHAR: SO FAR, SO GOOD
Start
Contents
8 | News Scan Roundup of regional & international news Features 14 | Milaha: Qatar’s Shipping Giant Qatar’s top shipping company crossing milestones
spectives PK Menon examines the implications of leadership transitioning in a volatile corporate world
44 | Cleaning Technologies: Hygiene considerations Clear growth prospects for companies offering cleaning technologies
Features 18 | FedEx Express on Fast Track Following a good track record, FedEx Express is now making new forays in the region sights on the High Water Mark Successful berth for Oman’s top and one of the region’s fastest growing ports
and Logistics Market Things are looking up for Saudi Arabia’s principal commercial city
43 | Professional Per-
16 | Offshore Supply Vessels (OSV) Qatar’s Halul Offshore Supply Company tugs along despite stormy situation
22 | SOHAR: Setting
40 | Jeddah Warehouse
48 | ADIPEC 2015 All the show floor news from this year’s show
22 40
29 | Hive Technology New revolutionary identification technology set to make big impact on logistics industry
52 | Supply Chain Insights Mark Millar studies how omni-channel retail is impacting the Supply Chain 54 | Last Page: In First Person Brian Cartwright on the necessity of networking for supply chain professionals
32 | Iran sanctions:
time for a roll back A take on the Iranian market opening for business this month, with commentary from KPMG and AT Kearney ME
36 | 3M Oil & Gas: Get-
ting Energised Set to play a wider role in the region’s energy sector
39 | Maersk Magleby makes port call World’s largest container ship makes maiden call at Jebel Ali Port.
18 Logistics News ME | December 2015 | 3
Editor’s Note Yearend Musings This is the last edition for the year and so as 2015 draws to a close, it is time for introspection, reflection and some yearend musings. 2015 has been a mixed bag after all although the GCC logistics market on the whole still appears to be holding up and holding on well. It has been largely a rather ambivalent, mixed and volatile year for most companies in the logistics and supply chain sector in the region. The situation is further exacerbated by the continued fall in oil prices, which has deep implications for this energy-rich region. With falling revenues and as a fallout, less money in the government coffers, there is less money available for investment and development project. This is bound to have a domino effect with rollback for new and proposed ventures. Some are optimistic and several are doubtful. Many are biding their time hoping that the New Year 2016 will bring glad tidings. Actually, the good news has come. It was recently reported that Dubai was officially named the Host City for Expo 2020 by the 168-member governing body of the Bureau International
Managing Director Walid Zok Walid@bncpublishing.net
Editor Malcolm Dias Malcolm@bncpublishing.net
Director Rabih Najm Rabih@bncpublishing.net
Group Sales Manager Joe Taphouse Joe@bncpublishing.net
Director Wissam Younane Wissam@bncpublishing.net
Sales Manager Vishvanath Shetty vish@bncpublishing.net
Group Publishing Director Diarmuid O’Malley Dom@bncpublishing.net
Marketing Mark Anthony Monzon Mark@bncpublishing.net
Group Editor Melanie Mingas Melanie@bncpublishing.net
Art Director Aaron Sutton Aaron@bncpublishing.net
des Expositions (BIE) as it met for its 158th general assembly in Paris. This rubber stamping and formal ratification of the agreement provides hope and cheer for businesses in the region including the logistics and supply chain sectors. SOHAR Port and Freezone have a prominent place of pride in the logistics landscape of the Sultanate of Oman. In a wide-ranging interview, Andre Toet, CEO, SOHAR Port and Engr. Jamal T. Aziz, CEO, SOHAR Freezone provide us updates and their takes on developments thus far for our cover story. There is plenty of content elsewhere in this edition—our usual mix of news, views, interviews and profiles to keep you updated and better informed on the supply chain and logistics industry in the region. The situation notwithstanding, it is my hope you will have a joyful festive season this December!
Malcolm Dias Editor malcolm@bncpublishing.net
c o n t ri b u t o r s Mark Millar, Joy Thattil, Prakash PK Menon
SUBS C R I B E subscriptions@bncpublishing.net PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 F +971 4 4200 196
For all commercial enquiries related to Logistics News Middle East contact P +971 4 4200 506 All rights reserved © 2014. Opinions expressed are solely those of the contributors. Logistics News Middle East and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Logistics News Middle East. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Images used in Logistics News Middle East are credited when necessary. Attributed use of copyrighted images with permission. All images not credited otherwise Shutterstock. Printed by Raidy Emirates Printing Group LLC www.raidy.com
ne w s
In The NEWS Bion Industrial plans Africa expansion
B
ion Industrial, one of UAE’s leading manufacturers of heavy transport equipment, recently introduced an expanded range of Tipper Trailers and the CB 520, a 52 cbm. cement bulker semi-trailer at PMV Live 2015, the Middle East’s leading plant, machinery and vehicles show. The Dubai based manufacturer has consolidated its position and now covers five key GCC markets including the UAE, Qatar, Oman, Kuwait and Bahrain. Bion Industrial tipper trailers’ versatility, operational efficiency and high performance at lower operational costs have enabled the company to supply products to four out of the top five major heavy transport companies in the UAE. In response to the positive growth rates, Bion Industrial is looking to increase production to 1,500 tippers per annum by 2016 following next year’s opening of a new half a million squarefeet manufacturing facility located in Dubai Industrial City (DIC) which will accommodate up to 1,000 employees. The company has also started penetrating the African market by exploring business opportunities in Nigeria and Kenya as part of its ongoing commitment to providing quality heavy transport equipment to different markets around the globe. “At Bion Industrial we’re driven by a mission to deliver above and beyond the industry values and customer expectations. We are committed to developing promising, potential markets on the African continent,” reiterated Noas Al Rawi, CEO, Bion Group. Bion’s B 460 and B 240 Tipper Trailers provide 46m³ and 24m³ capacities respectively and have been 8 | Logistics News ME | December 2015
Noas Al Rawi, CEO, Bion Group at the Bio Industrial Stand in PMV Live showcasing the B250 Tipper Trailer
specifically developed to efficiently transport bulk abrasive materials such as sand, gravel, aggregate, rubble and debris while offering long service life, high payload and low maintenance. On the other hand the new CB 520 Cement Bulker Semi-Trailer is designed to achieve superior durability, optimal payload, higher safety and maximum operational efficiency. With a chassis made of high yield steel –Strenx 700, the
CB 520 is extremely stronger and lighter featuring a wider design that ensures better stability. Bion Industrial prides itself on using quality and internationally recognised production processes. Each heavy transport equipment comes pre-fitted with a range of operational and safety features unrivalled in the market and is made to measure by a team of highly skilled engineers.
ne w s
Gulftainer surpasses 1m TEUs milestone in Iraq’s Umm Qasr port
Gulftainer, reached another significant milestone with a combined throughput of 1 million TEUs at its terminals in Umm Qasr Port in Iraq, since they were commissioned by the Sharjah based company in 2010. The one millionth unit was discharged from the MSC Didem, a regular caller at the Iraq Project Terminal. Gulftainer Iraq has experienced phenomenal growth and a compound annual growth rate (CAGR) of some 100.78%, since beginning operations from a standing start in August 2010. Rob Smith, Operations Manager, Gulftainer Iraq, commented: “Umm Qasr Port has always been and will remain the dominant container hub in Iraq, due to its strategic location on the Arabian Gulf. We are uniquely positioned, having terminals in both the North and South Ports in Umm Qasr, each of them with strong selling points that have helped us achieve a steady growth since we started operations in the country.” Part of a $150 million investment programme made in the country by Gulftainer, the Iraq Container Terminal (ICT) is the largest terminal
within Umm Qasr port and the only facility that has its own entry and exit points, along with a customs office and relevant facilities. It is also the only terminal in the North Port to be secured by its own professionally trained guards protecting the facilities, people, cargo and equipment at all times. Gulftainer’s Iraq Project Terminal (IPT) facility opened for business in August 2010 at Umm Qasr South Port, and has rapidly grown since inception. IPT is already in full compliance with, and supports the requirements of Iraq’s fast-developing oil, gas and energy sectors. Smith further explained that Gulftainer had made substantial investments in order to improve the operational capacity and productivity of both its terminals in Umm Qasr, as well as at Umm Qasr Logistics Centre (UQLC). Most recently the facility handled two of the largest pieces of cargo ever to transit Iraq being two bullet tanks of more than 200 tons and measuring some 49 metres long and 8 metres wide. UQLC was the start of their marathon journey of some 600 kilometres across Iraq.”
GES reinforces presence in India with opening of branch in New Delhi Globe Express Services, recently opened its first office in the Indian capital New Delhi and the second in the country after Mumbai. The move is in line with GES’ strategic plans and comes as a result of the company’s worldwide success--fully complementing industry forecasts that India’s logistics market will grow at a compound annual growth rate (CAGR) of 12.17% by 2020 as a result of the boom in the manufacturing, retail, fast-moving consumer goods and e-commerce sectors. The opening of new branches is part of GES’s expansion strategy into new territories as a multinational organisation to cater to the growing demand for logistics worldwide. The New Delhi office will contribute in the company’s development synergies in resources and strengths to multiply the value of expansion. Mustapha Kawam, president and CEO, Globe Express Services, commented: “GES’ offices in Mumbai and New Delhi 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.” “We are extremely positive that our New Delhi branch will help us drive towards further growth and consolidate our business in the country,” concluded Fulvio Moletti, managing director, Asia Pacific, Globe Express Services. Globe Express Services president and CEO, Mustapha Kawam
Logistics News ME | December 2015 | 9
ne w s
1m TEUs
The recently crossed container throughput at Iraq’s Umm Qasr Port
Abu Dhabi Ports witnesses remarkable container volumes increase in 2015
Abu Dhabi Ports has seen significant surge in cargo volumes during the first ten months of 2015 compared to the same period last year. Container volumes increased by 36% at the Khalifa Port Container Terminal, operated by Abu Dhabi Terminals. The terminal moved 1,204,993 TEUs, up from 889,165 TEUs in the same period in 2014. The busiest single month in this year was October, when the port handled 157,673 TEUs. Roll-on-roll-off (RORO) traffic saw 29% rise with 110,831 vehicles, up from 85,835 vehicles last year. In 2015, all roll-on-roll-off (RORO) operations were transferred to Khalifa Port from Zayed Port to meet the growing demand from the automotive sector in the UAE. An enhanced yard and terminal facilities opened the door for increased customer services and provided strategic location and flexible capacity. This transition to Khalifa Port contributed to the upswing in volumes. Currently, Khalifa Port offers a capacity of about 350,000 vehicles a year. In the same period, general and bulk cargo edged up 20% to 12,596,956 million freight tonnes (FT) from 10,469,374 million FT last year. “Our double digit growth in all three cargo sectors, especially the top performance at our flagship Khalifa Port, has a special significance on the backdrop of a slowdown in the global maritime industry. Our growth is set to continue throughout this year,” said Capt. Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports.
10 | Logistics News ME | December 2015
RSA Logistics ranks 9th at Dubai SME 100
RSA Logistics, the leading Dubai-based third party logistics (3PL) won the 9th rank at this year’s Dubai SME 100 ceremony. Shaikh Ahmad Bin Mohammad Bin Rashid Al Maktoum, chairperson of the Mohammad Bin Rashid Foundation and president of the UAE National Olympic committee congratulated managing director Abhishek Ajay Shah at a recent ceremony. Dubai SME, an agency of the Development of Economic (DED) identified the top performing 100 SMEs in a bid of help them grow bigger and support them through their growth. Dubai is increasingly becoming a launch-pad for SMEs in vital sectors such as health, education,
information technology, logistics, tourism, hospitality and others due to its global reputation as an entrepreneurial hub. According to statistics provided, the number of enrolments in the third quarter 2015 was 4,532—an increase of 49% compared to 3,041 companies in Q2-2015. Together, the companies enrolled in the third cycle represent net revenues of $18.9 billion and a workforce of over 144,000. Abhishek Ajay Shah remarked: “Being recognised by Shaikh Ahmad Bin Mohammad Bin Rashid Al Maktoum is indeed a proud moment for us at RSA Logistics. Dubai SME gives us the opportunity to showcase our abilities and resources we offer to our customers.
EXCELLENCE IN GLOBAL
INTEGRATED LIQUID LOGISTICS Aviation in Africa currently supports more than 6.9 million jobs and over $800 billion in GDP across African nations. Africa’s jet fuel shortfall is expected to triple from 1.8 million MT in 2013 to around 5.2 million MT by 2025. It is our vision to be a major contributing partner of the Airlines and be part of the exciting growth period in African Aviation.
WE OFFER A RANGE OF AVIATION REFUELLING SOLUTIONS Trained Staff using IATA and JIG approved Trainers Aviation Storage design, build and operate Into Plane, Into Helo Operations Committed to highest Quality and Safety Standards Comprehensive Aviation Insurance as required by AFRAA and AACO More than 48 million litres of storage built across Africa Off Shore and Remote aircraft refuelling operations An integrated ERP system using Oracle
IN ADDITION TRISTAR CAN OFFER:
• Logistics • Warehousing • Bulk Purchase and Trading options for clean petroleum products • Ship Bunkering and Chartering Services • River transport • A range of Lubricants for vehicles, marine and aviation use • Turnkey solutions for humanitarian, military, oil, gas and mining operations
Logistics News ME | December 2015 | 11 info@tristar-group.co | www.tristar-group.co
ne w s
55,000 sqm.
Area of Grandweld’s shipyard in Dubai Maritime City
Swisslog wins major order from Almarai
Saudi Arabian food producer Almarai has commissioned Swisslog to automate its distribution logistics for their operations in the city of Al Kharj near the capital Riyadh. The value of the order is approximately $45.6 million. By the end of 2018, Swisslog will implement automation projects in five phases. In addition to innovative warehouse logistics, Swisslog will also handle on-site system operation. Almarai will link this major project to a
strategic reorientation of its logistics operations. It plans to achieve additional competitive advantages by optimising and significantly accelerating its logistics processes. The scope of the Swisslog order includes cranes, conveyors, monorail systems, automated truck loading and automated picking modules. In addition, Almarai management has opted for Swisslog’s system operation service to ensure smooth warehouse operations. Swisslog service technicians will maintain and support the systems on site. “Almarai is the second Middle Eastern company in a short period of time that we were able to gain as a customer,” commented Daniel Hauser, Swisslog’s Managing Director for Germany, Austria, Switzerland and the Middle East. “This is evidence that we can provide innovative and tailor-made solutions to meet the requirements of every customer.”
Oman Shipping performs naming ceremony for two new tankers Oman Shipping Company (OSC) recently performed the naming ceremony for two new product and chemical tankers – the Muscat Silver and Rustaq Silver. The ceremony took place at the Hyundai Mipo Dockyard in Ulsan, South Korea. OSC will now take delivery of the Muscat Silver as part of a deal which will see 10 MR (medium range) tankers delivered to it over 2016. All the vessels will be chartered to Shell International Trading and Shipping Company for its Project Silver, which consists of 50 new-builds. They will each operate worldwide with 20-strong crews, including a number of Omani officers. The Muscat Silver and Rustaq Silver are both 183 metres in length and 32.2 metres wide with a depth of 19.1 metres. Each medium range tanker’s capacity was 37,900 metric tonnes at the design 12 | Logistics News ME | December 2015
draft and 49,800 metric tonnes at the scantling draft. They both have a gross tonnage of 29,354 tonnes and net tonnage of 12,195. OSC general manager Wasam Al Najjar commented that OSC, one of the biggest ship operators in the Gulf, would strengthen and consolidate its position in the hydrocarbon shipping sector with the new vessels.
Grandweld delivers support vessel ‘TAWAM 1’ to ADNOC Grandweld, a leading UAE shipyard, recently delivered a one-dive maintenance and support vessel ‘TAWAM1’ to Abu Dhabi National Oil Company (ADNOC). Grandweld took the new-build project from conception to completion, designing and building the 50m long vessel with a 65-ton bollard pull capability, after signing a contract in December 2013 with ADNOC. TAWAM1 will be operated by ADNOC’s group company, Abu Dhabi Petroleum Ports Operating Company (IRSHAD). “This was a prestigious contract and cements our relationship with ADNOC, one of the world’s leading oil and gas companies,” commented Jamal Abki, general manager of Grandweld who added that the vessel will perform a broad range of tasks, designed with real versatility, performance and operational integrity. Amongst its many specifications, TAWAM1 is equipped with anchor handling equipment and an offshore lifting crane with a capacity of 35 ton at 7.5m reach. This will be utilised to manoeuvre heavy lift items such as gravity anchors, mooring buoys and SBM hoses. In addition, the vessel, which can accommodate up to 30 crew, is fitted with integrated diving systems and is classified by DNV GL to firefighting capability class 1. TAWAM1 was constructed in the company’s Dubai Maritime City 55,000 sqm. yard. Grandweld’s delivery to the firm comes after the recent successful deliveries of a 42m Aluminium Crew Boat to Global Marine Operation Co and a Crane Workboat to Kuwait Oil Company (its fourth for the customer). Last month the yard signed a contract with International Naval Works to design, build and deliver three high speed 21.3m Aluminium Crew Boats. Delivery of these vessels is scheduled for early 2016. Founded in 1984, Grandweld is a fully integrated shipyard specialising in shipbuilding, ship repair, and engineering solutions headquartered in Dubai Maritime City.
I n t er v ie w - P r o fi l e
Milaha: Qatar’s Shipping Juggernaut From being the first public shareholding company in Qatar, Milaha has come a long way to become a vital contributor to the country’s GDP
Milaha president and CEO Abdulrahman Essa Al-Mannai
E
stablished in July 1957, Milaha is the first public shareholding company registered in Qatar with commercial registration number 1. Founded as Qatar National Navigation and Transport Company (QNNTC), it is now one of the Middle East’s largest and most diversified maritime and logistics companies. In 1974, Milaha launched marine transport services in Doha Port consisting of lighterage, berthing, and towage. By 1978, it had established a branch in Dubai, UAE. Subsequently, the ship repair and fabrication facili-
14 | Logistics News ME | December 2015
ty in Mesaieed opened in 1982 to offer the first fully integrated ship repair facility in Qatar. Over the next decade, Milaha launched its first fully integrated service centre – Navigation Marine Services – in 1991 to offer services, such as repair, marine supplies, engines, and equipment. Next year, Qatar Shipping was co-founded with QNNTC owning a 15% equity share. By 2000, the company co-founded Halul Offshore Services Company through a joint venture with Qatar Shipping. The following
year, it merged land transport, freight forwarding, custom clearance, and warehousing into Navigation Freight Services. To reflect its real service offerings, the company was renamed Qatar Navigation in 2003. Expanding its portfolio, Milaha made an equity investment in Qatar Gas Transport Company (Nakilat) in 2005. In 2010, the Milaha-owned Navigation Tower was inaugurated and in the same year, Qatar Shipping and Halul Offshore Services were merged and acquired, paving the way for the launch of the Milaha brand name in 2011. The company’s current activities include marine transportation in gas, petroleum products, containers and bulk; offshore support services; port management and operations; third party logistics (3PL) services; shipyard; trading agencies; real estate investments; and asset management. In 2015, Milaha launched the Nhava Sheva-Doha Express (NDX), the first direct container service between the Nhava Sheva Port in Mumbai, India and Doha Port in Qatar. In an interview with Logistics News Middle East, Abdulrahman Essa Al-Mannai, president and CEO, Milaha, considers this introduction to be one of the greatest contribution to the innovation of the sea transportation sector in recent times. “The new service enables direct shipments between Nhava Sheva and Doha, eliminating the need for transshipment in Jebel Ali or else-
I n t er v ie w - P r o fi l e
where to ensure reduced time and cost as well as increased reliability,” affirmed Al-Mannai. In addition to bolstering Qatari-Indian trade ties and Milaha’s feeder commitment to the Indian market, the new service increases the company’s presence in non-vessel operating common carrier (NVOCC) activities. In addition, according to Al-Mannai the new non-stop service will strengthen the company’s existing feeder network with the UAE with more fixed connections. Exporters and traders will benefit from a late cut-off, providing more time to bring cargo into the port due to an endof-the-week sailing. Moreover, perishable products will retain freshness, quality and taste for Qatar-based consumers because of reduced transit time. Another example of Milaha’s innovative solutions and contribution to its home country’s supply chain is the partnership with Qatar’s leading petrochemical marketing and distribution company to which it provides a full package of transportation and logistics services, including carrying its containers from Qatar to the UAE and then to India and Pakistan. “As part of the package, our logistics unit handles customs and port clearances of containers leaving Qatar,” adds Al-Mannai. In response to a customer’s requirement, Milaha demonstrated its ability to provide integrated and tailored supply chain solutions by managing the transport of four 31.4-ton rotors from Doha to Germany by air on an Antonov 124 chartered specifically for this trip. Milaha not only arranged for the heavy lift operation on site to load the rotors and transport them to the airport, but also performed the heavy lifting at the airport using a 250-ton crane on the runway to load the shipment. The operation was supervised and approved by the Qatar Aviation Services and Civil Aviation Authorities. “This is a major accomplishment and highlights our capabilities,” remarked a visibly happy Al-Mannai. Al-Mannai also pointed out another unique task that Milaha handled this year—which was the transportation of 25 endangered birds from the Far East to Qatar. Milaha’s team took transportation approval from the National Office of Endangered Animals, chartered a suitable aircraft, and altered its seating setup to fit the cages. The aircraft landed on time in Doha where a team of veterinary physicians in collaboration with the Qatar Ministry of Environment and Customs were present to ensure that the birds were in good health. “This was indeed a proud moment for us and yet another distinctive attainment,” he declared proudly.
On expansion plans, opportunities and challenges
HE Sheikh Ali bin Jassim Al Thani, Chair, Milaha
“It is through hard work, sincerity and dedication to customers that we have positioned ourselves as one of the Middle East’s largest and most diversified maritime and logistics companies.’’ Financial Performance The financial results for the first six months ending June 30, 2015 showed Milaha delivering a net profit of QAR 651 million ($ 175.77 million), an increase of 26 % in profitability compared to the same period of 2014. Its operating revenues increased by 22 % to $ 407.7 million for H1 2015 up from $ 334.8 million for the same period in 2014. Likewise, operating profit increased by 31 %to $ 119.34 million, up from $ 91 million. Milaha Maritime and Logistics’ revenue grew by 27 % and net profit by 119 %, mainly driven by increased activity in its port services and container shipping business units.
Expansion: Filling a major gap in the cold chain in Qatar, Milaha is currently developing temperaturecontrolled warehouses to complement its existing warehousing service in Doha and Dubai. The environmentfriendly stores, which are the first of their kind in Qatar, are expected to become operational by the end of 2016, and are an indication of Milaha’s ability to constantly innovate solutions to better serve its growing customer base Opportunities: The Qatar National Vision 2030, which highlights the importance of business diversification as a driver of economic growth, will likely inspire more opportunities for Milaha, which already holds one of the most diverse portfolios in Qatar and the GCC. Furthermore, the increase in the population in Qatar ahead of the World Cup 2022 and the mega infrastructure projects that the State of Qatar has undertaken represent an excellent opportunity for growth for Milaha. The rising trade volumes and the increased demand need for food and consumer goods will allow Milaha to expand its business and consolidate its regional position. Challenges: Fulfilling the economic, social, human, and environmental requirements of the Qatar National Vision 2030 is an exciting challenge for Milaha in the coming years. Additionally, Qatar’s hosting of the World Cup 2022 not only constitutes an opportunity but also a challenge for all the companies operating in Qatar. The unprecedented size of the projects undertaken by the State of Qatar has been an incentive for Milaha, as an integral part of the country’s supply chain, to provide even more creative solutions to its clients. Other industry-related challenges include the gap between supply chain talent and leadership, the need for more investments in technology, and the growing need for reliable global partners.
Logistics News ME | December 2015 | 15
Off s h o re Ser v ice Ve s s e l s
Halul tows on despite choppy economic situation Halul Offshore Services Company (HOSC—Halul) was established in Qatar in 2000 to provide the most comprehensive offshore support services to the oil and gas industries locally, regionally and even worldwide. The company currently operates a fleet of 40 offshore service vessels.
Vivek Seth CEO Halul Offshore, Qatar Vivek Seth is a second generation marine engineer, who after sailing as C/E, (Conformité Européenne, French for the European Conformity standard) took his first shore job as Technical Superintendent in Hong Kong. After his MBA from Manchester Business School, he started his offshore career with Tidewater – where he worked for five years in four different countries in commercial and general management roles. Subsequently, he joined Svitzer, UAE (AP Moller-Maersk Group) as regional commercial manager for three years before joining Smit Lamnalco as regional managing director, ME and the Indian Subcontinent. During the five years in Smit Lamnalco, he was responsible for operations in nine countries and successfully doubled that business. In February 2014, he joined Halul Offshore in Qatar as CEO.
16 | Logistics News ME | December 2015
H
alul Offshore Services Company was founded in 2000 as a joint venture between the two largest shipping companies in Qatar at that time: Qatar Shipping and Qatar Navigation. Halul has expertise in several areas of marine services including safety standby vessels, anchor handling tugs, wire line support vessels, construction vessels, wellhead maintenance vessel and diving support vessels. Vivek Seth, CEO, Halul, recently spoke to Logistics News Middle East. What are Halul’s USPs and what sets you apart? Since our founding and following the establishment of the Milaha brand, we have been on an admirable growth trajectory during which we increased our fleet, attracted the brightest people in the industry, and are now serving the leading oil and gas players in the region. Our success is a direct result of our unwavering commitment to international standards of operational safety and customer service. We provide our clients with a diverse portfolio of services backed by the latest technological innovations and a highly-skilled team of profession-
als who are always willing to go above and beyond to exceed expectations. Additionally, Milaha’s Board of Directors has been very supportive of Halul’s expansion plans. How would you characterise your relationship with Milaha? Although Halul Offshore is a wholly-owned subsidiary of Milaha, we have our own independent operations, but remain strongly attached to the parent company in terms of corporate affiliation. This link to Milaha and our sister companies means that we are able to offer our clients what few other offshore companies can, which is seamlessly integrated transport and supply chain solutions under the Milaha umbrella. Also by sharing a range of corporate services, we are able to tap into a very strong set of capabilities at a much reduced unit cost, thus resulting in a more cost efficient operation. How is the fall in oil prices impacting HOSC’s current and future prospects? The drop in the price of crude oil has led to deferment of exploration and new development activi-
Off s h o re Ser v ice Ve s s e l s
ties, which are capital intensive, and resulted in a slowdown for the OSV market supporting these developments. As the market becomes buoyant again in the medium to long run, we will most likely see an increased demand for OSV services, particularly in West Africa, South Asia, and the Middle East— all slated to undergo tremendous expansion in offshore energy supply by 2030. Although growth in offshore renewable energy will continue as the unit cost of generation declines, fossil fuels will continue to remain the dominant sources of energy for the foreseeable future. We are also seeing more impetus in the long term for deeper waters offshore as most of the shelf region globally has already been identified for proven oil and gas reserves. This will also impact subsea needs in deeper waters in the medium and long term. Today, quite a few leading oil companies have looked at cost cutting and renegotiated the day rates, which has put offshore service providers at risk of losing contracts due to cheaper available supply. Since the market is now oversupplied, it has become a matter of survival in some cases, with ship owners giving discounts of up to 25% in order to ride out the storm. Talk to us about your performance and expansion plans. Our H1 results saw our revenue growing by over 35% coupled with a significant increase in net profit compared to the same period last year despite the weak market conditions and the cutbacks on capital spending by oil and gas majors. Our aim is to end the year on a similarly high note and maintain an above average utilisation rate for our fleet. As for expansion and prospects, our management team continues to take steps towards a long term strategy of fleet renewal and geographic expansion, while optimising operating efficiency under the current difficult conditions. What challenges do you confront presently? The OSV market is being reshaped as it adapts to the current oil price. As such, the key challenge is maintaining profitability without compromising safety and quality of service. Other longstanding challenges include high vessel maintenance and replacement costs. Another issue this industry will continue to face is the growing gap between increasingly sophisticated vessels and the capabilities of ship staff to handle the technology on these vessels. You addressed the recently concluded fourth Annual Offshore Vessels Middle East forum in the
UAE. What was the Halul message at the assembly? We were very happy to be part of this year’s edition and my message at the event focused on the challenges faced by ship owners and operators in the Middle East’s offshore oil and gas services industry—surviving low charter rates, managing the utilisation and how to manage uncertainty in longer-term. Discussions at the forum also covered the pros and cons of consolidation within the OSV sector and the outlook on future market prospects. Meanwhile, in a separate presentation, I also talked about the prospects in the lift boat market, especially the rules and regulations for classification and construction, utilisation and demand for lift boats in shallow waters. Is consolidation the way forward in the industry? The main purpose of consolidation is to create boost revenues while becoming more efficient through achieving scale, thus improving the overall profitability and long term sustainability of the business. However, M&As may sometimes look good on paper, but that does not ensure that synergies between the two companies can be realised easily. This can be crucial as we have seen major M&As fail simply because of different work cultures. Therefore, this is an essential component that must be addressed early on as it can erode the profitability, and eventually shareholder value of both the companies. What broadly are current industry trends in the global OSV industry? In the near term, the industry is unlikely to see an increase in offshore exploration, production activities and investments in infrastructure. Given this, the market will stagnate in the short term. Once the confidence is back and oil and gas prices stabilise at healthier levels, capital spending will gradually come back. It will be a few more months before we see that positive impact trickle down to the OSV market. In the medium to long run, mid-range AHTSVs (Anchor Handling Tug Supply Vessel) will lead the market and become more profitable, owing to the increase in day rates in the Americas and West Africa. In addition, other driving factors that will help bring in more growth include the increase in offshore exploration as onshore matures; the growing offshore rig count; and rising demand for marine logistics. Leading
Halul brings First Ship Handling Simulator to Qatar Halul has recently procured an Offshore Support Vessel (OSV) Ship Handling Simulator, which is the first of its kind in Qatar. Halul is now one of the few companies in the Gulf region to own the Netherlands-built simulator, which is normally used in training schools. Chairperson of Milaha, HE Sheikh Ali Bin Jassim Al Thani; Milaha’s president and CEO, Abdulrahman Essa Al-Mannai and Halul’s CEO, Vivek Seth, accompanied by the management teams attended the inauguration of the simulator which was followed by a presentation of its capabilities. Milaha’s President and CEO, Abdulrahman Essa Al-Mannai asserted that the use of such modern equipment affirms the company’s longstanding commitment to provide the highest level of training to our staff. For his part, Halul’s CEO, Vivek Seth asserted: “Technically speaking, with this simulator we can create scenarios for towing operations like rig moves, berthing, un-berthing, and tanker assist operations offshore.” In addition to the simulator training, Halul continues to provide other forms of practical on-board training to its crew. This covers safety drills, mooring, unmooring, and dynamic positioning system familiarisation, among other operations.
industry players will be implementing strategies to expand their reach in various regions once the price of oil comes back to more sustainable levels. What is your outlook for the future? The offshore services industry will continue to be affected by the current decline in the oil and gas segment and by other factors like the oversupply in the global OSV sector. This year has been quite challenging for oil and gas operators and their equipment and service providers. We remain confident though that once the oil prices start recovering, we can look forward to better years ahead.
Logistics News ME | December 2015 | 17
I n t er v ie w
Fast Forward FedEx
FedEx Express, a subsidiary of FedEx Corp., the world’s largest express transportation company, is moving speedily along and swiftly expanding as it reinforces its primacy and cements its legacy in the Middle East, Indian Subcontinent, Africa (MEISA) region. David J. Ross, regional president, speaks to Malcolm Dias
Trivia Consolidated revenues for FedEx Corporation in Fiscal Year (FY) 2015 reached $48 billion, a 4% increase from the previous year. The company has retired old aircrafts, as well as invested in new Boeing 767Fs to boost capacity and modernise its fleet. From a regional perspective, the Middle East remains a significant market for FedEx, adding sustained value to its overall global operations. The MEISA region represents over 30% of the countries FedEx serves globally. This region consists of several high-growth economies that are among the most competitive and the best places to do business.
18 | Logistics News ME | December 2015
I
t’s the inaugural day of the recently concluded biennial Dubai Airshow 2015 in the new, bustling, cavernous, purpose-built DWC venue. Amid the drumbeat of the military band present, and the din of military aircraft flying in formation above, the charismatic and expressive David J. Ross, an Australian with roots in Sydney and a long-serving FedEx veteran, waxes eloquently on a variety of subjects as he fielded questions with ease and aplomb. FedEx had a place of pride at the Dubai Airshow 2015 where it was the ‘Official Courier’ sponsor of the show for the fifth consecutive time. “Innovation is part of the FedEx DNA, and in our 40 plus year history, we have a track record of using technology to enhance our ser-
vices. From the introduction of a centralised system in the late 70s, to launching new services that give customers real-time information on their packages, technology has helped FedEx to grow, evolve and thrive,” he begins as he makes his case for FedEx’s commitment to stay abreast of and harness the latest industry technology available. He reminds me of Fred Smith, the legendary company founder, who has famously been quoted as saying: “The information about the package is just as important as the package itself.” This belief is key in the adoption of technologies at FedEx. In 1979, the company launched COSMOS, a centralised computer system to manage people, packages, vehicles, and weather scenarios in real time. This was
I n t er v ie w
Csr Activities
before the widespread use of the internet; therefore this technology was cutting-edge for its time. More recently, FedEx has taken this idea of package information to the next level. Last year, it launched SenseAware® in the UAE. The service uses sensor technology to provide customers with information on the location, temperature, light exposure, humidity level and barometric pressure directly from their packages. This service is relevant for a wide range of industries, including healthcare, aerospace, oil and gas, manufacturing and fashion, which require instant access to highly valuable products. At the Airshow, FedEx offered visitors an exclusive preview of its cold shipping package solution. This patented, temperature controlled package is designed for shipping sensitive products. The solution uses a packaging technology with a special cooling device to maintain a constant temperature of 2 to 8°C for up to 96 hours. Ross avers that this is an exciting time to be in the Middle East’s logistics industry as a result of the ambitious plans of developing intraregional transportation infrastructure. He notes that the aviation industry in this region is booming. Local airlines are continuously expanding, as are several airports, increasing the size, depth and reach of the aviation sector. This will benefit the logistics industry by enabling an increase in the number of flights, thereby enabling us to increase cargo capacity. Within the aviation sector, investment and ambitious expansion plans are setting the tone for how the Middle East economies are
“Our customers are our prime focus and offering them ways to connect with others across the world through our innovative solutions is why we are here.” set to diversify to complement oil revenues. Figures from Oxford Economics estimate that in the Middle East, two million jobs and around $116 billion of GDP are supported by aviation. It is the development of the aviation sector and its supporting functions that has led to increased trade with and through the Middle East, he observes. “In fact, Dubai International Airport is listed amongst the top 10 busiest airports for international freight traffic. According to the most recent statistics by the Airports Council International, 798,186 tons of freight was processed through Dubai International Airport every month on an average for the past six months, making it the sixth busiest airport for cargo worldwide, proving that this Emirate is an important location for the logistics industry,” he explains. Ross is also keen to seize business coming out of the e-commerce stream. Consumers now have increased awareness of new eshopping destinations and are armed with multiple devices and payment methods to acquire unique products or cheaper deals
In response to the devastating earthquake that caused severe destruction across Nepal, FedEx committed approximately $1million in cash, transportation support, and a chartered flight as part of its humanitarian recovery efforts. Another example is the support provided by FedEx to thousands of migrants and refugees escaping conflicts from some of the affected countries in the region. FedEx mobilised its humanitarian relief program by delivering emergency supplies and critical medical aid to the people and local communities hit by the crisis. FedEx and its team members are also actively involved in a number of initiatives, including volunteer work, which help improve the quality of life. FedEx Cares is an annual global volunteering program that aims to improve life in local communities. It allows FedEx team members and their families to invest their time and effort in giving back to the societies they live and work in.
not available in their own markets. FedEx is the backbone of this change; such as the Internet connects buyers, sellers and economies across the world. E-commerce is growing at a rapid pace and SMEs are gaining access to more markets globally. This trend definitely changes the way SMEs are doing business. FedEx supports and enables this growth by connecting SMEs to their global customers through its world-class network, competitive transit times and extensive range of international and domestic solutions. As the region grows, FedEx is growing with it. The company is continuously expanding its network, infrastructure, and service offerings. In 1989, when it started its direct-served operations in Dubai, it had just one facility. Today, it has complexes across the Emirates, in order to meet increased logistics demand. Alongside this it has also introduced customised shipping solutions for the region, covering industries from aerospace to healthcare and oil and gas which according to Ross constitute the top three industry verticals for FedEx in the region.
Logistics News ME | December 2015 | 19
I n t er v ie w
Fedex: A history On 17 April 1973, FedEx Corp., then known as Federal Express, began operations at the Memphis International Airport with the delivery of 186 packages to 25 US cities. Today, FedEx and its four operating companies handle over ten million packages each day via a high-tech network designed to connect customers by air, land and sea in more than 220 countries and territories worldwide. The FedEx Express story in the Middle East is tied to Dubai in a unique way. The company set up headquarters in Dubai in 1989, and has since grown into a 9,000 strong team that serves markets in the Middle East, India and Africa. Its regional hub for the Middle East, Indian subcontinent and Africa (MEISA) region in Dubai International Airport also acts as a centre for trade between airports in the United States, France, India and China. On a weekly basis, 44 dedicated FedEx flights arrive in and depart from Dubai. It currently serves its customers through 7 stations and 15 FedEx retail locations based in the UAE, Kuwait and Bahrain. Starting with only one station in 1989, FedEx has developed its network of facilities to strengthen its presence in the Middle East region. In 2011, it launched a 48,000 square feet facility in the Jebel Ali Free Zone (JAFZA), and an intercontinental B777F flight, providing its customers with the increased US – Middle East connectivity and enhanced transit times. In the following year, it launched its largest operating facility in the Middle East, in Dubai’s Garhoud area. The Abu Dhabi station was opened in 2013 to enhance service coverage to the fast-growing industrial areas and upcoming developments within the capital.
20 | Logistics News ME | December 2015
“FedEx is not only dedicated to providing innovative and sustainable solutions for our customers through operational and fleet enhancements, but is also committed to making a difference in its own communities where our team members’ passion for volunteerism is ingrained in the FedEx corporate culture.” Expansion The opportunities in the region far outweigh the challenges. In Ross’ estimation this is a region driven by the world’s most rapidly emerging economies. By focusing on this region, the company is able to create broader service offerings for the specific needs of the Middle East’s businesses. “Our focus is on enhancing our market reach and expanding our portfolio of solutions. We do this by investing in our people, and by strengthening our value proposition with hub expansions and strategic acquisitions,” affirms Ross. To accommodate the growing demand, FedEx has expanded its airnetwork to 44 flights a week in and out of the regional hub. “Ultimately, our commitment is to provide customers with greater access to global opportunities through our well-established global network, wide range of services and dedicated team members,” pledges Ross. Ross also foresees big opportunities in the region in the run-up to the Expo 2020 in Dubai. This event is estimated to attract significant activity and business into the region, with the expected economic impact to be in the tens of billions of dollars range. “The economic growth following the Expo 2020 will reinforce the UAE as a key economic and trading hub. This will attract more businesses in to the region, which will require logistics and express shipping support during and after their event,” asserts Ross. Ross also see great potential spanning from disruptive technologies, such as the increased adoption of Smart Tech. Connectivity is
growing, especially with increased smartphone usage. Four in 10 residents in the Middle East have access to Internet shopping, making e-commerce one of the most viable opportunities. The sector is predicted to become a $41.5 billion market in the Middle East by 2020. The opportunity for logistics firms comes here in the form of providing shipping solutions to retailers. FedEx currently serves several regional online companies with its express transportation solutions. In April this year, FedEx also announced that it has signed a conditional agreement to acquire TNT Express. This is a significant strategic acquisition and milestone for Fed-
I n t er v ie w
David J. Ross
MEISA countries served
68 countries in the Middle East, Indian Subcontinent and Africa region
Team members
Over 700 based in the U.A.E., Bahrain and Kuwait
Main hub
Terminal 2, Dubai International Airport
Air operations* (Dubai Hub)
17 international (McDonnell Douglas) MD-11 flights arriving to, and departing from Dubai Hub per week 27 international (Boeing) B777 Freighter flights arriving to, and departing from Dubai Hub per week
Stations
7 FedEx Express stations located in ME Direct Served countries: five stations in the UAE, one in Kuwait and one in Bahrain
FedEx retail locations
16 FedEx retail locations in the ME Direct-Served countries: 11 in the UAE, three in Kuwait and two in Bahrain
Call centres
Two call centers: Dubai and Kuwait City
Ex, and will be of great importance to the growth of the Middle East, Indian Subcontinent and Africa region (MEISA). This acquisition will provide development opportunities for both FedEx and TNT team members
worldwide. Once completed, it will allow the company to quickly broaden its portfolio of international transportation solutions, while better positioning FedEx for greater longterm profitable growth.
David J. Ross is the regional president of FedEx Express, Middle East, Indian Subcontinent and Africa since February 2015. Based in Dubai, Ross manages over 9,000 team members and is responsible for the leadership and strategic direction of FedEx Express in the MEISA region. The region encompasses some of the world’s fastest growing economies, including India, UAE, Saudi Arabia, Turkey and South Africa. Ross began his career with FedEx Express in Sydney, Australia, in 1992, managing the company’s ground operations until he was promoted to managing director of Australasia and Pacific Islands in 1993. In 1994, Indonesia was added to his scope of responsibilities. In November of 1995, Ross moved to take up the position of managing director for Hong Kong and Macau, one of the important districts for FedEx in Asia Pacific. Having successfully developed operations in Hong Kong and Macau, he was appointed as vice president of North Pacific Region in September 1998, responsible for all corporate strategies and operations across Japan, Korea, and Taiwan. In April 2011, Ross was appointed as vice president, integration and domestic operations in India. Shortly thereafter in August 2011, Ross was promoted to the position of senior vice president operations for the MEISA region, and moved to Dubai. Ross now heads the region as president, since February 2015.
Logistics News ME | December 2015 | 21
C o v er S t o r y
SOHAR: In a Period of Phenomenal Port and Freezone Progress The rapidly growing deep-sea Port of SOHAR in the Sultanate of Oman and its associate, contiguous Freezone, constitute what some may call the perfect fit. As the facility prepares to celebrate its 15th anniversary in 2016, Logistics News ME goes behind the scenes at the prime location port
S
OHAR Port and Freezone, managed by Sohar Industrial Port Company (SIPC), is a 50:50 joint venture between the Government of Oman and the Port of Rotterdam. This crown jewel located in the capital of the North Bithniyah Governorate of the sea-faring nation is reportedly the birthplace of the Arabian legend Sindbad the Sailor and has an economically promising
22 | Logistics News ME | December 2015
and vast hinterland comprising the GCC, the wider Middle East, the African continent, the populous Indian subcontinent and booming CIS bloc. It can now boast easy connectivity to the remainder of the vast sprawling country, the UAE and more recently a direct road link to Saudi Arabia, in addition to proposed future and planned extensive rail links between the
Sultanate and the remainder of the GCC. The original agreement was signed between the two parties in 2002 and industrial commencement began immediately. The port and freezone, now fully operational with modern sophisticated facilities and terminals has current investments exceeding $14billion effectively making it one of the largest port development projects.
C o v er S t o r y
SOHAR is now equipped to manage 1.5 million TEUs per year
SOHAR Port: 2015 In Focus - The opening of a new and expanded container terminal - A number of historic vessel calls - The transfer of all commercial shipping from Muscat - Alignment of supply chains - The announcement of a major new agro terminal - As international marketing campaign that has built awareness of SOHAR among stakeholders and prospects and is driving new investments
the past year, rising from 16.6 million tons in the first three quarters of 2014, to 19.6 million tons in the first three quarters of 2015. Dry bulk accounted for over half of all the bulk cargo we handled in 2014, with the total dry bulk capacity of SOHAR currently at 45 million tons. This is especially noteworthy given that the three main contributors to this growth – Brazilian iron ore giant Vale’s 9Mt pelletising plant, Jindal Shadeed’s 1.5Mt DRI (Direct Reduced Iron) plant, and Sohar Aluminium’s state-of-the-art plant only began operations after the global recession struck in 2008.
Andre Toet, CEO, SOHAR Port, speaks to Logistics News Middle East: SOHAR has sustained double-digit growth for over a decade (see box). How was this growth accomplish? The relocation of all commercial traffic from Port Sultan Qaboos in Muscat to SOHAR has given us a tremendous boost, especially our container traffic that has more than doubled in a year. But there is still a great deal of organic growth in those figures, especially when it comes to bulk, where we are now one of the biggest ports in the entire region. Where is the increment coming from and what product lines contributed to the surge in volumes? Equipped with deep-water jetties that are capable of handling the world’s largest ships, SOHAR has experienced exceptionally strong growth of close to 18% in dry bulk cargo over
How significant is SOHAR as a transshipment hub? Handling capacity at our state-of-the-art container Terminal C, operated by Oman International Container Terminals (OICT), has doubled over the past year. With the relocation of all commercial traffic from Muscat to SOHAR from September 2014, and the newly expanded Terminal C fully operational, SOHAR is now equipped to manage 1.5 million TEUs per year. We have committed ourselves to building the future of trade in the region through continuous capital investments. By attracting investment in Oman, we are realising the vision of the government to create a major regional hub port which will help grow not only our captive cargo, but will also take full advantage of Oman’s strategic location for trans-shipment activities. The increase in major shipping lines bears witness to the steady growth in both our handling capacity and our efficiency at SOHAR Port. Already, this year, SOHAR has added two major shipping lines to its roster. In May, we
- Q1-Q3 2014 bulk throughput 27,909,451 tons - Q1-Q3 2015 bulk throughput 34,162,751 tons 22%+ increase - Q1-Q3 2014 container throughput 196,347 TEU - Q1-Q3 2015 container throughput 402,850 TEU - 105%+ increase
welcomed the EGL Messini from Evergreen, and in August, the M.V. Hanjin Hamburg. These represent the fourth and ninth largest global lines, and Hanjin now links us to all major ports in Asia, facilitating direct links to South Korea, China, Malaysia and Singapore. These new direct calls help us to reduce costs, savings that can be passed on all the way through the supply chain; as well as broadening the connectivity of SOHAR with the world and offering even more choice for Omani importers and exporters. We will continue to develop facilities at the port in and in the future will have the potential here to serve the latest class of 20,000 TEU mega-vessels. What are SOHAR’s USPs and advantages? So far, a total of more than $21 billion has been pumped into the Port and Freezone and in less than a decade we have created a worldclass facility here. SOHAR Port has a perfect location at the crossroads of east and west and thanks to a naturally deep draft is equipped to handle the world’s largest ships. SOHAR Freezone is lucky enough to have abundant space; available energy; a willing and well-educated local workforce; world-class connectivity to other ports globally, for imports and exports; as well as fast and direct connections right across
Logistics News ME | December 2015 | 23
C o v er S t o r y
SOHAR Port: The future • Oman Oil Company, the energy investment arm of the government, is currently building an $800 million petrochemical plant. • Additional $1.5bn expansion of ORPIC refinery to produce a further 60,000bpd. ORPIC also operates a second refinery in Muscat, connected by a new 266-kilometer pipeline that delivers chemical feedstock to SOHAR. • Continued development of an agrobusiness pillar • Food Zone under development, with a dedicated agro-terminal in the Port - a first for the region. • 180,000sqm sugar refinery confirmed, following contract between Oman Sugar Refinery Company and Sinolight Corporation. The refinery will be able to handle over one million tons of raw sugar imports a year, largely eliminating the need for Oman to import refined sugar. • Flour mills planned, with a daily capacity of over 600 tons of wheat flour a day, coupled with strategic grain silos capable of storing 700,000 tons of grain. • Sohar Food Cluster Company signed to operate 10ha plot, located between the new flourmill and sugar refinery • Other facilities to include: processing molasses that will be produced by the sugar refinery, as well as opportunities in associated areas such as cold storage, warehousing and other investments along the supply chain.
the Arabian Peninsula. We can offer international investors either long-lease land parcels, or pre-built warehousing and storage facilities. That leaves so many possibilities open to industry investors of every size in SOHAR, from global giants to regional SMEs. SOHAR also offers a single window One-Stop-Shop system through which all licences, permits and approvals can be obtained. In practice this means that investors setting up their businesses require very little interaction with the various governmental institutions, making it easier than ever to start a business in the Middle East. Describe how SOHAR Freezone is complementing and driving the Port’s business in SOHAR? The Freezone attracts companies from a range
24 | Logistics News ME | December 2015
of downstream industries, including the petrochemicals, metals and automotive sector. More and more, our Freezone companies are either utilising feedstock produced in the Port area, or shipped in through the Port. The vision is that products manufactured in the Freezone, utilising those raw materials, are then shipped out again through the Port, creating a kind of symbiosis between the Port and Freezone and boosting both sides of our business. More than 8,800 direct jobs have been created at the Port in recent years, which in turn has led to the creation of approximately 25,000 indirect jobs in related industries, both inside and outside the Freezone. One of our core strategies in SOHAR is to maximize the use of Oman’s natural resources, like oil and gas, and to help build more in-country value; while our Freezone is fast becoming a regional hub for the conversion of raw minerals into value-added products. With our new agroterminal we hope to build on this, by eventually combining projects and providing synergized services to increase ease of business and add even more value for our tenants. Investments are already in the pipeline to meet
the extra demand for food packaging, following the planned addition of food processing projects in and around SOHAR. Among these, Ompet, a joint venture between the Oman Oil Company and LG International, plans to open a $600m facility in SOHAR by 2017, turning out 250,000 tons of PET a year once running at full capacity, the feedstock required for plastic beverage bottles. Our aim is to attract new investment in food and food-processing industries and create a cluster than can help feed the region. (see box). Explain how SOHAR’s strategic location outside the Straits of Hormuz is an advantage for container movements? Our location is one of our biggest strengths. As the situation between Iran and the west continues to improve and relations become normalized, that may take some political pressure off the Strait of Hormuz. However, it is still one of the world’s narrowest and busiest shipping lanes and the associated risks carry steep insurance premiums and longer shipping times, and that will not go away. Our prime position outside the Strait, with direct liner calls, means goods can be imported
C o v er S t o r y
and exported faster to the region and at lower costs. Furthermore, we have no issues with congestion. We are a young Port and are building worldclass infrastructure as we develop. Thanks to 400 years’ operational experience of the Port of Rotterdam, we know what to expect as things scale-up and it’s a big advantage to have that kind of heritage and working knowledge inside our company. We have new highways opening up to the UAE and Saudi Arabia and, over the next three to five years, the Gulf railway will be a huge boost to the free movement of cargo around the Arabian Peninsula, something that should help to significantly reduce the cost of doing business in the region. Major South Korean shipping line Hanjin, and one of the top ten in the world, recently debuted in SOHAR. What are the implications of Hanjin’s entry in SOHAR? Hanjin now connects us to all major ports in Asia, facilitating direct links to South Korea, China, Malaysia, and Singapore. As well as Hanjin, we have also added Evergreen to our roster of direct calls in recent months. These new direct calls help us to reduce costs, savings that can be passed on all the way through the supply chain; as well as broadening the connectivity of SOHAR with the world and offering even more choice for Omani importers and exporters. With the relocation of all commercial traffic from Muscat to SOHAR in 2014, and the newly expanded Terminal C now fully operational, SOHAR is now equipped to manage 1.5 million TEUs per year. Ultimately, our goal is to secure that all imports and exports from and for Oman go through Omani ports, and adding these new direct services is another important step on that journey. Which are the top five destinations for outbound and in-bound freight through SOHAR? That obviously depends whether you are looking at volumes or value, but by and large you could say our top five export markets by value are China, South Korea, some of the other smaller Asian markets, like Taiwan, then Japan and the UAE; and for imports into Oman, the top five would start with the UAE, then Japan, China, India and the United States. What implications will the development of rail development both in Oman and the wider GCC have for SOHAR when functional? How will it impact the port’s operations? The plan is, that SOHAR will quite soon become a critical intermodal point in Oman’s new
26 | Logistics News ME | December 2015
rail network. Work is set to begin later this year to build the first stage of this multi-billion Dollar investment, a 207km line between SOHAR and Buraimi on the border with the UAE. The line will link to the wider regional network, facilitating the import of materials and export of goods between GCC member states. Further sections of the 2,000km GCC rail grid will eventually span the length of the Sultanate, connecting Oman’s most populated areas, as well as other seaports and industrial centres. What is your vision for SOHAR for the short and long term? Port of Rotterdam is currently developing a Global Ports Network to facilitate trade and generate new business opportunities around the world. SOHAR Port and Freezone is a part of this new network as well as Porto Central, a greenfield development in Brazil and, of course, the Port of Rotterdam, the largest Port in Europe. By bringing Port of Rotterdam’s brand name and world-class port management expertise to growth markets, the network can help these markets to achieve their full international development potential. Furthermore, it offers commercial parties the opportunity to establish themselves in these growing markets. So aside from continuing all the good work
here in SOHAR, there is plenty to do globally as we continue to develop the network. As the Port and Freezone continue to go from strength-to-strength in SOHAR, we look forward to entering new areas, such as the food industry to take a recent example, as we start to create a regional hub for that industry. How is SOHAR energising the economic development of the Sultanate of Oman and particularly the Batinah Governorate? Oman’s Vision 2020 programme aims to diversify Oman’s economy beyond the oil industry. The development of SOHAR is a good example of how the nation is strengthening its manufacturing capabilities, and slowly shifting away from being a country that only exports hydrocarbons. Despite currently low global oil prices, the development of industry in Oman will continue regardless, because the cost of energy resources within the country will always be relatively low, irrespective of global market prices. SOHAR is a critical link in Oman’s commercial logistics industry and is committed to building a sustainable logistical hub that will help Oman to achieve its Vision 2020 objective of globalising the economy.
C o v er S t o r y
SOHAR Freezone’s industrial clusters • • • • • • • • •
Logistics Metals Automotive Iron Steel Plastics Rubber Ceramics Chemicals
SOHAR Freezone: 2015 in focus • • • • • • • • •
Engr. Jamal Toufiq Aziz, CEO, Freezone Sohar and deputy CEO, Port of Sohar shares his insight How significant is the logistics cluster at SOHAR Frezone and how much of a priority is it for you? The logistics sector in Oman is set to grow beyond the $12 billion mark by 2017 and the Sultanate is quickly advancing its plans to diversify the economy beyond its traditional hydrocarbon base, and transforming itself into a major industrial and logistics centre for the region and beyond. As Oman diversifies its economy, SOHAR Port and Freezone has a critical role to play.
Our rapid growth has positioned SOHAR as a significant regional hub, and we are fully committed to building a sustainable logistics infrastructure that will support Oman in achieving our Vision 2020 objectives. Our research indicates that some $250 billion has been allocated for the construction of 67,000km of railway lines across the Middle East. This includes the eagerly anticipated Gulf Railway, which will connect Oman with Bahrain, Kuwait, Qatar, UAE and Saudi Arabia over the course of the next three to five years. The newly completed 680km road linking the Sultanate with neighbouring Saudi Arabia and traversing through the vast Empty Quarter is also going to boost trade and logistics between the two countries. What is driving growth at SOHAR Freezone? SOHAR is now one of the fastest growing port and free zone developments in the world, with investments totaling well over $21 billion. The last twelve months alone have been remarkable, with the transfer of all commercial shipping from Muscat; the opening of a new and expanded container Terminal C and more than 100% growth in container throughput; a number of historic vessel calls, including new direct
327ha total tenant occupied space in 2014 57ha total tenant occupied space in 2015 +70% increase 14 SME tenants in 2014 25 SME tenants in 2015 27 large tenants in 2014 42 large tenants in 2015 3,175 employees in 2014 5,975 at time of press
lines to Asia and the first 10,000 TEU ships to call in this part of the world; the announcement of a major new Food Zone, and a marketing campaign that has built international awareness for SOHAR and is driving new investments faster than ever before. The existing One-Stop-Shop system in SOHAR, designed to facilitate the start-up of Freezone businesses by easing the complexity of initial business registration, the issuance of all required government permits, as well as visa and labour processing, was completely overhauled and the department was expanded from three to ten specialists. In addition, SOHAR held down its historically low rates for a further year, making it highly competitive for land lease, energy and labour costs compared to other major regional players. How is SOHAR Freezone energising and reinforcing Port activities and revving up the economy of the Sultanate of Oman? Driving the growth of Oman’s economy and serving the wider GCC region remains a top priority for SOHAR. SOHAR Port and Freezone is a crucial link in Oman’s commercial logistics industry and a vital contributor to the diversification of the country’s economy.
Logistics News ME | December 2015 | 27
C o v er S t o r y
The Freezone attracts companies from a range of downstream industries, including the petrochemicals, plastics, metals and automotive sector. More and more, our Freezone companies are either utilising feedstock produced in the Port area, or shipped in through the Port. The vision is, products that are manufactured in the Freezone using those raw materials are then shipped out again through the Port, creating a kind of symbiosis between the Port and Freezone and boosting both sides of our business. More than 8,800 direct jobs have been created at the Port in recent years, which in turn has led to the creation of approximately 25,000 indirect jobs in related industries, both inside and outside of the Freezone. What are the new business source markets SOHAR Freezone is targeting via the global marketing campaign that was launched in 2014? Our ability to reach global audiences has been greatly accelerated by the global marketing campaign that we launched last year. This campaign has already achieved a number of milestones following the launch of a new brand identity for SOHAR Port and Freezone back in January 2014. It is one of a number of initiatives aimed at engaging key markets in developed and emerging economies, including China, Korea, Japan, India, Brazil, the United States, Europe and, of course, the Middle East. Where is new investment in SOHAR Freezone coming from and who are the top five players in this? Currently our main investments from outside Oman are from other GCC countries, especially the UAE and Saudi Arabia, India, China and Europe.
With most of the leasable plots within Phase one of the Freezone already leased out, work will shortly commence on Phase two of our massive 4,500-hectare development. International businesses eager to invest will be offered either long-lease land parcels, or pre-built warehousing and storage facilities
What are the expansion plans for SOHAR Freezone including further infrastructural development around the vicinity? So far, a total of more than $21 billion has been invested in the Port and Freezone and in less than a decade we have created a worldclass facility here. We were recently commended by the UK’s Financial Times’ fDi Magazine in their ‘Global Free Zones of the Year 2015’ competition, for ‘Ease of Access’ and for ‘Infrastructure Development’. As I mentioned, we soon hope to see the development of a fully-fledged Food Zone taking shape. Combined with recent developments in our roads network, as well as air, sea and, soon, rail infrastructure, this will undoubtedly spur interest in SOHAR as a prime destination for further agro-industrial investments. Our aim is to attract new investment in food and food-processing industries and create a dedicated Food Zone that can help feed the region.
What challenges confront SOHAR Freezone going forward? The Port is coming up to its 15th anniversary, with the adjacent Freezone added to the mix about six years ago. With investments now totaling well over $21 billion to date, the growth that we have experienced in such a short space of time has been phenomenal. I suppose the single biggest challenge as we move forward is to keep the momentum up as we continue to grow the businesses here.
28 | Logistics News ME | December 2015
As CEO, what is your broader vision for SOHAR Freezone for the long-term? SOHAR Freezone should be a formidable player in regional supply chain and a major hub for re-exports. In addition, Port of Rotterdam is currently developing a Global Ports Network to facilitate trade and generate new business opportunities around the world. SOHAR Port and Freezone is a part of this new
network as well as Porto Central, a greenfield development in Brazil and, of course, the Port of Rotterdam, the largest Port in Europe. By bringing Port of Rotterdam’s brand name and world-class port management expertise to growth markets, the network can help these markets to achieve their full international development potential. What is your parting message to the region’s logistics and supply chain community? Oman’s logistics sector is projected to grow beyond the $12bn mark by 2017, as the country progresses with its plans to become a major regional logistics hub. We predict that the new railway network will create a second ‘industrial revolution’ in the region and will transform the Sultanate into a major cargo hub, creating a wealth of investment opportunities. SOHAR is a critical link in Oman’s commercial logistics industry and is committed to building a sustainable logistical gateway that will help the nation to achieve its Vision 2020 objectives. From the standpoint of Oman’s economic diversification strategy, the logistics industry has the potential to eventually surpass the hydrocarbons sector as the nation’s economic mainstay.
Sin g l e I den t ifica t i o n Tec h n o l o g y
Revolutionary new identification technology has Hive buzzing In a move that has wide ramifications for the logistics, supply chain, RFID and other sectors, a UAEheadquartered technology is about to unveil its totally secure wireless technology, enabling ‘single identification’ across multiple applications, known as Hive One ID.
H
ive Technology is a technology innovation and consulting business, head-quartered in Dubai, UAE with regional offices located in Ireland and South Africa. Hive Technology was established with the foresight that in a connected world, single identification of all objects and people will become a major constraint. Enter the patented, proprietary ‘Hive Single Identification’ Technology, the fifth generation wireless product developed by the South African inventor Terry Ashwin who has been designing products in this domain since 1978. Terry patented the world’s first Active RFID (radio frequency identification) in 1999 but continued to work on the technology today known as Hive One ID. Malcolm Dias met the ebullient and charismatic Mohideen Shaikh, director, Hive Technology, to find out what the buzz was all about.
Hive Technology launched the Hive One ID technology at the Arab Future Cities Summit (AFCS), held in Dubai in early November 2015. Explain ‘One Identification’ technology? To understand ‘One Identification’ in the Hive context, one needs to look at the challenges in the current technology landscape. Currently there are different identification methods and devices for different purposes resulting in clutter and complexity. A person living in the UAE for example has a national ID, passport, labour card, several other ID cards, a driver’s licence, bank cards, loyalty cards, access cards, travel cards, garage openers, remotes for vehicles, keys and more. This will only increase as more and more devices are connected to the Internet. Existing identification technology only functions in silos. Even though there already are uni-
versal product codes (UPC) the data collected at every point in the value chain is owned by the entity that collects the data. These silos partly exist due the fact that existing reader technology can only be configured to update a specific data destination with all the IDs read. Massive duplication of data about non consumed entities—people, objects, animals and more—in databases across the cloud which was only accurate at the point of collection. Compromised security and privacy is increasingly becoming a problem. Accounts are hacked and with identity theft, security is compromised and identities are used for criminal activities. Through a comprehensive analysis of the problems and considerations, Hive Technology designed a configurable single identification technology that addresses the above problems. The technology consists of two components.
Logistics News ME | December 2015 | 29
Sin g l e I den t ifica t i o n Tec h n o l o g y
Hive Highlights • Hive One ID technology is the only comprehensive single identification technology that makes provision to identify physical as well as virtual objects. • The ability to enable existing products with single identification capability. • The One ID is totally unique and cannot be copied or recreated. • The Hive One ID is configurable and the data on every One ID can be totally uniquely encrypted should the application require. The deployment methods recommended by Hive ensures total privacy and security should it be required. • Hive technology uses a proprietary through the air data transfer method that is ten times faster than any of its competitors allowing more devices in the same space. This feature also allows for the use of this technology on applications where high speed reading is required. • Hive is the only identification technology where readers are not application-specific. Any reader can read any identification and ensure that the data is transferred to the required destination. • Hive technology has local intelligence and can group objects or people without being connected to the internet. • Hive One ID technology can verify identity with the carrier’s biometrics without an internet connection. • Hive One ID can be incorporated in cell phones where the cell phone acts as a Hive One ID. • The Hive One ID solution can also be used to authenticate virtual objects for example electronic agreements, purchase orders, emails, telephone conversations and more. 30 | Logistics News ME | December 2015
The first is the secure and unique Hive One ID. The second is the Hive Reader, which securely reads any One ID in range. When a One ID passes within range of a Hive Reader, the One ID will automatically transmit its unique identity as well as instructions—according to predefined rules. The Hive reader can then use this data to securely trigger local actions, or can securely transmit this data onwards to the address specified on the One ID for further actions or storage. Hive One ID products can include basic to advanced sensing capabilities not only identifying objects but also monitor the use and functioning of the object. The technology has multiple applications in all industries and verticals. Hive technology provides the missing link in the ‘Internet of Everything’ technological revolution that is now rapidly gathering momentum. On which industry verticals within the supply chain and logistics field will Hive have the greatest bearing? Hive One ID Technology is not a product but a technology that enables existing providers in the supply chain and logistics space to enhance their existing products with the features our technology provides. Hive has appointed distributors and solution providers in every industry to incorporate the technology into their products on an OEM (Original Equipment Manufacturer) basis or to use the generic Hive Technology in client solutions. Rights to global rollouts for example the shipping containers will be awarded to distributors with global reach. What is the larger vision for Hive? The vision is to provide every person, animal and (non-consumable) object on the planet with a single identification that can be used across multiple applications.
Sin g l e I den t ifica t i o n Tec h n o l o g y
Profile: Mohideen Shaikh
director, Strategic Business, Hive Technology
Mohideen is a multifaceted senior management sales professional with a proven history of delivering quantifiable, profit-making achievements in both startup and turnaround situations in technology and business software industry. Mohideen has held several challenging positions at companies such as Informatica Corporation, Business Systems, Kol Corporation, where he delivered ground breaking changes for these organisations such as achieving significant revenue growth, geographic expansions, re-defining a successful channel model and more. Some of his recent key accomplishments have been launching supply chain and logistics software solutions for 2PL, 3PL and retail industry and setting up partner ecosystems in sustaining a successful ‘go to market’ strategy. Mohideen works closely with cross functional teams including marketing, professional services, pre-sales and senior management to accomplish and sustain a common goal.
Hive’s general portfolio of offerings in SC&L Hive Technology is an identification and monitoring technology that can be used across all aspects of supply chain and logistics. The technology can address unique problems in this vertical by the mere fact that the technology can operate across silos. A good example is the use of One ID in the Supply Chain and Logistics space to examine how the technology can track and monitor shipping containers across multiple organisational and national boundaries. The technology can be used locally in ports, container yards and by logistics companies with Hive readers in every installation globally. The Hive readers are USB or serial devices that can be added to existing networked infrastructure. The reader infrastructure can be used for all Hive One IDs and can be used in these different environments to track staff, vehicles, assets and shipments updating the IP address specified on the Hive One ID. The same infrastructure can update a central container database with global container movements. The containers can be tracked when on open sea or in the container yards. The containers can also be tracked while being transported by rail or road. The accurate location of containers can be determined where readers are equipped with GPS or else via Hive Location IDs that provide the accurate
position of the readers. The central container database allows for any authorised individual in the value chain to find the container whereabouts and whether in use. The container’s Hive One ID can also be equipped with movement sensors and anti-tamper sensors that will allow the logistics partners to monitor not only the container but also to ensure that the container is not tampered with. Where tampering results in an alarm condition, an alarm condition may be transmitted to a suitable security service provider close to where the container is located. The container database will also update wherever the container is seen by a public reader next to motorways, intersections and parking areas. The technology enables the collection of data in a central database even though the assets, in this case containers, are in use by thousands of logistic partners globally. Single identification is also a key enabler of product lifecycle management. Single identification enables tracking of products from origin to disposal. The Hive OEM model allows for the technology to be included in products to not only uniquely identify the product but also to transmit usage and error codes directly from the product to the manufacturer.
Hive Technology CEO Gert Botha on: Vision:
Hive Technology will aim to enable existing solution providers to the SC&L industry with its single identification technology and implementation methods that will provide new and innovative options to improve and simplify internal as well as client processes.
Technology Statement:
Single Identification technology will simplify the way logistics operators identify, monitor and secure goods or stock throughout the value chain. Exposing this information to partners and client can be simplified dramatically.
Logistics News ME | December 2015 | 31
C o u n t r y f o c u s : I ran
Logistics industry to benefit from ease of Iran sanctions
F
ollowing the July 2015 Iran Nuclear Agreement between the P5 + 1 countries (the United States, United Kingdom, France, Russia, China, Germany and Iran), the settlement provides for the termination of most European Union (EU) and United Nations sanctions and significantly more modest changes to the longstanding US embargo against Iran.
32 | Logistics News ME | December 2015
The much-touted phasing out of the longprevailing sanctions will open doors to commerce and industrial development by businesses in the UAE, the wider GCC and even globally, delegates to a seminar were told. The logistics and transportation industries will be some of the single biggest beneficiaries from relatively unimpeded trade. KPMG and international law firm Fresh-
fields Bruckhaus Deringer recently held a conference in the UAE titled ‘Investment Opportunities in Iran’ to share insights on what to be aware of when approaching the Iranian market to do business. The conference was attended by senior stakeholders and investors from across the UAE. With a population of 78 million and high literacy rates, Iran is the most populous and the
C o u n t r y F o c u s : I ran
All eyes are now on the much-anticipated easing of the sanctions in Iran by the world’s powers, expected to boost investment and trade opportunities and as a spinoff, logistics and supply chain services industries both in the GCC and in Iran. That’s the view from KPMG, a global network of professional firms providing audit, tax and advisory services.
Nilesh Ashar, partner and head of tax, KPMG
second largest country (after Saudi Arabia) by area in the Middle East and the 18th largest economy in the world after Turkey and before Australia. Currently, almost 64% of the population is under the age of 35 years – making it a lucrative market for UAE investors. Iran has also an established industrial base and is the largest exporter of cement in the world alongside commodity and energy reserves. It has the
largest natural gas reserves and the fourth largest oil reserves in the world. Iran has highly-developed logistics and transport infrastructure with 54 airports and over 10,000 kilometers of railway. It is a diversified and resilient economy, and despite years of war and sanctions it has continued to grow consistently, with the oil sector accounting for only 10% of GDP.
Sharukh Dumasia, partner at KPMG notes that Iran is the last unexplored frontier for international investors. It boasts favourable demographics, significant private sector, resilient diversified economy, established infrastructure and encouraging tax environment present rich opportunities. Global investors have recognised this and have already begun preparing themselves for potential investment; ready to close deals as soon as sanctions are relaxed. According to Dumasia, the key to success will be—finding the correct local partner, thorough due diligence to understand the opportunities and careful structuring to ensure legal protection alongside commercial efficiency. Dumasia also voices KPMG’s expertise to offer potential investors an overview of the economic and business landscape of the country and share perspectives on current and future investment opportunities, including the factors to be aware of when approaching the Iranian market. Nilesh Ashar, partner and head of Tax at KPMG recognises that Iran has no tax on dividends and no capital gains tax. Coupled with low corporate tax rates, free zones and a number of established double taxation treaties, Iran is a very attractive option for investors. Easing of sanctions could lead to liberalisation of trade and direct foreign investment - particularly into oil, gas, and petrochemicals. It could also lead to a rise in size and importance of capital markets and result in Iran being added to the MSCI Frontier or Emerging Markets index. Farid Sigari-Majd, partner at Freshfields remarks: “As talks of easing sanctions gain momentum, investors are eager to understand potential business opportunities in Iran. Investors can seek to gain legal protection under established foreign investment laws within Iran and internationally through a number of bilateral agreements with more than 40 countries across the world.” In addition, it was pointed out that prospective investors need to be aware of factors such as: pre planning deal-related considerations (applicable sanction regime, restrictions on foreign investments, local partnerships), deal execution (local advisors, due diligence, commercial codes, financing) and post deal considerations (human capital, labour laws, capital controls). It was noted by all speakers that Iran offers vast market prospects for investors, the business environment is buoyant and the potential rewards for those prepared to embrace this market are immense.
Logistics News ME | December 2015 | 33
C o u n t r y F o c u s : I ran
Eye on Iran
as Iran prepares for economic sanctions to be lifted this month, Eduard Gracia, Middle East principal, AT Kearney, explains how the country’s energy and logistics sectors will benefit
A
s 15 December draws closer the question on many minds is how a free to trade Iran could alter regional dynamics. A former giant of oil and gas production bestowed with the fortune of natural resources and an advantageous geographical position, Iran will soon be competing for a share of the region’s business and brains. It’s a development that could change how the region works, and it will certainly be met with caution by some nations. But for business, it is likely to open new streams of potential and many new sources of revenue. The country’s economy is only just beyond the world’s top 20 and, for a nation which has been effectively closed for business for a number of years, that’s an impressive achievement. In the first instance, it is likely that with newly regained economic freedom, Iran will be able to source the technology and knowledge it needs to re-open its closed oil fields and up oil production by at least the 800,000 barrels it dropped by when sanctions were imposed. Once sanctions are lifted, so too will the ban on shipping insurance end, and the pool of players who can ship cargo out of the country will no longer be severely reduced. “In early 2011, Iran was exporting 2.3mbpd of crude in addition to close to 100,000 barrels of various products; significant numbers,” says Middle East principal, AT Kearney Eduard Gracia. “What that means is that Iran’s position in terms of products is not going to be the same as it was in 2011, when it was the biggest gasoline importer in the Middle East because they couldn’t cover the production of gasoline, but over time the capacity for refining has increased,” he adds, referencing the sale of LPG, naphtha, jet kerosene and residual fuel oil, which are all exported on different ships. “In the following few years you would expect Iran to be interested in developing its reserves as much as possible. If that development happens, like Iraq was able to do over the last few years, then what you would expect is that additional production takes the place of more expensive sources,” he continues.
34 | Logistics News ME | December 2015
Eduard Gracia, Principal at A.T. Kearney Middle East
Clearly energy and breakbulk cargo will be a huge driver of the logistics industry, as well as the overall economy, and opportunities also exist in infrastructure development. But so too Iran’s inevitable development as a major consumer market in the region would bring about enormous supply chain opportunities. For that, Iran may look to position itself as a regional logistics hub; it has a geographical advantage over most GCC states, which combined have spent billions of dollars on port development. In Saudi Arabia these include King Abdul Aziz Port, Jizan Economic City project and King Fahd Industrial Port in Jubail. In Qatar, $7.1bn has been earmarked for a mega port project, near the busy Messaeid Industrial Zone and Port. The UAE is developing the ports of Jebel Ali Free Zone and Kizad on its Gulf coast, and further
development in Fujairah and Ras Al Khor, on the east coast. Most significantly, on the approach to the Strait of Hormuz, Oman operates cargo ports in Salalah, Sohar, Qalhat, sultan Qaboos and Khasab. A port in Iran, where cargo can join to existing rail and road infrastructure or re-export to the rest of the world, could be tough competition. “It could be something they may want to do but nobody knows right now. We are saying Iran as a country will need investment across the chain. So will they invest strategically, or in everything? Logically you invest where the greatest returns are,” Gracia predicts. Energy in energy However, the world’s oil markets are very different to 2011, when prices reached an average of $111 and, for the first time, broke the
C o u n t r y F o c u s : I ran
Tehran skyline and greenery in front of Alborz Mountains
global benchmark of $100pb. Today, prices fluctuate around $50pb and oil is not the be all and end all it is to other nations. “When the price of oil goes down, upstream suffers at the same time. If oil prices are down, globally upstream investment is down too, but that doesn’t happen here because upstream costs are so low. “In the latest forecast the impact here will be less pronounced. There is room in downstream but we should keep in mind there is a lot of downstream capacity. There is a lot of capacity in Iran and globally also, but it’s a difficult assessment,” Gracia explains. “If you look at price forecasts most analysis are forecasting that oil prices will take a slow recovery path. How slow we don’t know. It’s very speculative, but you can say that certainly technologies can have an im-
pact as they reduce the need for energy. “There is always a decrease in efficiency for energy and every year you need to produce more in order to make the same GDP contributions; it is safe to assume that will continue,” he adds, stating that while technological evolution and a move away from hydrocarbon dependency in the GCC are evident, past analyses have been too quick to talk about peak oil. According to Gracia, the greatest investment opportunity for rapid growth will be in gas, due to Iran’s existing bottleneck. Oil production will develop too as despite low prices, the country can be highly competitive; thirdly, downstream chemicals will also provide opportunity for growth. “I can see opportunities across the value chain but to put those in order I would always
begin with gas,” he clarifies. There is a wide spectrum in preparations foreign investors can involve themselves in and the market will surely become very competitive very quickly. Iran, in turn, must make contract formalities attractive in order to retain and attract both business and knowledge. Gracia states there is “logic” in engaging in mergers and acquisitions, as companies face lower values due to lower oil prices. “They will be in financial situations which make them more favourable to acquire. Those investments make a lot of sense when you expect the price of oil to go up. It is predicted to rise, but it may be a gentle slope. There may be a lot of opportunities which are good from a price perspective,” Gracia explains. People Power But one thing the country will need the most is talent. While Iran has far from suffered a brain drain during its years under sanctions, it hasn’t been able to provide its engineers and petrochem sector talent with the opportunities and experience necessary to tackle the nation’s forthcoming requirements. “Iran has good engineers, but obviously for many of these developments they will need expatriate talent so investors and IOCs need to be interested and they will need regulations in place to attract those necessities” states Gracia. “Upstream, Iran does not allow alienation of its natural resources to foreign entities, so in that respect there are restrictions. In the past what they have done is establish a buy back contract. If they want to develop these reserves quickly, they have to make them more attractive and there are many ways to do that,” he adds. For the immediate road ahead, forecasts are driven by assumptions but Gracia is certain on the likelihood of more cross traffic in the Middle East when it comes to the factors driving the breakbulk sector. Logistics infrastructure will be driven by the gas industry, for which such elements will be “crucial”. What remains to be seen is the worst case scenario; the continued uncertainty, both regionally and globally, in politics and security. The uncertainties are many and include the sanctions themselves but what does remain a strong possibility is that Iran could, through its breakbulk sector, become a very real force in regional shipping and logistics and, ultimately, re-write the rules of the game.
Logistics News ME | December 2015 | 35
ADIPEC 2105
ADIPEC 2015 3M oil and gas debuts at Show
3M oil and gas solutions address the needs of companies in all three sectors of the oil and gas industry: upstream, midstream and downstream. From exploration and production to refining and petrochemicals, 3M technologies offer an array of innovative solutions to many of today’s toughest challenges.
O
ver the years, ADIPEC has consistently grown to become the most respected and anticipated exhibition in the oil and gas sector across the Middle East region. The event provided 3M as other exhibitors, an unprecedented access to senior technologists, decision makers, executives and key stake holders in the region, all of whom are looking for innovative ways to maximise productivity and reduce costs, which the company offers. Logistics News Middle East caught up with Debarati Sen, business director when 3M oil and gas Solutions participated for the first time in ADIPEC 2015
3M made its maiden foray at ADIPEC 2015. Briefly what propelled this initiative? With global volatility in the oil and gas market, we do believe that the demand for innovative solutions that increase efficiency and lower costs is significantly higher than before. More and more we hear of the same refrain of enhancing productivity and streamlining operations at diminished costs. At 3M, we offer an array of solutions for the oil and gas sector and ADIPEC 2015 is a good platform to connect with and interface with industry professionals. To enhance the experience and engage our customers in finding solutions for their chal-
36 | Logistics News ME | December 2015
lenges, we will be opening a Customer Experience Center in Abu Dhabi within the next few weeks. Dedicated to the oil and gas industry, this centre is among a select few market focused 3M customer centres of its kind globally. How significant is the Oil and Gas sector for 3M? For more than 60 years in the oil and gas industry, 3M has built a massive portfolio of product solutions encompassing more than 10,000 product solutions for the industry, designed to protect people and the environment, extend the life of critical assets and improve productivity and recovery. With the current situation in the oil industry, more and more oil and gas companies
are looking at solutions that improve productivity and lower operational costs. This makes it an extremely significant sector for us as we provide an abundance of solutions to help companies increase productivity, lower costs and potentially benefit from higher returns on investment. What potential do you foresee for 3M in this arena? At 3M, we understand the challenges the industry is now facing which enables us to work closely with the oil and gas companies to help them conserve resources by doing more with less. Our technologies and products help these companies solve complex problems across the value chain - upstream, midstream as well as downstream segments.
ADIPEC 2105
Are you concerned about the changing financial dynamics for the O&G segment accentuated by declining oil prices and the reluctance of companies to invest in new developments? As mentioned earlier, we are a science-based company with solutions that help companies increase efficiency, improve productivity and reduce costs. We have seen heightened interest in our efficient solutions from the industry players in the current environment which will help them overcome the current challenges generated by declining oil prices. Clearly there is a move towards cleaner, renewable, sustainable energy sources and resources and lesser dependence on fossil fuels and ‘dirty’ oil. How is 3M contending with this challenge? The issues around effective use of energy resources and climate change are complex and interconnected. At 3M, we are focused on seeking solutions that promote energy conservation, clean energy infrastructure and help reduce carbon footprint. We already have many products and technologies that reduce the impact of energy use, promote energy efficiency, and reduce material intensity. Our goal is to continue developing and implementing solutions that help the industry and generate positive long-term impact. Is 3M also involved in developing alternate energy resources; wind, solar, hydroelectric, LNG? 3M continues to evaluate, invest in and incorporate on-site renewable energy sources within our own operations, where feasible, while continuing to expand and collaborate with external partners. We estimate that approximately 1% of 3M energy used today is from renewable sources generated on-site in our own operations. We also partner with utility providers that incorporate renewable energy into their own operations, thereby passing those benefits onto their customers, including 3M. What is your assessment of ADIPEC 2015? Did it meet your preset expectations? ADIPEC 2015 was quite beneficial in helping us generate potential leads. We had a number of visits from senior executives and key decision makers of reputed organizations and we are excited to see the interest and engagement in 3M solutions. We are
3M oil and gas solutions address the needs of companies in all three sectors of the oil and gas industry: upstream, midstream and downstream.
bullish on this region and look forward to continued growth in our business in the Middle East. Do you envisage a bigger role for 3M in the energy space going forward? What opportunities do you foresee for the company? At 3M, we look at sustainability in terms of shared global needs and the future of our business. As the population grows, particularly in emerging economies, challenges like energy availability and security, raw material scarcity, human health and safety, education, and development must be addressed to ensure people across the globe can lead healthy, fulfilling lives. We recognise that the impact we make includes our own operations, the difference we make for our customers through the products we offer, and the difference we make in local communities has far greater impact. Amplify on 3M glass bubbles? What are the USPs and what prospects do you anticipate for this new technology in the region? 3M™ Glass Bubbles are engineered hollow
glass spheres typically used as a density reducing additive in cement slurries and drilling fluids to reduce and control bottom hole pressure. In addition to several industry leading products, we introduced the latest product from our portfolio at the ADIPEC show. The new HGS4K28 3M Glass Bubble is a highstrength, low-density additive specially designed to afford greater density reduction capabilities than other lightweight additives under similar downhole conditions. With the improvement in the strength-todensity ratio, the newest addition to the Glass Bubbles portfolio is ideal for low to moderate downhole pressures. No other additive on the market today can match the value 3M provides with Glass Bubbles, as these hollow glass microspheres offer more strength at less volume, meaning you purchase less, ship less, reduce inventory, and reduce storage costs. Is this new revolutionary 3M technology being harnessed elsewhere? The new product will be commercially available in the markets across the world later this year, with sample and field trial quantities available for order since October 2015. Its use offers the potential for improved well integri-
Logistics News ME | December 2015 | 37
ADIPEC 2105
ty, reduced non-productive time and increased well productivity when drilling in highly depleted zones and weaker formations, as it may help minimise or eliminate problems associated with fluid loss, lost circulation and formation damage. How are proprietary 3M O&G technologies pioneering new trends towards lowering costs and boosting efficiencies in the industry? Specifically referring to Glass Bubbles, the HGS4K28, coupled with 3M’s higher strength HGS19K46, which launched globally earlier this year, 3M demonstrates that less can be more, even under pressure, as these products reduce costs by creating lighter cement slurries and drilling fluids while requiring less additive to achieve target density at pressure. Using less additive creates stronger, cured cement for better performance. Furthermore, in drilling, completion and work-over fluids less additive gives customers more pressure control, as HGS4K28 and HGS19K46 help to achieve and maintain target density throughout the operation. What challenges confront you for the short-term future? When we think about our customers, partners, and communities, and our mutual challenges and needs, we see a shared opportunity. In addition to environmental challenges, we recognise the connectedness of social challenges we face in pursuing a better world. Our strategy, goals, and report are organised around these challenges and how we’re addressing them for the sustainability of our business, our planet, and our daily lives. What did 3M showcase at ADIPEC 2015? In addition to the Glass Bubbles, 3M showcased nearly 30 solutions that improve productivity for the oil and gas industry, protect and extend the life of critical assets and protect people and the environment in which they operate. One of the most noteworthy products was 3M Novec 1230 a revolutionary non-conductive fire suppressing agent. Unlike other agents, Novec 1230 suppresses fire significantly faster whilst preserving any technological products that come into contact with their solutions. Other products showcased by 3M at ADIPEC were the Cubitron II Abrasives, our tapes and adhesive solutions including the VHB Tape and personal protective equipment to protect workers such as respirators, hel-
38 | Logistics News ME | December 2015
mets, protective apparel, eyewear and more. It was announced that 3M’s Customer Experience Centre will be officially opened shortly. Tell us more. The Customer Experience Centre will be opened in Abu Dhabi on the 8 December and is located very close to the Abu Dhabi National Exhibition Centre. It will showcase the latest solutions 3M has to offer in the oil and gas sector and other key sectors that 3M operates in. How has 3M’s O&G Solutions performed to date since you set up operations in Abu Dhabi in September 2014? What other countries do you oversee? 3M Gulf established its oil and gas solutions division in Abu Dhabi in September last year to oversee the markets of the UAE, Kuwait, Oman and Qatar. Over a span of one year, the company’s oil and gas solutions business in the region witnessed a growth of over 20%, mainly driven by the company’s close proximity to its customers through one customer-facing entity. Furthermore, the new 3M Customer Experience Centre is strategically located in Abu Dhabi to attract key decision makers from the UAE and across the region to ensure consistent growth. Give us a sense of the scale and extent of 3M’s products offering to the O&G sector? 3M has several solutions for downhole applications. From lightweight glass bubbles for reducing the density of downhole cements to ceramic sand control and well stimulation chemicals. Our personal and site safety solutions keep workers safe in hazardous environments. In addition our electrical, maintenance and repair operations solutions drive operational productivity and our high-performance coatings help prevent and deter corrosion in extreme environments. Our filtration solutions drive downstream productivity and specialty polymer processing additives help drive customised properties in polymer and packaging films. What are your ambitions for 3M Oil and Gas in the region? Our ambition is to provide organizations in the region’s oil and gas industry with the most innovative and sustainable solutions to improve productivity, increase the lifespan of equipment, reduce costs and significantly contribute to protecting the environment.
Debarati Sen Business Director – 3M oil and gas solutions
Debarati (Deba) holds the position of global business director of oil and gas solutions representing the broad portfolio of 3M solutions to the oil and gas industry. Deba’s career spans over 23 years in Asia and US with over 18 years in 3M in various global, regional and country roles driving marketing, sales and customer engagement, product development, business development, strategy as well as mergers and acquisitions. She has also held the position of vice president of global marketing – equipment protection business at Pentair, Inc. Deba is on the board of the 3M A3CTION (Asian Employee Resource Network) and an executive member of 3M’s Women’s Leadership Forum. She also volunteers her time in reducing homelessness and poverty in the community and in supporting education and empowerment in women. Debarati holds a BS in Electrical Engineering, as well as an MBA in marketing and finance. Her career with 3M started in India. She has been with 3M since 1996.
Port Call
Jebel Ali Port receives world’s largest container ship
DP World’s flagship Jebel Ali Port recently received the world’s largest container vessel, the Magleby Maersk on its maiden visit to the region. This event reinforces Dubai’s role as a regional gateway for the new generation of mega liner vessels.
T
he management and operations team at Jebel Ali rolled out a well-drilled operation to welcome, berth and service the mammoth liner with the clockwork-like precision that has made the container port the most productive in the world. The 18,270 TEUs capacity vessel was welcomed by Mohammed Al Muallem, senior vice president and managing director, DP World, UAE Region and officials from Jebel Ali Port who were also joined by Dubai based Maersk Line top officials including Mark Rosenberg, head of procurement, Maersk Line. A commemorative plaque marking the occasion was presented on behalf of DP World to Captain Soren S. Maagaard, master of Magleby Maersk. Jebel Ali is one of the very few ports in the Middle East equipped to receive containerships of the size of Magleby Maersk, a TripleE class vessel with an overall length of 399.2 meters, equivalent to four football pitches. The Magleby Maersk moulded beam is 59.00 metres wide and the ship has a maximum draft of 16.50 metres. Maersk Line operates the carrier on its 2M Europe-Asia route. “Receiving and handling the Triple-E Magleby Maersk is another milestone for DP World and Jebel Ali Port which is capable of handling the world’s biggest container ships, delivering efficiency that simply can’t be achieved elsewhere,” remarked Mohammed Al Muallem at the welcome ceremony. “We chose DP World’s flagship port, a priority for Maersk, for her maiden visit by Magleby Maersk because of the exceptional operational efficiencies offered here. We’re delighted that the DP World team has serviced our Triple-E vessel to our satisfaction and thank them for continuing to support our growth over the past 40 years in the UAE,” observed Mark Rosenberg. Jebel Ali is equipped with the most sophisticated STS (ship-to-shore) semi-automated cranes that are operated remotely from the port’s Operations Building. With the completion of the 4 million TEU Terminal 3 the port will be able to handle 10 mega ships simultaneously.
Mohammed Al Muallem, senior vice president and managing director, DP World, UAE Region welcomed Captain Soren Maagaard, master of Magleby Maersk.
Magleby Maersk at Jebel Ali’s Terminal 2
Its ultra-modern infrastructure, smart operation systems and the world biggest quay cranes strengthen Jebel Ali’s role as the gateway to the Middle East, Africa and the Indian Subcontinent.
DP World recently started the construction work on the brand new Container Terminal 4 which will deliver new capacity of 3.1 million TEU in Phase 1 by 2018, taking the port’s total capacity to 22.1 million TEU.
Logistics News ME | December 2015 | 39
J edda h Ware h o u s in g M ar k e t
Jeddah Warehouse and Logistics Market In overdrive With the Government of Saudi Arabia targeting a contribution of 20% of GDP from the industrial sector by 2020, up from 10% in 2013, Jeddah’s warehouse, logistics and manufacturing market is set to play a key role in meeting this objective.
A
ccording to leading global commercial real estate company Colliers International’s ‘Jeddah Warehouse and Logistics Market Overview’, which provides a timely update on the state of the market and provides insights on the key trends likely to impact future development, the principal commercial city on the Kingdom’s Red Sea coast is set for a boom in the warehousing and logistics sectors. The report reveals that approximately 45 million sqm. of land has been allocated to Modon, a quasi-government organisation that
40 | Logistics News ME | December 2015
promotes investment and job creation in the industrial manufacturing sector through the development of industrial cities. Of this, 25 million sqm. has already been developed in Jeddah, with the remaining 20 million sqm. still in the construction pipeline. Construction start date for phase two of Jeddah’s third industrial city has not been announced yet whereas infrastructure works for Jeddah’s fourth Industrial City as well as Asfan Workshops Masterplan are currently underway to be completed within one to two years. Each masterplan covers approximately
5 million sqm. The owners of these masterplans (Modon and the Amanah) are planning to develop the required infrastructure and subsequently offer the serviced land plots for lease. Jeddah’s warehouse and logistics market has also continued to witness significant development as strong demand fundamentals from the automotive, consumer and construction sectors are being actively addressed by the planned expansion of the city’s logistics capabilities, with support from Jeddah’s Municipality and the Jeddah Chamber of Commerce.
J edda h Ware h o u s in g M ar k e t
25m sqm of industrial space has already been developed in Jeddah
In an interview with Logistics News Middle East, Imad Damrah, managing director of Colliers International in Saudi Arabia, remarks: “The industrial and logistics supply structure in Jeddah is on the verge of change with the construction of the fourth industrial city to the North and the expansion south with more facilities to become available in the second and third industrial cities. As the market grows and develops, we expect facilities that are well located, offering mixeduse premises to benefit and expect to see a greater level of built-to-suit facilities for specific tenants brought to the market by professional developers.” Damrah further reveals that The Government of Saudi Arabia has and is investing in creating several purpose-built industrial cities across the Kingdom such as the King Abdullah Economic City (KAEC) and Yanbu on the Red Sea coast and Jubail I, Jubail II in the Eastern Province and several others. Jeddah houses two existing and two upcoming purpose-built industrial cities that are developed and managed by Modon. These cities focus mainly on the manufacturing sector (with more than 550 factories) and hence they are not considered competition but rather enablers and demand generators to the logistics sector. According to Damrah, on the other hand, KAEC will provide additional capacity to accommodate future growth and will likely pose competition on the long-run in the automotive, FMCG and light industries sectors benefiting directly from the connectivity with the city’s King Abdullah Port. Nonetheless, Jeddah will still possess a location advantage over KAEC given its close proximity to both Jeddah Islamic Port (JIP) and the Red Sea Gateway Terminal (RSGT), the largest commercial port in Saudi Arabia handling 70% of its throughput, as well as to a large customer
and growing population base in Jeddah, Makkah and Taif. “As such, lease and occupancy rates will likely remain unchanged, but landlords will have to start offering incentives, adding value features and better quality products in order to hold their competitive position,” he maintains. Upcoming rail and road projects are expected to create new corridors for growth in the city. For example, the upcoming Second Ring Road will connect North, East and South Jeddah facilitating the future plans to expand the sector in the northern eastern part of the city. The Saudi Land Bridge is another example that can ultimately position Jeddah as a regional distribution hub providing direct connectivity between the Red Sea and the Arabian Peninsula. At a macro level, the main challenge for the city is to upgrade its infrastructure network including main intersections, bridges, power and utilities to ensure that there is sufficient capacity to accommodate existing and future growth in demand. At a micro level, retailers and distributors need to transform to a more efficient business model by spinning off their real estate portfolio in order to free up valuable resources and focus on their core activities. This can present opportunities to the under-penetrated segment of Built-To-Suit warehouses as well as Logistics and Distribution facilities offered on pre-let basis. Damrah however cautioned that the falling oil prices coupled with the general slowdown in global trade have been dragging the sector from double digit growth rates down to single digit rates. Therefore, in his estimation, operators and owners need to adjust their business model and scale down their expansion plans in order to cope with the slower pace of activity. “Nonetheless, we maintain our positive outlook for the sector in the short to medium term driven by strong
Imad Damrah Imad joined Colliers with vast experience in real estate advisory services and whilst with Colliers has led feasibility studies covering some of the largest projects in Saudi Arabia including 5-star hotels, furnished apartments, residential resorts, commercial malls, residential cities, office towers, commercial complexes, land use, e-real estate and real estate financing. Imad currently holds the position of MD for the Colliers offices in Saudi Arabia. Prior to joining Colliers International in 2007 Imad was manager of transaction advisory services at Ernst and Young, Saudi Arabia, for 10 year, during which time he managed and delivered real estate advisory assignments including feasibility studies, market research, highest and best use studies, business plans, financial modeling and business valuation.
fundamentals, burgeoning population and a rising middle class,” he adds. In addition, according to Damrah, given the city’s position as the major trading and commercial hub in Saudi Arabia, it is currently witnessing the construction of a range of infrastructure and transportation projects. “As such, large share of demand for warehouse space is being generated by related industries including F&B, consumer goods, automotive as well as construction materials,” he notes.
Logistics News ME | December 2015 | 41
C o mmen t
Road to success Editor of Construction Business News ME, Lorraine Bangera analyses the Sultanate of Oman’s transition from an oil dependent land to an economically diversified hub
A
fter the financial crisis in 2008 and the continued decline in oil prices, the once secure GCC has been shaken up to work on its economic structure and diversify its income and interests. Oman, in particular, was hit by the declining oil prices as it relied heavily on the sector since the 1970s. In fact just in 2013, the Omani government accounted 75% of its revenue from the oil industry. Since then the government has rolled up its sleeves and taken an active role to diversify into other sectors, including construction, tourism, hospitality and logistics. Oman’s construction industry has been unique compared to that of other countries within the GCC. It exhibits more thoughtful progression, within limited developments and emphasis on vital infrastructure projects rather than luxury real estate. It might be the reason why experts believe that the construction industry is expected to remain promising in the future. Local daily Oman Observer reported that the Omani construction sector is a $6bn industry recording CAGR of 7% since 2013. While the logistics sector has noticeably picked up pace with the aim to be the gateway into to the GCC, the country aims to capitalise on its geographical position and stable political climate to become the next best logistics hub. In fact Oman cemented this vision in its recently launched Sultanate of Oman’s Logistics Strategy 2040 (SOLS 2040), which lays out a road map for making Oman one of the world’s top 10 logistics-centric economies by 2040. The sector will now be a major driver for economic growth, creating both direct employment in the transport of cargo and attracting inward investment by companies that wish to warehouse, rework or redistribute goods. This sort of efficient logistics could help reduce costs for both importers and exporters and enable new markets to be opened up. With this new plan the country aims to double employment in the logistics sector to 80,000 jobs by the end of the decade and a whopping 300,000 jobs by 2040, according to Oxford Business Group. It reported that the sector’s contribution to the economy is targeted to double to $7.8bn by 2020, reaching $36.5bn in the next 25 years. This goes hand-in-hand will construction of 42 | Logistics News ME | December 2015
Lorraine bangera infrastructure projects across the region including its $250bn allocated for the construction of 67,000km of railway lines across the Middle East. Not to mention the successful launch of Oman’s direct road link with Saudi Arabia launched a month ago, being the first among
the many freight corridors planned under SOLS 2040. The road, now under the advanced stage of development, will be completed by mid-2016 and aims to flow traffic from Sohar Port all the way to Riyadh. According to Arab News this new road will cut the distance between Saudi Arabia and Oman by 800km. Before this road, all links were through UAE, with a total road distance of 2,000km. The Omani government has spent more than $270m on the construction on its territory, while Saudi Arabia has spent about $260m on its side. This new road, along with others in the pipeline, will offer tremendous opportunities and have a positive trickledown effect boosting the entire economy. Uduak S. Akpan in his paper Impact of Regional Road Infrastructure Improvement on IntraRegional Trade in ECOWAS states that transport infrastructure promotes cross-border trade and investment, improves countries’ competitiveness, and raises domestic output, thus fostering regional integration. In my opinion, transport infrastructure within the GCC could play a make or break role in the future, and Oman is making the right decision with some very prudent investments.
P r o fe s s i o na l P er s pec t i v e s
Leadership Transitioning: Key imperatives for the 21st century By Prakash ‘PK’ Menon The modern world is volatile, uncertain, complex and ambiguous, well coined as ‘VUCA’ by industry experts. With the traditional barriers of geographies, industries and expertise shrinking to form a seamless working world, there are bound to be cross-overs from one traditional area to another, discerns Prakash ‘PK’ Menon.
P
eople are transitioning across levels, roles, countries and even industries. Such transitions are unavoidable. Assuming that the past expertise will automatically translate into success in the transitioned domain would be foolhardy. In fact, there are almost 25% cases of failures while transitioning across levels, and 40 to 50% failure rates for cross country or industry transitions. Ensuring a smooth transition, especially for a leader is all the more important, since the entire team’s fate rests on that one person. A leader under transition is likely to undergo various phases during the transition process. These feelings are perfectly natural, given the circumstances. One may experience anxiety of being unable to cope with the changes or feel excited because of the change. There may even be a sense of uncertainty, giving rise to fear of the change and its impacts. Then there may be guilt for taking the ‘dreaded’ step, or a feeling of threat that it seems impossible or tougher than anticipated, leading to depression, disillusionment at the very change or even denial. A number of people ultimately resort to tackling the change with a hostile vengeance of trying to make things work, treading along the path of sure-shot failure, since their attitude is detrimental in the first place. What is important is to identify the changes, take them in one’s stride and gradually accept the new situation. Only then can one move forward in the right direction and at the right pace for a successful future. There are three qualities that a leader in transition must exhibit: 1. Instill confidence from fear 2. Provide clarity from confusion 3. Mobilise, motivate and inspire the team in pursuit of a better future Here are five key imperatives during leadership transitioning that can ensure that one is on top of things:
yours and others’ eyes, as well as enhance one’s own abilities to lead by example. 3. Instill a sense of urgency “When things get tough, the tough get going.” A leader must not procrastinate; rather learn to fight back with a resilient spirit, a positive attitude and a re-energised zeal to make things work. This will help bring out oneself and the team from the dumps, with a high morale and zest to bounce back with a bang.
Prakash ‘PK’ Menon Prakash ‘PK’ Menon is a respected supply chain expert, internationally acclaimed speaker, thought leader and mentor. He is the executive director of Thought Leaders Middle East and has authored three books: Driven, Fail Smart and Supply Chain is Sexy.
1. Invest in yourself One learns on the job all the time. It is extremely vital to have an attitude towards continuous self-improvement. As a thumb rule, you should reinvest 20% of your earnings every year to improve yourself and stay relevant in the changing times. Inability to upgrade yourself and keep up with the changing environment can spell doom for you because you will stagnate and finally reach a point of decline. 2. Practice mastery A golden statistic suggests that a minimum of 10,000 hours of practice leads to mastery. It is very important that one focusses and learns new things, practices them, becomes an expert and then gives it back by teaching it to others. This will generate respect in
4. Get a mentor Learning from the experiences of someone who has been on the journey before, whose guidance can help one gain valuable insight, is a wise idea. Investing time and effort in learning from a mentor does not mean one cannot learn by self, it simply means one can fast-track the pace towards success. A sound mentor can help you avoid pitfalls, as you learn from his/her mistakes and achievements and apply them to yourself. 5. Stop people pleasing Listen to all, heed to yourself. A leader should not worry about what others say. Let them not drive you, rather follow your own instinct, your own state of mind, your own vision. A stable and focused state of mind is very important for self-clarity and to be able to lead others, especially in the process of transitioning and even beyond. Conclusion Having the right attitude and aforementioned key imperatives in mind is crucial for a successful leadership transition in the 21st century. The opportunities to let failures slip by are getting lesser in this increasingly competitive world. Keeping one’s focus and learning to quickly overcome the negativity will help a leader surmount challenges and extend the past glorious success into the new role. Logistics News ME | December 2015 | 43
C l eanin g Tec h n o l o g y
MECTW 2015 makes a clean sweep
The recently concluded Middle East Cleaning Technology Week (MECTW) was the region’s first global forum that united the cleaning and hygiene industry. The exhibition was conceptualised with the objective of drawing attention to creating a sustainable future by bringing all facets of the cleaning industry under a single umbrella.
44 | Logistics News ME | December 2015
C l eanin g Tec h n o l o g y
F
or three days, 2 to 4 November 2015, Mumbai, India-based Virtual Info Systems (VIS) Exhibitions and Conferences, established managers of specialised trade shows, organised the Middle East Clean Technology Week (MECTW) at the Dubai International Convention and Exhibition Centre. The maiden show hosted three major events concurrently — Clean Middle East Pulire Expo 2015, Gulf Car Wash-Car Care Expo and Gulf Laundrex-Linen Care Expo. Clean Middle East Pulire 2015 provided industry leaders a platform to promote their solutions and best services to the public at large, highlighting the use of environmentally friendly solutions for a better future. Gulf Laundrex-Linen Care Expo was the laundry equipment, chemicals and dry cleaning trade show in the Middle East and North African region (MENA) in 2015. This premier event for the laundry, dry cleaning, and linen and textile services industry brought together under one roof, leading owners, operators, distributors and manufacturers of machinery and equipment. Gulf Car Wash – Car Care Expo 2015 — was the region’s first event dedicated to the car washing and car care industry. The event assimilated leading car care and car wash owners, operators, car wash equipment manufacturers and suppliers from the regional and global markets. This trade show showcased the best-in-class car wash and car care products, accessories, technologies and services from diverse segments of the industry, with emphasis on energy and water conservation in a region.
In an exclusive interview with Logistics News Middle East, Jayaraman Nair, chairperson, Virtual Info System (VIS), emphasises the growing importance of the cleaning and hygiene sectors to the UAE and wider GCC. “The growth of construction, hospitality and healthcare verticals have led to new range of commercial cleaning services setting up shop in the Middle East. On the backdrop of Dubai’s successful Expo 2020 bid, various industry and construction sectors have witnessed a boom. This has led to companies in the service industry to step up their quality of cleaning and hygiene solutions,” he opines. In Nair’s estimation the global facility management market is poised to reach $394 billion by 2017, while in the next 25 years the GCC region is expected to reach a market value of an astounding $892 billion. The cleaning and hygiene industry is growing at a speedy pace. Rapid construction developments, building infrastructure for airports, roadways, parking, ports and railways have resulted in never-before demand for the facility management and its allied industries. Cleaning equipment and services is the foundation of a successfully sustainable facility management company. “As the scale of investment in the construction sector continues to grow across the GCC, the approach to the cleaning industry assumes centre stage, beginning from the grass-root levels to end solutions,” Nair observes. More than 155 regional and international exhibitors displayed a wide range of services, including pest management, outdoor cleaning services and specialised cleaning mechanisms. MECTW’s reach grew significantly to incor-
“Today with MECTW well ensconced, there is now a platform for each company to demonstrate its products, skills and innovations to its clients, and potential clients.” Jayaraman Nair, chairperson, VIS - Organizer MECTW porate companies from 17 countries displaying a total of 1000+ brands collectively across different verticals in the cleaning industry. Commercial laundry industry: The hospitality and healthcare sectors are growing rapidly in the GCC region creating a demand for commercial laundry services. In the UAE, the hospitality sector is on the rise. An additional 20,000 new hotel rooms are scheduled to be added to the existing 80,000 dwelling spaces in Dubai and Abu Dhabibased hotels by 2016. Linen and towels are vital brand touch points for any hotel, a matter of pride in delivering that quality and uniqueness consistently to their customers. Companies dealing in accessories for institutional laundry, commercial, central laundry, healthcare laundry, and linen suppliers, chemical suppliers, dry cleaning and dyeing equipment are entering the competitive GCC market.
Logistics News ME | December 2015 | 45
C l eanin g Tec h n o l o g y
Car care industry: In line with the Frost & Sullivan industry report, Saudi Arabia leads the GCC market with 7.55 million vehicles on the road, followed by UAE with 2.94 million and Kuwait with 1.38 million vehicles. There is thriving business for leading car care and car wash owners, operators, car wash equipment manufacturers and suppliers. The car care market is still in its nascent stages in UAE. The automotive industry in the UAE, contributes close to $100 billion in trade capital. There is immense scope for growth and innovation in the car care sector Cleaning and hygiene industry: Due to the rising scale of construction investment in the GCC, there is an influx of companies setting up practices in the region. The market is likely to touch AED 300 billion by the year 2020; with opportunities to maximise productivity, cleaning and hygiene companies in the region have tremendous potential to grow. “As the GCC works toward being one of the most sustainable regions in the world by 2020, the Middle East Cleaning Technology Week is another step towards achieving this goal. The cleaning and hygiene industry has the potential to grow tremendously and we live in a time of extraordinary opportunity in the region,” remarks Nair, mirroring the country’s goals of sustainable growth. Intercare John Henry Colley is chairperson, Intercare, a multi-faceted, multinational Group of companies and one of the largest suppliers of hygiene and cleaning equipment and services to the hospitality, industrial, FM and institutional markets. He spoke to Logistics News Middle East on a range of issues. He begins by stressing the importance of the pivotal role played by MECTW in uniting suppliers, practitioners and professionals in the cleaning and hygiene sector. “I feel that our ‘infrastructure industry’ was not adequately showcased or represented in the past for the region. Today with MECTW well ensconced, there is now a platform for each company to demonstrate its products, skills and innovations to its clients, and potential clients,” he comments. “The purpose of the exhibition is to be able to make new contacts in the industry for both the local market, and beyond. For the moment the focus of the show is still regional, but the overseas visitors will begin to materi-
46 | Logistics News ME | December 2015
“As a private company, we never disclose our confidential information. However, as a major regional player in the GCC, North Africa and Levant, suffice it to say that Intercare’s reach is well beyond that of its peers,” John Colley Chairperson, Intercare alise in future editions,” he predicts. Nevertheless he is pleased that Intercare’s participation has won it some new business friends and they are working to develop these relationships further. “It is an essential part of a show such as this, as all the local players can only seek to expand overseas. The local market is already over traded,” he notes. Colley does not provide annual turnover or market share but acknowledges that Intercare is a leader in the business. “As a private company, we never disclose our confidential information. However, as a major regional player in the GCC, North Africa and Levant, suffice it to say that Intercare’s reach is well beyond
that of its peers,” he reveals. Acccording to Colley, Intercare does many things to remind ourselves that this world that we live in has limited resources which must be used and re-used as efficiently as possible. “We cannot sustain or support any unsustainable activities,” he stresses. “It is with this precept in mind that all our businesses have been built. We recycle all the water we use in our laundry and chemical plants. We recycle, regenerate and re-use all the water from our rinse tanks in our coatings plant. We collect all our washbasin and shower rinse water in our accommodation unit, re-filter and regenerate it to be used as toilet flush water. We re-
C l eanin g Tec h n o l o g y
Intercare provides a number of products to enable its customers to make their own ecofriendly contribution. These comprise the following: • Automatic scrubbing machines with water recycling features. • Chemicals, all of whose ingredients, meet or exceed WHO standards for recyclable products. • No heavy metal used in any of the manufacturing work. • New underground waste disposal systems which reduce carbon footprints by as much as 90 percent. • New above-ground waste disposal systems which use the Sun’s energy and intelligently use existing technology, (GPRS & WiFi) to manage. Compact and segregate waste, thus eliminating unnecessary trips to the landfill and therefore, once again, the carbon footprint. Whatever the cost of energy, any energy-saving solution must save money too. There is no compromise.
direct all our air-conditioning condense return water and reject water from our water recycling plant and use it to irrigate the plants and trees outside our office and factory complex,” he continues. Intercare has many expansion plans, both in its offerings as well as its geographic reach. The company already operates in Egypt and Cyprus and its clients include the biggest and most prestigious hotels spread across the GCC. “You will be seeing more and more of our innovations all of which will have the following in common. If it’s sustainable, then it’s good for you. However, if it’s dirt cheap it’s just more dirt,” he philosophises.
Logistics News ME | December 2015 | 47
ADIPEC 2105
ADIPEC 2015 Rockwell Automation energises oil and gas producers with digital oilfield
Rockwell Automation’s fully integrated and scalable solutions enable the digital oilfield for oil and gas producers to maximise the recovery of existing reserves, reduce costs, while doing so, protecting both people and the environment.
T
he recent downturn in the oil and gas industry, talks about curbing capital and operational expenditure and smart technologies were some of the hot topics discussed in the world of energy during ADIPEC. Companies are pushed to find ways to cope with the changing global trends. Technology continues to play a major role in the transition that is taking place worldwide. Rockwell Automation, the world’s largest company dedicated to industrial automation and information, participated at this year’s Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2015, the largest oil and gas event outside of North America which was held at Abu Dhabi National Exhibition Centre from 9 to 12 November. At the show, Rockwell Automation showcased the fully integrated and scalable solutions for the wellhead and control room to enable the digital oilfield for oil and gas producers to maximise the recovery of existing reserves, reduce costs, while doing so, protecting both people and the environment. Rockwell Automation has introduced an integrated solution for the digital oilfield that addresses most of these challenges. ConnectedProduction provides oil and gas producers the secure connectivity, and scalability, required to visualise and optimise production from the well head to the point of custody transfer. Deployed within an operations environment (on premise), or in the cloud, ConnectedPro-
48 | Logistics News ME | December 2015
Neil Enright, sales director, Middle East, Rockwell Automation
duction provides a complete set of capabilities including visualisation, historical Data, data modeling, reasoning and analytics, mobility and an open architecture enabling third party connectivity. Intelligent Assets provide contextualised data within a ConnectedProduction solution, and can be any combination of third party assets and intelligent assets offered by Rockwell Automation. “ADIPEC is one of the most significant investments of Rockwell Automation in the EMEA region. What we see here is that the key focus is really on maintaining and improving production rather than building new
plants,” commented Neil Enright, the Abu Dhabi-based sales director, Middle East, Rockwell Automation. Enright also notes that, due to the volatility of oil and gas prices, customers are looking to get more out of their current plants which is driven by two trends. First is an obsolete legacy system which needs replacing as otherwise production will shut down. “Thus we focus on migration technologies. Second, the optimisation of running processes, which we support with Pavillion8 software,” added Enright. As the future is driven by the Internet of Things (IoT), the data gathered from ConnectedProduction services enables companies to predict and analyse in order to take better business decisions making them more sustainable. At the large, 90 sqm. floor space and twolevel Duplex pavilion, industry and technical experts from Rockwell Automation briefed the media and engaged with technical, professional visitors highlighting technology and solutions to optimise production processes, maximise profits and reduce costs. “Anyone looking at reducing energy consumption, upgrade legacy systems, make better use of their data they generate or whatever the challenges they might face, Rockwell Automation will address them via its global and regional oil and gas competency and vast industry experience,” reiterated Enright. At ADIPEC 2015, US-based Andrew N. Weatherhead, manager, global engineering,
ADIPEC 2105
tools and technology global solutions business, Rockwell Automation, briefed Logistics News Middle East on the company’s latest technologies and solutions to help reduce operating costs while maximising uptime. Weatherhead was upbeat about the efficacy and benefits of Rockwell Automations’s technologies and offerings in the energy sector. “Our proprietary practices drive productivity and increase process efficiencies with the PlantPAx® modern distributed control system. We also reduce unplanned downtime with our OptiSIS™ pre-engineered process safety solutions and improve cost containment with our advanced wireless communication technology, optimise production data with integrated production intelligence and Distributed Control System (DCS) capabilities and help improve recoveries with subsea control solutions,” he added. He also noted that that the systems operate on a lower TCO (total cost of ownership) with local support and remote services. At their dedicated stand Rockwell Automation also exhibited its advanced wireless communication solutions; Optilift platforms: Artificial Lift Surveillance systems, Optilift-RPC (Rod Pump Controller) and NF (Natural Flowing Wells) mechanisms. The OptiSIS—Optimised and Packaged Process Safety Instrumented System and world-renowned Plant PAx—the modern and world class Distributed Control System (DCS) were also star attractions at the event. Rockwell Automation also showcased ConnectedProductionTM, the secure pathway from production data to actionable knowledge Similarly to 2014, Rockwell Automation also displayed products and solutions of its strategic alliance partnership to highlight the integration of best-in-class field devices into a modern plantwide control architecture. In a related major development Rockwell Automation has acquired vMonitor, a global technology leader for wireless solutions in the oil and gas industry. vMonitor Rockwell Automation delivers innovative monitoring and control solutions for wellhead and upstream applications that combine cutting-edge wireless instrumentation and communication with visualisation software. These solutions combined with the comprehensive range of integrated information, control, power, and safety solutions and services Rockwell Automation already provides the entire supply chain results in true end to end integration throughout the enterprise. The value of these combined solutions will be seen when data is turned into actionable knowledge and presented to engineers at the right time regardless of location, helping them make more informed decisions and improve production.
Rockwell Automation at ADIPEC 2015
According to Thony Brito Cardier, regional sales manager vMonitor, Rockwell Automation, the company has been providing services to oil and gas companies for the past over four years in the UAE. Currently vMonitor Rockwell Automation has deployed a number of solutions to approximately eighty wells and well head platforms. vMonitor Rockwell Automation also provides solutions including wireless instrumentation, control and monitoring equipment for artificial lift systems, CCTV Systems and SCADA More recently the company has provided well surveillances and remote shutdown panels for artificial lift systems, using the latest technology for local and remote control systems vMonitor Rockwell Automation has implemented its solution using a diverse suite of communication solutions for its customers, in-
cluding GSM/3G, WiFi, WiMAX, UHF, satellite and fiber optics. “The combined solutions will provide a common engineering, deployment and integration methodology that delivers this knowledgerich information across the enterprise without the risks associated of doing so individually. This will result in lower installation risk and lower lifecycle costs thanks to this common delivery model based on common in-house design and integration methodologies,” comments Cardier. vMontior Rockwell Automation’s offerings include the digital oilfield production system for monitoring, control and optimisation and the Optilift system, a complete solution designed to sample, compute, analyse, control and communicate the parameters needed to optimise oil field production.
Logistics News ME | December 2015 | 49
ADIPEC 2105
ADIPEC 2015 Ingersoll Rand unveils new technology for onshore and rig operations
Ingersoll Rand brought it latest sophisticated, cutting-edge product offerings for the oil and gas sector to ADIPEC 2015. These were well received by the industry professionals who recognise and value the company’s leadership role in specialised areas for this segment.
N
orth Carolina-based Ingersoll Rand, a global leader in compressed air and gas, power tools, material handling and fluid management, recently showcased a new addition to its line of dedicated Man Rider winches at ADIPEC 2015. The new MR150 Man Rider winch includes the most built-in safety features of any of Ingersoll Rand’s dedicated Man Rider winches and features rugged construction and advanced engineering to withstand the brutal environments of oil and gas operations both onshore and on rigs. The company also showcased the latest high-torque tools from its QX Series™ of cordless tools. The QX Series has been developed to deliver the right tool for the right job in industries that require high accuracy for fastening and connecting parts, whether in the heavy equipment, light manufacturing, automotive or aerospace sectors. Ingersoll Rand executives and technical specialists in personnel handling demonstrated the new Man Rider equipment. In addition, power tools and fluid management experts also discussed the latest technologies in hoists, air-operated diaphragm pumps and pistons for the oil and gas industry. Mike Hall, communications director, Ingersoll Rand briefed Logistics News Middle East on the company’s third participation in ADIPEC. “The oil and gas sector is very significant for Ingersoll Rand,” he began, adding that the brand has great recognition and significant
50 | Logistics News ME | December 2015
market share for air winches and a lot of potential in the power tools and pumps arena. Ingersoll Rand is also well known for its air compressors. Optimism for Ingersoll Rand’s overall growth potential in the energy sector was tempered by the volatility in oil prices. Hall did have concerns about the falling oil prices and its impact on the industry. “Yes, this is obviously a concern because the oil and gas companies may be forced to go to tier II products and accept a reduction in quality along with price. We anticipate this may be a short term reaction. We are however reinforcing our services to support any additional requirements for extending existing product life,” he affirms. Clearly there is a move towards cleaner, renewable, sustainable energy sources and re-
sources and lesser dependence on fossil fuels and ‘dirty’ oil. Ingersoll Rand is ready to contend and confront this challenge. “Ingersoll Rand is very focused on providing environmentally friendly products and where electrical power is required to drive products such as air compressors, efficiency is a key element in the design in reducing the carbon footprint,” he assures. He also asserted that whilst Ingersoll Rand was not directed involved in in the field of developing alternate energy resources such as wind, solar, hydroelectric, LNG, it did supply specialist products to all the above sectors. Hall reveals that he was pleased with the outcome of ADIPEC 2015 for Ingersoll Rand and did largely meet corporate expectations. “Ingersoll Rand is very pleased with the visitor
ADIPEC 2105
FAMCO UAE FAMCO (Al-Futtaim Auto and Machinery Company LLC) is a member of the Al-Futtaim Group, one of the largest privately owned business houses in the Gulf region. The company is a market leading supplier of products and services to a wide range of industry sectors including, transportation, construction, manufacturing, warehousing, oil and gas and marine. In the UAE, FAMCO provides access to world-class brands including Volvo Trucks, Volvo Buses, Volvo Construction Equipment, Linde, Ingersoll Rand, Yanmar, Himoinsa, Merlo, Hartl, Dexion, Volvo Rents, Doosan, Montabert, Stertil, Hart, Nassau, Bott, Stanley Proto, Fenner and Mase. With headquarters in the UAE and branches in Dubai, Abu Dhabi, Al Ain and Ras Al Khaimah, FAMCO also has subsidiaries across Saudi Arabia, Oman, Qatar, Bahrain, Kenya, Tanzania, Uganda and Egypt. In all these markets, the company’s development and success has been based on an in-depth understanding of customer needs and the dedication of its skilled staff. FAMCO remains committed to providing outstanding second-tonone service levels to customers and to maintaining quality, safety and environmental standards at the highest possible levels. Endorsing this focus is the ISO 9001:2008, ISO 14001:2004 and OHSAS 18001:2007 certifications held by FAMCO UAE.
turnout and the interest shown in the company’s range of exhibited products that included winches and hoists, pumps and power tools. We also had an excellent location and numerous new enquiries were received from many new contacts,” he confirms. Hall envisages a bigger role for Ingersoll Rand and many opportunities in the energy space in the future. He affirmed that oil and gas is a key market and he did see an expanding and much bigger role for the company in providing existing and new solutions through its products and services. He also speaks of the leadership role by Ingersoll Rand in oil and gas technologies that is pioneering new trends towards lowering costs and boosting efficiencies in the industry. “Ingersoll Rand is always striving to develop new
advanced products whilst also endeavouring to reduce costs. This is a continuous initiative to give us the edge and market leadership on all products,” he adds. Hall is also cognisant of the challenges Ingersoll Rand faces for the short-term future. “Oil prices are obviously a key driver which is effecting the spending power of our customers. The challenge is to maintain a good service level during the down turn and to be in a stronger position to serve our customers when the market picks up,” he rationalises. Hall also elaborates on the new MR150 Man Rider winch introduced by Ingersoll Rand at ADIPEC 2015. “This winch is a very safety critical item and is a mandatory requirement for Personnel Man-riding within the oil and gas industry. The new MR150 Man Rider winch is specifically designed to minimise the risk of lifting people and meets standards such as the Norwegian Petroleum Directive (NPD) and complies with leading regulatory bodies such as DNV and ABS,” he explains. Ingersoll Rand has a strong foot print in the
Middle East in general and the energy-rich GCC in particular. Ingersoll Rand is present in most countries around the world. It is represented by FAMCO in the UAE (since 1988), Oman and Qatar as an exclusive distributor. Hall further confirms that the company has consistently enjoyed great successes in the past and is presently serving most of the oil and gas companies present in the region. According to Hall, Ingersoll Rand is best recognised within the oil and gas sector for air winches and BOP Handling Systems with a majority market share. These products are industry recognised and proven for many years. Many other products such as air compressors, tools, pumps and the wider range offer bespoke solutions for the oil and gas world. Hall also nurtures ambitions for Ingersoll Rand to become the number one provider for sales and services for all of its products in the region. Continuing on, he is also appreciative of his company’s partnership with FAMCO which he characterises as a ‘long-term, very loyal and trustworthy relationship’.
Logistics News ME | December 2015 | 51
S u pp l y C h ain I n s i g h t s
How Omni-Channel Retail impacts the Supply Chain Few, if any, consumer-oriented businesses have escaped the explosive growth of e-commerce globally. Mark Millar surveys the digital marketing landscape and its implications for the logistics and supply chain industry as the robust, exponential growth in e-commerce continues to fuel the omni-channel retail.
E
-commerce, the web-based technology platforms that embrace and harness the transformative power of size and connectivity to empower smartphone equipped digital natives to shop online to their heart’s content, is rapidly becoming the new marketing conduit as companies embrace technology as a means to boost sales revenues. Today’s digital consumers can now browse through the cloud and choose from a previously undreamed-of massive range of products and services to buy what they want, when they want, how they want, from wherever they happen to be! During recent years, e-commerce has emerged as one of the key driving forces and a critical element of what has become known as the Omni-Channel. This phenomenon brings together the entire spectrum of consumer shopping channels available from the offline bricks-and-mortar retail outlets that include convenience stores, mini markets, supermarkets, hypermarkets and shopping malls; through the relatively unemotional and inert home shopping conduits such as TV, direct mail and catalogues; and now embracing the dynamic, exciting online world with internet access available 24-7 through desktop computers, laptops, tablets, smart phones and other mobile devices. Spawning global giants such as Amazon 52 | Logistics News ME | December 2015
and Alibaba, the digital revolution of ecommerce is transforming the way in which consumers shop - and changing their expectations of service, choice and value. This ecommerce frenzy has been driven by nearuniversal access to the Internet, the availability of affordable smart phones, iPads and similar devices – and not least by the burgeoning young populations in developing economies engendering a new generation of digital-native consumers. According to New York Citybased eMarketer, the global Business to Consumer (B2C) daily newsletter, the e-commerce market grew 20% year on year to exceed $1.5 trillion in 2014 and every forecast confirms it will continue to expand. Significantly, the market and potential for further growth lies in the developing markets across the Asia region, much more so than in the developed economies of the Western world. The AsiaPacific market already accounts for more than one third of the global e-commerce market and is forecast to reach $1 trillion by
S u pp l y C h ain I n s i g h t s
2017, with the Chinese online market on its own, forecast to hit $1 trillion by year 2020. In turn the new OmniChannel retail model impacts every aspect of a supply chain ecosystem - products, inventory, warehouses, fulfilment, picking, packing, shipping, transport, distribution and the all-important information flows. This e-commerce-enabled upsurge in online shopping is transforming B2C trade at every level, presenting logistics practitioners and supply chain ecosystems with a vast number of challenges and opportunities that have fundamental implications for every aspect of a company’s business model, their profitability - and even their future. How Omni-Channel impacts the supply chain and logistics The online revolution tests almost every aspect of the long-established pattern of retail supply chain processes - including warehouse operations, pick, pack and dispatch , order fulfilment and delivery, as well as introducing new dilemmas such as free shipping, last mile delivery, product returns and cross-border transactions. Most warehouse operations serving consumer oriented businesses have traditionally focused on carton (or pallet) picking for bulk orders, shipped to retail outlets, often as full truck load (FTL) shipments, which include hundreds of products from numerous suppliers all destined for one store or supermarket. However, the e-commerce model of online web store to consumer, typically involves logistics management of shipping multiple individual orders, the majority of them comprising just one or two pieces, to hundreds of individual delivery points – typically residential addresses. To serve this expanding B2C sector of online shopping, warehouse operations can no longer rely purely on bulk storage of pallets and cartons, handled using fork lift trucks in a distribution centre; they now need capabilities to manage single unit order fulfilment, involving piece-pickers, shelving storage, tote boxes and individual packing stations. Many traditional third party logistics (3PL) service providers are challenged in adapting to this new business model. This represents new opportunities for non-traditional distribution companies to establish ecommerce fulfilment centres – physically configured specifically to process large-volume small-order demand generated through online shopping. Unencumbered by legacy systems and operational practices, new en-
“This e-commerce-enabled upsurge in online shopping is transforming B2C trade at every level, presenting logistics practitioners and supply chain ecosystems with a vast number of challenges and opportunities” trants can start with a green-field solution and capitalise on the logistics opportunities to serve single-unit order fulfilment with efficient pick and pack business solutions. Adopting technologies such as Pick-toLight and Pick-to-Voice - not yet pervasive across traditional warehouse operations can enable the all-important operational efficiencies that are critical for economically successful e-fulfilment centres. Online e-commerce giant Amazon embraced technology and automation to the extent that back in March 2012, it acquired robotics company Kiva Systems for $775 million and now deploys over ten thousand Kiva robots across its massive fulfilment centres – many of them over one million square feet – across the USA. As relatively new entrants into the market, the pure-play online retailers – Amazon, Alibaba, JD.com and their numerous peers – are unburdened by high-street bricks and mortar infrastructure, with its related fixed overheads, and therefore have much lower operating costs. These e-tailers set the stage by offering consumers free delivery to their home or office, leaving the established retailers with no option other than to offer the same service - which brings a whole new set of logistics obstacles to overcome, quite apart from the higher cost of individual deliveries to residential locations.
Mark Millar is the author of Global Supply Chain Ecosystems, commissioned and published by Kogan Page of London - in which he presents detailed and practical insights that help companies capitalise on market opportunities, overcome supply chain challenges and make better informed business decisions. His series of ‘Asia Supply Chain Insights’ presentations, consultations, seminars and corporate briefings deliver practical knowledge and educated insights that help companies navigate the complex landscapes in Asia, improve the efficiency of their supply chain ecosystems, develop new business opportunities and make better informed business decisions. Acknowledged as an engaging presenter who delivers a memorable impact, Mark has completed over 350 speaking engagements at corporate events, client functions and industry conferences across 23 countries. A Visiting Lecturer at Hong Kong Polytechnic University, Mark is recognised in the ‘China Supply Chain Top 20’, as one of ‘Asia’s Top 50 Influencers in Supply Chain and Logistics’ and in the 2014 USA listing of ‘Top Pros-to-Know in Supply Chain’. www.markmillar.com Logistics News ME | December 2015 | 53
La s t P a g e : I n F ir s t P er s o n
The Networked Supply Chain Professional Ensuring you remain well networked within the ‘people supply chain’ is key to success for many supply chain professionals, writes Brian Cartwright, managing director, Middle East and Africa, for the management consulting firm, The Logistics Executive Group.
Brian Cartwright
N
etworking experience and ability should be a no brainer for people in commercial management roles, but what if your whole career to date has been focused on operational management functions in the supply chain and you haven’t been making a conscious effort to build your business networks? The truth is that if you are a supply chain professional with a pure operational focus you are probably already an excellent relationship builder and networker as your working week will involve dealing with many stakeholders both internal and external, including people from Government entities to MNCs, local organisations and SMEs. You will have been regularly building working relationships as well as influencing, supporting, and also challenging people in order to keep your part of the supply chain running smoothly. I am willing to bet that when a supply chain professional has made significant improvements to an organisation’s supply chain it has been largely due to their ability to foster relationships and positively influence people from all walks of life. Facts, figures, and overall analysis provide the visibility to know what needs to be changed or what can be improved but the only way to successfully implement these things is by winning over the people. If you take the supply chain on a local, regional or even a global level I don’t think we see enough operational supply chain professionals actively networking with their counter parts in other organisations including those from their competitors in order to understand if they are sharing the same challenges or can support one another to run more efficient supply chains. Don’t get me wrong, there are plenty of sup-
54 | Logistics News ME | December 2015
ply chain focused events and conferences going on constantly around the world where SC professionals get together and briefly network during the breaks between presentations and panel discussions, there are also plenty of steering committees and industry bodies which promise to champion the cause of supply chain (only a few manage to do this effectively). That’s all good, but my big question is this… How many people in operational supply chain management functions make a point of getting together with their counterparts in other organisations on a fairly regular basis just to catch up for a coffee or a bite to eat and chat about the supply chain in general? For the cost of a drink and some of your time I am sure there will be good advice to share and you might also highlight some challenges which could be overcome through sharing experiences
or taking action together. The more networked supply chain professionals we have in the sector the better, and with enough people having these kinds of meetings a bigger picture outcome could well be improvement of global supply chain efficiencies and standards in the future! So if you aren’t already an avid networker then please don’t just wait for the formal industry conferences and events, I would suggest being proactive and reaching out to some of your counterparts with the aim of getting together for a chat once in a while; if nothing else I am sure you will be able to share some useful information about the market! The Supply Chain only works because of the people involved! (This article is derived from www.ThePeopleSupplyChain.com the popular Supply Chain focused blog, created and owned by Brian Cartwright)