Logistics News ME - January 2018

H e a lt h c a r e

Mars, Inc.

Forklifts

Logistics providers discuss trends and challenges

Site visit reveals food giant’s sustainable strides

Alternate fuel sources to power the industry

Connecting trade professionals with industry intelligence

Leading To Glory

January 2018

TRUCKS

Start 8 | News 18 | Op-ed An academic insight on green supply chain management

Features 22 | Cover story Bahrain’s transportation minister discusses growth strategies 28 | Site visit

Mars, Inc. is driving a global agenda of sustainability

34 | VAT

Deloitte explains the impact of VAT in the UAE

38 | Healthcare

Healthcare logistics is a robust industry that doesn’t come without challenges

44 | Forklifts

The rise of alternate fuel sources in this traditional market

18

28

48 | Viewpoint An analysis of how large corporations can adopt sustainable practices 52 | Supplier News 54 | Diary

34

44 Logistics News ME | January 2018 | 3

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CEO Wissam Younane wissam@bncpublishing.net

Editor’s Note

W

elcome to the new year! I am sure that our readers must be anxious about 2018 and the changes, whether good or bad, that it will bring along. The logistics and the supply chain industry underwent a sea of changes in 2017; technology played its role in shaping the sector whereas multimodal transportation saw a massive increase.

Hence to begin 2018 on a positive note, this issue of Logistics News ME features an exclusive interview with Bahrain’s Transport and Telecommunications Minister, HE Kamal bin Ahmed Mohammed.

He presents a positive outlook for the tiny Gulf state and wants the country to become the next logistics gateway for the GCC. According to the Bahrain Quarterly Economic Report by Economic Development Board, the strong growth materialised in spite of a small contraction in the oil sector along with minimal expansion in government services. The momentum is supported by a record infrastructure pipeline.

On another note, who doesn’t like chocolates? This issue also gives a sneak peak into the Mars Dubai chocolate factory and the impressive sustainability initiatives that they have adopted. Last but not the least, the magazine delves into one of the most anticipated topics of the year, the value added tax (VAT). The UAE will be implementing VAT from

January 1, 2018, at a very low rate of 5%, which is standard rate as well. Analysts believe that VAT will be affecting every step involved in the supply chain, businesses, and the end consumers. The introduction of VAT in the GCC region is being seen as one of the long due steps towards strengthening the economy by diversification of the revenue base.

Will it be a happy new year? Only time can tell. The new year is a clean slate; it will shape up according to what we fill in.

Change is the only constant and so will the industry follow the same.

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

Sales Manager Lionel Matthews lionel@bncpublishing.net

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

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

Paromita Dey Editor paromita@bncpublishing.net @paromitadey1 linkedin.com/in/paromita-dey

Photography Hayder Al Zuhairi

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On the web Keep up to date with all the latest news, features and much more on our website.

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Opinions expressed are solely those of the contributors.

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                                                                  

         

Bespoke Logistics Project of the Year 2017

Domestic Logistics Service Provider of the Year KSA 2017

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

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Regional News An update from around the region

For News, features and more, Visit www.CBNme.com/logistics-news Follow us on twitter for breaking news: @logisticsnewsme Follow us on Facebook for up-to-the-minute breaking news

Partnership

Emirates SkyCargo to develop e-commerce solutions with Dubai CommerCity

E

mirates SkyCargo, the freight division of Emirates Airlines, signed an MoU with Dubai CommerCitythe first free zone dedicated to e-commerce in the Middle East and North Africa (MENA) region, located in Dubai. The MoU was signed in the presence of HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive officer of Emirates airline and Group, by Nabil Sultan, Emirates divisional senior vice president, cargo, and Dr Mohammed Al Zarooni, director general of the Dubai Airport Free Zone Authority (DAFZA).

Emirates SkyCargo will work with Dubai CommerCity to develop new solutions for the global e-commerce sector. E-commerce is a growing vertical for the air cargo industry worldwide and Emirates SkyCargo said that it aims to identify the best methods to add value to the e-commerce business.

Sultan said: “Every day, Emirates SkyCargo transports a large volume of e-commerce shipments as part of

8 | Logistics News ME | January 2018

our mail or general cargo offerings.

We are progressing to the next step where we cooperate more closely with e-retailers with the ultimate aim of getting products to customers even more quickly and cost effectively.

Dubai CommerCity, with its focus on e-commerce, can be an ideal platform for us to develop and roll out new solutions as well as technology that can be used to improve the speed, efficiency, and safety of e-commerce shipments.”

Dr Zarooni said: “We are delighted to partner with Emirates SkyCargo, one of the world’s largest air cargo carriers, and we are confident that it will be a major boost to our strategic goals of making Dubai CommerCity a unified platform for government, administrative and customs services, and logistics, to help meet the needs of the e-commerce sector. This will be in line with the Dubai government’s efforts towards achieving comprehensive and sustainable development and provide an exceptional experience for its investors.”

He further added: “The cooperation between Emirates SkyCargo and Dubai CommerCity will enable us to strengthen Dubai’s position as a global hub for e-commerce operations and provide a value-added logistics experience, which in turn, can drive the growth of both parties. Dubai CommerCity is considered to be a pioneering and influential leading city in solidifying e-commerce in the UAE and the region, which adopts a non-traditional approach to formulating and offering complementary services directly related to the development of its business, which will be announced in the near future. We are optimistic with the pivotal and dynamic role played by Emirates SkyCargo in Dubai CommerCity.”

Dubai CommerCity is a joint venture between DAFZA and Wasl Asset Management Group. Launched in October 2017, Dubai CommerCity aims to strategically promote Dubai’s position as a focal point for international e-commerce and retail. www.cbnme.com

Development

Iran inaugurates $1bn Chabahar Port extension Iranian president Hassan Rouhani inaugurated a $1bn extension of its southeastern Chabahar port, which Tehran hopes, will help the country become a key transit route to land-locked Afghanistan and Central Asia.

The project in Iran’s southeastern Sistan-Baluchestan Province was inaugurated at a ceremony attended by 60 foreign dignitaries from 17 countries, including Indian Minister of State for Shipping, Pon Radhakrishnan, at the port located by the Sea of Oman.

The inauguration of the port project comes some 15 years after India and Iran first formally agreed to develop the Chabahar port in January 2003, during the visit by then Iranian president Mohammed Khatami to New Delhi.

The project, due to its strategic location, linking the region to Central Asia and the Commonwealth of Independent States (CIS), will revive the far south-eastern areas of Iran in terms of development and employment. The capacity of the port is 8.5 million tonnes.

According to IRNA, Rouhani said: “We are happy that the first wheat shipment for Afghanistan has been sent to the country’s people via the Iranian port. The routes of the region should be connected on land, sea, and air.”

The port’s inauguration comes more than a month after the first consignment of wheat from India to Afghanistan was sent via

Chabahar — the first shipment after the trilateral agreement to develop the port as a transport and transit corridor between India, Iran, and Afghanistan was signed by Prime Minister Narendra Modi with Iranian and Afghan Presidents Rouhani and Ashraf Ghani, respectively, in May 2016.

According to The Economic Times, Tehran has offered New Delhi a proposal

to manage phase 1 of the Chabahar Port.

The offer involves management rights for two years and such rights could be renewed by another decade. Japan is also partnering India for expansion of the Chabahar Port complex – one of India’s primary connectivity initiatives for the region that juxtaposes of sorts with China’s BRI.

Bitesize news

Exporters based in Saudi Arabia and the UAE will be required to pay value-added tax (VAT) of 5% on goods transported between the two Gulf neighbouring states from 2018.

E-commerce website Souq.com launches the Amazon Global Store to allow UAE consumers to tap the US online store for more than one million Americanoffered products.

Dubai Maritime City Authority (DMCA) announced the election of Saeed Al Malik as the new chairman of the International Shipsuppliers & Services Association, the first Arab national to hold the post.

Online car rental company, SelfDrive.ae, announced the addition of the Renault Zoe All Electric Car to its fleet, allowing customers to charge their car free of cost at any of the 90 charging stations offered by DEWA. Logistics News ME | January 2018 | 9

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Agreement

Maqta Gateway, LOGINK sign agreement to boost logistics database

Maqta Gateway, a wholly-owned subsidiary of Abu Dhabi Ports, signed a cooperation agreement with LOGINK, the national logistics platform operated by the Chinese Ministry of Transport.

The signing ceremony took place in Hangzhou, China, and was signed in the presence of Gao Xingfu, vice governor, Zhejiang Provincial People’s Government; Shan Hongjun, deputy director, International Cooperation Division, Ministry of Transport; Liu Zhanshan, vice-president, China Waterborne Transport Research Institute, Ministry of Transport; and Song Dexing, – CEO, SINOTRANS & CSC HOLDINGS. The agreement was signed on the side lines of the workshop on International Port Logistics Information Sharing and the Northeast Asia Logistics Information Service Network (NEALNet) meeting. NEAL-Net is a non-profit cooperative mechanism for logistics information exchange, and sharing technological cooperation.

Under the agreement, signed by Dr Noura Al Dhaheri, general manager of Maqta Gateway and Guo Jianbiao, director general, LOGINK, logistics information will be shared between Maqta PCS and LOGINK System, which 10 | Logistics News ME | January 2018

in turn will provide visibility of nine ports in China.

Commenting on the signing, Captain Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports, said: “The cooperation agreement is another milestone to add to Abu Dhabi Port’s growing trade portfolio of collaborations with Chinese companies in the logistics, maritime, and trade sphere. Sharing information of LOGINK Systems and with our Maqta Gateway’s single digital maritime window will allow customers to track the details of their shipments and vessels at anytime and anywhere before they reach destinations.”

Dr Al Dhaheri added: “We are excited to be the first company in the Middle East to sign this agreement.

The agreement with LOGINK will better utilise the information that exists in our port community system, Maqta PCS, and that in the China LOGINK system, to better serve our customers. Our intent is to expand our network of reach to access accurate and reliable shipping information to better optimise our logistics services.”

Maqta Gateway has already begun the efforts of integrating Abu Dhabi’s port community system, Maqta PCS, with other international port community systems, initially planned for 2020.

Gulf Air, VFS Global launch online Bahrain tourist visa service Flag carrier Gulf Air, in partnership with VFS Global, has launched an online Bahrain Tourist Visa Service available exclusively for the airline’s passengers flying across its global network to Bahrain.

Travellers with return Gulf Air tickets can now conveniently apply for a visa to Bahrain online via Gulfair’s website or by visiting their local Gulf Air sales office with the necessary documents, no more than 30 days prior to travel to fill in the relevant forms and submit their application.

The visa service takes a minimum of four working days to process and is done in coordination with the relevant ministries and government entities.

Captain Waleed Abdul Hameed Al Alawi, deputy chief executive officer of Gulf Air, said: “Promoting Bahrain as a many faceted tourist destination is key to Gulf Air’s longstanding mission. We are delighted to, in partnership with VFS Global, launch the Bahrain Tourist Visa Service – making the process of obtaining a visa to enter Bahrain easier and more convenient.

We anticipate positive feedback from our customers, for whom this service is tailored, and we look forward to welcoming more people from around the world to Bahrain to experience all that the Kingdom has to offer.”

Vinay Malhotra, COO – Middle East and South Asia, VFS Global, added: “We are delighted to partner with Gulf Air and the Government of Bahrain to develop a convenient, next-generation visa service for Gulf Air passengers visiting Bahrain. The dedicated online platform not only makes applying for a visa to Bahrain quicker and more convenient than ever before, but also provides passengers with 24×7 accessibility and online tracking of their visas, amongst other advantages.”

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Innovation

RSA Global, SirajPower launch first solar rooftop in Dubai South

RSA Global officially launched the first solar rooftop in Dubai Logistics City, on its flagship facility. The project developed

by SirajPower, the Dubai-based joint venture devoted to net metering and providing comprehensive turnkey solutions on solar rooftops in the UAE, is the first of its kind in Dubai South.

For the occasion, Abhishek Ajay Shah, co-founder and group CEO of RSA Global, and David Auriau and Laurent Longuet, directors at SirajPower, hosted a ceremony at RSA Global’s headquarters to showcase the project to customers and VIPs including HE Khalifa Al Zaffin, executive chairman of Dubai Aviation City Corporation and Dubai South.

The power plant, developed and installed by SirajPower, will generate 1.1MW from RSA Global’s headquarters in Dubai Logistics City. It will provide an alternative source of electricity for the next 15 years and generate 90% of the energy required for the facility. The lease agreement between RSA Global and SirajPower signed earlier this year is aligned with Dubai Electricity and Water Authority’s (DEWA) Shams Dubai initiative.

As part of the UAE Centennial Plan 12 | Logistics News ME | January 2018

2071, the UAE Energy Strategy 2050 has been announced to boost the country’s ambitions to increase the share of clean energy in the national energy mix to 27% by 2021 and 50% by 2050.

Shah commented: “In line with our core purpose of solving challenges for a better tomorrow, RSA Global is delighted to have achieved such an important milestone. It is never easy to be the first.

We were the first company to come and set up in Dubai South and we take pride in overcoming challenges and adopting new technologies quickly this is in our DNA and our team works tirelessly to stay at the forefront of innovation.

Together with SirajPower and all our partners, we believe in the importance of protecting our environment. We hope this will open the door for many others to follow in our first steps to contribute to the ambitious target set by the UAE leadership with the launch of the UAE Energy Strategy 2050 to increase clean energy use by 50%.”

Auriau said: “It has been a great journey towards this green day as we are celebrating the completion of the very first solar rooftop project in Dubai.

This example of providing cheaper and

cleaner electricity is a clear opportunity for RSA Global but also for all industrial and commercial businesses in general.

At SirajPower, our commitment is to innovate to deliver unique and tailored solar energy solutions together with custom financing options to suit both commercial and industrial needs. We share with our clients, partners and Dubai’s Authority a common mission, which is to develop renewable energy sources as we believe in its true and immense potential for the future of the emirate.”

SirajPower has delivered this project under a fully financed leasing scheme.

SirajPower’s value proposition requires neither upfront investment nor operational obligations from RSA Global.

SirajPower is a joint venture between Akuo Energy of France and Corys Environment of Dubai. It started operations on its first project in Dubai in January 2016, and since then has secured a number of large and prestigious projects, all with blue chip names in the region. Siraj has also set out to finance 50MW of solar rooftop projects over the next five years in Dubai as part of the Shams initiative. www.cbnme.com

Thales to modernise Egyptian National Railways network Thales, a global technology leader for the aerospace and transport sector, has been awarded a three-year contract by Egyptian National Railways (ENR) for the modernisation of the signalling and telecommunications systems and all works related to a 180km section of line between the towns of Asyut and Nagh Hammadi, located in the Upper Egypt portion of the Alexandria–Cairo–Aswan rail corridor.

The project is part of an ambitious plan, promoted by the Ministry of Transport and completely financed by the World Bank, aimed at transforming Egypt’s railway infrastructure. It is aimed at improving traffic safety and security to allow trains to travel at speeds of up to 160 km/h, as opposed to the current 120 km/h, and traffic

volumes are expected to double.

All of these changes will increase passenger and goods transport capacity across the backbone line that links the North and South of the country from Alexandria to Cairo all the way up to Aswan. The solution is designed to work together with the existing ATP system (Automatic Train Protection) and a future European

Train Control System (ETCS).

As per the contract, Thales will help in the installation of leadingedge electronic interlocking systems besides implementing an integrated signalling and communication solution to improve railway security and safety and allow trains to increase their speed from 120 km/h to 160 km/h. The project includes full protection of signalling and telecommunications systems against cyberattacks to ensure safety and system availability, said the statement from Thales.

This is the group’s second contract in this domain in Egypt and follows the project awarded in 2013 to modernise the line connecting Alexandria with Cairo.

Acquisition

DP World acquires additional stake in Embraport DP World has completed the acquisition of an additional 66.67% stake in Empresa Brasileira de Terminais Portuários (Embraport) in Brazil from Odebrecht Transport (OTP).

The transaction increases DP World’s shareholding to 100% and the terminal will be rebranded to DP World Santos.

The purchase consideration is below 5% of DP World’s net asset value as of H1 2017, and on a pro-forma basis DP World’s net leverage would be 2.8x net debt to EBITDA with this transaction compared to the reported 2.6x.

DP World Santos is the largest Brazilian private multi-modal port terminal and operates in the Port of Santos, which is the busiest container port in Latin America handling 3.4 million twenty-foot equivalent units (TEU) in 2016 and has strategic access to sea, road, and rail, and 90% of the cargo is destined for Brazil’s most populous city, São Paulo. DP World Santos has an annual capacity of 1.2 million TEU and the first phase of the project has created 653m of wharf, 207,000sqm of terminal area.

DP World group chairman and CEO, Sultan Ahmed Bin Sulayem, said: “We are delighted to fully consolidate our stake

in DP World Santos and to underline our commitment to the Port of Santos and the future of trade in Brazil. DP World has become a major player in the South American infrastructure sector with a network of container terminals in

Peru, Dominican Republic, Argentina, Ecuador, and Suriname, and we remain committed to our role as a global trade enabler and targeting a broader strategy to grow complementary sectors in the global supply chain.”

Logistics News ME | January 2018 | 13

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dnata incorporates blockchain into cargo operations

dnata’s cargo operations, in conjunction with Emirates Innovation Lab, IBM, and flydubai Cargo, has created a new value proposition for cargo service delivery through the use of blockchain technology. This has added value by eliminating redundant data and improved visibility and transparency for all stakeholders. As a result, processes can be more streamlined and simplified right from the origin to the final destination.

Kevin Ennis, vice president commercial and business development for dnata’s UAE cargo operations, said: “dnata has always been at the forefront of innovation, and the success of our study to use blockchain technology in our operations means greater security, efficiency, and cost savings to our customers. We are on the cusp of revolutionising the way we operate, and the success of this initiative with our partners will give the industry a real boost towards seamless service delivery.”

In cargo, much of the processes are traditionally paper based, which require multiple sign-offs by inspectors and receivers before goods can be delivered. Even when the system

14 | Logistics News ME | January 2018

is electronic, it still requires multiple parties to sign off on cargo shipments, creating a lengthy administrative process. To try and streamline this process, blockchain technology can be used to manage and track the paper trail of cargo containers by digitising the supply chain. In such a scenario, what makes blockchain infallible is that, no one party can modify, delete or even edit any one of the blocks without the consensus from others on the network. flydubai Cargo and dnata, in collaboration with Emirates Innovation Lab and IBM, jointly developed a logistics platform in which blockchain infrastructure was implemented for supply chain transactions from a purchase order from the origin to delivery to the consignee warehouse at its destination. Through PoC (Proof of Concept), flydubai Cargo, Emirates Innovation Lab, and dnata were able to identify issues from various perspectives such as technology, security, operation, legal perspectives, and were able to realise new supply chain services including digitalisation of documents.

Neetan Chopra, senior vice presi-

dent – IT strategic services, Emirates Group, said: “Blockchain technology has great potential to exponentially improve efficiency and transparency of business networks, especially in cargo and logistics flows. However, neither the technology nor the potential is easy to understand or appreciate. Hence it is imperative to carry out such business experiments and trials so that participants can experience the benefits of breakthrough technologies in a live environment.”

Commenting on the collaboration, Mohamed Hassan, vice president of flydubai Cargo, said: “Blockchain technology is able to transform sectors far beyond financial services. It improves the way we work together in providing reliable and convenient airfreight as it provides end-to-end services. As a result of this collaboration, flydubai Cargo has become the first airline to complete a proof of concept (PoC) using blockchain technology in airfreight transportation.

We would like to thank all the stakeholders involved who have contributed to this milestone, and we look forward to the benefits that this technology will bring to the industry.”

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Development

DHL Express invests $18mn into facility expansion at DXB Terminal 2

DHL Express unveiled its newly expanded $18mn state-of-the-art facility at Terminal 2 in DXB, which will significantly increase the capacity of shipments managed every hour and strengthen DHL’s regional hub operations from Dubai.

The 13,100sqm facility, which is located in the Cargo Terminal at DXB, will have the capacity to manage up to 5,000 shipments per hour. That will double its current capacity of 2,500 and serve nearly 70,000 customers across the Middle East and North Africa (MENA) region.

Ken Allen, member of the board of management Deutsche Post AG, Division EXPRESS, said: “The expansion of our facility at Terminal 2 in Dubai is the latest investment by DHL to support economic growth in the country and wider region by facilitating global trade to and from our growing hub in the UAE. We are confident that the new facility will be able to adequately meet increasing demand for faster shipment deliveries, especially with the boom in e-commerce in the region.”

Nour Suliman, CEO of DHL Express MENA, said: “We continue to see sustained growth in the Middle East region, which is why we are strengthening our regional hub in Dubai and successfully increasing capacity.

The new state-of-the-art facility 16 | Logistics News ME | January 2018

incorporates the very latest technology that ensures we can sort and ship over 120,000 shipments a day. DHL is continuing to set new standards for the logistics industry across the region and we will continue to work closely with our key partners and customs officials to ensure that our customers in the UAE receive the highest levels of service.”

Eugene Barry, executive vice president of Dubai Airports Commercial Group, said: “Dubai Airports’ partnership with DHL goes back many years, and we are delighted with their continued investment in people, infrastructure, and systems.

This confidence is testament to Dubai’s global position as a well-positioned aviation and logistics hub, and highlights the significance of Dubai International’s key role as a gateway to the emirate and the region.”

The new facility will enable consolidated export, transit and import operations with a customs’ clearance and hold area that will feed inter-continental and region-wide airand-land-network distribution. An automated conveyor system with dualview X-ray screening of parcels, imagecapture technology, and an automatic bar-code parcel sorting system will enable the delivery of more than 120,000 shipments a day.

RAKEZ wins fDi freezone award in ‘Bespoke Category’ Ras Al Khaimah Economic Zone (RAKEZ), the umbrella authority of RAK Free Trade Zone (RAK FTZ) and RAK Investment Authority (RAKIA), has been named as the most cost-effective economic zone by the prestigious fDi Global Free Zones of the Year Awards 2017.

Taking the Bespoke Category – Set-up Cost Reduction award, RAKEZ stood out from over 60 free zones from across the globe upon the evaluation of the Financial Times specialist editorial team and an independent panel of judges.

Ramy Jallad, Group CEO of RAKEZ, RAK FTZ, and RAKIA, said: “We’re ecstatic for winning the Bespoke Category – Set-up Cost Reduction at this year’s fDi Global Free Zone of the Year Awards. RAKEZ was just recently introduced but it has already been recognised for its cost-effectiveness, which is actually among our key strategic pillars in attaining our vision of becoming a leading global investment destination.”

He added: “Delivering fit-forpurpose facilities and customercentric business solutions that are premium and affordable will always be among our strongest commitments to investors. 2017 has been very eventful for RAKEZ and winning a prestigious award from fDi is our cherry on top.”

This year, RAKEZ has launched several promotions that let businesses enjoy a 10% reduction on set-up packages as well as 12-month instalment option with its three-year business plan. The easy payment plan allows investors to spread the formation costs over 12 months, making payments more manageable.

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ENOC to construct the UAE’s largest Tasjeel facility Emirates National Oil Company (ENOC) has joined hands with the General Resources Authority (GRA) in Ras Al Khaimah (RAK), to build the largest comprehensive retail outlet in the emirate. The agreement comes in line with the group’s commitment to further expand its footprint across the UAE. Also known as the RAK Auto Village, the new project will spread over an area of 50,000sqm, and will include the UAE’s largest Tasjeel facility for vehicle testing and registration needs, along with a service station, and retail outlets, thus providing comprehensive service to more than 1,000 vehicles daily.

Saif Humaid Al Falasi, ENOC Group CEO, said: “The growing demand for service stations and vehicle testing facilities is directly linked to the country’s rapid population growth. Through our partnership with the GRA, we plan to launch the largest ENOC retail outlet to cater to our customers in the Northern Emirates and reiterate our commitment to contribute to the expansion of our country’s key infrastructure.”

Major General Ali Abdullah Bin Alwan Al Nuaimi, the commander-in-chief of Ras Al Khaimah Police, commented on

the announcement: “RAK Auto Village aims to expand its services to the public which will exceed their requirements and expectations. This new project is state-of-the-art in all aspects and will serve the emirate, especially the southern part of Ras Al Khaimah. The ENOC facility will enable all motorists in the area to make full use of the service station and take mandatory tests that are required for vehicle registration.”

The station will feature several energy saving technologies such as LED lights; variable refrigerant flow (VRF) technology for the air conditioning system, which saves 35% of energy as compared to the conventional AC system; and the vapor recovery system, which uses a process to recover vapour released from the petrol dispensers and storage tanks and condense it

back into fuel form, and is expected to convert up to 20,000l of fuel.

Jamal Al Tair, the chairman of the board of GRA, said: “Today, we are witnessing another milestone added to ENOC’s accomplishments. We are happy to announce this collaboration which emphasises our commitment to provide our customers with the best and highest service standards.”

He futher noted that in line with the group’s mandate to enhance energy efficiency across its operations, the new service station will include provisions to install solar PV panels on the roof of the service station canopy and Tasjeel centre. Motorists visiting the service station will be able to access a variety of amenities, including Zoom convenience store, Pronto, and AutoPro, along with a variety of F&B offerings.

Acquisition

CMA CGM completes Mercosul Line acquisition CMA CGM completed the acquisition of Mercosul Line, a leading player in Brazil’s domestic container shipping market, with a fleet of four container vessels and around 290 people employed.

Launched in 1996 and acquired by Maersk in 2006, Mercosul Line is a specialist in the Brazilian internal transport market. Its fleet of four ships operates in Brazil and South America. Mercosul employs 130 land based staff and 160 seafarers, reporting revenues of $128mn in 2016 and offers strong profitability.

In June 2017, CMA CGM and Maersk Line announced a binding agreement whereby CMA CGM would acquire Mercosul Line.

The agreement was subject to Brazilian regulatory approval and the closing of Maersk’s Hamburg Süd acquisition, both of which have now been finalised, following which the transfer of ownership between the

two companies was completed, marking the closing of the acquisition.

Søren Toft, chief operating officer, A.P. Moller – Maersk, said: “Mercosul is a highly respected and well-run company with an excellent fleet and customer value proposition. It has been a valued brand in our portfolio and we wish the company and its dedicated people the best in the future.”

The transaction, whose price was not disclosed, will ensure that the cabotage sector in Brazil remains competitive and that customers continue to benefit from a comprehensive choice of carriers.

Maersk Line is strengthening its presence and strong value proposition in the sector through Hamburg Süd’s subsidiary, Aliança, Brazil’s leading cabotage carrier.

Logistics News ME | January 2018 | 17

O p -e d

Green is better Dr Sreejith Balasubramaniam, lecturer at Middlesex University Dubai, explains the importance of green supply chain management in the UAE construction sector

The application of green supply chain management (GSCM), a systematic and integrated approach to reducing the environmental footprint across the various supply chain stages (from design to end of life) has witnessed significant interest in recent years. However, despite the burgeoning interest, the uptake of GSCM across various sectors has been uneven. This is because seamless application of GSCM warrants commitment and participation of all stakeholders in the supply chain, which is challenging, especially for sectors with complex supply chains such as the construction sector, in which the number of stakeholder firms involved in the supply chain could be in hundreds, if not thousands. The lack of application of GSCM in the

18 | Logistics News ME | January 2018

construction sector is a major concern given that construction is the single largest contributor to global carbon emissions, resource, water and energy consumption, and landfill waste. Curtailing the negative environmental impacts of the sector has become critical especially in emerging countries such as the UAE in which the sector is growing at more than 9% per year.

The Developers The green decisions made by the developers at the design stage, such as the extent of natural ventilation, natural lighting, solar energy, waste water recycling system, and energy efficient heating and lighting system, could significantly and directly reduce the environmental impacts

during the operational phase of the building as well as it will eliminate the need for costly and disruptive refurbishments for reducing any environmental impacts during the post-occupancy stage. Similarly, the importance given by a developer to the environmental aspects vis-à -vis traditional aspects of cost, quality, and time during the awarding of the construction contract to architects/consultants and contractors could improve the overall environmental performance of the supply chain. Finally, at the end of a building’s useful life, developers could execute a carefully planned environmental friendly demolition process to maximise recovery and recycling of demolition waste instead of sending all the demolition waste to landfill.

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O p -E d

The Suppliers Suppliers too have a key role in improving the environmental performance of the construction sector since up to 10% of the global energy is consumed for the manufacturing of the construction materials/products. The green product design aspects considered by suppliers such as products with high recycled content, low embodied energy, and hazardous materials could reduce the overall life-cycle energy consumption of the building. Also, suppliers’ product design consideration could improve the recyclability/recoverability of the material/product during the end of life demolition of a building. Like contractors, the sector could also benefit from their involvement at an early stage, since they understand the design requirements much better and could, therefore, suggest/provide customised product to meet the green design challenges.

Green purchasing decisions made by the suppliers such as the purchase of raw materials with low embodied energy, which requires less treatment and processing, along with other green purchasing practices such as electronic invoicing, and purchasing of raw materials from close proximity could further improve the environmental performance of the sector.

However, collaborative research and development between suppliers and other stakeholders, which is common in other sectors, is relatively low in the construction sector.

The Architect/Consultant They are the ones responsible for providing a cost-effective green design for the developer, with an important role in curtailing the environmental impacts of the construction supply chain. The skilfulness of the architect/consultant in providing a cost-effective modular design will not only enhance pre-fabrication of building components, but also enhance disassembly during the building demolition to maximise recovery of demolition materials. Also, the architect/consultant has an important role in convincing the developers to go for green projects, especially to those developers who are not aware of the environmental and financial benefits of green buildings. They also need to ensure that there are no major flaws in the design and tender specifications as any oversight may increase re-work and design changes at a later stage of the project, leading to project being unsustainable. In addition, they are required to demonstrate stringency in rejecting environmentally unfriendly products such as products with hazardous materials and low recycled content. Finally, they need to show stringency during building commissioning to ensure contractors/subcontractors and suppli-

20 | Logistics News ME | January 2018

ers are not bypassing any green requirements, and that non-compliance (if any) at this stage is reverted to the main contractor to rectify before the building is commissioned.

The Contractors Contractors have a direct role in minimising the environmental impacts of the construction supply chain through their onsite green construction practices, such as on-site waste segregation and recycling, use of energy efficient machinery and vehicles, and use of pre-fabricated materials, and materials with recycled content. Also, stringency in the contractors’ green purchasing decisions, which include both material purchasing decisions and in the selection of subcontractors could play an important role in improving the green performance of the sector since thousands of contracts are awarded in a construction project. Equally important are the green transportation practices of contractors/ sub-contractors such as providing employee accommodation near projects sites, transport of materials in full truck quantities, and use of energy efficient vehicles. Unfortunately, early involvement of contractors during the design stage is rare in the construction sector.

The Government With regards to the role of governments in promoting GSCM, enforcement of mandatory green building regulation, which cover several aspects such as those pertaining to material selection, design aspects that include natural ventilation, lighting, water and energy consumption and use of renewable energy, along with associated non-compliance fines and penalties, and landfill tax could play a significant role in changing the status quo of stakeholders, especially developers.

In summary, given that most of the underlying issues in construction are similar across countries, the findings of this study provide an exceptional opportunity for environmental policymakers and practitioners to make (informed) stakeholder specific policy changes/ interventions and actions to improve the application of GSCM in the construction sector.

For instance, concerted effort from governments and the sector in hosting conferences, workshops and seminars in increasing the buyer/investor green awareness, can improve demand for green buildings.

The application of GSCM can be extended to any sector and supply chain in the region from manufacturing to oil and gas, and cold food chain.

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C ov e r Sto ry

The first phase was to build a bus system in Bahrain and now we have a bus network that serves most areas of the country.�

HE Kamal bin Ahmed Mohammed

22 | Logistics News ME | January 2018

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e l p o e P

Connecting

HE Kamal bin Ahmed Mohammed, Minister of Transportation and Telecommunications of Bahrain, talks to Paromita Dey about the state’s future plans for land, air, and sea

C

omprising more than 30 islands in the Arabian Gulf, Bahrain has seen a meteoric rise and reported an annual economic growth rate of 2.9% in the first quarter of 2017. This was in line with the performance seen in 2016. According to the Bahrain Quarterly Economic Report by Economic Development Board, the strong growth materialised in spite of a small contraction in the oil sector along with minimal expansion in government services. The momentum is supported by a record infrastructure pipeline.

In an exclusive with LNME, HE Kamal bin Ahmed Mohammed, Minister of Transportation and Telecommunications, mentions that the Kingdom is currently busy with execution of plans and working on the infrastructure, also focusing on investment that empowers the people.

“Bahrain is a neutral country; we enjoy great relationships with everybody from the region and all around the world. We want to work together for the benefit of everybody.

When it comes to markets, the GCC is an important market to Bahrain, especially Saudi Arabia (to me, it’s part of our local market).”

Air transport For air transport, the Gulf state is investing in a new $1.1bn terminal building for a ca-

pacity of 14 million passengers per year. The project is already in the implementation stage, concept is finished and in design stages. HE Mohammed says: “We completed almost 40% of the project; hopefully this new terminal building will be operational in Q3 2019. We are progressing as planned as we keep working day and night.

“This project will definitely improve the quality of services we provide to our passengers and the airlines that uses Bahrain International Airport. It will also enable us to attract more airlines to the country. We might not have the biggest airport, because we don’t need to build something that we don’t need. We need to build something that will allow us to grow, attract new airlines, and use our resources wisely.”

Also, the ministry is investing in building new MRO facilities that will accommodate almost three aircrafts. HE Mohammed points out: “We are nearly completing the design stage by French company SETEC, who is responsible for the development of the maintenance, repair, and overhaul (MRO) zone, which includes a new MRO hangar, main stores, new aircraft parking, aprons, new taxiway, airfield pavement, engine run-up area, airfield ground lighting (AGL) lighting, and the associated infrastructure. We have finished the big qualifications process for the contractor, so hopefully

Logistics News ME | January 2018 | 23

C ov e r Sto ry

We have seen growth in general cargo because of the construction we have; we have projects worth $32bn that are being implemented.”

HE Kamal bin Ahmed Mohammed

in the few coming months, we will issue the tender document for execution.”

In addition to it, HE Mohammed also highlights that they have established a new company called Gulf Air Group Holding Company, for which he is the chairman of the group. “Under Gulf Air Group, comes Bahrain Airport Company; the operator responsible for managing Bahrain International Airport and maximise its profits. This company is doing fantastic; in 2016, we witnessed 38% growth in profit while the year before was around 30% to 40%.”

Land Transport According to HE Mohammed, in Bahrain, people heavily rely on personal cars to move from point to another, which is not sustainable, and the number of cars keeps increasing.

“Building roads and highways will not solve

24 | Logistics News ME | January 2018

the problem, it will just delay it but will not address the issue in a sustainable manner. So, we have a strategy at the Ministry to make sure that we provide additional mode of transportation to shift people from using their personal cars to other modes of transportation.

“The first phase was to build a bus system in Bahrain and now we have a bus network that serves most areas. We brought in new buses; we also brought in a new international operator – Bahrain Public Transport Company, which is a joint venture between UK-based international transport providers, National Express, and Bahrain based Ahmed Mansour Al Aali.”

The Ministry is also planning and working on a new mode of transportation, in conjunction with a Spanish consultant, IDOM, who will be responsible to carry out consultancy services for having a light rail network in

Bahrain. HE Mohammed says: “We are in the study phase, so I don’t want to jump to conclusions. The deliverable of the study will tell us. We were supposed to finish the study by end of 2017 but hopefully, by end February 2018, we’ll finish the study and be able to share it with the government and take it to the execution stage.”

The Ministry is additionally in the process, together with its colleagues in Saudi Arabia, of building an additional causeway to link Bahrain with KSA, and will be part of the GCC Rail project, to have both passenger and cargo trains, as well as additional capacity for cars. HE Mohammed states: “We finished the technical and financial viability studies of the project and we are at a stage to take this project to another phase, hopefully by appointing the transaction adviser and project management.”

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Sea transport HE Mohammed is of the opinion that the shipping industry is going through tough times, people are trying to cut costs. “We heard recently that many large companies announced their bankruptcy but I am optimistic with what we are doing collectively in Bahrain, we’ll be able to increase the growth in our port. We have seen growth in general cargo because of the construction we have; we have projects worth $32bn that are being implemented – this affected the port and will continue to affect the port in the next three to four years.”

He also highlights that the tiny Gulf state is the most liberal when it comes to serving the ports, and when it comes to ship registration.

“We have an IT platform, where people can register their ships online from the comfort of their homes in any part of the world. It’s smooth and can easily be done; we want to

simplify it for people so that they can see the difference in what we can offer.”

Bahrain is also investing in enhancing the utilisation of Bahrain Logistics Zone, which is currently more than 80% occupied. A lot of the projects are in construction stage or have opened and now expansion is in demand from the business sectors both inside and outside of Bahrain.

HE Mohammed says: “I don’t think anybody can offer this linkage between sea, air, and land transport like what we have in Bahrain. Saudi Arabia is a big market; everybody wants to serve the Saudi market, and I think Bahrain is a good gateway to serve the eastern part of Saudi Arabia.”

Future goals HE Mohammed mentions that they will soon be launching a program called “Ajwaa”, to

ensure they have enough air traffic controllers and air traffic safety engineers in Bahrain.

“We need more of them as many of the current ones are retiring and we want to ensure we have a lot of highly qualified and skilled workforce. They are controlling over 600,000 flights over Bahrain and GCC skies annually. They have to do their jobs and adhere to the highest standards of safety and compliance to international regulations.

“We have also, with BAC, launched the program, Tahleeq, which aims at employing fresh graduate Bahraini engineers and technicians to work with us throughout the projects, so that at a later stage they can play an important role in maintaining the new facilities at the new airport that we are building. Today, we have 40 of those fresh graduate engineers and technicians, and we’ll have an additional 20 of them soon, so a large part of the human resources develop-

Logistics News ME | January 2018 | 25

C ov e r Sto ry

ment plan is being implemented.

The Ministry also works with Tamkeen to bring in graduates for a two-year program to be trained with consultants and experienced engineers, and then to be employed full time.

HE Mohammed mentions: “They will be travelling abroad to see the factory acceptance test.

I have a team in Florida to check on security equipment, so the team will be involved in engineering, construction, and testing equipment, before we buy it for the new airport. They will participate in approving materials together with the senior staff and consultants. They are our eyes on site - by this they are accountable and will take the program more seriously.�

26 | Logistics News ME | January 2018

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va reports ehak Srivasta M ; p u ro g d ty irite of sustainabili home to a sp e is lu i a va b e u th D ld in o tory ny to uph The Mars fac by the compa n ke ta s e tiv a the initi

M

ars, Incorporated is a name well known in households around the world. What started with a young Frank C. Mars making candies in his Tacoma, Washington state kitchen over a century ago, is today a multi-billion dollar business. Following his father’s simple beginning, Forrest Mars Sr. built Mars into the mature company it is today, first by creating products such as the Milky Way bar and M&M’s, and later by expanding the business overseas and diversifying into new categories like pet care and food. Mars is still a privately-owned business, run in all entirety by the Mars family, with firmly set

28 | Logistics News ME | January 2018

principles— quality, responsibility, mutuality, efficiency, and freedom.

The Mars Dubai site in Jebel Ali Free Zone too believes in these principles, and the associates—which is what all employees are referred to as — are a passionate bunch. Their eyes glimmer with love for their company, and they are not wrong to be so attached to the business.

Mars, Inc. has repeatedly ranked on Fortune’s list of 100 Best Companies to Work For, and the associates are extremely proud of the company’s excellence in more fields than one, one of which is sustainability.

Neil Long, plant director for Dubai, comments: “I think when we speak to associates

about what attracts them towards Mars and makes them stay at Mars, it is the fact that our owners take this (sustainability) as seriously as they do. It helps when you’ve got something that associates feel they can be passionate about, something they can positively contribute towards.”

Mars Dubai has adopted a number of methods to strengthen its strategy of being a sustainable business, falling under its global ‘Sustainable in a Generation’ plan, which includes goals for ‘healthy planet’, ‘thriving people’, and ‘nourishing wellbeing’. From reducing water and electricity usage, to eliminating waste, and even reaching out to the farming com-

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The Mars Dubai team (L-R)- Mansoor Muhamed, Neil Long, Christine Greaves, Boniface Kimonyi, Vivian Maduray

munities to ensure best practices are followed through, the organisation has worked hard to ensure it gives back to the planet earth what it has reaped in bountiful.

Energy As per Mars’ global strategy, all sites that produce chocolate need to reduce energy consumption by 3% every year. Their aim is to utilise 100% renewable energy by 2040, with zero dependence on fossil fuels; their energy needs are to be met through solar or hydro energy.

Boniface Kimonyi, environment and sustainability officer – SES, explains: “The energy from the 400 solar panels installed on the rooftop (of Mars Dubai) is used to heat the chocolate pipes; we’ve also insulated the pipes to help save energy which would otherwise be used to cool them. Our solar panels also provide electricity to our car parking.”

Another major strategy implemented by the site includes shifting to ammonia-based chillers instead of Freon-based ones. Ammoniabased refrigeration systems are cheaper to build, are more efficient than CFCs, and is safe for the environment.

Globally, Mars has invested in wind farm technology in the US, and all electricity consumed by the US operations are imparted by

the wind farm. A similar farm was established in Scotland in 2016, and powers all Mars UK factories and offices.

Waste The journey, initiated in 2008, was not an easy feat. At that point, Mars Dubai was producing nearly 36% landfill waste, out of all the global Mars sites, even though it produced only 2% of the total chocolate. The pressure from the family to curb this issue was massive. More so, Dubai had only just begun exploring recycling options, and the government was not sure how the organisation could achieve the sustainability goals it had set for itself.

However, gradually, the regional site has managed to tackle all challenges and has emerged as a role model for other companies around. Today, Mars Dubai proudly boasts of ‘zero waste to landfill’ i.e., not a single truck goes out from the site to the landfill. Waste generation in the factory has been reduced to the bare minimum point possible, and the rest is either recycled or put to better use.

Mansoor Muhamed, safety manager, remarks: “Our primary issue was with segregation—we didn’t know how much and what kind of waste we were generating, since it was all mixed together. Plus, since landfill dumping

was considered to be easy, not much thought was given to recycling at first, something that has been completely altered today.”

The organisation understood that change had to come from within; the associates were taken through a sustainability induction, and thoroughly educated on why they all had to come together to fulfill the goals.

“In 2011, we formed a cross-functional, multi-functional team, known as the G-transformers, or ‘green transformers,’ explains Muhamed. “Our mission was to convert waste into value, and to not rest until all nonbelievers were converted. We had employees from various departments in the company, and while it was not a part of their objective, they volunteered for the greater good.”

Initiatives included installing segregated recycling bins in the office, and getting rid of individual bins at every work-desk. Plus, every employee was handed personal water bottles to ensure half-empty bottles were not tossed in the trash at the end of each day. Garden furniture and sculptures made of out used chocolate wrappers stand proudly, while visitors and students are invited on site to learn from the mission.

Long says: “When we started this journey, we really needed to create a huge paradigm shift within the business. Under the banner of

Logistics News ME | January 2018 | 29

S i t e V is it

creating value out of waste, we were able to galvanise the team to look at every single thing that we did that generated waste, and tried to understand what we could do to either reduce, reuse or recycle, eliminate, or generate some value out of the process.”

The biggest issue, however, remained with handling chocolate waste. Muhamed stresses on the fact that for every tonne of chocolate produced, nearly 110kg of chocolate was sent to landfill. This consisted of chocolate remains left behind on the production line, and any batches that were damaged during the distribution chain and deemed unfit for sale. The company toyed around with several ideas to fix this problem, including using it as fertiliser or animal feed, and finally locked down on one—it was sent to cement factories as fuel.

Muhamed explains: “All our chocolate is now sent to a cement factory—they previously used coal as a fuel for their furnace, but now they add our chocolate waste to it, thus reducing the overall use of fossil fuel. We’ve pioneered this method, and other chocolate factories are following similar suit and sending their chocolate waste to cement factories.”

There, however, remained a small percentage of waste which could neither be recycled, nor sent to recycling companies.

“It was very less, but it was still a challenge,” says Kimonyi. “That’s how we came up with a machine that thermally treats this waste.

We call it the ‘beauty’, which is a waste thermal treatment plant. It basically works like an incinerator; it treats all the waste to ash, but it burns the gases in the secondary chamber (it has two chambers) to acceptable levels within EHS (Environment, Health and Safety is the regulatory arm of Trakhees Dubai). The ash is then used as a fertiliser, while the gases can be released into the atmosphere.”

Water “We worked on waste, and we did do a lot of work on water as well,” says Kimonyi. “The strategy was to have the same quality of water both ways—what comes in is what should go out. We wanted to be able to use the water collected after washing our machines to water plants, and plus reduce our overall usage of water.”

The company invested heavily in a waste water treatment plant, which treats around 125cbm of water chock-full of pollutants onsite, to irrigation standards. Additionally, water by product from the ammonia plant is redirected to flush the toilets, and any excess water from the treatment plant is sent to a third-party for irrigation purposes. The initiatives have helped Mars Dubai save nearly 10cbm of water per day.

30 | Logistics News ME | January 2018

Ammonia cooling systems

Community initiatives The organisation is extremely conscious of the importance of land for its business, for its raw material comes from it. Mars is an active participant in UN’s sustainable goals, and has partnered up with governments worldwide to ensure best practices are followed throughout the supply chain.

Christine Greaves, external affair manager, Gulf and Pakistan, mentions: “All our raw materials, for tea, cocoa, palm oil etc., are 100% from certified sources. Part of being certified means that child labour does not exist within our supply chain, which is very key

to us. We make pet food, and since a lot of fish goes into this, we’re very involved in saving coral reefs and sustainable fishing practices. We just recently launched an initiative for mint farming in India, a vital part of our brand Wrigleys.”

Long adds: “Being a privately-owned business means we can do some things that are different from the publicly traded companies; we can take longer-term views, versus shorter term views which need immediate return. Sustainability is definitely one of those areas where we’re making investments and we’ve been making investments, which don’t necessarily

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Quick Facts

Garden furniture made out of used chocolate wrappers

• Mars, Incorporated established in 1911 • Sixth largest privately held company in US, as reported

by Forbes • Reported a revenue of $33bn in 2017 • Global employee count: 80,000+ • Operates in six key segments: Chocolate, Food, Petcare, Wrigley, Drinks, and Symbioscience

Boniface Kimonyi talks about the solar panels

pay off tomorrow, but they pay off in the years and decades to come.

“We do a lot of work in cocoa sustainability, in South America, Ivory Coast, India, Indonesia, and we’ve had some global patents which we’ve put out there for everyone to be able to use, because it isn’t necessarily a competitive advantage for us. It is the right thing to make sure the cocoa industry thrives for the longer term. We help farmers develop better farming practices, and educate them in terms of fertilization and pesticides. We help them improve their yield as well, so for the square metrage these farmers have—and there’s millions of

these farmers out there with small parts of land with a few cocoa trees on—we develop their yield so that they can get more out of their pieces of property, and hence benefit more as part of our value chain.”

Mars, Inc. is a part of the African Orphans Crops Consortium, an establishment whose goal is to sequence, assemble, and annotate the genomes of 101 traditional African food crops to improve their nutritional content, thus providing long lasting solutions for Africa’s nutritional security.

Mars is also involved with several NGOs worldwide and has its own Mars Volunteer

• Popular products include M&M’s, Snickers, Twix, 3 Musketeers, Pedigree, Whiskas, Uncle Ben’s Programme (MVP) to involve its associates with the community.

Today, Mars Dubai has turned into an example for all factories in and around Dubai.

One and all are welcome to visit the factory to understand how they can incorporate the same practices into their trade, ensuring that the ultimate goal of sustainability is met.

As Long puts it: “Chocolate is a product that brings smiles to the consumers faces. And what we do here at Mars is make sure we do it (produce chocolate) in a responsible manner, and do our bit in reducing our impact on the planet, giving back to the communities that we are a part of.”

Logistics News ME | January 2018 | 31

Int e rv iew

The ideal choice Kushal Nahata, CEO and co-founder of the Indian start-up, FarEye, discusses logistics trends, the company’s approach to work, and their strategy to further up their game

FarEye has steadily picked up as an internationally recognised solutions platform. When and how did this journey begin?

Logistics occupy 8-10% of GDP in developed markets and 12-13% in developing markets.

On the other side, cargo losses during product journey were estimated at $60bn in 2016. Given that prices for technologies such as high-end computers, smartphones, and mobile internet etc., have continuously come down over the years, digitisation becomes adoptable for logistics industry. I, along with my partners Gaurav Srivastava and Gautam Kumar, founded FarEye to address the business challenges of logistics industry by leveraging these technologies.

FarEye has designed the world’s first logistics BPM engine for the modern-age logistics, enabling B2C as well as B2B companies to bring predictability and visibility to their lo-

32 | Logistics News ME | January 2018

gistics operations. The typical value chain of an organisation is inclusive of customers on one end and suppliers on the other. FarEye integrates both ends, influencing not only the cost side of the value equation, but also fuels growth by enabling businesses to create value added services on top of its platform.

Plus, FarEye’s mobile platform is transforming the logistics industry by enabling managers to dynamically allocate jobs, set geo-fences, live track delivery status, optimise routes, analyse customer feedback; and keeping customers engaged through ETA and live-status updates. As a result, FarEye is reducing operating costs by 28% , boost productivity by 25%, and customer visits by 66%. It is also promoting green logistics and has helped save 45,000 million sheets of paper and one billion kilometre travel.

A testimony to company’s global leadership position is its client portfolio that includes

many Fortune 500 companies including DHL, Blue Dart, Amway, Hitachi, and 75+ enterprises across APAC, Middle East, Europe, and the Americas. FarEye’s proprietary technology has helped companies make more than a million successful deliveries per day, thus improving efficiencies and creating new revenue streams.

Going forward, technology development will continue to power the FarEye platform; as we step into 2018, the company will play a bigger role in digital transformation of global logistics industry by empowering desk-less workforce of its growing list of customers.

What is FarEye’s strategy for the year 2018?

According to Gartner, revenue of over 72% of companies in supply-chain-dependent industries will be tied to digital business, and over 77% of processes will be digitised by 2020. Far-

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Eye intends to be an indispensable partner in their transformational journey. With our proven solution, we would like to be the partner-ofchoice in digitising their logistics operations, helping them champion the game of customer experience, and create new revenues. FarEye’s flexible, scalable, and futuristic solution helps logistics companies manage their business more efficiently and effectively while improving their delivery happiness score. In 2018, we also plan to work aggressively towards creating ready-to-use geographic-specific process templates for logistics on our BPM platform.

What are some of the key trends to keep an eye out for in the logistics industry, for 2018?

The logistics industry is undergoing a radical transformation in the way it operates. As per our observations, we believe that the ‘click-todelivery’ time would further come down from same-day to a couple of hours for a larger proportion of deliveries in 2018. This will be possible through hyper-local sourcing and shipping. It will make the logistics operations more cost efficient and enhance the delivery happiness score.

We also see a jump in the demand for digital solutions that provide geo-intelligence for auto-routing, dynamic-fleet management, ETA calculation, and real time notifications to customers; big data analytics for assessing the

customer feedback using a delivery happiness dashboard, and continuous performance monitoring to increase the first attempt deliveries.

Elastic logistics will continue to be a key trend next year allowing companies to expand and shrink capabilities to align with the demands within the supply chain model at any given time.

the ‘click-to-deliver’ cycle and enhance the delivery happiness score.

Logistics companies also need to utilise the new-age mobile solutions that blend the operational workflows with new-age technologies like robotics, data analytics, and drones. Overall, it is an exciting time for the logistics industry, and technology will bring the next leap.

Technology is playing a major role in the advancement of logistics. Your views on this?

Today, consumers have plenty of buying options. Given that delivery is an integral part of the buying experience, a delayed or wrong delivery can make the brand lose a customer forever. The new age consumers are even ready to pay extra to receive their products early, even if they do not need it immediately. This shift in consumer behaviour requires brands to use digital solutions that enable immediacy and ubiquity. Technology can address some of the fundamental customer expectations such as ETA and real-time tracking of shipments, flexible delivery options, personalised deliveries, and hassle free reverse pickup amongst others.

Logistics companies also need to use anticipatory logistics and elastic logistics to predict the future fluctuations in demand and scale up or down accordingly. They can estimate the demand in specific regions and ship some units in advance to the nearest hubs. This will reduce

What are some of the challenges faced when working with a largely traditional industry like logistics?

Due to the increasing complexity of logistics business, clients do not merely need a software vendor but a true business partner who handholds them throughout the digital transformation journey. With its experience and expertise, FarEye’s team understands the specific business challenges for each client and customises its solution to meet the requirements. The team continues to monitor the system performance and bridges any gaps arising during the journey. This is why we are the ‘partner of choice’ for several Fortune 500 companies around the world.

Additionally, logistics industry is extremely dynamic in nature. Client and end-consumer expectations change very fast. At FarEye, we are constantly monitoring the market needs and trends to stay ahead of the curve and work towards providing our clients with geographicspecific ready-to-use templates.

Logistics News ME | January 2018 | 33

VAT

All about the VAT

Deloitte analyses the application and impact of the upcoming Value Added Tax (VAT) laws in the GCC “When will VAT be introduced?”, “When will the GCC VAT Agreement be available?”, and “When will final versions of local VAT laws be available?” are all commonly asked questions Deloitte receives on a frequent basis. The final answers are not clear yet and we can only speculate using information available to us. Although the UAE and KSA have both publicly committed to introduce VAT on January 1, 2018, the dates are not clear for the rest of the Gulf countries. It is

34 | Logistics News ME | January 2018

important to remember that they do not all have to implement VAT at the same time. Deloitte hopes that implementation across the GCC will happen soon as it will provide a much-needed certainty and will help people plan ahead.

The GCC VAT Agreement, published in KSA, is a landmark document for the Gulf region.

It sets out the framework of a VAT system between the six GCC countries – Bahrain, Kuwait, Oman, Qatar, KSA, and the UAE.

The agreement is also sometimes called the framework agreement, and it sets out the “wire frame” for a collaborative VAT system between the GCC countries. However, it is worth remembering that it is an agreement among the countries, and not a law in itself. It is therefore not a document that taxpayers can rely on per se – one must look to local implementing laws to work out the precise mechanics of the VAT in each country. As of today, VAT laws are only avail-

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able in the UAE and KSA, but these give some insights as to how a domestic framework will look in a GCC context, and how other GCC countries might outline their domestic rules. The agreement sets out what one might call a “normal” VAT system, as it contains all the usual provisions one might find in a common international VAT system, including the input tax credit system, place of supply, and time of supply provisions. Therefore, anybody who is familiar with other VAT systems should have a reasonable working understanding of the core mechanics of how VAT will apply in the GCC. The GCC VAT system has adopted many strong policy attributes from more modern VAT systems. Firstly, taxation applies at a low rate but across a broad base; there are a relatively limited number of exemptions and zero-rates, and a very low standard rate of 5%. Possible exemptions and zero-rates are generally limited to a few specific categories of goods and services, and the system is therefore relatively simple and broad based. As a result, it is likely the GCC countries will be able to sustain low rates of VAT for the foreseeable future. There are some unusual rules concerning the collection and distribution of import VAT for goods which are transited through-

CA Naveen Sharma, chairman of the Institute of Chartered Accountants of India (ICAI) - Dubai Chapter, comments: “UAE is a major logistic hub. Because of its strategic location, goods from most parts of the world come to the UAE and are redistributed in the region and beyond. The UAE has natural ocean ports and most of the international logistics companies have a strong presence in the UAE. There is no impact on export industries as VAT is not applicable on exports. VAT is essentially a consumption tax. If the goods are not consumed in the UAE, VAT is not applicable. Only the services which are rendered will come under the purview of VAT laws. Moreover, we should remember that the maximum tax levied is 5%, one of the lowest in the world— in my opinion, logistic trading will not be affected because of VAT laws. As most of the goods will be re-exported, with our past experience, world class infrastructure will only improve when the government has more revenue.

VAT is coming for the first time in the UAE and the first major challenge will be to rationalise or standardise business practices in line with VAT laws. At present, businesses are using wide variety of practices, but now they would have to change. I think it will take at least somewhere between a year to two years, to acclimatise with the new law.”

Logistics News ME | January 2018 | 35

VAT

out the GCC; these are intended to accrue VAT revenues to the place of final consumption.

Zero-rating for international transport of passengers and goods (including between two GCC countries) is a mandatory requirement of the agreement. This is not optional. However, countries have the choice between exemption, standard rating, and zero-rating for domestic passenger transport.

Similar choices are available for real estate, education, and healthcare. In these cases, the countries may choose between taxation, exemption, and zero-rating.

In the healthcare field, the agreement requires countries to zero-rate certain pharmaceutical and medical devices, but this is based on a list that remains to be agreed on and is, therefore, unavailable at this time.

The food and oil and gas sectors are also areas where the countries are given a choice, albeit more limited – they may either zero-rate or standard rate the products. In the case of food, there is a “list” of just under 100 items, composed primarily of commodity foods and not prepared foods, but which has not been made public. Even if a country opts for this treatment, they may only zero-rate the specific food items included on the list.

Other provisions in the agreement allow for

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the zero-rating of means of transport (e.g. airplanes for passengers) and the compulsory zerorating of exports of goods and services. These are expected reliefs in a normal VAT system.

Following the agreement framework, the UAE and KSA have specified how they will treat international and local transport, and means of transport; real estate, education, and healthcare; food, and oil and gas; and export of goods and services. There are some similarities in how the UAE and KSA will treat these industries.

One of the issues that comes up from time to time is that the VAT rate is low. But how long can it stay low? The answer is probably quite a while.

There are two main reasons for this, practicality and economics.

The GCC VAT system has achieved something the EU has not – a unified VAT rate. Set at 5% it is one of the lowest in the world, and the fact that the six GCC countries managed to agree on this is somewhat of a political achievement.

The EU VAT system does not have this level of harmonisation: individual countries like to control their own economies and one of the levers to do this is tax rates.

However, for any one of the GCC countries to move the VAT rate, they would now have to achieve a unified agreement to move the rate; this is because the VAT rate is hard coded into the

agreement. So the only way to change is to either breach the agreement or to agree to change it, which requires all six countries to agree.

The second main reason the VAT rate will not necessarily go up any time soon is that there is likely to be a lack of economic pressure to do so.

This lack of pressure is caused by the broad base of the VAT system, which is notably lacking in reliefs and special rules. Whilst there is room for differences between the countries, in the main, each country will end up with very few things not subject to VAT. For this reason, the broad base will allow VAT revenues raised to be relatively high despite the low rate. This gives the GCC a massive design advantage over EU systems, as the many special rates and reliefs typically found in an EU system require a higher headline rate to sustain the revenues required by the government.

It is important to note that in Malaysia, when the Goods and Services Tax (GST), which is the same as VAT, was introduced, it was about eight or nine months in advance that the law was first exposed. Likewise, look at Egypt, where VAT is in place, but the executive regulations have not been made available.

We do not expect any GCC country to do this, but it illustrates the benefit of being prepared for the worst and also shows there is still time for January 1, 2018 to be a reality in some countries.

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H e althca r e

Delivered

Mehak Srivastava explores the trends in the healthcare logistics industry, with insights from industry experts on client needs, challenges, and technology trends

38 | Logistics News ME | January 2018

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H

ealthcare organisations around the globe are beginning to take a different approach to their dealings with suppliers and manufacturers in the industry. Things are more streamlined and efficient— as they have to meet emerging patient demands, address healthcare legislation, support an overall focus on improving patient care, and reduce healthcare costs.

A 2016 report by Gartner, Healthcare Provider Supply Chain Outlook, highlights a few of the most prominent issues and initiatives.

In particular, the study notes that healthcare industry leaders are primarily looking to align their objectives with the strategic goals of an integrated delivery network (IDN), prioritise standardisation, and tackle pharmaceutical costs.

Even until a decade ago, many organisations negotiated and managed logistics almost as an afterthought — a necessary evil to make sure products were available as needed and to avoid supply chain fire drills. Today’s healthcare supply chain is different, finds the Gartner study, noting that it is shifting away from provider or group purchasing organisation (GPO) sourcing and toward total cost to serve.

Today, logistics companies provide highly specialised solutions to meet client needs— the storage, transportation, and distribution of the product is handled from A to Z by the provider, creating a hassle-free supply chain network. Global transportation giants like

UPS, DHL, and FedEx have heavily invested in this industry. Aviation goliath Emirates offers specialised pharma solutions under its Emirates SkyCargo banner.

Emirates Pharma involves three levels of innovative transport solutions based on a requirement mix that includes the temperature sensitivity of the product, the packing solution used by the pharmaceutical manufacturer, and the origin/ destination of the shipment. Emirates Pharma is the service designed for pharmaceuticals with a high tolerance to temperature fluctuations and those in passive packaging solutions. Emirates Pharma PLUS is ideal for high value pharmaceuticals with a thermal cover that can withstand minor temperature fluctuations during handling and transportation, while Emirates Pharma Active is ideal for high value pharmaceuticals that are extremely temperature and time sensitive, and need to be transported in active containers.

Julian Sutch, Emirates manager for global cargo accounts, says: “The most important trend that we are witnessing is that shippers and forwarders are becoming more stringent and will move cargo only with carriers who have specific solutions for transporting pharma products and those with a certification. There has been a huge shift from pharma products being moved as general cargo to being moved as specialised temperature controlled cargo.

One of the biggest markets where we have seen this change is India. The Food and Drug Ad-

Logistics News ME | January 2018 | 39

H e althca r e

ministration (FDA) now have auditors in India checking manufacturing standards for any drugs bound to the USA. This also includes how they are shipped from the factories in India to the stores and hospitals in the USA.” Sutch also mentions that there is a drive from organisations like the World Health Organisation (WHO) and international and national regulatory authorities for pharma manufacturers to shift from shipping pharmaceuticals as general cargo to using specific temperature controlled solutions for transport.

“Modern pharma drugs are increasingly sophisticated to treat specific medical conditions but are also often more sensitive to temperature related changes. Hence, there is a requirement for infrastructure including temperature controlled containers, thermal blankets for when the cargo is on the ramp, and so on,” says Sutch. “As pharma becomes more sophisticated, the need to keep it within a tighter temperature range increases and therefore the demand for active containers increases. This has also seen the introduction of a new type of container based on vacuum insulation panels and phase change material, which gets rid of the need to charge or supply dry ice.”

According to Albert Asool, chief executive officer of Agility Dubai, the pharma coldchain logistics will have a potential value of $16.7bn by 2020.

“Pressures from a rise in lifestyle diseases, mandatory health insurance schemes, and a growing hospital network will encourage increased local manufacturing and push efforts to keep costs low,” says Asool. He adds: “To meet this demand, companies across sectors are adopting a ‘hub and spoke’ model, with goods stored in a central location such as Dubai for the region, offering economies of scale and faster response time.”

The challenge of course centres around offering the best possible solution to the client, making it a highly competitive industry. Frank Courtney, chief operating officer at Global Shipping & Logistics, notes: “Compliance and traceability are forcing clients to request more sophisticated solutions. They cannot just have a shed to store goods in, they need the assurance that temperature and condition controlled facilities are in place to ensure that there have been no temperature excursions throughout the product’s life. Flexibility and quicker response times are also becoming increasingly important.”

Sutch agrees. He says: “Customers have quite rigorous demands and often require the transporting carrier and suppliers to sign SLAs (service-level agreement), which are derived

40 | Logistics News ME | January 2018

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Albert Asool, Agility

Frank Courtney, Global Shipping & Logistics

from GDP guidelines to manage compliance and service levels.”

But keeping up with the client’s needs is not all the providers have to deal with.

Transporting between countries ensues that there are rules and regulations to follow.

Asool explains: “International shipping guidelines and customs regulations are affecting the cross-border movement of pharmaceuticals and biological material. This often includes dedicated shipping lanes and decontamination protocols. Standardised industry processes such as good distribution practices (GDP) established by global health authorities in maintaining product integrity are increasingly observed in the Middle East by logistics companies.” But Asool sees the positive side in abiding by the laws.

“In the long run, these stringent controls are good, as they increase customer security and ensure that 3PL logistics providers maintain strict quality control processes in every step of the supply chain.”

Technology has played an important role in shaping the industry the way it is today. Without the aid of communication technology, automation, and advances in the field of temperature control, transporting medical supplies in immaculate condition would be almost next to im-

possible. As Sutch explains, advances in technology means that there are now devices that can be used to track location, temperature, shock, light and other parameters impacting temperature sensitive pharmaceutical shipments in transit.

Courtney adds: “Technology is a great enabler, and improved visibility of the supply chain has allowed for quicker response to customer requirements. It will also affect the way people buy pharmaceuticals. Efforts by DHA to integrate medical records is boosting real-time diagnosis and online dispensing of prescriptions. This is helping patients seek medications online with less need to go to a pharmacy to get prescriptions. Businesses will have to have their back-offices up to speed to deal with this change and B2C will be the new norm.”

Agility Dubai has created a new technology venture to invest in disruptive technology related to logistics. Cargo X is a platform seeking to revolutionise how road freight is booked in complex markets like Brazil. Asool says: “Our goal is not just to see it succeed in Brazil, but to help bring the model to other emerging markets where we have strong local relationships with regulators, shippers, and transport suppliers. A philosophy of finding multiple points of application is the core of our tech strategy.”

Julian Sutch, Emirates

Logistics News ME | January 2018 | 41

Int e rv iew

Masters of the trade Ali Khalifa Bin Beyat, CEO of Allied Transport (ATC), discusses the transportation company’s service capabilities, and is strongly optimistic about growth in 2018

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What are the transportation services offered by Allied Transport Company?

Allied Transport Company (ATC) is one of the leading transport companies in Dubai, providing land transportation services. ATC was founded in 1972, and has been providing a caliber of service that is unrivalled within the industry. ATC specialises in land freight transportation and haulage of all types of cargo.

Effective quality management systems are in place to ensure customer’s satisfaction, and paves way for continual growth.

ATC offers impeccable services and has one of the largest growing fleets in the region, comprising over 3,000 vehicles and an inventory of diverse equipment and technology, that underpins the most efficient transport of time-critical goods, connectivity to airports, and precise execution of all cargo shipments with tailor made solutions, deploying the widest range of trucks and trailers to suit all types of cargo.

We serve pure land transportation; land to air and air to land; hub concept— by connecting sea and land cargo; mainly business-tobusiness (B2B) and have recently started with e-commerce serving B2C niche; and re-export sensitive niche market (medicines/short life shelf products/valuable products).

What are your target markets and key clients?

ATC targets the entire (Middle East) region and deals with leading international banks, auditors, and consultants to ensure that it follows the highest standards and delivers the best service to its customers. ATC only uses the leading brands of equipment and technology provided by global standard manufacturers.

Our key clients come from different industries, such as air cargo, pharmaceuticals, perishables, FMCG, radioactive materials, garments, and electronics.

What do you think enabled ATC to win the “Most Innovative & Regulated Road Feeder Services of the Year” during the Transport Arabia Excellence Awards 2017?

ATC’s globally pioneering solutions have benefited the airport and the cargo logistics sector in many ways, such as reduction of manpower, facilities and assets required, eliminating need for double handling operations, secured cargo movements, and significant reduction in the operating cost.

The robust mission and vision, which has been built through the years, to have a stand-

ATC was founded in 1972, and has been providing a caliber of service that is unrivalled within the industry.” ard package of experienced people/team, quality of equipment, latest security features, new technology of GPRS, has allowed us to meet international standards (certifications – ISO, TAPA, GDP, and FANR).

That said, ATC won the Most Innovative & Regulated Road Feeder Service of the Year 2017 for designing and creating a solution that not only served the immediate need for Emirates SkyCargo but resolved the challenges the airport faced with connecting Dubai International Airport and Al Maktoum International Airport.

From day one, a secure solution was provided to ensure constant security of cargo, and progressed to ensuring cargo integrity for Dubai Customs was never compromised as they provided the mechanism to safeguard the economy of Dubai. The result of this secured solution benefited customers and airlines financially from since the inception of the project in 2014.

ATC has always managed to stay ahead by providing additional security layers to ensure

driver, equipment, and cargo are constantly protected by installing live streaming cameras to provide a safer environment for the drivers and Dubai residents using the same route as our trucks.

ATC solutions are looked at as being the most innovative and the only solutions that exist globally where cargo movements are protected aircraft to aircraft over a road journey 70km long.

How did the company fare in 2017?

What are some of the trends to keep an eye out for in 2018?

In 2017, we saw the business slightly recovering from a slowdown in the market since the previous year. But we are very optimistic that in 2018, the market will pick up and the business will grow for us across the UAE and the regional markets.

The most important thing we are keeping an eye on in the new year is the development of a network based on research and development (R&D) and innovation.

Logistics News ME | January 2018 | 43

F o rk l if ts

The

Bar

Alternate fuel sources — in particular, hydrogen fuel cell technology — are greatly impacting the forklift industry, reports Mehak Srivastava Modern forklifts can have their origins traced back to the mid-19th century through the early 20th century, when they were nothing more than counterweight and pulley systems.

In 1917, the Clark Company created a truck called the Tructractor to move materials around their factory. When visitors saw the convenience offered by the invention, they placed orders for Tructractor for their businesses too. Clark Company’s tactic was shortly followed by Yale & Towne, a renowned forklift company today (now known as Yale Materials Handling Corporation), who introduced the first electric truck with forks that could lift loads off the ground — it is regarded essentially as the first forklift, as conferred by the Material Handling Equipment Distributors Association (MHEDA) Journal.

In a report by Research Markets, titled Global Markets for Forklift Trucks, the market for forklifts around the world is expected to increase

44 | Logistics News ME | January 2018

from $41.9bn in 2016 to $56.3bn in 2021, at a compound annual growth rate (CAGR) of 6.1% for 2016-2021.

Key driving factors identified in the global forklift truck market include expansion of warehouse space globally, growing e-commerce business across the globe, strong demand for forklift truck replacement in developed markets, and bulk investments in purchase of low-cost forklift trucks in emerging markets.

Within the GCC, the combined logistics market for materials handling equipment, is estimated to be worth around $47bn, with Saudi Arabia accounting for around $19bn, or a 43% share.

Varun Viswanath, assistant sales manager for storage and material handling solutions at GENAVCO, comments: “The forklift market segment has actually grown in 2017 as compared to 2016. Key driving factors identified

in the UAE forklift truck market include expansion of warehouse space by 3PLs, FMCG, and retail companies, and of course, growing e-commerce business.” GENAVCO offers forklift trucks by a range of companies, including Crown, Flexi, Stow, and JLG. While worker safety has always been a primary topic of discussion with forklifts, another vital factor to be considered is environmental — most importantly the amount of emissions that forklifts release. Development of electric forklifts is the main way that manufacturers have found they can lower emissions levels.

However, there is still a setback with electric forklifts— they are not as powerful as their diesel or gas-powered counterparts. However, alternate forms of energy are gradually coming into play.

Viswanath adds: “The market is seeing the development of semi-automated and automated material handling equipment (MHE); in

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Varun Viswanath, GENAVCO

addition, lithium powered machines are more readily available and, given the right applications, we will see increased sales of this power source in the market place.”

Fuel cell forklifts, which utilise hydrogen to generate power, can be rapidly refuelled in as fast as three minutes, allowing operators to get back to work quickly. In multi-shift operations with two or more battery replacements per day, the quick refuelling of hydrogen fuel cells saves time and increases operator efficiency, thus increasing productivity. Furthermore, since lift truck operators can refuel hydrogen themselves, operations can keep business moving and make more efficient use of labour resources. In addition, fuel cell powered forklifts are often used in refrigerated warehouses as their performance is not as affected by temperature as some types of lithium batteries.

In early 2017, Amazon announced that it was replacing its forklift’s batteries in 11 warehouses with hydrogen fuel cells. A Reuters news report read that the e-retail giant had acquired the right to buy up to 23% of hydrogen fuel cell maker, Plug Power. Plug Power went on to say that Amazon was going to spend $70mn in 2017 on making the switch to hydrogen power — but the end result would enable Amazon’s forklifts to work round the clock, without the need to recharge. Operators will simply have to refill them with hydrogen fuel when they run out. Amazon was soon followed by Wal-Mart,

Logistics News ME | January 2018 | 45

F o rk l if ts

and currently the entire fleet of material handling equipment at the new Wal-Mart Perishable Distribution Centre (PDC) in Balzac Alberta is powered by hydrogen fuel cells.

Toyota Motor Corp., the world’s largest forklift maker, is developing hydrogen-powered models and began using prototypes at one of its plants in Japan this year. Hyster-Yale Materials Handling, another large forklift maker, bought Nuvera Fuel Cells in 2014 and has begun incorporating the technology into its products. Hyster is also looking into bio fuels and CNG options to power forklifts.

Nuvera CEO, Jon Taylor, comments: “Leadacid batteries have inefficiencies. Fuel cells solve most of those shortfalls.” Nuvera produces PowerEdge, a ‘drop-in’ hydrogen fuel cell system designed to replace the battery in an electric forklift, and PowerTap, an onsite hydrogen fuel generation and distribution system.

Other fuel-cell companies, including Ballard Power Systems and Hydrogenics Corp. are pushing beyond forklifts, using hydrogen to power buses, delivery trucks, and drone aircraft. In each of those markets, the vehicles return to a central depot for refuelling, eliminating the need for a sprawling network of hydrogen stations.

However, hydrogen fuel is still taking its time to be mass-accepted. Plug Power, founded in 1997, spent years trying to tap into the commercial market before Amazon and Wal-Mart came knocking at their door. While hydrogen fuel doesn’t emit anything harmful, manufacturers still have to use a lot of energy and produce greenhouse gases in the process. Plus, switching to hydrogen is no simple solution since the fuel must either be delivered or produced on-site. However, as more companies prioritise green supply chain management, materials handling operations not only face challenges to reduce total cost of operations and increase efficiency, but to minimise environmental impact. Fuel cell-powered lift trucks offer a realistic, long-term solution that addresses all of these challenges.

Fuel cell technology explained A fuel cell is a device that generates electricity by a chemical reaction. Every fuel cell has two electrodes called, respectively, the anode and cathode. Converting hydrogen gas into electricity produces only water and heat as a byproduct, meaning fuel cell cars or forklifts don’t create tailpipe pollution when they’re driven. Producing the hydrogen itself can lead to pollution, including greenhouse gas emissions, but even when the fuel comes from one of the dirtiest sources of hydrogen — natural gas — today’s early fuel cell cars and trucks can cut emissions by over 30% when compared with their gasoline-powered counterparts.

46 | Logistics News ME | January 2018

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V i e wp o i n t

Within the box

Ralf W. Seifert and Mervegül Kırcı analyse how corporations can incorporate sustainability without altering too much in their day-to-day workings

48 | Logistics News ME | January 2018

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A

s concerns over sustainability rise, corporations are extending their efforts to improve their environmental performance. For more than a decade, standards such as the ISO 14000 series request action on a broad number of issues ranging from life cycle assessment and greenhouse gas emissions, to labelling and communications for product design.

Adding to these challenging external standards, companies leading in environmental sustainability are proactively setting targets that are even more daring. By doing so, these measures ensure their long-term development and may lead to a significant competitive advantage. However, at the same time, many companies still struggle to comply with even basic environmental standards. To find out why, we investigated the internal and external capabilities of firms that are most influential in the journey towards sustainable products and supply chains.

Interestingly enough, in line with studies in the field of strategic management, it turns out that there is no need to think too far outside of the box for greener supply chains: management skills and how leaders behave are the key capabilities needed to run successful sustainability initiatives.

Nestlé, the 2013 industry leader in the Dow Jones Sustainability Index, is a prime example of this. One of their major initiatives, a sustainability program around ‘Zero waste to disposal’ for factories, showed that the actions and policies of top-management were the main success factors of its effectiveness, with the exception of some countries where legislation is strict. One main implementation challenge remains due to the cultural differences in the countries where it operates. Nestlé overcomes this by explicitly describing the broader objective of sustainability initiatives internally and providing incentives and training for their employees.

Despite its global operations, Nestlé managers are able to identify local solutions in the markets it operates in. For example, factories work with neighboring farms and communities for recycling and reuse of production byproducts. Moreover, communication platforms and regular meetings with internal stakeholders help identify and reduce common resource inefficiencies. As a result, markets reap the benefits of decentralisation by learning and implementing solutions faster. Finally, Nestlé’s continuous improvement program provides methodologies that can be used to track progress.

Likewise, leading companies such as Adidas, BMW, and Unilever are working on improving their environmental sustainability performance through developing management skills and integration. For example, Adidas was the leader

Five key capabilities There are major challenges to overcome if firms are to operate sustainably where they produce a zero or positive net impact on the environment. As seen in the examples above, companies can effectively and proactively transform towards environmental sustainability and gain competitive advantage though management practices. To do so, here are the key capabilities managers should drive for in their organisations.

1. Communicate your purpose internally, follow up on progress, and increase motivation by rewarding success with incentives and recognition for implementation success. Companies that clearly communicate to their internal and external stakeholders why they are launching sustainability initiatives are more likely to be successful.

Some channels include the firm’s mission, policies, targets, and internal standards.

2. No single solution fits all: identify and standardise routines that enable learning and communication. Depending on your company structure, seize the opportunities to prototype or replicate solutions. For decentralised companies, encourage markets to share their success stories and replicate solutions elsewhere based on the market, safety and quality conditions.

3. Be proactive. Keep a close eye on changing environmental regulations and shape competition for the future. Identify and implement initiatives that maximise the gains in environmental performance. Update your internal routines, company structure and partnerships should they no longer provide competitiveness.

4. Improve your internal capabilities before changing trusted suppliers.

Countless companies and scientific studies focus on sustainable sourcing as a means of improving environmental performance, yet supply and collaboration in the supply chain are only one part of the equation: the behaviour of any supply chain entity is governed by its internal routines and processes.

5. A supply chain is only as strong as its weakest link: consider your supply chain partners in the firm’s environmental mission and vision.

We live in an era where companies are competing on their environmental sustainability performance. The world’s leading companies are taking great steps on the long road to sustainable supply chains and products through management skills. Their top managers have the skills to embed environmental sustainability in their core business, and drive commitment within their organisations. If others are to compete, investments for developing top management skills are crucial.

Ralf W. Seifert is a professor of Operations Management at IMD, and directs the Leading the Global Supply Chain (LGSC) program. Mervegül Kırcı is a doctoral researcher at the Chair of Technology and Operations Management at EPFL. in the textile industry in the 2015 Global 100 Index, which measures the most sustainable corporations in the world. In their 2015 report, Adidas sites senior manager commitment and horizontal integration as success factors for having embedded sustainability management in their core business functions and daily decisions.

BMW has also set personal sustainability targets for managers, who subsequently receive performance-based remuneration. In their 2015 report, they state that “Environmental improvements that have been effective at one location are implemented at other locations wherever possible.”

Logistics News ME | January 2018 | 49

E v e n t r ev i e w

50 years of success

U

AE-based construction equipment conglomerate, GENAVCO, celebrated its 50th anniversary in a glitzy evening at the Jumeirah Beach Hotel. A spectacular event filled with breathtaking shows and entertainment, reflects on the history of one of the leading companies in the UAE for supplying commercial vehicles, road construction equipment, material handling equipment, lubricants and many more industrial and construction equipment representing the world's leading brands. GENAVCO is a part of the Juma Al Majid Group of companies.

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www.cbnme.com

Asif Sayeed Khan, GM, Plant and Equipment

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Sup p lie r N e ws Cargotec signs up for Orange’s IoT connectivity service Orange Business Services and Finland-headquartered Cargotec have signed a threeyear, multimillion euro agreement for worldwide IoT connectivity that helps Cargotec keep goods moving efficiently and safely.

Cargotec is a provider of cargo and load handling solutions, and its business areas – Kalmar, Hiab, and MacGregor – are leading players in their fields, having a unique position to optimise global cargo flows and create sustainable customer value. Kalmar offers cargo handling equipment and automated terminal solutions, software, and services that are used in ports, terminals, distribution centers, and various industries. Hiab provides on-road load handling solutions to customers operating in the land transport and delivery industries, while MacGregor offers solutions and services for marine cargo and offshore load handling, said a statement.

Cargotec aims to become the global leader in intelligent cargo handling. This requires connectivity during every stage of its customers’ lifecycles. The IoT connectivity solution from Orange will integrate intelligence into the machinery to provide better collaboration for daily operations, monitor and maintain equipment to enable the highest possible uptime and react remotely before problems arise. It will also help Cargotec develop insightful data-driven services, it said.

The Orange IoT connectivity

service provides tangible business benefits for Cargotec, enabling new digital services and delivering a much higher degree of operational efficiency, both internally and further down the value chain at the customer level. These include seamless IoT SIM card ordering, simple activation and tracking through a dedicated portal; one price per IoT SIM card regardless of location; and scalable connectivity reaching 220 countries and territories.

Soili Mäkinen, CIO, Cargotec, said: “A reliable IoT communications infrastructure, global presence, with local support everywhere in the world, and an attractive business model are vital for us to become the leader in intelligent cargo handling. We chose Orange Business Services for these reasons.”

Fabrice de Windt, senior vice president, Europe, Orange Business Services, said: “Cargotec is determined to grow its business through strong customer focus and improved IoT services that are vital in its development. We are very happy to have been selected as their provider of choice and to help enable their ambitions to lead and transform the cargo handling business globally.”

Orange already supports over 14 million connected devices through its Datavenue IoT and data analytics solution across a variety of sectors, including automotive and transport, smart cities, industry and manufacturing and daily life (smart home, healthcare and wearables).

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B&H Worldwide to provide time critical solutions to Hong Kong Airlines

B&H Worldwide, the world’s best-in-class aerospace logistics supplier, has signed an aircraft on ground (AOG) and time critical freight services contract with Hong Kong Airlines. B&H will provide a range of time critical solutions to the Special Administrative Region’s regional carrier, which serves more than 35 destinations across Asia and the Pacific, effective immediately.

B&H will control the business from its 24/7 365 Hong Kong facility and in particular manage freight import and customs clearances for Hong Kong Airlines to ensure the timely arrival of its critical engineering parts and supplies. As the carrier continues its expansion programme through the addition of new routes, B&H will also provide AOG logistics to and from the new destinations.

By committing to pro-

vide timely services with full transparency through utilising its in-house designed IT system, OnTrack, to manage the process, Hong Kong Airlines will receive a cost-effective freight solution.

Stuart Allen, CEO of B&H Worldwide, commented on the new contract: “This further strengthens our relationship with Hong Kong Airlines and we are very excited to be part of their expansion plans. As the airline adds new routes to its network, we will ensure its critical engineering logistics requirements are fully supported via the B&H global network and our suite of aerospace logistics services”.

B&H has customs experts at all its operating centres to provide country specific specialist knowledge to meet customer requirements and ensure their supply chains are not compromised by unforeseen issues. www.cbnme.com

Honeywell launches Bluetooth-enabled gas detector in Middle East

Honeywell, a global technology and manufacturing leader, has launched a new connected gas detector in the Middle East, designed to keep industrial operations safe while making set-up, maintenance and compliance reporting faster and easier by leveraging Bluetooth connectivity.

The new Sensepoint XRL fixed gas detector monitors industrial operations for specific hazardous gases, such as carbon monoxide or methane.

Unlike other fixed gas detectors, Sensepoint XRL is Bluetoothenabled, meaning it can be set up and maintained remotely using a smartphone app.

Sensepoint XRL is part of Honeywell’s Sensepoint line of connected gas detectors, announced in May 2017, which also includes the Sensepoint XCL for commercial and light-industrial applications.

The gas detector and the app can also quickly produce system reports necessary for safety and environmental regulatory compliance.

Sensepoint XRL is certified for explosive area applications, and is suitable for wastewater, utilities, power generation, laboratories, and downstream oil and gas operations and applications ranging from laboratories to boiler rooms, and from fuel stations to warehouses.

The detector monitors for hazardous levels of one targeted gas from among 23 toxic and combustible gases, including methane, carbon

monoxide, and hydrogen sulphide. The detector is IP 66-rated and uses a metal enclosure to stand up to rugged use, including hosedowns.

Edmond Mikhael, general manager, Honeywell Safety and Productivity Solutions (SPS) in the Middle East, Turkey and Africa (META), said: “Setting up, maintaining and generating reports from a fixed gas detector has usually been a timeconsuming effort for industrial workers across the region.

Previously, their work involved using ladders or lifts, multiple personnel and even temporary equipment or production shutdowns. The Sensepoint XRL leverages new Bluetooth connectivity, so a single worker can quickly carry out a range of tasks – from set-up and maintenance to reporting – in hazardous areas from the safety of ground level.”

Honeywell’s gas detectors are part of the company’s broad portfolio of industrial safety products and solutions, which include equipment to protect workers from helmet to boot, including hearing protection, safety harnesses, respiratory, and electrical safety equipment, turnout gear for first responders and protective eye-, hand- and footwear.

When paired with an intrinsically safe smartphone available from Honeywell, a single worker can perform many standard maintenance tasks, including set-up, commissioning, and calibration wirelessly from up to 10m away.

WABCO, Dongfeng Liuzhou strengthen partnership WABCO, a global supplier of technologies and services that improve the safety, efficiency, and connectivity of commercial vehicles, signed a new agreement to strengthen its strategic partnership with Dongfeng Liuzhou Motor, one of China’s major truck manufacturers, and extend their strategic supply agreement.

The new agreement will build on the existing strong cooperation between WABCO and Dongfeng Liuzhou and focus on advanced technology development. WABCO will offer new products, systems, and value-added services to Dongfeng Liuzhou with a view to upgrading the technology and optimising on-board systems performance for Dongfeng Liuzhou brands. As part of the agreement, WABCO will provide Dongfeng Liuzhou with technologies to enhance fuel efficiency and advanced driver assistance systems (ADAS), such as ESCsmart electronic stability control (ESC), Air Disc Brakes (ADB) as well as other active safety systems.

In recent years, WABCO has delivered innovative products and systems to Dongfeng Liuzhou which have contributed to the overall safety, efficacy, and reliability of its commercial vehicles. WABCO has also collaborated with Dongfeng Liuzhou to enhance vehicle performance through braking systems diagnostics and provide diversified training programs to help optimise the manufacturer’s service to its end users.

Sujie Yu, WABCO president for Asia-Pacific and business leader, China, commented: “We are extremely pleased to extend our business with Dongfeng Liuzhou. Over the past years, we have established a strong and successful partnership, based on mutual trust and cooperation. As part of our new agreement, we will support the strategic transformation of Dongfeng Liuzhou, leveraging WABCO’s local manufacturing excellence and globallyleading technology.”

She added: “WABCO is committed to advancing technology innovation in commercial vehicles for a safer, more efficient and connected future. In China, we have built up a strong business, supporting our customers with our differentiated product portfolio designed to meet their local needs. We look forward to continuing to support Dongfeng Liuzhou as a strategic partner.”

Liuming Qin, general manager of Dongfeng Liuzhou, said: “WABCO’s advanced safety and efficiency systems correspond well with Dongfeng Liuzhou’s future strategy for intelligent and connected vehicles. We look forward to further deepening our cooperation with WABCO. With its industry-leading technologies and system integration capabilities, WABCO has already contributed significantly to the improvement of our vehicles’ efficiency and quality and elevated our brand image significantly.”

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Save t he dat e

Save the date

The key exhibitions, conferences, and seminars coming up this month

January

23-24

February

6-11

MRO Middle East Dubai, UAE MRO Middle East is the Gulf region’s leading conference and trade show for commercial aircraft maintenance, with more than 4,500 industry professionals from commercial aviation converging on site. Co-located with another key event called Aircraft Interiors Middle East (AIME), MRO Middle East’s specific focus on commercial aircraft ensures the buyers and solution providers will all be available under one roof. It is the perfect place to meet new contacts, expand business networks, discuss current trends and technological developments, and to source the latest products and services within the aviation industry.

Singapore Airshow Singapore The biennial Singapore Airshow is the leading event for aerospace and defence business in the Asia Pacific region. The past editions of the event have seen attendees ranging from high-level military and government delegations as well as leading industry players, airlines, and airports. Returning exhibitors include bigwigs like Airbus, Boeing, and Lockheed Martin, and new exhibitors such as Honda Aircraft, Aviation Learn, and Boom Supersonic. Key highlights of the event include the 50th anniversary celebrations by the Republic of Singapore Airforce (RSAF), plus the second run of the Singapore Airshow Aero Campus (SAAC) - a programme aimed at getting secondary and tertiary students, as well as young working adults, interested in the sector.

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February

6-7

May

1-3

Breakbulk Middle East Abu Dhabi, UAE Held under the patronage of the Federal Transport Authority- Land and Maritime, Breakbulk is the only exhibition and conference in the region specifically for the project cargo and breakbulk industry.

More than 60 exhibitors, representing the end-to-end value chain for the transport of oversize cargo, will be in attendance.

The event offers a full conference schedule where key industry members share their knowledge and their experience, such as leaders from Fluor, Petrofac, Saudi Aramco, and Technip. Attendees will have the opportunity to visit exhibits detailing new and proposed projects in the GCC, as well as network with all participants.

Automechanika Dubai Dubai, UAE Automechanika is the world’s biggest trade fair for the automotive service industry, with visitors and exhibitors from industries such as automotive sport, workshop equipment, tyres and batteries, parts and components, electronics and systems, repair and maintenance, accessories and customising, etc. The Dubai edition is the most sought-after event in this part of the world, with industry experts proclaiming it to be the perfect time to explore new products, find new suppliers, connect with new distributors and wholesalers, while comparing product alternatives.

The number of official country pavilions taking part this year is 25, which includes the world’s largest German pavilion for the automotive aftermarket industry. www.cbnme.com

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