Logistics News ME - November 2016

Sector Focus

Event Preview

Country focus

E-commerce and the rise of mobiles

Materials Handling arrives in KSA

Saudi Arabia under the spotlight

Connecting trade professionals with industry intelligence

November 2016

The challenges of scaling Jebel Jais

Start 10 | News 20 | News Analysis

Contents

The story behind Hyperloop One and DP World’s $50m investment

Features 24 | Event Preview

Behind the scenes at the first Materials Handling Saudi Arabia

28 | Sector Focus The latest trends in e-commerce 32 | Interview Walid Daniel, MD of SPAN, talks warehouse advancement

36 | Cover Story The logisitcs of constructing the road up Jebel Jais

20

42 | Country Focus Saudi Arabia’s long term visions for growth

46 | Viewpoint 56 | Supplier News 58 | Diary

36 48 32 Logistics News ME | November 2016 | 3

Editor’s Note

T

he wheel was around for 300 years before somebody thought to flip it and attached it to a chariot, thus transforming how we move and inhabit our surroundings. For the magnet, well it’s been waiting quite some time to breakout beyond its usual scope of work.

There are two stories in this issue of Logistics News ME which seem to mirror each other in their pursuit of next generation transport and logistics development. Firstly, in our cover story, Volvo Trucks and FAMCO recall the provision of vehicles for the construction of the Jebel Jais road; demonstrating the technology and planning tools that allowed the job to progress as it has, and also showcasing the knowledge that will help get the rest of the GCC’s road projects completed on time and to budget.

The second story concerns the impending development of Hyperloop One, the once sci-fi fantasy transport system that will see cargo and people hurtled down a magnetic tube at speeds of up to 700mph. The brain child of eccentric billionaire inventor Elon Musk, Hyperloop technology is being developed by a handful of private companies with one recently securing an investment of $50m from DP World.

With so much happening to advance how we do business it’s easy to get carried away with such news – especially news that makes it sounds as though the most exciting parts of the future have already arrived. But while looking ahead, we must also reflect on the difficulties and challenges technological developments have brought this year in order to understand the kind of world we operate within and the realms of modern possibility.

Highly anticipated, autonomous vehicles have been largely undermined by the media with computer errors, crashes and even deaths reported during the testing phase. Telematics remains an optional extra for those who want to explore increased efficiency, and shipping continues to be blighted by market fluctuations.

The introduction of something like Hyperloop would propel transportation out of its relentlessly analogue era and hail in an age of rapid – almost instant – movement. The question that remains is whether or not the world is ready.

As the magazine went to press this month, Hyperloop One’s local PR team distributed a video of the technology in action showcasing the vision for a passenger transport system; in a region that has yet to build a rial network. Volvo Trucks may have heavily documented its contribution to the Jebel Jais project but the level of promotion around this vital – and educational – project remains low.

With “hype” being the key word, consider that unless the first planned Hyperloop extension of less than 30km in Jebel Ali is hailed a success by the logistics industry, travelling Dubai to Abu Dhabi in 12 minutes will not become a reality. The necessary advancement of road construction technology and fleet management, while not as fancy, is required for future infrastructure.

The future may be flash, but unless it’s functional it just won’t work.

Melanie Mingas Editor

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In the NEWS DHL to build third KSA facility At a glance: DHL in Saudi Arabia DHL’s new facility will have capacity to: • Handle 4,000 shipments per hour.

• Process more than 100,000 shipments everyday – scanning, weighing and capturing the details of every package.

• Provide airside and landside dedicated in-house customs clearance capabilities.

I

n preparation for a major expansion of its operations in Saudi Arabia, DHL has announced its biggest ground and air operations facility in Jeddah, a new SAR90m Jeddah Gateway which spans 15,000 sqm.

The facility means DHL is the first international express provider to offer a direct network flight service into Jeddah’s King Abdel Aziz Airport, enabling the firm to introduce additional network flights into Jeddah as demand increases.

Ken Allen, CEO of DHL Express, said: “Saudi Arabia has always been one of our key markets in the MENA region and we have seen enormous expansion 10 | Logistics News ME | November 2016

over the past two years, with the Jeddah facility being the latest of three new state-of-the-art facilities.

“The Jeddah facility offers industryleading road and air express solutions and strengthens our already existing strong presence across the region. It demonstrates our commitment and confidence in the growth of the Saudi economy as we continue to enhance our capabilities and market-leading position in the region while fulfilling customers’ changing needs.”

Faysal El Hajjami, country manager, DHL Express Saudi Arabia, added: “This is a real statement about DHL’s commitment to our operations and our

customers in the Kingdom as we open the doors to our third – and largest – air and ground operations facility.

“DHL is continuing to set new standards for the logistics industry across the Kingdom and we will continue to work closely with our key partners and customs officials ensuring that our customers in the Kingdom of Saudi Arabia receive the highest levels of service.”

As the third facility in the Kingdom it brings DHL’s investments to over SAR 200 million, with two other facilities already operational in Dammam and Riyadh, since 2014 and 2015 respectively.

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430m vehicles to have builtin telematics by 2025

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lmost 430 million vehicles in use globally are expected to have built-in telematics by 2025, according to data published by Navigant Research.

In the coming years, developments in connectivity, automation, and cloudbased services are expected to merge with electrification to create an autonomous, on-demand mobility ecosystem. The resulting pervasive connectivity will offer a unique opportunity for businesses connected to the transportation ecosystem, to provide data-driven products and services to consumers and fleets.

“In the next decade, a staggering number of vehicles will come to rely on built-in data connections capable of providing increasing amounts of data about usage and location that can be leveraged to enable an array of customerfacing services,” says Sam Abuelsamid, senior research analyst with Navigant Research.

“These services can enhance the customer ownership experience and provide new revenue opportunities for original equipment manufacturers (OEMs) and service providers.”

Al Tayyar rebrands cargo division, names new CEO Al Tayyar Travel Group has re-braded its cargo division to Saudi International Logistics and appointed Andre Verdier as its CEO. The re-branded division of Al Tayyar Travel Group is scheduled to open two new distribution centres, in close proximity to the major airports in Riyadh and Jeddah,

by January 2017.

Abdullah AlDawood, CEO of Al Tayyar Travel Group, said: “Al Tayyar Travel Group has initiated a restructuring plan for our Al Tayyar Cargo division in order to drive growth and expand our core services in logistics and supply chain.”

Commenting on his appointment, Verdier added: “The rebranding of our cargo services is the first step towards strengthening our logistics network, infrastructure, and capabilities across the Gulf region. We are also building our upstream capabilities through a series of collaborative agreements with WACO members to ensure we can deliver an end-to-end capability.”

Logistics efficiency could cut food waste in UAE Intelligent and efficient logistics solutions could save 5% of the UAE’s food waste, specifically relating to food distribution and re-exports, according to data released ahead of Gulfood Manufacturing, taking place this month in Dubai.

“The UN’s Food and Agriculture Association has clearly stated that substantial savings can be made in food loss and waste through improved storage and transportation,” said Trixie LohMirmand, SVP, Events and Exhibitions, DWTC. “These are now crucial issues as countries and industries move to reduce their carbon footprints and deliver on sustainability goals.”

Transformational technology and systems will be in focus at November’s Logistics Solutions Middle East – a dedicated zone within Gulfood Manufacturing – at the Dubai World Trade Centre (DWTC), as the industry moves to shave the country’s food wastage bill, currently put at 3.27 million tonnes worth some AED13.6 billion ($3.7 billion) by Abu Dhabi’s Massar Solutions.

Food-specific logistics remain a core component of a UAE logistics industry which reached AED 99 billion in 2015, according to the UAE National Association of Freight and Logistics (NAFL), which has signed up as the show’s official logistics partners. The issue is vital for Dubai, which currently re-exports nearly half of its imported food product to other GCC countries, Russia, India, Pakistan and East Africa, according to the Dubai Multi Commodities Centre.

NAFL President, Nadia Abdul Aziz (pictured) will lead a campaign to strengthen Dubai’s position as a global logistics hub; highlighting how the emirate plans to keep ahead of competing global markets and what it means for transport and logistics stakeholders at the Food Logistics Forum being held at DWTC on 8 November.

Logistics News ME | November 2016 | 11

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UPS expands Worldwide Express Plus service

U

PS has announced the expansion of its earliest morning package delivery service, UPS Worldwide Express Plus. By expanding its reach to 28 new countries and enhancing service to cover more postal codes in 25 existing countries, including those in the UAE. The UPS Express Plus service offers guaranteed delivery on the next business day as early as 8:00 a.m., depending on the destination.

Businesses in the industrial manufacturing, automotive, healthcare and retail industries use the service for urgent shipments.

“Companies that require spare parts quickly to keep operations running, and 12 | Logistics News ME | November 2016

healthcare customers shipping emergency products rely on the speed and dependability of the service,” said Jim Barber UPS international president.

“With this latest expansion, the coverage area comprises nearly 90% of the global gross domestic product and nearly 90% of global real imports.”

“This expansion of our Worldwide Express Plus service validates our commitment to customers in the UAE and Middle East. It means we now guarantee early morning delivery for their most time-sensitive shipments.

This is an important market for us and we are pleased to launch another UPS Express service in the region,” said Jean-Francois Condamine, UPS president for the Indian subcontinent,

Middle East and Africa (ISMEA) region.

In addition, the expansion now makes the service available in 3,000 additional postal codes in the United Kingdom and 2,000 more postal codes in Canada.

Europe adds 19 countries with the greatest expansion of service in emerging economic centres including Romania, Turkey and Serbia. Romania is projected to be the fastest growing economy in Eastern Europe this year.

Expanding early morning delivery in Paris, London and Milan will benefit luxury goods retailers’ production and fulfilment cycles. Through 2019, UPS plans to invest $2 billion in European operations to expand destinations, enhance time in transit, and increase overall capacity.

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

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

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

How can RHS Logistics help your Logistics business?

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

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

RHS Logistics Established 1910

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Saxo Bank warns of global recession risk in 2017

The shifting focus of major central banks from the controversial, yet popular, quantitative easing (QE) programmes to fiscal policy through potential “back-door helicopter money” is poised to have a knock-on effect that could “lead the world into recession next year”, according to Steen Jakobsen, chief economist and CIO of Saxo Bank, the online trading and investment specialist.

With troubles originating in the US, the knock on effect will send reverberations around the global economy, leading to a potentially tricky year here in the GCC. Speaking from Saxo Bank’s office in Dubai International Financial Centre (DIFC), Jakobsen said: “A stronger US Dollar combined with the US Federal Reserve’s intention to hike interest rates by December this year almost guarantees a dramatic increase in the probability of a recession in the US. This recession will be the real challenge to the policy makers and what’s unfortunate is that it comes during a period when there are several major political elections in Europe and the US. “Our forecast is that 2017 is going to see weakness in emerging markets, oil, gold and silver against the rising US Dollar. Furthermore, the change in the US Central Bank’s policy from infinite monetary easing to indirect helicopter money will ultimately raise both inflation and growth, but only through a recession.

“Looking at all the external factors that will influence Middle East economies, my outlook is that 2017 will be a challenging year for the region. The focus locally should be to diversify and balance the economies better,” he continued.

14 | Logistics News ME | November 2016

GES names new regional head of Americas While the election of the next American President is filling newspapers around the world, Global Express Services (GES) has too named its next “president of the Americas”.

David Bennett, has been named the new regional head for the global 3PL/4PL firm, drawing on 30 years’ experience, including several positions working for beneficial cargo owners (importers & exporters), which provides important insight from the 3PL customers’ perspective.

Mustapha Kawam, president and CEO of GES commented: “We are confident that David will be an asset to GES and will contribute significantly in its further expansion. We are also pleased on him joining the company to provide leadership for the Americas, an extremely important market where we are committed to taking our business to the next level. At GES, David has the opportunity to leverage his deep supply chain experience with a company that is well positioned and poised for growth given our continued investment in resources, technology and “A-Team” talent. I welcome David on board and extend him complete support in taking Globe Express Services USA to new heights of success.”

Bennett added: “GES’s mission of ‘providing logistics solutions delivered by people who care’ really sums up our approach, which will be reinforced through our core values of operational excellence, transparency, accountability and integrity. We are a service business and it’s our team that makes the difference. I’m challenging the organisation to take the word ‘no’ out of our vocabulary in order to better serve customers and provide an unparalleled experience.”

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SOUQ.com launches InstaShop

Ronaldo Mouchawar and John Tsioris, founder and CEO, InstaShop

SOUQ.com has invested in grocery ordering app InstaShop, with a view to further expand its involvement in FMCG and grocery retail in response to a global surge in the online shopping of both.

The investment comes at a time when grocery shopping online is experiencing a significant global uptake – investment banking firm Morgan Stanley, estimates an increase in grocery shoppers buying online from 21% in 2015 to 34% in 2016.

The investment in InstaShop comes shortly after SOUQ.com recently announced investments in Wing.ae and helpbit.com, as part of its drive to support SMEs in the region while creating an integrated network to provide a world-class online shopping, delivery and after sale service experience for customers.

Ronaldo Mouchawar, CEO and co-founder, SOUQ.com, commented: “We’re committed to the development of e-commerce in this region which includes constantly adding new offerings to make online shopping as enjoyable and seamless as possible. SOUQ.com has a lot of responsibility as a local brand to deliver on its promises, not just to users but also to the larger ecosystem of entrepreneurship and technology.”

John Tsioris, founder and CEO, InstaShop commented, “The partnership is a major milestone for Instashop. Our team is very excited to join forces with SOUQ.com and leverage its tools and customer base to accelerate our already strong growth in the UAE and to speed up our expansion in the MENA region. Besides domestic growth and international expansion, the funding will be invested in technological innovation and process optimization to ensure that our users enjoy a continuously enhanced experience.”

InstaShop, available through Android and iOS, allows customers to have groceries delivered to their doorstep in as fast as 30 minutes. Users of the app simply choose their products, select their delivery location and pay either via credit card or choose the cash on delivery option.

16 | Logistics News ME | November 2016

MENA security spending to reach $1.3bn in 2016

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pending on information security technology and services in the Middle East and North Africa is predicted to reach a total of $1.3bn in 2016, a YoY increase of 8%, according to Gartner, Inc. Speaking at its Security and Risk Management Summit at the end of last month, Greg Young, research vice president at Gartner attributed the steep rise to a growing awareness of the business impact of security incidents.

He said: “Enterprises in MENA are the targets of some of the world’s most advanced attacks, as well as the highest rate of attacks. Organizations are trying to increase detection, blocking, and advanced defenses while faced with limited availability in the security workforce.

“Large organisations in the Middle East and North Africa continue to invest in building out security operations capabilities either in house or by leveraging external services offered by managed security services providers (MSSPs). I’m encouraged by the regional security cooperation as evidenced through standards and CERT coordination.”

Other conclusions in the report include that 30% of large enterprises will increase their security consulting services by 2019 as they transition into digital business. Additionally, IoT will contribute less than 5% of consumer security software spending by 2018 and by year-end 2018, over 50% of IoT device manufacturers will remain unable to address product threats emanating from weak authentication practices.

He added: “Targeted attacks, ransomware, and denial of service attacks are the most relevant threats to enterprises today, however they are enabled by failing patch vulnerabilities and overloading security personnel with alerts.”

Seaborne oil trade grows 4.7% despite oil price

Seaborne oil trade experienced a growth rate of 4.7% in 2015, despite struggles imposed by low oil prices. It was the fastest rate of growth since 2009.

According to Clarkson Research, tanker fleet capacity took two decades to double to its current size of 540 million deadweight tonnage (dwt), witnessing average volume growth of 2.2% per annum, in combined crude and products trade.

However, the current surge in tanker fleet capacity, was generated during a long period of low oil prices and has recorded an increase of 6.5% since early 2015.

Chris Hayman, chair of Seatrade, said, “The tanker sector faced a tough time between 2009 and 2014, but it has now bounced back. Seaborne oil trade grew 4.7% in 2015, the fastest rate since 2009, but operators are still mindful of unpredictable market conditions, moving forward.”

OPEC’s decision to allow the market to balance on its own without price support has perhaps been the biggest catalyst for increased tanker business. But add in the lifting of sanctions in Iran, an estimated global increase in oil refining of 7.7 million barrels per day until 2021 and the swinging supply and demand dynamics and it is easy to understand why this market is growing, albeit impulsively.

“While some tanker operators remain cautious about the future, many are riding high on the back of storage deals with big refineries – especially offshore Singapore and Malaysia whereby tankers are used to balance supply and demand by removing tonnage from the market,” added Hayman.

THINKING AHEAD – MOVING FORWARD ...in Dubai.

Hellmann Worldwide Logistics is a family run business with offices in more than 150 countries around the world. Our proximity to our customers is what allows us to build long-lasting partnerships and tailor made solutions for all your logistic needs.To learn more go to: www.hellmann.net

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Vision 2021 goal provides backdrop for Natrans Integrated transportation, as outlined in the UAE’s Vision 2021 was the focus of NATRANS 2016, with His Excellency Abdullah Salem Alkathiri, Director General of the Federal Transport Authority Land and Maritime making a keynote address on the relationship between innovative technology and sustainable growth in transportation.

“Innovative technology is integral to the sustainable growth of the transportation industry in the Middle East, which is already witnessing unprecedented demand from an increasingly diverse and growing population”, said AlKathiri.

“The focus on innovation and smart technologies given across policies and strategies in the United Arab Emirates is a valuable opportunity for every sector to grow further and become globally competitive.”

Under Vision 2021, the UAE has ambitions to become the number one leader in “several areas of transportation infrastructure”.

Alex Heuff, exhibitions director, said: “The second edition of NATRANS Expo comes in line with Abu Dhabi’s ‘Surface Transport Master Plan’ (STMP) which aims at improving the country’s strategic infrastructure; and making the UAE one of the most innovative nations in the world; stimulating innovation in various sectors that include technology and Smart Infrastructure. The two accompanying conferences will introduce the latest developments and innovations in the transport industry through their educational sessions and panel discussions over the two days of the event.”

Two Technical Conferences ran parallel to the event, discussing sustainable transportation and IoT in transportation.

18 | Logistics News ME | November 2016

Low oil price driving break-bulk opportunities

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he low oil price has provided “robust opportunities in the Middle Eastern project logistics and breakbulk sector”, according to discussions at the Breakbulk Middle East launch press conference.

Analysis by global management consulting firm A.T. Kearney identifies opportunities for Middle East oil and gas players to take advantage of the growing global demand for natural gas.

“Now is an attractive point in time for the Middle East players to tap into these opportunities and benefit from the current level of lowered upstream capital costs combined with lower raw material prices,” a release read.

Ada Perniceni, partner, A.T. Kearney, said at the press conference: “In the next few years the Middle East is likely to increase its exporting position in gas in addition to meeting the fast-growing regional demand. We expect to see more projects kick off and an increased demand for suppliers such as logistics providers servicing this sector.”

Mark Rimmer, event director, added: “There are some unique challenges and opportunities in the Middle East when it comes to infrastructure projects and the associated breakbulk and project logistics sectors forming part of the supply chain.

How regional players leverage the current low cost environment is a key talking point, and one we’ve only touched on today.

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N e w s A n a ly s i s

Beyond the hype Since 2013, Elon Musk’s vision for a magnetic and solar powered freight and passenger transport system has been slowly gaining pace. Then last month DP World announced an investment of $50m in the USbased developer Hyperloop One and the appointment of its group chair and CEO, Sultan Ahmed Bin Sulayem, to Hyperloop One’s board of directors, paving the way for the world’s first Hyperloop in Dubai.

Logistics News ME examines what this could mean for the future of transport infrastructure

A

few short years ago, the man who dreams of humans becoming an interplanetary species was sat in traffic in LA. As legend has it, on this fateful day Elon Musk – CEO of SpaceX and Tesla Motors, and the founder of PayPal – let his mind wander and, in his frustration at the cumbersome transport infrastructure of California, he began to dream of a system powered by magnets and sunshine that would transport people at speeds of 700mph.

He committed the idea to a white 20 | Logistics News ME | November 2016

paper, published in 2013 and titled Hyperloop Alpha, making the plans public in the hope that future-focussed start-ups would take on his idea and make it a reality.

Between colonising Mars and developing next generation cars, Musk decided he was “too busy” to pursue the endeavour personally.

Since then two start-ups, Hyperloop Transportation Technologies and Hyperloop One have made their ambitions to bring Musk’s vision to

life public, with a series of announcements on funding, partnerships and even locations for potential Hyperloop connections.

But no matter how big the names backing the project – Rob Lloyd, former president of sales and development, Cisco; Shervin Pishevar, the man whose money got Uber off the ground; and Brogan BamBrogan formerly of SpaceX who is currently suing Hyperloop One after an acrimonious departure from the company earlier this year – they were

N e w s A n a ly s i s

still working from a garage on an idea they knew would be blighted by safety and regulatory red tape in most locations.

In early 2015, after months of speculation and hype, Forbes ran a cover story on Hyperloop One declaring “Hyperloop is real” and ignoring the company’s premises had been hired only because a photoshoot location was urgently needed. But imaginations were still captured and soon Hyperloop was regularly popping up in news stories around the world.

Over in the GCC, a city-state with a strong vision for what the future should look like, saw the plans and began to court Hyperloop One. Bringing the idea to life Following successful tests in May 2016,

by August Hyperloop One and DP World had signed an MoU to explore the feasibility of Hyperloop technology being used to transport cargo from Jebel Ali Port to an inland depot 29km away.

The study will also focus on efficient handling of containers, costs, benefits,

Rob Lloyd, CEO and demand and volume patterns of moving cargo using the new technology.

Then last month came the news that DP World’s involvement would be much greater, with financial backing of $50m and the appointment of DP World group chair

and CEO Sultan Ahmed Bin Sulayem, to Hyperloop One’s board of directors. It is this news that has elevated the story of futuristic trains, powered by solar and magnets, from hair-brained Silicon Valley status to actual possibility, not only within our lifetimes but by 2020.

Now a ‘Dubai’ section has been added to hyperloop-one.com it seems all systems are go.

While Bin Sulayem’s team did not respond to requests for comment, in a statement announcing the news he was quoted as saying: “We build our investment decisions on our readings of the industry trends and changes. This project will enable us to deliver competitive features to our customers in terms of speeding their operations, which will significantly increase their returns.”

Hyperloop One CEO Rob Lloyd says: “By eliminating the barriers of time and distance, we believe we can increase the volume of freight DP World moves through the port using a Hyperloop to a new inland depot, which supports more revenue and profit for all stakeholders.

Logistics News ME | November 2016 | 21

N e w s A n a ly s i s

At a glance

Who owns the Hyperloop technology?

The technology, and the name “hyperloop”, were originally coined

by Elon Musk in a 2013 white paper.

The SpaceX/Tesla Motors CEO made his research public in order to spur development and open the gates for others to develop and fund a system. At least three start-ups have made public announcements on their intentions to develop Hyperloop systems to date with Musk directly involved in none of them.

Who is building Hyperloop?

Despite the technology being Musk’s idea, he isn’t directly involved every time an announcement is made for a Hyperloop system in a specific city. Hyperloop One is the company behind the Dubai system – and has also announced intentions for a Hyperloop in Russia – but others include Hyperloop Transportation Technologies, which reportedly has its own means by which to create magnetic levitation and, as the SpaceX competition demonstrates, many more are scrambling for a part of the action.

How much funding has Hyperloop One raised to date?

According to the Financial Times, Hyperloop One has raised $160m to date, with $50m of that coming from DP World.

22 | Logistics News ME | November 2016

“A Hyperloop system fits seamlessly with existing transport corridors, minimising any impact on urban Dubai and reducing freeway congestion and emissions,” he adds.

A feasibility study will investigate the business case, route options and cost to build and operate the system In September a competition organised by Dubai Future Foundation and judged by high profile industry names such as Laing O’Rourke MD Mark Andrews, was held for budding engineers to have a hand in the design of hypothetical Hyperloop stations with the full buy in of Dubai RTA. This route was to link Dubai and Fujairah with a 10 minute travel time. It was the eighth in a series of collaborative BIM (building information modelling) projects and of the seven final round entries the winners were named as Team Mobius from France.

Mobius was ranked first among the finalists after the panel evaluated the projects from technical and economic perspectives, as well as their ability to reinvent transportation for passengers and cargo alike. The panel also evaluated safety and security, efficiency and sustainability.

In the finals stage, the qualifying teams presented their designs before the judging panel; each had to lay plans for parallel passenger and cargo Hyperloop transportation systems that would eventually converge into one station at the finish line. Projects also had to include stations complete with spacious halls for passengers to board the pods.

His Excellency Saif Al Aleeli, CEO of Dubai Future Foundation, says: “Announcing the first-place winner of the Hyperloop Competition is a milestone that makes evident our resolve to move forward with our plans to build the future today. The winning project was chosen by a highly qualified panel of experts and specialists in engineering and technology; it is one of the most innovative plans to build an integrated high-speed Hyperloop transportation system that can travel from Dubai to Fujairah in a mere 10 minutes.”

Hinting that the competition could be repeated, he adds: “The first edition of Dubai’s International Hyperloop Competition has accomplished a great deal of success and commanded global attention. The contest attracted commendable international

participation in a record period of time.

This drive to participate in the challenge reflects Dubai’s positive international image as a world-leading platform to implement the planet’s most advanced technologies.”

Future Transport While the GCC grapples with the political and economic complications of building a rail network, Hyperloop and DP World are exploring a type of transport system that exists nowhere else in the world.

In fact, DP World’s endorsement and backing of Hyperloop One is the first time such technology transcends the realms of Sci-Fi fantasy.

The dare to dream attitude of the GCC, paired with the relaxed approach to regulatory hurdles that would stifle the project elsewhere, appears to be the perfect setting in which to pursue the

N e w s A n a ly s i s

opportunity to bring our capabilities, knowledge and global network to bear in support of the TU Delft team as they built a viable Hyperloop prototype. We hope that DHL has inspired them with our own logistics performance today and that we have made a contribution to their future success in the SpaceX Hyperloop Pod Competition,” he continues.

The capsules in the competition are half-shell prototypes and therefore still unable to accommodate passengers. Using light and strong carbon fiber, the Delft capsule weighs only 149 kilograms and is about 4.5 meters long and 1 meter high.

The prototype can attain a speed of 400 kilometers per hour on the 1.6-kilometer test track that is being constructed adjacent to the headquarters of SpaceX in California. In longer tubes, the Delft prototype can reach up to 1,200kpm.

The Delft team is flying the flag for the Netherlands against other international competitors including the renowned Massachusetts Institute of Technology (MIT).

first Hyperloop. While a test track is currently under construction in the Nevada desert, full scale tests models are not expected before the end of this year, or even the start of 2017, leaving a very narrow window in which to construct, test, improve and complete a Hyperloop project before 2020.

But it is perhaps the involvement of private companies, whose shareholders and clients depend on their sound business management, which provides the greatest endorsement.

Here that comes in the form of a partnership between DHL Express and Delft University of Technology in the Netherlands, with DHL pledging to support the university’s own development of a Hyperloop system.

In a release from DHL dated 19 October 2016, it was confirmed the Delft Hyperloop, a capsule developed by TU

Delft for the rapid transportation of people and goods through tubes, is on its way to California onboard a DHL freighter plane to perform the first tests as part of the Hyperloop Pod Competition organised by Musk’s SpaceX. In late January the team of students will defend their invention in the finals of the competition.

Ken Allen, CEO, DHL Express says: “In our efforts to stay ahead of the curve, DHL is continuously looking at ways in which our own business could be enhanced or renewed over the near and long-term. As the quickest option available in today’s world when it comes to global door-to-door transportation, we are also happy to support any initiatives that look to push the boundaries of logistics to new levels of speed and efficiency.

“We therefore welcomed the

Future logistics The Hyperloop bandwagon is officially on the road and with strong and steady interest from a growing base of stakeholders it is set to continue generating attention from engineers, designers, physicists and, of course, logistics firms.

Unlike some of Dubai’s most lavish and elaborate plans, Hyperloop does have the potential to happen and is far from hype alone – although the added press inches that a billionaire inventor from Silicon Valley can generate, undermines credibility at times.

Last quarter the Hyperloop One team were granted an audience with Sheikh Mohammed, the Prime Minister of the UAE and ruler of Dubai, and Sheikh Hamdan, Crown Prince of Dubai. While their own online diary of the trip seems to place Sheikh Zayed Grand Mosque in an entirely different emirate, the fact remains the Hyperloop One team was greeted – and listened to – by two of the UAE’s most influential minds.

Will we be sending parcels and peers intercity by magnetic tube within three years? Who knows. But science and imagination has shown that it is possible and enough people with enough power (and money) to make Hyperloop a mainstream technology, are on the case.

Logistics News ME | November 2016 | 23

news

Materials Handling Saudi Arabia

The popular Materials Handling Middle East arrives in Saudi Arabia 28 – 29 November, marking its first step into the Gulf’s largest MHE market. Ahead of the opening at Park Hyatt Jeddah, Logistics News ME goes behind the scenes and speaks to show director Jasmeet Bakshi

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his month, for the first time in Saudi Arabia, the popular Materials Handling Middle East will gather hundreds of trade buyers – from manufacturers, retailers, and third party logistics providers, to shippers, construction companies and freight and warehousing companies – to meet and interact with the world’s leading suppliers of warehousing, materials handling and lifting equipment.

The launch of the show in Saudi Arabia follows several years of biennial exhibitions in Dubai, covering the entire region. With the launch of this new show, organiser Messe Frankfurt will alternate between the Saudi Arabia and Dubai editions on an annual basis.

Announced in June of this year, the highly anticipated show – expanded in partnership with Saudi-based Al-Harithy Company for Exhibitions (ACE) – will offer global suppliers and regional manufacturers direct access to the Kingdom’s thriving logistics, warehouse, freight and cargo industries.

“Materials Handling Saudi Arabia is the latest development in our ongoing expansion in the Kingdom, and together with Materials Handling Middle East, we have a dual platform offering intralogistics and supply chain players unmatched access to one of the most promising markets in the world,” said Ahmed Pauwels, CEO of Messe Frankfurt Middle East.

“Saudi’s logistics and materials handling industry is undergoing immense expansion and change and with it challenges that are unique to the Kingdom. We felt the need to provide a dedicated trade and networking event so key stakeholders can share their experiences, understand the market realities, and prepare for future developments,” he added.

Muwaffaq Al-Harith, chairperson of ACE, said: “The warehousing and logistics sector in Saudi Arabia is currently on the upswing, riding on a phase of sustained industrial and retail expansion, along with infrastructural development.

“Over the years we have succeeded in identifying demand for focused trade events and we look forward to continuing

In Focus: Supply Chain and Logistics Forum Headlining Materials Handling Saudi Arabia, this forum will bring together leaders, academics, and solutions providers to address the opportunities and challenges of the rapidly evolving market.

The two day conference will cover retail strategies, last mile and e-commerce, cost cutting, change management and risk allocation.

The co-located exhibition will also feature the biggest global brands and world-leading suppliers of warehousing, materials handling and lifting equipment, including launch partners Swisslog, along with Daifuku and SSI Schaefer - the world’s top two materials handling systems providers.

Among the more than 20 industry partners on board, are Abdul Latif Jameel Industrial Equipment Company – the Saudi distributor for Toyota forklifts – Log Square, and Al Samaani.

our association with Messe Frankfurt Middle East to bring Materials Handling Saudi Arabia to fruition.”

Why has Materials Handling launched in Saudi Arabia?

Jasmeet Bakshi: Having successfully organised Materials Handling Middle East in Dubai for the last several years, we wanted to introduce a dedicated platform in what is the Gulf region’s largest market for Materials Handling Equipment (MHE).

The Kingdom’s warehouse and logistics market is undergoing a major redevelopment phase, driven by the government’s objective to diversify its economy away from oil revenue into other sectors such as manufacturing, construction, automotive, and retail. To that end, the objective is to increase industrial contributions to GDP from 10% in 2013, to 20% in 2020.

Saudi Arabia’s logistics and materials handling industry will likely undergo

immense expansion and change in the coming years, and new technologies are already transforming working practices in the warehousing, transport and logistics sector. There are challenges that are unique to the Kingdom, and we felt the need to provide a dedicated trade and networking event so key stakeholders can share their experiences, understand the market realities, and prepare for future developments.

What is the current value of the MATERIALS HANDLING market in SAUDI ARABIA according to your estimates?

Bakshi: It’s estimated that Saudi Arabia accounted for nearly 50% of the GCC’s $3.78 billion MHE market in 2014, and this large share will likely remain over the next four years at least up to 2020, when the market is expected to reach between $4.8bn to $5billion.

How do you predict performance of the materials handling sector in Saudi Arabia will continue in 2017?

Bakshi: Recently Saudi Arabia unveiled a string of commitments to end the kingdom’s dependence on oil by 2030 which will be good news for the materials handling sector.

A shift to more vibrant non-oil industries, such as manufacturing, FMCG, automotive, and retail will have a positive flow on effect for materials handling, warehousing and logistics landscape.

We’re already seeing examples of this in the Jeddah region, where 45 million sqm of land has been allocated by Modon, a semi-government organisation that promotes investment and job creation in the industrial manufacturing sector through the development of industrial cities.

Of this, 25 million sqm has already been developed in Jeddah, with the remaining 20 million sqm still in the construction pipeline.

According to the Saudi Ministry of Commerce and Industry, the Kingdom is home to nearly 7,000 operating factories, with 19% of these (1,296), located in the Makkah region. And further expansion is on the cards, with the construction of the Logistics News ME | November 2016 | 25

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Jasmeet Bakshi

Highlights from Materials Handling Middle East, held in Dubai last year

Recently Saudi Arabia unveiled a string of commitments to end the kingdom’s dependence on oil by 2030 which will be good news for the materials handling sector. fourth industrial city to the north of Jeddah, and the expansion south with more facilities to become available in the second and third industrial cities.

What will be the primary factors driving this?

Bakshi: Saudi Arabia still has a high import dependence. Even if the manufacturing sector takes off for example, much of the raw materials will still need to be imported. This of course translates into international logistics consignments in most cases that require use of MHE at multiple stages of the value chain starting from shipment receipt at ports to final delivery at retail stores.

The construction, retail, and automotive sectors will continue to account for the majority of demand for warehouse space and manufacturing land.

High purchasing power, a growing young population, and consumer confidence are all factors that will help drive this.

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What are the primary industry trends you see in this sector currently?

Bakshi: E-Commerce, and now Industrie 4.0, or cyber physical systems (the convergence of robotics, Internet of Things and cloud computing) are what will propel the industry forward in the future.

Automation and mechanisation in Saudi’s warehousing and logistics sector is still in its nascent stages, but there is a clear desire to upscale operations to

increase efficiency and throughput in the supply chain.

Considering the importance of usage and expectations as well as challenges of logistics service end users, Saudi Arabia’s logistics market presents tremendous scope for automated solutions.

A key pre-requisite for the success of such solutions is affordability and adoption by logistics service providers who can pass the benefits of usage to their customers.

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Exhibitor Focus: daifuku Andry Krass, Daifuku, talks to Logistics News ME about exhibiting at the first Materials Handling Saudi Arabia What are the main trends in materials handling currently in Saudi Arabia?

We see changing trends in shopping behaviour and the growth of the e-commerce industry, as well as TV shopping industries, are all slowly but steadily re-shaping the views on material handling and logistics in general. In other words, the success in a new business environment hinges on how well your logistics and intralogistics processes have been organised.

In this sense, the warehouse stops being just necessary burden on business but becomes a cornerstone of its success.

What do you see as your main challenge in the industry currently?

Several things. First, deeply entrenched beliefs that throwing in more people will help you get more orders out of the door.

Labour is still cheap, and no matter how

poorly skilled and unreliable the labour is, the managers have long resigned themselves to the fact that this is a given of their work environment.

Secondly, the major challenge today is an economic slump caused by low oil prices. Our only hope is that sooner or later business owners will come to terms with the new conditions of the business – slower company growth – accept them on top management level, and the companies will again start planning their investments.

Which part of your business has seen the strongest performance this year?

The pharmaceuticals, plastics and food industries show interest in automated storage solutions more than other industries.

In light of the recent advances in automation, how are you integrating new

technology with your operations?

We do not integrate automation into our operations but we help this to happen on the client’s side. In order to sell an automated warehouse, we need to fully understand the client’s operations, so that a new toy that they buy from us would facilitate their business and would never become a burden.

Why have you joined the first edition of Materials Handling saudi arabia?

For the past several years since we started doing business in the Middle East we have come to an understanding that Saudi Arabia has more potential for the storage and factory automation market than any other GCC country and were glad to learn that the MHME organisers think alike. In addition, since it is from companies located in Jeddah that most of the inquiries come to Daifuku, we found it to be the right decision to hold this show in Jeddah.

Visit Materials Handling Saudi Arabia, 28 – 29 November at Park Hyatt Jeddah. For registration and show details visit: www.materialshandlingksa.com

Ahmed Pauwels, CEO of Messe Frankfurt Middle East and Muwaffaq Al-Harith, chair of ACE

We see changing trends in shopping behaviour and the growth of the e-commerce industry, as well as TV shopping industries, are all slowly but steadily re-shaping the views on material handling and logistics in general Logistics News ME | November 2016 | 27

Sector Focus

Proceed to checkout The GCC is home to two of the world’s fastest growing e-commerce markets. But take off has been slower than predicted and many worry the main barriers to growth are out of the hands of the logistics industry

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perfect storm is brewing in the GCC – high levels of disposable income, an insatiable thirst for shopping and some of the highest levels of mobile connectivity and tech ownership in the world.

The culmination of these factors has produced a number of opportunities for many industries, particularly retail, but it is e-commerce which is driving business to logistics players and pushing them to create ever innovative solutions to help retailers keep up with demand.

In the Middle East, the UAE’s e-commerce industry is expected to be valued at $10bn by 2018, according to MasterCard data released in Q1 of this year, noting the likelihood of a three-fold increase. Compared to the rest of the region this is a lion’s share – consider the entire Middle East e-commerce market is set to reach values of $20bn this year.

“With high GDP per capita and the highest smartphone penetration rate in the world, the Middle East represents one of the fastest growing e-commerce markets globally with the UAE and Saudi Arabia predicted to be the fastest growing countries regionally as well as globally,” says Ronaldo Mouchawar, CEO and cofounder, SOUQ.com, the largest online retail and marketplace platform in the Arab world. SOUQ.com today features close to two million products across 31 categories.

Mouchawar is not being modest. With the wider digitisation of our lives – from automated payment terminals to the launch of Beam and online bill payments – technology is becoming ever central to the lives of millions of Middle East residents

28 | Logistics News ME | November 2016

and now, when they want to shop, book tickets, or arrange transport, they turn to the Internet.

Growth is experiencing such a pace, AT Keaney believes the GCC is “on the cusp of becoming the world’s fastest growing” e-commerce market should basics such as usability and security be satisfied.

In its Getting in on the GCC E-commerce Game report, the consultancy claims that despite strong economic fundamentals, the GCC is one of the most underpenetrated e-commerce markets in the world. However, with high levels of disposable income, world-leading Internet and smartphone penetration, and evolving consumer behaviour, there is robust potential in the region and some companies are beginning to seize the opportunities this brings.

Currently, the e-commerce market in the region is much smaller compared to mature markets with similar economic fundamentals. With an estimated market size of $5.3 billion in 2015, e-commerce contributes only about 0.4% to the region’s GDP – a miniscule amount which is up to eight times lower than other comparable markets.

Commenting on the report, Laurent Viviez, partner, A.T. Kearney said: “We expect the growth of e-commerce in the GCC to transform the future of businesses, economics and lives across the region – but only with the right set of enablers in place. And it doesn’t rule out traditional retailers, who can

Sector Focus

be on the winning side of e-commerce by adopting an omni-channel approach. We see the future for the sector as not digitalonly but ‘physical with digital’ – traditional retailers can really tap into this.”

A game of two sides Those enablers are varied – from the usability of sites to the latest in mobile technology and security features on payment cards, not to mention consumer trust and awareness. In the GCC, where a unified postal system has never been established – last mile delivery provides particularly costly as couriers have to be employed to fulfil orders.

The usability of sites and apps is also key to perfecting the online shopping experience; factors beyond the reach of the logistics industry. Baymard Institute claims that 68% of online shoppers leave their cart at the checkout, in its report E-commerce Checkout Usability. the nature of online “window shopping” was considered along with the shopper’s scrutiny of security measures and, importantly, delivery costs and times, for the items to be bought.

In a survey conducted by the Institute, sites like Amazon, Sears and Sephora rank highest for features such as search, product list and field descriptions, respectively. But those same sites scored low in other areas, for example Staples was ranked one of the worst based on its search function, but scores the highest for its input functionality.

Mouchawar says: “For SOUQ.com the initial vision still remains: connecting people to products. We place customers

With high GDP per capita and the highest smartphone penetration rate in the world, the Middle East represents one of the fastest growing e-commerce markets globally with the UAE and Saudi Arabia predicted to be the fastest growing countries regionally as well as globally at the forefront of what we do and we are dedicated to providing them an unparalleled shopping experience through continuously innovating across the platform. Over the last couple of years, we have phenomenally extended our lifestyle and fashion offerings. We continuously monitor customer trends and use these findings as a basis to adjust our category offerings.

“Through varied categories at the most competitive pricing, we place the power in our customers’ hands along with the convenience to select from a large assortment of products.

“As a brand that is born in the region, we

take pride in personalising our customers’ experience and providing them exceptional service that makes the shopping experience as easy and seamless as possible.”

Looking beyond the usability of sites, the AT Kearney report reads: “There are several obstacles preventing e-commerce in the GCC region from reaching its potential, including consumer trust and awareness, gaps in payment systems, distribution and logistical infrastructure, government policies, data security and fraud. Furthermore, e-commerce offerings from the retailer side are also lacking.

“Approximately 34% of major GCC retailers have an e-commerce channel, compared to 58% in the United States.

However, there are significant opportunities to overcome these challenges and facilitate growth in the sector, with expectations the market will quadruple in value to $20bn by 2020 if the right set of enablers is put in place.”

The ways around such barriers to adoption have included many novel tricks.

For example, 60% of online orders regionally, are still paid in cash at the point of delivery, overcoming consumer trust issue and expensive e-commerce functions on sites, as well as expanding the focus of the logistics partner. However, cash on delivery is not only expensive for retailers as they bear transaction and cash transportation risks, but also negatively affects the cash flow.

“This should be a focus area for retailers as they select best payment options to ensure transaction security as well as an enjoyable customer experience. They need to form payment ecosystems to ensure interoperability, and forge strategic partnerships with the best-of-breed providers that are already active in this space. They then need to enable mobile-based payments collaborating with telecom players and taking advantage of the region’s high mobile penetration,” commented Adel Belcaid, principal, A.T. Kearney.

Gains need to be made in last mile delivery also. The rise in demand is palpable with the likes of Aramex, DHL and Fedex all increasing their on-the-ground network across the Middle East, but efficiencies must be found in the cumbersome nature of repeated delivery attempts and returns.

Earlier this year it was announced that Dubai’s bus shelters would be transformed into Smart Shelters, providing space for couriers such as these – and even e-retailers themselves – to Logistics News ME | November 2016 | 29

Sector Focus distribute certain goods and facilitate returns, providing a cost effective way to meet customers half way.

Mouchawar adds: “The cost of logistics is still considered high and poses a challenge to provide products at the most competitive pricing, however at SOUQ.com we are making good strides and collaborating with various companies and start-ups to solve some of these concerns.”

On the go The GCC has some of the highest mobile penetration rates in the world; the average CAGR for mobile penetration between 2015 and 2020 is 3.9%.

In the GCC, the share of mobile transactions is 43%, which is 4% higher than the worldwide average of 39%, according to a report by Criteo.

The GCC’s share of mobile transactions is the fourth highest globally – after Japan, the UK and South Korea, with 86% of transactions in the GCC taking place on smartphones, ranking the region number two worldwide, in contrast to just 14% on tablets.

Dirk Henke, MD Emerging Markets, Criteo, says: “Middle Eastern markets witness some of the highest smartphone penetration in the world, and retailers must ensure more products are made available online, as well as create a seamless experience for consumers.

Currently, the GCC is second in the world in terms of smartphone share among mobile transactions.

“Keeping this in mind, brands have the opportunity to master this trend and have a head start on competitors, should they choose to utilise it.”

GSM Association (GSMA) reports the mobile phone industry’s contribution to the Middle East and North Africa’s GDP will grow from 4% in 2015 to 4.2% by 2020 and contribute $194 billion by 2020 compared to $156 billion in 2015.

Mouchawar says: “Mobile commerce, or m-commerce, has also been a huge driver of e-commerce growth in last couple of years, both for SOUQ.com and the overall industry. Over 60% of our total sales account for mobile shopping.

“Smartphone sector growth is driving m-Commerce growth even faster. There has been a significant rise in the smartphone penetration in the Middle East, currently at 96% and valued at $4.9 billion. The UAE is rated the highest in the region with a smartphone penetration rate of 90%. This highlights a huge opportunity for SOUQ.com particularly 30 | Logistics News ME | November 2016

We see the future for the sector as not digitalonly but ‘physical with digital’ – traditional retailers can really tap into this with our mobile app, which has been rapidly gaining popularity,” he continues.

Living in a digital world As the number and frequency of online and mobile transactions in our lives continues its steady climb, e-commerce as well as m-commerce, will become ever more central to how the world works, normalising a technology that once seemed beyond its time.

Necessary transactions such as bill and utility payments, not to mention mobile top ups, which all happen online, have helped drive the wide scale adoption of the associated technology, strengthened by the rise in tailored apps and higher security payment gateways.

Mouchawar observes: “There has been a rising trend within the Middle East, where consumers are more accepting to process

their e-commerce transactions online, suggesting a substantial level of assurance in payment security and privacy. This can be contributed to the fact that online consumers are becoming more sophisticated and demanding higher levels of service which allows for fast and easy payment options with an even higher level of security.

“The Middle East is witnessing a rise in the online payments with a 24% average growth across the region. The UAE and Saudi Arabia are at the front leading this by 24% and 40% respectively. Visa predicts that by 2018, 65% of non-cash retail payments in the UAE will be by credit card.”

The potential future growth of e-commerce is expected to become a major driver of change in the logistics sector and this fundamental shift will likely create a wave of demand for new types of logistics facilities, not to mention innovations in the handling of returned stock and a growth in the demand for last mile delivery services.

But without fulfilling the needs of buyers at the very first point of contact, the local e-commerce industry is in danger of stagnating at its current stage, rather than innovating to the same standards as such global leaders as Amazon. While the logistics industry has strides to make, so too do the online developers and platform architects creating e-commerce sites.

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Interview

The warehouse wizard Walid Daniel, MD of SPAN Group, talks to Jason O’Connell about the next generation of client needs, how these are shaping the warehouses of the future and the group’s planned expansion into West Africa

1982

You arrived in the UAE in , a time when the logistics industry operated on a very different landscape. What are the primary points of development you have witnessed in the industry since then?

I joined SPAN in 1989, seven years after arriving in the Emirates, and in those days Dubai was still a trading hub and not yet a logistics hub. Over the course of the early 1990s, and with the development of Jebel Ali Freezone, that began to change and Dubai evolved and adapted. Even in JAFZA’s early days, major companies were setting up, and a rapid growth was witnessed in the area. Subsequently, the leading logistics players began to arrive and it was the inception of a new community.

At SPAN, our business is integrated supply chain solutions; we are technicians of every facet of what goes on between the four walls of the warehouse. At that time warehouses had corrugated sheet roofing and no insulation systems, no dock levellers, and structures at five metres in height were considered high. The resources invested in those warehouses were minimal.

So through the 1990s when those big 32 | Logistics News ME | November 2016

players started to emerge we saw specialisation in all facets of the warehouse business; flooring, refrigeration, and we saw the introduction of firefighting and safety systems within facilities. In parallel, land lease prices began to escalate and companies thought about how they could use their plots more effectively. This is when we started to see structures of 20 metres in height and now we are involved in several projects with warehouses of up to 38 metres. Along that, a very important factor emerged; the specialisation of skills. No longer is a warehouse manager the longest serving, or most faithful, employee. The manager is a specialist, educated, logistics professional.

All of this happened in a very short period of time. If we look at neighbouring countries, we are at least 10 years ahead in terms of this development.

SPAN is headquartered in Dubai and also has operations in Lebanon, Saudi Arabia and Qatar. Are there any geographic expansion plans in the pipeline?

We are currently setting up in West Africa, in response to the demands of our customers. If they wanted us to operate in

Logistics News ME | November 2016 | 33

East Africa we would, and in future we might, but for now the focus is on the west of the continent. Those customers include names like Aramex, Agility, DHL, Nissan and Transmed What are your largest projects currently in the UAE? We are engaged in two projects. The first is with a Flight Catering company to upgrade its ntralogistics’ capacities and double its throughput.

The second project is for a major retailer, with whom we have a contract for their distribution centre in Jebel Ali. Pending approval from the authorities it is planned to be a rack supported building that will be unique in this part of the world.

Our scope of work on a typical project includes design, procurement, quality control, delivery, installation and commissioning and after sales service of equipment, including a few months of support after the delivery of a facility.

How do you work with clients to fine tune the health and safety of their warehouses?

SEMA is a UK based organization, which promotes standardized and safe design, installation and use of storage systems and equipment. We have approached SEMA and encouraged one of our specialists to obtain a professional approved inspector qualification.

Accordingly, we are able to provide an 34 | Logistics News ME | November 2016

extra service to our clients, through which our approved inspector will survey, inspect and audit the safety of their racking installations. We see today that companies are starting to think more and more about the safety of their equipment and people. An important and good tendency today is that senior management is seriously scrutinising the safety aspects of their operations. do you have plans for SPAN to expand into new sectors in the short to mid-term?

We can adapt our offering to any client in any sector, but in terms of sectors to watch over the short to mid-term, we are looking closely at e-commerce. It is promising substantial growth and the potential in this region is significant, which will result in changes in the warehouse structure and flow of operation.

If you’re an online retailer and you’re shipping 100 items, most probably 30 will be returned by the buyer for refund. So how do you process that? We are in the business of adapting the warehouse environment to keep our client’s operations efficient.

E-commerce businesses have unique needs that we need to provide solutions to meet. The supply chain cost of an e-commerce operation is very high.

What are the main challenges in growing the business?

In our industry there is a transformation happening. I would not say it is a challenge

but we need to be able to adapt with our customers. It isn’t rocket science, however it does require close observation. Macro economics is definitely affecting the industry, and it is out of our hands.

In terms of technology and evolution of technological aids and services, how have these shaped warehouse operations?

Consider there are four main activities in a warehouse, you receive, store, pick and dispatch. Granted there are developments such as automated transport on the dispatch side and other developments in the receiving and storing of goods, within the warehouse, the real innovation is happening in the third stage, picking.

Do we need to look for a machine that can automate the picking of any item from a pair of glasses to a bottle of orange juice?

Or should we find a way of bringing the picking forward to the human and leaving it to him/her to fulfil this last movement?

A lot of thought and research is being put into that direction.

What is the long term vision for SPAN under your leadership?

Definitely it is to adapt to the new landscape. It is a hugely competitive business, as is the nature of business in this region, but we compete on all areas of the services we offer, not just as warehouse technicians.

Cover Story

Conquering unknown

Logistics News ME finds out about the project management challenges that arise when 88 vehicles are carving out a road on unchartered territory, which just happens to be the highest, and one of the most unforgiving, peaks in the UAE

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f all the road projects currently underway in the UAE, the road to the top of Jebel Jais – the country’s highest peak at 1,900m – has to be the most difficult.

While predominantly a tourism attraction – and already popular with locals, day trippers and a significant number of filmmakers for car adverts thanks to its location – there are plans also for the Jebel Jais road to provide an economic boost to RAK, providing access to a quarry on the mountainside producing aggregate for the construction industry.

The first 30km of road was opened up by the government of Ras Al Khaimah in October 2014 and to date the new road snakes through eight hairpins and countless corners until reaching a u-turn and vantage point currently 6km shy of the highest peak. The project has reportedly cost more than $82m and more than 5.2 million cubic metres of rock, stone and concrete had to be cut, blasted, removed or filled in.

Construction has been a long and arduous process that began all the way back in 2005, but contractor General Mechanic Company is now working to complete the final 6km which it expects to handover in March 2017, barely six months from now.

Initially the road is flat and follows the harmony of the wadis at the foot of the Hajar Mountains. For the first 12km there is just one lane in either direction but once the road begins its ascent it widens into two lanes, allowing more powerful vehicles to pass.

Yet what made the project necessary also proved to be its greatest challenge – conquering the terrain. Even to reach the foot of the mountain takes vehicles on a brutal route that it sought out by leisure drivers for its rocky off road tracks. Put excavators and trucks through those conditions and you’re straight in at the deep end.

Nigel Johnson, senior MD, FAMCO Group, recalls: “The extreme terrain made this area inaccessible for years. It’s a remote location with limited access points around the mountain areas; unpredictable and harsh weather conditions such as snow, fog and blowing winds; and the surrounding hazards such as loose rocks and avalanches on the mountain.”

Cover Story

Weather conditions can make driving treacherous, with roads often closed in the winter months due to flooding and heavy rain. The area has even been known to see snow during prolonged cold spells and fog covers the mountain – until 10am at certain points of the year – halting work for hours at a time.

From contractors General Mechanic Company, project manager Yaghoub Alipour, says: “There are so many wadis from the Oman border. When it rains one of the biggest risks is rock fall.

Unlike most of the roads in the UAE we can have 70 metre high rock face alongside the road. Rain can wash the clay rock faces and damage the surface.

The more risky areas are stabilised by us through gritting and bolting in some areas. Our method is to stabilise one face and later come to lower faces.”

Vaezi has been on site since 2008 meaning that by the time the project is complete he will have contributed over 10 years of his career to it.

On the road The fleet of Volvo vehicles comprised of 50 Volvo Construction Equipment and 33 Volvo Trucks (see box). The project was scheduled into three phases and the equipment provided by FAMCO was supplied throughout each phase.

FAMCO, which supplied the Volvo Logistics News ME | November 2016 | 37

Cover Story

Volvo trucks FAMCO provided 50 Volvo Construction Equipment and 33 Volvo Trucks in the following models: • Volvo Crawler Excavators: EC700, EC480, EC460, EC380, EC360, EC290 and EC210.

• Volvo Soil Compactors: SD110 • Volvo Articulated Haulers: A35F and A35E.

Unlike most of the roads in the UAE we can have 70 metre high rock face alongside the road. The more risky areas are stabilised by us through gritting, bolting some areas. Our method is to stabilise one face and later come to lower faces

• Volvo Wheel Loaders: L120F and L180G. • Volvo Breakers.

• Volvo Trucks: FMX370 Tippers

vehicles for Jebel Jais, is currently also supplying three Articulated Dumper trucks to the Fujairah Port extension project, to construct heavy rock reinforced, artificial harbours.

Finding vehicles that could not only scale the difficult mountainside, but also cope with extremes in temperature and potential flooding, sounds like the ultimate in roadblocks, but the team had confidence in Volvo’s ability to complete the job.

Jan-Erik Thoren, business team director, Volvo Trucks Middle East, explains: “From our personal experience Volvo has a proven track record in the Scandinavian terrains and the previous FAMCO project in Saudi Arabia, such as the Empty Quarter desert road. We were extremely confident FAMCO’s Volvo range could cope with the project demands.”

Thoren adds: “The project started two years before FAMCO established a rental and used equipment division. Back then this division targeted the challenging and unique projects to assist in building its fleet as these projects would offer the opportunity to assemble the right fleet for challenging and extraordinary projects. At the same time, the contractor – after two years on the project – realised that in order to deliver according to schedule and budgets, a cost effective solution to equipment needs was required. This was answered by FAMCO’s Rental & Used division. It was a win-win 38 | Logistics News ME | November 2016

deal for both of FAMCO and GMC by teaming up to undertake such a challenging project.”

The culmination of the challenging ascent, harsh extremes in temperature and a need to deliver the job on time, also had an impact on team dynamics as daily

situations constantly called for quick and creative thinking, especially with between 150 and 300 people on site.

Thoren remembers: “This meant we needed a supply chain of easy to deploy, strong and technically efficient equipment. It was paramount. Due to

Cover Story

this, FAMCO’s Rental & Used presence with Volvo increased month on month through the project’s duration as more equipment was deployed.”

Vehicle advancements The Volvo trucks used are enough to tow

up to 32 tonnes. These FMX370 Tippers are sturdy enough to bump into a concrete wall and carry on; the bumper corners are made from 3mm high-grade steel. The headlights are high up, away from knocks and split body panels keep any potential damage isolated.

The first Volvo FMX from 2010 was followed up with a completely updated version in 2013, including innovative breakthroughs such as Volvo Dynamic Steering. In 2015 Volvo Trucks introduced a new series of solutions that enable trucks and drivers operating in Logistics News ME | November 2016 | 39

Cover Story

In numbers 36km road

5.5million

cubic metres of earthworks moved

33

Volvo trucks on site

8

year project

30

minute ascent

$82million

project commissioned by Sheikh Saud Bin Saqr Al Qasimi, Crown prince and Deputy Ruler of Ras Al Khaimah

tough conditions to perform their work more smartly and efficiently.

The SD110 soil compactors are 11-ton class compactors providing powerful drum performance for exacting work with soils and aggregates, specialising in site preparation to highways, water retention structures, utilities and more.

Two models of articulated haulers were used, the Volvo A35F and A35E for loading, travel, manoeuvring and dumping and seven models of crawler excavators were required.

For wheel loaders, the Volvo L120F and L180G were used, known for driver safety and comfort and features such as filtered air intake and ergonomic positioning of controls.

While the future of vehicles remains firmly focussed on autonomy and using new and alternative fuels, Volvo’s focus remains on the niche applications of its vehicles for specialist projects such as this one.

In part this is achieved through CareTrack, Volvo’s bespoke telematics system, providing data on productivity and efficiency, including fuel consumption data, location reports and service reminders. CareTrack is installed in Volvo Construction 40 | Logistics News ME | November 2016

This area was inaccessible for years, with remote location, limited access points around the mountain areas, unpredictable and harsh weather conditions such as snow, fog and blowing winds Equipment and complemented with MATRIS, a built in tool using information gathered from the machine to analyse and monitor its operation, with analysis then used to optimise performance through driver training.

Shahir El Essawy, business director, Volvo Construction Equipment, says: “Volvo invests heavily in developing its product range so that it is always a step ahead from competitors and leading the innovation in the industry. Volvo FMX Trucks used in this project were modified to provide easy handling and manoeuvrability on the steep and curved slopes.

“Accordingly, we ensured nonstoppable performance and most efficient output of machines and vehicles, which contributed towards the improvements of better fuel economy, efficient operation and

longer machine life”. The race is now on to complete the final stretch of road to the summit of Jebel Jais, and with huge potential to fulfil the project’s economic ambitions, the coming months could see similar projects gaining support.

With the GCC pledging to invest $121bn in road infrastructure projects back in 2014 – and with Dubai alone set to invest $1bn in its road infrastructure by 2020 – the technology developed and combined in new ways for projects like this one will be called on time again. Projects with unique challenges, like Jebel Jais, can be used as a template for the future advancement of construction and planning practices.

Not only do they fulfil the need for vital infrastructure but provide important lessons for the teams working on them.

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Country Focus

conquering the kingdom

I

Saudi Arabia’s logistics market is showing robust growth and strong performance according to the analysts. But with the World Bank placing it behind the UAE, Qatar and China in the Logistics Performance Index 2016, could the Kingdom’s ambitions to become an industry leader, be in jeopardy?

n the face of ongoing economic woes in the oil industry, Saudi Arabia’s logistics industry has demonstrated robust performance over the course of 2016, paving the way for a number of new players from across the industry to invest in the country.

Over the last few weeks alone a number of reports have drawn hugely favourable conclusions.

Research consultancy Solidiance predicts the Kingdom’s logistics industry is set to further, and rapidly, build on the $1bn growth witnessed 2013 – 2014, with the creation of more trade zones expected also.

In a report by Container Management magazine, King Abdullah Port was named the fastest growing port in the world,

42 | Logistics News ME | November 2016

topping a list of 120 ports globally. The only fully private sector owned and operated port in the country, its management expects to finalise the first phase of bulk cargo terminals with a capacity of 3 million tons, in addition to the RORO terminals with a capacity of 300,000 CEU, by the beginning of 2017.

With Saudi Arabia responsible for 40% of the $47bn GCC logistics industry, such findings stand to verify the country is on track to reach its 2030 goals, as outlined in the Saudi Vision 2030. It is under this vision the country has outlined its ambition to raise its ranking in the World Bank’s Logistics Performance Index from 49 to 25, however in the 2016 list the countrywasplacedat52,behindtheUAE(13),

Qatar (30) and China (27). The criteria for the ranking accounts for customer processes, infrastructure, international shipments, competence, tracking and tracing, and timeliness. Saudi Arabia averages 3.16 while the UAE takes a score of 3.94.

When compared to the top performer, Germany, Saudi Arabia is consistently a full point behind on all six key indicators.

When the results are viewed on an overall averagefrom2007to2016,verylittleprogressis visible YoY (see graph).

The country recognises there are gains to be made to the regulatory environment and that support is required for the further development of e-commerce capabilities.

There will be a specific focus on the SME sector and the development of multi-modal

Country Focus

Saudi Arabia in numbers • Private sector involvement in rail to increase 45% • Private sector involvement in ports to increase from 30% to 70% • $1bn growth witnessed in logistics industry 2013 – 2014 • 40% of the GCC logistics industry contributed by Saudi Arabia • $47bn value of GCC logistics market • 20% of Saudi Arabia’s factories are located in Makkah

hubs in Yanbu and Jubail Industrial Cities.

The steps will also be necessary to meet National Transformation Plan targets which predict the country’s dependence on imports is set to increase, placing greater demand on logistics providers.

In real terms – and in the face of the LPI results – firms are still flocking to invest.

Among them DHL, which will soon become the first international express provider to offer a direct network flight service into Jeddah’s King Abdul Aziz Airport. Part of an ongoing expansion drive, which will include the development of the firm’s biggest ground and air operations facility in Jeddah, it will enable DHL to introduce additional network flights into the city as demand increases.

Faysal El Hajjami, country manager, DHL Express Saudi Arabia, was quoted in a release as saying: “This is a real statement about DHL’s commitment to our operations and our customers in the Kingdom as we open the doors to our third – and largest – air and ground operations facility. DHL is continuing to set new standards for the logistics industry across the Kingdom and we will continue to work closely with our key partners and customs officials ensuring that our customers in the Kingdom of Saudi Arabia receive the highest levels of service.”

Investment potential While the 2016 LPI ranking may fall short of expectations, Saudi Arabia does score highly

on the lists of others, including Agility, which placed the country second in its 2015 Emerging Markets Logistics Index.

Pipped to first place by China, it marked the fifth consecutive year of improved results under Agility’s scoring framework, which specifically highlights “strategic economic planning, combined with growing domestic demand” and the “high market potential with few barriers to market entry”.

In addition, investments in multi-modal land transport continue with the Saudi ArabiaGeneralInvestmentAuthority(SAGIA) havingearmarkedahefty$28bnforportsand sea transport, and around $23bn for aviation.

The government has made a strong commitment to developing infrastructure, specifically sea ports, which is a highly competitive business regionally. Handing approximate 20% of the region’s port capacity, this is set to increase along the Red Sea coast specifically. A rail network of 9,900km is set to be operational by 2040 and investment in roads is ongoing, adding to the existing 97,000km network.

According to data from the organisers of Transtec, in addition to the ongoing expansion of King Khalid International Airport in Riyadh and King Abdulaziz International Airport in Jeddah, the King Fahd International Airport (KFIA) in Dammam is now developing its Cargo Village Project to reduce timings for customs clearances by 50%.

Features of the village include: a

second Cargo Terminal of 20,000 sqm; a non-dedicated new outbound terminal of 10,000 sqm to handle exports; a semiautomated processing facility; and a bonded freezone.

Knock on demand The demand for logistics facilities – specifically warehouses – is growing. Before 2030,theSaudigovernmentwishestoexpand the industrial sector’s contribution to the economyto20%by2020,upfromthecurrent 10% level. In a report, Colliers International believes this will provide “considerable boom” to the logistics and warehousing sectors.

ImadDamrah,SaudiArabiaMDforColliers International, notes: “Import and export activities have been a major occupier of warehouse space to store and distribute products such as FMCG good, household items, equipment and machinery.”

Highlighting another factor driving the growth of the warehouse market, he adds: “The number of manufacturing operating factories has been growing rapidly at circa 6% over the last 10 years, which in turn has increased the need of storage and warehousing space for finished goods and products.”

In Jeddah, the construction, retail, and automotive sectors will continue to account for the majority of demand for warehouse space and manufacturing land.

Elsewhere, Riyadh has witnessed unprecedented private development of industrial cities, and in Makkah where 20% of the country’s total factories are located, manufacturing output sustains demand.

Nationwide, driving the demand for warehouses – in addition to transportation solutions – will be the strong retail sector and high disposable income among large swathes of the population, notably Gen Y and Gen Z. It’s far from a one-size-fits-all approach, placing onus to the warehouse technicians and designers to create bespoke facilities.

As the report notes: “Districts concentrated on the southern outskirts of the city primarily feature large and midsized warehouses used by prominent commerce and trading companies as their central storage units. Conversely, industrial districts situated within close vicinity to population and work centres generally feature small warehouses catering mainly to demand generated by distributors, retailers, and workshop owners.”

The heightened business activity is also driving demand for commercial vehicles,

Country Focus

which is expected to sit at a growth rate of around 9% to 2021, according to the Saudi Arabia Commercial Vehicles Market Forecast and Opportunities, 2021 report.

Drawing in the crowds In addition to DHL’s expansion plans for the Kingdom, 3M has located its largest manufacturing facility in the MENA region in Dammam. Announced a little under a year ago, initially to cover the needs of the Saudi local market, the 3M manufacturing facility will be developed to become a regional source of supply for other countries in the Middle East, Europe and Africa.

Saleh Al-Rasheed, director general of the Saudi Industrial Property Authority says: “When we look at the development of the industrial sector in Saudi Arabia today, it is easy to observe that the industrial cities have been successful in attracting major global industrial players.

“We believe that having the first 3M manufacturing facility in the MENA region in Dammam Third Industrial City will have great positive impacts on the industrial sector’s constant growth and prosperity.”

Industry exhibitions and conferences have also followed on this well-worn path to the kingdom.

Messe Frankfurt, organisers of Materials Handling Middle East, will hold the inaugural Materials Handling Saudi Arabia show this month, with Transtec returning the following month.

It is exactly this buy in from the private sector that Saudi Arabia is looking to strengthen, in light of the continued struggle of the oil price and the need to diversify and modernise in order to compete with its neighbouring nations more than ever before. In this bolstering of the private sector, projects such as King Abdulah Port will no doubt become best practice case studies.

As the first fully privately owned, developed and operated commercial port in Saudi Arabia, it is strategically located on the Red Sea coast on one of the world’s busiest maritime shipping lanes and with direct access to extensive transportation networks and urban centres. Once fully built, King Abdullah Port will be able to handle 20 million containers (TEU), 1.5 million vehicles (CEU) and 15 million tons of clean bulk cargo every year.

Once operating at target capacity, and with the co-located Industrial Valley fully operational and developed, the adjacent 44 | Logistics News ME | November 2016

Saudi Germany Logistics Index 2016

King Abdullah Economic City is expected to rival Jeddah as a prominent logistics base drawing demand for a transhipment, export and re-export business as well as large-scale warehouse and logistics projects.

Last year, a statement from Saudi Arabia’s General Authority for Civil Aviation outlines plans to privatise 27 airport across the Kingdom, starting with Riyadh’s King Khaled International airport (KKIA). However the private sector is now bound by strict nationalisation criteria, which is to see four million private sector jobsgiventoSaudinationalsby2030.Thiswill drastically change the employment landscapeifoneconsidersthatcurrently70% of Saudis of working age are employed in the public sector.

Adding to the concern this causes, research published earlier this year by Riyadh’s King Saud University found that 80% of Saudis polled in the capital said they would rather wait for a government job than work in the private sector.

In an editorial published in June, The Wall Street Journal cited it as one of the Kingdom’s greatest challenges.

Workforce reforms will no doubt be supported by the privatisation of select government backed companies with plans to increase the percentage level of private

sector contribution in the rail sector from 5 to 50%, and in the ports sector from 30 to 70%. But without continued buy in from the private sector, Saudi Arabia’s visions for 2020 and 2030 will fall short.

It is these key ease of business criteria that will define the coming decade – the ability to not only easily finance the facilities required to meet growth targets, but also train in the skillsets necessary to staff them.

Saudi Arabia must weather the post-oil world by creating enough confidence in a sector it has prevented from flourishing before, in order to remain competitive and in order to achieve ambitions that have been set out in the most public way.

Whether the World Bank wishes to recognise the strides made in these plans to date remains unseen. For all its economic progress Saudi Arabia remains a challenging country to do business both in and with, considering its political approach to many sensitive issues. While this could continue to haunt progress over the short to mid-term, it is unlikely to stop the Kingdom in its tracks. The momentum built to date and the presence of more and more private companies, who are investing heavily to ensure they have a ringside seat at transformation of this super-economy, will be vital to the country’s future.

Viewpoint

Beat the overwhelm factor

I

Prakash Menon writes about the cyclical effects of motivation and momentum

t’s an interesting fact that those who just “get on with it” rather than procrastinate and over think things, are generally more motivated and successful. Why? Because progress generates momentum and momentum drives motivation and success, which in turn drives further progress, motivation and success in a perpetual loop.

But progress isn’t just about being busy for the sake of productivity. There is an important difference between efficiency and effectiveness. To drive maximum results you must concentrate your efforts (and the efforts of others) on the few things that will deliver the greatest success. In other words, the effort you and your team put in is not always proportional to the results achieved.

Named after Italian economist Vilfredo Pareto, the Pareto Principle (also known as the 80–20 rule, the Law of the Vital Few, and the Principle of Factor Sparsity) states that, for many events,

46 | Logistics News ME | November 2016

roughly 80% of effects come from just 20% of causes. To look at an example, in a retail environment you will find that 80% of profits generated on a particular line of products result from spending of around 20% of the target market. Similar results would be found when you examine workings of any industry.

So as a leader, whenever you implement a course of action it is important to take time to assess the results those actions produce. Don’t be surprised to find that only around 20% of your efforts produce the greatest results.

There is no point in continuing an action for the sake of appearing busy if the results of your actions fail to deliver the desired results. Focus on the 20% that delivers the goods.

In striving to achieve a vision, hurdles will always be encountered along the way. But when it comes to problems and challenges, too many people spend far too much time thinking and talking about the problem and nowhere near enough time looking for a solution. The key to finding the right answer is to ask the right questions and, rather than seeing each problem as a problem, seeing it as an opportunity to challenge yourself. People who tend to focus too much on problems become easily

Viewpoint

overwhelmed, which leads to hitting the wall and getting nowhere. Resolving a problem is unbelievably satisfying.

Just as no soldier has ever won a battle alone, no leader can ever hope to achieve the company vision singlehandedly. It’s not how much you know that counts.

What matters most is what you DO with your knowledge and how much access you have to what other people know.

Equally, it isn’t about how intelligent your team members are. It’s about how much of that intelligence you can draw out and put to good use that counts.

Extraordinary achievement is less about talent than it is about opportunity.

It is possible to continually grow, evolve and transform throughout your lifetime.

Once you have mastered the art of selfleadership and leading others (including the art of delegation) you can elevate your status by using your skills and knowledge to help others accelerate their own careers. This way, your success doesn’t end with you because you have the gift of being able to leave a legacy behind.

The leader who tries to accomplish everything alone ends up achieving nothing.

In large-scale projects, which may take many years to complete and many hurdles to overcome, it may be

disheartening for a leader and his or her team if success is not immediately visible. Remember, the adage “When the going gets tough, the tough get going”.

In fact, the harsh reality is, all but around 5% of the population fail to follow through on their initial plans. Why? Because; inspiration has a shelf life. One of the most common reasons people fail to last the distance is that their initial desire and belief (no matter how strong) fail to translate into ongoing action due to waning resilience and focus when the going gets tough. Even the best and brightest superstars eventually hit their moment of truth over time. It is at this point that their path can go one of two ways. They can sink into the black hole of oblivion or they can rise above the superstar status and become a supernova.

As a leader of any organisation, your company’s profits are directly attached to the energy, activities and outputs delivered. It is your responsibility to keep reminding yourself and your people of the overall vision and why you are all putting in the hard yards. Stay 100% true to your vision at all times (even when others begin to lose sight of it). Only the most successful leaders have the courage to stay in the game when the odds are against them.

Five simple ways to avoid the ‘Overwhelm Factor’: 1. Manage your state of mind – stay resourceful even when you feel low. Have faith in yourself that you will overcome the problem.

2. Be solutions-focused using the 80-20 rule (20 per cent on the problem and 80 per cent on the solution).

3. Don’t procrastinate – don’t wait for the perfect time to start. Address the problem immediately.

4. Monitor as you go to ensure you stay on the right track. Change your approach if necessary.

5. Change your attitude towards problems. Consider them challenges that provide us with the opportunity to grow. Facing the biggest challenges has helped many achieve great things in life.

The leader who tries to accomplish everything alone ends up achieving nothing.

Logistics News ME | November 2016 | 47

Viewpoint

The Journey Back to Profitable Growth Transportation and Logistics is changing and will likely be affected by several megatrends over the short to mid-term. From BCG Perspectives, Jens Riedl, partner and MD, Munich; Hady Farag, principal, New York; and Dorota Korenkiewicz, senior knowledge analyst, Hamburg, explore the potential

I

n the coming years, the transportation and logistics (T&L) industry will most likely be significantly altered by several megatrends that are reshaping the business environment.

As these megatrends change the industry, leading players will capture the new opportunities by reacting faster and more decisively than their competitors. The most successful companies will start preparing for these changes today.

Our discussions with transport and logistics (T&L) CEOs have highlighted six megatrends that will exert the strongest influence on the industry. These trends will affect T&L segments in different ways.

Some segments will encounter headwinds (for example, road and air transport will see higher costs as companies meet sustainability objectives), while other segments will gain advantages (for example, rail transport stands to benefit as a “greener� mode of shipping). In all cases,

48 | Logistics News ME | November 2016

To address the increasingly complex city logistics resulting from urbanisation, contract logistics players, like road transport companies, can offer hub services for efficient operations in cities the megatrends will create business opportunities that players should be prepared to address.

A Two-Speed World Global economic development is progressing at two speeds. Emerging economies are expanding rapidly, while

growth in developed countries is stagnating. The fast growth of emerging economies will further increase trade flows within and among Africa, Asia, and Latin America. As consumption increases in rapidly developing economies (RDEs), so too will production. As a result, companies from these countries will become large global players. (See Allies and Adversaries: 2013 BCG Global Challengers, BCG report, January 2013.)

All T&L segments will benefit from the increase in transport volumes resulting from the high growth rates of RDEs. The biggest beneficiaries of the increase in long-distance global transport will be the sea and air transport segments—as well as the infrastructure and freight-forwarding segments that provide services related to long-distance transport. The greater complexity of transport chains will also create demand for logistics advisory services and contract logistics.

GETTING CLOSER TO THE TOP...

Getting closer to the top of the tallest mountain in the UAE will soon be a lot easier, thanks to the fleet of Volvo construction equipment used in the building of the road to the Jebel Jais mountain. When it’s finished, the route will run from Ras Al-Khaimah right to the 1,910 metre summit. The road has already become a popular destination for motoring enthusiasts, who like to show off what their machines can do. But when the road runs out, that’s where the Volvo VIDEO http://goo.gl/FPsU43

operators show off their machines. And it’s impressive to see what they can do. If you want to get closer to the action, scan the code and watch the video.

Building Tomorrow.

Viewpoint Urbanisation As the large-scale migration from rural areas to urban centers continues, more megacities will evolve and create new demand patterns among consumers that affect logistics players. These companies will need to cope with the greater complexity of logistics within cities and with consumers’ increasing expectations for convenience.

The segments that stand to benefit the most from urbanisation are road transport and CEP delivery, as well as hinterland terminals and warehousing.

The contract logistics segment will also see increased demand. Rail and air transport and the related infrastructure segments will benefit to a lesser extent as players offer more point-to-point connections between cities.

Sustainability More stringent regulations and greater resource constraints make it imperative for logistics players to find new ways to reduce energy consumption. Additionally, the increased awareness of sustainability issues among consumers will mean that “green” transport will have greater value.

Sustainability will create winners and losers among the T&L segments. Rail will benefit, because this transport mode is environmentally friendly, as will the related rail network providers and other segments that help to make transport more efficient, such as hinterland terminals. Air, sea, and road players will face increased burdens for regulatory compliance, such as having to upgrade or replace fleets to meet new emission standards. Logistics services companies may also be under pressure from their customers to pursue a green agenda.

For many T&L companies, the critical challenge will be to identify business opportunities related to sustainability rather than focusing on how sustainability will affect operations. Capturing the opportunities will require developing business models to provide new services— such as logistics services that address the complexity of sustainably transporting food throughout the supply chain.

Infrastructure Congestion and Scarcity Infrastructure is increasingly becoming a bottleneck for business. Congestion and the related cost increases, such as higher landing fees, will impose additional burdens on logistics providers and could potentially disrupt service offerings, such 50 | Logistics News ME | November 2016

as just-in-time delivery. Congestion and scarcity of infrastructure will be especially critical challenges in areas with high population density. Logistics players will need to overcome these constraints when developing solutions for their customers.

The logistics infrastructure segments will benefit, as players in highly congested regions where customers have few alternatives will have an opportunity to increase margins, while execution segments will face the prospect of diminished market power. The freightforwarding and contract-logistics segments stand to gain, as companies earn higher margins by reselling capacity on congested routes. These players can use their broad perspective on the market to

identify which routes will have the most significant capacity constraints, secure capacity on these routes, and offer it to customers at premium prices. The logistics advisory segment also will benefit, as players provide advanced solutions for planning routes, helping customers identify bottlenecks and achieve greater efficiency.

E-Commerce Trade volumes are shifting away from physical retail outlets to online and mobile platforms. As consumers increasingly buy products through ubiquitous offerings on the web, the flow of goods through the transport network has already become more complex. Direct deliveries to homes

Viewpoint Digitisation This megatrend affects the T&L industry in two ways. First, companies have significant opportunities to apply big data and automation to improve operational efficiency, quality, and costs.

For the past several years, T&L players have made increasing use of IT solutions for tracking and tracing shipments and advanced analytics for route and network optimisation. They have also implemented IT systems to replace paper-based processes for pricing, booking, and billing. Second, digitisation has enabled the emergence of new business models. These primarily relate to platform solutions, such as cloudbased transport management systems, advanced freight exchanges, and virtualforwarding offerings made available by Transporeon, Flexport, Cargomatic, and other companies.

The Implications for Companies in Key Segments To help T&L players get ahead of the changing industry landscape, we examined how the megatrends will affect companies in three segments— road transport, freight forwarding, and contract logistics—as well as the initiatives they should take.

are replacing deliveries to retail stores.

Logistics players need to broaden their end-to-end services and prepare for aggressive competition from new companies specialising in fulfilment and last-mile delivery, as well as retailers establishing their own logistics operations.

Segments related to parcel delivery will benefit from the continued growth of e-commerce. These segments include not only CEP delivery but also others, such as road transport and contract logistics providers, that have companies capable of last-mile fulfilment. The postal-delivery segment is already benefiting from this trend, but these gains are often not sufficient to offset the loss in business caused by electronic communications.

Road Transport Urbanisation creates new opportunities for road transport players to develop offerings that reduce customers’ higher costs stemming from the complexity of logistics in congested cities. Such offerings include hubs for bundling lessthan-truckload shipments and efficient delivery networks. Road transport companies should also consider designing a last-mile fulfilment strategy to capture opportunities at the intersection of urbanisation and e-commerce over the long term.

Road transport players will need to prepare for the impact of more stringent sustainability regulations, as well as for the effects of increased fuel costs, and, potentially, carbon taxes.

Successful players will replace their aging fleets with new, fuel-efficient vehicles to comply with regulatory requirements and to lower operating costs. To capture opportunities related to sustainability, companies can develop such offerings as green transport using electric vehicles to help customers reduce their carbon footprint.

Freight Forwarding To prepare for a two-speed world, freightforwarding companies in particular should develop offerings tailored to the trade flows within and among the African, Asian, and Latin American markets. The growth of these trade flows will help offset stagnating trade in developed markets. Freightforwarding players also need to build a strong presence in attractive markets, such as RDEs, identify the fast-growing companies early on, and prepare to win their business, as these up-and-comers represent the next wave of global challengers and large-scale customers. Competitive cost bases and aggressive expansion plans will be essential for success in this effort. In addition, ensuring access to infrastructure in congested regions will be critical to prospering in the face of urbanisation and overall infrastructure scarcity.

Contract Logistics To address the increasingly complex city logistics resulting from urbanisation, contract logistics players, like road transport companies, can offer hub services for efficient operations in cities.

To respond to infrastructure congestion, contract logistics players can invest in and control critical infrastructure points, which will allow them to offer services at a price premium in some markets. Contract logistics providers can also invest in their own manufacturing facilities (such as for outsourcing the final assembly of products) and their own infrastructure to benefit from the congestion in megacities and the scarcity of infrastructure overall.

E-commerce also presents opportunities for contract logistics providers. As small e-commerce players proliferate, there will be greater demand for fulfilment offerings, such as product distribution, reverse logistics (that is, transporting returned products back to the seller), and value-added services (for example, repackaging and payment processing).

Proprietary logistics expertise will allow leading players to offer know-how and unique value-added services to customers. As providers integrate their expertise and offerings into customers’ supply chains, a broader array of opportunities will arise.

Which companies will be leaders in the T&L industry a decade from now? Those who start preparing for change today. By proactively addressing the opportunities created by these megatrends and avoiding losing ground to new players, incumbents can emerge as winners in the long term.

Logistics News ME | November 2016 | 51

Viewpoint

The Success Secrets of a Logistics Construction Investment Evangelos Antoniou, regional project manager, IBLS-WPL and Ioannis Berlis, commercial manager, advise on how to create a functional and effective logistics centre

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hen it comes to a logistics investment (of distributers or retailers) – like building a new storage-distribution facility of goods, or expansion, reorganisation, optimisation of existing ones – the first step is the realisation of the market needs, the potentials of 52 | Logistics News ME | November 2016

business expansion and the anticipation of future growth, along with the potentials of productivity and operational cost savings under a numerical and quantitative point of view.

The second and most crucial step that very often is neglected, following the strategically land selection, is the

requirement analysis.

Warehousing generally is about efficient space utilization, optimum material flow and cost-effective materials handling given the logistic activities characteristics and the physical constraints.

The best possible understanding of the true needs, the systematic mapping of the

Viewpoint

current and the anticipation of any future requirements, as well as the incorporation of the works into the general context of modern techniques and solutions constitutes a premise for success in terms of productivity and operational efficiency and costs.

Proper design of a logistics centre takes place from the inside out; from the SKU and the current activities on the stock inside the building. Thus, every warehouse design phase should begin with a diagnostic study and requirement analysis (stock data organisation and analysis, storage calculation model and capacity utilisation rate) to conclude on the proposed operational arrangements and the building concept (see box) This methodology transforms historical data into design requirements.

Profiles of different data elements help to address the variety of questions that must be answered in the facility design effort.

That way the building under design shall adapt to the current stock needs and logistic activities and not vice versa. Such requirements indicative relate to the following: • maximum storage volume of building • optimum materials flow • flexibility of racking arrangement with variable aisle positions • size flexibility of all functional areas (receiving - loading area, cross docking area, added value area and stock area).

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Requirements analysis is meant to respond to the question “what requirements need to be addressed?” It is the process of answering, by close cooperation between client and consultant, a very well formulated customised set of right and tangle questions of the logistics and building aspects that unlocks the mindsets and the hidden data, evolves and transforms the initial idea into reality reveling and leading to the best possible building concepts from operational, maximum capacity utilisation and productivity point of view.

Another very important factor in the process of materialisation a construction logistics project is the assumption of full responsibility from the technical building and logistics consultant.

That means that the key of a successful end result in terms of cost effectiveness, time schedules and in the end operational and productivity efficiency of a logistics facility is the full assumption of responsibility from a single suitable consultant for all installation studies, along with budgeting and licensing of the project, as well as construction project management and supervision even commissioning and training, up to the delivery and operation of the project by the end user. That means also responsibility assumption by a single manager regarding communication with the client for all technical, economical and operational issues that may arise.

The single point of responsibility assumption is a necessity, since a very

well identified problem in a lot of cases is that, from one hand the involvement of different parties with inherent separate and different points of view eventually leads to a building where all the critical parts and aspects (logistics activities, automation systems, structural approach, building cell, electromechanical installations etc) are not finely and desirably tuned to serve the maximisation of the operational and productivity efficiency and from the other it is the major reason responsible for conflicts and schedule delays. In a way it is like choosing between a holistic design approach and a reductionist approach, and not only.

This commitment of full responsibility from a technical consultant capable to combine logistics specialties and engineering expertise is the safest road in the end of the day to guarantee the best result of a logistics construction project.

As a conclusion, requirement analysis and full assumption of responsibility are the two essential elements, the two major pillars that can safely and cost effectively lead a logistics construction investment to a logistics facility with very high productivity, optimum operational functionality and flexibility, maximum storage capacity, all those key factors that are related directly or indirectly in maximising turnover, income and financial results of a logistics unit and an enterprise. If requirement analysis is the foundations, the full assumption of responsibility is the body and the framework.

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SUPPLIER NEWS

Cyber attack losses higher in Middle East

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ccording to a recent report from PwC, companies polled in the Middle East region suffered larger losses than the rest of the world last year as a result of cyber incidents.

The data showed how 56% of respondents lost more than $500,000 compared to 33% globally, while 13% lost at least three working days, compared to 9%. The report continued to highlight that businesses in the Middle East are also more likely to have suffered a cyber breach, compared to the rest of the world (85% of respondents compared to a global average of 79%), with 18% of respondents in the region having experienced more than 5,000 attacks,

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which is higher than any other region, and compares to a global average of only 9%.

Many of the countries and nation states in the Middle East are actively focused on cyber security solutions and developing initiatives to combat regional and global threats. The UAE, Saudi Arabia, Qatar, and Kuwait have been some of the most vocal and advanced in the process.

Stephen Brennan, SVP Cyber Network Defence at DarkMatter, said: “Next generation initiatives in the Middle East include Resilient Smart Governments, where in the UAE a resiliency model has been developed that showcases and informs authorities of the interrelated impact of a cyber security breach; and a

National Security Operations Centre, from which Federal and Municipal authorities are able to assume a pro-active stance to cyber security, bringing their digital assets into a life-cycle encompassing planning, detection, protection, and recovery. “Cyber security threats play an expanding role in the Middle East and lessons learned from combatting them today may well shape policies in Western countries and the rest of the world tomorrow.

The region is a microcosm of the battle playing out digitally and cyber security initiatives taking place there, while in their infancy, are great examples of innovation necessary to combat the world’s

S u pp l i e r n e w s

Robotics, Drones and IoT driving business innovation

Rockwell launches new software

IDC has named six technologies it believes will shape the future of business.

The “innovation accelerators” are the Internet of Things, next-generation security, 3D printing, cognitive systems, augmented/virtual reality, and robotics. IDC believes they have the power to “accelerate transformation and drive organisations to innovate and seek new business models and, more importantly, achieve their digital ambitions.”

In a report produced for Gitex, Megha Kumar, senior research manager, Software, IDC MEA, wrote: “The successful and widespread adoption of innovation accelerators will require vendors to build a lot of awareness around use cases, drive thought leadership around the associated benefits, and invest in setting up the right channel ecosystems to support customers both in terms of deployments and maintenance services.

“Skills for new and emerging technologies will be a challenge, and vendors will need to seek out partners that are ready to support investment in allocating headcount for these innovation solutions. End-user organisations are going to have to look closely at various factors that will ultimately drive or inhibit the adoption of innovation accelerators, including user experience, risk, and cost.”

Kumar also urged organisations to start experimenting with emerging technologies such as robotics, IoT and 3D printing to evaluate how these accelerators can be aligned with their overall business processes and strategies, ahead of the curve.

Rockwell Automation has announced the launch of FactoryTalk Batch View software, to address the global demand for improved employee collaboration and system interactions that have traditionally been difficult to achieve.

FactoryTalk offers what Rockwell Automation calls “an intuitive and scalable, browser-based interface that adapts across smartphones”.

Users can access real-time information and interact with their process from the plant floor to the production office through a consistent user interface.

The software replaces the need for desktop or mobile access to production data.

User-specific configurations or remote desktop sessions managed by IT staff are no longer required, enabling plants to quickly on-board more users and deliver value that increases productivity.

“In today’s environment, most production facilities have a lean workforce. The new software frees your staff from their desktop or fixed workstation enabling them to visualise and respond to their process from anywhere on their production network,” said Dan UpDyke, product manager, Rockwell Automation.

IFS Applications wins Port of Duqm contract IFS, the global enterprise applications company, has been appointed to provide its selected IFS Applications™ to facilitate the final transition from greenfield to a fully operational harbour at Port of Duqm, Oman.

Implemented jointly with Envecon, Port of Duqm will be able to scale up operations as clients, personnel, and suppliers are onboarded, so it can effectively manage its core business processes.

Envecon is a trusted IFS partner specialising in ports and terminals, shipping companies, and offshore drilling operations. Envecon will implement IFS Applications as a centrally integrated ERP solution to manage Port of Duqm’s operations. Furthermore, business intelligence, and IFS Enterprise Operational Intelligence will play an integral role providing real-time insight into the business.

“The chemistry between Port of Duqm and the IFS and Envecon team during the selection process indicated a strong sharing of minds, and a common ambition to realise a mutual successful journey. Combined with exceptional industry expertise in harbour operations and the testimonies of their customers, IFS and Envecon demonstrated its ability to meet our needs. As a partner, the firm will play a pivotal role in scaling our operations and realising our strategic objectives,” said Reggy Vermeulen, CEO Port of Duqm.

Luis Ortega, the IFS managing director for Middle East, South Asia and Africa said: “We look forward to working with Envecon in helping Port of Duqm scale up its operations and driving business value from its investment in IFS Applications. In addition, this will add further value supporting other public and private organisations who will utilise the Duqm Port and Industrial facilities to facilitate their integration with the Port Authority services.”

Logistics News ME | November 2016 | 57

Diary

The month ahead

The key exhibitions, conferences and seminars coming up this month

ADIPEC

November 7 – 10 Abu Dhabi NEC

Held under the patronage of the President of the United Arab Emirates, His Highness Sheikh Khalifa Bin Zayed Al Nahyan, and organised by the Global Energy division of dmg events, ADIPEC is the global meeting point for oil and gas professionals from all sectors. ADIPEC 2016 is supported by the UAE Ministry of Energy, the Abu Dhabi National Oil Company (ADNOC), the Abu Dhabi Chamber, and the Abu Dhabi Tourism & Culture Authority (TCA Abu Dhabi). dmg Global Energy is committed to helping the growing international energy community bridge gaps by bringing oil and gas professionals face to face with new technologies and business opportunities.

Supply Chain Innovation Summit

November 17 – 18 Chicago

Redefining your supply chain through data, topics discussed will include: Technology in the supply chain; CSR in the modern supply chain; Data Integrity and its role in manufacturing; Tools and techniques for Supply Chain Improvement; and Redefining Procurement and Inventory Management. Speakers are confirmed from McCain, Navistar, Caterpillar, GE Transportation and Reyes Holding, plus others. With further speaking opportunities still available through the show organisers, Innovation Enterprise.

Military Logistics and Procurement Kuwait 2016

November 28 - 29 Radisson Blu Hotel, Salwa, Kuwait

The objective of this event is to pool together logistics and procurement professionals as well as selected suppliers of components and maintenance services to the Kuwait Armed Forces. With Kuwait’s parliament recently approving an additional defence budget of over US$10bn to

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support additional procurements, don’t miss this opportunity to meet and network with senior officials from a brand new authority responsible for these procurements at a time when they will be about to embark on a period of major spending.

Materials Handling park Saudi Arabia

November 28 – 29 Park Hyatt Jeddah

The inaugural edition of Materials Handling Saudi Arabia is the latest development in Messe Frankfurt’s ongoing expansion in the Kingdom.

Materials Handling Saudi Arabia is a biennial event, alternating between Materials Handling Middle East in Dubai, with the dual events lifting your business to new heights. The Dubai edition will return next September. For full details of the show turn to page 36.

E-Retail Middle East

December 6 – 7 Le Royal Meridien Beach Resort and Spa, Dubai

Speakers at this two day forum in Dubai are scheduled to include Saygin Yalcin, founder and CEO, SellAnyCar.com; Razi Hamada , head of business excellence, E-commerce, Al Futtaim; and Ahaskar Pandey, head of strategy and planning, Souq.com.

9Th Annual ME ShipTech Conference

November 28 – 29 The Address Hotel Dubai Mall, Dubai, UAE

This year ME ShipTech 2016 will for the first time include ideas that go beyond the tanker and bulk carrier industry and incorporate the intrinsically linked marine offshore and ship building markets. There will be dedicated streams on OSVs and Workboats, Ship Repairs and Conversions, held alongside strategic sessions examining the future of the market and transformative new technologies. Ship owners attend this conference for free