Case Study
Country Focus
In the hot seat
The reality of desert island hospitality
Construction to buoy Kuwaiti logistics
Telematics in the mix
Connecting trade professionals with industry intelligence
September 2016
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Start 8 | News 16 | News Analysis
Contents
The latest shipping trends
Features
18 | Case Study The logistics of operating far flung resorts 24 | Sector Focus The latest trends in telehandlers
28 | Interview Brodie Von Berg, Mix Telematics, talks safety and technology 32 | Cover Story China’s bold ambition to revive its ancient Silk Route
38 | Country Focus How Kuwait plans to build its success 42 | Viewpoint
32 50
50 | Supplier News 54 | Diary
28 38 42 Logistics News ME | September 2016 | 3
Editor’s Note
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ver recent years the GCC has made no secret of its plans to become the centre of the world’s logistics industry, ploughing billions of Dollars into the construction of ports, roads and freezones. The success of these plans depends on many things, from the steady economic growth of partner nations to the world’s need to trade and a continuation of the security enjoyed by certain nations. But it also depends on one other vital component… that no other region or nation will execute the same idea. Enter China. The paradoxical Asian powerhouse that is both admired and condemned in equal measure – and sometimes even consecutive breaths. For the last three years it has been quietly forging ties with a number of nations to re-establish the world’s oldest, and most known, trade route. The Silk Road Economic Belt (SREB) and accompanying Maritime Silk Road (MSR) would transport China’s manufacturing products to key ports and cities on the East to West route. Just like the ancient Silk and Spice routes did. But it’s far from innocent nostalgia. The fruition of China’s plan could see the GCC becoming a detour on the world’s primary trading lanes, and how that will impact on the region’s ambition to become a global logistics hub is anybody’s guess. Without its own manufacturing output to rival that of China, the GCC has very little to export once its fossil fuel days are over. China also has strong relationships with the nations the GCC
does not. The final part of the puzzle is its ability to develop rail networks, one of which has cut the journey time between China and Iran to a matter of days. In building partnerships with nations that have either been economically left behind or penalized on the global stage, China is building an alliance that few will be able to rival. As with many political and economic events of the last decade, this isn’t the result of a single action but the buy in of nations and nationals who feel ignored. Since the collapse of the Soviet Union, Central Asian nations have struggled economically – China’s wave of investment and the promise of jobs and prosperity is an answer to their dreams. In 2013, the year China’s ambitions were announced, trade between the five states of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, grew rapidly to reach $50 billion. Iran, Russia, Hungary and Poland, the list of SREB beneficiaries continues, with even Rotterdam welcoming China’s plan with open arms. As the GCC lurches towards its post-oil future, whenever that will arrive, there will be many harsh realities to face. But this, could be the first.
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In the NEWS UPS adds nine Middle East countries to Express Freight service
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he UPS Worldwide Express Freight service is to launch in nine new countries, all in the Middle East and Indian Ocean, meaning faster guaranteed palletized shipments between 60% of the key city combinations when compared to FedEx’s guaranteed palletized freight service, according to claims made by UPS. The new countries are: Bahrain, Bangladesh, Kuwait, Malta, Morocco, Pakistan, Qatar, Sri Lanka, and Tunisia. Together with the eight additional countries added within the past year, the 8 | Logistics News ME | September 2016
service is now offered in 66 origin and 64 destination countries and territories. UPS also expanded UPS Worldwide Express Freight service to over 2,110 zip codes in Mexico in June. Since its launch in 2013, the number of businesses using UPS Worldwide Express Freight has increased more than 250%. “Companies in the healthcare, retail and automotive industries have grown their international volume, 18, 11 and five times more, respectively, using UPS Worldwide Express Freight than their peers over the last three years,” said Bill Seward, president, US international, UPS.
Global smart railway to grow 27% CAGR to 2020
Global smart railways systems market is expected to grow at a CAGR of more than 27% during the period 2016-2020 according to a report by market research firm Technavio. In the report, advanced solutions are credited with driving growth in both public and freight transportation across Europe, North America, APAC and Russia, with Europe named as having the “most advanced” railway system. According to Sharan Raj, a lead analyst at Technavio for research on logistics: “To make their services efficient and effective, each sector in the railway management system is automating their systems, solutions, and devices to offer better services to customers. This will reduce the operation time and make systems faster as well as reliable. Cloud computing is the fastest emerging solution in the railway industry, which will improve the passengers’ facilities and increase railway revenues.” APAC has emerged as one of the fastest growing markets because of the increase in demand for railways in countries such as China and India.
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DP World to operate first American port
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P World has signed an agreement with Canada’s Rodney Container Terminal for the expansion and operation of the multi-purpose facility in New Brunswick, Canada. It is one of Canada’s main ports and the only Atlantic Canadian port that is served by the country’s Class I railways. The contract marks DP World’s first North American port and the Dubai-based operator is to make “immediate investment” in supersize ‘post-panamax’ container vessels. The expansion works will create a 350 metre deep-water berth, an enhanced stacking area and a 12,000 foot intermodal rail yard capable of handling a full train, according to a statement from DP World. Sultan Ahmed Bin Sulayem, group chair and CEO of DP World, said: “Our investments and commitment to Canada are for the long term, contributing to trade and the development of its national and local economies as well as providing employment for people with a leader of world trade. Our international experience and expertise will be further enhanced with this project.” Saint John is Canada’s fifth-largest port and last year handled 24.4 million metric tons of crude, petroleum, liquefied natural gas and other chemicals. The Wall Street Journal reported that the move will allow DP World and the port to compete with hubs on the United States eastern seaboard, including New York and Boston.
APICORP, Bahri launch $1.5b shipping fund
The Arab Petroleum Investments Corporation (APICORP) and The National Shipping Company of Saudi Arabia (Bahri) have announced the launch of a landmark shipping fund. The Fund’s target is to acquire approximately 15 Very Large Crude Carriers (VLCCs) over three phases with total investments of up to $1.5 billion composed of debt and equity. APICORP will be the main investor and fund manager whilst Bahri will be the exclusive commercial and technical manager. APICORP will invest 85% in the Fund with Bahri investing the remaining 15%. The Fund will be a closed-end fund with a 10 years life period, and will deliver returns derived from the commercial employment of the VLCCs. An agreement to establish the APICORP Bahri Oil Shipping Fund (ABOSF) was formally signed in Riyadh in July in the presence of HE Khalid Al-Falih, Minister of Energy, Industry and Mineral Resources for the Kingdom of Saudi Arabia and chair of Saudi Aramco. This agreement is in line with Saudi Arabia’s long term economic diversification plan, supporting economic growth and creating employment opportunities. The project is a step in the right direction to enhance maritime sector awareness and augment growth of this industry in the country. APICORP and Bahri have developed a unique structure that assists Bahri in increasing its VLCC fleet. This will also make Bahri the biggest VLCCs operator in the international VLCC market segment. This fund is APICORP’s second shipping fund after the launch of APICORP Petroleum Shipping Fund in February 2013. Ibrahim Al Omar, CEO of Bahri said: “At Bahri we remain steadfast in our efforts to contribute to our national vision and goals, and are committed to playing an integral role in further developing and transforming the maritime industry in the Kingdom to strengthen its position as a leading regional logistics hub, thereby creating more employment opportunities for Saudis while continuing to play our part in the economic development of Saudi Arabia. With a current fleet of 36 VLCC’s and 10 new build orders scheduled for delivery in 2017-18, the 15 crude carriers proposed for acquisition under this fund will propel Bahri into becoming the largest operator of VLCC’s in the world.” Logistics News ME | September 2016 | 9
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GEFCO outperforms china trade targets for H1
GEFCO Middle East has reported that it has exceeded its import and export targets with China for H1 2016. Its forecast of 1,500 TEUs reached 2,150 by the end of Q2 with an increasing number of shipments from 11 cities and ports across the country including Tiangin, Qingdao, Beijing, Ningbo, Wuhan and Hong Kong with goods destined for the MEA region. Stefano Pollotti, MD of GEFCO Middle East, which has been operating in Jebel Ali since 2013 said: “We have had tremendous results from China so far this year and our delivery has been exceptional. Complete end-to-end services are constantly improving in terms of transport options, speed, monitoring and security and our clients have the very best support across the board.” 10 | Logistics News ME | September 2016
Milaha H1 financial results down on 2015 Qatar Navigation (Milaha) has experienced mixed financial results in H1 2016, with operating revenue, operating profit, net profit and earnings per share all down on the same period last year (see box). “Despite a slowdown in some of the business segments in which we operate, our results remain strong. The foundation we have laid in the past few years will not only enable us to withstand any headwinds, but also position us for sustainable future growth.” said H.E. Sheikh Ali bin Jassim Al Thani, chairperson of Milaha’s Board of Directors. “Our clear focus on executing our long term strategy and creating shareholder value has enabled us to weather short term volatility and deliver healthy results supported by a strong balance sheet,” added Mr. Abdulrahman Essa Al-Mannai, Milaha’s President and CEO. In better news Milaha Gas & Petrochem’s revenue grew by 56% despite a global slowdown in the shipping market. The investment in two LNG carriers made in the second half of 2015, and the mid to long-term nature of the majority of charter contracts, largely insulated this segment during the first half of 2016, according to a statement from the company.
Key financial highlights: • Operating revenues of QR 1.387 billion for the six months ended June 30, 2016, compared to QR 1.507 billion for the same period in 2015 • Operating profit of QR 371 million for the six months ended June 30, 2016, compared to QR 442 million for the same period in 2015 • Net profit of QR 553 million for the six months ended June 30, 2016, compared to QR 651 million for the same period in 2015 • Earnings per share of QR 4.86 for the six months ended June 30, 2016, compared to QR 5.73 for the same period in 2015
We deliver on Logistics The Rais Hassan Saadi (RHS) Group have been at the very front of the emergence of Dubai as a Shipping and Logistics hub since they started operations in 1910. Now over 100 years later, the company has evolved into the regional powerhouse it is today with diverse interests across the region. RHS Logistics, the 3PL and supply chain systems integrator, operates from the Middle East, but with a truly global vision. Utilising the latest of technologies, and with a wealth of experience on diversified
product handling, in high quality, sophisticated environments, it has cemented its status as an innovative market leader within the Logistics industry.
With cutting edge facilities in Dubai World Central, Jebel Ali Free Zone, Dubai Airport free Zone adjacent to the Sea and Air ports, housing a total of 100,000 pallet locations, RHS have and will continue to
invest in first class infrastructure, ensuring they remain leaders in their field.
How can RHS Logistics help your Logistics business? Call us on (971-4) 8810007, (971-4) 8082300 or visit rhslogistics.com
RHS Logistics represents the 3PL division of the RHS Group of companies operating out of Dubai, U.A.E.
RHS Logistics Established 1910
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UAE Ministry of Economy and freezones collaborate to enhance trade, investment A series of “ongoing, periodic meetings” are underway between the UAE’s Ministry of Economy and several freezone authorities with a bid to several Freezones at its headquarter in Abu Dhabi, to strengthen and unify efforts towards maximizing the country’s international exposure. The first meeting was organized by the Ministry’s Trade Promotion and Investment Department and was attended by senior representatives from several of the UAE’s free zones such as Abu Dhabi Global Market, Abu Dhabi Media Zone Authority – Twofour54, Masdar City, Dubai Airport Free Zone, Dubai International Financial Center Authority, Jebel Ali Free Zone Authority, Dubai Maritime City, Dubai Creative Clusters Authority, Dubai South City, Dubai Silicon Oasis Authority, and Ajman Free Zone. Mohammed Nasser Al Zaabi, director of Trade Promotion and Investment Department explained that the gatherings are intended to raise the level of coordination, review the promotion management plan, and share ideas on areas of future cooperation in foreign events and participations. Al Zaabi emphasized that the freezones represent some of the Ministry’s most important strategic partners, as they are major economic contributors to the state. He pointed out that many of the country’s freezones are regarded as among the best in the world by international reports due to their high efficiency and global economic and investment
Tristar takes 5th RoSPA Gold Award for Health and safety Tristar has won the UK-based Occupational Health and Safety Award for five consecutive years and was presented the Gold Medal Award by the Royal Society for the Prevention of Accidents (RoSPA). The company was also given the Gold Award for Fleet Safety for its road safety records and safe driving culture during the awarding ceremonies held recently in Birmingham, England. Tristar is currently engaged in a Goal Zero initiative to eliminate workplace accidents and launched the Zero is Possible theme at its Safety Day on March 1 2016. Julia Small, RoSPA’s head of awards and events, said: “To win an award at such a highly-regarded event as the RoSPA Awards is a great achievement for our winners. It recognizes their commitment to maintaining an excellent health and safety record and raises the bar for other organizations to aspire to. We offer them our congratulations.”
DAFZA welcomes Japan’s Terumo The European branch of Terumo Medical Corporation, a Japanese multinational medical products and equipment firm, has opened a new office at the Dubai Airport Freezone to better serve its customers in the Middle East and Africa – including the GCC, Levant, Pakistan and Africa – and pursue emerging opportunities in these markets. The proximity to key markets and services at the freezone is also said to reduce operating costs. Terumo joins other pharmaceutical brands including Abbot Laboratories, Actavis, Johnson & Johnson, and Himalaya Drug Company, among others. Mohammad Ismail, General Manager of Terumo Middle East, added: “Through our new HQ, Terumo will be able to facilitate business operations in the region and ensure timely and efficient distribution of our prod-
12 | Logistics News ME | September 2016
ucts and services to our distributors as well as engage key opinion leaders and patients at a more personalized level. We expect that our presence in Dubai will help us focus more on serving local and regional patients by making our solutions easily accessible. We will also leverage DAFZA’s numerous incentives such
as 100% exemptions on corporate and personal income taxes, full foreign company ownership and repatriation of capital and profits, a dedicated logistics center with 24-hour services, single-window administrative support, advanced infrastructure, and investororiented management, among many others. This is the best place for us to reach out to a number of the most promising healthcare markets in the world.” Terumo’s 800-square-metre leased area will accommodate Terumo’s comprehensive range of products and accessories especially used for interventional cardiology, interventional oncology, peripheral intervention, pharmaceutical, cardiovascular, diabetes management and other medical products like syringe and infusion pumps, infusion sets, safety hypodermic needles and dental needles, among others.
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DMCA forms group to promote marine and leisure sector The Dubai Maritime City Authority (DMCA) has revealed the formation of RASEINA Maritime Domestic & Leisure Working Group, a first of its kind in the UAE, which aims to promote Dubai’s marine and leisure sector activities. The group has been created in a push to advance the Maritime Sector Strategy and further lead Dubai into becoming one of the world’s most important maritime centers. It forms part of DMCA’s efforts to implement strategic programmes and innovative projects highlighting the emirate’s maritime services and effectively promote marine and leisure sector in Dubai, given its “leading role in the local maritime sector”.
Aramex founder sells 10% stake The founder of Middle East courier firm Aramex has sold a stake in the company worth almost 10% of the Dubai-based company. Aramex confirmed in a stock exchange filing in late July that founder Fadi Ghandour has sold all of his stake in Levant Logistics Holdings, a Cayman Islands-based company that controls a 9.9% stake in Aramex, the Associated Press reported. The buyer was another Cayman Islands-based company, Boson Ventures Corporation. Aramex did not disclose when the sale happened or at what price. Based on the most recent Aramex closing price, the stake is worth 579.8 million dirhams ($158 million), AP reported. The news was followed by a performance update from the company that confirmed Q2 2016 profits increased 36% to AED125.7 million, up from AED92.5 million in Q2 2015. Revenues were also up 17%, over the corresponding period of the previous year. Aramex’s Half Year 2016 Revenues increased year-onyear to AED2,134 million, up 15% compared to AED1,856 million for the corresponding period of 2015. Net Profits during the same period rose to AED222.5 million, up from AED179.2 million in the first half of 2015, a year-on-year increase of 24%. Overall Net Profits registered double-digit growth, impacted by a one-time fair value adjustment related to Aramex’s investment in AMC Logistics joint venture in Egypt amounting to AED41.6 million.
DIP opens 70 warehouses for lease
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ubai Industrial Park (DIP) is offering 70 pre-built storage and light industrial unit warehouses to meet the needs of the region’s manufacturing and logistics sector, including cold, chemical and general storage, as well as for light industrial use. The ready-to-use warehouses and storage spaces are available for short-term and long-term lease and range in size from 5,000sq ft to 10,000sq ft. Spanning an area of over seven million square feet in DIP, the warehouses project includes warehouses with provision for offices, retail showrooms equipped with attached storage to allow retailers increased storage and open yards with asphalt floorings. Furthermore, all facilities at DIP are provided with surveillance and security services round-the-clock, with additional support for SMEs. Saud Abu Al Shawareb, COO, said: “At Dubai Industrial Park, we consider warehouse solutions and storage facilities a critical component of the integrated solutions that we offer our business partners to meet their evolving needs. With our comprehensive solutions, we now boast the capability of addressing the diverse demands of the industrial, manufacturing and logistics sectors in the region. In addition, our best-inclass security and safety standards, outstanding location and advanced infrastructure ensure the highest value to industrial, commercial and service enterprises that choose to locate themselves within our dedicated industrial park.”
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Agility Q2 profit up 11%, GIL revenue down 10% Financial results for Q2 2016 from Agility report a net profit of KD15m, an increase of 11% YoY, while Q2 revenue for Agility Global Integrated Logistics (GIL) stood at KD233m, a 10% decrease from Q2 of 2015. The firm has cited low shipping and fuel rates in the market as a key cause. Net revenue remained flat when adjusted at constant currency rates, with margins expanding from 25% in Q2 2015 to 27% in Q2 2016. Earnings-per-share stood at 13 fils, and EBITDA stood at KD29m, a 12% increase compared to Q2 of 2015. Revenues are KD309m for the quarter. Tarek Sultan, Agility’s CEO, said: “To quote the World Trade Organisation, ’subdued’ trade forecasts for the year continue to impact the freight forwarding market. However, Agility GIL was able to record volume growth in its core air and ocean markets and is focusing on products and markets that are growing despite sluggish overall volumes. Growing demand for contract logistics in emerging markets – an area that Agility has longestablished market leadership in – coupled with improved yields in the freight business and better commercial discipline has resulted in margin expansion within GIL.”
Ransomware threat to business
Chinese silk road investment reaches $75.9bn Reports in the Financial Times have states that Chinese investors have now announced a total of 315 greenfield investments with a combined value of $75.9bn across Belt and Road countries in the 18 months to June 2016. The figure, which is twice as much as in the previous 18 months, according to statistics from fDi Markets, demonstrates China’s dedication to re-creating the former Silk Route, land and sea trade network under a project called Belt and Road. The primary beneficiaries of the Belt and Road plans have so far been central Asian nations, which suffered economically after the collapse of the Soviet Union and have welcomed the additional investment and jobs. Their natural resources have largely been routed to China through new pipelines and other infrastructure bankrolled by the country. Further backing the figures, it is estimated that around 56% of Chinese ODI has been funneled into so called “Belt and Road countries” with Chinese investment in other countries over the same 18 months declining by nearly 29%. Turn to page 32 for the full story.
14 | Logistics News ME | September 2016
Mike Weston, VP, Cisco ME
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he Cisco 2016 Midyear Cybersecurity Report has concluded that companies are unprepared for future strains of more sophisticated ransomware. Fragile infrastructure, poor network hygiene, and slow detection rates are providing ample time and air cover for adversaries to operate. According to the report’s findings, the struggle to constrain the operational space of attackers is the biggest challenge facing businesses and threatens the underlying foundation required for digital transformation. Other key findings in the MCR include adversaries expanding their focus to serverside attacks, evolving attack methods and increasing use of encryption to mask activity. On average, organizations take up to 200 days to identify new threats, according to date released by the company to promote the report.
N e w s A n a ly s i s
Sale into the sunset
The latest sale and purchase (S&P) figures from Vessels Value show a steep decline in rates and values while modern bulker values firmed up
July 2016 saw a 48% reduction in the total value of secondhand sales concluded, compared to July last year. The total amount spent on second hand
vessels was $1,627m compared to $3,083m last year. Bulker and Tanker sales were down 13% in July 2016. The largest drop was in the container sector
where only two sales were concluded compared to 31 sales in July 2015 and only 12 new building orders were placed in July 2016.
Bulkers Handy Bulkers saw slight increases in value in modern tonnage with the Ethel L sold for $9m. Meanwhile older values fell with the open hatch sisters New Mariner and New Laurel selling at $2.80m. The busiest dry bulk sector was Panamax bulkers with 15 sales concluded in July. The highest impact has been in resale vessels, with Blue Planet Shipping buying four vessels. Capesize values remain steady. The biggest deal of the month was the sale by ZOSCO of the Zosco Jiaxing and Zosco Shao Xing at $14.80m each to Sinokor. Handy Tankers experienced a flurry of activity with 25 Handy Tankers sold in July. 16 | Logistics News ME | September 2016
Older tonnage has remained fairly constant however there have been slight decreases within older Supramax vessels. Older vessels have not enjoyed such an uplift with the Nord Pegasus selling at $8.50m, a price only marginally above February’s slump. Supramaxes also remain stable at the modern end with older tonnage declining in value due to scrap prices. This is evidenced by Darya Maya and Darya Rani sold for $16.90m with VV valuing at $16.87m and Atlantic Altamira $3.65m. Tanker values have continued to fall throughout July, with the most noticeable reductions in older tonnage.
N e w s A n a ly s i s
Rates The LPG sector has seen values fall over the course of 2016 as a result of a softening in the charter rates, especially in larger tonnage. In July
2015, the Baltic Exchange’s LPG Index $/ton was at $140 and monthly charter rates were at c.$3.5m, currently they are at $25 and
$500,000 respectively. In terms of values this has resulted in resale VLGCs falling from c.$78m to c.$71m.
Logistics News ME | September 2016 | 17
news
Overcoming island isolation As the Maldives has propelled itself to middle-income status despite the geographic constraints and usual challenges of a small island economy, the last five year’s economic growth has averaged 4.5% per year, mainly on account of tourism. Evgenia Boyankova, group director of business development, Sun Siyam Resorts tells Sophia Soltani how the hotel overcomes delays and uncertainties of cargo to ensure smooth operations of the 5-star, luxury property 18 | Logistics News ME | September 2016
Interview
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ocated in the Indian Ocean, 600 km south of the Indian subcontinent lies the idyllic archipelago of the Maldive Islands. Consisting of 1,192 tiny coral islands that form a chain stretching 820km in length and 120 km in width, these islands cover a geographical area of approximately 90,000 sq. km of which land area comprises of only 300 sq. km. The islands form 26 natural clusters, often referred to as atolls, which are grouped into 20 administrative atolls. The islands are surrounded by varying levels of sea and access to the islands is by sea route with the islands and the atolls mainly connected by boats and seaplanes. With the majority of these atolls occupied by 5-star, luxury properties, connectivity is not a problem for the tourist resorts as the government has provided major infrastructure facilities with international airports, jetties and related transport facilities with many hotel
companies constructing their very own infrastructure systems at their resorts with high-speed boats and sea planes to take tourists between the international airport and the resorts. However, the logistics behind running a luxury hotel can often be challenging at the best of times, let alone when situated on a remote island. The Sun Siyam Iru Fushi resort A prime example of one of these luxury hotels, is the Sun Siyam Iru Fushi resort, located among the unspoiled islands of Noonu Atoll in the Maldives and is a scenic 45-minute seaplane journey from the capital, Malé. The resort features 221 luxury oceanfront villas, including 70 overwater bungalows, inspired by traditional Maldivian architecture. All of the rooms are equipped with the latest in-room amenities including a 32” flat-screen TV and Bose home theatre systems. In addition to 14 restaurants and bar choices,
the resort’s unrivalled range of leisure activities and excursions include a fully equipped PADI 5-star dive facility and a water sports centre, tennis and badminton courts, kids club and multiple swimming pools. The Spa by Thalgo comprises 20 treatments rooms, each dedicated to a different Eastern or Western wellness philosophy for a wide range of health, relaxation and beauty options. In order to keep the running of each facility immaculate, inadequate transport infrastructure can pose as a serious constraint for micro, small and medium enterprises, including private resorts on the atolls, and to get around this constraint many of the hotels resort to chartering private ferries when the need arises, ultimately increasing the operating expenses of the hotel. With the high cost of moving goods domestically – a study in 2012 estimated that the rate of transporting cargo from one atoll to another can be $1,000 as a starting
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Interview figure, almost the same cost as transporting goods internationally. In tandem with changing import prices, island life is also susceptible to change, as Evgenia Boyankova, group director of business development, Sun Siyam Resorts explains: “We are constantly updating our services to provide enhanced facilities for our valued guests. We want to be on top of the most current market trends, as well as changing customer preferences. Over the past five years, we have added some more F&B outlets to provide the variety that an international client mix requires.” Sourcing the food Like many of the hotels on a remote island, variety is key. The Sun Siyam Iru Fushi Resort offers an extensive range of F&B outlets with 14 bar and dining options, but location can cause challenges when trying to source ingredients, Boyankova says: “Maldives is a country very dependent on imports; most food items come from abroad. Due to this, pricing becomes a challenge for us as we still must maintain prices at the F&B outlets. In addition, with fresh produce, there is sometimes a variation in the quality, which we are keen to avoid. Running a 5-star, luxury property, we strive to maintain the same quality across our outlets.” On further analysis, this is not just an issue unique to the hospitality industry, as the Maldives’ small manufacturing sector has low technological content and provides a narrow scope for structural transformation. In the future, new export activity, in addition to tourism and fisheries may be needed to diversify sources of foreign exchange to finance the demand for imports of foodstuff with manufacturing fish preparation and processing accounting for approximately 65% of gross value to the country. Discussing how these challenges are overcome, Boyankova explains: “To overcome the main challenges faced with supply, we buy most of the items in bulk. We also make sure that we work with reliable companies, rather than smaller suppliers, to ensure both the best quality and price. Some of our direct suppliers are chosen for their speciality; for example, our best-quality canned foods are sourced from Dubai and our meat comes from Australia. We have excellent Asian restaurants, including Indian, Thai and Japanese, and for those our supplies come from Thailand for their quality herbs and spices.” In terms of developing new or nontraditional exports for any economy, 20 | Logistics News ME | September 2016
The Sun Siyam Iru Fushi has a farm island, Minaavaru
We face operational pressure if a shipment does not arrive on time. As most of the items come in from abroad and are then transported to the resort on sea vessels, timing is of the essence. there is a need for a set of ‘nearby’ products that are currently not produced or exported, but that appear to be within reach given the capabilities acquired for the current export basket. These are new exports that, in principle, would be easiest for an economy to move into. For the Maldives, with its limited natural resources and dispersed remote islands, such products are likely to include: Food waste, fat and oils and fish. Smooth operation Limited natural resource endowments result in dependence on a few sectors. Although not true for all island resorts, several of them have limited natural resource endowments and underdeveloped interindustry linkages. This results in dependence on imports even for basic commodities. Given a limited land mass, agriculture cannot be developed on a large scale. With some of the islands only
competitive in one or two products or in services such as tourism, which makes them susceptible to global economic conditions. Pacific island economies rely mostly on fisheries, tourism, and a few commodities such as copra and sugar. Other islands, such as Papua New Guinea or Timor-Leste depend on resources such as natural gas and water for hydropower. International market access and trade openness remains limited and is exacerbated by remoteness. Several factors affect a hotel’s access to the international market. In addition to the structural and capacity impediments, underdeveloped transport infrastructure, limits the potential to gain from trade. Poor international and domestic connectivity coupled with high transport costs make an island’s goods and services less competitive in the world market. High transport costs have inhibited trade integration for a number of remote islands, which require sea and air transport to facilitate trading activities. Nonetheless, delays and uncertainties in basic supplies and inputs to production are to be expected, especially in archipelagic and dispersed islands that are far from main commercial centers. And with irregular maritime and air transport services, enterprises on the islands can find it difficult to meet sudden changes in demand unless they keep large stocks, which in turn has the potential to raise working capital costs, as Boyankova says: “We face operational pressure if a shipment does not arrive on time. Since
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Interview most of the items are coming in from abroad and then transported to the resort on sea vessels, timing is of the essence.” As a 5-star resort, planning is key to a smooth operation, Boyankova adds: “However, by planning ahead, we are able to overcome the operational pressure. We have a good storage system, including huge freezers, which can store a week’s supply of items. Usually we plan two weeks in advance, adjusting for shipping. We also have to consider the occupancy forecast when planning and placing orders. We usually do keep extras, knowing the difficulty of obtaining items at the very last minute. But however planned one can be, mishaps do happen. In such events, we first try to source it from the capital, Malé, and if not available, we approach the manufacturer directly for immediate courier service.” Taking care of the environment Environmental degradation has been increasing with the Maldives’ pursuit of economic development. In the early stages of the Maldivians’ economic development, their lifestyle was simple and had a negligible impact on the environment. However, recent socioeconomic developments and growing population have led to a marked deterioration in the country’s environment. With a very fragile and delicate ecosystem as well as vulnerability to the threat of global warming and sea level rise, the need for environmental management and planning has been acknowledged by the government and individual hotel establishments. Discussing Sun Siyam Iru Fushi’s efforts to minimise its carbon footprint, Boyankova explains: “Due to the nature of the islands, most of the goods are supplied on sea vessels in the Maldives, very rarely on flights, but this too depends on the urgency. For The Sun Siyam Iru Fushi, we have a weekly supply boat that carries all purchases to the resort. We also have a farm island, Minaavaru, where we grow some fruits and vegetables. These include bananas, varieties of melon, papaya, and varieties of lettuce. However, this is not enough to cater for a 5-star luxury property. So, depending on the supply from the farm island, we also adjust our orders with suppliers.” Energy efficiency The government’s energy policy embodied in the National Energy Policy and Strategy 2010 includes the objectives of promoting conservation and energy security by 22 | Logistics News ME | September 2016
The Minaavaru farm grows a variety of fresh fruit and vegetables
diversifying sources and developing renewables. Renewable energy is very important for the Maldives, to decrease its dependence on fossil fuels. Given the country’s target of being the first carbonneutral country in the world by 2020, the government urgently needs to find alternative sources of energy that will provide energy efficiency and sustain economic activity. The Investment Plan for Scaling up Renewable Energy Program (SREP) 2013–2017 emphasises investment in solar, wind, and waste for energy use. Under this plan, a 40-megawatt solar photovoltaic system will be installed to meet 30% of day time peak demand in all inhabited islands within the next five years. The SREP plan aims to transform the electricity sector and develop renewable energy on a larger scale. It also aims to improve energy efficiency and conservation of energy and encourage the adoption of low-carbon technologies in production, distribution, and consumption of energy. The SREP targets a reduction of greenhouse gas emissions by about 90,000 tons of carbon dioxide per year, and a saving of about 36 million litres of diesel annually. While there is clear potential for using renewable energy sources, challenges need to be addressed to push forward with the
SREP. The challenges include an absence of a comprehensive assessment of renewable energy resources; the need to come up with a concrete strategy and plan to implement the renewable energy program; the cost implications of developing renewable energy sources, and thus, the concern about the financing requirements for renewable energy projects; the limited availability of financial support from the private sector; and the concern over the intermittent nature of renewable energy. How successful the plans for renewable energy will remain an important issue. With so many island hotels, resorts have an obligation to the environment to manage waste and energy consumption. Explaining how The Sun Siyam Iru Fushi resort puts its best foot forward for the environment, Boyankova says: “Being a remote island, we have to be selfsufficient. We produce our own electricity through generators, water through our desalination plant and we have an incinerator for waste disposal. It is a standard regulation from the government to have these basics and to properly maintain them. The items that cannot be disposed of on the island are brought to the garbage disposal island near the capital city.”
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Sector Focus
The Final Frontier Jason O’Connell investigates how the Middle East is getting to grips with telematics
T
he benefits of fitting vehicles with telematics have been slow to catch on in the Middle East but interest has been accelerating ever since the UAE decided to rationalise fuel prices in 2015. Fuel is likely to make up a gradually more significant component of the operating cost of a truck fleet and that has woken operators up to the fact that telematics can prevent those costs from spiraling out of control. Telematics is data, pure and simple. A system is installed in the vehicle which transmits through GPRS to the operator, allowing them to know what the vehicle is doing, where it is located, the vehicle’s condition and the driver’s behaviour. But it’s the use of that data that is the key to unlocking the environmental and fuel consumption benefits that telematics can bring. “If you use telematics correctly, you know every time a driver presses the break peddle, if he presses the breaks too hard, if he steers erratically or if he’s speeding,” says Dr Richard Brown, head of aftersales and product management, MAN Truck and Bus Middle East and Africa. “The data is all there. Initially the main purpose is to train the operator to use the data that’s been provided, and when they’re
24 | Logistics News ME | September 2016
trained and understand the system they will see the gaps in the driver’s knowledge that we can then focus on to train them to drive better. You can optimise routing, tire wear and load all through the understanding of the information provided.” Cost benefits Telematics has been widely used among fleet operators in Europe for around 15 years. Unsurprisingly, the Middle East is one of the last regions to introduce it but the market has really begun to hot up in the last two years. “Every manufacturer is representing their own telematics offering to the market,” says Brown. “The uptake in the Middle East has certainly increased in the last 20 months where there’s a mind shift towards fuel consumption with the fuel prices changing. Two years ago, when we started talking to end users about telematics for the Middle East, the attitude was very much ‘fuel cost is not worth thinking about’.” Most manufacturers will now offer a telematics package with a new vehicle. Clients have the option of doing without or choosing from a range of packages from basic vehicle tracking to a far more complex system that provides all sorts of data. Systems can also be retrofitted and there are many
Sector Focus
Data is sent back to the fleet manager to be processed
third parties in the market offering their services too. There is, of course, an initial cost to install a telematics system and there’s an operating cost for the data transfer, however savings can quickly outweigh those costs. “From a business case that we’ve done with one operator, the telematics pays for itself in nine months through fuel savings in this region,” says Dr Brown. “That’s for both long distance vehicles and construction.” You might think that telematics might only be used for long distance vehicles but that isn’t the case. “I’ve had a lot of meetings in the last year and I was surprised how many construction machines are delivered from factory with telematics installed as standard,” says Dr Brown. “It records vehicle health, operating hours, similar things to what we do with vehicles. It’s also used for preventive maintenance. The system we provide can tell the user if the vehicle has enough kilometres to do the run that he wants before its next due service. If not, he can send it for service straight away and that reduces downtime.” The next generation of data capture will even predict component change requirements so the system can inform the owner that the vehicle needs to go to the workshop.
Two years ago, when we started talking to end users about telematics for the Middle East, the attitude was very much ‘fuel cost is not worth thinking about’
improvements, which can be made from improving a driver’s skills are significant. “Normally we find drivers in the Middle East to be C-D category,” says Dr Brown. “If we train them from a D to a C we reduce cost of ownership by between three and 5%. If we train them from a D to an A that increases considerably above 10%. The data that you get back focuses the driver training.” Around 80% of fuel consumption saving comes from the driver but the remaining 20% comes from the operator or the fleet manager making sure the driver is going to the correct destination via the shortest route possible.
Driver Training Telematics systems allow operators to provide their drivers with focused training. They can detect everything from improper gear shifting to excessive use of breaks, not using cruise control, not using the correct gear for the speed, excessive acceleration and using the break and accelerator at the same time. All of these things have a negative impact on fuel efficiency. MAN’s telematics system produces a driver scorecard rating them from A (the best) to G (problem driver). The cost savings, not to mention safety
Safety Safety works in the same way. Harsh steering and harsh breaking are the two focus points for improving safe driving. And though it hasn’t been done yet in the Middle East there is even the option to fit vehicles with forward and rear facing external and internal cameras to monitor the driver as well as road conditions, making it easier to determine the cause of an accident right away. “We’ve got one video of an incident that happened in the UK between a truck and a motorbike,” Dr Brown says. “The truck driver was sent to court but Logistics News ME | September 2016 | 25
Sector Focus
The RTA will make it mandatory to have telematics on vehicles over 12 tonnes
they played the video and the case was thrown out because it wasn’t his fault, it was the biker’s fault.” There is greater and greater emphasis being placed on road safety in this region, especially in the UAE where the Roads and Transport Authority (RTA) is now planning to make it mandatory for all vehicles over 12 tonnes to have telematics systems, which will allow them to monitor every commercial vehicle on the road in real time. So does this provide opportunities for providers to retrofit existing vehicles with telematics systems? “We can retrofit and we can fit systems to almost any make of vehicle but we haven’t seen the full scope of the requirement yet from the RTA,” says Dr Brown. “If there’s a requirement that we haven’t engineered yet then we’d have to do some development. But if there’s one government body that’s starting to think that telematics can assist them in policing road safety, hopefully that’s the seed that starts to grow and spreads throughout the GCC. Dubai seems to be one step ahead of the rest of the region.” Despite its relatively recent introduction, uptake of telematics systems among fleet operators in this region has been swift and they are hungry for more. 26 | Logistics News ME | September 2016
From a business case that we’ve done with one operator, the telematics pays for itself in nine months through fuel savings in this region Dr Richard Brown, MAN Truck and Bus “Our initial intention in November last year was to introduce the simple system to this region, just to start the operators understanding what to do with the data,” says Dr Brown. “But by January we’d already reached where we thought we’d be in July by introducing additional modules. We’re now at the fourth module and we didn’t expect to be there until next year. The end users are asking us for more. At the moment our full package has seven modules but it’s always in development.” Emissions From an emissions point of view, it’s fair to say standards in the Gulf still lag
someway behind Europe and elsewhere. Current legislation is a GSO (Gulf Standards Organisation) regulation from 1986. But on July 1, 2017 all GCC countries will introduce a mandatory EURO 3 standard for all newly registered vehicles. That’s a quantum leap from where we are now which is around EURO 1.5. It’s clearly a big step in the right direction and will produce a significant reduction in emissions but Europe is now at EURO 6 so there is still a considerable gap. “Today, only the UAE could introduce a EURO norm higher than five because of the fuel quality which is as good as anywhere in Europe,” Dr Brown says. “But in general the cost of implementation of a higher EURO norm is huge because you’d have to change the quality of fuel and the vehicle technology is also totally different. The cost of the components is a lot higher so the initial cost of purchase is a lot higher and the Middle East has not reached a point where it will accept vehicles that cost significantly more.” However Dr Brown says he expects the region to move up the gears to higher EURO standards far quicker than happened in Europe. “They don’t intend to allow high polluting vehicles on the road much longer.”
THE SAFETY AND EFFICIENCY OF YOUR FLEET
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Interview
In the mix
Despite the current economic conditions, one man is on a mission to make sure that telematics is no longer an additional investment but an essential component of a business. Logistics News catches up with Brodie Von Berg, head of sales and marketing Middle East and Australasia, MiX Telematics
What are the latest trends and developments driving the use of telematics in the logistics industry? The logistics industry in the Middle East is ultimately affected by macro-economic factors such as oil, and in the current climate there is pressure on both revenue growth and reducing costs. This is driving logistics companies to reassess telematics from two points; firstly brand and reputation become more important, therefore being able to better manage driver performance and on-time deliveries with telematics is appealing. Secondly, managing costs by assessing utilisation and identifying waste ensures that telematics is a high priority. 28 | Logistics News ME | September 2016
How is Mix Telematics keeping ahead of these in terms of development and implementation of systems? We continue to focus on delivering safety and efficiency improvements for our customers, this ensures we don’t limit our thinking to just technology alone. Tangible results are only achieved once you truly understand and address the business issues and utilising a combination of consultancy, technology and training services. We also have the luxury of our industry leading technology via our in-house development capability. This provides us with the ability to design technology to meet future requirements and achieve best in class reliability –
keeping customers’ fleets where they should be – on the road generating revenue, not in the workshop. What is the greatest challenge you feel the industry faces currently? With the current economic climate, it is common for price to be challenged. If you believe that price is the only deciding factor when you fail to differentiate, then logistics companies in the Middle East are needing to identify areas where they can delight customers. This places an emphasis on operational efficiency and we have come to know that you can’t improve what you can’t measure.
Logistics News ME | September 2016 | 29
Interview As a percentage of the total investment a firm makes in its mobile assets, how much of that should be invested into telematics and how long is the ROI period on a new system? Thanks to the commercial models we offer today, telematics is no longer “an investment”. We put our money where our mouth is and prove the cost and safety improvements upfront for our customers. From the very start, our customers have the comfort that they are receiving a direct saving with the savings quantified and proven in their fleet. Additionally, we take care of all the capital expenditure costs and the small service fee we ask in return becomes almost irrelevant. How are you improving benchmarking for clients in order to enhance the effectiveness of systems? Of late we have made our analytics capability even better. This further enables us to visualise big data in seconds, offering unparalleled insight. Our account managers are enabled to easily compare performance across geography, and even industries to identify where potential improvements lie. This exposure from having over half a million assets connected to our services ensures we can take learnings and apply them to our customer’s businesses. Looking next at technological developments, how can the telecommunications suppliers advance services to enhance coverage? There is a common misperception that we are constrained by the services of the telcos in the Middle East. Truth be told, we are already reliably streaming high resolution video over these networks. Yes we could get further coverage however it is not economical to have 100% coverage and we already have excellent hybrid satellite networks that service the demand. The biggest challenge has certainly been maintaining the existing infrastructure in countries that are suffering the effects of conflict. How do you expect the Internet of Things (IoT) and autonomous vehicles to direct the future development of systems? Even autonomous vehicles have a flaw, they are programmed by humans. The future is more integrated with intelligent 30 | Logistics News ME | September 2016
systems offering new capabilities. The challenge lies in selecting the best possible assets, utilisation of these assets, and minimising the operating costs; not too different to today’s challenges. Certainly from the technology perspective, software has a lot stronger role to play than hardware, more specifically integration and analytics. How does the growth of Dubai as a smart city and the potential roll out of 5G networks support telematics systems? 5G networks provide more opportunity for more data rich applications. We see an insatiable demand for our current integrated video offering so higher bandwidth enables our future
generation offering to deliver even more content – faster. In terms of safety, when it comes to policing dangerous driving, how can telematics support the vision of regional governments in significantly reducing road accidents? Telematics has time and time again enabled us to stop drivers from crashing but it is not just having the information about which drivers are at risk – rather addressing the improvement cycle for the drivers. I have witnessed governments try and address driver behavioral issues with just technology and it doesn’t work in isolation. I am a firm believer we can significantly reduce the 1.25 million people being killed on our roads every year – how? Measure driver performance, reward good behaviour and coach drivers on deficiencies as they are captured. Without the mechanisms to do this we continue to see people die unnecessarily. In order to support these ambitions would you advise governments to make telematics systems mandatory in industrial/ commercial vehicles to help companies identify and train less qualified drivers? My first challenge for governments is to adopt a road safety strategy for their own fleets and those which they can exert control. Just imagine if every taxi, bus, and government driver were to obey speed limits, stopped tailgating, didn’t use phones while driving, and used indicators – this alone would have a significant impact.
Cover Story
In 2013 China detailed ambitions to revive and modernise one of the world’s oldest trading lanes, the Silk Route, under an initiative it calls One Belt One Road. Now, with the backing of central Asian nations and key logistics hubs in Europe, the plans are full steam ahead
32 | Logistics News ME | September 2016
Cover Story
T
he Silk Route was one of the earliest catalysts for trade across and beyond Asia, connecting Europe to the world’s most eastern continent via 4,000km that traversed hundreds of towns and cities, from the obscure ancient city of Khiva in north-western Uzbekistan, to the major hubs of Quanzhou and Istanbul. The ancient route wasn’t just for trading goods, but also acted as a throughway for cultural and archeological exchange, along with knowledge and religion. Today it is one of a number of ancient East to West corridors recognised by UNESCO alongside the Desert Route from Xian to Kashgar and the Maritime Route from Osaka to Venice. While the modernisation of land and maritime transport made the ancient route redundant, China has now stated its intention to create a modern day Silk Route through an economic integration project connecting a number of urban hubs to strengthen and ease its passage to the West. The ambition is to forge two cross-continent paths, the first the Silk Route Economic Belt (SREB) – a land route linking Asia, Russia and Europe – and the second a sea route across the western Pacific and Indian Ocean, to be called the Maritime Silk Road (MSR). It isn’t just roads and maritime routes; vital infrastructure will support the connections including pipelines, railways and other connectors; in some places, China will even bankroll such developments to bolster the support of partner nations, pledging $40bn during a project announcement in November 2014, on top of $50bn pledged by the Asian Infrastructure Investment Bank. As luck would have it the prices of oil, gas, steel and other vital materials are falling just in time and China signed more than 20 country-to-country energy
cooperation deals last year to facilitate the plans. Despite this being a Chinese project to serve Chinese interests, early reaction from Singapore, Pakistan, Hungary and Iran, is positive with all giving a seal of approval and even Russia joining forces, stating its intention to include the 9,200km Russian Trans-Siberian and the 4,300km Baikal–Amur Mainline (BAM) railway networks in the plans. With China continuing to lead the world’s manufacturing output, a transport route out of the country and towards its neighbouring continents is an initiative that makes sense. It’s also one it can present as mutually beneficial for its partner nations, thus paving the way for greater international cooperation.
The geographical area that is potentially covered by the initiative is vast. In its current shape, the initiative has close to 65 countries somehow connected, covering more than half of the world’s population (circa 4.4 billion), around 30% of the global economy and a total infrastructure investment need of around $5 trillion
East economic lifeline The developments wouldn’t be possible without the emergence of former soviet and central Asian states and there is a clear bond between China and these nations. Trade between the five states of Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan, has grown rapidly in recent years to reach $50 billion in 2013. Known as “the Stans” they will form the backbone of the strategy, becoming the main beneficiaries of development grants and credit and also finding new buyers for their natural resources (see box). According to UNESCO: “This key region is gradually reclaiming its place in the Eurasian land mass and becoming the geographic and cultural ‘bridge’ between Asia and Europe that it was for 3,000 years.” For example, in Kazakhstan deals worth $70.3bn have been signed for everything from infrastructure to hydropower and border fortification since 2013, following the ChinaKazakhstan oil pipeline launched in 2005. With the establishment of SREB the Financial
Logistics News ME | September 2016 | 33
Cover Story
Times reports Kazakhstan aims to boost transit trade to 1.7m containers by 2020 — a 35-fold increase over 2015 — in an attempt to capture 10% of the $600bn trade between Europe and China following a visit to launch the project in May this year from Chinese president Xi Jinping. Zang Hongzhou author of Building the SREB, from the Rajaratnam School of International Studies at Nanyang Technological University, comments: “In the long run, China needs to integrate Central Asia into the Pan Asia Production Network. To overcome challenges to the Sino-Central Asian economic cooperation, economic restructuring of Central Asian 34 | Logistics News ME | September 2016
countries and China’s western provinces is needed to build a regional supply chain to minimise direct competition.” The coverage doesn’t end there. In its February 2016 report named Belt and Road, PwC says: “The geographical area that is potentially covered by the initiative is vast. In its current shape, the initiative has close to 65 countries somehow connected, covering more than half of the world’s population (circa 4.4 billion), around 30% of the global economy and a total infrastructure investment need of around $5 trillion.” The firm describes China’s ambitions as both a national vision and foreign
policy strategy that to date has tracked the equivalent of circa $250 billion in projects that have either been built already, recently started construction or have been agreed on and signed in relation to SREB. Realising the dream In February of this year, the first train to travel part of the belt arrived in Tehran after a 10,399km journey that began in Yiwu city in East China’s Zhejiang two weeks earlier. Iran’s road and urbanism minister, Mohsen Pour-Aqaei, was quoted as saying at the time: “To revive SREB, the launch of the train is an important move, since about 700 kilometers of
Cover Story
trip has been done per day.� To put the achievement in historic context, it is more than 100 years since trade between or across Iran and Central Asia flowed freely. In July 2015, the first train from China arrived at Waalhaven, in the Netherlands. With a journey time of about 15 days, rail transport is approximately two to three weeks faster than transport by ship. Yet despite load and cost restrictions, it is still cheaper than air and provides the ability to easily connect to the UK and East coast US. In Holland, The Port of Rotterdam is already courting investment eyeing its opportunity to remain at the top when it comes to European logistics hubs. It takes 30 days to transport goods from Shanghai to Rotterdam by sea, but with China’s new freight route transit time is curtailed to 18 days. Like China, Eastern European
territories are planning a string of new towns plotted along the corridor clustering the EU/CIS border. In one example, the mayor of Terespol Municipality, between Poland and Belarus, has big plans for a new town that will boost the population by roughly four times that of the
municipality currently. There are no timelines in place but there are solid ambitions and with many such territories keen to follow any investment, it appears to be a matter of time and little else. Yet without a strong maritime route, SREB almost completely by-passes the
Cover Story GCC; a region that has ambitions to become the centre of the global logistics industry. With China forging strong ties with Iran, the GCC’s allegiance to the US, and the inability of the economic block to develop its TURKEY own integrated and compatible rail system, only the MSR provides solid Basra opportunity for the GCC’s world-class, client-ready infrastructure. The future of global trade The revival of ancient trade routes is not a nostalgic ploy but rather a means by which to position China at the centre of global trade. While the routes of centuries ago developed organically according to necessity, these are forged and constructed infrastructure, bankrolled by a nation that wants to remain at the heart of the world’s economic output. So what’s in it for China? As Hongzhou writes, reactions are mixed – economic development is welcome, but at same time the central Asian nations specifically have been wary of a resource grab by Chinese authorities. This isn’t exactly the same “silk route” idea that brought them riches in the past. In Europe, a continent marred by the financial crash of the last decade, the ability to trade with a global powerhouse is too good to miss. Bloomberg has called it an “ambitious feat in diplomacy and engineering” claiming it’s a risky plan designed to provide opportunity for Chinese companies facing a slowdown at home. To some, it’s China’s African land grab mark two – using state banks to fund investment by Chinese companies on foreign soil – but on a far wider scale. The public relations around SREB and MSR to date has clearly stated that this is not a political maneuver but an exercise in efficiency and the ease of transporting goods and manufacturing output. In that respect it seems more common sense than anything else; and an initiative that had to be spearheaded by somebody. However, if preferential treatment is given to Chinese companies across the 65 countries SREB hopes to unite, and the 30% of the global economy that will be encompassed, the political and economic disadvantages for China are hard to find. What only time can tell is whether China’s foreign policy has the interests of the whole world at its heart, or just those of the nation. 36 | Logistics News ME | September 2016
The route
Economic belt Maritime road
Xi’an Formerly Chang’an, the city today has a population of 8.5m and ambitions to promote as an international trade port and free trade zone. Traditionally as an ancient imperial capital it was the eastern departure point of the original Silk Road.
Turkmenistan Already connected to China via gas pipeline; the country’s primary source of gas. Its state-owned energy company CNPC is the only foreign company to receive the rights to the recently discovered Bagtyyarlyk gas field, among others.
Urumqi Capital of Xinjing, with a population of 3million today it is situated along the ancient Silk Road, and was formerly an important centre linking the Ili River Valley from the main route across Turkistan.
Pakistan The meeting point of both the Silk Road Economic Belt and the Maritime Silk Road, Pakistan holds strategic importance for China’s plans and was the recipient of a $46bn energy infrastructure deal in Q2 this year.
Kazakhstan A supporter and beneficiary of China’s ambitions to link to the west. The two countries have signed deals worth $70.3bn for everything from infrastructure to hydropower and border fortification since 2013, following the China-Kazakhstan oil pipeline launched in 2005. Kyrgyzstan Despite having fewer natural resources Kyrgyzstan is still firmly on China’s radar with billions in loans and investment secured over recent years and the rumoured potential to barter loan terms which the country is struggling to repay. Tajikistan Already the beneficiary of Chinese investment in the form of credit for a new railway, power plant and upgrades to the national aluminium smelter, a reported $6bn in investments has been promised to 2017. Uzbekistan Chinese firms enjoy preferential access to trade deals in the country with reports of 31 deals totaling $15.5bn in 2013, including a fourth Uzbek/Chinese pipeline and a railway between the two countries.
Iran After years of support during the country’s US imposed sanctions, China is funding an Iran-Pakistan natural gas pipeline, which could in future link to China. A five year plan to construct road, rail and port infrastructure has been established to further connect the country to China and this year a cargo train travelled from China to Iran in a little over two weeks. Russian In a probable case of “if you can’t beat them, join them”, President Putin gave his seal of approval for the Silk Route Economic Belt back in 2014 and agreed to include the Russian Trans-Siberian and BAM railway networks in the plans. Turkey While recent events in Turkey have given investors much reason to worry, the country still forms an integral part of China’s ambitions. The country had its own Silk Road ambitions in 2008 but the project failed to gather momentum and depended heavily on third party investment.
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WHO WILL YOU MEET AT THE SECOND ANNUAL BREAKBULK MIDDLE EAST?
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38 | Logistics News ME | September 2016
Country focus
Building a success story Historically driven by the strength of the oil and gas and construction industries, Kuwait’s logistics sector has become the unwitting beneficiary of the shift toward a privatized economy and huge government investment in transport and warehousing infrastructure
F
or such a small nation, both in terms of geography and population, Kuwait has the potential to pack a significant punch economically. Despite suffering the same hit as other nations in light of the oil price crash, it is about to benefit from an economic evolution few saw on the horizon: the tandem emergence of a robust private sector, and government investment in new construction projects. Under the current cycle of the government’s five year development plan – the funds for which are contributed 49.3% from the government, 33.8% from the oil sector, and 16.9% from the private sector – $15.75bn has been allocated to development for the period 2017 – 2018. Projects scheduled for period include the Al-Zour refinery, construction of which is due to finish by 2019-end, as well as the Clean Fuel project, scheduled to be finalised by Q2 2018, not to mention numerous infrastructure and transport projects. According to Oxford Business Group’s 2015 country report on Kuwait, the scale of activities in the past few years – with projects worth over $38 billion in 2014 alone – means the market is one of the fastest growing in the region. According to figures released ahead of The Big 5 Kuwait taking place this month, infrastructure construction was the third-largest market in the Kuwaiti construction industry in the last five years, accounting for 20.5% of the total industry’s value in 2015. The market grew at a CAGR of 8.82% in nominal terms, increasing from $1.6 billion in
2011 to $2.1 billion in 2015. But weaknesses exist and for those on the ground, the balance between those and the country’s strengths is somewhat of a symbiotic tailspin. Ravi Varrier, GM, Al Rashed International Shipping Company, says: “The State of Kuwait is undergoing significant expansion in the building and construction industry. The government of Kuwait has approved a multi-billion Dollar national development plan that includes the construction of major roadways, a new container terminal, and infrastructure to support transportation. The potential weakness or threat is the delay in execution and implementation of the announced projects. One example being the new refinery which was awarded four years before and then reversed and again re-tendered and awarded subsequently.” Pieces of the puzzle Like with all GCC nations, the construction industry is a product of oil and gas revenues with logistics positioned across both – and further – pulling things together. While the crash in oil prices has been felt across all States, it doesn’t necessarily signal a decline in the logistics sector. The trick is for logistics players to innovate and find new industries to replace those in decline, at home and in emerging markets away from home. Ali Mikail, SVP, Kuwait and Levant for Agility says: “The oil and gas sector is still one of the most significant for the Kuwait logistics industry, but the massive infrastructure and Logistics News ME | September 2016 | 39
Country focus development projects underway mean that import and transportation of raw materials also hold significant importance. These sectors are likely to remain strong for years to come.” However, privatisation triggered by oil price declines may be one strength, but apprehension over the weaknesses in the market remains widespread. Conducting a survey of 1,100 logistics professionals for the 2016 Agility Emerging Markets Index indicated caution on the industry outlook for 2016. Mikail reports: “Respondents predicted volatility and continued instability in the global economy. But at the same time, emerging markets are primed to resume growth at a faster pace. More than 59% of respondents to the survey said the IMF prediction of 4.7% growth for emerging markets was ‘about right’, which tells us that there are plenty of opportunities for the logistics industry despite the threats of a slowing global economy.” According to Mikail it is this rising rate of privatization that is driving the overall economic performance of the country. Kuwait ranked ninth for business conditions in the index, which was three spots higher than the previous year. He explains: “Contributing reasons for Kuwait’s rise on the index could be the continued inching towards privatization of key state-owned enterprises, and the Kuwait Development Plan. These privatization plans indicate low oil prices, and this is encouraging governments to take steps to improve private sector participation in the economy and strengthen its capabilities sectors unrelated to oil. This is something we think will be very positive, and one of the benefits of falling oil prices over the past years.” Prices may be crashing, but Kuwait is still pumping oil from the ground – a measure commended by the World Bank. According to the group: “Activity should be supported by rising oil output (due to recent discoveries, improved production efficiencies, and as production from the Neutral Zone oilfield resumes in 2017). After years of stalled projects and delays, prospects for investment have also improved, with major infrastructure and development projects awarded in 2015. Growth in the non-oil sector should accelerate in parallel. Also, fiscal and current account positions should gradually strengthen in line with a modest recovery in oil prices 40 | Logistics News ME | September 2016
Ravi Varrier, GM, Al Rashed International Shipping Company
Kuwait has the advantage of being in close proximity to the biggest markets in the Middle East. Its location by the sea at the head of the northern Gulf means it has huge potential to be a hub for trade into Iraq and Saudi Arabia, which have a combined population of over 60 million and output. Public finances should also be supported by the gradual implementation of spending and revenue reforms, including the implementation of VAT (expected in 2017).” On the other hand, it is thought key domestic risks include slow implementation of infrastructure projects and parliamentary gridlock that delays critical fiscal reforms. The banking sector is well capitalised, yet has exposure to the real estate sector. Taking these factors into account it becomes clear the real defining factor is exactly what Kuwait plans to build. The drawing board It was reported in January of this year that Kuwait is to develop five islands off
its coast into business freezones. The Kuwait news agency reported that the islands Boubyan, Failaka, Warba, Miskan and Awha after plans were presented to Sheikh Sabah Al Ahmad Al Jaber Al Sabah, Emir of Kuwait. The specific businesses sectors that will be courted to operate from the islands have yet to be announced but, isolated from the mainland, and no doubt with new and leading infrastructure capabilities – not to mention favourable financial and ownership models – the logistics industry could receive a significant boost. Also in the plans is a Logistics City, to be developed by Kuwait Ports Authority (KPA) following its request to Kuwait Municipality for a license. Under the requested permission, KPA would be allowed to carry out investment and commercial activities to assist with ambitions to make the country an international financial and commercial centre. A letter by KPA Director General Sheikh Yousuf Abdullah Al-Nasser AlSabah to Municipality Director General Ahmad Al-Manfouhi said this will “improve Kuwait’s image in this vital area, as the World Bank indicates in the logistics performance index of world countries a drop in Kuwait’s ranking compared to other GCC countries, each of which has more than one logistics city.” The final mega-project currently being discussed was announced in May 2016, following the signing of MoU documentation between the South Korean and Kuwaiti governments. The agreement will see the development of a $4bn smart city in Kuwait, reported Pulse. The city is called South Saad Al Abdullah New City and will cover 59sqkm. The project will be built in the west of the country and will also have 25,000 residential units. Supporting this, Korea Land and Housing Corporation inked a second agreement with the Public Authority for Housing Welfare (PAHW) of Kuwait in connection with the project. Under that deal, Korea Land and Housing Corporation will draw up a “comprehensive plan and conduct a feasibility analysis in creating the city” and, together with PAHW, set up a special-purpose vehicle to jointly invest and build the development, according to reports at the time of the announcement.
Country focus
Trade routes Oil aside, Kuwait also benefits from favourable geography and is positioned to maximize its access to multiple trade routes. Mikail comments: “Generally, the logistics industry in the Gulf region is benefiting hugely from the increased trade between Asia and Africa, and Agility is primed to leverage this growth because we understand how emerging markets work, and we are able to assess the opportunities presented by markets where for example the infrastructure may not be fully developed yet. “Kuwait has the advantage of being in close proximity to the biggest markets in the Middle East. Its location by the sea at the head of the northern Gulf means it has huge potential to be a hub for trade into Iraq and Saudi Arabia, which have a combined population of over 60 million people. At Agility, we are constantly exploring opportunities to widen our operations and increase our global footprint, and Kuwait, as our home market, is essential to our growth,” he continues. Positioning may be favorable but the nations Kuwait shares border with do brig challenges to road transportation. However, beyond its own borders, Kuwait it also bankrolling the trading hubs of other places, like Djibouti. There, more than $14bn worth of new airports, pipelines, port and terminal
Kuwait’s development to 2018 Funds for Kuwait’s development plan will be derived from.... Private sector
Government - 1%
33 66
Oil sector
facilities, and roads and railways are under construction, underwritten by several vast public and foreign investment schemes. More than $14bn worth of new airports, pipelines, port and terminal facilities, and roads and railways are under construction, underwritten by several vast public and foreign investment schemes. Here, Kuwait has funded a link between the port of Tadjourah and the northern town of
Balho, close to the border with Ethiopia, by donating $52.2m from the Kuwaiti Fund for Arab Economic Development. Bright future As the oil price crashed and Gulf States began to look for other ways to generate the same economic output as during their boom years, Kuwait’s private sector has blossomed. Whereas over the last few decades the construction and O&G industries were the primary beneficiaries of oil revenues, the private sector companies working in those fields have been able to forge their own success stories to today become the new driving force for the logistics industry. At the same time the government t is minimizing its exposure to domestic markets by investing strategically in emerging markets. While it is far from a match for the pace of development and growth in other GCC nations, Kuwait’s economic outlook is far from the dead end it could be seen to be from afar. The real challenge now is keeping up the pace, as Mikail concludes: “Other markets in the region are fast tracking developments in the transport and logistics sectors, with countries like the UAE growing rapidly, securing global investments and ramping up capacity. Kuwait has to keep up and work to reach the goals stated in the Kuwait Development Plan in order to compete and secure growth.”
Vi e w p o i n t
Turning Traffic into customers By Prakash PK Menon
Converting Store Traffic Into Customers You spend a phenomenal amount of money on marketing and promotion to lure prospects to your retail store. However, it’s not enough to get visitors to your store. It’s only half the challenge; the real challenge lies in turning their visit into an actual purchase. It’s also called your conversion rate. The conversion rate of a store can be calculated by keeping actual track of the traffic and the transaction counts. For example, if 200 traffic counts were logged for a store and there were 50 transactions recorded for the day, the conversion rate would be 50/200 = 25%. Your conversion rate depends on your retail employees and how effective they are at converting store traffic into customers. The conversion rate measures your sales staff effectiveness. The conversion rate is a good measure, because it actually allows a retailer to really know whether the salespersons have been productive or not. So, as a retailer, you must improve conversion rates in your store by taking care of these things: Make sure your sales staff is aware of how to approach customers. Most salespersons try to engage customers with a single purpose – to sell. In order to achieve this purpose, they tend to be pushy with customers. Believe it or not, a pushy salesperson turns customers off, even drives them away, affecting your reputation and bottom line. The key is to teach sales staff to approach the customers in the right way with the right attitude. No matter how much a salesperson wants to make a sale, he needs to remember that ultimately the customer is spending, and thus he should get his money’s worth. Hence, the salesperson should sell the benefits of how product/service will make the customer’s life better. When a salesperson doesn’t sound desperate and shows that he genuinely wants to help the customers, customers talk about their problems, the solutions (read: the product 42 | Logistics News ME | September 2016
or service) they are looking for and eventually, might make a purchase. Make sure they can read the customers. Every customer is different, hence they need to be approached differently. Great salespeople read the customers (their personalities, interests and behavior) and make adjustments in their sales techniques accordingly. • From the behavior, a salesperson would realize that the customer is an introvert or self sufficient, and would like to browse on his or her own, with minimal interference – in such a case, the salesperson should give space to the customer, but just stay within the periphery of the customer’s vision and speech, so that they can be available to assist when the situation demands. • Then there are customers who are open and extrovert, and like to take the help and opinion of the salesperson – in such a case, the salesperson should stay close to the customer or walk with them through different aisles if need be. • Salespersons should also learn to work out who the decision makers are in a group or family, so that they can approach the right people for effective sales. Make sure they know what questions to ask. Sales requires the art of asking questions. When the right questions are asked, instead of the salesperson pushing his products or services, his questions will encourage the customer to talk. Hence, your sales staff must know what questions to ask to the customers. The first few questions should be directed at uncovering needs so that a product/service can be suggested as the solution – • What kind of a product (outfit/shoe/ smartphone) you are looking for? • Any specific color you want it in? • What price range do you have in mind? • For whom you are buying for? • Is it for a special occasion? These questions will give the salesperson enough lead to suggest products and services
to meet the need. Or, it will certainly help the salesperson in forming the subsequent round of questions pertaining to closing the sale. • Do you think this is what you are looking for? • Are you happy with your choice or would you like to look at some more options? However, a salesperson should know that apart from asking and talking, he is required to listen to the customer – his needs, preferences, opinions and suggestions. Make sure they know your product well. Salespeople should have in depth knowledge of the products and an understanding of the items that complement those products. For example, when a customer is buying a television of a lower price range, it would not be able to offer a high sound quality. In such a case, the salesperson can talk about surround sound systems that can go with the TV. Or, which accessories (stockings, shapewear, etc.) go well with a black party dress. By knowing their products well, they create additional value for their customers and help increase your sales . Make sure they have a certain freedom. Your salespeople should operate within a set of rules and guidelines. However, they should be empowered enough to use their judgement and be creative. For example, your store has no return or exchange policy, however, there are cases where this policy needs to be tweaked in case the garment was torn or two different colored shoes reached the customer. The salespeople should be equipped to handle such scenarios on a case to case basis, and be fair and reasonable to the customers. Converting traffic into sales is not just the responsibility of the sales associates, but the entire staff. Hence, make sure that all your staff puts in their collective effort. Make sure that your staff understands what conversion is and how each of them can help influence it. Discuss and assign targets to them and take their opinion on how to improve the conversion rate. A dedicated and excited staff can work wonders for your store sales.
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Q&A
The fleet master Edvardas Gindrenas, MD, Softdata Solutions L.L.C., tells Logistics News ME about the latest trends in fleet management
What are the most beneficial fleet management tools currently for logistics companies? A Fleet management system (FMS) benefits companies on a very individual basis. For example, transportation companies may use our software to generate monthly reports of mileage, fuel consumption, driver performance and behaviour to award or re-educate drivers. Construction firms, on the other hand, benefit in reducing machinery idle time and improper use of vehicles. Other companies, such as ones involved in the trading, service or distribution industries often face challenges in cutting out unnecessary employee expenses. These expenses are often caused by staff using vehicles for unauthorised personal reasons, or by the employees simply abusing the vehicles due to lack of road safety education. All of these issues can easily be avoided by using our FMS software, such as iGeoTrack. What are the primary trends in fleet management in terms of product development and client demands? The current market is no longer satisfied with the basic tracking features that have been available for the last 10 years. The demand is growing more towards intelligent and customised solutions. For instance, companies often require FMS data to be available on their existing accounting systems (ERPs). Another example would be large fleet owners, who usually have one or more maintenance garages and therefore require virtual tracking on their vehicle’s maintenance status. Quite often, the FMS is actually used as a part of large IT projects which in turn calls the FMS provider to be dynamic and creative in order to link the software to the END project. However, as our company does both IT integration as well 44 | Logistics News ME | September 2016
About Softdata Solutions Softdata Solutions L.L.C. was established in Dubai and after two years in business counts more than 200 clients in the UAE and MENA, including: Al Naboodah, SEDAR, Al Bayader International, and more. The company has partners in Saudi Arabia, Qatar, Oman and even in Africa.
as software development, we are able to satisfy many individual requirements that our partners may have. What do you believe to be the top fleet management techniques to enhance a business’s efficiency and reduce costs? In the current market we see three major challenges that affect the majority of companies in the UAE and MENA. Firstly, drivers or other office staff often tend to feel that they are able to avoid responsibility for the work which they are doing outside the office. However, by putting your drivers under supervision you eliminate any chance of misbehaviour as drivers realise they have to perform or face the consequences of misbehaviour such as, using company fleet for unofficial matters, speeding, harsh driving, ending the duty before the time, etc. Second key challenge is idle, both work and engine. During most of iGeoTrack training sessions we find that a large number of drivers keep their engines running for two to six hours a day while staying at one spot for various reasons (waiting for customers to pick up, colleagues, having lunch even during afternoon nap or night sleep). Removing
idle will can cut companies fuel expenses 10 - 25% and significantly increase vehicle lifetime. The third and last efficiency enhancer of our product is the well ongoing co-operation between client, our support team, and the drivers themselves. We believe that the FMS must be educational rather than enforcing. In order to do so we encourage decision makers and drivers to attend our software training courses so that everyone would be on the same page when it comes to the new rules. We encourage the decision makers to meet our sales professionals in order to create action plans for mentioned and other challenges. What are the latest innovations from Softdata Solutions and how have these been received in the market? If this is not relevant, please answer: What is your most popular product and why do you believe it is widely used in the market? We like to surprise our clients every three to four months with consistent innovations. By doing this we keep the relationship with our customers progressing. For example, recently we have linked speeding notifications with dynamic road limits of every single road around the world, while for another large UAE-based transportation company we have developed the individual truck way bill or trip bill feature that we have seen has improved their delivery rate exponentially. Another potential area of development we see emerging in the UAE is the electrical car industry which we are working to service by regulating its battery level and performance efficiency. In order to help you choose exactly what features you need for your company, our product portfolio offers different packages of iGeoTrack packages.
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Vi e w p o i n t
How to build your high-performance team Team performance is not the responsibility of the individual team member but a mark of the success of its leader. Claire Donnelly, Senior Consultant, MHC, explains
I
n his book Good to Great, Jim Collins studied the attributes of top performing companies. Enduring great companies that had both great cultures and delivered consistently strong financial performance for their shareholders all made sure they had “the right people on the bus” – but what does it mean and why is it important? Jim’s research showed that great companies worked to the principle that it is more important to have a team that substantially shares common core value, purpose, and vision than the skills, talent, and experience they bring to the team. In other words, the “essence” of who they are as team members is more vital for success than the “what” they can do as a team member. You can’t argue against the research and data explained in Jim’s book, and from our experience of previously spending 25 plus years working within corporate businesses and since coaching and advising individual companies, we can completely agree with the data. So how do you do this? Before reviewing your recruitment and talent acquisition processes, look internally and ask yourself three key questions:
What are the right seats on my bus? What roles are essential for the company to succeed its strategic business plan? Be honest in this review, remove from your mind the current team members and personalities you have in roles now, chances are you may have created some roles within your company to fit an individual’s capabilities, and the role is no longer required. Once you have 46 | Logistics News ME | September 2016
the people in those roles the right people to lead you to success based on their skills, talent, and experience? Do you have gaps? Do you need to move someone from one position to another? Do you have team members no long suited to any of the seats? The final question to ask is:
Avoid the C-player trap. The number one reason why A-player talent leaves is the company’s tolerance of C-players. completed this work, ask yourself: Do I have the right people in each seat? On the assumption that everyone that works for you is displaying the right values and attitude, once you have the roles determined, you need to decide: are
Are the right people in the right seats doing the right things? One of the key reasons why A-players leave a company is because they are working on pointless tasks that are not focused on getting the company to where it plans to be. Are all your team members focused on the right priorities and KPIs or are they wasting their time and energy on priorities that are unimportant to the company’s success? Great companies develop a discipline to ask these questions regularly and then take action to ensure they are happening in their culture. There are five attributes of developing a culture to ensure you have the right people in your company: 1. Conduct a regular review of the company’s talent to ensure you are continuously working to update your talent pool and remove C-players from the company. Use your current employees to find top talent. If the A-players on your team enjoy working for you, they will be your biggest brand advocates and entice their friends to come work for you as well. 2. Create and nurture a culture that attracts top talent. Respect, autonomy, recognition, and appreciation are the four keywords for
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a welcoming and attractive culture. Ensure that the core values and purpose are alive within the company, team members are congratulated openly for demonstrating them and called out if not. 3. Review the productivity of your team members, measuring their performance against specific KPIs and metrics that lead back to your strategic business plan. A-player talent should be some of the most productive team members in their individual contributor roles; they need to know that they are performing to the required level. 4. Avoid the C-player trap. The number one reason why A-player talent leaves is the company’s tolerance of C-players. The vast majority of managers will spend more time with C-players one-to-one than they do with their top talent. Don’t fall into the trap of spending more time with your problem people at the expense of spending time with your top talent. 5. Retain, coach, warn, move on! Learn to instinctively know what actions to take with each type of team member. Work to retain your A-players, coach and develop your B-players, warn your B/C players to make required improvements within the set
deadline and move your C-players out of the company, do not waste time trying to fix them. By putting many of the above ideas into practice, companies are well on their way to attracting A-players to join their team. However, most A-players aren’t actively seeking new employment, they are probably well compensated and happy in their current positions - which is why it’s difficult to find them. Companies need to attract A-players effectively into the organisation. Learn to approach future candidates as if they were your customers because they are equally important to your success. Consider the way you approach prospects for your services and products. How do you treat them, talk to them, and sell to them? What are the things that you do to get their business? That’s how you should approach top talent. After all, you are also selling them on your company. In her book Smart Tribes, Christine Comaford notes that “a wellorchestrated team depends on everyone doing their job in the time they are supposed to do it in, yielding the results they are supposed to yield”. Teams need to know what their accountabilities are, the company’s expectations on their results, and how these link to the overall company strategic plan. A-players are drawn to companies that
allow them to stretch, develop, and hone their skills. This kind of culture not only attracts top talent, but it also helps retain the current A-players on the team. If you place an A-player in an environment that’s nonconducive to self-development, they’ll leave and search for a company that is. A-players can go wherever they want, and they know it! Leaders often make the mistake of spending many hours locked away with their senior team, strategizing, planning and developing the company business plan only to not communicate this to the rest of the company. High performing teams need to know where they fit in with the company plan and how they can contribute. Don’t hide away the plan, be proud and display it to everyone. We have seen some amazing results with companies that take the time to get their team motivated against the future plans of the company and asking them how they can contribute. Setting specific targets and KPIs for individuals against the plan and then measuring success with simple criteria will yield significant results within a defined time period. As noted by Mike Harden in his Huffington Post article: “The bottom line is, if you want to hire A-players in your organisation you need to cultivate an A -player culture. Treat prospective A-player employees as if you were courting your best client prospect.” Couldn’t have said it better myself.
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Supplier news
SUPPLIER NEWS
UD Trucks unveils a new truck range for the Middle East
J
apanese heavy trucks manufacturer, UD Trucks has unveiled a range of Quester trucks, specifically designed for the Middle East market, in a string of launch events across Saudi Arabia, Qatar and Oman in the presence of senior company representatives, the Japanese Ambassador, the Consul General for Japan in Saudi Arabia as well as media guests. The all-new Quester is a modern and robust heavy-duty truck platform designed to serve a w ide range of a pplications including construction, distribution and long-haul 50 | Logistics News ME | September 2016
transportation. The multi-purpose truck can be used for a wide variety of applications found in the Middle East, including off and on-road use, construction, distribution and long-haul transportation. The launch of the new range is a major step in UD Trucks’ proud history which has seen it become the first Japanese truck brand to enter the region, under parent organisation the Volvo Group. Commenting on the Quester’s arrival in the Middle East, Lars-Erik Forsbergh, UD Trucks President in the Middle East, said: “We are very excited about
the arrival of the Quester range in the region. With the new Quester, we have built on our tradition of reliability and durability to launch our new customer promise, ‘going the extra mile’. “I am confident that Quester will be a big game-changer for UD Trucks. More than 400 full-time experts from around the world, with extensive knowledge and experience, have been involved in designing, developing and validating Quester and its associated services. The team has spent over a million engineering hours and 65,000 tests hours to build the ultimate trucking machine’’.
Supplier news
Semiconductor Daimler’s autonomous city bus Capital Spending to Decline 0.7% revealed
Daimler Buses has become the world’s first manufacturer to put a city bus into automated operation in a real-life traffic situation with the MercedesBenz Future Bus with CityPilot driving autonomously for the first time on a route of approximately 20 kilometers in Amsterdam. On a section of the longest bus rapid transit (BRT) line in Europe, the bus reached speeds up to 70 km/h, stopped to the nearest centimeter at bus stops and traffic lights, and drove again automatically, with an onboard driver monitoring the system. Hartmut Schick, head of Daimler Buses said: “The Mercedes-Benz Future Bus with CityPilot once again demonstrates our leading role in the bus business. We will claim this position also in the future. That’s why we are investing approximately €200 million in the further development of our city-bus portfolio. The advantages of CityPilot for our customers are clear: Our Future Bus operates fuel efficiently and with minimal stress on the engine. That has a positive impact on operating and maintenance costs, vehicle lifetime and availability.”
Worldwide semiconductor capital spending is projected to decline 0.7% in 2016, to $64.3 billion, according to Gartner, Inc., following earlier forecasts of a 2%. “Economic instability, inventory excess, weak demand for PCs, tablets, and mobile products in the past three years has caused slow growth for the semiconductor industry. This slowdown in electronic product demand has driven semiconductor device manufacturers to be conservative in increasing production,” said David Christensen, senior research analyst at Gartner. “Looking ahead, it appears the second half of 2016 may see improved demand. However, following Brexit, semiconductor inventory levels may rise in the third and fourth quarters, which could lead to reduced production volumes.” “While currency exchange rates are another reason for the ongoing revenue decrease, the aggressive pursuit of semiconductor manufacturing capability by the Chinese government and related investment companies is becoming a major factor,” said Christensen. “This will dramatically affect the competitive landscape of the global semiconductor manufacturing in the next few years as China becomes a major market for semiconductor usage and manufacturing,” he added.
Emerson and StepChange Global collaborate on O&G efficiency
Emerson and StepChange Global have collaborated to launch Integrated Operations (iOps) and Digital Oilfield to help O&G producers increase production and cut operational costs. Emerson’s technology and StepChange Global’s consultants help improve collaboration between the operational site and the support teams in the office in order to maximize the value that can be gained from operating asset information. With iOps, an enterprise can then build confidence in its information and trust among extended teams to implement improvements that include improving operator efficiency and optimising its core operational processes. According to a joint statement, in optimising production using iOps tools and techniques, an oilfield can see production efficiency improvements of up to 2%. A closed-loop gas lift application can see production improvements of five percent. Previous iOps implementations have seen OPEX reductions of 5-20% with payback in less than a year. “The oil field major players see Integrated Operations as a transformational program to optimize their business performance, and is the way they will work in the future,” said Tony Edwards, StepChange Global CEO. “Performance optimization is required as the industry struggles with falling oil prices, key skill shortages, and risk reduction and compliance requirements for both Health, Safety & Environmental (HSE) and production.” Logistics News ME | September 2016 | 51
Supplier news
ManageEngine ITAM solution earns InfoTech award
Rockwell Automation launched FactoryTalk AssetCEntre v7 Rockwell Automation has launched FactoryTalk AssetCentre v7.0 software for managing automation assets by discovery and tracking of the status of devices, network switches and software on workstation computers across an entire facility or production operation. The software streamlines life-cycle management and helps decrease unplanned downtime. According to Rockwell Automation the asset-inventory agent can be scheduled to scan at regular intervals or run on demand. New discoveries are compiled for user confirmation before they are added to the active inventory. Ongoing tracking of updates provides a history of how a system has changed and potential hazards, such as workstation computers running unauthorized software. Manual entry is still available for devices that are not identifiable during the scan or to fill in missing information or attributes for discovered devices. “Investments in automation infrastructure helped industrial companies better control their processes and assets, but managing that investment is too often only focused on critical assets or reacting after part of a system goes down,” said Chirayu Shah, product marketing manager, Rockwell Automation. “A comprehensive, asset-management program is designed to improve decisionmaking that spans the life cycle of devices.” The asset-inventory agent increases efficiency for a number of operational tasks. Streamlined life-cycle management improves how a project scope is developed. For instance, an engineer needs to know how many devices are running in production during a firmware update, especially those devices near end of life. The asset-inventory agent will automatically discover all of the current firmware, IP address and additional data that will help define the project. 52 | Logistics News ME | September 2016
ManageEngine, the real-time IT management company, earned the top Value Score in InfoTech Research Group’s Vendor Landscape: IT Asset Management (ITAM). The company’s ITAM solution, AssetExplorer, earned Info-Tech’s Value Award for providing “comprehensive asset management and integration to ManageEngine ITSM, desktop management, and IT operations modules at a fraction of the price of other tools. “For a decade now, ManageEngine has enabled thousands of organizations to run a tight IT ship by optimizing IT asset usage and reducing maintenance costs,” said Rajesh Ganesan, director of product management at ManageEngine. “This award recognises our mission to move IT organisations from being cost centers to profit centers by offering world class ITAM capability.”
Rajesh Ganesan, Director of Product Management, ManageEngine
BEYOND 2020:
Connecting Supply Chains, Creating the Future NOVEMBER 22 - 23, 2016 | SOFITEL DUBAI DOWNTOWN A premier event for Logistics & Supply Chain professionals, educators, Information Architects and Usability Practitioners. LogiSYM Dubai 2016 will bring together 300 international and local professionals from around the region.
REGISTER TODAY CONFERENCE HIGHLIGHTS: Meet these Speakers and 50+ more experts
MOHSEN AHMAD
ENG. MAHMOOD AL BASTAKI
ADIL AL ZAROONI
ABHISHEK SHAH
MICHAEL PROFFITT
ALAN WHITE
JOHN MANNERS-BELL
KUNAL GUPTA
MARK HEALD
SANJAY SETHI
SAIID SABER
BADER AL KALOOTI
CENTIN BAXTER
MARKUS KÖPSEL
KATHARINA ALBERT
MOHAMMED SHAHEEN
KEN LYON
KIM WINTER
JAMIE MAJID
DARRYL JUDD
Here are some of the Key Sessions Exploring Future Directions for Global Supply Chains
Emerging Markets - The New Hubs of Innovation
Last Mile: The New Frontier in the E-Commerce Supply Chain
Disruptive Technology. Supply Chain Execellence in the Digital Age
Changing Business Landscapes in Middle East Supply Chains: Is Globalisation Dead?
Logistics Challenges and Transformational Leadership in a Middle East Integrated World
The Logistics Property Play: Why Logistics Property Assets are in Hot Demand in the Middle East at Present and What Happens Next
Excellence to Reduce Wastage Within the Cold Chain and Transportation Networks
CONFERENCE SPONSORS AND PARTNERS:
R S A
L O G I S T I C S
Global Freight Forwarding 2016
The 2016 edition of Ti’s Global Freight Forwarding report contains market sizing and JOINTLY ORGANISED BY:
forecasting data, profiles of the 15 largest freight forwarders, as well as trade lane analysis and an examination of the technology supporting and disrupting the industry.
www.logisym.com/events/logisym-dubai-2016
Di a r y
The month ahead
Logistics News ME picks the latest and most sought-after exhibitions, conferences and seminars coming up in the industry
IMHX 2016
Annual Air Cargo Handling Conference
13 - 16 September 2016 NEC, Birmingham, UK
20 – 22 September 2016 JW Marriott Marquis Hotel, Dubai, UAE
ME Translog 2016
22 September 2016 Cordis Hotel, Mong Kok, Hong Kong
IMHX is the premier meeting place for the UK’s intralogistics industry. This September will see tens of thousands of supply chain professionals gathering to evaluate cutting edge technologies, explore the latest industry solutions and discuss how to increase efficiencies within supply chain operations. Co-located is the SHD Logistics Awards 2016. Lynn Parnell is a judge for these awards and will be attending the event
5 – 7 September 2016 Oman International Exhibition Centre, Muscat, Oman
Local, regional and international exhibitors will showcase latest technologies, best practices, pioneering research, advanced trends, and innovative products and solutions. Aimed at businesses in the aviation, construction, infrastructure, manufacturing, O&G and utilities sectors.
CCA Pharma & Bioscience Conference
19 – 20 September 2016 JW Marriott Marquis Hotel, Dubai, UAE
The 3rd CCA Pharma & BioSciences Conference took place in Basel in early October and was opened by Cool Chain Association. chairman Sebastiaan Scholte and Daniel Setz, SVP for global cargo operations at key sponsor Swissport.
54 | Logistics News ME | September 2016
We are all experiencing some very harsh realities of our business – do we really learn from each correction and each warning? Yesterday on reflection was very straightforward, today requires reflection, consideration and new direction – Tomorrow will be very different and to ensure stability and sustainability we have to re-address some ‘back to basics’ and enhanced disciplines.
CEO Breakfast Series
The LogiSYM CEO Insight series features critical insights into the dynamic North Asian economy and its impacts across the supply chain – including process, people and productivity. Specifically for a Target audience of Regional and Local CEO’s, Managing Directors, SVP’s and VP’s, CFO and finance leaders and HR Directors,
CILT(UK)Annual Awards for Excellence 2015
27th October 2016 Lancaster Hotel, London, UK
CILT’s Annual Awards are designed to recognise achievement and to encourage the highest standards and a professional approach to the practice of logistics and transport. Hailed as one of the best networking events of the year, last year’s Awards were attended by finalists, sponsors, members and their guests.
Innovation in design Power in motion The 1843T Tractor, hitting the road with full power.
Powered by a groundbreaking 430PS Ecotorq engine that yields impressive torque values, the Ford Trucks 1843T Tractor is made for any road and any load. Stop by your authorised dealer today to experience its sheer power. www.fordtrucks.com.tr
Ford Trucks Sharing the load
Bahrain –– Manama / venugopal.nair@almoayyed.com.bh Bahrain––Almoayyed AlmoayyedMotors Motors Manama / venugopal.nair@almoayyed.com.bh Iraq––Al AlKasid KasidCommercial Commercial Agencies Ltd - Erbil, Baghdad / ahmed.ali@al-kasid.ae Iraq Agencies Ltd Erbil & Baghdad / ahmed.ali@al-kasid.ae Jordan––The TheCommercial Commercial Industrial Company - Amman / w.albajjali@cic.com.jo Jordan && Industrial Company - Amman / w.albajjali@cic.com.jo Oman––Mohsin MohsinHaider Haider Darwish LLC - Muscat / bhaskar@mhd.co.om Oman Darwish LLC / Muscat -bhaskar@mhd.co.om Qatar––Almana AlmanaMotors Motors Company W.L.L – Doha / oghobrial.aa@almanagroup.com Qatar Company W.L.L – Doha / oghobrial.aa@almanagroup.com Saudi Arabia – Al Jazirah Vehicles Agencies Co Ltd – Riyadh, Dammam, Jeddah / smomea@aljazirahford.com Saudi Arabia – Al Jazirah Vehicles Agencies Co Ltd – Riyadh, Dammam, Jeddah / smomea@aljazirahford.com United Arab Emirates – Al Tayer Motors – Dubai / razmy@altayer-motors.com United Arab Emirates – Al Tayer Motors – Dubai / razmy@altayer-motors.com United Arab Emirates – Premier Motors – Abu Dhabi / homohamed@altayer-motors.com United Arab Emirates – Premier Motors – Abu Dhabi / homohamed@altayer-motors.com