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March 2015 Issue 13

ENHANCING THE BUSINESS OF LOGISTICS

Kuwait

Investing in infrastructure

DP World

Prepped for more business

Autonomous vehicles The future of cargo?

MAN VS NATURE Al Futtaim and Volvo set about building an arterial connection in the Empty Quarter


INTRODUCING SKYSTABLES YOUR NEW EQUINE TRANSPORT SERVICE

Etihad Cargo, winner of 2014 Air Cargo Industry Customer Care Award, is proud to announce the launch of SkyStables, the brand new bespoke service for your equine shipments. Right from booking to arrival, SkyStables will guarantee a safe, comfortable and convenient journey for your valuable horses, giving you the peace of mind you require. With dedicated Equine Managers who supervise the handling teams both in the air and on the ground, you can now take advantage of our global freighter network, and ship from Abu Dhabi to destinations in Europe, Asia, Africa, Australia, and the Americas. Visit etihadcargo.com for more information.


Against all odds SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: info@signaturemediame.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven jason@signaturemediame.com Director: Deepak Chandiramani Deepak@signaturemediame.com Managing Editor: Munawar Shariff munawar@signaturemediame.com Art Director: B Raveendran ravi@signaturemediame.com Production Manager: Roy Varghese roy@signaturemediame.com

Printed by United Printing Press (UPP) – Abu Dhabi Distributed by Tawseel Distribution & Logistics – Dubai

Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused. Articles and information contained in this publication are the copyright of Signature Media FZ LLE & SIGNATURE MEDIA LLC and cannot be reproduced in any form without written permission.

The cover article on building a road in the middle of the Empty Quarter, is not a story of grit and determination, it’s a story about perseverance and patience and how the right equipment can steadily move you towards an impossible goal only if you keep on at it. FAMCO knew what they had taken on trying to work with the unforgiving environment where the blowing winds can change directions and perspectives in an instant. The end result - a connection between the Kingdom of Saudi Arabia and Oman - will change lives and businesses forever. The successful completion is a testament to the fact that a job is a lot more than going to work for eight hours everyday. Business at DP World is increasing everyday, new targets have been set for the year and aim to be surpassed as has been the trend. DP World Chairman HE Sultan Ahmed bin Sulayem tells us about how the company is handling the challenges of the industry to retain its international top spot and that favourable market conditions point to a good business year ahead. Speaking of work, the biggest motivator for all of us humans is the salary. This issue we bring to you a real time forecast and idea of the current status of the compensation package in the supply chain and logistics industry. The supply chain industry is a diverse one, and every company has their own requirements, based on their unique business model. One of the most common positions at the moment is with Demand/Supply Planning and Procurement Managers, who can set up procurement functions from scratch. Lots of interesting facts and figures as well a forecast for growth in the year. Here’s to hoping that it is true. Hope you enjoyed reading this issue. See you next month.

Munawar Shariff Managing Editor munawar@signaturemediame.com

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March 2015 Issue 13

ENHANCING THE BUSINESS OF LOGISTICS

06 News 12 Kuwait – Middle East’s

logical transport centre

Kuwait is a logical transport centre for the northern Gulf

19 Man vs Nature – a dream project

Battling harsh working conditions FAMCO KSA builds a highway in the Empty Quarter

26 Docking at the right port An update on business operations by DP World Chairman HE Sultan Ahmed bin Sulayem

29 Vacancies galore in 2015 Career opportunities in the supply chain industry are growing

32 Oman adds links to food chain

Major investments in agri-businesses this year look set to help Oman improve food security

34 Up in the air Boeing, Airbus and Bombardier have soaring sales in the GCC

39 Logistics optimisation

in chemicals – mid-term planning

In the chemicals industry, tactical logistics management poses an opportunity 4 MARCH 2015

19 49 Autonomous vehicles There can be no more disruptive technology to the global road freight industry than ‘autonomous driving’

55 Creating the perfect fit Renaults Trucks reveals details of special Middle East testing for the region’s growing construction industry

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56 Innovation – the way forward

Frost & Sullivan’s GIL 2015: Middle East Executive Congress

58 Dubai Trade honours

ESEA Award winners

Dubai Trade held their annual flagship event the ESEA

60 A transparent and direct leader

A chat with Jerome Lorraine, EVP, Balkan, Africa, ME and Central Asia at CEVA

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P.O. Box 61450, Dubai, United Arab Emirates. Tel: +971 4 881 8288, Fax: +971 4 881 9157 e-mail: contact@aflogistics.com www.aflogistics.com


Emirates Group Security signs MoU with Arab Air Carriers Organisation The Centre of Aviation and Security Studies (CASS), the academic arm of Emirates Group Security and the Arab Air Carriers Organisation Regional Training Centre (AACO RTC), have signed a Memorandum of Understanding (MoU) to extend two University Diploma programmes to the members of the Arab Air Carriers Organisation (AACO). The University Diploma in Aviation Security Management and the University Diploma in Ground Handling are being inducted as part of AACO RTC’s training curriculum with its offices in Jordan and Egypt. These two courses are jointly developed

by Edith Cowan University of Western Australia and Emirates Group Security. The courses, administered by CASS and academic staff from Edith Cowan University, consist of an 18-month programme

Fast Logistics Solutions Group (FLS) expands portfolio of services FLS Group, headquartered in Dubai, but with a strong presence across Africa, UAE, India and Far East, has become a holding company in January 2015 and widened its bouquet of services and expanded its coverage globally. Their portfolio of activities now includes scheduled air cargo services, air cargo charter solutions, international ocean freight, multi-modal air-sea-land doorto-door solutions, customs clearance, 3PL warehousing and distribution, cross trade, vehicle loading, trucking services in UAE and Africa and engineering solutions - flow technology, renewable energy, landscape design. In the UAE, FLS Group has 15 offices and warehouse facilities in five strategic locations. They also have 20 offices on the African continent, and five in Asia. The companies under the Group’s umbrella include Fast Forward Solutions, Fast Forward Cargo, and First Priority Cargo. They also have a new CEO, Peter Scholten, who brings 25 years of experience to the company.

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which involves self-study, tutorials and examinations.“We believe these courses add to the educational and professional development opportunities available to those working in aviation, and ultimately help

support the growth of the aviation industry in the MENA region,” said Dr. Abdulla Al Hashimi, Divisional Senior Vice President of the Emirates Group Security. “Students who sign up for these diploma courses will be embarking not only on a learning journey from the aspects of the civil aviation profession, but also the road towards attaining academic qualifications,” said Edith Cowan University’s Professor Nara Srinivasan, Pro-Vice Chancellor (Emirates Engagement) and Professor of Security and Risk.

Globe Express Services’ UAE office posts seven per cent gross revenue growth Globe Express Services has announced that its UAE operations recorded a seven per cent gross revenue increase in 2014 compared to the previous year. Last year’s strong revenue was driven by thriving domestic demand for modern logistics services on the back of the country’s increasing economic prosperity. The company is capitalizing on immense opportunities in the flourishing market by offering its cutting-edge supply chain solutions to meet the logistics needs of various organizations across industries. GES combines its core specialties of air freight, ocean freight, and logistics services to deliver globally integrated, tailor-made end-to-end services to its clients. As per industry reports, the UAE’s location, state-of-the-art infrastructures, and progressive non-bureaucratic government are some of the sector’s main growth drivers. In Dubai, in particular, the burgeoning maritime sector is also seen to contribute to the industry’s further expansion in the next few years. Among the sector’s four key areas, freight forwarding is projected to account for the largest share this 2015 as in the previous years. This will be followed by transportation, warehousing services, and value-added logistics services (VALS).


Citilink selects Turkish Technic for Airbus A320 component pooling

Turkish Technic and Citilink have signed an Airbus A320 component support agreement in a ceremony held at MRO Middle East in Dubai. The deal was signed between Citilink CEO Albert Burhan and Turkish Technic CEO Ahmet Karaman. The agreement comprises component supply and repair on part number basis. Components will be supplied from their Istanbul main base and Turkish Technic

pooling stations in the Middle East, as well as their Jakarta main base. Repair work of the components will be done at the Turkish Technic sites in Istanbul, Turkey. The contract also aims at business development with GMF Aero Asia - one of the largest aircraft maintenance facilities in Asia - as vendor and capability development for GMF, to support the Citilink–Turkish Technic contract.

Agility Wins New Contract with ExCeL London Agility has been awarded a new contract by ExCeL London to be its exclusive supplier of logistics services. Under the new three-year contract, Agility Fairs & Events will partner with ExCeL to provide event organisers, exhibitors and contractors with specialist event transportation and logistics, pre- and post-show storage, on-site receiving and delivery, forklift/ mechanical handling equipment, and

customer logistics advice and support. In 2012, Agility Fairs & Events re-located its London-based team to ExCeL, making it the only logistics company on-site with staff offices and warehouse facilities. Being based at ExCeL gives Agility unrivalled knowledge of the facility and the ability to cater for any logistics requirements on-site or anywhere in the world via its global network of more than 500 offices.

GEFCO ME signs long-term logistics service agreement with RSA Logistics

GEFCO Middle East recently signed a long-term logistics service agreement with Dubai based RSA Logistics, to support the storage services for Finished Vehicles. The objective of the agreement is to cater to the growing demand for FVL (Finish Vehicles Logistics) in the region. RSA will be providing just over 100,000 sqm of logistics space, along with IT support, security and resources to assist in the operation. Abhishek Ajay Shah, Managing Director at RSA Logistics, commented “RSA logistics believes in offering a tailored solution for all of our customers, and our relationship with GEFCO is no different. We listened; understood their needs, and are now implementing it to make it a reality.” Added Stefano Pollotti, Managing Director – GEFCO Dubai,“As GEFCO, we believe in the integrated logistics solutions to improve the supply chain of our customer. The quality and highest standard of the service level are our credo: the agreement with RSA will support the growth of the FVL activity in the Region”

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Etihad Airways hits Emiratisation milestone Mohamed Al Mansoori, a 30-year-old Abu Dhabi resident, has become Etihad Airways’ 2,000th Emirati member of staff. He recently joined the airline’s Human Resources team as Senior Manager- People Reward and Policy. A graduate of the University

of Hull in the UK, Mohamed brings with him a wealth of knowledge in Human resource management. He joins Etihad Airways from the Abu Dhabi National Oil Company (ADNOC), where he worked in various senior roles including Senior Specialist Strategies and

Studies and Senior Specialist Compensation and Benefits for Asia Pacific and the Middle East based out of Singapore. With the aim of diversifying its offering and training UAE Nationals in all aspects of the aviation business, Etihad Airways

had recently expanded its UAE national development efforts with the launch of a two-year Graduate Finance Development Programme and plans to launch new specialised programmes in government affairs, network planning, properties and logistics.

Citi and Etihad Airways sign supply chain finance partnership Citi and Etihad Airways have announced the signing of an agreement to provide a Supply Chain Finance (SCF) solution to pay select suppliers. The innovative financing programme will enable Etihad Airways to unlock liquidity and pay its suppliers almost immediately through funding provided by Citi. It also offers a highly customised structure that will cater to the airline’s supplier segment across the globe, and will facilitate access to liquidity across businesses of all sizes.

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The partnership with Etihad Airways marks Citi’s first supply chain financing deal in the airline sector in EMEA and the first ever SCF partnership for Citi in Abu Dhabi. Equally, Etihad Airways will also be launching the programme for the first time. The solution will be rolled out in two phases, with the first phase covering a select number of key suppliers, and will subsequently be rolled out to remaining suppliers in the second phase. James Rigney, Etihad Airways’ CFO, said: “Our suppliers are an essential part

of the success of our business and we are happy to provide the tools that offer new credit and liquidity sources and accelerate their access to cash flow.” Added Steve Donovan, Citi’s Head of Treasury and Trade Solutions (TTS) for the Middle East, North Africa, Pakistan and Turkey, “We are committed to providing the best supply-chain finance solutions to our clients, and place significant emphasis on developing a long-term partnership with Etihad Airways for the benefit of their suppliers.”


ENEC wins major honour at Global Risk Awards

The Emirates Nuclear Energy Corporation (ENEC), responsible for the development and operation of the UAE’s peaceful nuclear energy programme, has won a major award in the ‘Building Risk Management Capability’ category at the Institute of Risk Management’s (IRM) 2015 Global Risk Awards. Over 30 well-known organisations, from all over the globe, submitted entries

to the category, and ENEC was selected to win by the judging panel of more than 30 leading risk management practitioners and academics. ENEC’s entry, ‘Building Risk Management Capability,’ showcased how the corporation built a rigorous risk management process that is a critical element in the culture of safety that ENEC promotes. This world-class process included identifying and assessing potential strategic risks that could

affect the business’ organisational mission. Said H.E Mohamed Al Hammadi, CEO of ENEC,“This award is an international recognition to the systematic approach that ENEC has in its risk management processes and procedures. As a nuclear organisation, we use the industry’s principle of continuous improvement to implement a proactive approach to risk management. It is a proud moment for the organisation and the team.”

Essa Al Ghurair Investment partners with SOHAR SOHAR Port and Freezone and Essa Al Ghurair Investment have entered into a new partnership with the aim of promoting value chain, food processing, and logistics support within a growing multibillion dollar regional food industry. Essa Al Ghurair Investment will lease a 93,000 square metre plot from SOHAR Port and Freezone until July 2043. The creation of

Sohar Food Cluster Company will allow Essa Al Ghurair Investments to focus on the development of value chains, which will be ideal considering the availability of dedicated infrastructure and competitive prices at SOHAR; robust food demand in the GCC, and strong financial projections for a number of identified industries and projects.

In addition to this agreement, there will be a purchase of prevailing assets from SOHAR Port and Freezone. The contract was signed by H.E. Sultan Bin Salem Al Habsi, Chairman of SOHAR Port and Freezone, Andre Toet, SOHAR CEO, and Chairman of Essa Al Ghurair Investment Company, H.E. Essa Bin Abdullah Al Ghurair.

Sohar Food Cluster Company will be located adjacent to the flour mill and sugar refinery at SOHAR, and will be close to the grain storage facility that is being built as part of the food security strategy of the Sultanate of Oman. As these activities grow, they are expected to contribute to downstream industries and support the growth of dry bulk cargo volumes.

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Dubai Customs claims International Standard for Service Excellence

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai.” Musabih pointed out that this international recognition came as a result of diligence and hard work that significantly advanced the quality of Customs services and procedures, making them more user-friendly, more streamlined, and more reliable and timely. Dubai Customs managed to achieve great savings in the cost and time of its 180,000 clients, being served through 22 sea, land and air customs centres across Dubai, further placing the emirate as a favourite destination for many traders and investors around the globe.

Ahmed Mahboob sharing the moment with Dubai Customs’ officials, BSI delegates and managers of accredited customs centres

The British Standards Institution (BSI), the UK’s first national standards body, awarded Dubai Customs The International Standard for Service Excellence (TISSE), after completing the audit carried out for its processes, policies, services, employees and operational performance. Theuns Kotze, Regional Director, MEA, British Standards Institution, presented the certification to His Excellency Ahmed Mahboob Musabih,

Director of Dubai Customs, at a reception held for this occasion, in presence of BSI delegates and DC’s executive directors and centres managers. Commenting on this achievement, Musabih said,“This distinguished world-class accreditation is a solid proof that we are on the right track towards delivering services that go beyond the conventional customer satisfaction into creating public happiness, as envisaged by

Ahmed Mahboob Musabih receiving TISSE certification from Theuns Kotze, regional director, British Standards Institution

FMCG, Food and Healthcare sector in Jafza records tremendous growth

Jafza senior officials and strategic partners at the forum

Jebel Ali Free Zone (Jafza) has seen a three-fold increase in the number of companies in the FMCG, Food and Healthcare sector in the last ten years. The sector is estimated to have generated trade worth over AED 30 billion (US$ 8167822200) in

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2014. Talal Al Hashimi, COO of Jafza, said, “FMCG, Food and Healthcare is the third largest sector in the Free Zone in terms of size. The sector has witnessed 300 per cent growth in the number of companies in the last decade, growing from 283 in 2004 to

829 in 2014. The sector has registered 400 per cent growth in the volume of trade during this period. Looking at the trend, I expect double digit growth this year. The remarkable growth reaffirms Jafza’s position as the trade and logistics hub and huge growth

opportunities for the businesses engaged in the sector in the rapidly growing wider Middle East region.” Al Hashimi also highlighted the recent initiative of Economic Zones World (EZW), the parent company of Jafza, to position Dubai and the Free Zone as the global hub for Halal products. EZW, early last year, announced the plan to develop two world-class Halal Zones, one in Jafza and another in TechnoPark, specifically designed to cater to the regional and international Halal Product markets. The move seeks to support Dubai assume the status of the capital of the world’s Islamic Economy as well as ‘the global hub for Halal products’.


Swisslog to deliver first CarryPick® solution for DB Schenker Logistics Automation specialists Swisslog, is to deliver its newly developed order fulfilment system for DB Schenker Logistics in Arlandastad, Sweden. The global logistics provider will be the first to implement the pioneering CarryPick® solution, part of the Swisslog Click&Pick® e-commerce portfolio, for its customer Lekmer.com, Scandinavia’s largest online toy retailer. “Together with Swisslog, we have developed an inventory management solution that is unique for online businesses in Europe. This is designed to deliver levels of productivity that exceeds all manual solutions in the industry,” says Anders Holmberg, Business Development Manager of DB Schenker Logistics. The CarryPick solution will consist of 65 Automated Guided Vehicles (AGVs), 1 500 mobile racking units and seven ergonomic

workstations, installed together with Swisslog’s proprietary control systems, WarehouseManager. The technology behind the fully

automated storage and order fulfilment solution has been proven in similar installations across the world. This is the first time, however, that the full scale CarryPick solution will be implemented; designed together with DB Schenker Logistics to provide Lekmer.com with an automated supply chain that guarantees faster order processing and higher quality as well as lower handling costs.

Coface and Oman Insurance become partners Coface, global credit insurance leader, and Oman Insurance Company (P.S.C.) have signed a partnership agreement to offer joint credit insurance solutions. Increased awareness of the benefits of credit insurance – solutions that protect companies’ accounts receivables from loss due to customer payment defaults – has caused a surge in interest for the product in recent years. The credit insurance market is undergoing a quick expansion in the UAE and overall GCC. “Through our partnership with Oman Insurance, Coface now offers not only trade credit insurance protection, but also trade finance and collection solutions in the UAE, Qatar and Oman,” commented Gregory Le Henand, Coface Emirates’ Country Manager. On the back of strong infrastructure spending, competitive funding terms from local banks and favourable tax regimes, the partnership signing comes as the UAE exports over 70 per cent of the goods transiting locally to Asia and Africa, with 8 per cent growth estimated in 2014, making trade credit insurance an increasingly in demand financial product.

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COUNTRY REPORT KUWAIT

Kuwait I The state of Kuwait sits at the confluence of three of the most populous and prosperous countries in the Middle East – Iraq, Iran and Saudi Arabia. As such, Kuwait is a logical transport centre for the northern Gulf and has committed itself to making investments towards attaining that goal.

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n 2012 transport accounted for 50 per cent of service exports from Kuwait, up slightly from 49 per cent in 2011, according to World Bank figures. Over the past two decades, many Gulf countries have specifically used transport as a means to diversify their economies and develop other sources of revenue. Kuwait’s national development strategy, known as Kuwait Vision 2035, envisages the country becoming a regional commercial and financial hub. In order to achieve this upgrading the country’s connectivity is an essential step. As such, Kuwait’s National Development Plan (NDP) is a comprehensive


COUNTRY REPORT KUWAIT

Middle East’s logical transport centre programme of investment, to the tune of KD30bn ($105.48bn). Much of this investment is dedicated to social spheres such as housing, education and health, both in terms of physical infrastructure and improving the quality of services provided. Infrastructure projects in the pipeline include a new port, road improvements, a railway and metro system, and expanding the existing Kuwait International Airport (KIA). Separate to the NDP, Kuwait is investing roughly KD15bn ($52.7bn) to raise its oil output from around 3m barrels per day (bpd) to 4m bpd by 2020. In turn, this will necessitate increased

imports of equipment, which will stimulate the economy more generally, especially the petrochemicals industry, and create further opportunities in transport and logistics.

Ports Perhaps the initial beneficiaries of this investment in the hydrocarbons sector will be the two main ports of Shuaiba and Shuwaikh, which between them processed 98 per cent of Kuwait’s exports in terms of revenue in 2011, according to figures from the Kuwait Central Statistical Bureau (KCSB). This came to 128m tonnes of cargo, worth KD27.84m ($97.8m). The ports processed

60.3 per cent of imports, totalling 23m tonnes of goods, worth KD4.18bn ($14.7bn). According to the KCSB, in 2012 the number of oil tankers passing through Kuwait’s ports was 1469, compared to 1424 in 2010, while total cargo volumes were 35.9m tonnes in 2012, over 27.3m tonnes in 2010. Shuaiba, situated 45 km south of Kuwait City, is the site of several refineries and is the main port for exports of crude oil and petrochemicals. The Kuwait Ports Authority is planning dredging works to deepen the whole basin to 16 metres, which will enable Shuaiba to accommodate the largest cargo vessels weighing up to 75,000 tonnes. At the

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time of writing, however, implementation remained stalled due to changes in parliament and administration. The Ahmadi Port and Mina Abdullah to the north and south, respectively, of Shuaiba are set aside for the exclusive use of specific refineries. In early 2013, the Kuwait Oil Company awarded a $486.5m contract to Turkey’s STFA Construction Group to build a new port next

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to the Ahmadi refinery. The project involves upgrading the main harbour, constructing a number of smaller ones and expanding the road network around the port complex. The new port will support the Kuwait Oil Tanker Company’s expanded fleet, as the company is due to take delivery of nine new vessels from South Korea’s Daewoo Engineering and Construction in late 2014 or early 2015.

Shuwaikh is located to the west of Kuwait City, much closer to the city centre, and acts as a port for general cargo and consumer goods. It features 21 berths, including two floating berths, and has a maximum draft of 9.6 metres at 14 of them. Pilotage movements have steadily increased, from 1318 in 1961 to 2993 in 2010. Given its location so close to the capital, Shuwaikh has become a major


COUNTRY REPORT KUWAIT

consumers with an economy that will require major investment in reconstruction. Just as a number of ports in the southern Gulf, notably Dubai’s Jebel Ali Port, act as hubs for Saudi Arabia and parts of Iran, Kuwait aims to act as a centre for the northern Gulf.

New centre

source of congestion on the country’s already crowded roads, creating up to 1000 lorry movements a day.

Boubyan As such, Shuwaikh is not really suitable for expansion, and Shuaiba, being geared mostly to hydrocarbons, is unable to act as a substitute. In order to expand the country’s

MAK port is therefore envisaged as a game changer. The port, which is scheduled for completion in late 2016, will have a capacity of 24 berths with a depth of 20 metres and an initial capacity of 2.5m twentyfoot equivalent units. The contract for construction of the port was awarded to a joint bid from Korea’s Hyundai Engineering and Construction Company and Kuwait’s Kharafi Group, and initial Kuwait is investing work commenced in roughly KD15bn April 2011. Subsequent (US$52.7bn) to raise phases will include deepening the draft to 30 its oil output from metres and constructing a 36-km-long, $2.6bn around three million causeway spanning barrels per day (bpd) Kuwait Bay, which would make landfall at Subiya, to four million bpd by reducing the current 2020. In turn, this will distance between the port and Kuwait City of necessitate increased 140 km. MAK will also imports of equipment, benefit from a rail link to the mainland and the which will stimulate rest of the GCC. MAK faces the economy challenges in the form of competition from established ports in the lower Gulf and from potential Iraqi unwillingness to avail themselves of its facilities. Iraq has plans to develop its own Grand Al Faw Port at the mouth of the Shatt al Arab, with an investment of $6bn and a final capacity of nearly 100m tonnes a year. Moreover, there have been previous territorial disputes between Iraq and port capacity a new port, Mubarak Al Kabeer Kuwait over the area in which Boubyan is (MAK) port, is planned for Boubyan Island, located. However, Iraq and Kuwait signed off the north-east coast of the country. an agreement in 2013 on shared use of the Boubyan also lies near the Shatt Al Arab Khor Abdullah waterway. Iraq, despite its waterway at the mouth of the Tigris and oil wealth, remains in political paralysis Euphrates rivers, and as such is located very and continues to suffer from poor security, close to both Iraq and Iran. This makes it meaning that reconstruction may take years a natural gateway port not just for Kuwait, to materialise, though it is likely to generate but also for Iraq, a market of some 25m

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the logistics market, companies have had to increase the amount of services provided and tailor products to fit customers’ needs,” Hisham Albahar, the country manager at Posta Plus, told OBG. The poor relations between Iraq and Kuwait are having a negative effect on Kuwaiti logistics companies. Currently, in order to move goods between Kuwait and Iraq trucks must unload their cargo at a dedicated bonded warehouse at Safwan. Then, goods are reloaded onto Iraqi vehicles on the other side of the border. While it is in principle Logistics possible to obtain a visa for Kuwaiti lorries, In the wake of the US-led invasion of Iraq this is both cumbersome and expensive in 2003, the logistics industry in Kuwait to acquire, and it benefitted from a near decadehas to be renewed long boom due to the presence every six months. of US armed forces, who used Agility has sold off However, both the the country as a supply base. its fleet of lorries NDP and the refinery The withdrawal of foreign troops upgrade programme from Iraq, which was completed over the past few are likely to have a by 2012, has had a marked effect on the industry, although years to concentrate stimulatory effect on the logistics business a number of US and NATO on other areas, such in Kuwait, due to military personnel have remained expected increases in in Kuwait. Perhaps the biggest as warehousing, demand for imports logistics group in Kuwait, Agility but another of machinery and was founded in 1979, has more than 22,000 employees and a Kuwaiti firm, Posta construction materials. presence in over 100 countries. Plus, continues Agility, which is listed on the Roads Kuwait Stock Exchange, reported The state of the nation’s to maintain a net revenue of KD386m ($1.36bn) roads network is 500-truck fleet in on the back of KD1.38bn also a challenge for ($4.83bn) in turnover in 2013, logistics companies, the region compared to figures of KD370m especially importers. ($1.3bn) and KD1.42bn ($4.99bn), Land transport carries respectively, in 2012. The value of the firm’s some 9.7 per cent of Kuwait’s imports, but less assets was KD1.41bn ($4.9bn) in 2013, down than 1 per cent of exports, and is equivalent slightly from KD1.43bn ($5.02bn) in 2012. to around $5.5bn. While the roads themselves Agility has sold off its fleet of lorries over the tend to be of excellent quality, congestion past few years to concentrate on other areas, is increasingly a problem – partly due to such as warehousing, but another Kuwaiti the fact that Kuwait is quite a small country firm, Posta Plus, continues to maintain a and almost the entire population lives in 500-truck fleet in the region. Other logistics Kuwait City and its environs. Public transport groups in Kuwait include global players such consists of buses and taxis; however, much as DHL, UPS and FedEx. of the government transport budget goes to subsidising the price of petrol, which stands at KD0.068 ($0.24) per litre, rather than the Finding a niche public transport network. The government is Logistics firms often find themselves relying planning to develop new roads as part of the on government contracts, and given the NDP, with KD4bn ($14.06bn) earmarked for relatively small size of the local market, new road projects. Among the biggest projects many have had to adjust their operations to are the Jahra and Jamal Abdul Nasser roads, compete.“Due to the competitive nature of a big flow of both imports and exports when it does. MAK could act as a stop-gap port for Iraq until they have developed their own facilities, and in any case, enjoys an advantage over Al Faw in that it has a deeper draft – 30 metres compared to 13 metres at Al Faw. Some in Kuwait have suggested that a joint Iraqi-Kuwaiti company could be set up to manage MAK port, giving the Iraqis a stake in the project and helping to smooth over differences between the two parties.

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together worth $927.8m. The first involves widening a motorway from two lanes in each carriageway up to 12, while the latter involves the expansion of an existing road, and installing utilities and drainage facilities. The contract was awarded to a consortium of local construction firm Boodai, Italy’s TREVI and Rizzani di Eccher, and Spain’s Obrascón Huarte Lain, with completion due in late 2016.

Railway In addition to the metro system, Kuwait also plans to build its own railway network, to dovetail with the GCC railway that is due for completion by 2018. This will mostly be geared to freight traffic, but passenger trains may also run. The internal rail network, the National Railway System, is set to stretch for 518 km in total, and link MAK and Kuwait City, as well as provide connections to Iraq, Iran and other locations in the Arabian Peninsula. Although the railway project currently remains at the design stage with tenders yet to be issued, the railway could cement Kuwait’s status as a transport hub, although work on Iraq’s internal rail network is unlikely to occur for some years. Omar Hariri, the Kuwait country manager for DHL, told OBG,“Kuwait has a key strategic location in the region that holds a lot of potential for the logistics sector by offering itself as a gateway to the Middle East.”

Aviation Over the past 20 years, Kuwait has lost some of the competitive edge in aviation it once enjoyed over other Gulf countries. KIA has also become more congested as passenger numbers grow rapidly, especially after it came to act as the hub for not only Kuwait Airways, but also for the country’s low-cost carrier (LCC) Jazeera Airways as well. In early 2014, Kuwait’s Directorate General of Civil Aviation (DGCA) said passenger traffic at KIA has reached 9.37m in 2013, a 6 per cent increase over 2012. Arrivals grew by 5 per cent from 4.48m in 2012 to 4.7m in 2013, while departures increased by 6 per cent from 4.39m in 2012 to 4.65m in 2013. The DGCA also reported that commercial flights at KIA increased by 3 per cent from 75,588 in 2012 to 78,135 in 2013. Between 2007 and 2012, KIA saw through traffic increase by over a quarter. As such, the need to increase capacity at KIA


COUNTRY REPORT KUWAIT

The expansion programme at KIA has meant that more traffic has had to be diverted through the Sheikh Saad General Aviation Terminal (SSGAT), which had originally been purpose-built for Wataniya Airways (see analysis). Capacity at KIA is due to rise to 25m by completion of the expansion project, which is unlikely to affect traffic at SSGAT as much of the work at KIA is geared to providing Kuwait Airways with a hub so that it can re-emerge as a long-haul carrier, as well as implementing much-need updates for facilities. SSGAT primarily serves the private, highend segment. Indeed, as KIA becomes bigger, it may well be the case that more travellers and niche carriers are likely to find the quick turn around times that SSGAT is able to offer more attractive. A 2014 report by investment bank Alpen Capital further notes that MENA is set to witness growth above the world average in the aviation sector, with revenue per kilometre set to expand at a compound average growth rate of 6.7 per cent between 2012 and 2032. The report specifically identifies the lack of secondary airports in the region as one major constraint for the industry, forcing LCCs to operate from primary airports where they face head-to-head competition with flag carriers. LCCs account for just 13.5 per cent of the MENA aviation market, compared to 30.2 per cent in North America and 38 per cent in Europe, according to Alpen.

Outlook

has been evident for some time. KIA’s own figures project that passenger numbers are likely to rise to 13m passengers a year by 2016 and 25m a year by 2040. In 2012, a master plan was finalised to redevelop KIA, with more than 70 projects to be implemented over the next seven or eight years and a budget exceeding KD2.5bn ($8.79bn). Together, these will increase capacity at KIA to over 25m passengers a year. The major projects planned for the redevelopment of KIA include: extending the western runway from 3400 metres to 4775 metres; demolishing the existing eastern

runway and constructing a new one in its place that will be 4000 metres long and 60 metres wide, with a 30-metre-wide parallel taxiway; a brand new third runway to be 4580 metres long and 60 metres wide, also with a parallel taxiway 30 metres wide; a new terminal building; developing 1m sq metres of apron space and a 2m-sq-metre cargo and maintenance, repair and operations centre, along with dedicated facilities for the air force; a new air traffic control tower; new landside terminal facilities, such as hotels, a mosque and parking space; and access tunnels and a connection to the KMRT.

Of all sectors of the Kuwaiti economy, transport is perhaps the most likely to benefit from the investments programme under way as part of the NDP. Although political wrangles have delayed many projects, the authorities have demonstrated a sound understanding of the role of transport as a multiplier, and some of the most important projects, such as the expansion of the airport and MAK port, are already under way. If greater political stability can be -Extracts from article originally published by Oxford Business Group (OBG) in The Report: Kuwait 2014, published in September 2014, Transport Chapter. For economic news about Kuwait and other countries covered by OBG, please visit http://www.oxfordbusinessgroup.com/ economic-news-updates

MARCH 2015 17


New Heights in

OPERATE & INTEGRATE WORLD

RECORD

5,000 TONS

HEAVIEST ITEM BY ROAD

LARGEST FLEET

1, 800 TRUCKS 2,200 TRAILERS

2 MILLION

FREIGHT

TONS PROJECTS CARGO

EXECUTED ANNUALLY

2 MILLION

SQM TERMINAL WAREHOUSING

FACILITIES

The journey that started with a single truck seems a distant memory. Since 1965 our fleet grew over 1,800 trucks and 2,200 various types of trailers such as flatbed, low bed, extendable and semi-hydraulic. In addition to other types of trailers such as conventional hydraulic, SPTs and SPMTs. Our terminal and storage capacity is over 2 million SQM with more than 6.9 million MT of exports a year. Our formula of success is to keep everything 'in-house' starting with employing the right calibers, owning state of the art equipment and utilising the latest technology. Then, we are left with the daily task to integrate all of our resources to offer our clients a holistic logistics & SCM solution.

Heavy Lift Transportation Freight Forwarding Terminal & Warehousing

Please visit www.almajdouie.com to find out more about our integrated services. Tel: +966 13 8198111


COVER STORY

e r u t a N s v n a ject M a dream pro

working Battling harsh extreme conditions like shifting sands temperatures, ty to the site, and accessibili arter highway the Empty Qu ccessful project saw su anks in completion, th hinery that part of the mac ork to get enabled the w Al-Malik, done. Essam ager (Central Regional Man MCO Saudi, Province) – FA e challenges talks about th rcome during that were ove ject. this unique pro

B

uilding a 256 km-long highway, linking the Kingdom of Saudi Arabia and the Sultanate of Oman, through the nearly 600,000 sq metre of sandy wilderness of Rub’ al Khali – or the Empty Quarter – seems like an idea that is overly ambitious from the word go. But the concrete highway that now weaves between the sand dunes and allows you to drive through what is still one of the world’s hottest, driest and most unforgiving environments, stands as proof of what the power of a dream or ambition can do. Says Essam Al-Malik, Regional Manager (Central Province) – FAMCO Saudi, “It was definitely the most challenging work environment. The nature of the Empty Quarter was the biggest challenge for us as only highly engineered and sophisticated construction machinery can survive such work conditions. The main objective for the contractor was to reduce, if not eliminate, the downtime of the machines, so that the work can be completed according to the time plan. The extreme temperature called for both a reliable work force and machinery to work together to overcome that factor. Also, not to forget the distance between the work sites and the nearest inhabitant city demanded us to come up with practical and effective solutions, which meant establishing mobile workshop at the work sites to provide 24/7 service and maintenance to the working equipment.” The project took three years to complete. However, of course, there was months of preparation before the actual start.“From FAMCO’s part, we started several months before as we needed to plan the resources that had to be mobilised to support the contractor (Al-Rosan Contracting),” explains Al-Malik.

MARCH 2015 19


20 MARCH 2015


COVER STORY

Essam Al-Malik

The resources included mobile workshops at the work site, where technicians were available 24/7, and spare parts replenishment was done on continuous basis. FAMCO also conducted regular site visits to ensure that all Volvo machinery was wellmaintained and serviced regularly. “These measures ensured smooth running of the operations, and certainly helped in meeting the entire project’s time plan,” he says. Given the sheer size of the project, ensuring the availability of resources on site, and meeting the different needs of the project, is not an easy thing to gauge.“Due to the unique and demanding nature of this project, a logistical bridge was established between our branch in Riyadh and the work site,” explains Al-Malik, adding,“There were weekly trips to and from these locations to monitor spare part’s stock management. In addition, we had our technicians based on site to support whenever and wherever required. Those technicians were on rotating shifts, where every two weeks, a new technical and service team would replace the one stationed on site. Food, water and other essentials were arranged by the contractor, who organised mobile housing units at the work site for both his work force and ours.”

The main objective for the contractor was to reduce, if not eliminate, the downtime of the machines, so that the work can be completed according to the time plan. Nature is not always kind though, and the work conditions were not only harsh, but also unpredictable. Intense heat and dryness is one thing, moving sands and sandstorms is another.“One of the elements in this project was building sand bridges between the sand dunes. This required service roads to be constructed, but then there would be a sandstorm and work would have to stop. At the end of the storm, those service roads would be completely covered with sand, making the bridges inaccessible unless new service roads were built. Not to mention that when the machines are not operating, they are easily filled with fine sand carried

MARCH 2015 21


COVER STORY

by the wind, and then require a full cleaning and service to get back in shape,” says Al-Malik. Considering the timelines, manpower, and service requirements of the project, it is obvious that the machinery that was deployed had to meet certain standards. The criteria was: durable, reliable and strong equipment to stand the test of this harsh environment.“Volvo construction equipment was the logical choice, and the perfect answer to these demanding conditions,” states Al-Malik. In fact, FAMCO maintains the service to these machines even today. “The support never stopped as most

22 MARCH 2015

of the machines are being utilised by the contractor for other projects. We value For this project, our relationship with our the plan included clients, and therefore, we are always there to putting together support them whenever a team of trained and wherever required,” says Al-Malik. technicians with While it is surely one the proper tools to of the most challenging for anyone to handle urgent issues projects have worked on, Al-Malik assures it was certainly not related to machine the biggest, and states it break down. was the unique nature of the project that brought the challenges, not the scale of it.

Which is why there were 95 Volvo machines, including Articulated Haulers A35, Excavator EC700 and EC210 and Graders G990, that were deployed for the project. Although there was already a degree of confidence with the favourable reputation of Volvo Equipment, and FAMCO’s strong aftersales support, there were minor details that needed to be added. FAMCO provided Al-Rosan Contracting with a state-of-the-art mobile workshop and consignment parts warehouse facility, and onsite technician availability. The machines were transported by low bed trailer, delivered to 1,100 kms away from Riyadh. It took an entire day to


COVER STORY

reach the actual site, and Al- Rosan Contracting had arranged the fuel station at the project site to meet those needs. Al-Malik brings his own experience to the project. He himself has undertaken different types of projects, such as infrastructure projects, commercial and industrial construction projects, and large scale construction undertakings, including Al Swailem Co (International road freeway- North of KSA) and Economic Contracting Co (Border road between Oman and KSA, which is ongoing).“It is our system to establish a strong relationship with the customer. I give my full

attention to the customer at the time of selling, and offer the correct machines required for the project to ensure correct application. I stay connected with the customer to ensure everything is under control, and offer support when needed, including responding to complaints, offering competitive prices, and comprehensive services for the offered solution,” says Al-Malik. For this project, the plan included putting together a team of trained technicians with the proper tools to handle urgent issues related to machine break down. Machines had to be repaired on site to reduce downtime, and in order to do

that, it was imperative that fastmoving parts were readily available. Technicians and parts personnel were embedded in the team to keep an eye on these points. They also had to use softwares like Care Track, Techtool, Matris, Prosis, Oil Sampling, etc. About 600 staff, including operators, labourers and mechanics from Al-Rosan, battled the hard desert environment, with extreme temperatures from day to night, to complete the project.“If there is one thing to be learned from this, it is that nothing is impossible when Volvo Construction Equipment and FAMCO’s team are entrusted with such challenging projects,”smiles Al-Malik.

MARCH 2015 23


‫املواقع ملراقبة إدارة مخزون قطع الغيار‪ .‬وفوق‬ ‫ذلك‪ ،‬رتبنا لفريقنا من الفنيني أن يقيم في‬ ‫املوقع لتقدمي الدعم كلما وأينما ومتى لزم‬ ‫األمر‪ .‬عمل هؤالء الفنيون في ورديات عمل‬ ‫بالتناوب‪ ،‬بحيث أنه كل أسبوعني يكون‬ ‫هناك فريق فني وفريق خدمة جديد يحل‬ ‫محل الفريق السابق املتمركز في املوقع‪ .‬قام‬ ‫املقاول بتوفير وتنظيم الطعام والشراب وغيرها‬ ‫من الضروريات‪ ،‬وكذلك عمل على توفير‬ ‫الوحدات السكنية املتنقلة واملناسبة في مواقع‬ ‫العمل للعاملني معنا ومعه»‪.‬‬ ‫الطبيعة ليست مشهورة بكرمها أو‬ ‫تهاونها‪ ،‬إذ لم تكن ظروف العمل قاسية‬ ‫وحسب‪ ،‬بل ال ميكن التنبؤ بها أيضا‪ .‬احلرارة‬ ‫الشديدة واجلفاف شيء‪ ،‬والرمال املتحركة‬

‫واملتنقلة والعواصف الرملية شيء آخر متاما‪،‬‬ ‫وعن ذلك قال عصام‪ « :‬أحد عناصر هذا‬ ‫املشروع كان بناء جسور من الرمال تربط ما‬ ‫بني الكثبان الرملية‪ .‬هذا تطلب شق طرق‬ ‫خدمة فرعية‪ ،‬لكن فجأة تهب العاصفة الرملية‬ ‫وبعدما تنتظرها لتمر‪ ،‬حتى إذا سكنت كما‬ ‫بدأت وانقشعت‪ ،‬جتد الغبار يكشف لك‬ ‫أن طرق اخلدمة التي شققتها مغطاة بالكامل‬ ‫بالرمال‪ ،‬مما يجعل الوصول إلى اجلسور غير‬ ‫ممكن إال إذا شققت طرق خدمة جديدة‪.‬‬ ‫ناهيك عن أنه عندما تتوقف اآلالت عن‬ ‫العمل‪ ،‬سرعان ما جتدها وقد امتألت بسهولة‬ ‫بالرمال الناعمة التي حتملها الرياح‪ ،‬ومن ثم‬ ‫حتتاج إلى تنظيف وعمل خدمة كاملة لها‬ ‫لتعود إلى العمل مرة أخرى‪».‬‬

‫‪24 MARCH 2015‬‬


‫‪COVER STORY‬‬

‫االنسان ضد الطبيعة ‪-‬‬

‫املشروع الحالم‬

‫في مواجهة ظروف العمل القاسية مثل درجات احلرارة املرتفعة بشدة‪ ،‬الرمال‬ ‫املتحركة وصعوبة الوصول إلى املوقع‪ ،‬بلغ مشروع الطريق السريع العابر للربع‬ ‫اخلالي نهايته بنجاح‪ ،‬ويرجع الفضل في جزء من ذلك إلى اآلالت التي جعلت إمتام‬ ‫املشروع أمرا ممكنا‪ .‬حدثنا عصام مالك‪ ،‬املدير اإلقليمي (املنطقة الوسطى)‬ ‫في شركة فامكو السعودية‪ ،‬عن التحديات التي مت التغلب عليها أثناء هذا‬ ‫املشروع الفريد من نوعه‪.‬‬

‫يبدو شق طريق سريع بطول ‪ 256‬كم‪ ،‬يربط على‪ ،‬أوقات تعطل اآلالت وتوقفها عن‬ ‫اململكة العربية السعودية بسلطنة عمان‪،‬‬ ‫العمل‪ ،‬بحيث ميكن االنتهاء من املشروع‬ ‫من خالل ما يقرب من ‪ 600‬ألف متر مربع‬ ‫وفقا للخطة الزمنية التي وضعت له‪ .‬درجات‬ ‫من الرمال الصحراوية الناعمة في الربع‬ ‫احلرارة األعلى من املعدالت املعتادة أوجبت‬ ‫اخلالي‪ ،‬يبدو وكأنه فكرة شديدة الطموح‬ ‫علينا االعتماد على قوى عاملة موثوق بها‪،‬‬ ‫منذ بدايتها‪ .‬رمبا كان األمر كذلك حقا‪،‬‬ ‫وجلب آالت ومعدات ميكن االعتماد عليها‪،‬‬ ‫ولكن الطريق السريع احلالي والذي ينساب‬ ‫للعمل معا للتغلب على هذه احلرارة‪ .‬كذلك‬ ‫حاليا بنعومة ما بني الكثبان والتالل الرملية‬ ‫دعنا ال نغفل املسافة الطويلة بني مواقع العمل‬ ‫يسمح لك بقيادة سيارتك بدون مشقة عبر‬ ‫وأقرب مدينة مأهولة بالسكان‪ ،‬األمر الذي‬ ‫منطقة تبقى واحدة من أكثر املناطق جفافا في فرض علينا ضرورة الوصول إلى حلول عملية‬ ‫العالم‪ ،‬منطقة ال ترحم من يشرد فيها وهي‬ ‫وفعالة‪ ،‬وهو ما يعني إقامة ورش عمل متنقلة‬ ‫من أقسى البيئات الطبيعية‬ ‫في املواقع املختلفة لتوفير اخلدمة‬ ‫في العالم‪ ،‬طريق يقف‬ ‫ولصيانة معدات العمل على مدار‬ ‫مثلت طبيعة الربع‬ ‫كدليل على قوة احللم و‬ ‫الساعة طوال أيام املشروع!»‬ ‫اخلالي التحدي األكبر‬ ‫الطموح الذي ميكن القيام‬ ‫استغرق املشروع ثالث سنوات‬ ‫لنا‪ ،‬ذلك ألنه فقط‬ ‫به وتنفيذه وحتقيقه‪.‬‬ ‫إلكماله‪ ،‬لكن بطبيعة احلال كان‬ ‫الهندسة‬ ‫عالية‬ ‫املعدات‬ ‫يستكمل عصام مالك‪،‬‬ ‫هناك أشهر من التحضير قبل‬ ‫املتطورة‬ ‫البناء‬ ‫وآالت‬ ‫املدير اإلقليمي (املنطقة‬ ‫البدء الفعلي‪ .‬عن هذه الفترة‬ ‫البقاء‬ ‫على‬ ‫القادرة‬ ‫هي‬ ‫الوسطى) في شركة فامكو‬ ‫أخبرنا عصام قائال‪« :‬من جانبنا‬ ‫السعودية‪ ،‬حديثه قائال‪:‬‬ ‫في شركة فامكو‪ ،‬بدأنا قبلها‬ ‫واالستمرار في العمل‬ ‫«من املؤكد أنها كانت‬ ‫بعدة أشهر حيث أننا كنا بحاجة‬ ‫في مثل هذه الظروف‬ ‫بيئة العمل األكثر حتديا‬ ‫لتخطيط املوارد التي كان ال بد‬ ‫الرهيبة‪.‬‬ ‫لنا‪ .‬مثلت طبيعة الربع‬ ‫من توفيرها ونقلها مسبقا لدعم‬ ‫اخلالي التحدي األكبر لنا‪ ،‬ذلك ألنه فقط‬ ‫املقاول؛ شركة الروسان للمقاوالت»‪.‬‬ ‫املعدات عالية الهندسة وآالت البناء املتطورة‬ ‫شملت قائمة املوارد املطلوبة ورش عمل‬ ‫هي القادرة على البقاء واالستمرار في العمل‬ ‫متنقلة في مختلف املواقع‪ ،‬حيث كان الفنيون‬ ‫في مثل هذه الظروف الرهيبة‪ .‬كان الهدف‬ ‫متوفرين على مدار الساعة عند احلاجة لهم‪،‬‬ ‫الرئيسي للمقاول هو تقليل‪ ،‬أو قل القضاء‬ ‫وكذلك قطع الغيار التي يتم توفيرها بشكل‬ ‫‪MARCH 2015 25‬‬

‫مستمر‪ .‬أجرت شركة فامكو أيضا زيارات‬ ‫ميدانية منتظمة لضمان أن جميع ماكينات‬ ‫فولفو قيد الصيانة اجليدة واملنتظمة‪،‬‬ ‫واستكمل عصام كالمه‪ « :‬هذه التدابير‬ ‫ضمنت سير العمليات بسالسة دون توقف‪،‬‬ ‫وبالتأكيد ساعدت على االلتزام باخلطة‬ ‫الزمنية للمشروع بأكمله»‪.‬‬ ‫نظرا للحجم الكبير للمشروع‪ ،‬فإن‬ ‫توفير املوارد في املوقع دون انقطاع‪ ،‬وتلبية‬ ‫االحتياجات املختلفة للمشروع‪ ،‬ليس‬ ‫باألمر السهل قياسه‪ ،‬ويفسر لنا ذلك عصام‬ ‫بقوله‪« :‬نظرا للطبيعة الفريدة كثيرة الطلبات‬ ‫لهذا املشروع‪ ،‬قمنا بإنشاء جسر لوجستي‬ ‫بني فرعنا في الرياض وموقع العمل‪ ،‬إذ‬ ‫كانت هناك زيارات أسبوعية من وإلى هذه‬


PORT OPERATOR UPDATE

Docking at the

right

port DP World Chairman HE Sultan Ahmed bin Sulayem tells us about how the company is handling the challenges of the industry to retain its international top spot. Favourable market conditions point to a good business year ahead

We are well into the New Year now. So what’s your outlook for 2015?

It’s still very early to comment, but we have seen a good start to 2015 volumes. Our flagship Jebel Ali port has made a good start to the year. We have a number of exciting developments, with our terminals in Rotterdam and Nhava Sheva expected to open in the first half of 2015, and our additional Jebel Ali capacity and Turkey development coming on line in the second half. Although some of our terminals continue to operate in a challenging macro environment, market conditions across the portfolio are expected to be generally favourable in 2015. This, coupled with the addition of new capacity, places us in good stead to perform in line or ahead of the market this year.

26 MARCH 2015


What infrastructure investments are currently underway and are planned for the year?

In 2015, we will be adding further capacity of approximately six million TEU to our portfolio, including 2.4 million TEU at Rotterdam and 800,000 TEU capacity at Nhava Sheva in the first half. An additional capacity of two million TEU will raise the total capacity of Jebel Ali to 19 million TEU in the second half of the year. The opening of Yarimca in Turkey during the second half

An additional capacity of two million TEU will raise the total capacity of Jebel Ali to 19 million TEU in the second half of the year. The opening of Yarimca in Turkey during the second half also will add 0.8 million TEU capacity

also will add 0.8 million TEU capacity. Our aim is to operate over 100 million of TEU in capacity by 2020, subject to market demand. Recently, the Journal of Commerce declared the Jebel Ali Port as the most productive in the world. What has been done so far to ensure this position is retained?

JOC ranking is a result of our customer focused strategy. Customer service is at the heart of everything we do, and we

MARCH 2015 27


PORT OPERATOR UPDATE

as construction materials and goods are brought through our Jebel Ali port. What are current transhipment trends within the region?

We have seen an increase in O&D cargo in the UAE, which is a positive indicator for the local economy. It also produces higher revenue and higher margins than transhipment cargo. We have always said that we expect to lose a small quantity of transhipment to some other ports, but this is immaterial, as seen today by recent volumes. Jebel Ali is the regional hub, and we are continuing to develop it. The other ports in the region will aid the development of local economies and encourage trade, which benefits all. Tell us about some of the challenges you face.

constantly invest to ensure we stay ahead of demand, so our customers can maximise the efficiency of the supply chain and improve their competitiveness. We have invested significantly in infrastructure, equipment, technology and training at Jebel Ali, and we will continue our strategy to ensure we can serve our customers’ efficiently and help them realise the benefits of scale the new, larger vessels bring. JOC rankings are based on the average moves of containers per ship, per hour, reported by shipping lines themselves, representing more than 75 per cent of global vessel capacity. Jebel Ali led the industry with an average of 138 moves per vessel hour (MPH). According to the report, Jebel Ali Port beat 483 ports worldwide, and topped the list of the world’s top 25 ports after an analysis of more than 150,000 port calls, and we are proud of those achievements. More importantly, given the move to larger and larger ships, Jebel Ali also tops

28 MARCH 2015

the list of ports handling ships with capacity of more than 8,000 TEU (20-foot equivalent container units), with an impressive 163 MPH. What was the capacity handled by the Jebel Ali Container terminal last year? How is that going to be surpassed this year?

Our flagship Jebel Ali port continues to reach record highs with 15.2 million TEU handled in 2014, representing growth of 11.8 per cent for the year. The opening of an additional two million TEU capacity in the third quarter of 2014 has alleviated constraint, and will provide the capacity we need to achieve further volume growth at Jebel Ali. A further two million TEU is expected to come online in the second half of this year. The strong result displays the growth not only of Dubai, but also the UAE and the wider regions which it serves, and we expect to benefit from the 2020 World Expo

The ultra large container vessels that are increasingly coming into service now are one of the biggest challenges for the industry. On the one hand, they help shipping lines to reduce unit costs, but they also require the port industry to invest in longer berths, deeper drafts and bigger cranes to translate on-water economies of scale to land. And there is a knock on effect that impacts all ports: as the giant 18,000 TEU capacity vessels join the world fleet, slightly smaller vessels are redeployed into routes not usually served by large vessels. It is up to us to meet and adapt to this change, and to serve our customers in the locations where they want us to be. Can you explain a bit more about how capacity is being remodelled at the port to handle the bigger ships on the sea? DP World recently received the largest sugar carrier – how are the planned changes going to handle this?

Jebel Ali is one of the few global ports that has been able to handle as many as six mega container ships at one time in its terminals 1 and 2. With its 21st Century infrastructure and 18 metre draft, Terminal 3 is the world’s most modern container terminal, and gives Jebel Ali the ability to handle up to 10 of the new generation mega vessels at the same time across all the three terminals. So we are well prepared.


CAREER INSIGHT

2015 Vacancies galore in

Career opportunities in the supply chain industry are growing, and suitable candidates have a lot to look forward to in 2015, predicts Chris Greaves, MD, Hays Gulf Region. Some excerpts.

P

eople are the heart of any business, and having the right people on board can determine if it is going to be a successful one. Even so, companies have to be practical when looking for and hiring staff. A lot of elements come into play here.“Salary may be seen as a big point, even though most MNC companies have strict grades in place, meaning you cannot ‘break the bank’ to get anyone on board,” explains Chris Greaves, MD, Hays Recruitment, Gulf Region. Employers are looking for people who want to grow their career with the company, and hope that a promising career path (along with the correct package) can attract and retain staff. The supply chain industry is a diverse one, and every company has their own requirements, based on their unique business model.“All our clients have different challenges facing their business, meaning they look to fill in different areas. I think in general, employers are looking for dynamic and enthusiastic candidates who can bring a fresh approach to the role,” says Greaves. One of the most common positions at the moment is with Demand/Supply Planning and Procurement Managers, who can set up procurement functions from scratch. Although the GCC has a lot of suitable candidates within supply chain, there are still a large amount of European and North African candidates entering the market. This, believes Greaves, is because the ‘hot’ sought-after skill sets

MARCH 2015 29


seem to swing from time to time.“One that constantly seems to stick though is the need for quality candidates within Demand Planning and Management. Knowing how to use an ERP system is great, but companies are looking for candidates who can not only pull computer generated data, but also analyse the figures given to them,” he elaborates.

Supply Chain and Logistics Forecast growth 2015 Looking at the number of vacancies registered in 2014 for Supply Chain and Logistics roles, it is clear that the GCC market is on a growth trajectory. The market is being fuelled by the surge in global import and export volumes, as well as local

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pply Chain & At a glance: Su dents on sp Logistics re Logistics 83 per cent of pecting a salary ex e ar s nt de respon ar increase this ye Supply Chain 78 per cent of pecting a salary e ex ar s nt de on sp re ar increase this ye ceived a salary 69 per cent re 14 increase in 20 e was the averag 14 5-10 per cent 20 in e as re pay inc company-wide ly Chain pp Su of nt ce 5-10 per ase pect a pay incre respondents ex this year y d more is the pa 10 per cent an by Supply Chain ed ct pe increase ex is year respondents th

investments in Dubai Free zones, Abu Dhabi Industrial zones and logistics hubs (such as the new Dubai World Central airport). The Kingdom of Saudi Arabia remains focused on creating efficient supply chain teams. This has increased the demand for Saudi Nationals, but during the last half of 2014, the number of vacancies tapered off slightly. Recently, billions have been invested in the local market in order to establish a prominent logistics hub and retain ‘worldclass’ status. For this reason, there has been an increase in demand for Project Logistics roles, as well as senior positions to head up these developments. The need for quality Demand/Supply planners is still high and will remain


COVER STORY

Position

Knowing how to use an ERP system is great, but companies are looking for candidates who can not only pull computer generated data, but also analyse the figures given to them. constant. Typically, it’s not until we get further into the New Year that salary movements within organisations take place. Last year, salaries took a small but positive increase, and this is expected to happen again in 2015. Unfortunately, this is a mismatch with the expectations of Supply Chain and Logistic professionals, who are expecting a substantial monetary increase due to the positive economy and an increase in the cost of living. In light of the discrepancy between employee expectations and the reality of salary increases, employers need to be aware that to attract and retain the strongest talent in the region, they need to make attractive offers, or else risk counter offers appearing more appealing. Offering career development and training, as well as justifiable/realistic remuneration packages, will help to retain top talent. In the last six months, procurement roles have specifically

COO

Range Average 70,000-100,000

80,000

3PL 35,000-60,000

50,000

Logistics Manager

15,000-30,000

25,000

Planning Manager

20,000-30,000

25,500

Logistics Specialist

10,000-18,000

15,000

Logistics Coordinator

10,000-17,000

13,000

7,000-15,000

11,000

Operations Manager

20,000-35,000

27,500

Supply Chain Director

50,000-75,000

60,000

Group Supply Chain Manager

40,000-50,000

45,000

Supply Chain Manager

25,000-35,000

30,000

Supply Chain Coordinator

10,000-22,000

18,000

General Manager

Customer Service Executive

picked up, and Shipping and Warehousing organisations have started to expand their operations. The year 2015 is forecast to be a positive growth year for the Supply Chain and Logistics sector.

Employee survey summary 2014 was a steady year for Supply Chain and Logistics professionals. In terms of salary, those who saw changes averaged an increase of 5-10 per cent to their monthly salaries. The majority of rises were a result of companywide pay increases, which is reflective of expectations and UAE cost of living. Bigger percentage increases in salaries were a result of professionals moving organisations during the year. In 2015, 83 per cent of Logistics professionals are expecting an increase to their salary, 41 per cent of which expect the increase to be over 10 per cent. This is compared to 78 per cent of Supply Chain professionals who are expecting an increase, and just 18 per cent of whom predict it to be over 10 per cent of their monthly salary. Supply Chain professionals reaped the largest salary increases (when compared to Logistics), with 21 per cent more respondents benefiting from a 15 per cent + monthly pay rise. About 66 per cent of respondents within these specialisms will be considering new employment in 2015, half of which are ‘active’ with their search. However 59 per cent of total respondents will also be looking to progress internally. When asked ‘what is most important to you when considering a job offer?’, career development opportunities came out on top, ranking 18 per cent higher than ‘high salaries’, which is good news for staff retention projects.

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FEATURE

Oman adds links to

food chain Major investments in agribusinesses this year look set to help Oman improve food security and develop an export capacity in processed foods from its new hub in the northern port city of Sohar. The expansion will also produce spin-off benefits for the freight and packaging sectors

Edwin Lammers, Sohar Port and Freezone’s Executive Commercial Manager

32 MARCH 2015

T

he development of Sohar as a major food-processing centre will see the construction of an OR15.5m (US$40.3m) flourmill with a daily capacity of 500 tonnes when production begins in late 2017. Oman Flour Mills, the country’s largest flour producer with a daily output of 850 tonnes, said in a statement in January that the new mill had an eventual capacity of up to 2000 tonnes. The agri-industrial hub will also feature Oman’s first sugar refinery, which will eliminate the need to import the more than 120,000 tonnes of refined sugar consumed annually. Like other countries in the Gulf region, the Sultanate has to import most of its foodstuffs due to climatic conditions and land-use restrictions. It is working to enhance food security by increasing cultivation and buffer food grain stocks, with extensive storage facilities being developed at Sohar and elsewhere. The US$200m facility, commissioned by the Oman Sugar Refinery Company (OSRC), is expected to come on line later this year or early 2016. With a planned capacity of 700,000 tonnes in its initial stage, and 1m tonnes in the second phase of the project, the refinery will supply the local market and support the growth of the processed foods sector. In addition to private sector investment, the government is also offering support to the industry via funding announced in its

January budget. Plans to develop a OR100m (US$260m) plant in a joint venture with poultry products firm A’Saffa Foods is part of a major initiative to give Oman near selfsufficiency in poultry products. Oman Food Investment Holding – a new state enterprise overseeing agri-business investments – will lead the project, in which A’Saffa has agreed to take a 20 per cent stake. Works on the mega facility are set to begin later this year, although a decision has yet to be made on its location.

Spin-offs for packaging sector Underpinning the expansion of Oman’s food processing sector will be the construction of a US$170m agricultural handling terminal at Sohar. Work on the terminal is scheduled to begin in March, and when completed it will be able to handle 700,000 tonnes of grain and 1.5m tonnes of raw sugar imports annually.


Packaging is another sector lined up to benefit from the expansion of food processing industries.“Our aim is to attract new investment in food and food processing industries and create a cluster than can feed the region,”said Edwin Lammers, Sohar Port and Freezone’s Executive Commercial Manager.“Grain silos and a sugar refinery are already in the pipeline, and as this sector grows, the opportunities for packaging companies to serve multinational businesses will grow,”he added. Investments are already in the pipeline to meet the extra demand for packaging following the planned addition of food processing projects in and around Sohar. Among those, Ompet, a joint venture between the Oman Oil Company and LG International, plans to open a US$600m beverage packaging factory in the Sohar Port and Freezone in 2016, turning out 250,000

tonnes of plastic bottles a year at full capacity. One of the major aims behind the project is to reduce the import requirements of Polyethylene terephthalate (PET) products in Oman and the region more generally. It will also leverage Oman’s low-cost energy resources to reduce the cost of pre-packaged food imports. Other developments utilising the output from the petrochemical plants in the region will see packaging materials capacity rise to 1.5m tonnes annually, according to port data.

Investing in logistics support The focus on agri-industry is expected to have positive knock-on effect for other industries, including the domestic transport and logistics sector, which will benefit from increased freight traffic between Sohar and processing centres to other markets. The planned construction of a national

rail network, scheduled to be completed before the end of the decade, will alleviate the pressure on road transport facilities. Work is set to begin later this year to build the first stage of the multi billion-dollar network, a 207km line between Sohar and Buraimi on the border with the UAE. The line will link to the wider regional network, facilitating imports of materials and exports of processed foodstuffs and other goods between the GCC members. Further sections of the 2235km rail grid will eventually span the length of the Sultanate, connecting Oman’s most populated areas, the ports and industrial centres. -Originally published by Oxford Business Group (OBG) in Economic News Update Oman, published in February 2015. For economic news about Oman and other countries covered by OBG, please visit http://www.oxfordbusinessgroup.com/news

MARCH 2015 33


AVIATION

Up in the air e of ominanc d g in w ro n, the ing the g al aviatio b lo Emphasis g in , s – Boeing ast airline rs re tu c Middle E fa anu the aircraft m – came to big three r ie rd a b d Bom region Airbus an les to the a s e c n u nno GCC to a

34 MARCH 2015

T

he Dubai Air Show covered an area of 645,000 sq metres, and an estimated 60,000 visitors attended the event, as well as some 1055 exhibitors from around 60 countries. The show indicated the enormous potential for aviation in the region and promised to put Dubai at the centre of new developments. During the show’s opening,


aircraft. At the 2007 Dubai Airshow the sales figure of $155bn was 25% lower than 2013, and earlier in 2013 the Paris Air Show at Le Bourget, traditionally a major global event, revealed sales of $115bn at list prices. Another first for the Dubai Airshow was the venue – Al Maktoum International at Dubai World Central – on target to be the world’s biggest airport with five runways and a 160m-person capacity when fully built and operational. The show was also used to launch the new Boeing 777X aircraft, which the company did with great fanfare, announcing 259 orders and commitments from Emirates, Qatar Airways, Etihad and a previously announced order from Lufthansa. The number was yet another record for the launch of a new model, according to Jim McNerney, the CEO of Boeing. The latest 20-year outlook for commercial aviation from the US plane manufacturer is for a $4.8trn market for jet transport aircraft. Of that, the Middle East region is expected to require 2610 jetliners valued at $550bn.

Final verdict Aviation analysts summed up the Dubai Airshow by saying that the results had catapulted the importance of the event to the top of the heap.“Overall, the show now puts Dubai as the world’s number

Sharief Fahmy, the chief executive of Dubai Airshow organiser F&E Aerospace, told local press,“If there was anyone left in the aerospace industry who had not recognised the undeniable importance of this region, this morning removed all doubt. We are in the centre of the region with the world’s fastest-growing aviation infrastructure, fastest-

growing airlines and a region where security commitments are in focus.”

Success Aircraft orders announced at the show topped $200bn at list prices as Emirates Airline, Etihad Airways, Qatar Airways and flydubai all announced major shopping lists for new

one air show,” Saj Ahmad, chief analyst at StrategicAero Research, was quoted as saying by the UAE daily The National.“The show has stamped its authority as a mustdo venue for aviation deals.” Combined orders from the world’s two biggest aircraft manufacturers, Boeing and Airbus, reached about $179bn, with most

MARCH 2015 35


AVIATION

of the buyers coming from the Middle East. The two aircraft manufacturers’ figure of $179bn is more than the GDP of New Zealand, and the more than $200bn from the whole show was around the same size as the GDP of Peru or Algeria. It was the revelation by Bombardier of a $387m order for 16 CS300 from Iraqi Airways that took the show total over the $200bn mark. Canada’s Bombardier, the third-largest plane manufacturer in the world, announced firm orders and commitments for 38 aircraft valued at $2.01bn. The Thai low-cost carrier Nok Air was the other main Bombardier customer apart from Iraqi Airways. The expansion of Gulf carriers such as Emirates, Etihad and Qatar Airways is gradually shifting the focus of global air travel in the world to the Middle East, although Turkish Airlines based further north in Istanbul is also a rising force to be reckoned with. The big three in the Gulf are within eight

36 MARCH 2015

to 10 hours’ flying time of almost 80% of the world’s population. Airbus, based mainly in Toulouse, France, won 160 orders and commitments, with Emirates’ order of 50 A380s constituting an especially significant boost to sales of the superjumbo. Fabrice Brégier, the French firm’s CEO, said,“This is probably one of our best Dubai Airshows. We had an initial target of 800 orders [for the year] and we are above 1200 so it means we have overachieved our initial target. We will deliver close to 620 aircraft.”

Next generation Emirates’ biggest single order was for the newly announced Boeing 777X. The Dubai carrier bought 150 of Boeing’s re-winged 777s for $76bn at list price, plus an option for 50 more. Qatar Airways bought 50 for $19bn, Etihad ordered 25 and the 34 from Lufthansa makes up the 259, which

Boeing says makes it the biggest launch in commercial jetliner history. Two of the big buyers, Qatar Airways and Emirates, cast aside traditional rivalries and negotiated with Boeing together for 200 firm orders and 50 more as options. And Emirates, which operates 175 of the current 777s will cooperate with Boeing on suggestions for the design of the next-generation models. The airline is reported to have been in talks with Boeing over the new 777 for several years before the order was announced. Tim Clark, the president of Emirates, said the airline will begin retiring its 777 fleet by 2017. The new 777X burns 20% less fuel and offers a 15% operating improvement on the existing 777-300ER, according to Boeing – add to this an interior design and décor inspired by the 787 and a passenger cabin that is said to be 11% more spacious than the Airbus 350. The purchasing power of the Middle East region’s major airlines allows them to offer aircraft that


AVIATION

FlyDubai

are newer – and therefore more attractive – and much more cost-effective to operate. “Although it looks like a large number on paper, the reality is that the capacity is being phased out. … The new aircraft are coming in to replace it,”said Clark.“We keep our aircraft for 12 years.” The supremacy of the Gulf carriers in fleet renewal is emphasised by noting that they constitute around 85% of the 777X orders, while Emirates accounts for almost half the bookings for the Airbus A380 – 50 out of 101 orders. The airline already operates 39 of the world’s largest commercial jets. Asked by reporters at the show if the airline market was big enough to absorb the mass expansion by Emirates, Qatar Airways and Etihad, Clark replied,“Every time the three companies ordered more aircraft, everybody asked if there is enough to go round. We seem to be managing to fill the airplanes. We are optimistic there will be enough room.”

While the three full-service carriers were virtually monopolising attention, a newer carrier was in the process of making major strides forward. Flydubai, the stateowned carrier based at Terminal 2 of Dubai International, is not yet five years old and has not even taken delivery of its entire initial order of 50 Next-Generation Boeing 737800 aircraft made at the UK’s Farnborough Air Show in 2008.Yet, the airline made a commitment at the Dubai Airshow in November 2013 to order additional aircraft from Boeing. This order includes 75 737 MAX 8 and 11 Next-Generation 737-800 aircraft, and the airline also retains purchase rights for a further 25 737 MAX 8. Since its inaugural flight in 2009, flydubai has built up a network of more than 65 destinations, served by a fleet of 35 Boeing 737-800 aircraft. The remaining 15 aircraft from its 2008 order will be delivered by 2015. In the past five years the airline company has targeted secondary cities within the range of its aircraft, which is around five hours’ flying time or slightly more. The firm also aims to enhance connections in tourism and trade across its expanding network. Since its launch, the carrier has opened up 46 new routes that were previously underserved or did not have direct air links to Dubai. The first Next-Generation Boeing 737-800s from the latest order will be delivered between 2016 and 2017. Deliveries of the first Boeing 737 MAX will then begin in the second half of 2017 and continue until the end of 2023. The 737-800 is the bestselling commercial jet in history. Total sales hit almost 10,500 in June 2013 at the Paris Air Show when Ryanair placed an order for 175 planes.

Air safety The question of air safety inevitably arises whenever such high aircraft numbers circulate, even though statistics show it is safer to fly than to drive. Be that as it may, GCC investment in airspace management technology seems to be keeping pace with the sales of new aircraft. In February 2013, the AutoTrac III automation system produced by Raytheon, the US defence and electronics manufacturer, entered operational service at Dubai International and Al Maktoum International, becoming the main tool for air traffic controllers to safely manage the increasing number of approaching and

departing flights. While not downplaying the importance of safety, the much more common effect of crowded skies is wastage of time and fuel. New arrival and departure procedures are aimed at allowing planes to fly more direct and therefore more fuel-efficient routes using AutoTrac III. Mohammed Ahli, the directorgeneral of the Dubai Civil Aviation Authority, told OBG,“It is important for GCC and subcontinent countries to understand that a unified approach is to the greater benefit of all as external airspace congestion continues to heighten throughout the region.” In addition to ground-based electronics, air traffic management technology on board aircraft is also cutting fuel costs by helping aircraft to find more direct routes. Irrespective of the amount of technology, according to Hussein Dabbas, the regional vice-president for the Middle East and North Africa at the International Air Transport Association, there is a“need for a more coordinated air traffic management system or there is a risk of stifling growth in the aviation sector and the profitability of airlines”.

New deals The Dubai Airshow’s announcement of aircraft sales and talk of all the high-tech ancillary equipment are becoming less and less a one-way street. The UAE’s aerospace industry, centred on Al Ain in the emirate of Abu Dhabi, also derived huge benefits from the agreements revealed at the show. The deals will generate $4.4bn of manufacturing work for Strata, Mubadala’s advanced composite aerostructures manufacturing plant, in the period up to 2030. The 2013 show’s results will also lead to a move into engine parts manufacturing, generating $1bn of work, with the aim to become a tier 1 supplier for next-generation commercial engines. The UAE’s aim, as in other parts of the world, is to be recognised as a direct supplier for the global original equipment manufacturers. That status puts the partner on a par with the original firm. An edited version of an article originally published by Oxford Business Group (OBG) in The Report: Dubai 2014, published in January 2014, Transport Chapter. For economic news about Dubai and other countries covered by OBG, please visit http://www.oxfordbusinessgroup. com/economic-news-updates

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LIQUID LOGISTICS

Logistics

optimisation in chemicals – mid-term planning

In the chemicals industry, tactical logistics management poses an opportunity for competitive advantage. It can save an average-size chemicals company up to US$73 million annually through increased efficiencies and responsiveness; for the whole chemicals industry, the savings could surpass US$9 billion.

A

look into the world of logistics in the chemicals industry reveals an interesting state of affairs. Long-term logistics planning is largely in place to ensure there is infrastructure to support chemical companies’ needs for several years out. Short-term logistics runs pretty well, too, with transport and warehouse managers seeing to regular daily and weekly transportation needs. In between the two extremes, however, is a gap in logistics planning. Some chemical companies sense it; others have yet to identify it. A fortunate few know the opportunity that mid-term logistics poses. In logistics terms, that means collaboration, mid-term planning, and more prolific information exchange to put the building blocks of tactical logistics into place. One major chemical company minimizes warehouse rental costs by holding monthly planning summits with its business units, logistics procurement, and logistics suppliers. Another chemical company reduces last-minute searches for transportation by tailoring logistics plans for specific ISO containers. Elsewhere, a global logistics supplier pinpoints the best hinterland connections from European ports by regularly assessing truck, rail, and barge costs and lead times. These are examples of components in tactical logistics management. Unlike other industries, such as consumer goods, where perishable food products quickly traverse the supply chain, or automotive, where parts reach the production line just in time and in sequence, few companies in the chemicals industry unite their supply chains with mid-term logistics planning. There is a promising opportunity for those that do. Tactical logistics management can save an average-size chemicals company up to $73 million annually through increased efficiencies and responsiveness; for the whole chemicals industry, the savings could surpass $9 billion. Even

MARCH 2015 39


LIQUID LOGISTICS

more important, tactical planning and companies going forward. Tactical logistics optimization can yield up to 4 percentage management, as the layer between points of improvement in on-time, in-full strategic, long-term design and short-term delivery reliability. Single players that operations, fills a gap to respond to market improve their logistics ahead of competitors trends (see figure 1). can translate this advantage into more satisfied customers and increased sales. Long-term supply chain design To till this fertile middle ground, it helps often includes: to understand some of the factors driving A time horizon of three or more years for the chemicals industry today, the barriers major strategic decisions, such as the size, that chemical companies capability, and location of face when trying to respond A fortunate few know warehouses, distribution to these conditions, and centers, and filling lines, the opportunity that the actions they can take and plans for using into optimize their mid-term house or logistics service mid-term logistics logistics operations. In providers’ (LSPs’) assets poses. In logistics this paper, we draw from A time horizon of our extensive experience one year or more for terms, that means working with chemical procurement of logistics collaboration, companies on their supply capacity, such as tenders chains and logistics. We for major lanes and the mid-term planning, also draw from the results definition of preferred of our Tactical Logistics in lanes and routes within and more prolific the Chemicals Industry the network (some information exchange companies determine survey of industry leaders to delve into these areas and these on an as-needed to put the building offer recommendations for basis) blocks of tactical strengthening the supply Optimizing networks chain with tactical logistics. with one-off, status-quo logistics into place network analyses

Mid-term logistics is the missing link

The chemicals industry is in tremendous flux. The bottom line here is that planning for responsive, flexible logistics capacity, securing access, and optimizing usage become key success factors for chemical

Figure 1

Tactical logistics optimisation fills the gap between short-and long-term operations

Source A.T. Kearney analysis

40 MARCH 2015

Short-term logistics execution often includes: Shared service centers, which are established using economies of scale to process shipment orders that apply harmonized processes and systems Daily operations supported by transport management systems that offer optimization functionality for shipment consolidation Outsourcing partners to handle administrative logistics services to achieve scale and complement internal logistics expertise. Partners may provide capabilities for lesser known regions or specific processes, such as customs optimization, for example We find that a highly detailed focus and even higher accuracy characterize chemical companies’ short-term logistics, but the information they rely upon is often available for very short horizons (sometimes less than one week). This pushes players


COVER STORY

into a reactive mode of operation. Tight timeframes leave little or no room for significant optimization. Hence, there is a need for mid-term planning.

The building blocks of tactical logistics management Mid-term planning addresses three areas: 1. Capacity planning. This essential block accounts for the growing volatility and short supply of services during seasonally critical periods, such as Christmas. To smoothen demand and supply fluctuations, strengthening the accuracy of forecasts and improving the flow of capacity-

relevant information are key. This can be accomplished by working more collaboratively and transparently with LSPs and internal units. It starts with a review of long-term plans for annual and weekly volumes. As the mid- and short terms approach, logistics managers reach out to their shippers, which confirm or adjust production and warehouse plans to match actual shipping volumes and timing. Carriers come into the mix at this point, to confirm that they will send the needed equipment and drivers. This approach is known as available-to-promise and is commonly used when managing production assets in the chemicals industry.

Shippers and carriers work directly with one another as well. Together, they can identify site-level constraints that may impede capacity and flexibility, such as excessive wait times for loading or overly rigid appointment windows. When shippers and carriers are well connected, it becomes markedly easier for them to share requirements and reallocate committed capacity for new lanes and volumes to accommodate last-minute customer changes. Joint planning, for example, can give the LSP an extended window from pickup to delivery and enable it to best utilize capacity.

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LIQUID LOGISTICS

2. Optimisation. Once planning is underway, optimizing it is the next step. Proportions assigned to different carrier segments can be adjusted regularly to better respond to volatility and improve capacity utilization. For example, the U.S. head of logistics for a global chemical company told us that his firm analyzes its transportation needs quarterly and adjusts among lowerpriced fixed capacity, medium-priced flexible capacity, and market-priced broker spot capacity where needed. Each shipper’s and carrier’s situation is unique, of course, in terms of their committed volumes and supply chain characteristics, among other factors. Differentiating capacity in this way accounts for variability, and, at the same time, can lead to effective capacity consolidation and more flexible use of transportation modes. 3. Monitoring. Capacity markets do not tend to be regularly and systematically monitored, which leads to reactive logistics decisions. Actively evaluating capacity can help chemical companies’ logistics and supply-chain managers identify market developments as they appear and proactively take action. Monitoring brings other benefits, too. It can reveal actual utilization of fixedcapacity assets, such as internal and external warehouses and rail-tank cars, capacity available through frame contracts, and usage of full truckload (FTL) rates. Putting these blocks in place can lead to notable improvements in delivery reliability. According to A.T. Kearney’s most recent

Figure 2

Delivery reliability is chemicals executives’ most important buying criteria

Note: Rated on a scale from 1(not important) to 5 (very important); percentages represent those that marked 4 or 5. Source A.T. Kearney Chemical Customer Connectivity Index (C3X)

42 MARCH 2015


MARCH 2015 43


So why haven’t more chemical companies incorporated tactical logistics into their operations or achieved a company-wide holistic approach? The answer is, it isn’t easy. Logistics is often decentralized, for one thing, with responsibilities set up by business units, regions, and modes. Transportation logistics is handled separately in Europe and the United States, for example, and further parties oversee surface, sea, and Getting in the way Capacity markets do air, with specialized of a good thing In our survey, 70 percent not tend to be regularly responsibilities divided among other areas, such of participants saw midand systematically as road versus rail, and term logistics as a vital advantage (see figure 3). monitored, which leads bulk versus packaged goods. These different One participant who has to reactive logistics silos make a holistic instituted such tactics told approach difficult. us:“We have improved decisions. Actively Companies know customer satisfaction and evaluating capacity that a holistic system is loyalty by introducing important but have not proactive information flow can help chemical yet tackled it (see figure to customers regarding companies’ identify 4). The head of supplylogistical delivery constraint chain management for periods.”Another chemical market developments one chemical company company reduced indicated to us that such transportation costs by as they appear and management has been on increasing FTL share on proactively take action the company’s agenda for small volume lanes.“We years, but they have not introduced fixed delivery yet been able to implement it. Fragmented schedules, which are automatically filled by logistics responsibility and the need to our transportation management system,”its optimize tactics already in place are challenges representative said. A third respondent told that other participants in our survey shared. us,“To reduce firefighting in resolving the lack of transport capacities, we established These companies revealed that they logistics planning for specific ISO containers. face barriers to tactical logistics This allowed us to increase productivity in optimization in three critical areas: our transport management operations.”(See 1. Organizational alignment. Probably the sidebar: Strong Tactical Practices in Action.) Chemical Customer Connectivity Index (C3X), while chemical customers seem to have accepted market realities around product availability and pricing, they have consistently ranked delivery reliability as their most important buying criteria over the years (see figure 2). In fact, the survey showed that they are willing to pay up to a 5 percent premium to suppliers with strong delivery and product availability performance.

Figure 3

Tactical logistics management is highly relevant to most chemicals executives

Source A.T. Kearney’s Tactical Logistics in the Chemicals Industry study

44 MARCH 2015

biggest barrier, chemical companies lack a strong interface between their logistics staff and the logistics procurement department. Without logistics demand information and the proactive updates that such an interface can provide, companies often gain valuable insights only after the fact. Mutual trust and collaborative commitment between parties has yet to be established. Better optimization comes when LSPs are willing to share information about their network utilization with shippers, a step they often are reluctant to take, given their fear of losing competitive advantage.


LIQUID LOGISTICS

Without someone responsible for tactical logistics management, opportunities and solutions to pain points go unrecognized. 2. Data availability. Many shippers concede that transparency into assets is not at the same level for logistics as it is for production. They lack a database to reveal real-time information about warehouse capabilities, current utilization levels, and cost. Similarly, they lack logistics supply-market data. Logistics partners may provide some information, but chemical companies often do not sufficiently monitor supply capacity

and price developments between tenders. As one logistics procurement head told us,“We would happily share tactical logistics planning information with our LSPs, if we had it ourselves.� 3. Support for outsourcing excellence. Reliable demand information is hard to obtain in the tight timeframes of today’s dynamic chemicals markets. Instead, for one- to three-year tenders, companies just have historic data to share. Yet, LSPs require more timely information for their price calculations. To ease this situation,

shippers could provide them with regularly updated outlooks on expected capacity requirements for a given tactical horizon. The growing tendency of chemical companies to outsource transactionalpurchasing and logistics activities, such as tendering and transport management, to fourth-party logistics providers (4PLs) often widens the gap between business units and procurement. LSPs have found that the quality of tender information deteriorates as a result. Historically, logistics has been viewed as a cost center. Compared to other levers that drive company performance in the

MARCH 2015 45


chemicals industry, such as raw materials, energy, and regulation, logistics receives less attention and limited resources. In turn, these resources are pushed to their limits and logistics staff into firefighting mode to ensure timely deliveries. All hands go to operative logistics to resolve issues that arise because tactical planning is not in place. Shifting resources to mid-term planning would reduce the need for firefighting, yet many organizations remain stuck in this vicious cycle. They may be achieving decent performance by focusing on short-term optimization, so the potential that mid-term planning can bring may not be apparent. The opportunity for truly world-class logistics performance may be lost as well.

Three keys to comprehensive logistics excellence To achieve logistical performance that is outstanding enough to be a competitive differentiator, it could behoove chemical companies and their logistics partners to work together for the common good, much like Dumas’Three Musketeers. They use

Figure 4

collaboration, mid-term planning, and more prolific information exchange to put the building blocks of tactical logistics into place. Bring the experts together. On the corporate side, the three parties that are key to the collaboration are logistics planning, logistics operations, and logistics procurement. For mid-term, tactical planning, they will want regular exchanges and alignment. Logistics procurement retains the lead in contracting logistics services, with other parties weighing in on specifications and information exchange. By having the various logistics experts in discussions, good ideas for making improvements have a higher chance of bearing fruit. Extend planning to logistics assets. Translating sales and operational planning (S&OP) results into transportation and warehousing requirements can be a basis for freeing and optimizing bottlenecked capacities and for better leveraging market price fluctuations. S&OP is already applied to planning the use of production assets for the short, mid-, and long term. This information stream could be incorporated

The chemicals industry has room for improvement in implementing tectical logistics management

Source A.T. Kearney’s Tactical Logistics in the Chemicals Industry study

46 MARCH 2015

into logistics as well. Systematically translate production or, even better, distribution plans, into logistics plans. In the short term, augment detailed planning with evaluations of actual customer and transport orders. Market information from logistics suppliers will further enhance this planning. Improve end-to-end information exchange. Outsourcing of tendering can divert time-consuming administrative tasks to a partner to free up procurement resources to focus on more value-adding tasks, such as supplier relationship management. Make it a requirement, however, that 4PLs work extensively with their customers to improve demandinformation quality and that shippers establish ways of regularly sharing collaborative planning information with all concerned parties.


LIQUID LOGISTICS

The questions to ask When demand suddenly fluctuates, the chances of chemical companies getting the capacity they need at the right price are much higher when they have secured that capacity and shared resources across their logistics team in advance. Otherwise, they may come up short with transportation or pay a premium for it. Looking at the big picture, if a chemical company fails to plan short-term logistics, logistics staff will feel it fast. A lack of the right long-term logistics will make its presence known, too, especially when a chemical company has spent a great deal of money on infrastructure or agreements that do not work out. Now, the next area to consider is tactical logistics planning. Responding in the moment to today’s volatile chemical markets may be working for chemical companies to a point, but it can divert them from the possibilities

mid-term planning can bring, from alleviating the firefighting to conserving resources for short-term planning, instead putting them to more effective and profitable use for the midand long term. Not sure where your company stands with this complex subject? There are six questions that your logistics staff can ask of their own areas, as well as of LSPs and chemical shippers: Does your company have transparency on tactical logistics capacity information? Is there a dedicated responsibility for tactical logistics optimization? Are logistics procurement, central logistics functions and businesses fully aligned and do they continuously share information? Is demand information systematically translated into logistics capacity requirements?

Are capacity requirements regularly shared with procurement and LSPs? Are logistics supply side developments systematically monitored and leveraged to improve delivery reliability and logistics cost? Answering no to two or more of these questions could make a strong case for the “all for one, and one for all” approach of tactical logistics planning. No swords, plumed hats, or tights required. The authors wish to thank Raj Kumar (New York), Armin Scharlach (Berlin), Otto Schulz (Düsseldorf), Andrew Walberer (Chicago), Sven Rutkowsky (Düsseldorf), and Saurabh Tejwani (New York) for their valuable contributions to this paper. - Michael Zimmerman, Partner; Ingo Schroeter, Principal; Benedikt Frank, Consultant www.atkearney.com

MARCH 2015 47


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FUTURE OF CARGO

no more e b n a c e r The gy to the lo o n h c e t disruptive dustry in t h ig e r f global road g’ or in iv r d s u o om than ‘auton al term u s u e r o m to give it its ough h lt A . ’ s le ic veh ‘driverless ds, this in m ’s le p o in many pe is little y g lo o n h c not , type of te n io t c fi e c scien more than eality so true in r

s u o m o n Auto

s e l c i h ve

T

he fact that technology giants such as Google have invested heavily in developing the concept of driverless vehicles shows that it is perhaps closer to realisation than people think. Whereas the headlines have mostly focused on cars, one of the world’s largest manufacturers of trucks, Daimler, recently revealed its own plans. These included demonstrating a prototype which drove autonomously on an autobahn in Germany, successfully navigating a junction in real life driving conditions. This is part of its Future Truck 2025 strategy. Trucks will be equipped with Daimler’s Highway Pilot assistance system which will allow them to navigate successfully at speeds up to 85 kilometres/hour. However at this stage removing drivers from trucks is still a very long way off and will face

MARCH 2015 49


FUTURE OF CARGO

huge challenges, not only years ago. At the very Daimler, the world’s from labour organisations, least plans should be in but also safety and largest manufacturers place to implement such regulatory bodies and even technologies. However of trucks, recently the wider population. A this is not the case and cursory look at the railway this perhaps hints at the revealed its industry throws up some of problems such initiatives demonstration of the barriers faced. Although in the road freight sector the technology has existed will face. a prototype which for many years for driverless It is for this reason that drove autonomously trains or rapid transits, vehicle manufacturers very few are in service. In such as Mercedes Benz on an autobahn in theory, the highly controlled (Daimler) are being very Germany, successfully careful with the language environment of a railway should lend itself ideally to use, unwilling navigating a junction they the technologies. In fact, as they are to upset given the congestion which vested interests. For the in real life driving exists on many parts of a rail foreseeable future the conditions network and the expense of technology which they building new infrastructure, are developing will be it would seem obvious that autonomous to assist the driver rather than take over driving should have been adopted several the driving. A comparison perhaps would be with airline pilots who use an autopilot once they have taken off, and only return controls to manual when they are about to land. This is despite the fact that at many airports some newer airliners are quite capable at landing themselves.

50 MARCH 2015

What are the driving forces behind driverless trucks? Congestion. One of the foremost reasons for the investment in this technology is the potential increase in transport efficiency. With congestion forecast to rise substantially in the near future, there is a need to break the link between economic growth and vehicle movements. German authorities predict that truck transport volume will increase by 39 per cent by 2030 unless steps are taken. Construction of new roads is unpopular from an environmental perspective, and many countries in Europe just don’t have the money available to make the sort of investment required. Major trunk road networks in Western Europe have barely grown in the past decade. Therefore it becomes essential to utilise existing road capacity more efficiently and new technologies can aid in this goal. Costs In many countries in Europe, it is estimated that around 45 per cent of total cost for road freight operators is related to the driver. Eventually removing the driver (although no one is suggesting this is likely for many years) would obviously then have an enormous impact on road freight costs, profits and margins.


COVER STORY

Another issue is the looming driver shortage crisis. Many people are increasingly unwilling to commit to a career as a driver given the hours away from home; the relative low pay and the conditions. This will eventually translate into higher costs for road operators and their customers. By taking away most of the stress from driving by leaving most of the important decisions to a computer, the working conditions will become more attractive. There may also be the opportunity for the role to become more value-adding as the driver will have the time and connectivity to undertake an enhanced role, perhaps in transport management activities. Safety The demand for absolute reliability is not so much a technical requirement, this can be archived by embedding some degree of redundancy in the vehicles if they go ‘offline’ for a few seconds (although to put this in context 99.95% reliability would be just about acceptable). However public perceptions will demand that absolute

reliability must be proven. Therefore, by definition, any operations involving autonomous vehicles ‘in the wild’ so to speak, will need to be as part of a much larger system. How long before this is a practical reality?

The technology There have already been major developments in terms of assisting the driver. Daimler’s Proximity Control Assist adapts the speed of the truck depending on traffic situations through an integral cruise control and braking function. Threedimensional maps exist for a Predictive Powertrain Control system, and telematic products ranging from vehicle management and transport management to apps for the driver and operator have However at this stage already been rolled out. removing drivers from Future advances in technology will be in

trucks is still a very long way off and will face huge challenges, not only from labour organisations, but also safety and regulatory bodies and even the wider population

Vehicle-to-Vehicle (V2V) and Vehicle-toInfrastructure (V2I) initiatives which will build on the technologies already in place, adding in more cameras and sensors. Vehicle manufacturers at present believe that the driver will still be completely essential to the driving process in 2025. The technology is there to aid them rather than take over their job. V2V and V2I connective technologies are not strictly essential to autonomous driving, although if used in conjunction will create more efficiencies. Vice versa, V2V and V2I technologies do not require autonomous vehicles. Big data It is increasingly possible to ‘harvest’ a huge amount of data from the vehicles, both cars and trucks, which if analysed in a proper and timely way will result in efficiencies, mostly related to the avoidance

MARCH 2015 51


FUTURE OF CARGO

of congestion. This data can be generated either by traffic authorities (such as municipalities or highway agencies); private companies, which provide information to users on speed of traffic or more recently mobile applications which allow individuals to log incidents as they observe them. The latter can theoretically mobilise thousands of drivers who act as monitors of traffic situations in areas which no other organisation could reach. With vehicles having the capability to interact not only with other vehicles around them, but also with highway infrastructure, a huge amount more data will be generated. Embedded sensors in everything from transport infrastructure through to smart devices on board the vehicles themselves will be generating huge volumes of data. This data has to be assimilated and processed, with the resulting conclusions fed back into the system. This places huge demands on the communications topology required to carry the data. It has to be reliable and virtually ‘fail safe’. Legislative barriers to autonomous driving The US is leading the way in the development of autonomous vehicles, although other jurisdictions have not been slow to catch on. However three US states, Nevada, California and Florida have enacted legislation which allows these types of vehicles to be tested on their roads. In Europe, Spain, Italy, Finland and Greece have also passed some form of legislation. There are three main challenges, in addition to the technology development, which will need to be overcome if driverless vehicles are to be widely accepted. Safety (see above); Data security (see above); Insurance liability. The last point may be the most difficult. If, for example, a driverless vehicle was involved in a collision with a pedestrian, who would be to blame? At present the case depends on whether the driver is in the right or wrong and in most cases a judgement would be derived by assessing the driver’s decision-making or behaviour. However if a collision was caused by a software or sensor failure, a case could be made to hold the car manufacturer

52 MARCH 2015

There have already been major developments in terms of assisting the driver. Daimler’s Proximity Control Assist adapts the speed of the truck depending on traffic situations through an integral cruise control and braking function responsible, unless, for example, it could prove that the owner had failed to maintain the systems to the requisite standard. Conclusion Autonomous road vehicles are under development by almost all major manufacturers. Their ability to operate as part of a coherent logistics operation will depend on a number of factors. Leaving aside the inherent technology inboard the vehicle itself, consideration must be given to the operational environment in which it will function. This is a miasma of technical, legal and social rules. There is little doubt that the technology which will allow autonomous vehicles will be in place in five years, although due to some of the reasons outlined above it is more likely to be 10 years before it becomes a reality. It will be much longer before legislators, vehicle manufacturers and road freight operators feel comfortable with removing the driver completely. In summary, vehicle manufacturers believe that the efficiencies the technology will deliver will come in the form of: Reduced fuel consumption – the computer will drive the vehicle more fuel efficiently Reduced emissions – for the same reason 100% connectivity and location services which allow for ‘perfect’ route planning Diagnostic services which ensure correct

maintenance and fewer breakdowns Emergency braking will ensure fewer accidents; gaps between vehicles will be adhered to. Routes can be re-planned around known areas of congestion. Accidents caused by human error (through tiredness, for example) will be considerably reduced. Communications can be shared with customers to provide visibility of delivery times, changing in line with the traffic situation.


Many of the vehicle manufacturers have developed their driverless vehicles to function within the constraints of prevailing transport infrastructures. In short this means the driverless technology ‘augments’ the driver rather than replacing them. It is fair to assume that this will be the first step in an evolutionary path towards complete autonomous operation. During this period we will probably see vehicles operate as just one component in a huge data generating transport system. As

organisations learn to use and analyse the tsunami of data streams, they will be able to reap the potential efficiencies from both a cost and operational point of view. The challenge for many transport operators will be how do they modify their existing information systems to manage a sensor rich environment. Rather than replacing or enhancing existing platforms, this will most likely require a fundamental redesign of their approach to their business. John Manners-Bell, MSc FCILT, is CEO of Transport Intelligence, has over two decades

experience working in and analysing the global logistics industry. He is a member of the World Economic Forum’s Logistics and Supply Chain Global Agenda Council and has advised a wide range of governmental organisations and industry bodies. Ken Lyon is the Managing Director of Virtual Partners and is one of the pioneers of informatics development and supply chain collaboration within the logistics industry. Ken has over 30 years’ experience and is a member of Ti’s advisory board. -www.transportintelligence.com

MARCH 2015 53


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3/3/15 9:00


CONSTRUCTION EQUIPMENT

T

he construction boom on the Middle East is attracting suppliers from the world over. One such is Renault Trucks, which has built and tested 50 units of its new range of trucks in real conditions all over the world, as it seeks to grow its presence in the Middle East’s growing construction industry. The French truck manufacturer, which has firmly established itself in the region since arriving 40 years ago, revealed details of its rigorous testing processes for the new range of trucks, the K range, in Oman before the Middle East regional launch in Doha, Qatar, late last year. Throughout last year, the Middle East construction market completed projects worth US$ 67.7 billion (AED 248 billion) across Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, and a further US$ 103 billion (AED 378 billion) worth of construction contracts are expected to be awarded in 2015. The new K range was pushed to the limit in some of the region’s harshest operating conditions in the Sultanate of Oman, as it was put through exacting quality trials to ensure optimum performance and maximum reliability with a zero failure rate. Lars Erik Forsbergh, President of Renault Trucks Middle East, said: “Our business is to provide a range of commercial vehicles for distribution, construction and long haul, which all allow our customers to maximise productivity while reducing operational costs. Testing our products in real market conditions allows us to build vehicles that service our customer’s needs exactly.” Throughout the 12 month trial period, the K range was used to transport stone, sand and gravel in unforgiving terrain, and driven daily for almost 400km, covering a distance of 100,000km in total. This range’s new powerful and sustainable engine was able to pull 110 tons of sand in extreme heat conditions without any engine or gearbox overload. Renault Trucks Middle East sees the K range as the best fit when it comes to applications in the construction industry segment. The K range is available in rigid

Creating the perfect fit Renaults Trucks reveals details of special Middle East testing as it gears up to serve the growing construction industry in the region

configuration as 6x4 and 8x4 and is also obtainable in tractor head 4x2 and 6x4, which is another dominant segment in the Middle East.

With a steady rise in GDP growth in the GCC region since 2013, growth of the construction sector is approaching 10 per cent in some countries. There has also been a major rise in investment by foreign countries in the construction industry in the GCC region. Renault Trucks’ aims to provide all round solutions for the expanding GCC construction industry, relying on its Middle East dealer network to provide the best customer service and secure uptime to its customer with its 36 trucks centres around the region. Having experienced sustainable growth for the last three years, while at the same time building a strong dealership network in the Middle East, Renault Trucks Middle East is gearing up for a successful year with a projected 10 per cent growth in deliveries in 2015.

MARCH 2015 55


EVENT

Aroop Zutshi, Global President and Managing Partner, Frost & Sullivan, in an interactive question and answer session with His Excellency, Abdul Baset Al Janahi, CEO, Dubai SME.

Innovation the way forward Executives who attended Frost & Sullivan’s GIL 2015: Middle East Executive Congress agreed that innovation is a critical component for the future of industry and business alike. Some highlights from the event

56 MARCH 2015

I

t is the sixth consecutive year that Frost & Sullivan has hosted and presented its GIL Congress in the Middle East, and it was as successful as the previous editions. Held at Atlantis, The Palm, Dubai, the event was a phenomenal showcase of visionary leadership and innovative ideas of regional executives in and around the Middle East. The event kicked off with Frost & Sullivan Global President and Managing Partner, Aroop Zutshi taking the stage, talking on this year’s theme of ‘Convergence’ and ‘The Connected World’. Zutshi explained,

“Convergence is playing a pivotal role in defining the future of business and our competitive landscapes, not just today, but is redefining the way in which we must begin doing business tomorrow.” Addressing nearly two hundred CEOs and members of their management teams, Zutshi continued,“Convergence and the connectivity of things are two subjects that are creating widespread disruption across every industry out there, with the potential of not only transforming, but also collapsing entire industries. If responded to appropriately, and with the right strategic mix of tools and strategies, businesses can drive opportunities that will rapidly accelerate an organisation’s growth.”This unique session facilitated the coming together of the C-Suite of some best-in-class organisations to collectively brainstorm and share ideas and perspectives for the future of their industries. The informative sessions continued with


Sarwant Singh, Senior Partner and Head of the Frost & Sullivan Visionary Innovation Group presenting the Top 15 for 2015 Global Mega Trends

Frost & Sullivan’s the ‘Top 15 of 2015 Global Mega Trends’ presentation and interactive think tank, moderated by Sarwant Singh, Senior Partner and Head of the Frost & Sullivan Visionary Innovation Group, who illustrated some game-changing scenarios. The participants were tasked with creating some innovative and futuristic scenarios of their own that could yield high growth opportunities, which they could take back to their organisations and implement.

In attendance this year was His Excellency, Abdul Baset Al Janahi, CEO, Dubai SME, for an interactive question and answer session. He spoke of the need for innovation and the critical part it plays for companies in being able to survive and thrive in an emerging market such as the Middle East. Janahi shared his thoughts on the future of Dubai as a business hub, and highlighted the critical role that SMEs are playing in being able to achieve this vision, urging executives to come

together on this journey toward Visionary Innovation. GIL 2015: Middle East also included an overview of business trends and opportunities for investing in the African marketplace by Mani James, Operations Manager for Africa, Frost & Sullivan. There was also an update from Frost & Sullivan’s Techvisions research practice by Anand S, Senior Research Director, Technical Insights, Frost & Sullivan, which focused around technologies that are fuelling cutting-edge developments and driving creation of innovative business models through convergence. The evening also saw the announcement of this year’s recipients of Frost & Sullivan’s 2015 Best Practice Awards, representing companies performing in the top 10 per cent of their industries. The recipients were recognised for their Visionary Leadership, Technological Innovations, Superior Customer Service, and achievements in Strategic Product Development. The evening concluded with a vote of thanks for GIL 2015: Middle East’s global strategic partners - Oracle, Eloqua, Lenos Software, Zula, BrightTalk, Manufacturing Leadership Executive, as well as regional media partners — Gulf Business, the Official Business Magazine, AMEinfo, the Official Online Partner and the Strategic Regional Media Partners: Global Supply Chain, Business Islamica, Tech Channel MEA, Saneou Al Hadath, and SourceGulf.

Some of the Visionaries, Innovators, and Leaders recognised at GIL 2015: Middle East Award Title

Company Name

2015 Frost & Sullivan Middle East Emerging Company of the Year Award for Farm Products

Al Ghalia Farms

2015 Frost & Sullivan Middle East Integrated Healthcare Company of the Year Award

NMC Healthcare LLC

2015 Frost & Sullivan Middle East Emerging Healthcare Provider Company of the Year Award

Burjeel Hospital (A unit of VPS Healthcare)

2015 Frost & Sullivan Market Leadership Award for Domestic Logistics Services – Oman

Al Madina Logistics Services Co. (SAOC), Sultanate of Oman

2015 Frost & Sullivan Market Leadership Award for Port Terminal Operations – UAE

DP World, UAE Region

2015 Frost & Sullivan Market Leadership Award for International Logistics Services – Qatar

DHL Global Forwarding Qatar W.L.L.

2015 Frost & Sullivan Middle East Growth Excellence Leadership Award for Automated Door Systems Market

DORMA Gulf Door Controls FZE

2015 Frost & Sullivan Middle East Technology Leadership Award for Pipeline Rehabilitation Technology

OAK Utility Solutions & Development WLL

2015 Frost & Sullivan Middle East Product Line Strategy Leadership Award for Heavy Sections & Nuclear Grade Reinforcing Steel

Emirates Steel

2015 Frost & Sullivan Middle East Integrated Steel Plant of the year

Qatar Steel

2015 Frost & Sullivan Middle East Customer Value Leadership Award in IT Services

Infosys Limited

2015 Frost & Sullivan Middle East New Product Innovation Leadership Award in IT Security

Fortinet

2015 Frost & Sullivan Middle East Visionary Innovation Leadership Award for Digital Game Publishing

Game Power 7

2015 Frost & Sullivan Middle East Company of the Year Award for Digital Content Delivery

Intigral

MARCH 2015 57


EVENT

Dubai Trade honours ESEA Award winners Dubai Trade held their annual flagship event, under the patronage of H.H. Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, to highlight e-Services in trade and logistics, in Dubai recently. Some highlights

58 MARCH 2015

C

hange is never easy, they say. More so if this change involves learning and adapting a new system or technology. But progress demands just that, and those who manage to succeed are winners all round. It is for these winners that Dubai Trade instituted the E-Services Excellence Awards (ESEA). Now in its seventh edition, and held under the patronage of His Highness Sheikh Maktoum Bin Mohammed Bin Rashid Al Maktoum, Deputy Ruler of Dubai, the ESEA awards were announced by Dubai

Trade at a ceremony recently held at the Ritz Carlton, DIFC-Dubai. The ESEA is Dubai Trade’s annual flagship event that honours and recognises the best performers from the trade and logistics community for their role in adopting e-Services. The event saw some high-profile attendees, including H.E. Abdulla Al Saleh, Undersecretary – Foreign Trade and Industry Sector at the UAE Ministry of Economy; H.E. Jamal Majid Bin Thaniah, Chairman of Dubai Trade; Mohammed Al Muallem, Senior Vice President and Managing Director, DP World - UAE


EVENT

Region and Board Member of Dubai Trade, H.E. Ahmed Mahboob Musabih, Dubai Customs Director, and Eng. Mahmood Al Bastaki, CEO of Dubai Trade; alongside senior government and federal officials, dignitaries, sponsors, Dubai World business units, supply chain representatives, the trade and logistics community and the media. In his keynote address, H.E. Jamal Majid Bin Thaniah, Chairman of Dubai Trade, said: “Dubai has a vision of becoming a smart city, and the adoption of e-services is integral to our development. More efficiency, lower costs and faster customer service are all benefits that technology brings to both supplier and customer, and the reputation of Dubai as a centre for technology and innovation is also reinforced. The Logistics sector helps keep trade moving and lies at the heart of the supply chain and our own success. I am delighted that the winners have been recognised in this way and encourage others to follow their lead.” The nine award category winners were selected after shortlisting and evaluation by the Award Committee, based on criteria that reflected the winners’ adoption of e-Services on the Dubai Trade Portal (www.dubaitrade.ae) during 2014 measuring transactions for key services and the number and volume of transactions. Awards of appreciation were also given to customers who have pioneered the usage of and have supported the two major initiatives launched by Dubai Trade, which are Tradeshield, the online

The nine winning organisations, whose representatives received the 7th ESEA Award were: Emirates Global Aluminium for Exporter of the Year 2014 Samsung Electronics for Importer of the Year 2014 S.K Motors FZCO for Re-Exporter of the Year 2014 Al Mashaweer Transport for Haulier of the Year 2014 NAFFCO for Free Zone Company of the Year 2014 Goldentopaz Shipping LLC for Clearing Agent of the Year 2014 Transworld Shipping & Logistics LLC for Shipping Agent of the Year 2014 - Containerised Cargo Greenport Shipping Agency LLC for Shipping Agent of the Year 2014 - General Cargo Danzas AEI Emirates for Freight Forwarder of the Year 2014

cargo insurance platform; and Cargo Booking, a service that allow traders and freight forwarders to send cargo bookings to shipping agents. During the event, Dubai Trade also recognised the Sponsors of the ESEA in its 7th edition, including Al Futtaim Logistics as a Gold Sponsor, and Silver Sponsors Agility, Freight Systems, Dar Al Takaful, Landmark Group and GBM. His Excellency Abdulla Al Saleh, Undersecretary – Foreign Trade and Industry Sector at the UAE Ministry of Economy, commented on this year’s awards: “Electronic services are an indispensable 21st century tool for driving growth in trade, which is the central pillar of our national economy. Such services play an integral role in providing enhanced and improved facilities by significantly lowering costs, time and effort. Enabling trade through e-Services helps consolidate the UAE’s leading position as a major regional and international trade hub, and contributes towards our goals of achieving a diversified economy.” To highlight how Dubai has recovered from the global recession, Eng. Mahmood Al Bastaki, CEO of Dubai Trade, highlighted some of the achievements of the trade community and the robust growth of his company. He stated that the online transactions rose to almost 18.4 million, boosted by a significant rise in the total number of registered companies to 105,000, in which more than 15,000 companies had registered in 2014 to use the online services offered through Dubai Trade Portal. In his concluding remarks, Al Bastaki said: “Once a year, we are able to bring the prominent trade and logistics community together at our annual flagship event to celebrate their success and appreciate the role that this vital community plays in Dubai’s continuing growth, leading up to Dubai Expo 2020, and towards realising the Dubai Strategic Plan 2021. We congratulate the winners of the 7th ESEA, and will continue to remove bottlenecks in core trading activities to ensure Dubai’s ambition of being a smart city of happy, creative and empowered people.”

MARCH 2015 59


UNWIND

r e d a e l t c e r i d d n a t n e r a p A trans alkan, aine, EVP, B Jerome Lorr sia at nd Central A a E M , a ic fr A ords. n of a few w o rs e p a is CEVA and pproachable a n a s a h e H and f leadership open style o is only a manager s e v lie e b e h ective e has an eff effective if h is he shares h team. Here SC ertise with G p x e l a ri e g a man

60 MARCH 2015

you go to? iversity did n u d n ness a l o o s from a busi Which sch ter in Logistic as M a in d I graduate ance. school in Fr

b? company your first jo ily trucking What was er ch in a fam at sp di a as I worked in France. siness h you in bu ey not teac th o d t a h W intricacies of school? ion and the at tr is in m ad ness General busi and logistics. n ai ch ly supp el? Why? r role mod ntleman Who is you . He was a ge arcel Ponton M , s. ss es bo n t si rs My fi have in bu e how to be m t h ug ta o wh ip style? arent ur leadersh ct and transp What is yo t, open, dire h ig ra ic st lit ry ve for po s! I believe in a with no room am te y m ible if g in is only poss style of lead ed that this n ar le e av h I However, spirit. there is a team ing rtant for be most impo is k in th u What do yo manager? team. an effective stituting the e people con th of ity al The qu ur ? What is yo andle stress h u yo o d g? How well de-stressin bers method of y team mem m to ks fool proof an th l, el w s. ly m ir ss fa to proble I handle stre en it comes with me wh en d spending op e an ar is o n wh gging, ten jo y jo en I k Besides wor ughters. y wife and da time with m uraging? verse u find enco yo o d t adjust to ad a h W an being to um h e th of The ability conditions. e? ur free tim u spend yo yo o d w t. o H g spor ily and playin With my fam ? a right now your agend f e o dl p id to M e th ure in the What is at se the struct t ili en ab ci st fi ef to is an so to set My priority region and al is th ow gr East and e in Africa. onal structur and professi


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Global Supply Chain 2015 March Issue  

supply chain management, logistics and supply chain segmentation, warehousing, RFID, healthcare logistics, 3PL, 4PL, six sigma, kaizan inven...

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