December 2015 Issue 21
ENHANCING THE BUSINESS OF LOGISTICS
Emirates SkyCargo’s new home
ENOC’s jet fuel pipeline
Supply chain at it ﬁnest
PREVENTIVE MAINTENANCE IN THE
WAREHOUSE What, why and how
Perfection in the warehouse SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: firstname.lastname@example.org Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven email@example.com Director: Deepak Chandiramani Deepak@signaturemediame.com Managing Editor: Munawar Shariff firstname.lastname@example.org Art Director: B Raveendran email@example.com Production Manager: Roy Varghese firstname.lastname@example.org
Printed by United Printing Press (UPP) – Abu Dhabi Distributed by Tawseel Distribution & Logistics – Dubai
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For the 3PL services provider, the warehouse is where your clients’ stock is stored. It is imperative that this space is the best it can be because business depends on it. Materials handling equipment, ie, fork trucks, are a mix of electromechanical/hydraulic components, which wear and occasionally fail. They need to be maintained via preventive scheduled maintenance and/or breakdown repair. An incorrectly maintained fork truck, like a poorly maintained car, is neither operationally or fuel efficient, is subject to ever increasing breakdowns, and is a safety risk to all in the warehouse. Selection of equipment should be based upon pure operational requirements. The right equipment in the right configuration, operating at known capacity, provides the best opportunity for a safe and effective operation. Incorrectly selected equipment operating outside of design parameters is an immediate recipe for disaster. David Dronfield, Regional GM, Storage & Handling Solutions Division, FAMCO, gives his valuable insights on having the perfect warehouse. It’ the cover article on page 28. Emirates SkyCargo recently inaugurated the residence for its 15 freighter fleet at the Logistics District - the SkyCentral. Operational since 2014 when cargo moved from Dubai International to AL Maktoum International, His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group officially inaugurated SkyCentral during the recently held Dubai Air Show. More details on Page 24. A very interesting feature on the intricate and error proof lunch box delivery system in place in Mumbai called simply the Dabbawala (meaning a person who delivers the lunchbox). It is a six sigma awarded system that used colour codes to identify different location as almost all of the delivery men are uneducated. What’s more is, there has never been an error in delivery only one in 16 million transactions is an error, if at all! Page 42 has more. And with that, here’s wishing everyone a happy, blessed and fruitful New Year. See you in 2016, InshaAllah!
Munawar Shariff Managing Editor email@example.com
DECEMBER 2015 3
December 2015 Issue 21
ENHANCING THE BUSINESS OF LOGISTICS
46 Shape of things to come
06 News 36 Focus on Africa DP World launches infrastructure 16 Country report – Africa report at Africa Global Business Slow but steady growth How the political situation and oil prices are affecting growth in the Sub-Saharan Africa region
24 SkyCentral – Emirates
SkyCargo’s new home
Emirates SkyCargo’s newest statement
28 Preventive maintenance in the warehouse
David Dronfield, Regional GM, Storage & Handling Solutions Division, FAMCO, speaks about preventive maintenance
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Forum, while contributing to the environment and acquiring DP World Southampton
40 The wheels are turning Yang Junling, Director, Division of Overseas Business, SAIC Motor Commercial Vehicle Company, tells GSC what they are bringing to the market
42 Supply chain at it
finest – the Mumbai dabbawala system
This six-sigma organisation delivers lunch to most of Mumbai’s office goers. A focus on their supply chain
With an ever-increasing population, the UAE needs a perfect pharma supply chain
51 ENOC’s Project Falcon ENOC’s Project Falcon is a 58-kilometre long jet fuel pipeline linking its storage terminal in Jebel Ali with Dubai International Airport (DXB)
54 Resilient MENA economies
Oil prices are declining but the future of economies that make up the MENA region is moving up
60 Sabic promotes local and regional growth
SABIC’s Home of Innovation initiative connects industry-leading companies to promote regional and local growth
Integrated supply chain solutions that move your business forward. When it comes to integrated logistics solutions across the supply chain, you can trust Al-Futtaim Logistics to get your business moving ahead. Automotive: Vehicles, Spare Parts, Machinery | Retail: Fashion, Hanging Garments, Electronics, High Tech, Furniture Engineering | Industrial | Project Cargo: Heavy Lift and Break Bulk | Humanitarian
P.O. Box 61450, Dubai, United Arab Emirates. Tel: +971 4 881 8288, Fax: +971 4 881 9157 e-mail: firstname.lastname@example.org www.aflogistics.com
Volaris deploys electronic flight bags Volaris is optimising costs by deploying iPads as Electronic Flight Bags (EFBs), using SITA’s Managed Mobile Devices service. The iPads are replacing paper manuals and charts, reducing the volume of paper required on-board. The technology delivers information to pilots much more efficiently, and the weight savings have the added advantage of reducing fuel burn. Volaris has ordered more than 600 iPads, ensuring all pilots have one, while provisioning for the airline’s rapid growth. The airlines’ operational and airline manuals, as well as navigation charts, are being digitised. The mobile devices are controlled by software that enables the airline to establish well-defined access rights for pilots, ensuring the tablets are only used as intended. The system also provides valuable information for tracking who has been assigned a device and monitoring usage. This provides electronic signatures, for example, to show pilots have read the required documents. Because iPads are designed to be highly intuitive, minimal training is required, keeping costs down while providing quick workflow adoption.
Abu Dhabi International Airport pioneers automatic boarding pass validation system Abu Dhabi International Airport has become the first in the region to successfully introduce an automated Traveller Document Authentication System (TDAS). The new technology, developed by SITA, is now in place in Terminals 1 and 3.
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Using SITA’s Airport iValidate technology, the system automatically verifies mobile, home-printed, and original boarding passes, before passport control, helping to improve security and reduce waiting times for passengers. The new system
has been introduced in four security lanes, and comprises of automatic gates activated by both handheld and static boarding pass scanners. The new document authentication system ensures passengers are at the correct terminal and security
checkpoint when they scan the barcode on boarding passes. The captured data is automatically validated, sent to security, checked for duplicates and cross-referenced against the airport Operational Database and the airline’s Departure Control System.
Agility wins contract for three major defence shows in UAE Agility has been awarded a contract by Abu Dhabi National Exhibitions Company (ADNEC) to manage international freight and provide on-site handling services for the 2017 and 2019 editions of the International Defence Exhibition and Conference (IDEX), the Naval Defence and Maritime Security Exhibition (NAVDEX), and the 2016, 2018 and 2020 editions of the Unmanned Systems Exhibition and Conference (UMEX). The announcement is an immediate outcome of the five-year partnership that Agility Fairs and Events signed with ADNEC in August this year towards providing logistics and freight forwarding services to ADNEC’s customers. As exclusive freight forwarder and on-site handling agent for the three major defense shows, Agility Fairs & Events will assist exhibitors and their contractors with logistical requirements and with shipment of exhibits to and from the events.
OICT gets new truck appointment system Alstom begins train production for Riyadh Metro Alstom has started the production of trainsets for the Riyadh Metro in its Katowice plant in Poland. As part of the contract awarded in 2013 by Arriyadh Development Authority (ADA) to the FAST consortium, which includes Alstom, for the design and construction of lines 4four, five and six of the Riyadh
Metro network, the Katowice plant will manufacture all 69 of the Metropolis trainsets. A full-size mock-up of the Riyadh Metropolis trainset manufactured by Alstom will soon be unveiled to the city’s inhabitants by ADA. The first three Metropolis trainsets will be delivered to ADA in 2017.
A brand new truck appointment system that will allow drivers calling at SOHAR Port and Freezone to schedule collection and delivery of cargo in advance is to be unveiled at Oman International Container Terminal next month, according to a senior official at the terminal operator. OICT/Hutchison Port Holdings has invested US$ 184 million (almost AED 676 million) in developing state-of-the-art terminal operations at SOHAR. The new truck appointment system will be an important step in creating the nucleus of a seamless logistics network in Oman’s busting North Al Batinah region. It has been designed with end-users in mind, and drivers will have three options to book arrival times at the port, includes a mobile app, a dedicated website, and an IVR (Interactive Voice Recognition) number.
DECEMBER 2015 7
IAG’S new state-of-the-art facility touted to be a game changer Transguard and Gunnebo sign smart cash deal
In a strategic move to expand in the Middle East region and cater to the increasing market demands, International Armoured Group (IAG) has launched its new manufacturing facility in Ras Al Khaimah, UAE. H H Sheikh Saud bin Saqr Al Qasimi Supreme Council Member and Ruler of Ras Al Khaimah inaugurated the new IAG production facility located in the RAK Free Trade Zone.
8 DECEMBER 2015
IAG’s new state-of-the-art facility consists of a production area covering 35,000 sq mts, including ballistic glass and laser CNC cutting factories. The facility will also be producing an impressive 150 vehicles per month, thus increasing the current production volume by 40 per cent. It also consists of a fully sheltered stock area that can store up to 600 armoured vehicles. The facility will be carrying out the following operations: OEM chassis disassembling, ballistic steel fabrication, painting, upholstery, suspension and other systems upgrading, ambulance conversions, tactical armoured vehicles engineering and production, testing and training.
UAE-based Transguard Group, an Emirates Group company, has signed a partnership agreement with Gunnebo, whereby the two companies will offer a market proposition that integrates the cash in transit (CIT) services of Transguard with the cash management solutions of Gunnebo. Despite the significant growth in online banking in the UAE, as well as broader and more efficient connectivity, cash is not disappearing, and remains the most widely accepted form of payment. However, as ironic as it sounds, handling cash costs money. Gunnebo supplies automated ‘smart’ cash deposit machines to retailers and banks, which receive, check, count, credit and securely store cash until it is collected by CIT. This reduces staff time sorting and counting cash and reconciling sales with deposits, as well as reducing shrinkage due to counterfeit notes and miscounts. When funds are deposited in the drop box, they are automatically credited into the client’s bank account, in real time, as opposed to physically waiting for the cash to be collected by CIT before it can be credited to the client’s account. The safe also eliminates the risk of loss through theft or fraud and, because Transguard is liable for the cash once it has been deposited in the drop box, at that stage clients have no access or ownership of the cash, which reduces risk significantly and can also reduce the cost of insurance premiums.
Left to right: Dr. Abdulla Al Hashimi, CEO, Transguard Group and Henrik Lange, CEO, Gunnebo, seal the cash deal
Egyptian students in SAP’s Young Professional Programme learn technology skills to prepare for them for Digital Economy careers.
SAP’s Young Professional Programme supports Egypt’s next generation SAP will help prepare a third group of young professionals for technology jobs in Egypt, aiding the next generation of talent in a country where ICT revenue is set to double over the next five years. Egypt’s incremental revenue from ICT sector innovation is set to grow from USD one billion (AED 367 billion) in 2015 to USD 2.2 billion (AED 8 billion)
Emirates Holidays announces new leadership appointment
in 2020, according to a report by the Mohammed Bin Rashid School of Government and SAP. SAP’s Young Professional Programme covers hands-on training in cutting-edge SAP solutions, with graduates becoming SAP Certified Associate Consultants, with global certification in SAP’s innovative solutions, tools, and offerings.
RSA Logistics ranks 9th at DubaiSME100
RSA Logistics won the ninth rank at this year’s Dubai SME 100 ceremony, and received congratulations from Shaikh Ahmad Bin Mohammad Bin Rashid Al Maktoum, Chairman of the Mohammad
Bin Rashid Foundation and president of the UAE National Olympic committee. Dubai SME identified the top performing 100SME’s in a bid to support their growth. Dubai is increasingly
becoming a launch-pad for SMEs in vital sectors such as health, education, information technology, logistics, tourism, hospitality and others, due to its global reputation as an entrepreneurial hub. As per the record, the number of enrolments in the third cycle was 4,532, an increase of 49 per cent compared to 3,041 companies in the second cycle.
Emirates Holidays has announced the appointment of Robin Parry to the role of Vice President, in which he will oversee the company’s financial growth and performance for operations in 37 countries around the world, including the company’s hub market, in the United Arab Emirates. An industry veteran, Parry has 25 years of experience in travel and tourism. Before joining Emirates Holidays, he spent five years in management positions at Gold Medal Travel Group as Interim Managing Director and Marketing, Product and Commercial Director. During his time at the company, Parry oversaw the firm’s transition of ownership from Thomas Cook to dnata, and also led the company to experience consistent yearover-year profit growth.
DECEMBER 2015 9
Air Canada inaugurates non-stop 787 Dreamliner Service to Dubai
Swisslog wins major order from Saudi Arabian food producer Almarai
Dr Christian Bauer
With the departure of AC056, Air Canada has inaugurated a new service between Toronto and Dubai, the newest addition to its growing international network. The new route will be operated using Air Canadaâ€™s most modern aircraft, the Boeing 787-9 Dreamliner, featuring its new cabin interior design with three classes of service, including its next generation, lie flat suites in International Business Class.
10 DECEMBER 2015
Since December 2014, Air Canada and Air Canada rouge have announced new international service to Dubai, Delhi, Brisbane, Lyon, London-Gatwick, Casablanca, Prague, Budapest, Glasgow and Warsaw. As a result of its ongoing expansion, Air Canada provides scheduled passenger service directly to 63 airports in Canada, 52 in the United States and 86 in Europe, the Middle East, Africa, Asia, Australia, the Caribbean, Mexico, Central America and South America.
Saudi Arabian food producer Almarai has commissioned Swisslog to automate its distribution logistics for their operations in Al Kharj. The value of the order is approximately Euro 43 million (AED 168673950). By the end of 2018, Swisslog will implement automation projects in five phases. In addition to innovative warehouse logistics, Swisslog will also handle on-site system operations. Almarai will link this major project to a strategic reorientation of its logistics operations. It plans to achieve additional competitive advantages by optimising and significantly accelerating its logistics processes. In addition, Almarai management has opted for Swisslogâ€™s System Operation service to ensure smooth warehouse operations.
logistics & Storage ad.pdf 1 23/08/2015 16:17:04
Russia-Jafza Trade Records 40 per cent increase in 2014 Jebel Ali Free Zone (Jafza) has recorded a significant yearon-year rise in its bilateral trade with Russia. In the last five years, Jafza-Russia trade has seen a four-fold increase, rising an impressive 40 per cent in the last fiscal. To further strengthen its bilateral trade relations Jafza is conducting a four-day roadshow in Russia, which will cover two of the federation’s major cities: Moscow, the country’s capital and Russia’s largest economic and political centre; and St Petersburg, Russia’s leading transport and commerce hub. During the roadshow in Moscow Jafza will be hosting a Business Seminar and an investor workshop, organised for Russian companies interested in the UAE and the rapidly growing Middle East markets, which Jafza as a business hub serves. During the roadshow in St. Petersburg Jafza officials will be conducting B2B meetings and investor workshops. The Jafza team for the roadshow includes Tariq Bin Ghalaita, Vice President, Europe and UAE Region, Abdulaziz Al Redha, Manager, Jafza Sales and Hamda Al Abbar, Senior executive, Jafza Marketing and Communications.
UPS to build new facility at DP WORLD London Gateway Logistics Park DP World London Gateway and UPS have announced plans to build a new 32,000 sq mt package sorting and delivery facility at the logistics site in the south east of England. At close to GBP 120 Million (AED 672878471.46), the project is one of UPS’s largest infrastructure investments outside of the United States of America.
The facility, expected to be completed in the summer of 2017, will act as a UK hub and distribution centre for the local area, as well as a key gateway to UPS’s global transportation network. Once completed, it will be able to process approximately 30,000 packages per hour, with room for further expansion.
DECEMBER 2015 11
Embraer S A: Lebanese Air Force selects A-29 Super Tucano for[ Close Air Support role
The Republic of Lebanon has confirmed the acquisition of six A-29 Super Tucano turboprop aircraft from Embraer Defence and Security and Sierra Nevada Corporation. The contract includes logistics support for aircraft operation, as well as a complete training system for Lebanese Air Force pilots and mechanics. The sale was approved in June by the US State Department. The aircraft sale is part of a larger, more comprehensive package, including infrastructure improvements, which will be fulfilled by other parties not involved in the Embraer/SNC partnership. The planes, which are currently in operation with 10 Air Forces around the world, will be built in the Jacksonville, Florida. The A-29 Super Tucano is a durable, versatile and powerful turboprop aircraft capable of carrying out a wide range of light air support (LAS) missions, even operating from unimproved runways. Due to its original concept design, high speed and excellent manoeuvrability, the Super Tucano is the only aircraft in its class to present superb cockpit visibility, extremely high efficiency and low vulnerability in the close air support role.
12 DECEMBER 2015
Economic Zones World launches e-procurement solution with Tejari Economic Zones World has launched an e-procurement platform in association with Tejari. The system aims to streamline the EZW’s eProcurement, eTendering, and Vendor Management processes by implementing the EZW ‘BuyWorld’ application.
BuyWorld will reduce costs for a leveraged spend that are typically in the region of 10-15 per cent, while savings can also be maximised across value and volume transactions. Enhanced compliance, control and data integrity improves governance and provides
clear records for auditing, and defines new ways of working. The application delivers tangible efficiencies, simplifying the purchasing process, eliminating duplicate activities, and significantly shortening the evaluation cycle times.
Boeing, Jet Airways confirm order Boeing forecasts demand in the Middle East
Boeing forecasts airlines in the Middle East will require 3,180 new airplanes over the next 20 years, valued at an estimated US$ 730 billion (AED 2681399500000). About 70 per cent of the demand is expected to be driven by rapid fleet expansion in the region. According to the Boeing Current Market Outlook (CMO), single-aisle airplanes such as the 737 MAX will command the largest share of new deliveries, with airlines in the region needing approximately 1,410 airplanes. These new airplanes will continue to stimulate growth for low-cost carriers and replace older, less-efficient airplanes. Twin-aisle aircraft will account for a little under half of the region’s new airplane deliveries over the 20-year period, compared
Boeing and Jet Airways have announced an order for 75 737 MAX 8 airplanes at the 2015 Dubai Airshow. The announcement marks the largest order in Jet Airways’ history, and supports the airline’s replacement strategy to have the most modern and environmentally progressive airplane fleet. The order, previously attributed to an unidentified customer, includes conversions of 25 Next-Generation 737s to 737 MAX 8s, as well as options and purchase rights for an additional 50 aircraft. The 737 MAX incorporates the latest technology CFM International LEAP-1B engines, Advanced Technology winglets, and other improvements to deliver the highest efficiency, reliability and passenger comfort in the single-aisle market. The new single-aisle airplane will deliver 20 per cent lower fuel use than the first Next-Generation 737s and the lowest operating costs in its class – eight per cent per seat less than its nearest competitor.
to 23 per cent globally. Boeing’s Commercial Aviation Services is a leading provider of aftermarket services in the Middle East, supporting airlines throughout the lifecycle of their fleets from airplane introduction to retirement. Boeing’s Component
Support Programs, a segment of Boeing’s GoldCare Services suite, are particularly successful with three new 787 operators in the region contracting Boeing to ensure reliable, timely, and cost effective component management.
DECEMBER 2015 13
Etihad Airways increases commitment to Morocco with new service to Rabat
Etihad Airways is increasing its presence in Morocco with the launch of a new twice-weekly service between Abu Dhabi and Rabat to create a direct link between the two capitals. Scheduled to start on January 15, 2016, and providing the only scheduled air link between the UAE and Rabat, the new service will be operated on Wednesdays and Fridays using an A340-500 aircraft
configured to carry a total of 240 passengers, with 12 in First Class, 28 in Business Class, and 200 in Economy Class. The new service is Etihad Airways’ second destination in Morocco and complements its existing daily service to Casablanca. This brings to nearly 4,200 the total number of seats available to passengers travelling on Etihad Airways’ services between the UAE and Morocco each week.
Abu Dhabi International Airport expands baggage handling system Abu Dhabi Airports recently announced several key capacity expansion initiatives at Abu Dhabi International Airport (AUH), that will significantly improve overall operational efficiency. These projects are being delivered in cooperation with Siemens, and are part of the upgrade of the baggage handling system at the capital’s airport, aimed at increasing its capacity and ensuring it is equipped with the right infrastructure needed to cope with the expected passenger growth. In Terminal 1, Siemens is adding new baggage conveyor lines and a fully automated hold baggage screening system, along with explosives trace detection equipment (ETD). This new system replaces the current manual
14 DECEMBER 2015
screening in the lobby of Terminal 1 and Terminal 1A, freeing up space in the terminal entrance for departing passengers, and new retail facilities. In Terminal 3, upgrades include doubling of check-in capacity and expansion of the baggage sorting areas. Eng. Ahmad Al Haddabi, Chief Operations Officer at Abu Dhabi Airports, said, “Abu Dhabi Airports has been closely monitoring passenger growth at Abu Dhabi International Airport and implementing development plans that will cater for the increase in traffic. The upgrade to the baggage handling system is another key initiative being completed to ensure efficient flight operations and convenient passenger experience. This
project is scheduled for completion in early 2016.” Siemens has successfully completed several projects at Abu Dhabi International Airport including the delivery of a new transfer baggage facility in Terminal 3 and installation of baggage handling system for the first US preclearance terminal in the Middle East. Abu Dhabi International Airport is one of the fastest growing airport hubs in the world, currently serving over 103 destinations in 56 countries, and in 2014 over 20 million passengers used AUH as their origin, destination or transit point for international or domestic flights. An anticipated 30 million passengers are expected to use the airport in 2017.
COUNTRY REPORT - AFRICA
16 DECEMBER 2015
COUNTRY REPORT - AFRICA
Slow but steady growth
Ricard TornĂŠ, Senior Economist, Focus Economics, reports on what impact political developments as well as low oil prices will have on the Sub-Saharan Africa region
rowth in the Sub-Saharan Africa region slowed markedly in Q2, according to a more complete set of data that accounts for around 82 per cent of the regionâ€™s nominal GDP. The regional economy grew 3.2 per cent annually in Q2, which was below the 4.1 per cent increase tallied in Q1. In fact, GDP expanded at the softest pace since the height of the financial crisis in 2009. Q2 data corroborate that the countries that are more exposed
to global commodity shocks are feeling the brunt of the pain. While Kenya, Mozambique and Tanzania showed some resilience, Botswana and Nigeria were severely impacted by the sharp decline in prices for oil and other commodities. Economic activity deteriorated in Ghana and South Africa mainly due to domestic challenges, although the drop in commodity prices also played a role. Along with the aforementioned economic headwinds stemming from low commodity prices, political
COUNTRY REPORT - AFRICA
Angola Economic Outlook
Analysts believe that the political deadlock the country sank into during this period has caused muchneeded economic reforms to be postponed 18 DECEMBER 2015
GDP Growth 2016
developments have taken centre stage in the last few weeks. Nigerian President Muhammadu Buhari, who took office in May, appointed his cabinet on November 11. Analysts believe that the political deadlock the country sank into during this period has caused much-needed economic reforms to be postponed. That said, Buhari now has the opportunity to not only decisively promote the reforms that the country needs, but also to lessen the impact of the current economic soft patch. In Cote d’Ivoire, incumbent President Alassane Ouattara, first elected in 2010, won the October 25 presidential elections by a landslide. Ouattara’s re-election promises that political stability and the path of reform will be maintained. In the tightest elections in Tanzanian history, John Magufuli from the governing Chama Cha Mapinduzi party, which has ruled the country for 54 years,
Kenya Economic Outlook
won the general elections on October 25. While this marked another victory for Africa’s longest-ruling party, the opposition did secure more seats than ever before. Magufuli’s ample victory promises to spur the development of Tanzania’s significant natural gas resources. Going forward, the economic situation in the Sub-Saharan Africa region is not expected to change significantly because the main threats to growth are far from being over. A protracted global economic recovery and mounting domestic challenges are expected to keep regional growth subdued. Moreover, commodity prices are predicted to remain low for the foreseeable future, thereby dashing hopes of a prompt recovery among economies driven by commodity exports. The United States Federal Reserve’s first rate hike that is expected in December will likely heighten volatility in the region’s financial and exchange rate markets.
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Outlook Improved political stability in the region drives the 2016 outlook to stabilise A panel of economic analysts maintained the outlook for SubSaharan Africa stable in this period for the first time in five months. Analysts kept their growth projections for 2016 at the previous month’s 4.4 per cent. This month’s forecast reflects stable
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The situation is exacerbated by severe drought conditions in the east and south of the continent due to unusual rainfall patterns related to the El Niño weather phenomenon.
projections for Cote d’Ivoire, the Democratic Republic of the Congo, Nigeria and Tanzania. The panel lowered its estimates for six of the 13 economies surveyed, including Angola, Ghana, Kenya and South Africa. Ethiopia was the sole country for which the panelists upgraded their view on the economy. For this year, the panel foresees the economy expanding 3.8 per cent.
COUNTRY REPORT - AFRICA
Minister. The new government will have the challenge of rekindling the economy after growth slowed to multi-year lows in Q2 amid a dramatic fall in oil prices and fighting the strong Boko Haram insurgency in the northeast of the country. One of the kewy decisions that the new government will have to make in the coming months will be whether or not to remove fuel subsidies to narrow the government’s rising fiscal deficit. Meanwhile, a recent business survey suggests that the appointment of the new cabinet is bolstering businesses sentiment. The country continues to suffer from falling oil prices and internal security threats. Further constraints on business activity via the country’s control of the availability of foreign exchange could also obstruct growth going forward. FocusEconomics panelists expect the country to grow 3.5 per cent this year. For 2016, the panel expects the Nigerian economy to accelerate and expand 4.4 per cent, which is unchanged from last month’s forecast.
SOUTH AFRICA – Severe droughts add to strain on the economy Nigeria Economic Outlook
South Africa Economic Outlook
Cote d’Ivoire, the Democratic Republic of the Congo (DRC) and Ethiopia are expected to be the best performers in 2016, with growth rates above seven per cent. At the other end of the spectrum, South Africa is likely to be the worst performer, followed by Angola. Among the other major economies in the SSA region, Kenya and Nigeria will expand six per cent and 4.4 per cent, respectively.
Sub-Saharan Africa Economic Outlook
NIGERIA – Buhari appoints new cabinet; now it’s time to deliver Five months after taking office, on November 11, the new cabinet led by President Muhammadu Buhari was finally sworn in. As expected, Buhari retained control of the all-important oil ministry, while former investment banker Kemi Adeosun was appointed as Finance
South Africa is suffering the effects of its worst drought in over two decades, and the low rainfall and rolling heatwaves have taken the largest toll on agriculture production. The adverse weather conditions are also exposing structural issues in water security, such as old infrastructure and technical problems, which are causing water shortages across the country. Against this backdrop, the government imposed water supply restrictions in Johannesburg earlier this month. The water crisis, coupled with the electricity shortages, are not only hampering the economy, but are also seen as a political threat for the ruling African National Congress party and could provoke social unrest. In late October, the government announced the Medium Term Budget Policy Statement, which aims for a slower fiscal consolidation compared to this year’s budget. More details about the budget will be presented in February of next year. The county’s outlook is dim. The electricity
DECEMBER 2015 21
and water supply constraint will hamper growth by both interrupting production and by discouraging investment. Moreover, a moderation in Chinese demand and low commodity prices will weigh on growth. FocusEconomics’ panel expects the economy to expand 1.5 per cent in 2015. For next year, the panel projects growth of 1.7 per cent, which is down 0.1 percentage points from last month’s estimate.
ANGOLA – Government resorts to external financing to tackle rising deficit Angola issued government debt in international markets for the first time since 2012 on November 5, with its first-ever Eurobond sale. The USD 1.5 billion (AED 5.5 billion) emission represents a reversal from the government’s decision last month to postpone the bond issuance until market conditions had
22 DECEMBER 2015
improved. This move reflects the headwinds that are battering the economy, yet, despite the challenges the country is currently facing, the debt issuance was considered successful. In fact, demand for debt was four times higher than the USD 1.5 billion (AED 5.5 billion) raised initially, which shows that there is strong investor interest. In addition, to make up for dwindling fiscal revenues, Angola is adding USD 10 billion (AED 36.7 billion) in external debt, and the government recently announced that public investment was cut by 53 per cent in 2015. Lastly, to keep the kwanza from devaluating further against the US dollar, the government has used up a third of its foreign reserves (USD 10 billion). Growth expectations for Angola are dim as low oil prices represent a persistent challenge - oil constitutes over 95 per cent of exports and 75 per cent of fiscal revenues.
FocusEconomics Consensus Forecast panelists expect GDP to grow three per cent in 2015 and to expand 4.2 per cent in 2016, which is down 0.1 percentage points from last month’s forecast. Inflation jumped from 11.7 per cent in September to 12.4 per cent in October, thus reaching an over-four-year high. At its October 27 meeting, the Central Bank decided to keep the Basic Interest Rate unchanged at 10.50 per cent for a third consecutive month. Panelists expect inflation to average 10.4 per cent in 2015 before increasing to 12.2 per cent in 2016, which is up 1.5 percentage points from last month’s forecast.
KENYA – Central Bank intervention increases government’s borrowing costs Economic growth ticked up in Q2 thanks to robust performance across
COUNTRY REPORT - AFRICA
several sectors, including construction, agriculture and financial services. While the important tourism sector held back growth, the contraction did soften compared to Q1. Recent developments sent mixed signals: even though the PMI indicated expansionary conditions in the manufacturing sector from July to October, October’s print marked the lowest reading in the survey’s history. The Central Bank’s efforts in recent weeks to defend the currency caused the shilling to stabilise in October, but also contributed to a rise in the government’s borrowing costs. A pending court case on a significant wage hike for teachers is adding to fiscal pressures. Meanwhile, several analysts noted that the failure of Imperial Bank does not imply a systemic risk for Kenya’s banking sector. Imperial Bank was the second lender put under management
within a period of few months and the Central Bank recently pledged to improve banking supervision. On a positive note, Kenya’s position improved markedly in the World Bank’s latest Ease of Doing Business Index, and the government promised to step up efforts to further improve the business environment. Kenya’s economy will likely pick up pace next year on the back of an expansionary fiscal stance, infrastructure development and solid household spending. However, tight monetary policy, currency weakness and a weakening external and fiscal position pose downside risks. Panelists project a GDP growth of 5.7 per cent for this year. For 2016, the panel sees growth of six per cent, which is down 0.3 percentage points from last month’s forecast.
INFLATION High food prices and weak currencies continue to prop up inflation in October According to preliminary data, inflation in Sub-Saharan Africa inched up from September’s 7.9 per cent to 8.1 per cent in October—the highest reading in almost three years. Weaker currencies across the region, high food prices and a general loose fiscal stance are fanning inflationary pressures in Sub-Saharan Africa. This
situation is exacerbated by severe drought conditions in the east and south of the continent due to unusual rainfall patterns related to the El Niño weather phenomenon. FocusEconomics Consensus Forecast panelists expect regional inflation to average 7.6 per cent in 2015, which is up 0.1 percentage points from last month’s estimate. In 2016, inflation is seen rising to 8.1 per cent, which is also up 0.1 percentage points from last month’s projection.
FocusEconomics is a leading provider of economic forecasts and analysis on the most important macroeconomic indicators for 127 key countries in the Middle East, Asia, Europe, Sub-Saharan Africa and the Americas. Forwardthinking companies require such reliable and timely information to help them make the right business decisions. FocusEconomics’ extensive global network of economists, coupled with its position as an industry leader, are indications of the company’s solid reputation as a reliable source for business intelligence among the world’s major financial institutions, multinational companies and government agencies.
DECEMBER 2015 23
SkyCentral Emirates SkyCargo’s new home
Along the sidelines of Dubai Air Show, His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group officially inaugurated Emirates SkyCargo’s new freighter terminal the SkyCentral
24 DECEMBER 2015
ubai reaffirmed its position as a leading global air cargo and logistics hub with the official inauguration of Emirates SkyCargo’s stateof-the-art cargo terminal at the Logistics District in Dubai South by His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group. Named Emirates SkyCentral, the cargo facility is the home of Emirates SkyCargo’s fleet of 15 freighter aircraft, and was officially opened on the side lines of the Dubai Air Show.“The opening of Emirates SkyCentral is an important milestone for us, as it represents our vision for future growth and firmly establishes Emirates SkyCargo as the world’s leading air cargo carrier
across all its operational areas. The space it currently occupies on the land allocated to us at Dubai South is part of a much bigger area, which we can develop over time to increase our cargo handling capacity to achieve our vision of 12 million tonnes annually by 2050, from the current 2.3 million tonnes,” said Nabil Sultan, Emirates Divisional Senior Vice President, Cargo. “This facility also features the best and latest of what the air cargo industry has to offer, and enables us to give our customers a world class, efficient and seamless service no matter what their requirements. It also further establishes Dubai as a leading global air cargo hub, which has the advantage of a strategic location in the centre of trade between East and West. It takes a lot of work to bring a facility such as this to reality, and
An outside view of the Emirates SkyCentral
His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group, with Thierry Antinori, Emirates Executive Vice President and Chief Commercial Officer, (right), Nabil Sultan, Emirates Divisional Senior Vice President, Cargo, (left), His Excellency Sultan Ahmed Bin Sulayem, Chairman of Ports, Customs and Free Zone Corporation (back row left) and His Execellency Ahmed Mahboob Musabih, Director of Dubai Customs (back right), officially opens Emirates SkyCargoâ€™s new terminal, Emirates SkyCentral
DECEMBER 2015 25
Nabil Sultan, Emirates Divisional Senior Vice President, Cargo, shows His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group, and members of the VIP delegation touring the facilty, some facts and figures about Emirates SkyCentral.
From left to right - Nabil Sultan, Emirates Divisional Senior Vice President, Cargo, explains to His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman and Chief Executive of Emirates Airline and Group, His Excellency Sultan Ahmed Bin Sulayem, Chairman of Ports, Customs and Free Zone Corporation, His Execellency Ahmed Mahboob Musabih, Director of Dubai Customs and His Excellency Khalifa Al Zaffin, Executive Chairman of Dubai Aviation City Corporation (back right), some of the features of Emirates SkyCentral.
26 DECEMBER 2015
I want to thank everyone for their support and commitment in making it happen, from the Government of Dubai and its various departments, to the contractors and staff of Emirates SkyCargo,” he added. Emirates SkyCentral is located 77 kilometres from Dubai International Airport (DXB) - a convenient location with factories and forwarders in the surrounding areas, and in close proximity to a dedicated corridor to the Jebel Ali Port and Free Zone.
Said Mohsen Ahmed, Vice President of Logistics at Dubai South,“With the launch of the Emirates SkyCargo facility, Dubai South begins an exciting new chapter in its journey towards establishing Dubai’s excellence as a logistics hub. Dubai South offers the ideal connection point for sea and air cargo, which calls for rapid movement to the markets of the Middle East, Asia and Africa.” With Emirates SkyCargo’s dual operation of belly hold cargo being managed at its Cargo Mega Terminal at Dubai International and freighter cargo at DWC, cargo is moved 24/7 by truck between the two airports via a bonded virtual corridor. Since Emirates SkyCentral first became operational in May 2014, the movement of cargo between the two airports has become a seamless process, and is now firmly integrated into its operations, with a transit time of just five hours between the arrival of goods, to their departure, from freighter to belly hold and vice versa. Emirates SkyCargo has 47 trucks that ply the virtual corridor between the two airports, with each truck being equipped with satellite tracking to ensure the safety and security of cargo and staff. The facility has many unique aspects, from a state-of-the-art centralised screening and integrated police facility, to the cool chain areas that occupy 15,000 square metres, and dedicated storage areas for goods requiring varying temperature ranges, to the fully automated material handling and Quick Dolly Transfer Systems that enables quick transfer of six Unit Load Devices (ULDs) simultaneously. Emirates SkyCentral is a dedicated freighter facility, and with 12 aircraft stands directly in front of the terminal, one of its key features is the close proximity of aircraft to the receiving docks, which enables quick movement of goods. The freighters that operate from Emirates SkyCentral fly to more than 50 destinations around the world.
Preventive maintenance in the
warehouse Safe and successful operations in the warehouse go hand in hand and are integral to creating an error-free routine business day. David Dronfield, Regional General Manager, Storage & Handling Solutions Division, FAMCO, tells GSC what makes this simple requirement for any warehouse a reality
28 DECEMBER 2015
tâ€™s safe to say that you would not risk your family memberâ€™s lives by putting them in a two ton SUV with poorly maintained brakes. So why would you risk your employees safety with a poorly maintained five ton fork truck? Materials handling equipment, ie, fork trucks, are a mix of electromechanical/ hydraulic components, which wear and occasionally fail. They need to be maintained via preventive scheduled maintenance and/or breakdown repair. An incorrectly maintained fork truck, like a poorly maintained car, is
neither operationally or fuel efficient, is subject to ever increasing breakdowns, and is a safety risk to all in the warehouse. “The best preventative maintenance occurs before the warehouse is operational, ie, at the design stage. Start with the plot layout, particularly the yard configuration for safe and efficient delivery truck manoeuvring,” explains David Dronfield, Regional General Manager, Storage & Handling Solutions Division, FAMCO. A yard, whereby an articulated vehicle can reverse from the ‘correct’ side, is a good start.“Next, the composition and layout of a warehouse should be determined, following a detailed analysis of the business operations, ie how many orders a day, how many of each product per day, when do I need to ship the orders, how should the orders be consolidated for shipping, how do I pick the orders prior to consolidation, how do I
An incorrectly designed or laid floor creates ongoing maintenance issues for the building life cycle, which is about, say 20 years. The real speed of operation is reduced and is a permanent safety risk to operators - for 20 years
replenish my pick stock, how do I resupply my general stock, when do the containers arrive, etc,”he adds. Selection of equipment should be based upon pure operational requirements. The right equipment in the right configuration, operating at known capacity, provides the best opportunity for a safe and effective operation. Incorrectly selected equipment operating outside of design parameters is an immediate recipe for disaster – both operationally and with regards to HSE. “Don’t forget the floor,”warns Dronfield, explaining,“An incorrectly designed or laid floor creates ongoing maintenance issues for the building life cycle, which is about, say 20 years. The real speed of operation is reduced and is a permanent safety risk to operators - for 20 years. Get the floor right, and everything else is possible, or save five per cent on the original floor cost and spend
DECEMBER 2015 29
30 DECEMBER 2015
an extra five per cent each year for the next 20 years. Operationally, traversing uneven floor joints with a load of tissue boxes on a fork lift will not harm the tissues – try that with eggs or TV’s.” In terms of rack protection, there is almost a ‘blind’ approach to trying to protect racking from damage via fork lift trucks. It is virtually impossible to prevent damage to racks via economically designed rack protection. A 5T fork truck carrying a 1T load, even at reduced speeds, is merciless against pallet racking, which is effectively thin gauge steel profiles. “Instead of spending the money on protectors, spend it on qualified driver training and establish a policy of rewards for a ‘clean license’. Consider monitoring via fitting impact sensors to fork trucks with wireless connectivity to clearly identify an incident and implement immediate damage checks and operator disciplinary action. In operations with high How many throughputs, ie, 3PL, FMCG, operators, prior utilise the safety technologies currently available on fork to lifting a load, trucks, including auto speed exit the cabin, control during cornering, load measure the load to stabilisation during cornering, and height pre-selection,”he says. determine the load The question here is: How many operators, prior to lifting a centre, establish load, exit the cabin, measure the the true weight of load to determine the load centre, establish the true weight of the the load, confirm load, confirm the storage height the storage height required and then cross check these key parameters against the required and then load chart supplied in every fork cross check these lift truck? “I never see it. Yet this is the key parameters correct process to establish that the fork truck can indeed safely against the load lift the load to the desired storage chart supplied location,” asserts Dronfield. Linde have introduced a in every fork lift retrofit unit called the ‘Linde truck? Safety Pilot’. The size of a regular GPS system, it fits clearly visible on the fork lift cage and continuously advisers the operator of the load factors and the residual capacity remaining during the lift operation. Effectively, it is his safety pilot to prevent him from operating the fork truck outside of its design parameters.
DECEMBER 2015 31
Warehouse operations clearly define pedestrian pathways, but inevitably, people and fork lifts operate in close proximity. A very simple device from Linde, called a ‘Blue Spot’, can be fitted to a fork truck, and it pre-warns operators of an approaching fork truck, particularly important as the truck exits an aisle.“One accident prevented in a warehouse easily offsets the cost of fitting these units. And remember – five tons of steel against flesh and bone is not an equal contest,” he warns. One simple point for operational safety is that warehouse trucks are designed to enable operators the best visibility, generally via travel ahead of the loads. While pallet racking may not be rocket science, it has taken 70 years of product development to provide a system that uses
32 DECEMBER 2015
two mm depth steel to support 20 tonnes of product.“In comparison, how large are the steel columns in a building?”asks Dronfield. Storage systems are designed to support stipulated loads with allowance for operational factors. These operational factors are often termed ‘safety factors’ – which effectively are designed to cater for operational overloads, ie, when a fork truck operator places a one ton pallet in a rack designed for one ton, the dynamic load is more than one ton – hence the requirement in storage systems for safety factors. “Within the industry, these safety factors now vary, some are questionable. Twenty years ago, I saw a fully operational rack system in Papau New Guinea with upright legs swinging freely, but the racks remained in operation. Driven by cost reduction, some
storage providers have misinterpreted these safety factors, and today I suspect the systems would no longer remain standing under such abuse,”says Dronfield. The warehouse/distribution centre is all about ensuring – the right product, in the right quantity, at the right place, at the right time, at the right price (cost). The highest operational throughputs with best in class safety standards will only be gained by the right facility design, utilising the right equipment, with the right operational training. In order to make this happen, one needs the right manpower.“There are both qualified and experienced fork truck drivers here in UAE. But they are in the minority. Most fork truck drivers travel to work by the company bus, do not drive another vehicle, or own
David Dronfield, Regional General Manager, Storage & Handling Solutions Division, FAMCO
a car, and originate from countries where driving safety standards are considered ‘low’, even dangerous. Even with the currently enforced UAE licensing and lesson system, the resulting standard cannot be compared to that of an operator, say in the UK. It really comes down to the individual company to train its operators to a required standard, not simply comply with local legislation,”he states. Having said that, it’s all comes down to developing the right solution for a client, which takes time and considerable effort on the part of both parties. Guiding the process through a client’s purchasing process often dilutes the solution to allow an ‘apples with apples’ comparison.“Final decisions are often based on the comparison of the wrong criteria with the resulting compromise in
solution. What ‘purchasing’ saves in capital reduction is often lost many times over in reduced operational effectiveness,”he explains. Client requirements are mostly the same, differing only in terms of the scale. Meaning the product handled, and the processors utilised are the same, the equipment and technology available is the same, so the only unique elements that are different between regions are demographics and resource costs. Key factors of land cost, labour cost, infrastructure, ease of border crossing, are all factors in how solutions are determined. “Tier 1 providers here in the region are on a par with those in most countries, and as the regional requirements develop, so does the competency of the core providers. Standards imposed are equivalent to those in traditional
markets, and further leveraging of principal support enables complete technology implementation,”he opines. Modern technology will continue to grow in leaps and bounds, and the better the flow of information up and down the supply chain, the less repetitive entries, the less errors, and ultimately lower costs. “How we capture, retain, transfer and use this information may be the key to future efficiency gains, particularly within the warehouse. Ultimately we must automate the information flow for the operations; the data will simply be too large to manage within existing processors,”says Dronfield. As with any change, ensuring the full engagement of the workforce is key to profitable adaption of the technology. Considering and implementing changes to any section of the supply chain in isolation will inevitably result in forced changes up or down the chain – sometimes with negative effect. Dronfield shares his prediction of the future trends:“The costs involved for a product to remain in the supply chain will continue to rise, and the hunt for the shortest route to market will continue to drive lower cost. Consumers will continue to demand ever increasing choice and the warehouse will evolve from the traditional ‘static storage’ to the more ‘dynamic operation’ to meet these demands.” As the consumer continues to drive the price down, the importance of the supply chain is expected to increase. Over the last 100 years, manufacturing has invested heavily in automation to reduce its unit cost of production. The opportunity for major savings now remains in the supply chain, where wastage is often hidden. “Considering the effectiveness of the warehouse operation and its importance within the supply chain in total as opposed to a stand-alone operation will guide how business invests in its development. When a business considers how the warehouse is part of its profit chain, and not simply a cost, it will look at how best to maximise that profit. Collaboration will drive data transfer up and down the supply chain, increasing the use of technology within the warehouse with the subsequent demise of the paper pick list,”he concludes.
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34 DECEMBER 2015
الصيانة الوقائية في املستودع
سير العمليات بشكل آمن وناجح في املستودع عنصر حيوي وأساسي في مجريات يوم عمل روتيني خالي من األخطاء واملشاكل .ديفيد درونفيلد ،املدير العام اإلقليمي لقسم حلول التخزين واملناولة ،شركة فامكو ،حتدث معنا وشرح لنا ما املطلوب جلعل هذا املطلب البسيط ألي مستودع واقعا فعليا. أجزم أنك لن تخاطر بحياة أحد أفراد أسرتك من خالل وضعه في سيارة دفع رباعي وزنها طنني تعاني من كوابح /فرامل سيئة الصيانة. وعليه ،فلماذا ستخاطر بسالمة موظفيك مستخدما رافعة شوكية وزنها خمسة أطنان ذات سجل صيانة سيء؟ معدات مناولة املواد ،وأقصد بها الشاحنات ذات األوناش ،والتي تعمل عن طريق مزيج من املكونات الهيدروليكية /الكهربائية ،تبلى سريعا جراء االستخدام وتتعطل .هذه املعدات حتتاج إلى احلفاظ عليها من خالل الصيانة الدورية الوقائية وإصالحها قبل التوقف. الشاحنة املصانة بطريقة غير صحيحة ،مثل املركبة رديئة الصيانة ،ليست عملية من حيث التشغيل أو كفاءة استهالك الوقود ،وتتعرض ألعطال متزايدة ،ومتثل خطرا على سالمة اجلميع في املستودع. «أفضل خطوات الصيانة الوقائية حتدث قبل جهوزية املستودع للعمل ،أي في مرحلة التخطيط والتصميم .البداية مع تخطيط مساحة املستودع ،خاصة مرحلة تخصيص املساحات ،من أجل ضمان سالمة التحميل والتفريغ من الشاحنات واملناورة الفعالة». ديفيد درونفيلد ،املدير العام اإلقليميلقسم حلول التخزين واملناولة ،شركة فامكو. ساحة فناء املستودع الواسعة ،حيث ميكن للشاحنة عكس اجتاهها لتصل إلى اجلانب «الصحيح» للتحميل ،هي بداية جيدة .يضيف ديفيد قائال« :اخلطوة الثانية هي حتديد أفضل السبل لتشكيل وتخطيط DECEMBER 2015 35
املستودع ،بعد حتليل مفصل لسير العمليات هذه العلب ،لكن حاول تكرار األمر ذاته مع حمولة من البيض أو أجهزة التلفزيون «. التجارية ،مثل كم عدد أوامر التشغيل من ناحية حماية الرفوف ،هناك شبه اليومية ،وكم منتج يتم مناولته في اليوم إجماع على إتباع نهج «أعمى» في محاولة الواحد ،ومتى يجب تنفيذ أوامر الشحن، حماية األرفف من التلف عن طريق استخدام وكيف ينبغي توحيد أوامر الشحن ،وكيف الرافعات الشوكية .يكاد يكون من املستحيل ميكنني اختيار األوامر املتقاربة جلمعها معا في أمر واحد ،وكيف ميكنني جتديد املخزون منع تلف الرفوف عن طريق استخدام طرق حماية رفوف اقتصادية .الشوكة القادرة قبل نفاده ،وكيف ميكنني إعادة التزود على رفع حمولة وزنها طن واحد ،حتى مع باالحتياجات العامة اخلاصة باملستودع، السرعات املنخفضة ،ال ترحم أرفف التخزين، ومواعيد وصول احلاويات ،وما إلى ذلك». ينبغي أن يستند قرار اختيار املعدات على تلك الرفوف الرقيقة املصنوعة من الصلب. يعود ديفيد ليؤكد قائال« :بدال من إنفاق االحتياجات التشغيلية وحسب .توفر املعدات املال على أساليب احلماية ،أنفقها على تدريب املناسبة بالشكل املناسب ،والتي تعمل بطاقتها املعروفة ،أفضل الفرص لعمليات آمنة السائقني املؤهلني وخصص مكافآت للقيادة النظيفة .فكر جيدا في املراقبة عن طريق تركيب وفعالة .املعدات املختارة بشكل غير صحيح أجهزة استشعار الصدمات السلكية في الروافع والعاملة خارج نطاق التشغيل اآلمن لها الشوكية للكشف الواضح عن أسباب وقوع أي هي وصفة فورية لكارثة ،سواء من الناحية حادث ولتنفيذ ضوابط الكشف عن األضرار التشغيلية وكذلك فيما يتعلق بإجراءات املباشرة واتخاذ اإلجراءات التأديبية الالزمة». السالمة والصحة العامة في بيئة العمل. السؤال هنا هو كالتالي :كم عدد املشغلني يحذرنا ديفيد قائال وموضحا« :ال تنس الذين ،قبل رفع احلمولة ،يخرجون من أرضية العمل ،فالطابق املصمم بشكل غير مقصورة الرافعة ،يقيسون احلمل لتحديد صحيح يخلق مشاكل صيانة عديدة على مد مركز التحميل ،ويقيمون الوزن احلقيقي دورة حياة املستودع ،والتي هي عادة ما تكون للتحميل ،ويتأكدون من االرتفاع املطلوب 20عاما .تنخفض السرعة احلقيقية لسير العمليات ومتثل خطرا دائما على سالمة التشغيل للتخزين ،ثم يتأكدون من توافق هذه املعطيات مع قدرات كل رافعة شوكية؟ ملدة 20عاما .احرص على تصميم وتخطيط «أنا لم أر ذلك يحدث في أي مكان. أرضية العمل بشكل صحيح ،ليكون كل شيء ولكن هذه هي العملية الصحيحة إلثبات أن آخر بعدها ممكنا .من الناحية التشغيلية ،السير الرافعة الشوكية قادرة على رفع احلمل بأمان فوق أرضية غير معبدة في املستودع مع حمولة من علب أوراق احملارم املرفوع على شوكة لن يضر إلى موقع التخزين املطلوب» ،يجيبنا ديفيد.
DP WORLD UPDATE
36 DECEMBER 2015
DP WORLD UPDATE
AFRICA DP World launches infrastructure report at Africa Global Business Forum, while contributing to the environment and acquiring DP World Southampton
HE Sultan Ahmed Bin Sulayem, Chairman, DP World
ver the past decade, investment in African infrastructure has risen sharply and some notable projects have been completed. But, despite the impressive flow of projects and policy reforms, the continent’s infrastructure development has failed to keep up with the average annual GDP growth of five per cent. The development of “soft” infrastructure, such as the legal and regulatory frameworks that enable physical infrastructure to be built and maintained, has also fallen short of requirements. A five point plan to help tackle Africa’s infrastructure gap is among the findings of a new DP World report unveiled at the Africa Global Business Forum. Public private partnerships, domestic bond financing, monitoring the life cycle of infrastructure by maintaining and upgrading existing stock, enhanced trade integration and improved trade facilitation are the key points raised in the study ‘Africa At The Crossroads: Bridging The Infrastructure Gap’, produced in association with the Economist Intelligence Unit. The report traces the continent’s strong economic growth in recent years, and highlights how infrastructure development has not kept pace, placing
DECEMBER 2015 37
DP World employees taking part in one of the “Go Green” activities.
an increasing strain on existing infrastructure assets. To overcome infrastructure deficits on the continent, as much as USD 93 billion (AED 342 billion) will be required annually (approximately 10 per cent of African GDP), with only half of that amount currently available, the report explains. Said DP World Chairman HE Sultan Ahmed Bin Sulayem,“African countries need a solid foundation on which to place the building blocks of their economies. Both soft and hard infrastructure is needed, which will determine how quickly physical assets are built and how quickly trade develops. Our ports in Africa have shown us how the region has enjoyed strong growth over the last 10 years, leading to rising incomes, falling poverty and a step toward economic diversification. However, all this has also placed an increasing strain on existing inland and marine infrastructure. If Africa’s countries and regions were better connected, market sizes would increase and encourage greater foreign investment.”
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Yet while Sub-Saharan Africa currently spends around USD 6.8 billion (almost AED 25 billion) per year on paving roads, this figure needs to be closer to USD10 billion (AED 36.7 billion). HE Bin Sulayem stressed the significance of the Public-Private Partnerships (PPP) model, explaining how several African governments have already started to design policies to accelerate infrastructure projects. Referring to report findings, he added,“PPPs are an increasingly popular model to fund projects and the regulatory frameworks supporting them are improving. In addition, resource-rich countries are using their commodities as leverage to obtain infrastructure investment. Today, a growing number of the new natural resource contracts that African governments hand out have an ‘infrastructure industrialisation’ component – requiring the company in question to invest in new infrastructure.” DP World has long advocated the power of partnership, having agreements with
governments in all six of its ports in five African countries. Africa is a key market in DP World’s network, where it employs over 5,000 people and has established strong community ties, while creating jobs and opportunities for local businesses. The report also finds that to address the soft infrastructure gap, better internal trade integration is key. One solution to encourage intra-African trade would be to create a pan-Africa free trade agreement, which has already been proposed. The paper concludes that growth in Africa brings new challenges and current evidence suggests that the African continent is moving at a rate with which its infrastructure cannot keep up. There are encouraging signs of world-class infrastructure delivery on the continent, like South Africa’s Gautrain rapid rail transit system and Kenya’s new railway connecting Nairobi with Mombasa. Other high impact projects underway could also be gamechangers if they can overcome operational
DP WORLD UPDATE
beautification and tree planting in Sokhna, Egypt and Karachi, Pakistan, alongside beach clean-up drives in Chennai, India, a ‘Green Race’ in Buenos Aires, Argentina and the recycling of old drums and tires into planter pots in Jeddah, Saudi Arabia. Said Bin Sulayem,“The huge response to the campaign from our global family underlines a firm commitment to the environment by the participants. Such initiatives help change behaviours and increase engagement in caring for the surroundings in which people live. One of our aims is to bring long term sustainable benefits to the communities where we operate and when local people and employees get involved in activities such as this then everyone benefits.”
Partnering with ABP
challenges. A notable example is the Inga Dam in the Democratic Republic of Congo. Meanwhile, a range of policies from regional free trade agreements to improved PPP frameworks across a large number of countries are starting to happen, which suggests that the enabling environment for infrastructure development is improving. If momentum can be maintained and accelerated, then it could help the continent overcome its critical deficits and seize the economic transformation that now lies within its grasp.
Environmental initiatives In an effort to conserve the environment, DP World staff was among thousands of port employees around the world who enthusiastically contributed their time and effort to a joint initiative launched by marine terminal operators DP World, Hutchison Port Holdings Limited (HPH), APM Terminals, PSA International and Shanghai International Port Group (SIPG) – five of the
world’s largest port operators, and joined by the Port of Rotterdam Authority (PRA). The week-long campaign entailed joint activities to pioneer a green drive across operations worldwide, while bringing sustainable change to the communities they impact. In unifying their global resources to realise environmental benefits, the port operators developed various initiatives around three main themes: reuse and recycle, climate change and the community. The campaign also identified local partners in the effort to improve the environment, while creating and upgrading local green spaces, launching educational programmes and community engagement. In line with DP World’s strategy of adopting a local approach to the implementation of its global environmental initiatives, 38 of its marine terminals across 29 countries organised activities tailored to the needs of the communities they impact. Employees across the world took part in a wide range of events, from a cycling marathon, public square
DP World added another feather to its cap, announcing an agreement with Associated British Ports (ABP) to extend the license agreement for DP World Southampton for a further 25 years, until 2047. Simultaneously, DP World has acquired the remaining 49 per cent stake in DP World Southampton from ABP, making DP World the sole owner of the business. Bin Sulayem commented,“We are delighted to announce the 25 year extension of the license agreement for DP World Southampton, which is one of the most efficient terminals in the UK and the only deep-sea container terminal on the south coast of England. Also, through full ownership of DP World Southampton, we will now be able to combine with DP World London Gateway, the newest deep-sea container terminal and logistics park at the heart of the UK’s biggest consumer markets, to offer our customers the best possible service and long term growth in the UK. A unique and very exciting proposition.” Ganesh Raj, Senior Vice President and Managing Director of DP World in Europe and Russia, said,“This news underlines our commitment to the UK and our ongoing presence in developed markets as an important part of our global network.” Added ABP Chief Executive James Cooper, “This isn’t just good news for the port of Southampton but for the entire city. The deal provides a solid foundation for the continued growth and development of the UK’s most productive container port.”
DECEMBER 2015 39
The wheels are
turning S Yang Junling, Director, Division of Overseas Business, SAIC Motor Commercial Vehicle Company, tells GSC what they are bringing to the market.
40 DECEMBER 2015
AIC Motors is the biggest car maker in China, with six million units produced and sold in 2015. Leading in terms of both quality and volume, they have now come to the Middle East region with the intention of launching a renewed concept of “Made in China’.“In the Middle East, our target is not to be number one in terms of sales, but to offer the best, most cost-effective vehicles in the commercial vehicle sector,” says Yang Junling, Director, Division of Overseas Business, SAIC Motor Commercial Vehicle Company. The company has established a base in Dubai, with plans to grow not only in the Middle East, but also North and East Africa. “We already have discussions ongoing with partners in Saudi Arabia, Qatar, Bahrain, Lebanon and Egypt, which shows the importance of our Dubai operation,” he added. For SAIC, the region is a ‘must win’ market, one that they believe will help
them achieve their global aim of becoming the most cost effective brand name in the commercial vehicle segment. The results from their sales to Western buyers, in countries such as the UK and Ireland, and also to Australian, New Zealand and Chilean buyers, have shown that SAIC is considered to be the most cost effective and reliable commercial vehicle brand. They want build on this reputation. “For Maxus, we are aiming at a 7.5 per cent market share in the LCV segment, and another five per cent in the MPV segment,” says Junling. In order to achieve this target, SAIC has already set the ball rolling.“We have already finished the customisation of our vehicles to suit the needs of Middle East consumers. We have put a particular focus on the air conditioning systems offered by our models, and are also meeting the driving preferences of consumers who drive for leisure purposes,” he explains. Commercial vehicles are ranked by volume, quality and safety. There are different companies that excel in every category.“By volume, Toyota is number one.
For quality and safety, European brands rank number one. In 2013, MAXUS/LDV was ranked first amongst all the European brands for reliability, with the lowest annual incidence rate, placing it even higher than the M-Benz Sprinter. But even though Maxus offers such an excellent package and performance, we nevertheless offer competitive pricing that allows us to compete with the Asian brands,” states Junling. As SAIC is bringing the same models here, as are sold in the European markets, their vehicles already meet the highest regulations and requirements for both homologation purposes, and also in terms of the technology available.“This is in comparison to many other vehicles that are on sale in the Middle East that feature technology that is far less advanced. Some brands deliver safety standards that are ten years old, for example featuring ABS technology, which could be regarded as dangerous,” he says. While SAIC currently has no plans to establish a production base here, they are surely well prepared to take on the market.
DECEMBER 2015 41
42 DECEMBER 2015
hen it comes to food, the entire world is serious about it! Especially a freshly cooked, sumptuous, home-made meal or dabba as it is referred to in Hindi. Mumbai office goers are lucky to have the Nutan Mumbai Tiffin Box Suppliers Association that pick up their meals from their homes and deliver them to their work places just in time for lunch. This is a world renowned system that illustrates the workings of the finest supply chain. Only one in 16 million transactions is a mistake! A chat with Arvind Gangaram Talekar, spokesperson for the Nutan Mumbai Tiffin Box Suppliers Association, is a look into the daily workings of this fantastic and error-free supply chain. GSC: How many lunch dabbas are handled by the dabbawalas on a daily basis? Arvind Gangaram Talekar: On a daily basis, one dabbawala handles between 35 to 40 lunch boxes.
Supply chain at it finest – the Mumbai dabbawala
Arvind Gangaram Talekar, spokesperson from Nutan Mumbai Tiffin Box Suppliers Association was in Dubai recently to attend and speak at BOLDTalks Innovation 2015. There GSC’s Munawar Shariff spoke to him about how the lunchbox delivery system works
GSC: How long has the dabbawala service been in operation? Talekar: The dabbawala organisation has been in service for about 125 years. It’s a very old tradition that started back in 1890. GSC: How many dabbas were being handled in early days and how many are being handled currently? Talekar: During the early days, this organisation handled one single dabba per day, and now we are handling 200,000 dabbas per day. GSC: What is the geographical area that is being served by the dabbawala service, and how many men are working with you? Talekar: The geographical area covers about 60 to 70 kms. We provide this service in all of Mumbai, including the suburban areas. The service is available to everyone, from office goers to school children. There are about 5,000 dabbawalas delivering lunch boxes daily in Mumbai. GSC: How can a person avail of this service and what would it cost? Talekar: If anybody wants to avail the service, they can either get in touch with the dabbawala who is already providing the service in their office building, or they can just call us to book the service. The monthly cost in Indian Rupee is 500 to 950 (AED 27.8 - 52.8), depending on the distance and the weight of the dabba.
DECEMBER 2015 43
A day in the life of a dabbawala A Dabbawala takes the lunch box from a house and delivers it to destination. Easy, right? Well, here’s a look. Bright and early every morning, the dabbawala has his bath, and does his pooja (prayers). He applies the tilak (religious mark) on his forehead, and is out on the streets with his bicycle. These bicycles are heavy, and their carriers are fortified with extra iron to be able to take a lot of weight. He moves through the Mumbai traffic to his assigned area, and goes up and down the multi-storied buildings to collect the tiffin boxes from homes. And if the building does not have an elevator, he has to take the stairs, which can be tiring, since he may have to go up and down 10 or even 20 times. By 10.30am, he is done collecting all the tiffins. With about 30-40 tiffins on his bicycle, he manoeuvres bad roads, mud, traffic, and the Mumbai monsoons. But thankfully, he is not alone. He reaches the nearest railway station, where dabbawalas from different areas have gathered. The tiffins are sorted as per their destination, according to dabbawala coding system. By now, most of his tiffins are handed over to other dabbawala teams going to different parts of the town. Our dabbawala then joins one of those teams, and is now carrying a new set of tiffin boxes. This teamwork and trust is what makes a common dabbawala do extraordinary things. He and his teammates pick up tiffin boxes for their assigned destination and transfer them in head crates. With about 60 tiffins in one head crate, you can try to calculate the weight they bear, but then, who has the time to indulge in such thoughts? They carry it on the heads and run towards the railway platforms. The Mumbai platforms are jam-packed at the peak time, but the dabbawalas move fast, climb up and down the railway bridges with those crates on their heads.
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A dabbawala must catch the right train, or he will fall behind with the timings, which is not acceptable. Some tiffins have complex routes, and are redirected at railway platforms if they need to be. All the dabbawala teams help each other to place the wooden crates in the luggage compartment on the train. Now is the first moment they relax, sharing news and other updates, as one by one, teams alight at their destination stations. Our dabbawala alights at Churchgate, the last station on the track. It’s almost 12 noon now, and he needs to hurry along. Outside Churchgate station, the scene is such – it’s a grand gathering of dabbawalas, all working together like clockwork. This is something even Prince Charles came to see in person. As the tiffins are sorted for their final journey, our Dabbawala takes off once more with a new set of tiffins in trollies. As they run towards the office buildings, they scream to clear the pedestrian traffic, all of whom oblige as they know that dabbawalas don’t stop for anyone. Once the dabbawala team reaches a business hub, they split up, each taking one building for the delivery. It’s up and down the skyscrapers once again – thankfully, most of these buildings have elevators. By 1.00 pm, all tiffin boxes have been delivered. The task is done. All the dabbawalas then gather at a place, pray, and have their own lunch. If you think that was simple, remember that the job is only half done. The dabbawala will take the empty tiffins from the offices, and will go through the same process again, in reverse, till the tiffin reaches home before 6.00pm. And this is the nine hour cycle they have been following diligently for the last 125 years. www.mumbaidabbawala.in
GSC: Tell us a little about how the picking up, sorting and identifying, and delivery strategy is designed. Talekar: The dabbawala comes to the house by around 8.30am to pick up the dabba. He then goes to station and does the sorting as per the destination, which takes about four hours. The tiffin thus reaches the customers’ offices between 12.30pm and 1.00pm, before lunch. The delivery strategy is based on colour coding for different groups, with alphabetical and numerical numbers. GSC: What are some of the codes used to identify different areas for the drop off service? Talekar: The codes for different areas are easily available on the internet. GSC: How many dabbawalas are needed in one area? Talekar: Depending on the density of customers in an area, the group of people delivering dabbas varies between 20 and 25. GSC: What is the success rate of the dabba reaching its correct destination? Have there been any mix ups? Talekar: The success percentage of dabbawalas is 99.99 per cent! There is only one mistake in 16 million transactions. GSC: It was recently said that the leftovers from the dabba are shared with street children who don’t usually have enough to eat. Can you tell us more about this initiative? Talekar: We recently had to stop doing this due to health reasons. Due to the nature of the climate in India, the shelf life of food is usually only four to five hours.
Meaning of dabba and dabbawala According to Wikipedia, a dabbawala is a person in India, most commonly in Mumbai, who is part of a delivery system that collects hot food in lunch boxes from the residences of workers in the late morning, delivers the lunches to the workplace, predominantly using bicycles and the railway trains, and returns the empty boxes to the worker’s residence that afternoon. In Mumbai, most office workers prefer to eat homecooked food in their workplace rather than eat outside at a food stand or at a local restaurant, usually for reasons of taste and hygiene, hence the concept. A number of workfrom-home women also supply such home-cooked meals, delivering through the dabbawala network.
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December 2015 Issue 21
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Emirates SkyCargo’s new home
ENOC’s jet fuel pipeline
Supply chain at it ﬁnest
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Shape of things to
come With an ever-increasing population, higher life expectancy, mandatory health insurance, UAE residents will require more and more from the life sciences industry. This is where the pharmaceutical supply chain service provider steps in and takes control. GSC spoke to Eric ten Kate, Director - Healthcare (Middle East), Hellmann Calipar Healthcare Logistics, DWC-LLC, about what changes the industry will see in the near future
he logistics of Life Sciences has become very important in the Gulf region, fuelled by a growing population, increased life expectancy, ageing population, government incentives aimed at boosting local production through establishing free zones, and Mandatory Health Insurance falling into place across the GCC. The demand for healthcare products is growing, and thus the need for good distribution practice (GDP) compliant storage and distribution. â€œIn the coming year, the industry will continue to further develop the temperature-controlled solution, as there is an increase in the number of new to market medicines requiring two to eight degrees Celcius storage. In addition, the focus will remain on Supply Chain Security, including serialisation, with the aim to prevent any counterfeit medicine entering into the GCC market out of Dubai,â€? explains Ten-Kate.
46 DECEMBER 2015
THE FUTURE OF PHARMA
DECEMBER 2015 47
THE FUTURE OF PHARMA
In terms of cool chain services, TenKate feels that is the that pharmaceutical industry in the GCC that will demand it the most, with KSA being the biggest market. “Depending on the lifting of the sanctions for Iran, with its population size of close to 80 million, this market is expected to see an increase in demand as well. And with Dubai becoming the hub for the greater MENASA region, the cold chain services to India can also be offered,” he muses. An ideal cool chain 3PL service provider is expected to deliver goods on time, under the right condition, to the right location, whilst
48 DECEMBER 2015
providing complete traceability. The 3PL should take away the headache from the client, and take full ownership, providing a seamless solution that requires no interference. The solution should run like clockwork, while allowing for timely intervention in case of possible temperature excursions. And this is where Hellmann finds its strength.“Within Hellmann, we focus on a number of verticals. The Hellmann Healthcare vertical provides a full service offering to the Healthcare industry. The Hellmann Freight Forwarding side is able to provide tailor-made solutions designed to
the customer needs, from full truck loads to single parcel shipments, assuring complete real time visibility of the whereabouts and the temperature of the products. This allows for timely interventions in case of possible temperature excursions, thus being able to better safeguard the products. Within our dedicated Healthcare vertical, through adequate training on the EU/GDP guidelines, our staff, both in the warehouses and on the road, is equipped to handle and follow through the shipment till final delivery. The differentiating factor is that we have dedicated, qualified staff who have the
THE FUTURE OF PHARMA
patient’s safety on their mind with every action they perform.” In today’s business environment, there is a need for complete end-to-end visibility. As the services offered mature and improve over time, the quality of the overall solution increases, allowing one to focus on improving the total concept. “We are excited about the specific valueadded services required for the healthcare market, such as serialisation and 2D barcode printing, for pharmaceutical products. These services require specialised knowledge and a good understanding, and close cooperation,
with the relevant government bodies to allow for implementation. By having this in place, companies like HCHL, become an integral part of the principals supply chain. And by offering these specialised services to our customers, it allows them to postpone the country specific customisation of the product till the last stages of the journey to the patient. In order to accommodate this new requirement, we’re expanding our facilities again, offering our principals a known and audited environment in which the new services and growth, as per the regions requirement, can be accommodated,”he explains.
According to Global Cold Chain Market Forecast & Opportunities 2020, the global cold chain market is expected to grow at a CAGR of over 11 per cent during 2015-20. As the technology on refrigerated storage and transport advances, overall knowledge and experience levels rise, temperature controlled storage and distribution will become totally integrated in the supply chain, where it is now considered a special service.“It will become a standard service, allowing for complete handling of products in the required temperature setting,”TenKate concludes.
DECEMBER 2015 49
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he aviation business in the UAE has sustained a compounded annual growth rate of about 11 per cent over the last 15 years. Fuel sales volume have grown from about 460 million US gallons (USG) in 2001, and to about 2.2 billion USG in 2015, reflecting a 480 per cent growth over this period. In order to meet the demands of this growth, Emirates National Oil Company (ENOC), through its subsidiary, Horizon Terminals Ltd, launched Project Falcon at the recently held Dubai Airshow. Project Falcon, valued at approximately US$ 250 million (AED 918 million), is a 58-kms long jet fuel pipeline that links its storage terminal in Jebel Ali with Dubai International Airport (DXB). The pipeline also includes provisions for future needs of Al Maktoum International Airport. The project also boasts state-of-the-art oil terminal facilities, with storage capacity of 140,000 cubic metres. The facility has a 850 cubic metres per hour pumping capacity, which will ensure adequate jet fuel supply to the Dubai International Airport.
ENOCâ€™s Project Falcon The aviation industry in the country and region is only going to grow. Looking at this strong indicator ENOC has launched Project Falcon â€“ a 58-kilometre long jet fuel pipeline linking its storage terminal in Jebel Ali with Dubai International Airport (DXB)
DECEMBER 2015 51
Runway at Dubai International Airport
Said Saif Al Falasi, Group CEO, ENOC: “The new jet fuel pipeline is part of our long-term investment strategy that is aligned with the broader vision of the Dubai Government to create a sustainable city that positions Dubai as a global hub and destination for travel, tourism, commerce, aviation, transport, construction and trade.” The pipeline will help meet traffic demand at the Dubai International Airport and Al Maktoum International Airport,
52 DECEMBER 2015
which is forecast to reach a total of 125 million passengers and more than five million tonnes of air freight in 2020s. The pumping capacity of the pipeline is 55 per cent of the ultimate fuel demand of Dubai International Airport. The pipeline has the capabilities to pump to fuel farms at both airports. In the near future when pipeline extends to Al Maktoum International Airport, it will be able to meet 60 per cent of Dubai Airports’ combined
demand, by 2050. The pipeline can also cater to other suppliers’ fuel requirements at the airport. “The new pipeline eliminates the constraints of road trucking of jet fuel that would have serious limitations for meeting the airport demand in future years. We achieved this milestone with the assistance of all Dubai Government departments, local authorities, stakeholders and agencies. This project truly reflects
the spirit of collaboration that Dubai is renowned for, where the Emirate, under the leadership of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, offers a platform for growth for enterprises, entities and establishments through partnerships to foster growth and prosperity,” said Al Falasi. ENOC obtained approximately 5,000 No Objection Certificates (NOCs) from 42
different Government departments, local authorities, stakeholders, and agencies. Approximately 10 kilometres of the pipeline’s original proposed route was redirected due to Dubai’s infrastructure development changes, and they have worked closely with the Dubai Municipality and RTA to identify an alternative route for the pipeline. The project involved a total of 45 road crossings, without causing any traffic disturbances to the major roads and highways.
ENOC is a strong contributor to the growth of the aviation sector in Dubai, having invested heavily in the adoption of latest technologies for the industry. ENOC Aviation, a division of ENOC Marketing, is a marketer and supplier of jet fuel in UAE since 1995, now boasting an international supply network of 97 Airports across 11 countries. It is an Associate member of Joint Inspection Group (JIG), and offers a range of Commercial and Technical services.
DECEMBER 2015 53
economies As declining oil prices put a dent in Q3 growth, the future of economies that make up the MENA region is moving up. FocusEconomics analyses the main factors that are propelling growth in the region
ecent data corroborate that increased oil supply, coupled with relatively-higher oil prices, led growth in Middle East and North Africa (MENA) to stabilise in Q2 after the regionâ€™s economy decelerated in the first quarter. GDP in MENA expanded 2.6 per cent annually in Q2, matching the result tallied in the previous period. Economic dynamics were resilient among the countries integrated in the Gulf Cooperation Council (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), expanding at the fastest pace in one year. Conversely, dynamics in oilbuying nations softened in the same quarter, mainly due to external headwinds and domestic challenges, which was particularly the case in Israel and Tunisia. Morocco, meanwhile, continued to be one of the bright spots in the region and expanded at the fastest pace in two years in Q2. Prices for oil remained subdued in recent weeks, thereby suggesting that regional growth took a hit in Q3, and that weaknesses may have carried over into Q4. On the supply side, the global oil glut is fuelled by record production by key producers, rising crude
54 DECEMBER 2015
MENA ECONOMIC UPDATE
MENA Economic Outlook
Saudi Arabia Economic Outlook
inventories in the United States and by the fact that, despite declining, output in the United States remains relatively resilient. On the demand side, there are still concerns about the health of the global economy, particularly among emergingmarket nations. The slowdown in Asia seems to reflect structural weaknesses, dashing hopes of a prompt recovery and a rapid increase in demand for oil, while heightened geopolitical risks are taking a toll on economic activity. Going forward, oil prices are expected to remain low. Analysts believe that it is very unlikely that the Organisation of the Petroleum Exporting Countries (OPEC) will cut production at its December meeting, while the awaited re-integration of Iran into the international economy is expected to bolster global oil supply. Against a backdrop of declining oil revenues, some governments in the region have already started to unveil measures to counter their rapidly-deteriorating fiscal positions. The United Arab Emirates removed fuel subsidies in August, and Saudi Arabia’s oil minister hinted at the possibility of adjusting subsidies on energy prices. Moreover, in Saudi Arabia, an official document leaked to the media early in October called for the government to halt projects and reduce expenditure. Despite rising concerns about the region’s fiscal imbalances, MENA still enjoys an enviable financial position. Most of the countries exposed to sudden swings in oil prices store a vast amount of reserves and their debt levels are very low. Regarding oil-dependent economies, while 2015 was supposed to be a year of strengthening economic conditions, external headwinds and domestic challenges are constraining growth. Weaknesses in oilexporting economies have reduced external aid and foreign investment, while sluggish growth in Europe has failed to support external demand. Moreover, the fact that the United States Federal Reserve is expected to make its first rate hike in December has the potential to heighten volatility in the financial markets going forward. The Middle East and North Africa have a tough road ahead as the main causes of the current economic slowdown are not expected to subside in the short- or medium-term.
Low oil prices and domestic challenges continue to weigh on MENA’s economic outlook The 2015 economic outlook for the Middle East and North Africa was lowered for the second consecutive period this month due to the aforementioned low oil price environment and continued domestic challenges in some countries. FocusEconomics Consensus Forecast panelists cut the region’s growth forecast for 2015 by 0.2 percentage points to 2.7 per cent. The revised forecast was driven by worse projections for seven of the 16 countries in the region (Iran, Jordan, Lebanon, Morocco, Qatar, Tunisia and Yemen). Panelists kept their projections unchanged for Algeria, Egypt, Kuwait, Oman and Saudi Arabia, whereas Bahrain, Iraq and the United Arab Emirates were the economies for which the panel revised up its forecasts. Growth in the MENA region is expected to accelerate to 3.2 per cent in 2016, which is unchanged from last month’s estimate. Qatar is expected to be the best performer in 2015, followed by Morocco. At the other end of the spectrum,Yemen will be the worst performer as the country remains firmly entangled in a bloody regional conflict. Among the major economies in the region, Egypt and the United Arab Emirates will likely grow the fastest, with a projected expansion of 3.9 per cent and 3.4 per cent, respectively. Regarding the largest economy in the region, the panel of economists expect Saudi Arabia’s growth to be 3.2 per cent in 2015.
SAUDI ARABIA - Falling oil revenues prompts government to act Although the Kingdom continued to pump oil at record levels, the fall in crude prices observed throughout Q3 is likely to have hit growth in the all-important petroleum sector. Moreover, although business indicators continue to show healthy activity, they did point to a slight deceleration in the nonhydrocarbon sector in Q3. Against a backdrop of rapid deterioration in the country’s finances, international reserves continued to fall in September and marked a nearly-three-year low. On October 27, Oil Minister Ali al-Naimi signalled that the government is considering adjusting heavily-subsidised energy prices.
DECEMBER 2015 55
56 DECEMBER 2015
MENA ECONOMIC UPDATE
According to the IMF, the Kingdom spends around USD 100 billion AED 367 billion) annually in oil and gas subsidies. Early in October, a leaked note from the Finance Ministry ordered that all new projects be stopped and that expenditure be reduced, highlighting rising concerns over the state of the Kingdom’s finances. The economy is benefiting from strong oil supply and robustness in the nonhydrocarbon sector. Going forward, however, the mounting fiscal deficits foreseen for 2015 and the next few years, which result from low oil prices, will likely prompt authorities to delay capital spending and reduce outlays, thereby hampering the country’s growth prospects. Panelists expect that the economy will rise 3.2 per cent in 2015. In 2016, the panel sees GDP growth slowing to 1.9 per cent.
UAE - Non-oil sector continues to gain momentum
UAE Economic Outlook
The severe slump in oil prices has prompted the government of the UAE to tighten its fiscal stance. The scrapping of fuel subsidies earlier this year is expected to help the country’s fiscal savings, especially in the medium term. However, the effect will likely be limited as fuel subsidies account for just a quarter of the country’s energy subsidies. The government has also announced that it has finalised drafting legislation that will introduce a federal value-added tax and a corporate tax. After presenting an AED 48 billion budget (USD 13 billion) for next year, the UAE’s Economy Minister emphasised that the government has plans to reduce reliance on oil by up to 10 per cent in the next 15 to 20 years. High-frequency data show that business conditions in the UAE’s non-oil private sector economy improved in Q3. The economy will continue to suffer the effect of lower oil prices going forward. Indeed, the country is set to record the first fiscal deficit in five years this year. Nevertheless, in the medium term, higher government spending and the finalisation of Iran’s nuclear deal will have a positive impact on the UAE’s economy. Panelists expect GDP to grow 3.4 per cent in 2015, which is up 0.1 percentage points from last month’s estimate. For 2016, the panel projects economic growth of 3.3 per cent.
DECEMBER 2015 57
MENA ECONOMIC UPDATE
58 DECEMBER 2015
MENA ECONOMIC UPDATE
EGYPT - Government’s economic reform plan fails to provide much benefit Egypt Economi Outlook
About FocusEconomics FocusEconomics is a leading provider of economic forecasts and analysis on the most important macroeconomic indicators for 127 key countries in the Middle East, Asia, Europe, Sub-Saharan Africa and the Americas. Forward-thinking companies require such reliable and timely information to help them make the right business decisions. FocusEconomics’ extensive global network of economists, coupled with its position as an industry leader, are indications of the company’s solid reputation as a reliable source for business intelligence among the world’s major financial institutions, multinational companies and government agencies.
Much of the hype surrounding the government’s plans for revitalising the economy in the short term seems to be fading. Revenues at the expanded Suez Canal were weaker in August and September compared to last year as global trade flows remain subdued. While the government is prepared to continue spending, it is unclear if other large-scale infrastructure projects will materialise going forward. The discovery of a massive gas field should help boost capital inflows, although it will take years for investment to ramp up on a significant scale. Meanwhile, there is concern regarding the pace of reform efforts, with no new details about the planned introduction of a VAT or further changes to fuel subsidies. A first round of parliamentary elections was held in late October amid notably low turnout. Voting will continue later this month and results are expected in early December. Egypt has been without a parliament since 2012, and while analysts predict that the new parliament will largely support President Abdel Fattah el-Sisi, political stability is not guaranteed. The slow implementation of new projects and structural reforms, as well as ongoing security issues, will restrict growth going forward. FocusEconomics panelists expect GDP to have expand 3.9 per cent in FY 2015. For FY 2016, the panel sees GDP growing 4.0 per cent, which is down 0.1 percentage points from last month’s forecast.
INFLATION - Inflation stabilises at very low levels in September Inflation in the Middle East and North Africa region stabilised in September at the previous month’s 4.1 per cent, according to the latest data. As a result, inflation remains at levels last seen 12 years ago. Regional inflation is being affected by severe global disinflationary pressures stemming from low commodity prices and uncertainties in the global outlook. FocusEconomics panelists see regional inflation averaging 4.8 per cent in 2015, which is unchanged from last month’s forecast. In 2016, inflation is expected to be stable at 4.8 per cent, which is down 0.1 percentage points over last month’s estimate.
DECEMBER 2015 59
Sabic promotes local and regional growth SABIC’s Home of Innovation initiative connects with 40 industry-leading companies to promote regional and local growth
audi Basic Industries Corporation (SABIC) ranks as the world’s second largest diversified chemical company. The company is among the world’s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers. Home of Innovation, a SABIC growth initiative, combines marketing, innovation and technology to create demand and promote downstream industry development. It offers a platform to showcase global innovation while identifying and developing new market opportunities and solutions. It inspires the regional business community by facilitating collaboration among industry-leading companies and showcasing what could be manufactured locally. Through its Home of Innovation growth initiative, SABIC has announced strategic marketing relationships with 40 global, regional and local manufacturing companies to promote the introduction of industry-leading technology into Saudi Arabia and the Middle East region.“We look forward to collaborating with these companies to seek cost-effective, high-performance solutions
that meet customer needs and increase demand for the design, manufacturing and purchase of new products in the Kingdom,”said Awadh AlMaker, Executive Vice President, Technology and Innovation, SABIC. “SABIC is committed to enabling downstream industry development in the Kingdom and region, and Home of Innovation provides a unique platform to engage the local market,” said
60 DECEMBER 2015
Tymon Moore, Marketing Director, Middle East & Africa at SABIC.“We look forward to exploring long-term, mutual growth opportunities to help advance the local and regional economy.” Through the initiative, SABIC engaged companies that demonstrated an interest in growing their business in the Kingdom and Middle East region. Additional qualities included a respected and recognized brand, a desire to engage with SABIC strategically, and innovative yet commercially-available systems or products. Participating companies self-selected among three engagement levels – Leadership, Performance and Program – which afford varying degrees of regional exposure, business opportunities, industry connections and market insight. The Leadership level currently includes Harwal Group of Sharjah, United Arab Emirates, New Products Industries Corp. (NEPRO) of Jeddah, Saudi Arabia, Philips Saudi Lighting of Riyadh, and Schneider Electric of France. The Performance level currently includes 3M, ABB, AlWasail Industrial Company, Arabian Gulf Manufacturers (AGM), Badger Meter, Geberit, Honeywell, Kawakita Denki Kigyosha (KDK), Kohler, Miele, REHAU, Riyadh Cables, Saft, Samsung, and Watts Industries. The Program level currently includes AlBarakah Company for Industry, Al Jazierah Home Appliances, Future Building Systems (FBS), Grundfos, Legrand, Leviton, Manik, Middle East Fiber Cable (MEFC), Panasonic Eco Solutions, Pentair, Plastbau Arabia, SAFID, Saudi Rubber Products Factory, Sermeta, Siemens, Somfy, SunPower, TE Connectivity, Thermaflex, Vimar and Wavin. Representing the Middle East, Europe, Asia and Americas, participating companies illustrate the global, regional and local representation sought by the Home of Innovation™ initiative. Additional participation agreements are expected through September 2015. In addition to engaging the local and regional market through industry events and targeted collaboration opportunities, SABIC is building a Home of Innovation™ facility in Riyadh to provide meaningful market awareness and insight, foster collaboration along the entire value chain and showcase advanced product and materials solutions. The facility is expected to be completed in the first half of next year.
Fully Automated multi-temperature and multi-user 3PL logistics solution
40,000 m2 40,000 m2 36,000 m2 18,000 m2 of high bay storage facility
of fully automated frozen (-18 to -30 degrees) pallet positions with state of the art crane & conveyor system
pallet positions of standard racking controlled at +25 degrees for general cargo
of mezzanine storage or added value area within the facility
metric tons of Bulk Stack
of rentable ofďŹ ce area to customers that use the facility
INL is a Third Party Logistics Provider (3pl) focusing on food service solutions to the end customer, it has a freight department and custom broker to assist in clearing and delivering shipments to the market. Located at Dubai South with easy access to road, sea and air ports.
Plots W5, W6, W7 Dubai Logistics City, Dubai South P.O. Box 3139, Dubai, U.A.E.
Telephone: +971 4 Fax: +971 4 8879195
8160600, +971 4 8160601 email@example.com
Published on Dec 10, 2015
Supply chain management , logistics and supply chain segmentation, warehousing, RFID, healthcare logistics, 3PL, 4PL, six sigma, kaizan inve...