Global Supply Chain January 2016 Issue

January 2016 Issue 22

ENHANCING THE BUSINESS OF LOGISTICS

ive! s u l c Ex Dubai Logistics District

Launches new Logistics Complex

Industry forecast

Leaders discuss 2016

McDonald’s biofuel breakthrough 5,000,000 km on biofuel

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

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

Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused.

Articles and information contained in this publication are the copyright of Signature Media FZ LLE & SIGNATURE MEDIA LLC and cannot be reproduced in any form without written permission.

In the energy and high hazardous chemicals industry, encompassing process safety management to address the management of risk, ranging from managing hazards and controls within the current financial environment; implementing process safety management systems to demonstrate compliance; balancing the cost of compliance with operational efficiencies and financial benefits and; managing and mitigating human failures/errors in safety critical activities are all important factors. Read our story on implementing the benefits of integrated asset management that will help transform the financial, safety and risk aspects of these businesses. (Page 26).

Our other important story is about the current status of the industry whether it is from an air cargo, IT, sea cargo and port operations or a freezone perspective.

Industry leaders have shared their opinion with us about how 2015 fared and what direction 2016 is likely to take. (Page 46).

McDonald’s UAE’s initiative to make use of its used cooking oil to power its fleet of trucks is a very commendable move by the fast food giant. In 2011, McDonald’s UAE launched an innovative biodiesel campaign. Last year, December 2015, that campaign hit a major milestone – their fleet logistics trucks crossed 5,000,000 km running on 100 per cent recycled vegetable oil from McDonald’s UAE outlets. The initiative was introduced in the UAE in July 2011, with the support of Dubai FDI. McDonald’s UAE is the first quick service restaurant in the MENA region to recycle all of its waste cooking oil, using it to refuel the company’s logistics fleet that transports its goods throughout the Emirates.

And finally, from all of us at Signature Media, I’d like to wish everyone reading a very happy, successful and prosperous 2016! Happy New Year!

Munawar Shariff Managing Editor Signature Media munawar@signaturemediame.com

JANUARY 2016 3

January 2016 Issue 22

ENHANCING THE BUSINESS OF LOGISTICS

26 06 News 16 Country report –

Europe and Americas

All for a better 2016 The Eurozone area experienced slow growth in 2015 and hopes for a much better 2016. The United States on the other hand had a strong and steady 2015 despite obvious impediments through oil prices

26 Cover Managing major hazard industry risk Risks in the hazardous goods industry are numerous. Here are best practices for the future of integrated asset management in the hazardous goods industry 4 JANUARY 2016

36 Creating the base for success

GSC talks to Neil Enright, Director Middle East, Rockwell Automation, about the need for incorporating the right technology into company processes

42 Coming full circle Crossing a significant milestone in their biodiesel programme, McDonald’s UAE has affirmed its position as the company with some of the most innovative and sustainable CSR initiatives

46 Forecast 2016 GSC talks to stalwarts from different industries to understand what the business outlook is for 2016

54 Innovative approach Almansoori launches new production testing and stimulation vessel in Arabian Gulf

57 Tackling the next

generation of challenges

Disruptive technology and oil market changes likely to dominate global economy in 2016, say experts at the recently-held Euromoney Qatar Conference

60 Unwind Ambitious and approachable Mohsen Ahmad, VP Logistics, Dubai South, spoke to Munawar Shariff about his leadership style and future plans

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Qatar airways celebrates new service between doha and durban Two days of celebrations marked the launch of Qatar Airways’ new four-timesweekly service between Doha and Durban. Qatar Airways’ inaugural flight QR1367, operated with a Boeing 787 Dreamliner, was greeted at King Shaka International Airport by a delegation of senior officials.

The launch of the new service complements the airline’s existing daily flights to Cape Town and double-daily flights to Johannesburg, and is an expansion of the airline’s operations in South Africa.

Celebrating the arrival of Qatar Airways’ inaugural flight to Durban in South Africa are, from left: Province of KwaZulu-Natal’s Premier Senzo Mchunu; Qatar Airways GCEO, H E Akbar Al Baker, the Mayor of eThekwini Cllr. James Nxumalo; and the MEC for Economic Development, Tourism and Environmental Affairs, Michael Mabuyakhulu.

6 JANUARY 2016

Qatar Airways’ Group Chief Executive, His Excellency Akbar Al Baker being welcomed on arrival at King Shaka International Airport, by a delegation of senior officials including the Province of KwaZulu-Natal’s Premier Senzo Mchunu.

Travellers can now choose from a total of 21 flights a week to South Africa from Qatar Airways’ hub, Hamad International Airport.

Keeping up their rapid expansion and entry into new markets, Qatar Airways Cargo announced the launch of a new freighter route to Dallas/ Fort Worth, commencing operations on January 19, 2016.

This will increase its network to six freighter destinations in the Americas.

A Qatar Airways Cargo Boeing 777F will fly two times a week to Dallas from Liege. In total Qatar Airways Cargo provides service to 13 destinations in the Americas, with additional upload provided in the belly hold of the airline’s commercial aircraft.

Abu Dhabi Airports awards Duty Free contracts

Agility expands delivery fleet in Abu Dhabi Agility has expanded its Abu Dhabi vehicle fleet with 30 new Mercedes-Benz Actros Benz trucks. The vehicles were supplied by Agility’s long-term vendor Emirates Motor Company (EMC), the authorised distributor of Mercedes-Benz in the Emirate of Abu Dhabi and the flagship company of Al Fahim Group.

Dubai trade adds oman insurance to its online tradeshield platform Dubai Trade has expanded its online marine and cargo insurance platform ‘Tradeshield’ by adding Oman Insurance to offer its customers a fourth insurance service provider.

Dubai Trade customers can now search and select competitive rates from the Abu Dhabi National Insurance Company (ADNIC), RSA, Noor Takaful and Oman Insurance, while using ‘Rosoom’, the company’s secure e-payment gateway. The move underlines Dubai Trade’s vision to facilitate seamless trade, allowing users to compare real time insurance quotes on multiple policies and complete end-to-end purchases.

Abu Dhabi Airports has awarded contracts to two of the world’s most innovative Duty Free operators, Aer Rianta International (ARI) and Lagardère Capital, to provide Duty Free concessions in the Midfield Terminal Building (MTB).

The ARI group will design and operate Duty Free space dedicated to perfumes, cosmetics, skincare, sunglasses and jewellery.

Lagardère will oversee the tobacco, confectionery, and fine foods categories, in partnership with Abu Dhabi Capital Group.

The MTB is the iconic new terminal under construction at Abu Dhabi International Airport, which will increase the overall capacity of the airport to more than 45 million passengers per year. It will feature a total of 28,000 square meters of Duty Free space, comprising of 18,000 square meters of retail and 10,000 square meters for food and beverage outlets.

Abu Dhabi Airports has successfully installed the first three of 106 passenger boarding bridges in the new MTB. These state-of-the-art bridges have been constructed with glass walls to allow passengers to appreciate the unique architecture of the MTB and see their aircraft as they board.

German manufacturer Thyssenkrupp delivered the 24 bridges to the MTB site, and will be providing the remaining bridges over the coming 15 months.

JANUARY 2016 7

Etihad airways deploys State-of-the-art baggage management system

Sita to provide egyptair with mission-critical connectivity

Etihad Airways has entered into an agreement with Luggage Logistics to transform the endto-end baggage management process across the airline’s global airport network.

Luggage Logistics’ advanced Baggage Management System (BMS) will enable Etihad Airways to significantly improve the delivery of guests’ luggage to their destination ontime. It will also help the airline to easily track where bags are at any point along the journey throughout its global operation.

BMS will integrate with flight schedules and other key passenger information and departure control systems, increasing the speed at which Etihad Airways’ guest bags can be identified and transferred from the aircraft to the airport terminal facilities onto connecting flights, keeping departures on schedule and improve the on-time performance of its flights.

Enviromena and TSK awarded contract for Al Quweira solar plant in Jordan EGYPTAIR has signed a five-year contract with air transport communications specialist, SITA, for the implementation, management and modernisation of the airline’s entire communications network. This will provide mission-critical connectivity to EGYPTAIR’s headquarters and across more than 190 sites around the globe.

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SITA, as the main provider of network communications to EGYPTAIR, is providing a state-of-the-art network which will ensure secure and reliable connectivity to help increase operational efficiency.

EGYPTAIR will benefit from a state-ofthe art private network with a centralised and secured breakout to the internet and to EGYPTAIR hosts. In addition, SITA’s ServiceNet will allow simple, fast and secure access to more than 20 third-party services from EGYPTAIR’s existing IP VPN connections.

Enviromena Power Systems and TSK Group have been awarded a contract to build a 103-megawatt solar photovoltaic (PV) power plant in Jordan’s southern region of Al Quweira.

Jordan’s Ministry of Energy and Mineral Resources will fund the USD 128 million (AED 470137600) solar plant through a grant from Abu Dhabi Fund for Development.

Sami Khoreibi, CEO, Enviromena, said, “The Al Quweira solar plant will be crucial to Jordan’s energy diversification programme and significantly reduce the Kingdom’s reliance on expensive hydrocarbons, helping it to reach its target of adding 600 megawatts of solar and wind power by 2016.”

Jafza Overview

King Abdullah II inaugurates the first and largest utility scale wind power plant in the Kingdom

JAFZA repays bank debt ahead of time Jebel Ali Free Zone (JAFZA) has made early repayment of its AED two billion (USD 544514040) Islamic loan facility to banks nearly four and a half years ahead of the scheduled maturity in June, 2020.

HE Sultan Ahmed Bin Sulayem, Chairman of Economic Zones World

Sultan Ahmed Bin Sulayem

(holding company of JAFZ), commented, “This is perhaps the most significant milestone in the history of JAFZ. Early repayment manifests the true commitment of the shareholder and Government of Dubai to reduce the debt of overall Dubai World Group.”

Jafza Team at the seminar

JAFZA attracts Indian companies In order to attract more Indian multinationals into the Free Zone, JAFZA conducted a highly successful four-day roadshow, which also included an exclusive investor seminar,

in Mumbai, India. During the roadshow, the authorities highlighted huge opportunities in the rapidly growing markets in the Middle East to Indian investors, which they

can capitalise on by being in JAFZA. The Seminar attracted 80 top Indian companies, who were keen to join JAFZA. India is one of JAFZA’s top trading partners.

The first and largest utility scale wind power plant in Jordan and the Middle East, the Tafila Wind Farm, was inaugurated under the patronage of His Majesty King Abdullah II. The 117-megawatt wind farm is directly connected to the national grid and will produce 400 gigawatt-hours of electricity annually.

The project is in line with a royal vision to diversify energy sources and promote greater reliance on renewable energy. The Tafila Wind Farm was developed in response to the 2010 renewable energy law, calling for around 10 per cent of electricity to come from renewable sources by 2020.

Jordan imports around 96 per cent of its energy needs at a cost equivalent to 20 per cent of the country’s GDP.

JANUARY 2016 9

Emirates strengthens ties with Latin American countries Emirates airline’s senior executives hosted a high level delegation from Central and Latin American countries on an official visit to Emirates’ Headquarters as part of a one-day Commercial Summit on 17 December, 2015.

The official visit and subsequent meetings aimed to examine mutually beneficial opportunities to enhance relationships, and further stimulate trade and leisure traffic flows between Dubai and Panama, and also with other markets in Central and South America.

Panama’s Vice Minister of Tourism, Jennifer Marie led the dignitaries which comprised senior officials from Panama, Mexico, Peru, Colombia,Venezuela, Uruguay and Dominican Republic. The delegation included Panama Counsel General, Eduardo Ramon; Colombian Ambassador, Faihan Alfayez; and the Head

of the Venezuelan Embassy, Robert Noriega.

Also present were the Ambassador from Uruguay, Nelson Yemil Chaben Labad; Mexico Commercial Attache, Enrique Abud Dip; and Dominican Republic Counselor, Charge d affairs, Eduardo Cintron, among other officials.

The delegation was met by Thierry Antinori, Emirates’ Executive Vice President and Chief Commercial Officer, and other senior Emirates executives including Adnan Kazim, Divisional Senior Vice President Strategic Planning, Revenue Optimization and Aeropolitical Affairs; Sheikh Majid Al Mualla, Divisional Senior Vice President Commercial Operations Centre; and Orhan Abbas, Senior Vice President Commercial Operations Latin America, Central and Southern Africa, amongst others. Emirates will launch services

Emirates airline’s senior executives hosted a high level delegation from Central and Latin American countries on an official visit to Emirates’ Headquarters on December 17, 2015.

to Panama City, beginning 1st February, 2016.

The new service will be Emirates’ first gateway destination in Central America, and the only air direct air link between the Middle East and Central America. It will also mark the world’s longest non-stop commercial flight clocking 17 hours in the westbound direction.

Service to Panama City, Panama’s capital and largest city by population, will commence with a daily flight operated by a Boeing 777200LR aircraft in a 3-class cabin layout with 8 seats in First, 42 seats in Business, and 216 seats in Economy. The aircraft can carry up to 15 tonnes of cargo. Key imports to the country include pharmaceuticals, machinery products, iron/steel rods, and electronics. Service to Panama City will operate through Tocumen International Airport (PTY).

From left to right: Orhan Abbas, Senior Vice President Commercial Operations Latin America; Thierry Antinori, Emirates’ Executive Vice President and Chief Commercial Officer; Annette Cecilia Cardenas, President of Expo Tourism and Secretary General of the Panama Chamber of Commerce; Jennifer Marie, Panama’s Vice Minister of Tourism; Eduardo Ramon, Panama Counsel General; Oreste del Rio, Deputy Chief of Mission; Adnan Kazim, Emirates’ Division Senior Vice President Strategic Planning, Revenue Optimization and Aeropolitical Affairs; Sheikh Majid Al Mualla, Division Senior Vice President Commercial Operations Centre.

10 JANUARY 2016

logistics & Storage ad.pdf 1 23/08/2015 16:17:04

Tristar’s HO Warehouse gets 5-star rating The warehouse of the Tristar Group in Jebel Ali has been given ‘Five Star’ rating by the Dubai Multi Commodities Centre (DMCC), which is part of Dubai Government. This was achieved after the company earlier this year joined the DMCC Tradeflow, which is a dedicated online platform for registering possession and ownership of commodities kept in UAE-based warehouses.

Tradeflow members are required to have their storage facilities audited under the DMCC Warehouse Ratings Programme. Facilities are then given one to five stars rating, benchmarked with the best warehouse practices across the region.

Consequently, higher rated warehouses attract a greater percentage of the rental market.

The focus areas of the audit conducted were statutory compliance, physical infrastructure, HSE systems, security, fire control, dangerous goods handling, inventory management, risk coverage, IT infrastructure, housekeeping, facility management, certifications, administration and performance measurement.

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Tristar Group CEO Eugene Mayne receives the DMCC 5-Star certificate from Tristar GM for HSEQ and Sustainability Muhammad Akber in a town hall meeting of the company.

JANUARY 2016 11

ENOC awarded global recognition in procurement and supply chain

Twelve delegates from the Emirate National Oil Company (ENOC) have received MCIPS accreditation from the Chartered Institute of Procurement & Supply, an internationally-recognised award, which signals procurement proficiency and represents the global standard for a professional working in the procurement and supply profession.

The MCIPS award was the result of successful completion of the CIPS Oil and Gas Advanced Practitioner Programme – a targeted programme for the oil and gas

sector. The CIPS Advanced Practitioner Programme is an accredited, modular training programme tailored to a specific organisation or industry. The scheme drives learning directly back into the participants’ organisation, resulting in tangible business advantages such as measurable cost benefits and a clear return on investment in a supportive environment, and learning from other delegates in the company. The ENOC delegates represent the largest group of practitioners to be added by a single company in the UAE, to date.

Gulftainer wins ‘Port Operator Award’ at Lloyd’s List Middle East and Indian Subcontinent Awards 2015

(L-R) Paul Holloway, Event Director at TOC Middle East; and Flemming Dalgaard, CEO International Operations at Gulftainer.

12 JANUARY 2016

Gulftainer has won the prestigious ‘Port Operator Award,’ sponsored by Fichte & Co, at the Lloyd’s List Middle East and Indian Subcontinent Awards 2015. Flemming Dalgaard, CEO International Operations at Gulftainer, received the award from Paul Holloway, Event Director at TOC Middle East.

Gulftainer was among six other finalists from the

region and was chosen for the laurel that recognises a company or port authority that has maintained the highest standards of operational efficiency and customer service throughout the year. Factors considered by the expert panel of judges were quality, tangible examples of innovation, improved efficiency, profitability and successful investment in port operations.

REMCO ALTHUIS APPOINTED ETIHAD AIRWAYS VICE PRESIDENT EUROPE

DP World and the Prince Rupert Port Authority sign Phase II South feasibility study agreement DP World and the Prince Rupert Port Authority have announced an agreement to study further expansion of the Fairview Container Terminal in Prince Rupert. The agreement was signed by DP World Canada Group General Manager, Maksim Mihic, and Prince Rupert Port Authority President & CEO, Don Krusel, further strengthening the commitment of their respective organisations to the development and growth of the Port of Prince Rupert.

DP World is the operator of the Fairview Container Terminal and construction is currently underway for the Phase II North expansion. Government of Canada approval has been received for the Phase 2 South expansion of the terminal further to the environmental assessment (Comprehensive Study Report) completed on terminal expansion in 2012 in accordance to the requirements of the Canadian Environmental Assessment Agency.

Under the Feasibility Study agreement, DP World intends to study current marine liner services and container volume growth forecasts for trans-Pacific trade on the West Coast, weighing demand for activation of Fairview’s Phase II (South) expansion to align the project schedule with market demand.

Additionally, DP World has agreed to a set of 11 principles designed to help tackle the USD 19 billion (AED 69.8 billion) illegal wildlife trade. In a ground breaking meeting in London last week, members of the United for Wildlife International Taskforce on the Transportation of Illegal Wildlife Products finalised the document that will shape the efforts of its transport and logistics sector members in the future. The Declaration and Commitments cover a raft of issues from information sharing and detection, practical measures to stop the transportation of illegal wildlife products and a common determination to tackle the illegal trade, wherever it may be.

Etihad Airways has appointed Remco Althuis to the position of Vice President - Europe. Althuis brings in more than 20 years’ sales and marketing experience, gained from his years at Etihad Airways, KLM and Air France-KLM. During this time, he worked in a number of different sales and marketing roles in Europe and Asia. He holds an MBA from the Rotterdam School of Management, Erasmus University, as well as a degree from Leiden University. A native Dutch speaker, Althuis also speaks English, German, French and Mandarin.

He first joined Etihad Airways in 2012 as its General Manager in China.

In his new role as Vice President Europe, he will assume commercial responsibility for the entire European region, which includes Etihad’s 14 European markets such as the UK, Ireland, France and Germany, and will be expanded to include Russia, Belarus and Kazakhstan.

JANUARY 2016 13

Abu Dhabi International Airport welcomes flynas

Virgin Australia first to use ‘Future Check-In’ Tech from SITA SITA has unveiled innovative and flexible new passenger services in collaboration with major Australian carrier, Virgin Australia. The check-in services were launched in November at the new domestic terminal at Perth Airport, and include the world’s first single hardware common-use hybrid desks that can quickly switch from selfservice bag drop mode to full-service traditional counters. SITA’s new solution

enables the airline to provide varying levels of self-service based on airline and passenger preferences all from the one common-use platform.

SITA is the overall technology lead delivering the solution on their global AirportConnect Open common-use platform, with tight integration from their partners Daifuku BCS for baggage management and Vedaleon Technologies for application software.

British Airways to launch the new Boeing 787-9 Dreamliner to Dubai British Airways has announced that its new Boeing 787-9 Dreamliner, complete with a new First cabin, will start flying to Dubai from October 2016. This announcement follows the hugely successful launch of the 787-9 on British Airways’ Abu Dhabi and Muscat

14 JANUARY 2016

routes in November 2015.

The airline also confirmed it will be flying the new 787-9 Dreamliner to Jeddah from July 2016.

The Boeing 787-9 Dreamliner is the most technologically advanced in British Airways’ fleet, and currently serves Abu Dhabi, Muscat, Delhi and

Kuala Lumpur, and will operate flights to Austin from February 5th and San Jose from May 4th, 2016. The new 787-9s will be rolled out across a number of routes in 2016 including: Newark, Narita, Jeddah, Houston, Mumbai, Boston and Dubai, with exact dates being announced in due course.

Abu Dhabi Airports today welcomed flynas’ inaugural flight from Riyadh, marking the start of the Saudi Arabian airline’s new service, connecting the two capitals with a direct flight, five times per week. Eng Ahmad Al Haddabi, Chief Operations Officer of Abu Dhabi Airports, along with senior executives from Abu Dhabi Tourism and Culture Authority (TCA Abu Dhabi), welcomed Bander Al Mohanna, CEO of NAS Holding, and key flynas officials, onboard the inaugural flight. flynas will operate the new route using an Airbus A320 aircraft with the capacity to carry 164 guests in a twoclass configuration – 156 in Economy and eight in Business Class. In the first nine months of this year, Saudi guests staying in the emirate’s 163 hotels and hotel apartments have increased by 29 per cent from the same period in 2014.

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COUNTRY REPORT - EUROPE AND THE AMERICAS

16 JANUARY 2016

All for a better The Eurozone area experienced slow growth in 2015 and hopes for a much better 2016. The United States on the other hand had a strong and steady 2015 despite obvious impediments through oil prices. The US economy is made of many more stronger aspects for any one impact to affect the economy as a whole.

FocusEconomics provides economic insights into both areas

Europe

Recovery intact despite moderation in Q3 The Eurozone economy continued to grow in Q3, supported by strong dynamics in domestic demand. However, GDP growth moderated compared to the previous quarter mainly due to headwinds from a deepening deceleration in emerging economies.

According to a preliminary estimate, the Eurozone economy increased a seasonallyadjusted 0.3 per cent over the previous

JANUARY 2016 17

COUNTRY REPORT - EUROPE AND THE AMERICAS

quarter in Q3, which came in below market which is unknown territory for the country. expectations that growth would match the In France, mainstream parties are expected 0.4 per cent expansion registered in Q2. to fare badly in the regional elections that Although the preliminary GDP data did are also scheduled for December, with the not include a breakdown by components, terrorist attacks in Paris on 13 November additional data indicated that growth was having created a more difficult backdrop. supported by domestic demand, in particular by private consumption. Household Eurozone can expect growth to consumption continues to be propelled by tick up in 2016 low inflation and an expansionary monetary The Eurozone’s economic recovery continues, policy, as well as by a gradual improvement despite the disappointing GDP figures in the labour market. The unemployment rate registered in the third quarter. There are in September stood at 10.8 per cent, which four key factors that are supporting the marked the lowest level economic recovery in the since January 2012. common-currency area: The positive influence low oil prices, a weak euro, Household the factors mentioned an ultra-loose monetary consumption above have had on policy that expands credit domestic demand in across the region and fiscal continues to be the Eurozone and, policy turning gradually propelled by low consequently, on economic less restrictive. However, growth, are contrasted external headwinds and inflation and an by external demand rising political uncertainties expansionary weakness in the wake of represent downside risks a deepening slowdown monetary policy, as to the recovery and to in emerging economies. the region’s economic well as by a gradual outlook. Taking the current This is particularly relevant in China where developments into account, improvement in in recent weeks the risk analysts surveyed this of a disorderly slowdown the labour market. month by FocusEconomics in growth has arisen. expect the Eurozone The unemployment economy to expand 1.5 per Moreover, political risk is likely to be the most cent this year. The economic rate in September important domestic outlook for 2016 is positive stood at 10.8 per threat that could weigh as our panel of analysts left on economic growth. cent - lowest since the region’s GDP growth Across Europe, support for projection at the 1.7 per cent January 2012 mainstream political parties expected last month. has fallen at a time when Looking at the economies real income levels are below those registered in the Eurozone, forecasters raised the 2016 10 years ago. Such an environment has led to economic outlook for five of the 19 countries political crises cropping up in some countries in the region. Growth prospects for 11 and this is likely to remain a feature of the economies were left unchanged over the region’s economy for some time to come. An previous month, while Estonia, Finland and impasse between the Greek government and Latvia were the only economies for which its international creditors has been solved, at forecasts were revised down. least for now. Meanwhile, political turmoil took center stage again in Portugal following GERMANY | Growth moderates in the October 4 parliamentary elections and it Q3 as slowdown in emerging remains to be seen what political direction economies weighs on external the country will take. In Spain, it is uncertain sector what the outcome of the upcoming general The German economy slowed slightly to a elections scheduled for 20 December will be.

0.3 per cent quarter-on-quarter expansion in Early polls point to a fragmented Parliament, Q3 (Q2: +0.4 per cent quarter-on-quarter).

18 JANUARY 2016

Disappointing export growth, due to weak emerging market demand, and fixed investment partly offset healthy private consumption and government spending.

The economy likely remained on a solid footing in the final quarter of the year: the unemployment rate fell to a fresh low in October, while businesses and consumer sentiment remained fairly strong in October and November, respectively. Adding to this, the flash composite PMI continued to strengthen in November. In the political arena, divisions among the governing coalition and several top politicians on how to handle the refugee crisis is putting Chancellor Angela Merkel under considerable pressure.

Ongoing strength in private consumption is projected to be the main pillar of growth this year and next. In 2016, household spending will benefit from a strong labour market, rising wages and pensions. Adding to this, the fiscal stimulus related to the refugee influx will likely boost consumption and construction activity. Exports are projected to perform fairly well thanks to steady demand from industrialized economies, although softer demand from emerging economies poses a downside risk. Panelists see the economy expanding 1.7 per cent in 2015 and 1.8 per cent in 2016.

FRANCE | Government plans to increase defense expenditures amid national state of emergency France’s economy expanded a modest 0.3 per cent over the previous quarter in Q3, which came in above the flat growth seen in Q2.

The third quarter’s acceleration came on the back of stronger domestic demand, which more than offset a negative contribution from the external sector. Following the deadly terrorist attacks in Paris on the evening of 13 November, President François Hollande declared a national state of emergency.

The Parliament voted to extend the state of emergency, which expands executive power, for 3 months on 19 November. Moreover, the government decided to immediately intensify its military campaign against ISIL in Iraq and Syria and reinforce interior security with the reestablishment of border controls. 5000 new police posts are set to be created over the next two years. The government also plans deep

legal changes in order to give more tools to France’s intelligence and counter-terrorism organizations, with discussions about constitutional reforms forthcoming. Drastic increases in defense expenses will impact the state’s 2016 budget, which had previously been blessed by the European Commission.

The budget will now likely breach previously announced objectives, although the EC showed its understanding and stated that it would likely allow for budget flexibility due to these unforeseen circumstances.

A weak euro and low energy prices are expected to support France’s economic recovery going forward. FocusEconomics

20 JANUARY 2016

panelists expect the economy to expand 1.1 per cent in 2015 and expect it to accelerate to 1.4 per cent in 2016, which is unchanged from last month’s estimate.

ITALY | Economic growth moderates in Q3, but economy kicks off Q4 on the right foot Italy’s economy grew 0.2 per cent over the previous quarter in seasonally- and workingday adjusted terms in Q3, which was slightly below the 0.3 per cent expansion tallied in Q2 and marked the softest rise since Q4 2014. Meanwhile, the expansionary 2016 budget proposal pushed by Prime Minister

Matteo Renzi, which includes sizable tax cuts and incentives for firms and employers, has received a mixed verdict from the European Commission (EC). The EC urged the Italian government to revise the budget so as to not jeopardize fiscal objectives, but also suggested that Italy may be granted fiscal flexibility if it successfully adopts structural reforms. The EC may also consider granting Italy further flexibility in order to compensate for the costs that the country is facing amid the ongoing migrant crisis. The EC will give its final assessment of the revised budget in the spring.

In its latest move, the government plans to launch a EUR 3.6 billion rescue fund run by

COUNTRY REPORT - EUROPE AND THE AMERICAS

Growth is expected to hit a post-recession peak this year, before moderating going forward as the economy transitions to a more stable growth path.

Growth will be fueled by robust domestic Looking at the demand on the back of economies in the greater confidence and Eurozone, forecasters improving labour market conditions. However, raised the 2016 political uncertainty over the incoming government economic outlook and the emerging markets slowdown pose for five of the 19 risks to the outlook. countries in the FocusEconomics panelists expect the economy to region. Growth grow 3.1 per cent in 2015. prospects for 11 For 2016, the panel sees the economy growing economies were left 2.7 per cent, which is unchanged unchanged from last month’s forecast.

INFLATION | While inflation remains weak, risks of outright deflation next year are low

Venice Italy

the Bank of Italy in order to save four regional banks. The move has been approved by the EC. Italy is expected to grow for the first time in four years this year and is seen gaining further momentum in 2016. FocusEconomics panelists expect the economy to expand 0.8 per cent this year. For 2016, the panel sees economic growth picking up to 1.3 per cent, which is up 0.1 percentage points from last month’s estimate.

SPAIN | Economic recovery continues as election approaches Spain’s economy lost a bit of steam in the third quarter according to a preliminary estimate. The

economy moderated from the over-seven-year high 1.0 per cent expansion in Q2 to 0.8 per cent growth quarter-on-quarter. The still solid result suggests that, although the economy may have hit its top speed in Q2, it remains firmly entrenched on the path of recovery after years of recession. Meanwhile, the country will head to the polls on 20 December in general elections. Early polls point to a more fragmented parliament and coalition government, which is unchartered territory for the country. While the results of the vote are unlikely to derail the country’s recovery, a more split Congress may increase political instability and could lead to policy inaction going forward.

More complete showed that harmonized inflation stood at 0.1 per cent in October (September: -0.1 per cent year-on-year), which was revised up from the flat reading showed in the 30 October preliminary estimate, dispelling fears that the commoncurrency block was entering into a deflationary spiral. Headline inflation in the Eurozone has fluctuated close to zero in the past months, largely due low oil prices. But the risks of sustained low inflation are decreasing and consumer prices are expected to pick up toward the end of the year and the beginning of next year mainly due to a large base effect generated by a drop in energy prices last year.

The Consensus view from our panel of analysts is that inflation in the Eurozone will average 0.1 per cent this year. As the sharp drop in global oil prices was more noticeable toward the end of 2014, the low base of comparison will start to fade at the end of this year and therefore a gradual rise in inflation is expected for next year. For 2016, inflation in the common-currency area is seen rising to 1.1 per cent, which is unchanged from last month’s forecast.

Written by: Ricardo Aceves, Senior Economist

JANUARY 2016 21

22 JANUARY 2016

COUNTRY REPORT - EUROPE AND THE AMERICAS

US Economic Outlook Recent data suggest that the U.S. economy is on stable ground, although performance is uneven. According to an advance estimate, GDP increased at a seasonally adjusted annualized rate of 1.5 per cent in Q3. The result, which was well below the 3.9 per cent expansion tallied in Q2, reflected weak fixed investment and exports, although private consumption, the motor of the economy, grew at a healthy pace. The October jobs report grabbed headlines, with payrolls surging, unemployment falling to 5.0 per cent and other measures pointing to solid labour market conditions. Consumer spending should remain buoyant going forward, despite signs that households are pocketing gas savings and remain somewhat wary about growth prospects for the months ahead.

United States Economy Overview

New York City

Despite facing challenges at the domestic level along with a rapidly transforming global landscape, the U.S. economy is still the largest and most important in the world.

The U.S. economy represents about 20 per cent of total global output, and is still larger than that of China. Moreover, according to the IMF, the U.S. has the sixth highest per capita GDP (PPP), surpassed only by small countries such as Norway and Singapore. The U.S. economy features a highly-developed and technologically-advanced services sector, which accounts for about 80 per cent of its output. The U.S. economy is dominated by services-oriented companies in areas such as technology, financial services, healthcare and retail. Large U.S. corporations also play a major role on the global stage, with more than a fifth of companies on the Fortune Global 500 coming from the United States.

Even though the services sector is the main engine of the economy, the U.S. also has an important manufacturing base, which represents roughly 15 per cent of output. The U.S. is the second largest manufacturer in the world and a leader in higher-value industries such as automobiles, aerospace, machinery, telecommunications and chemicals.

Meanwhile, agriculture represents less than 2 per cent of output. However, large amounts of arable land, advanced farming technology and generous government subsidies make

JANUARY 2016 23

COUNTRY REPORT - EUROPE AND THE AMERICAS

Times Square‚ New York

the U.S. a net exporter of food and the largest agricultural exporting country in the world.

The U.S. economy maintains its powerhouse status through a combination of characteristics. The country has access to abundant natural resources and a sophisticated physical infrastructure. It also has a large, well-educated and productive workforce. Moreover, the physical and human capital is fully leveraged in a free-market and business-oriented environment. The government and the people of the United States both contribute to this unique economic environment. The government provides political stability, a functional legal system, and a regulatory structure that allow the economy to flourish. The general population, including a diversity of immigrants, brings a solid work ethic, as well as a sense of entrepreneurship and risk taking to the mix. Economic growth in the United States is constantly being driven forward by ongoing innovation, research and development as well as capital investment.

The U.S. economy is currently emerging from a period of considerable turmoil. A mix of factors, including low interest rates, widespread mortgage lending, excessive risk taking in the financial sector, high consumer

24 JANUARY 2016

indebtedness and lax government regulation, led to a major recession that began in 2007.

The housing market and several major banks collapsed in 2008 and the U.S. economy proceeded to contract until the third quarter of 2009 in what was the deepest and longest downturn since the Great Depression. The U.S. government intervened by using USD 700 billion to purchase troubled mortgage-related assets and propping up large floundering corporations in order to stabilize the financial system. It also introduced a stimulus package worth USD 831 billion to be spent across the following 10 years to boost the economy.

The economy has been recovering slowly yet unevenly since the depths of the recession in 2009. The economy has received further support through expansionary monetary policies. This includes not only holding interest rates at the lower bound, but also the unconventional practice of the government buying huge amounts of financial assets to increase the money supply and hold down long term interest rates – a practice known as “quantitative easing”.

While the labour market has recovered significantly and employment has returned to pre-crisis levels, there is still

widespread debate regarding the health of the U.S. economy. In addition, even though the worst effects of the recession are now fading, the economy still faces a variety of significant challenges going forward. Deteriorating infrastructure, wage stagnation, rising income inequality, elevated pension and medical costs, as well as large current account and government budget deficits, are all issues on the radar.

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. 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.

Managing major hazard

industry risk 26 JANUARY 2016

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Risks are abundant all around our daily lives. But in the hazardous goods industry, risks multiply.

Here are best practices for the future of integrated asset management in the hazardous goods industry. Ian Travers, Principal Process Safety Consultant with Lockheed Martin, gives us more details

T

here is a rising awareness of the tangible benefits of integrated asset management approaches that t ransforms the financial, safety and risk performance of energy and high hazard businesses.

In 2011, the UK Health & Safety Executive (HSE) published a case study featuring Scottish Power (now Iberdola)

JANUARY 2016 27

28 JANUARY 2016

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and its work in partnership with us that ScottishPower embraced this approach and highlighted the merits of focusing integrating the underlying transformation of automating asset management with process safety key performance indicators (KPIs) through management within major hazard businesses its Operational Transformation Programme to ensure success in managing risk whilst (OTP). OTP aimed to make ScottishPower delivering significant cost savings. A joint an industry leader in process safety and asset approach has since been implemented within management focused through the delivery of a growing number of major hazard industry a“High Reliability Organisation.” operators worldwide.

ScottishPower was able to transform its We have also presented jointly at a organisation into a leading global exponent of multitude of conferences all focused on how process safety and asset management. In 2009 to encompass process safety management the company became the first power generator to address the management of risk, ranging to be certified to BSI PAS 55: 2008 (PAS 55); from managing hazards and controls in 2010 the Institution of Chemical Engineers within the current financial environment; recognised the company’s achievements by implementing process safety management awarding it first prize in the IChemE 2010 systems to demonstrate compliance; category of innovation in process safety; and, balancing the cost of compliance with in 2011 it became the subject of one of the first operational efficiencies and financial benefits case studies on this issue to be published by and; managing and the UK Health and Safety mitigating human failures/ Executive (HSE, 2011).

UK Health and errors in safety critical From the outset Safety Executive activities.

ScottishPower determined to In 2014, the US deliver full integration of asset (HSE) developed Chemical Safety Board management and process invited experts to share safety through the development an approach to best practice examples of of new IT systems. process safety using leading indicators, As a strategic partner, rather than just reporting Lockheed Martin assisted in management to on lagging indicators such the development and delivery help organisations of the underpinning IT strategy as a fire, to manage the potential for catastrophic including the development operating in accidents like the Macondo of the Process Safety KPI hazardous sectors Dashboard and associated blowout. While our team’s presentation highlighted core IT systems. Of particular to demonstrate an example in the power importance was automation of adequate risk generation industry, the KPI management process, similar recommendations which allowed the dashboard control were made to the Oil & to pull data directly from the Gas industry from around the globe about underlying business system and update the managing key performance indicators (KPIs). status of the KPI’s on a daily basis. Additionally, KPIs were ranked according to risk to reduce the reporting burden on staff. The dashboard CASE STUDY: MAJOR also meant staff have a greater level of trust in HAZARD INDUSTRY the KPIs as they knew the data has not passed Process Safety Approach A number of through numerous sets of hands before the high-profile, international incidents have whole business got to see the results. demonstrated that concurrent failures in the areas of people, processes and plant Key thinking was developed to answer can cause catastrophic plant safety failures. the following questions: In response, the UK Health and Safety What if Process Safety risks were as visible as Executive (HSE) developed an approach Health and Safety risks? to process safety management to help Which warning signs are most likely to help organisations operating in hazardous sectors you avoid an incident? to demonstrate adequate risk control.

JANUARY 2016 29

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Establishing KPIs at ScottishPower To deliver the process safety management system, and specifically to establish a comprehensive set of leading and lagging process safety performance indicators, ScottishPower followed the UK Health and Safety Executive’s Guidance on establishing process safety performance indicators (HSG 254.)

To establish KPIs a multi-functional team from the business followed the six stage

30 JANUARY 2016

approach in HSG 254 to identify 90 Hazards/ Hazardous Events and the 42 Risk Control Systems (or“preventative barriers”) that are required to manage these hazards. The team then reviewed each risk control system to identify one or more leading indicators.

Crib sheets were used to capture detailed specifications for each KPI. Whilst the process covered a range of power plant technologies it was found the majority of leading indicators could be applied by setting different targets and tolerances according to the power plant type

and risk. In total 100+ Leading Indicators were identified across all Risk Control Systems.

Differential rankings of leading and lagging indicators It was clear that 42 Risk Control Systems and the associated 100+ Leading Indicators was too large a data set to present meaningful information to the management team so the 42 risk control systems were nested into 8 headline Risk Control Areas to form the basis of the Process Safety Management Dashboard

COVER

The incident management system was modified to make it very simple for any member of staff or contractor to report an incident on-line. Automated incident reporting of process incidents was included in the development plan for the KPI dashboard.

This captured threats such as process excursions or limits being Of particular breached (e.g. tank level).

A key part of this process importance was was to classify incidents automation of the as major, significant or minor (based on API 754 – KPI management Process Safety Performance Indicators for the Refining process, which and Petrochemical Industry) allowed the and to relate these to one or dashboard to pull more of the underlying 42 Risk Control Systems

data directly from the underlying business system and update the status of the KPI’s on a daily basis

Major Process Safety Incident: Equipment damage > £100k Loss of production > 24 hours Injuries/fatalities (RIDDOR) Major environmental impact

Significant Process Safety Incident: Equipment damage > £20k but < £100k Significant release of energy or hazardous matter Fire and explosions Minor Process Safety Incident: Demand on safety system Process upset – control loops out of control, equipment in manual Breaches of plant limiting conditions that failed.

Best Practice to Reporting KPIs that covers Operational and Compliance Audits; Technical Risk Management; Staff Competence; Operational Management; Maintenance Management; Critical Systems Management; Alarm and Instrument Management; and Emergency Preparedness.

Implementing an Incident Management Process ScottishPower took a simple view that incidents and near misses were the single source of Lagging Indicators. To capture this

lagging data, a new incident management process was implemented to capture and to ensure the consistent investigation of root causes. A major cultural awareness programme was developed to ensure staff report process related incidents and near misses. Staff were trained on the importance of “lagging”indicators in learning from events and preventing such incidents occurring again across the Iberdrola businesses. Further to this a company-wide Technical Incident reporting system was developed.

To improve performance and track trends a system of simple colour coded targets were set for each KPI. Blue shows where performance meets a level that is considered industry best practice. Green indicates performance is on target, amber that it is within acceptable tolerance and red to show where it is below acceptable.

Both “leading and lagging”indicators were brought together to build a live picture of performance. The key focus at ScottishPower was always on leading indicators as they are

JANUARY 2016 31

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considered more predictive in preventing a major accident. This model was then developed into a visible Process Safety Management System (PSMS) to allow the Risk Control Systems (RCS) barriers to be measured daily.

indicators which prevent and predict an incident such as corrosion inspections and mitigation barriers are those leading indicators which reduce the impact of an incident such as the availability of a main protection or shutdown system.

Risk Ranking of KPIs

Ne xt steps in the journey to becoming a high reliablity organisation

A key concept is that not all indicators are consider to be of equal importance. Based on HSE’s Guidance three categories of indicators were identified, Operational Control, Generic and Programme Indicators.

Operational control KPIs measure the direct challenges to the integrity of plant and equipment and the process safe operating envelope, such as temperature, pressure and filling levels. Generic indicators cover the maintenance of key instruments, alarms and ensuring effective control of change, permit to work and other essential risk control measures. Whereas Programme Indicators capture progress with work such as audit programmes and safety tours.

Operational Control Indicators provide the best insight to the risk of a major accident. Many organisations have process safety key performance indicators based on programme and generic categories as often these are easier to measure. Whilst these indicators are important in terms of leadership and culture they are very rarely involved with the initiation of a process safety incident or event and are often over measured and can give a false sense of security that risks are being managed. Operational Control Indicators are often under collected due to the complexity of requiring some real time data to be transformed into relevant KPIs but are the key to preventing future incidents. Having recognised the categories of KPIs a risk model was developed which allowed the important KPIs to be easily visible. The KPI dashboard was then developed to take these concepts into the governance and management process of the individual indicators and power plants.

Key Hazard Report Once the KPIs have been developed linking key hazards to risks then it is a simple task to provide hazard reports and the condition of both preventative and mitigation barriers.

Preventive barriers are those leading

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Measuring performance of process safety systems is important but measuring the right things that give you the best insight into early failures or challenges to the integrity of containment systems is vital.

Repeatedly businesses who struggle with the whole concept of performance measurement and are driven to measuring areas of performance that have little bearing on whether they are operating safely or are running their assets in the most effective manner. Notwithstanding this, comfort is drawn from the act of measurement rather than the utility and benefit gained from the metric.

There is a strong argument against spending much time trying to distinguish between leading and lagging indicators on the basis that the information provided is much more important than the label. Ultimately, it’s the action taken to improve the control of risks that counts most. However, an oft repeated position that a near-miss really is a leading indicator as somehow a pre-cursor of a major accident leads to some concern about the most beneficial way to consider and develop key performance indicators. The issue with the concept of a ‘near-miss’ is that it’s a handy category of incident which can so often be dismissed as unimportant or fortunate.

Actually, it’s an adverse, unwanted outcome of a risk control system or barrier failure that will always provide valuable insights into failure of the process safety management system.

This is now a mature rather than emerging and developing area and KPIs feature in some form or another in most company’s monitoring and measurement system. For UK Major hazard (COMAH) [Ref] facilities this has partly been driven by a regulatory expectation. Therefore, in this mature environment a re-adjustment is proposed to the thinking around this divide between leading and lagging indicators. At the same time, the undervalued benefit of lagging

indicators is promoted at the expense of more alluring and attractive leading indicators.

This may sound like heresy but pursuit of leading indicators can drive companies into measuring obscure and low value metrics which offer little insight into the potential for a major accident. In proposing this shift in thinking how a slight change can actually make ‘near misses’ feature centrally in smart performance measurement will be illustrated.

But before that we need to change into outcome mode, and this is one of the hardest concepts for people to grasp when it comes to process safety management.

Process Safety Outcomes Every control or mitigation measure, barrier, slice of Swiss cheese, or layer of protection has a safety purpose or successful outcome. So few of us

COVER

consider what these conditions or outcomes are. Instead the tendency is simply to implement the elements of a process safety management systems as per good practice guidance such as the Energy Institute High Level Framework[Ref]. Identifying a control measure or system success is central to the HSE Guidelines, HSG 254 [Ref]. When writing HSG254 HSE worked out the critical factor in measuring process safety performance lies in determining whether the system is delivering its intended safety outcome and then seeking information to confirm this or show that something other than the intended outcome was occurring.

This starting point for setting either a leading or lagging indicator seems to have been forgotten.

This difficulty in thinking of system outcomes is illustrated when those involved in critical process safety control systems such as a Permit to Work system have difficulty in completing the sentence or agreeing a common position on‘we have a permit to work system in order to…?’Similar difficulty occurs in determining the outcome of a management of change or even a competence management system.

Recently, whilst working with organisations on improving competence management systems it was discovered that competence as an outcome rather than a process is difficult concept to some.

Questions to help organisations set and implement focusses KPIs Work on process safety KPIs has resulted in a simple set of questions to help organisations set and implement focussed KPIs. These are:

For lagging indicators: What is the intended outcome of the control system under consideration eg what does success in controlling this risk look like? Is there common agreement on this outcome and its description? Can the intended outcome or the adverse of the outcome be detected? What’s the deviation tolerance form the intended outcome which can be accepted? What is the metric to be used to measure outcomes above or below the threshold of tolerance?

For leading indicators: What is the most important activity or process that is required to consistently deliver the intended outcome? This about identifying ‘inputs’ required to deliver the

JANUARY 2016 33

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desired outcome. Which of these are dynamic and subject to variation rather than fixed?

Which of these inputs are undertaken most frequently? What’s the metric to be used to measure these critical inputs?

To get the greatest benefit from process safety KPIs its essential to set the desired outcomes around the most significant challenges to the integrity of the plant or process that contain hazardous material or stored energy. From research undertaken by HSE / HSL for chemical process plant these are known as: Corrosion High / low temperature High / low pressure High / low level Mechanical failure – e.g. material failure, wear and erosion Impact Human error – e.g. opening into containment

Not all KPIs are equal Measuring performance of process safety systems is important but measuring the right things that give you the best insight into early failures or challenges to the integrity of containment system is vital.

This leads to the conclusion that the most important KPIs are those that provide an insight into whether the systems that protect against the challenges to

34 JANUARY 2016

integrity are degraded. So it’s essential to set KPIs around the barriers or risk control systems that guard against these top six degradation processes. Moreover, the best benefit comes from continual measurement the outcomes of these control measures and then acting on the first signs of adverse degradation. I’ve previously describe these systems as ‘process measures’. The next most important area of performance measurement should be those special controls that manage the interface with the plant containment e.g. high risk maintenance that breaks into the containment e.g. a Permit to work system and controls that manage changes to the process and plant e.g. a management of change system. Measuring other aspects of performance such as outstanding audit actions at the expense of these front line control systems will be much less beneficial.

Conclusions The conclusion is that as a process safety near-miss represents an unintended or adverse outcome then they are far too

important to be dismissed or considered are fortunate outcomes. Instead near misses that relate to failures of the system designed to maintain the integrity of the plant and process and should be considered as a golden opportunity to detect a deterioration of a barrier or control measure. Identifying, reporting and investigation of process safety near misses is only one side of measuring lagging indicators as the same conditions can be proactively monitored through routine checks on the process conditions such as temperature, pressure, level etc.

The sophistication of instrumented systems means that this data logging and analysis can be done automatically and the results displayed in a KPI dashboard in real time.

So let’s re-label process safety near misses as ‘adverse system outcomes’ and treat these important lagging indicators as central to ensuring the integrity of process plant assets.

This should give such measures priority over less beneficial KPIs such as measuring audit scores, outstanding actions and safety tours.

About the author Ian Travers A world expert on process safety management, leadership and the establishment and implementation of key performance indicators for major hazard industries, Ian holds the Institute of Chemical Engineers’ Franklin Medal for his outstanding contribution to Process Safety.

Recently retired from the UK Health and Safety Executive (HSE) as Deputy Director, Chemicals Regulation, Ian is now Principal Process Safety Consultant with Lockheed Martin.

Ian has over 25 years’ experience in the regulation of chemical and major hazard industries and in the investigation of major incidents to discover the underlying causes. He led the joint HSE and industry response to the major fire and explosion at the Buncefield fuel depot in the UK and established the UK Process Safety Leadership Group.

He also chaired the international expert panel to publish the Organisation for Economic Co-operation and Development (OECD) Guidelines on Process Safety Governance which is now the global benchmark on Process Safety Leadership.

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We deliver the kind of service, quality assurance and safety that has made us a global leader for over 90 years.

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IT SOLUTIONS

has long recognised the importance of approach will help you replace disparate connecting independent automation systems silos of technology with an integrated, in manufacturing environments,”explains information-enabled plant and supply Neil Enright, Director Middle East, Rockwell network – our Integrated Architecture Automation. system,”explains Neil.

A vision of The Connected Enterprise has guided the development of Rockwell Solutions based on the Rockwell Automation’s Integrated Control and Automation Integrated Architecture Information Technology for decades. are designed to: Now, with the convergence of plant-floor Enable Plant-Wide Optimisation - PlantOperations Technology (OT) and businesswide optimisation is their approach to level Information Technology (IT), this vision help clients reap more productivity and has become a reality. efficiency from their automation investments The Connected Enterprise links production throughout all stages of the plant lifecycle. lines, in-the-field assets, utilities and Their architecture is designed for continuous enterprise IT to deliver contextualised improvement, and enables unprecedented information where it is needed. As a result, levels of visibility and flexibility so one can companies can make better quickly adjust to market decisions faster – and demands and maximise the achieve a new level of return on assets.

Rockwell operational intelligence to Boost Machine Builder Automation has improve productivity and Performance - Whether it’s global competitiveness. reducing time-to-market long recognised Built on a secure, or sharpening focus on the importance standard ethernet innovation, one must infrastructure, The face the challenges of the of connecting Connected Enterprise is global marketplace. Their enabled by their integrated flexible, scalable automation independent control and Information solutions are designed to automation systems lower total cost to design, portfolio.“Our broad, information-enabled develop and deliver SM in manufacturing portfolio includes the machines and improve environments. integrated architecture, overall performance. intelligent motor control, Drive Sustainable and solutions and services. Together Production - Now is the time to embrace with our partners, we intend to leverage sustainability, so clients can increase the internet of things (IoT), and other competitiveness and overcome the rising contemporary and proven technologies costs of energy, raw materials and lost worker that promise to enhance the connected productivity. From regulatory compliance to enterprise vision,” he adds. zero-impact manufacturing, they can help Today’s companies rely on information make operations cleaner, safer, and more integration to drive efficiency and resource-efficient. productivity. But while many manufacturers “Our operations in the Middle East are have achieved better supply and demand spread over the Gulf, including KSA, Bahrain, chain integration through their business and Egypt. We are a leading supplier of systems, they still lack that connection automation controls and drive systems, and to what is happening directly in their have the infrastructure to meet the needs production processes. And the production of customers doing business in this region. process is often characterised by a These are complemented by a network fragmented environment that includes of local system solution providers and outdated machinery, legacy information distributors in the region. Whether you’re systems and various automation solutions. an end user looking to procure automation “We believe the future lies in connecting products to support your business objectives, these pieces across your business. Our or an OEM looking to increase your business

38 JANUARY 2016

opportunities, we are a partner you can depend on. We serve the world’s leading manufacturers and local customers from our Regional Head Office in Abu Dhabi, and offer sales, service, repair and technical support expertise from our offices in Dubai, Bahrain, Egypt, Kuwait, Oman, Qatar and Saudi Arabia. We are nearly 250+ employees now in the Middle East,”informs Neil.

The fluctuating price of oil has major ramifications on all walks of life, from consumers to industry. While some reap the benefit, other suffer. But of course, it’s the oil and gas producers that are most affected.“If you’re in the oil and gas industry, you must be longing for a crystal ball, so that you can know when the price of oil was going to rise, and to what price,”says Neil warily.

IT SOLUTIONS

There aren’t too many industries that see large swings and volatility in the price of its commodity, and in a cyclical manner, and as quickly as the oil and gas industry.

So companies from the super majors down to the small regional producers have to design long term strategies to operate in an uncertain, highly dynamic industry.

One such strategy is finding ways to contain costs and become more efficient, and not just in the short term, but in sustainable ways that will benefit them in the future.

Because although no one knows exactly when the price of oil will rise again, you can be sure that it will.

“While cost containment may be the starting point, producers need to quickly look at how to become more efficient, and modern technology

is a good place to start. Making sure staff with the most knowledge and expertise are utilised appropriately is key to efficiency. Giving them the ability to access multiple sites from wherever they’re located, while providing them the right amount of contextualised data to help make the right decisions can help minimise downtime by predicting failures before they occur, taking appropriate actions to avoid such failures, or respond fast to an unexpected problem by being able to accurately and quickly diagnose the issue and move the correct parts and personnel to the production site,”explains Neil.

Regardless of the price of oil, safety will always be paramount to producers. But with the costs of downtime so high, and the impact on the bottom line even greater,

the need to help achieve safe and reliable operations becomes even more important.

The correct control system, right-sized to the application, can go a long way to making sure producers aren’t investing any more than they have to, to keep operations running safely and reliably, and making sure no unplanned downtime occurs as a result.

A modern control system rather than a traditional DCS is another way technology can be utilised to improve operational efficiency. With companies now more focused on existing assets rather than developing new ones, the need to maximise the operational efficiency of each is magnified.“Migrating from older distributed control systems to a modern, scalable control system that has a lower total cost of ownership, is becoming

JANUARY 2016 39

easier and simpler to do with many tools available to make the transition as seamless as possible,” he adds.

So while there’s uncertainty surrounding the price of oil in the mid to short term, it seems that the lower prices will be around for the foreseeable future. But oil and gas companies don’t need a crystal ball to see the benefit they can derive from utilising existing technology to wring out every last piece of efficiency from their operations, today and in the future.

“Gas processing facilities strive to optimise production and minimise downtime and operational cost, while maintaining safe operation. For this purpose, automation

40 JANUARY 2016

systems must meet stringent process control requirements, while being reliable and scalable. Keeping this in mind, Qatar is certainly a big market for us. With decades of experience, our team of knowledgeable engineers and project managers understand the issues customers face. Taking advantage of easy to use tools and modern technology, we are able to design solutions that meet their needs to help keep production levels high.

We have helped customers by seamlessly migrating their less effective control systems, updating safety systems, as well as optimising processes by using advanced process control solutions,”states Neil.

Rockwell Automation’s gas processing solutions are ideal for a wide range of applications, including: Distributed control system Optimisation of amine treatment, sulfur recovery, cryogenic process, lean oil absorption and fractionation operations Pump, compressor, turbomachinery control and condition monitoring Process safety, including Emergency Shut Down systems and Safety Instrumented Systems SIL levels Process improvement and advanced process control Burner Management Systems (BMS)

IT SOLUTIONS

These stages are:

nearly US$ 485 million (AED 1781477750) in potential annual energy cost savings.

Enterprise Maturity Model determines how 4. Analytics: At an operational level, ready a company is to change its processes analytics help to pinpoint the greatest needs and architecture to leverage accurate, real-time for real-time information (eg, persistent information. This work establishes a strategy problems); to identify the authorised to securely integrate technologies, processes, recipients who can act on information and people. From a financial perspective, it to address issues as they arise; and to quickly surfaces infrastructure problems, such establish the standardised practices and as high-risk security holes or the inability protocols that help these individuals make to monitor critical performance indicators the right decisions when action is needed. (eg, energy wastes, quality issues, machine At the senior executive level, analytics help downtime). A single minute of downtime in executives to evaluate and optimise their the auto industry, for example, can cost tens operations and achieve significant longof thousands of dollars. term savings via capitalWhat does downtime cost avoidance. At Rockwell your company annually?

Automation, for example, But while many approximately 30 per 2. Secure and cent savings annually upgraded network and manufacturers have in capital avoidance has controls – You now achieved better been realised alone due build and improve your to improved capacity operations-technology/ supply and demand utilisation and scheduling information-technology chain integration across their plant network.

(OT/IT) backbone. Can it be costly to upgrade through their business 5. Collaboration: With controls, sensors, and internal equipment and systems, they still infrastructure? Yes, but networks communicating the improved business with each other, the lack that connection processes and workflows Rockwell Automation to what is happening Connected Enterprise that result will deliver far more cost savings.

Maturity Model looks directly in their For example, scrap and to the outside world. It production processes. anticipates activities across rework costs an average of 5.4 per cent of plant the organisation and sales among all manufacturers, but among throughout the supply chain – market trends, the upper quartile of these firms, it’s only one political events, even weather patterns – to per cent. Do the math for your company. minimise losses from negative events, leverage new opportunities, and coordinate activities 3. Defined and organised working data from furthest suppliers to end customers. For capital (WDC) – Your organisation identifies example, speed-to-market with a new product how to harness and leverage its new data often comes down to how rapidly suppliers in Stage three by ‘contextualising’ the data can deliver new components, materials, within a matrix of new workflows, schedules, ingredients, or tooling. Enabling all supplyand responsibilities. The impact can be huge. chain players to see the opportunity can Improved access to the right information cut months or more from a product-launch allows executives to make dramatic schedule. Oak Stone Partners estimates that a workflow changes – line changes, production product delay can cost a company as much as scheduling, employee staffing – that are long 35 per cent of the product’s net present value. overdue, enjoy economic benefits in the form “Establishing a connected enterprise of lower energy costs, longer equipment offers a range of improvements and cost life, lower maintenance costs, and higher savings – production, network security, asset productivity. For example, results tallied for management, supply-chain collaboration – the first 200 Energy Savings Assessments that expand over time. And since the effort conducted in 2006 by the DOE showed opportunities to save a total of about 52 trillion pays for itself, this should be the easiest decision of your career,”concludes Neil.

Btu of natural gas per year, representing

1. Assessment – This stage of the Connected

Metering and measurement Fire and gas systems High Integrity Pressure Protection Systems Motor control solutions Customers and companies face countless decisions every day, in which the line from action to improved productivity is often hard to see.

“The return on investment from creating a connected enterprise - using the validated Rockwell Automation Connected Enterprise Maturity Model - is ongoing. As your organisation develops through five stages of maturity, the economic benefits keep increasing,”informs Neil.

JANUARY 2016 41

Coming full

circle Crossing a significant milestone in their biodiesel programme, McDonald’s UAE has affirmed its position as the company with some of the most innovative and sustainable CSR initiatives in the UAE

I

n 2011, UAE launched an innovative biodiesel campaign. This month, that campaign hit a major milestone – their fleet logistics trucks will cross 5,000,000 km running on 100 per cent recycled vegetable oil from McDonald’s UAE outlets.

The initiative was introduced in the UAE in July 2011, with the support of Dubai FDI, the foreign investment promotion arm of the Department of Economic Development.

McDonald’s UAE is the first quick service restaurant in the MENA region to recycle all

42 JANUARY 2016

ALTERNATIVE FUEL

JANUARY 2016 43

ALTERNATIVE FUEL

of its waste cooking oil, using it to refuel the company’s logistics fleet that transports its goods throughout the Emirates.

Each of the 16 trucks collects used cooking oil from McDonald’s outlets across the UAE once to twice a day, and converts it into 100 per cent biodiesel by McDonald’s UAE’s clean tech partner, Neutral Fuels. Explains Karl W Feilder, CEO and Chairman, Neutral Fuels,“This waste oil is filtered, then heated to 63 degrees centigrade. It is then mixed

plastic, and yet, is able to withstand the high temperature of cooking oil. Each ROC is individually numbered so that each of our McDonald’s restaurants’ waste oil can be accurately tracked. The clean, empty ROC is delivered with the regular McDonald’s deliveries, and the sealed, full ROC is collected by the same truck. Inside the truck, the ROCs are safely strapped so that they cannot move.”

The ROCs are delivered daily to Neutral Fuels, as their biodiesel factory is located very

Rafic (McDonald’s UAE) and Feilder (Neutral Fuels)

with methanol, and injected with a sodium methylate catalyst spray which reacts with the triglyceride oil. These molecules then break apart, and reform into new molecules called fatty acid methyl esters. The esters are filtered, polished, and filtered again, until it is pure.”

The whole process takes about four hours, producing a clean burning, environmentallygreen biofuel. One litre of McDonald’s waste cooking oil produces one litre of biodiesel.

The biodiesel is then used to fuel the company’s logistics fleet.

Elaborating on the process, Rafic Fakih, Managing Director and Partner at McDonald’s UAE, adds,“Our partner, Neutral Fuels, developed the Recycled Oil Container, or ROC, which is a specially designed wheeled container that can hold 120 litres for the oil. It is made from 100 per cent recyclable

44 JANUARY 2016

close to McDonald’s warehouse. This ensures that the trucks do not have to drive any additional distance.“The Neutral Fuels facility is approximately 6000 sq feet in size, and has a current capacity to process six million litres of waste cooking oil into biodiesel each year,” informs Feilder.

As oil is a natural substance, it will eventually spoil, but this takes many weeks to occur.“In general, European standards compliant finished biodiesel should be used within three months of production, but the biodiesel is in fact used in the UAE within one week of production. Because McDonald’s cooking oil is made from low saturated fat sources such as sunflower and rape seed, the oil is liquid at normal room temperature, thus there are no specific temperature requirements for transporting the oil,”explains Feilder.

The successful accomplishment of the collaborative effort between McDonald’s and Neutral Fuels highlights both companies commitment to use environment-friendly, alternative energy sources to reduce the carbon emissions. Reiterated Fakih,“We are proud to announce the five million km milestone, an incredible result that has made a significant contribution to the reduction of our carbon footprint in the Emirates.”

Added Feilder,“This milestone demonstrates long-term commercial innovation in action, and proves beyond a doubt that biodiesel is the most viable commercial alternative to old style fossil fuels.

Together with McDonald’s, we have shown that running vehicles on 100 per cent biofuel is a safe, logical, and sustainable course of action.

We have innovated a completely new way of

ALTERNATIVE FUEL

collecting waste cooking oil, and a novel and highly efficient method of converting that oil to biodiesel. As McDonald’s has shown, using biodiesel is so easy and sustainable that anybody could be running their diesel vehicles on this clean fuel.”

Based on the 2015 UK Government DEFRA conversion factors, McDonald’s UAE has saved 99 per cent of CO2e throughout the four years of driving with biodiesel, compared to driving with normal petrodiesel.

According to the 2015 UK Government DEFRA conversion factors, driving these five million kms on normal diesel would have been a carbon footprint of 4,427,759 kg of CO2e, whereas the use of biodiesel has a carbon footprint of 56,385 kg of CO2e.

As claimed by the World Bank figures, this saving is equivalent to 214,283 UAE

average citizens carbon footprint for one year.

The biodiesel campaign has received regional and international acclaim and recognition from the UAE government, media and stakeholders around the world.

In February 2012, the Dubai Road and Transport Authority recognised McDonald’s and Neutral Fuels for their commitment to sustainable transport when the Crown Prince of Dubai awarded them with the Dubai Award for Sustainable Transport in the Environmental Protection Category.

In an ongoing effort to improve communities and highlight the continuous environmental benefits of their actions, McDonald’s UAE and Emirates Environment Group join forces in spreading green values among the UAE’s children with the ‘Planting

a Greener Future’ campaign. In addition, McDonald’s UAE prides itself on being a local member of the community, and has been committed to being a responsible corporate citizen since the first restaurant opened in the UAE. McDonald’s vast CSR agenda includes various sports events that promote balanced active lifestyles, including the Olympic Day Run – the annual race which attracts thousands of runners every year, the Olympic Champion Kids Programme, which offered children the chance to experience the Olympic Games live from the event in 2008, and the Player Escort Programme, which has been launched twice in the UAE and offers children in the Emirates a chance of a life-time experience to fly to the FIFA World Cup venue and escort football players onto the field.

JANUARY 2016 45

777F Fleet

Emirates SkyCentral

46 JANUARY 2016

Emirates SkyCentral

INDUSTRY FORECAST 2016

Forecast

2016 GSC talks to stalwarts from different industries to understand what the business outlook is for 2016 Nabil Sultan, Emirates’ Divisional Senior Vice President, Cargo How was business in 2015?

What are your insights as we go into 2016?

Business remains strong at Emirates SkyCargo. In the last year, we officially inaugurated our new SkyCentral facility at Al Maktoum InternationalDubai World Central (DWC), which currently handles 2.3 million tonnes of cargo per year; we started service to new destinations, including Bologna, Orlando, Bali, Multan, Mashhad, and Istanbul’s Sabiha Gokcen Airport; and accepted delivery of our 13th Boeing 777F aircraft, which complements our two Boeing 747-400ERFs and 229 passenger aircraft.

As we look to the year ahead, we plan to continue our expansion when opportunities arise, and also launch several new products and initiatives that will better serve our customers across our network.

What plans are underway to enhance the cargo offering?

Our biggest issue going forward is capacity.

We are running out of room at Dubai International Airport, so we are looking

for enhanced facilities in the coming year. We also have plans to expand our operations at Dubai World Central, with the goal of being able to handle 12 million tonnes of cargo by 2050.

How is the company preparing for the upcoming capacity increase?

Even though we are the world’s largest air cargo carrier, we do not rest on our laurels. We constantly refine our business practices, tools and procedures to make cargo transport more efficient.

As such, we are working on a number of internal and external-facing initiatives that will help advance the industry.

However, we are not at the point yet where we are able to discuss them publicly.

What are your expectations from the industry moving forward?

We expect to see healthy growth in all of our key markets in the coming year, especially to areas like Africa, the Middle East and North America. Traffic slowed in Asia, and particularly in China, over the past year, but we are seeing signs of improvement there and believe that will continue in 2016 and beyond.

JANUARY 2016 47

INDUSTRY FORECAST 2016

Nabil Habayeb, President and CEO for the Middle East, North Africa & Turkey, GE Give us an overview of the industries GE caters to in the region.

GE has been a partner in the Middle East, North Africa and Turkey (MENAT) for over 80 years. We work with governments and customers to build capacities, train talent, provide advanced technologies, and co-create innovative solutions that will fuel the region’s socio economic growth.

Currently, we have a presence in 24 countries in the GCC region, Levant, wider Middle East, North Africa and Turkey. With our headquarters in Dubai, 45 offices and 30 facilities, we have a strong footprint in all the key growth sectors, including energy, power, water, healthcare, aviation, transportation, and lighting.

Our technologies support the generation of more than two-thirds of the region’s electricity, and purifies 800 million litres of water daily for drinking, irrigation and municipal uses across MENA. Some 90 per cent of hospitals in Middle East are equipped with GE technologies, while GE and its joint ventures help to fly two-thirds of the region – with 2,200 engines in service accounting for 64 per cent of the total. Underlining our commitment to localisation and human capital development, we have partnerships with more than 25 universities and educational organisations.

What is the company’s outlook for 2016?

We have just marked the most powerful transformation of our organisation company-wide by evolving into a digital industrial company, with the goal of being one of the Top 10 software

48 JANUARY 2016

companies by 2020. This has great significance for the MENAT region, where we have a strong operational presence for over 80 years.

We see 2016 as one of the defining years for GE as we take our Industrial Internet technologies to the next level to support our partners. We see tremendous growth opportunity across the region, in all markets, in sectors including energy, healthcare, transport, water, aviation and lighting. In this, our focus will be on maximising productivity, efficiency and sustainability for our partners.

I am also confident that the region will witness some powerful digital innovations from within. We estimate that our Industrial Internet and software solutions offer a potential 20 per cent increase in performance.

These solutions could help unlock US$ 465 billion (AED 1707921750000) in economic value annually for industry across the MENAT region and Pakistan.

How much of an impact does the region have on GE operations?

The MENAT region is one of our key markets globally, and we will continue to strengthen our presence here. By building on our 80 years of operations and presence in the region, our strategy has been to support the region in driving its infrastructure development, and aligning our business model to promote a culture of localised innovation. We are also investing in human capital development through the creation of new jobs for Nationals and promoting training and development.

We are promoting a co-creation model by working with our partners and local developers to create powerful and locally relevant software that will help our partners to get connected, gain insights proactively and optimise their assets.

What strategies is GE employing to cater to the regional expansions in the coming year and beyond?

As mentioned, our central strategy for the years ahead is centred on our evolution as a digital industrial company. Some of our localisation initiatives, such as setting up the GE Ecomagination Innovation Centre in Masdar City; and focusing on the first roll-out of a ‘Made in Saudi’ heavy duty gas turbine from our GE Manufacturing Technology Centre in Dammam, will contribute to the long-term competitiveness of the local economies.

Over the next decade, the Gulf region will see an increasing strain on its supplies of electricity, food and water. Regional governments are also focusing on their social priorities – to create jobs for its people, promote localised manufacturing, and strengthening small and medium enterprises. Industrial Internet helps unlock the true potential of the region’s assets. By enabling our partners to get connected, gain insights and optimise their operations, we can bring tangible value to their operations.

INDUSTRY FORECAST 2016

DWC Logistics House

Mohsen Ahmad, CEO, Logistics District, DWC How is the Logistics District offering going to expand in the coming year?

We have a different understanding today of how to approach business. The market in the region has stabilised more than in the past, and the signs for 2016 are much better.

Having said that, what we have done is diversified our focus. We have been focusing on phase two of our development, which is ‘built to suit’, meaning building warehouses as complete, high-end advanced facilities, not just as sheds.

We will continue doing a lot of logistics, but our focus is in taking the business to the next level. The main sectors we are looking at are IT and telecom, perishables, fashion, lifestyle, pharmaceutical, spare parts, and critical supply part, and oil and gas, which are high-value, low-density. We’re trying to create an ecosystem for the sectors.

We will always have logistics, but it’s not about simple operations anymore. There is the cargo business, and we understand that we have an airport and a seaport, and we

are basically developing the economy, but we also want to create a sort of a hub for these companies to operate a regional distribution centre of sorts. Like Ericsson, who are offering a complete valueadded service, where physically things are assembled at the facility, and then distributed to the ME region.

So when we are providing these kinds of facilities for our clients, it also allows us to have a better understanding of the sector. It allows us to talk to the regulatory authority to create a solution for the sectors, and thus it helps build an ecosystem. For example, for pharmaceuticals, we work with the Ministry of Health, and provide solutions to our clients, ensuring we are offering them more than just real estate.

At our core, we are a solutions provider.

At stage one, we brought in the big guys for logistics. In the next step, we have to develop an economy on the value of the cargo that goes through Dubai, which, at the moment, is just two per cent of the real value.

JANUARY 2016 49

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INDUSTRY FORECAST 2016

DWC Logistics Complex

What is the next stage for the Logistics City and Al Maktoum International Airport, as per UAEâ&#x20AC;&#x2122;s development plan 2021?

You have completed five years of operation. What would you like to say about this milestone?

Currently, we want to focus on the physical infrastructure. We are building various core products, for example, the logistics district divided into two: freight forwarding and contract logistics. We already have the land for this.

We have created a new offering where in we have a Logisticsâ&#x20AC;&#x2122; House and a Logisticsâ&#x20AC;&#x2122; Complex. Depending on what a client chooses we implement accordingly. There are many mid level brands who want to have a brand focus and a warehouse with particular specifications these are from the 2,500-5,000 sq metre size, we build that warehouse for them. Or for example there is a freight forwarder who wants his operations and needs a specific warehouse with cross docking or storage facilities etc. We can build that for them. So this is our new initiative.

We already have clients signing up for this from the end of 2015 and now. So this is like a value add, we make warehouses with say specific heights, or even as a simple indoor facility or a multi-user.

We want to attract different industries from the region to have their operations from here, we are making things easier. And these warehouses are top notch, state-of-the-art,

Phase one of the operation was to understand what clients want, and as they built their own facilities, it allowed us to understand what their requirements are.

In stage two now, we are becoming more sector-focused, and that allows us to deliver a better system.

Tell us about the Virtual Corridor, how has it facilitated business?

DWC Logistics Complex

on par with international standards. These warehouses are nothing like the one been designed in the past, as we want to raise the bar of what we are delivering.

With every project, we put it up for leasing, and only develop it when we have clients.

So in phase one, we leased the land, and are now doing the building. As I mentioned before, we are focusing more on built to suit, ie, building a facility to suit customer needs and specifications, like for IKEA, an 11-month-long project that is up to European and NA standards.

The virtual corridor is a Dubai Customs initiative. It is already operational, having been launched in the second quarter of 2015, and they have done a great job. We were involved in that the first project for the virtual corridor was connectivity from Al Maktoum international and Dubai International, and that was Emirates transferring their cargo facility.

The good thing about this is that goods are getting inspected virtually, without all the documentation processes that would have to be done physically. The inspection is now being done online, and this is only happening in Dubai right now. I want to ambitiously say this should happen for the entire GCC region, but to begin with the entire UAE would be a good target to achieve.

JANUARY 2016 51

INDUSTRY FORECAST 2016

Flemming Dalgaard, CEO, International Operations, Gulftainer What is your outlook for the port sector for 2016?

We are cautiously positive about the coming year for the Ports Industry. This is in spite of the significant challenges to global trade anticipated through 2016, driven by a combination of factors: the slowdown of economic growth in China; anticipated mergers and acquisitions within the container shipping industry; volatility in oil price and regional instability; all of which are contributing to a projection of only moderate growth for the global economy.

However, we believe that the projected upturn in the economic growth of emerging markets will be a positive driver for the ports industry. Further, the global port traffic is expected to be about 713 million TEUs in 2015, compared to 678 million TEUs in 2014, and it is projected to increase to 749 million TEUs in 2016. This is a positive outlook on the industry in general.

What are the companyâ&#x20AC;&#x2122;s growth plans for 2016?

Our current portfolio covers UAE operations in Khorfakkan Port and Port Khalid in Sharjah; terminals in Iraq; and activities at Recife in Brazil, along with Jeddah and Jubail in Saudi Arabia. We marked a significant milestone in 2014 with expansion to the US by signing a long-term agreement to operate the container and multi-cargo terminal at Port Canaveral in Florida. The terminal, which held its opening ceremony in June 2015, and is set to commence operations in the first quarter of 2016, aims to position Port Canaveral as the most economical and convenient ocean gateway for containerised cargo in central Florida. This agreement marks Gulftainerâ&#x20AC;&#x2122;s first venture in the United States.

In new growth plans, our next development will be the opening of a new container terminal facility in Tripoli in Lebanon in 2016. We will continue to expand our operations through investments in infrastructure to accelerate our operational efficiency. We are in active discussions with a number of entities and potential partners globally, including in India, Africa and

52 JANUARY 2016

select Southeast Asian markets. Our aim is to expand our global portfolio to reach 35 terminals across five continents, to triple business volume worldwide, with more than 10,000 vessel calls, and also triple container handling to 18 million TEUs. How is infrastructure being improved, or advanced, to handle more containers?

Gulftainer was appointed to operate the first container terminal in the Middle East nearly 40 years ago, in Sharjah, setting the fundamental infrastructure for the industry.

As the operator of the largest number of terminals in the Middle East, we strive to improve the infrastructure at all our terminals, to offer the latest technologies and the highest standards of services.

Last year, Khorfakkan Container Terminal (KCT) took delivery of four new state-ofthe-art Ship to Shore (STS) and twelve Rubber Tyred Gantry (RTG) cranes, marking an investment of over US$ 60 million (AED 220377000). This investment in new technologies enabled KCT to be megaship ready and able to handle the latest generation of Ultra Large Container Ships.

Gulftainer will roll out a new terminal operating system during the first half of the year, initially at the Sharjah Container Terminal in Port Khalid and then across all facilities. The implementation of the

new technology will mark a significant milestone for us as the system will generate specific data to help us drive greater efficiencies in cargo handling, and give a better understanding to target continued improvements to the services we provide to our customers. The global shipping industry does not stand still, and we are constantly exploring viable options for expansion to support our customersâ&#x20AC;&#x2122; growth.

What is your perspective on the industry as you see it currently, and moving into the near future?

In recent decades, global seaborne trade has surpassed global GDP growth; between 1980 and 2014, seaborne trade grew an average 3.1 per cent, compared to the global GDP growth of two per cent. Container traffic has also demonstrated exceptional growth at an average 8.3 per cent.

As a privately owned, independent terminal operating and logistics company, we are positive about 2016. The growth trend in international port operations remains positive with Moodyâ&#x20AC;&#x2122;s Investor Service recently changing its outlook for the US ports to stable from negative on the view that container-volume growth is sustainable and â&#x20AC;&#x2DC;business conditions for global shipping lines that drive cargo volumeâ&#x20AC;&#x2122; have

stabilised. Similarly rating improvements have been reported for the Middle East region too.

No doubt there are concerns regarding oil price volatility and regional tensions. But the projected upturn of emerging markets, several of them gaining from lower commodity prices and domestic consumption, will benefit the industry.

JANUARY 2016 53

OIL AND GAS

54 JANUARY 2016

OIL AND GAS

Innovative approach Almansoori launches new production testing and stimulation vessel in Arabian Gulf

A

s part of the companyâ&#x20AC;&#x2122;s ongoing expansion, AlMansoori Specialised Engineering has announced the deployment of the first of two planned production testing and stimulation vessels in the Arabian Gulf.

The company is ambitious about expanding its comprehensive portfolio of oilfield services in the region. Nabil Al Alawi, CEO, AlMansoori Specialised

JANUARY 2016 55

OIL AND GAS

Engineering, said,“The new vessel, with its range of unique capabilities, will substantially reinforce our capacity to offer production testing and well stimulation services of the highest quality, and an enhanced level of operational efficiency to our clients. This is part of our commitment to continue to offer our clients the highest levels of quality service and support.”

The vessel, MV Al Nisr DP-II, brings with it the capability to offer production testing and well stimulation of the highest level.

All on-board testing equipment has been

designed to conduct production testing on oil and gas wells with high H2S & CO2 levels.

Additionally, the vessel has been fitted with the latest safety equipment available in the industry in order to ensure safe and troublefree operations.

The oil production/testing capability of the vessel can accommodate up to 15,000 bbl/ day with re-injection using oil re-injection pumps. The gas production/testing capability of MV Al Nisr can reach 70 MMSCFD (million standard cubic feet per day). The vessel has the ability to test single or multi-

well developments, and to allow full-scale production tests to be performed at remote offshore locations with the minimum of down time.

The MV Al Nisr is also equipped with high pressure pumping equipment and related facilities that are capable of handling various well servicing applications such as chemical pumping and squeezing; acid mixing and pumping for well stimulation; well killing operations; pressure testing; nitrogen lifting and well unloading and pigging pipelines.

The fluid storage capacity of the vessel are: HCL 30 per cent - 43, 000 USG Chemicals -19,200 USG Diesel Oil – 180,000 USG Fresh Water- 200, 000 USG. The pumping and stimulation system has been configured to the latest international standards for automated mixing and pumping operations for a wide range of fluid volumes to efficiently enable various operations requirements.

The Al Nisr and its sister ship will be deployed in the Arabian Gulf to service the needs of some of AlMansoori Specialised Engineering’s leading clients. Founded in 1977 in Abu Dhabi, AlMansoori Specialised Engineering has grown into being a leading oilfield services provider in the Middle East.

Today, the company has operations in as many as 27 different countries worldwide, and employs more than 2,000 people.

56 JANUARY 2016

OUTLOOK 2016

Tackling the next generation of

challenges

QFC CEO and Richard Banks

Disruptive technology and oil market changes likely to dominate global economy in 2016, say experts at the recently-held Euromoney Qatar Conference

T

he outlook for the global economy in 2016 is very mixed, according to leading experts that met in Doha recently. The positive projections for the US economy will be offset by more troubling economic forecasts for other parts of the world. This is the opinion expressed by the experts speaking at The Euromoney Qatar Conference, held recently in Doha.

While economists are forecasting approximately three per cent growth in global real GDP in 2016, the benefits will not be felt equally, with Brazil, Canada, Japan, and Russia all facing downward revisions, and significant concerns emerging about the health of the Chinese economy.

For the GCC states, positive growth projections are being clouded by the ongoing plunge of the oil market, with prices falling to a seven-year low in December 2015, following OPECâ&#x20AC;&#x2122;s decision not to constrain production despite global oversupply.

More than 600 finance and banking executives took part in The Euromoney Qatar Conference 2015, as banks and leading institutions reviewed how to respond to these divergent trends. The event saw two key issues being examined in panel discussions.

Senior Qatari leaders spoke on the first day about the timely initiatives being undertaken by Qatar. The nation has benefited from its on-going efforts to support the banking sector, diversify

JANUARY 2016 57

OUTLOOK 2016

His Excellency Sheikh Abdullah bin Nasser bin Khalifa Al Thani, Prime Minister, State of Qatar

the economy, and invest in long-term sustainable infrastructure, making the nation one of the most stable in the world.

His Excellency Sheikh Abdullah bin Nasser bin Khalifa Al Thani, Prime Minister, State of Qatar, delivered an official address at the Conference. He discussed Qatar’s success in creating infrastructure assets that enable sustainable growth, and called for the adoption of measures to support international finance, trade and global growth.

His Excellency Sheikh Abdullah bin Nasser bin Khalifa Al Thani, said:“The State of Qatar continues to monitor the developments in the world economy. With the fluctuations in the oil price, it is incumbent upon us to review policies and work to minimise negative impact. However, we have been successful in pursuing a strategy of diversification and encouraging investment, which will ensure that non-oil sector growth will continue for Qatar in the coming period.”

His Excellency Ali Shareef Al Emadi, Minister of Finance, State of Qatar, also delivered an official keynote address during

58 JANUARY 2016

the opening session.“In spite of global pressures, Qatar will achieve good financial growth in the next phase. This is thanks to the on-going implementation of major projects in the field of health, education, infrastructure, and in preparation for the 2022 FIFA World Cup. The total value of major projects in development in Qatar is QR261 billion (AED 263 billion), not including projects for the oil and gas and private sectors,”he said.

The strong focus on stability and security was also stressed on. H E Dr Hessa Al-Jaber, Minister of Information and Communications Technology, State of Qatar, highlighted the coordinated strategy Qatar is undertaking to provide robust technological foundations, and outlined the measures being taken to ensure that ICT plays a key role in the development of Qatar’s knowledge-based economy.

She added,“We are studying the intersections between technology and industry to identify where the greatest opportunities for digital transformation lie. This includes looking at disruptive innovations that could transform

whole sectors, including the financial sector.

Qatar is reviewing the potential of mobile payment capabilities, online banking services and crowd-funding models to support economic growth.”

Senior representatives of Qatar’s financial sector Yousuf Mohamed Al-Jaida, Chief Executive Officer, Qatar Financial Centre and Dr R Seetharaman, Chief Executive Officer, Doha Bank, also provided insight into strategies being undertaken by individual institutions.

Speaking on some of the global challenges constraining growth, Dimitris Tsitsiragos, Vice President of International Finance Corporation, looked at the requirements for infrastructure development.“With some 1.2 billion people in the world lacking access to stable power, and two billion people expected to move to urban areas in the next 25 years, shortfalls in infrastructure is likely to directly impact economic growth,”he said.

In the MENA region, there is an estimated 20 per cent shortfall in power generation capacity and parallel shortfalls in water, hospitals, schools and housing – issues that

OUTLOOK 2016

His Excellency Ali Shareef Al Emadi, Minister of Finance, State of Qatar

are likely to be exacerbated by the increased flow of migrants and internally-displaced people. Tsitsiragos highlighted the key role of the private sector, and in public-private partnership in ensuring these needs are met now and in the future.

A new wave of disruptive technology, and on-going instability in energy markets, are likely to be two of the dominant trends affecting the global economy in 2016.

On the ‘Technology and Finance’ panel, senior executives from Hive Technology, FinTechStage, Qatar National Bank and Visa outlined some of the innovations that are impacting the financial sector, as well as the challenges preventing institutions from fully realising the benefits of these technologies.

One area that is likely to generate significant disruption is the move towards mobile and online payments, and the wider social shift to a ‘cashless society’. In the GCC region, where 90 per cent of retail transactions are still conducted in cash, the adoption of more cashless payment channels is likely to have a transformative effect.

H E Dr Hessa Al-Jaber, Minister of Information and Communications Technology, State of Qatar

“At Visa, we have a vision for a cashless society, enabling a connected world where you can make a payment wherever you are,” said Hadi Raad, Head of Emerging Products and Innovations, CEMA, Visa.“We see significant benefits for consumers, and for organisations in making this shift,”he added.

“The challenge for organisations looking to promote digital money processes is that you’re trying to replicate the immediacy of payment and full value that cash offers,” explained Lazaro Campos, Co-Founder, FinTechStage, adding,“The move towards a cashless society is taking place, and we will need central banks, financial services companies and technology leaders to work together in order to stay ahead of the pace of change.”

Duncan Fairley, Head of Group Operational Risk, Qatar National Bank, highlighted some of the challenges that disruptive technologies are creating: “Technology risk is very prevalent today.

Organisations need to recognise that new technologies can provide tools to mitigate

risks – by identifying fraud attempts and verifying identities more accurately – and also that these technologies themselves can generate new risks. The next generation of cyber-threats – which include identity theft, ‘spoofing’ and theft of assets online – will require a new skillset and operational model by banks and financial institutions.”

In the Energy Strategy session, speakers focused on falling demand from industrial powerhouses around the world, such as China and the BRICs, which has driven oil prices down in 2015.

With global demand expected to remain weak in the first half of next year, senior executives from leading asset managers and energy companies agreed that the disruption of the last 15 months is likely to continue.

However, the panel also noted that oil supply is continuing to fall, as less economically-viable projects are postponed and cancelled. For example, the US rig count (the number of rigs searching for oil and gas) declined to the lowest level since 1999 in December, with 737 rigs engaged in exploration and production – less than half the 2014 level of 1,920. Given the current dip on the supply-side, several analysts expect demand will outstrip supply as early as April 2016, leading to a recovery in oil prices.

The gas market is also likely to begin to recover in 2016, as nations around the world look to reduce emissions and introduce cleaner energy sources. Gas demand globally has grown at a better rate than oil in recent years – averaging 2.5 per cent – and is likely to increase as more nations look to phase out coal and other ‘dirty’ fossil fuels.

As a result, the longer term picture is positive for nations like Qatar and other energy producers in the GCC, given their long-term investments in the sector and their status as low-cost producers.

Victoria Behn, MENA director for Euromoney Conferences, summarised the impact of the event: “The Euromoney Qatar Conference 2015 has been a significant success, attracting a high volume of senior executives and also stimulating vital discussions on key topics affecting the world economy. The sessions on both days have helped to clarify the opportunities and challenges that we will all face in the coming year.”

JANUARY 2016 59

UNWIND

Ambitious and approachable Which school and university did you go to?

I’ve done all my schooling in Dubai. I have my Bachelors from the University of Tennessee in Knoxville in Logistics and Transportation and then I went on to do my Masters later on from University of Cranfield in Logistics and Supply Chain Management over eight years.

What was your first job?

My first job before I was in college was as a tour guide (laughing) but at that time nobody was talking about tourism in Dubai! But my first real job was here in Dubai and was related to logistics. I basically started with sea freight, with Al Futtaim Logistics.

What do they not teach you in business school?

Mohsen Ahmad, VP Logistics, Dubai South, is as ambitious as he is warm and approachable. His direction and vision for Dubai South is enhancing the future of businesses based here. He spoke to Munawar Shariff about his leadership style and future plans

60 JANUARY 2016

What is your leadership style?

It’s to work with the team. You have to be accessible to people, you have to listen to others. And sometimes you have to be the leader to make the decision and move things forward. It’s about balancing things out.And in Dubai it’s important to have a multicultural mindset and thinking.

How well do you handle stress?

What is your fool proof method of de-stressing?

I think as long as you have the objective and focus then you know how to handle stress. It’s important to get a fresh perspective and divert your mind and attention to get the results you need.

To de-stress I sometimes just spend time by myself in Nature. I also firmly believe that prayer calms the mind and gives great perspective as it forces the mind to shift its focus on the spiritual energy.

They don’t teach you that Dubai is multicultural and you have to deal with that and learn about it onthe-job. It is a challenge and while trying to adapt, I picked up Hindi in order to communicate with a lot of the people I dealt with. But that’s the funny side of it.

They do teach you academics and give you the tools and how well you connect these tools together is what you learn on the job.

What do you find encouraging?

Who is your role model? Why?

What is at the top of your agenda right now?

From my field of logistics, there have been a lot of good people that set the foundations of the nation … I don’t want to name names so as to not upset anyone. But all those people who were the pioneers in building the logistics sector in Dubai I look upto. People like Issa Baloch, David Phillips and say Sultan Joker from Customs ... these are the guys who in the 80s when everything in Dubai began. I think it’s them who we all have learnt from.

Providing things for the family. Also, leaving behind a legacy. I feel it isn’t about how much you have in the bank but what encourages me more is to know that years later when I’m not around and am retired and I come back here, I know that I was a part of this.

This is something to be proud of. And I’ll be happy to have achieved whatever I will have.

I want us to have a more knowledgebased economy. I want to change the focus and be more knowledge-based.

That is an area, I feel, we should focus on.

We are doing a lot of the business side of things but to be a more real nation, we need to have knowledge in house in the country. There needs to be more research institutes, white papers based on the inner workings of industries. This is very necessary and a big focus.

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