January 2018 Issue 44
ENHANCING THE BUSINESS OF LOGISTICS
OIL AND GAS Diversification is key
The value chain Of precious stones
Real time solutions
Genavcoâ€™s accolade Celebrating 50 years
Sustainability in relation to transport of goods and people. MAN Truck and Bus are constantly developing products and innovative solutions to provide operators of commercial vehicles and passenger transport services with sustainable transport systems. They are designed and engineered to make a positive contribution to the environmental, social and economic sustainability of the area they serve. Sustainability in transportation is predominantly measured by the effectiveness of the unit to move the load or people in an efficient, environmentally friendly manner thus reducing the impact on the climate. In short term, the improvements in fuel efficiency and reduction in vehicle emissions are contributing to an increase in air quality and the environment in which we live. MAN Truck and Bus do not just focus on the vehicle, it also focuses on ProfiDrive training and educating the driver to use the vehicle correctly which contributes to the achievement of highest levels of fuel efficiency. Therefore, a key element to sustainable transport is the training and professional ability of the driver of the vehicle. www.man-middleeast.com
Bespoke Logistics Project of the Year 2017
Domestic Logistics Service Provider of the Year KSA 2017
GCC Supplier Of The Year 2017 KSA Supplier Of The Year 2017
Oil and gas - a changing landscape SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: firstname.lastname@example.org Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven email@example.com Manager: Brian Cordeiro firstname.lastname@example.org Managing Editor: Munawar Shariff email@example.com Art Director: B Raveendran firstname.lastname@example.org Production Manager: Roy Varghese email@example.com
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Well, honestly nothing really is the same as it used to be. And as with all aspects of our lives, technology also dictates how the new normal works when it comes to the oil and gas industry. To say that demand is not guaranteed is somewhat where most countries are headed as we move into a higher awareness to save our resources for future generations. Add to that lower costs of alternative energy resources. Demand is definitely not guaranteed. So diversification is the safest and most prudent way forward. Investing in solar photovoltaics and energy storage are alternatives for existing oil and gas companies to invest in. Our cover story has more details on page 25. Ever wondered about the authenticity of the supply chain of precious and semi precious stones? We spoke with Dubai-headquartered Fura Gems as they sustainably source gemstones from carefully selected mining sites around the world, using industry best practices. President and CEO Dev Shetty believes that the rightful route to the market is at the heart of the company’s business and sourcing strategy. We’ve also featured a closer look at the technology at Roambee Solutions. Muthanna Muckatira, General Manager, is upbeat about his company’s technological applications and industry solutions especially for the chemicals, automotive, F&B and pharma sectors as he makes the case for his company’s indigenous technologies in telematics. With real-time solutions for the automotive industry such as the tracking of vehicles from the manufacturing factory to all their dealer locations, predicting ETA (expected time of arrivals) for deliveries of all raw materials to improve JIT (just in time) and JIS (just in sequence) inventory, and management real-time vehicle inventory at VPCs (vehicle processing centres), technology is the game changer, regardless of industry.
Munawar Shariff Managing Editor firstname.lastname@example.org
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January 2018 Issue 44
ENHANCING THE BUSINESS OF LOGISTICS
46 Unilever gets key manufacturing recognition
25 06 News 16 Region report Europe and the USA Resilient and promising For both regions - Europe and the USA - growth remains robust in Q3 and strong economic growth is projected for the USA
22 Guest column The future of road transport Brent Melvin, COO, Almajdouie Logistics, feels the regional road transport industry still has a lot of ground to cover to meet globally accepted standards
25 Cover Diversification - key to success The oil and gas sector needs to diversify if it wants to prosper. Jerad Ford, Managing consultant, CSIRO Futures writes 4 JANUARY 2018
30 Global airline profitability to continue Middle East carriers are in for a roll as IATA 2018 projections see net profits double
36 The supply chain of gems Dev Shetty, President and CEO, Fura Gems, holds forth on the challenges and shines a light on the logistics of the arcane and byzantine world of gems
40 The buzz about Roambee Roambee’s GPS portable, rugged trackers are enterprise grade and designed to monitor goods in the supply chain for multiple industry sectors
44 New roles for container lines in e-commerce Container lines must adapt or another entity will step in to fill the need
Proudly bearing the ‘Made in UAE’ label, Unilever’s mega Lipton Jebel Ali factory gets coveted professional accolade
48 2018 outlook on oil and gas Although still a net importer of crude, the United States’ growing place as an energy exporter and low-cost supplier could fundamentally change the country’s position in the global energy landscape
52 Arabian carriers partner with Amadeus Agreement to support the long-term needs of member airlines
55 Kuwait to pursue increased oil and gas output A new expansion drive will see Kuwait invest in hydrocarbons projects through to 2030
58 Genavco turns 50 Genavco celebrates 50 years of accomplishments and successes
Good for the fleet, even better for business. Mercedes-Benz ServiceSolutions provides you with tailor-made packages giving you peace of mind â€“ at a fixed cost over the ownership period. You have three attractive Mercedes-Benz ServiceSolutions packages to choose from: BestMaintenance: Transparent and plannable maintenance costs. SelectPlus: Convenient maintenance and extensive protection against unexpected costs. Complete: A complete service solution for utter peace of mind. Find out more about the different Mercedes-Benz ServiceSolutions for your truck, by contacting your nearest authorized Mercedes-Benz General Distributor or on our website: Trucks.MercedesBenzMENA.com
Emirates closes strong in 2017; records all-round growth The report for the calendar year 2017 for Emirates, the worldâ€™s largest international airline, makes impressive reading. Since January, the airline has carried over 59 million passengers. The airline served over 63 million meals on its flights departing Dubai and moved over 35 million pieces of baggage in Dubai to its network of 156 destinations. Emirates registered over 3,600 passenger flights on average per week, or over 191,000 flights in 2017, travelling more than 886 million kilometres around the globe, the equivalent of 16,000 trips to the planet Mars.
Fleet milestones and investments Emirates grew its fleet by 21 new aircraft in 2017, with nine Airbus A380 and 12 Boeing 777-300ER deliveries, rounding off the year with 269 aircraft, and 243 aircraft pending delivery. The airline also retired 11 aircraft during the course of the year.
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The airline marked nine years of A380 operations and also celebrated its 100th A380 delivery milestone in November. Emirates made global headlines at the recently concluded 2017 Dubai Airshow when it placed a US$ 15.1 billion contract for 40 Boeing 787 Dreamliners. The order will enable the airline to maintain a young and efficient fleet. To meet the growing demand for highly skilled commercial pilots, 2017 also saw the inauguration of the Emirates Flight Training Academy.
the launch of five new A380 destinations Tokyo-Narita, Casablanca, SĂŁo Paulo, Nice and Johannesburg. Emirates also consolidated additional A380 services to the schedules of existing points and also led one-off A380 services to four destinations - Boston, Colombo, Warsaw and Bahrain. In July, Emirates entered into a significant partnership with FlyDubai, which includes an extensive code-share agreement, strategic schedule alignment, as well as reinforcing collective resources to offer travellers access to over 200 destinations on the combined networks of both airlines. Furthermore, in October, Emirates and Qantas announced the extension of their successful partnership until 2023.
Emirates expanded its network to 156 destinations in 2017, with the addition of three new passenger destinations - Newark, New Jersey, USA via Athens; Zagreb, Croatia and Phnom Penh, Cambodia. Emirates expanded the number of cities served by its flagship A380 in 2017 aircraft to 48, with
Emirates SkyCargo also continues to play an integral role in the airlineâ€™s expanding operations, and in 2017 carried 2.5 million tonnes of freight loaded at Dubai International only. Emirates SkyCargo pioneered supplementary growth in the air cargo industry with its specialised transportation
solutions for various industry sectors including pharmaceuticals. With Emirates Pharma, the carrier saw a 38 per cent growth in the volume of pharmaceutical cargo since its launch. In May, Emirates SkyCargo and Cargolux Airlines signed a strategic operational partnership which saw both carriers working closely on a number of operational aspects. In October, the two carriers extended the partnership with a code-share agreement.
Introducing new customer initiatives In March, the airline launched its enhanced A380 Onboard Lounge, featuring a fresher, softer look and feel; new seating arrangements; private yacht-inspired décor, as well as new high-tech touches including lighting and sound. In November, Emirates unveiled its fully enclosed Boeing 777-300ER First Class private suites, part of a multi-million dollar upgrade that saw enhancements across all
cabin classes. Inspired by the Mercedes Benz S-Class, the suites offer up to 40 square feet of private space, as well as personal lighting and climate control features. World-firsts include a NASA-inspired ‘zero-gravity’ seating position, and virtual windows in the middle aisle which project an outside view using real-time camera technology. First Class passengers also have the luxury of easily communicating with cabin crew through the personal video-call function. Emirates was recognised as the Best Airline in the World in the inaugural TripAdvisor Travellers’ Choice® Awards for Airlines.
Building on brand success Emirates continued to invest in its brand. In August, Emirates extended its title partnership with the prestigious FA Cup through to 2021. That same month, the airline renewed its European Tour Agreement for another four years. The new deal includes Emirates becoming an Official Partner of the 2018 Ryder Cup, an event which brings together 24 of the top golfers from Europe and the USA.
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Charging stations to power up electric vehicles road trip
Etisalat Digital to implement automotive surveillance solutions Etisalat Digital recently announced its partnership with Cars Taxi to implement smart surveillance solutions and analytics across its fleet of 2180 taxis in Dubai to enable them manage and conduct real-time monitoring of all the taxis for passenger safety. This end-to-end automotive surveillance solution is implemented in compliance with RTA’s (Road and Transport Authority) directive to deploy CCTV cameras in taxis in order to enhance passenger safety. The smart solutions make use of Etisalat Digital’s sophisticated Internet of Things (IoT) platforms and are supported by the latest IoT command centre.
“This key initiative is just the beginning of our relationship as we plan to further strengthen our automotive portfolio to enable digital transformation of the public transportation industry,”observed Salvador Anglada, Chief Business Officer, Etisalat. “Today’s partnership with Etisalat Digital is significant as it gives our passengers a digital experience and keeps them secure. As we move into the digital future, Etisalat is an ideal partner to enhance the role of digital urban mobility,” commented Abdulla Sultan Al Sabbagh, CEO, Cars Taxi Group.
dnata’s pushback tractors helpful to aircraft at Dubai Airport As Dubai Airport braced itself for the busiest time of year, dnata stepped up efforts to ensure that passengers start their journey safely and on time. Playing a key role in the smooth operations on the ramp, are the small but powerful pushback tractors. This high powered ground services equipment plays a crucial role in making sure aircraft are positioned precisely on the taxiway for the aircraft to taxi to their take-off. Weighing between 30 to 70 tonnes, the tractors can push back a fully loaded A380 aircraft (tow-bar less tractor) weighing 550 tons. As aircraft do not have reverse gears, they rely on a pushback tractor to position it for take-off, safely and with precision. The aircraft is pushed back to the manoeuvring area where its engines can then be started,
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to taxi safely. dnata currently employ around 200 licenced pushback operators to handle the tractors whose engine capacity ranges from 180 to 750 HP. At Dubai International (DXB), dnata has 67 pushback and tow-bar less tractors in service that handle up to 500 pushbacks every day. dnata handles all flights and baggage at Dubai International (DXB) and Dubai World Central (DWC), as well as all passengers transiting though DWC and those accessing Terminals 1 and 2 at DXB. The global air services company manages more than 80 million passenger and 140 scheduled airlines annually, departing or arriving Dubai, or in transit en route to their final destination.
A new network of over 18 charging points will be established to power the convoy of electric vehicles taking part in the 2018 Electric Vehicle Road Trip (EVRT) Middle East across the UAE and neighbouring Oman. GreenParking, Global EVRT’s official charging station partner, will oversee the supply and construction of the stations and other related essential infrastructure along the 1,217-kilometre drive taking place over the nine-day period from 18 to 26 January 2018. Chevrolet, the official Electric Vehicle Partner for the EVRT Middle East 2018, is providing three of its first electric models in the region, the Chevrolet Bolt EV, for the extensive road trip, a year before it goes on sale in the region. The car has a driving range of over 500 kilometres. “The demand for electric vehicles is expanding globally each year, and the UAE is well positioned to be a strong market for low emission cars thanks to events such as the EVRT Middle East,” commented Gary West, Urban Active Operations Manager at GM International. “The Electric Vehicle Road Trip Middle East is an important step towards bringing zero emission vehicles to the forefront of the attention of the general public. Our extended charging station network will help to showcase these functional cars as sustainable and practical alternatives to petrol vehicles,” said Sam Alawiye, CEO of GreenParking. “By establishing a new, extended network of charging stations across this route we are demonstrating that these cars are not just environmentally friendly options for the future but with innovative gadgets and technology to excite and impress,”noted Ben Pullen, Managing Director of Global EVRT.
Dubai Science Park (DSP), the region’s leading science-focused business community and home to more than 350 businesses, has closed 2017 on a strong note. One of the DSP’s key highlights in 2017 includes the successful collaboration with the Executive Council of Dubai on the advancement of the Dubai Industrial Strategy 2030, through identifying, developing and promoting opportunities and enablers in the pharmaceutical and medical equipment sector. DSP has also hosted a series of high-level industry events such as the Green Leadership Series, a bi-annual event addressing the challenges and opportunities of Dubai’s evolving green economy. It also launched a successful e-waste campaign in partnership with Dubai Internet City, Uber UAE and Averda, collecting and safely disposing of nearly two tonnes of retired electronic devices collected from communities across Dubai and with the support of the Ministry of Climate Change and Environment (MOCCAE). According to Marwan Abdulaziz Janahi, Executive Director at DSP, 2017 has been a very successful year for the institution
DSP to strengthen pharmaceutical and medical equipment sectors in creating synergies for the benefit of the wider science sector.“Our taskforce partners from JAFZA, Dubai South, Dubai Healthcare City Authority and Dubai International Academic City, have all helped in the effort towards transforming Dubai into a leading healthcare destination with manufacturing capabilities,” he said. “We have continued to deepen our close
working relationship with business partners such as Sanofi Genzyme, Sobi and Alexion and our government stakeholders such as the Ministry of Health and Dubai Department of Economic Development. In addition, we have engaged with our many educational partners such as Mohammed bin Rashid University of Medicine and Health Sciences and Amity University,”he added.
Topshop gets systems makeover with Infor Infor, a leading provider of special business applications built for the cloud, has recently announced that leading British retail group Arcadia which owns global retail brands Topshop and Topman, has selected Infor CloudSuite financials and supply management as part of a program to modernise its finance systems. The solution is expected to support international growth and underpin an evolving business model for the iconic retailer and is anticipated to go live for 25,000 users in 2018. Having previously used a number of systems across the group, Arcadia required a
finance system which would consolidate processes from all business units to facilitate greater visibility, efficiency and more insightful, quicker reporting. Following a tender process, the company selected Infor CloudSuite financials and supply management based on the depth of functionality and ease of use and Infor’s credentials in retail. “As we continue to evolve as a business, it is paramount that our systems keep pace. Through our deployment of Infor CloudSuite Financials we anticipate significant time savings, reductions in errors and superior insights which will give us greater agility. This
will help to propel our business expansion, as well as give us much slicker, more flexible reporting which is crucial in the fast-paced retail industry,”comments Ian Grabiner, CEO, Arcadia. “Fashion retail is an increasingly challenging sector, and companies simply cannot afford to be restricted in any way by back office systems that are outdated,”said Tarik Taman, Vice President and General Manager, Infor.“Consumer expectations are perpetually increasing and retailers need systems which enable them to deliver a consistent brand experience across all channels,”he added.
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Scientechnic’s new sheet metal factory offers customised metal enclosures The sheet metal manufacturing division of Scientechnic, the flagship company of Easa Saleh Al Gurg Group, recently inaugurated its new 65,000 square foot factory at Jebel Ali. The factory has been designed and built to offer boutique and customised services with complete design and prototype development, giving clients the flexibility to review samples before actual production. Scientechnic, one of the region’s leading integrated solutions providers of electrical, mechanical, power, automation and mobility technologies, has for more than four decades been working collaboratively with industries, utilities and infrastructure customers on
ground-breaking projects such as Louvre Abu Dhabi, Burj Khalifa and the Dubai Opera. “Setting up a factory that connects the entire manufacturing process chain, from the initial orders of a sheet metal component to its design, development and delivery is another accomplishment for Scientechnic. This upgrade will add to the portfolio of engineering solutions that we offer,” said the company General Manager, Easa F. Al Gurg. Equipped with high precision Computer Numerical Control (CNC) machinery for punching, machines for bending and gasketing and in-house powder coating
capabilities, the new Scientechnic sheet metal factory continues to deliver high quality sheet metal enclosures. The factory also has a large storage facility for raw materials, which enables it to meet urgent customer requirements faster by reducing lead time for production. All products are ISO 9001, ISO 14001 and OHSAS 18001 certified. Scientechnic’s metal enclosures and panels are used in a number of applications by electrical retailers and wholesalers, panel builders, control panel assemblers, MEP contractors and firefighting system contractors.
JTS to open in Sohar Freezone Joint Tank Services (JTS) will establish a new depot in SOHAR Freezone on a 20,000 sq metre green-field site. The customised facility will be dedicated to cleaning, storage, repairs and support services for ISO tanks in line with the extraordinary growth of tank container traffic in Sohar Port. With the new facility in Sohar, JTS plans to consolidate existing services to the tank container industry and expand its portfolio in the future by developing business offerings directly to
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the chemical industry. These include chemical drumming, warehousing and distribution as the value-added petrochemical industry grows in Sohar. Construction of the new JTS facility is expected to start during second quarter of 2018, subject to approval from the relevant environmental authorities in Oman and trial operations should be underway by the fourth quarter of 2018. “As our new Liwa Plastics Project comes on-stream at Sohar, we are expecting major
growth in the petrochemical and downstream plastics industry here. Specialists like JTS will help to create the kind of worldclass cluster for putting Oman on the map as a major plastics producer,”said Jamal Aziz, CEO, Sohar Freezone, after the signing
of the land lease agreement. Originally developed in the UK in the 1960s these ISO standard stainless steel tank containers are built to a variety of specifications to transport hazardous and non-hazardous cargoes.
Nestlé has signed agreements with Yellow Door Energy, Dubai’s leading provider of lease-to-own solar power solutions, and ALEC Energy, a DEWA (Dubai Electricity and Water Authority)-approved solar contractor, to install solar photovoltaic panels that will provide renewable energy to three manufacturing sites in Dubai, and contribute to the reduction of 6,000 tonnes of CO2 (carbon dioxide) emissions annually. The move is in accordance with Nestlé’s commitment to the RE100 initiative, a global collaborative initiative of influential businesses committed to using 100% renewable energy. It is also a part of DEWA’s Shams (Sun) Dubai initiative, which encourages building owners to install photovoltaic solar panels and connect them to DEWA’s grid. The electricity is used onsite and the surplus is exported to the network. “We value the efforts of Nestlé to promote Dubai’s position as a leading city in the development of renewable and alternative energy, and the company’s commitment to achieve sustainability, reduce carbon
Nestlé Jebel Ali factories to go solar emissions, and protect the environment and natural resources,”said Saeed Mohammed Al Tayer, Managing Director and CEO of DEWA. “Our commitment is to provide climate change leadership and promote resources efficiency to further reduce greenhouse gas emissions,”said Yves Manghardt, Chairman and CEO of Nestlé Middle East. “Yellow Door Energy helps companies like Nestlé leverage solar power through lease-to-own agreements, where we invest in, manage and operate the solar plant in order
the maximise the energy generation and align with customers’ energy needs,”noted Jeremy Crane, CEO of Yellow Door Energy. “To meet Nestlé’s ambitious renewable energy goals, the ALEC Energy team produced an innovative, cost-effective, and efficient design matching Nestlé’s ambitious renewable energy targets,”said James Stewart, General Manager of ALEC Energy, the company contracted to carry out the design, engineering, procurement, and construction (EPC) with a completion target for the end of 2018.
“We are proud to be amongst the leading entities that have contributed and supported in the delivery and implementation of the new airspace design of the UAE,”emphasised Mohammed A. Ahli, the Director General of the Dubai Civil Aviation Authority and the CEO of DANS.
Leading the implementation of the new airspace design in Dubai, DANS has allocated a full-fledged team of its air traffic management professionals who supported and collaborated with members of the Air Space Restructuring project over the period of the past three years.
Newly designed airspace to enhance capacity, fuel savings The Emirate of Dubai now has a new designed airspace that enhances efficiency and optimum utilisation to cater to the growth and the expansion plans in the sector. Spearheaded by Dubai Air Navigation Services (DANS), the air navigation services provider of Dubai and the Northern Emirates, has ensured the implementation of 90 new air traffic management procedures and the introduction of 150 new way points. The Air Space Restructuring (ARP) project aims at delivering crucial benefits to the aviation sector in the UAE at large, such as the enhancement of the airspace capacity to meet the forecasted air traffic demand for 2020 and beyond. Benefits include the saving of fuel consumption of a total value of US$ 14.6 million and driving CO2 (carbon dioxide) emission reductions of 90,401 metric tonnes since the new design was introduced.
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Dubai Customs Director and Japanese Consul-General discuss cooperation Ahmed Mahboob Musabih, Director of Dubai Customs recently received Japan’s Consul-General in Dubai, Akima Umezawa, where they discussed reinforcing mutual cooperation to enhance trade and customs ties between the United Arab Emirates and Japan. Welcoming the Consul-General of Japan, Ahmed Mahboob Musabih underscored
Dubai Customs’ commitment to constant coordination with the Japanese diplomatic corps to boost trade between Dubai and Japan by means of better catering to the needs of the Japanese business community in terms of customs and border services. “Dubai’s non-oil foreign trade with Japan reached US$ 12 billion in 2016, against US$ 8.45
billion during Jan-Sept period of 2017,” he noted. Musabih further noted that Dubai Customs pays great attention to strengthening relationships with Dubai’s trading partners, including Japan.“We ensure our trading partners have the finest of customs facilities that give real added value to their active business sectors in Dubai. According to Musabih, bilateral trade between Dubai and Japan has greatly benefited from the smooth customs procedures and services delivered by Dubai Customs.“We seek to add more growth to this trade through enhanced communication and cooperation with all Japanese business constituents,”he said. Consul-General Umezawa praised the level of cooperation demonstrated by Dubai Customs and its commitment as a facilitator of international trade and business, particularly with the present position of Dubai as global trade hub at the crossroads between major markets in the East and the West.
Wasco announces phase two of Saudi waste sorting facility In line with Saudi Arabia’s Vision for 2030, Waste Collection and Recycling Company (Wasco) has announced the launch of phase two in its innovative waste sorting facility in Al Ahsa Governorate in the Kingdom’s east. Phase two has now been fully approved to supply the increasing demand for recycled materials
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in the Kingdom. Al-Ahsa Municipality launched the waste sorting plant project in accordance with environmental best practice requirements while adopting the latest high-tech equipment. New technology utilised in phase two of Al Ahsa includes a significant investment in optical sorting, the automated
process of sorting solid products using near infra-red (NIR). With the capability of automatically detecting and sorting materials quickly and effectively, optical sorting will allow the Al Ahsa waste sorting facility to dramatically improve the recycling yield and increase overall productivity.
Commenting on the project, Engineer Najib Fakih, president of Wasco, said:“Phase two of Al Ahsa symbolises Wasco’s commitment to utilise advanced waste sorting technology. Using a combination of sensor technology and software-driven intelligence, optical sorters at Al Ahsa recognise an object’s colour, size, shape and structural properties and then compares them to predefined criteria to identify suitable materials to be recycled.” Wasco is a wholly-owned subsidiary of the Middle East Paper Co. (Mepco), collecting over 40 per cent of Saudi Arabia’s waste paper through a fleet of collection trucks in various locations and supplying 26 collection centres around the Kingdom and Middle East. Founded in 2004, Wasco’s current collection capability is almost 500,000 tonnes per year.
Thales and Gemalto create a world leader in digital security Digital security solutions provider Gemalto has agreed to an acquisition offer from French aerospace and defence group Thales in a deal worth US$ 5.43 billion. “The acquisition of Gemalto marks a key milestone in the implementation of Thales’ strategy. Together with Gemalto’s management, we have big ambitions based on a shared vision of the digital transformation of our industries and customers,” explained Patrice Caine, Chairman and Chief Executive Officer, Thales. “I am convinced that the combination with Thales is the best and the most promising option for Gemalto
and the most positive outcome for our company, employees, clients, shareholders and other stakeholders,” stated Philippe Vallée, Gemalto’s Chief Executive Officer. Over the past three years, Thales has significantly increased its focus on digital technologies, investing over US$ 1.2 billion in connectivity, cyber-security, data analytics and artificial intelligence. The integration of Gemalto strongly accelerates this strategy, reinforcing Thales’ digital offering, across its five vertical markets, aeronautics, space, ground transportation, defence and security. Both Thales and Gemalto are in the business of providing solutions for data security challenges. These also include all operators of critical infrastructures
including banks, telcos, governments, utilities, and general industries. This combination will reinforce and further globalise Thales’ footprint. Thales will combine its digital businesses with Gemalto, which will continue to operate under its own brand as one of the seven Thales global business units. Philippe Vallée will lead the combined digital security business. Gemalto and Thales are technologydriven companies with world-class R&D capabilities and an extensive patent portfolio. The combined Group will have more than 28,000 engineers, 3,000 researchers, and invests more than US$ 1.2 billion in self-funded R&D.
Solutions for a healthy world Tranzone operates a state-of-the-art 3PL warehouse in Jebel Ali Free Zone. We have partnerships with the leading pharmaceutical, medical device and animal health companies around the world.
Healthcare Logistic Services: Air Freight Sea Freight Land Transportation Value Added Services Warehousing & Distribution Return logistics Documentation Tranzone FZCO (Member of Banaja Holdings)
Jebel Ali Free Zone (South) Plot No: S20129 P.O Box : 262955, Dubai, United Arab Emirates, Tel : +971 4 811 0000
Web: www.tranzone.ae JANUARY 2018 13
SAP unveils new hub to accelerate digital transformation SAP recently unveiled a new way for customers to simplify and speed the use of cloud-based people and organisational data across their businesses with the SAP SuccessFactors People Central Hub solution. The need for people and organisational data across the enterprise is vital, but integrating this data from disparate systems is complex and expensive. SAP SuccessFactors People Central Hub helps solve this by easily consolidating people
Bahri appoints Abdullah Aldubaikhi as its new CEO To steer the next phase of its growth, Bahri, the Saudi Arabian global leader in transportation and logistics, has appointed Abdullah Aldubaikhi as the company’s new Chief Executive Officer, effective 01 January 2018. As Bahri’s new CEO, Aldubaikhi will be responsible for setting and overseeing the implementation of Bahri’s core strategic direction to further cement its global leadership position in the maritime industry, and lead the company’s expansion into new growth markets while seeking new revenue streams. He will also be at the helm of the Bahri’s ongoing endeavors to integrate innovation into its business model. “Abdullah Aldubaikhi’s appointment as
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and corporate data from legacy systems into a central, cloud-based hub where it’s then integrated and available for use with SAP enterprise applications, such as SAP S/4HANA. “With many institutions in the midst of digital transformation, the most dynamic ones have realised that putting people first guarantees the best result,”SAP SuccessFactors President Greg Tomb said in prepared remarks.
Bahri’s new CEO comes at a time when the company is gearing to enter a new phase of expansion and development on the back of our phenomenal growth over the past few months. Aldubaikhi’s extensive experience across diverse sectors, deep understanding of the evolving business landscape, and strong leadership credentials make him a natural choice to achieve our long-term business goals and align our strategy with Saudi Vision 2030 objectives,”said Abdulrahman M Al-Mofadhi, Chairman of Bahri. Commenting on his appointment, Abdullah Aldubaikhi said:“My immediate priority will be charting short and long-term goals for Bahri while strengthening the company’s commitment to the Saudi Vision 2030 and ensuring a positive impact on the continued growth of the global maritime sector through ambition and innovation.”
SAP SuccessFactors People Central Hub is another step toward providing customers with connected enterprise applications according to a company press communiqué. By integrating third-party legacy core HR solutions with SAP offerings including SAP S/4HANA and SAP Fieldglass solutions and by increasing access to people and company data across the enterprise, companies can take an important first step to the cloud and digital HR transformation the statement continued.
Bee’ah achieves important milestone with innovative headquarters Bee’ah, the Sharjah-based award-winning environmental management company, has made great headway in the construction of its iconic new headquarters. The company commemorated the completion of the highest point of the structure, with a topping out ceremony held on Sunday, 10th of December, at the location of the site in Al Saj’ah. HE Salim Al Owais, Chairman of Bee’ah; Patrik Schumacher, Principal of Zaha Hadid Architects; and Edmund Mahabir, Managing Director of Al Futtaim Carillion, signed a special concrete panel at the topmost section of the building, in recognition of the important achievement. The event marked an important occasion for Bee’ah, and the project stakeholders, indicating that the headquarters is on schedule for completion, by the end of 2018. In alignment with Bee’ah’s growing ambition of improving the quality of life in the region, the company has created an environmentally sound structure, which will have minimal negative impact on the environment, across its lifetime. In addition to being completely powered by renewable energy, the new headquarters uses products like recycled aggregate in construction,
incorporates energy and water saving fixtures, maximises the benefit of natural elements like sunlight and winds for heating and cooling, utilises native vegetation for landscaping, and ensures reuse of greywater. Salim Al Owais continued: “At Bee’ah, as environmental pioneers, we have always driven ourselves to innovate and lead the UAE’s journey towards sustainability. Through our HQ project, we have formed partnerships with some of the world’s most renowned entities, to examine as to how we can maximise the potential for sustainability in the built environment.”
A primary feature of the headquarters is that of its zero net energy consumption. The building will be utilising photovoltaic cells to ensure complete reliance on renewable energy. To facilitate efficient use of the cells, Bee’ah signed an agreement with Tesla to utilise their advanced Powerpack battery technology. The company has acquired nine storage packs, with a total capacity of 1,890 KWHs, which will store the energy from the cells, and keep the building operational in the absence of sunlight. The building which is expected to receive a platinum certification, by the United States Green Building Council (USGBC), under its Leadership in Energy and Efficient Design (LEED) programme, is making rapid progress towards the completion of construction. In keeping with Bee’ah’s holistic approach to sustainability, the headquarters has followed a robust sustainability strategy, right from the designing phase. In a unique representation of sustainable aesthetics, the building has been designed by Zaha Hadid Architects to resemble a series of intersecting sand dunes, enabling it to blend harmoniously into the desert landscape.
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COUNTRY REPORT - EUROPE AND USA
Resilient and promising Growth remains robust in Q3 but political instability continues to threaten economic trajectory Europe The Eurozone economy continued to perform robustly in the third quarter of 2017, according to preliminary estimates released by Eurostat. GDP increased a seasonally-adjusted 0.6 per cent in Q3 from the previous quarter, which was a notch below Q2’s 0.7 per cent rise. The region’s economic drivers likely remained the same, as accommodative monetary policy,
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a recovering labour market and healthy external demand support activity. The Eurozone is on track to grow at the fastest pace since 2007 this year with a Consensus Forecast of 2.2 per cent. Looking at the available data for the individual economies, quarter-on-quarter growth gained steam in major players Germany and Italy, as well as in Finland, Latvia and Portugal. Robust exports and investment fueled the
uptick in Germany’s growth, while a solid performance in the industrial and services sectors likely supported growth in Italy. Meanwhile, momentum waned in Austria, Cyprus, France, Lithuania, the Netherlands, Spain and Slovakia. While Spain saw growth decelerate, it remained vigorous; the country has been one of the Eurozone’s top performers in recent quarters. While a stream of positive economic data continues to flow
COUNTRY REPORT - EUROPE AND USA
in, the political situation has become notably more uncertain. In November, coalition talks to form a new government failed in Germany, a country that has for years been a beacon of stability in the Eurozone. The FDP pulled out of negotiations, most likely over immigration policy issues, surprising analysts who had widely expected a“Jamaica coalition” between the CDU/CSU, the FDP and the Greens. The move has thrust the country
Robust exports and investment fueled the uptick in Germany’s growth, while a solid performance in the industrial and services sectors likely supported growth in Italy
Modern Headquarters of the European Central Bank, ECB in Frankfurt, Germany
into uncharted waters. In the short term, the turmoil is unlikely to have any economic repercussions; however, a strong government is needed to pass key structural reforms. In Spain, the political situation remains turbulent as a stand-off continues between the central government and Catalan regional authorities. The central government seized control of the region in late October and called for regional elections to be held on 21 December.
JANUARY 2018 17
COUNTRY REPORT INDIA
An iconic street of New York City
So far, economic data has remained healthy despite the political crisis within the region. Political noise will, however, likely continue to remain elevated in the coming weeks and could weigh on confidence if prolonged. Meanwhile, Italian elections are on the horizon in early 2018. While a populist government appears improbable, a fractured parliament and weak government are likely, and this could present obstacles in implementing much needed reforms. Euro area countries are still waiting to see how Brexit negotiations will play out and what impact the result will have on their economies and the region. The UK will submit a proposal on how to settle its divorce bill, ahead of a 14-15 December meeting of EU lawmakers, and has signaled that it will up its financial offer to around GBP 40 billion if trade talks begin. However, it remains to be seen if the new
18 JANUARY 2018
amount will be enough to push negotiations to the next stage, as it is still below the GBP 60 billion that EU officials are pushing for.
Outlook for 2018 The Eurozone’s 2018 economic outlook was again upgraded this month following a buoyant Q3 GDP reading. The economy is on solid footing heading into next year, with tailwinds from an improving labour market and accommodative financial conditions that should continue to support growth. FocusEconomics analysts project GDP will grow a healthy 2.0 per cent in 2018, which is up a notch from last month’s forecast. In 2019, economic growth is seen at 1.7 per cent. Almost all the economies in the Euro area saw improved 2018 prospects, with GDP forecasts upgraded for 13 countries including France, Germany and Italy. Luxembourg was the only economy to have its outlook
downgraded, while the rest of the countries in the region saw no changes to their forecasts. Latvia, Luxembourg and Malta are forecast to be the fastest growing economies in the Euro area next year, expanding at rates of 3.6 per cent or above. Conversely, Italy will be the region’s slowest growing economy, with a forecast of 1.3 per cent. Regarding the other major economies in the region, Spain will outperform the rest with 2.6 per cent growth. Germany is seen expanding 2.0 per cent, followed by France at 1.8 per cent.
United States of America The economy showed outstanding resilience in the third quarter despite hurricane-induced disruptions, with GDP growth coming in at three per cent, well above market expectations. Although data has been noisy in recent months due to weather-related distortions, the underlying strength of the economy seems
COUNTRY REPORT - EUROPE AND USA
estimate. In 2019, growth is seen moderating slightly to two per cent. Inflation eased to 2.0 per cent in October from 2.2 per cent in September. Our panel sees inflation averaging 2.1 per cent in 2018 and 2.2 per cent in 2019. The FOMC kept the federal funds rate unchanged at one to 1.25 per cent in early November. On 2 November, President Trump nominated Governor Jay Powell to take over as Chairman of the Federal Reserve in February. Powell would likely keep the Fed on its current course.
Solid Q3 GDP growth paves the way for third interest rate hike
largely intact heading into Q4. Core retail and vehicle sales for October suggest that consumer spending remained healthy at the outset of the fourth quarter, while October employment data showed a rebound in job creation and a further decline in the unemployment rate, which hit a 17-year low. On the policy front, the likelihood of a tax reform plan being enacted early next year has increased in recent weeks, with progress made in both the House and the Senate. The latter, however, has seen debate heating up in recent days due to contentious modifications to the tax bill. The increasingly-likely tax reform will, if passed, shore up non-residential investment and keep business sentiment buoyant next year, while a tighter labour market and firmer real estate prices will continue to boost consumers’ purchasing power. Our panel forecasts growth of 2.4 per cent in 2018, which is unchanged from last month’s
On the heels of improved global demand and the depreciation of the US dollar, exports rose a notable 2.3 per cent in SAAR terms in Q3, which nonetheless was below the 3.5 per cent increase recorded in the previous quarter. Imports, however, declined 0.8 per cent in Q3, contrasting a 1.5 per cent increase recorded in Q2. As a result, the external sector’s net contribution to growth came in at a solid 0.4 percentage points in Q3, which followed the 0.2 percentage-point contribution logged in Q2. The report spells good news for the U.S. economy, which has proven resilient to the unfavorable weather conditions in the third quarter. With business and consumer sentiment buoyant, and reconstruction efforts expected to shore up economic activity in Q4, broad-based economic growth and a tight labour market could see the Federal Reserve delivering a third interest rate hike before year-end, as widely expected by FocusEconomics panelists. The Federal Reserve expects economic growth of 2.1 per cent in 2018 and two per cent in 2019. FocusEconomics Consensus Forecast panelists expect GDP to expand 2.4 per cent next year, which is unchanged from last month’s forecast. For 2019, the panel expects the economy to expand two per cent.
The economy made significant progress in the third quarter in spite of the effects of the two hurricanes that made landfall in August and September. GDP expanded at a seasonallyadjusted annualised rate (SAAR) of three per cent in Q3, according to a first estimate released by the Bureau of Economic Analysis (BEA) on 27 October, well above market expectations of a 2.6 per cent increase. The domestic sector pulled its weight in the third quarter on the back of healthy private consumption growth, resilient non-residential investment and increased inventories. U.S. households continued to benefit from a robust pace of job creation and low unemployment, ISM manufacturing index with private consumption expanding at a shows resilience quarter-on-quarter SAAR of 2.4 per cent in Q3, The Institute for Supply Management (ISM) ahead of market expectations of a 2.1 per cent manufacturing index fell slightly more increase but below Q2’s 3.3 per cent increase. than markets had expected, easing from a Durable spending growth was particularly 13-year high of 60.8 in September to 58.7 in strong at 8.3 per cent, October. Market participants which partially reflected had predicted a smaller hurricane replacement decline to 59.5. The UK will submit demand for vehicles. NonMuch of the dip was residential investment was driven by lower inventories a proposal on also relatively strong at a and supplier delivery times, how to settle 3.9 per cent increase, with sub-components that equipment investment in September had been its divorce bill, recording a solid 8.6 per buoyed by hurricane-related ahead of a 14-15 cent pick-up. However, disruptions. In addition, the investment in nonDecember meeting index still sits comfortably residential structures fell 5.2 above the threshold of 50 of EU lawmakers, that separates expansion per cent, partially the result of disruptions related to from contraction in the U.S. and has signaled Hurricanes Harvey and manufacturing economy, that it will up its Irma. In line with this, which signals a solid pace residential investment was of growth in the sector. The financial offer to down six per cent in Q3. decline in supplier deliveries The external sector also suggests delays caused by around GBP 40 performed well, doubling its unfavorable weather last billion if trade contribution to growth from month were alleviated in the previous quarter. October. However, survey talks begin
JANUARY 2018 19
COUNTRY REPORT - EUROPE AND USA
One of the largest stock exchanges in the world in New York, New York
participants repeatedly stressed raw material shortages were still abundant in the market, which likely weighed on the inventories sub-index and fueled stronger input inflation. However, hurricane-related disruptions aside, the October report pointed to robust demand and production levels ahead in Q4, with output and new orders growth resilient at unusually strong readings. Employment growth eased slightly but remained strong at 59.8 on a 100-point scale, which allowed firms to work through some outstanding business in October. FocusEconomics panelists expect that industrial production will expand 2.2 per cent in 2018, which is unchanged from last month’s forecast. For 2019, panelists see industrial production expanding two per cent.
Retail sales growth moderates Retail sales expanded a moderate 0.2 per cent from the previous month in October, well below the upwardly-revised 1.9 per cent increase recorded in the previous month (previously reported: +1.6 per cent year-onyear) but above market expectations of 0.1 per cent growth. September’s robust increase - which largely reflected replacement sales following Hurricanes Harvey and Irma - and stronger-than expected October sales point to resilient private consumption growth in Q4. The headline figure reflected gains across most components, with some hurricane-related
20 JANUARY 2018
effects still evident in auto sales. Sales also picked up at clothing, sporting goods, furniture and electronic appliance stores. However, these increases were partially offset by a sharp reversal in building material sales, while sales at gasoline stations also declined markedly.
Payrolls rebound in October, unemployment rate drops to a 17-year low The employment report released by the Bureau of labour Statistics (BLS) on 3 November showed that the economy bounced back from hurricane related disruptions in October, but results were mixed overall. Job growth came in below market expectations and wage growth decelerated sharply, but the unemployment rate fell further. As such, the report does little to alter the probability of an interest rate hike at the Fed’s December meeting. It is, however, likely to turn up the debate in early 2018 as core inflation and wage growth continue to disappoint, despite a very tight labour market and improving economic growth. Employment growth bounced back in October from hurricane-induced disruptions a month before. The unemployment rate fell again, hitting a 17-year low of 4.1 per cent in October, below market expectations of an unchanged 4.2 per cent rate. However, the drop was largely reflective of a decreased labour force, which lost 724,000 workers in the month. Accordingly, the labour participation rate dipped from 63.1 per
cent in September to 62.7 per cent in October. In addition, average earnings growth was flat on a month-on-month basis in October after recording a robust 0.5 per cent increase in September, which took the year-on-year increase down to 2.4 per cent from 2.9 per cent in the previous month. FocusEconomics Consensus Forecast panelists expect the unemployment rate to average 4.1 per cent in 2018, which is down 0.1 percentage points from last month’s forecast. For 2019, the panel expects the unemployment rate to be steady at 4.1 per cent. rovider of leading p a is s ic nom sis on the FocusEco and analy ts s a ators c re fo omic indic economic acroecon m t ast, n E a rt le o d the Mid most imp the untries in d o c n a y e a k ic 7 for 12 haran Afr a -S b s u S ie , n pe compa Asia, Euro -thinking rd ation a rm rw o fo F . timely in d Americas n a le b a ess ch reli right busin require su make the sive m n e te th x e lp to he nomics’ o c E s d u c o .F ts, couple decisions economis f are o r, rk e o d a tw ustry le global ne as an ind tation u n p io re it s d o li p o s with its pany’s m o c ence e ig th ll f so ess inte indication e for busin rc u o s l le b ncia as a relia major fina d e world’s panies an m o c l a among th n o ti a in lt u s, m institution s. nt agencie e m rn e gov
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The future of
road transport The regional road transport industry still has a lot of ground to cover to meet globally accepted standards. Brent Melvin, COO, Almajdouie Logistics shares his thoughts
22 JANUARY 2018
he road transport industry in the Middle East is at the cross roads. It needs to overcome a number of challenges in order to catch up with international standards and best practices. The general state of trucks is poor, driver qualifications are questionable, and many operators fail to invest in their assets, employee training, or fleet maintenance. Until legislation is largely adhered to and enforced, the industry cannot be expected to mature. Implementing standardised driver qualifications would vastly improve the road transport industry in the region. The March 1948-established, Geneva headquartered, International Road Transport Union (IRU) is a good benchmark to follow. Of course, the Middle East market is a long way behind Europe in terms of driver qualifications. So while the principles are valid, the level of the programme needs to be adjusted to local market conditions initially with the view to extend the qualification over time. As a leading road transport service provider in the GCC, Almajdouie Logistics invests heavily in on-the-job training programmes to help drivers understand
The onset of digitisation is leading to a more efficient use of the roads, but this is a journey that takes time. In the interim, logistics companies need to decentralise from city centres to the outskirts.
the importance of cargo care, customer interaction, and safety in the workplace and on the road. We not only do this because it differentiates us from others, we do it because is the right thing to do.
Long way to go Although technological advances are being made on a daily basis, some operators in the Middle East have not adopted basic existing technology like track-and-trace with real time cargo visibility. This highlights critical data like cold chain integrity and is used as much for location management and cargo care as it is for driver performance and asset utilisation. Almajdouie Logistics follows all the major trends in transport and truck development to determine where we see ourselves in the future. We have adopted several technologies but do not consider ourselves ahead of the game when it comes to the possibility of digitisation, so this remains an area of interest and investment for us. As we move into 2018, technology looks set to continue playing a significant role in road transportation. Despite being in the developmental stages, innovations like driverless trucks and platooning are on the
horizon and have the potential to be game changers alongside eco-friendly electric trucks. These are areas Almajdouie Logistics is examining with great interest. Another area shaping the future of road transportation globally is partial road bans, which play a part in trying to reduce the impact of heavy vehicles within city limits during peak periods. While this serves a purpose, it limits the free movement of goods; so improved road infrastructure, public transport development, and rail are alternative options worth exploring. The onset of digitisation is leading to a more efficient use of the roads, but this is a journey that takes time. In the interim, logistics companies need to decentralise from city centres to the outskirts where they can provide inner city distribution via smaller vehicles that are more pliant and manageable. These are just some of the developments and trends that will change the face of logistics in the future. Everyone is looking for that next big disruptor. We need to adapt to these changes and understand where we fit in to determine the vital role road transportation will play in the future of the growing logistics industry.
JANUARY 2018 23
Diversification key to success The oil and gas sector needs to diversify if it wants to prosper. Oil and gas companies need to start planning for a low-carbon future and embrace the opportunities it presents. Jerad Ford, Managing consultant, CSIRO Futures writes on www.oilandgasiq.com
ne does not have to look far to see signs that the oil and gas industry has a bumpy road ahead. Demand might stay high for decades, but given the dizzying pace of technological change, who would bet on that? Take the recent pledges by India, France, Britain, and China to phase out petrol and diesel vehicles. Or the plummeting costs of
JANUARY 2018 25
grid-scale solar power, rapidly becoming cheaper than fossil-fuelled electricity. These developments should cause oil and gas companies to think very carefully about their next move. Big investments in natural gas globally, made on the assumption that gas is a bridge to a clean energy future, may fall flat because renewables are developing so swiftly. The fact of the matter is that oil and gas companies need to start planning for a lowcarbon future and embrace the opportunities it presents. One approach is to diversify their products and embrace renewable energy, one of four strategies that CSIRO has identified in its industry-led Oil and Gas Roadmap that outlines some of the future directions the industry might take. With 40 per cent of companies involved in the exploration and production of petroleum likely to move away from oil and gas in 2017, solar photovoltaics and energy storage offer
26 JANUARY 2018
Renewables can be integrated into operations to reduce both the cost and the carbon intensity of operations. In the longer term, these technologies could help energy companies to develop more sophisticated offerings
alternative avenues in which oil and gas companies can invest. Renewables can be integrated into operations to reduce both the cost and the carbon intensity of operations. In the longer term, these technologies could help energy companies to develop more sophisticated offerings. For instance, hybrid solar and gas microgrids could be sold to developing nations, allowing them to leapfrog from energy poverty into clean, cheap distributed energy for all, effectively skipping expensive, centralised electricity grid infrastructure.
Gas-powered ships Two more strategic opportunities focus on expanding the potential of the least carbonintensive fossil fuel: natural gas. For example, global demand for liquefied natural gas (LNG) for transport is expected to grow fourfold to 100 million tonnes a year by 2030, a prime target being maritime shipping.
Five ways IT is changing the future of oil and gas Anand Laxshmivarahan looks from the inside out at how next generation IT is going to revolutionise the energy business Being part of the IT industry that’s enabling digital transformation makes one thing abundantly clear – industries and business models are going to be disrupted unimaginably. However, being so close to this industry also means that one might be blinded to how the IT industry itself will be disrupted and transformed. In the recent past there have been a few moments that triggered this thought – this blog is a result of some deeper thinking trying to connect these dots. Here are a few of those moments:
A colleague’s digital mortgage On a car ride, a colleague tells how he was moving his mortgage from a physical, nationalised bank to a digital-only mortgage provider at record low prices. Record low prices because they could pass-on significant operating costs reductions by virtualising their entire business.
Bricks are giving way to bytes This was a typical customer call where an oil major was explaining to its vendor ecosystem how they envisioned the average petroleum retail forecourt to transform over the next 10 years. One of the attendees asked – if autonomous cars form the future of global transportation, would the supermajors consider moving to completely digital channels instead of physical convenience stores that accompany gas stations of today? Autonomous cars of the future can drive in to the gas station in the middle of the night by themselves which means the number of people visiting a physical store could significantly decrease. Could this mean that the oil majors start competing or partnering with the Amazons and Walmarts of this world?
industries move from physical to cyberphysical or digital-only businesses. Could this mean that the oil majors start competing or partnering with the Amazons and Walmarts of this world?
Source of the next billion dollars If you are in the oil and gas sector you follow the likes of Shell, BP, Chevron and Saudi Aramco, one cannot miss noticing the significant venture investments in niche startups they are all making. In my mind, these digitalised startups are at the epicentre of these organisations’ business diversification strategy.
“Servicelisation” of everything: In the new order of digital business, we are seeing a move towards match-making – brokering services between providers and consumers of services: be they taxis, rooms or programmers.
IT within organisations has evolved over the years thus: Initially, businesses bought and used their applications and tools. There was no formal IT or investment. As businesses matured and had more appetite for investment, there was a lot more standardisation and formation of a central IT organisation. Next came the wave of large outsourcing to key global IT providers while organisations continued to build their own IT groups. As IT within organisations became heavier, industries such as oil and gas considered them non-core and started disinvesting them. These disinvested entities were being bought by large IT outsourcers. With the emergence of disruptive technologies and digital, most IT organisations created a separate focus on digital. These entities are enabling customers to re-imagine processes and digitalise their operations.
Crystal ball-gazing into the future, I think these will be the next steps in the journey: IT moving from being a“cost centre”to becoming a“digital line of business”within organisations. The change from being people, process and technology-centric to driving AI, cyberphysical and hyper-automation to enable newer business models and revenue growth. Leveraging crowdsourced skills and expertise. This will cut overheads, significantly reduce costs to deliver, and bring agility in standing up new businesses. The CDO role and its ilk will likely manage the crowdsourced digital ecosystem with a lean team. In the new order of digital business, we are seeing a move towards match-making – brokering services between providers and consumers of services: be they taxis, rooms or programmers. Becoming the organisation’s nearautonomous business that will broker between an array of global service providers and service consumers. Transitioning from leveraging economies of scale to becoming the organisation’s ability to venture and diversify into new digital businesses. This is probably best explained through a visual example (below). The current model relies on the oil and gas entity makes it money from sale of oil and finished products. They have their own IT teams and a set of IT vendors to provide them with technologies and services at a cost. In the future, I see the oil and gas startups of today becoming the digital lines of businesses of tomorrow that will generate their own revenues. These revenue streams could come from diversification to new digital retail stores, AI-enabled autonomous algorithmic trades or a machine learning-enabled home energy advisory business. Anand Laxmivarahan is a Business/technology consulting professional. www.oilandgasiq.com
The new-age boss There is a buzz all around on the rise of a chief digital officer (CDO) role in across the business world. This role is expected to blend knowledge of both business and technology. Expectations from this role are high and there is even a belief that the role will potentially succeed current CEOs as
JANUARY 2018 27
Meeting this LNG demand could open up a valuable market for Australia. Another opportunity lies in the creation of higher-value products. Natural gas can be converted to many refined products that can fetch higher margins in the market, including diesel and other chemicals such as methanol and dimethyl ether. More investment is needed to make conversion technology economically competitive, but it would be a wise investment, especially in light of Australiaâ€™s
lack of domestic strategic fuel reserves. Hydrogen fuel is another possibility for Australian resource companies. It can be produced from gas, but in the future hydrogen fuel could also be manufactured by solar-powered electrolysis of water. Both would be good options, given Australiaâ€™s abundance of gas and sunlight. Investments will be needed to improve the production and transport economics of hydrogen, including the development of efficient technologies that can convert
28 JANUARY 2018
hydrogen carriers (like ammonia) to hydrogen at the point of use. Our roadmap also suggests other ways for companies to get involved in the energy transition, by becoming more efficient, less wasteful, and more productive. Advanced environmental solutions point to ways to improve water quality and reuse, reduce or eliminate greenhouse gas emissions (including sequestering carbon dioxide, controlling fugitive emissions, and finding alternatives to flaring), and finding the best ways to decommission assets like wells and offshore platforms after their useful life is over. The industry needs to be much more efficient in exploring and producing oil and gas so that the life of existing assets can be lengthened, often using less environmentally damaging approaches such as waterless fracturing and reservoir rejuvenation using microbes. Robots and artificial intelligence could also help to improve efficiency and safety. The oil and gas sector has an important role to play in the future of the energy sector, but that role is changing. Companies need to be proactive to remain relevant. If they pursue some of the opportunities outlined here, they will help ensure they stay viable into the future. Dr Jerad Ford is Manager - Strategic Advisory, CSIRO Futures, CSIRO
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IATA 2018 FORECAST
profitability to continue Middle East carriers are in for a roll as IATA 2018 projections see net profits double to US$ 600 million in 2018 (up from US$ 300 million in 2017) and demand to grow by seven per cent. Airline revenues, cargo receipts and volumes expected to rise
he recent International Air Transport Association (IATA) report forecasts global industry net profit to rise to US$ 38.4 billion in 2018, an improvement from the US$ 34.5 billion expected net profit in 2017 (revised from a US$31.4 billion forecast in June). The overall
30 JANUARY 2018
positive report however was tempered with the caveat that rising costs will adversely affect operating margins. Strong demand, efficiency and reduced interest payments will help airlines improve net profitability in 2018 despite rising costs. 2018 is expected to be the fourth consecutive year of sustainable profits with a return on
invested capital (9.4 per cent) exceeding the industryâ€™s average cost of capital (7.4 per cent), the report continued. â€œThese are good times for the global air transport industry. The demand for air cargo is at its strongest level in over a decade. Employment is growing. More routes are being opened. Airlines are achieving
IATA 2018 FORECAST
sustainable levels of profitability. It’s still, however, a tough business, and we are being challenged on the cost front by rising fuel, labour and infrastructure expenses,”asserted Alexandre de Juniac, IATA’s Director General and CEO. However, de Juniac also cautioned that the industry also faces longer-term challenges.
Since many of the airlines are governmentowned, he exhorted the authorities to take preemptive and forceful measures such as implementing global standards on security, finding a reasonable level of taxation, delivering smarter regulation and building the cost-efficient infrastructure to accommodate growing demand.
He also noted that the global aviation industry created 2.7 million direct jobs and provides critical support for 3.5 per cent of global economic activity. The value of goods carried by airlines is expected to exceed US$ 6.2 trillion in 2018, representing 7.4 per cent of world GDP.
JANUARY 2018 31
IATA 2018 FORECAST
These are good times for the global air transport industry. The demand for air cargo is at its strongest level in over a decade,â€? Alexandre de Juniac, IATAâ€™s Director General and CEO 2018 performance drivers Passenger: All metrics related to passenger numbers and passenger revenue are expected to soar in 2018, the report indicates. Passenger numbers are expected to increase to 4.3 billion in 2018, IATA revealed. Passenger traffic (revenue passenger kilometres or RPKs) is expected to rise 6.0 per cent (slightly down on the 7.5 per cent growth of 2017 but still ahead of the average of the past 10 to 20 years of 5.5 per cent),
32 JANUARY 2018
which will exceed a capacity expansion (available seat kilometres or ASKs) of 5.7 per cent. Revenues from the passenger business are expected to grow to US$ 581 billion (+9.2 per cent on US$ 532 billion in 2017). Strong performance of the passenger business is supported by expected robust GDP growth of 3.1 per cent (the strongest since 2010). Cargo: The cargo business will continue to benefit from a strong cyclical upturn in volumes, with some recovery in yields.
Volumes are expected to grow by 4.5 per cent in 2018 (down from the 9.3 per cent growth of 2017). The boost to cargo volumes in 2017 was a result of companies needing to restock inventories quickly to meet unexpectedly strong demand. This led cargo volumes to grow at twice the pace of the expansion in world trade (4.3 per cent). Cargo yields are expected to improve by 4.0 per cent in 2018 (slower than the 5.0 per cent in 2017). While restocking
IATA 2018 FORECAST
cycles are usually short-lived, the growth of e-commerce is expected to support continued momentum in the cargo business beyond the rate of expansion of world trade in 2018. Cargo revenues will continue to do well in 2018, reaching US$ 59.2 billion (up 8.6 per cent from 2017 revenues of US$ 54.5 billion). Debt: The industry has used the recent period of positive cash flows to pay dividends and to reduce debt. The debt to EBITDAR
(earnings before interest, tax, depreciation, amortization and rentals) ratio has consistently dropped through 2016 and 2017 and is expected to further fall through 2018. This will see net profits rise to a record US$ 38.4 billion in 2018 (up from US$ 34.5 billion in 2017).
Regional outlook: All regions are expected to report improved profitability in 2018 and all regions are
expected to see demand growth outpace capacity expansion. Carriers in North America continue to lead on financial performance, accounting for nearly half of the industryâ€™s total profits. North America The outlook is upbeat for the region and airlines are forecast to generate the strongest financial performance with net profits of US$ 16.4 billion in 2018 (up from US$ 15.6 billion
JANUARY 2018 33
IATA 2018 FORECAST
Highlights of expected 2018 performance
in 2017). Market conditions are expected to continue to be strong, with announced capacity growth (3.4 per cent) likely to be slightly less than our traffic forecast of 3.5 per cent. Asia-Pacific Airlines in Asia Pacific are forecast to see profits of US$ 9 billion in 2018 (up from US$ 8.3 billion in 2017). The strong cyclical rise in cargo markets has been a particular support for this region, whose carriers account for 37 per cent of global cargo capacity. Anticipated growth in demand of 7.0 per cent will outpace announced capacity increases of 6.8 per cent. Passenger market conditions vary across the region. Domestic markets have strengthened in China, India and Japan. New low cost market entrants in the ASEAN (Association of Southeast Asian Nations) region are intensifying competition and contributing to keeping profitability low. Europe Airlines in Europe are expected to deliver a net profit of US$ 11.5 billion in 2018 (up from US$ 9.8 billion in 2017). Announced capacity increases of 5.5 per cent trail the expected 6.0 per cent growth in demand in 2018 supporting a strengthening of the region’s performance. European airlines are benefiting from a strong economic recovery in home markets, including Russia, a rebound from the terrorism events of 2016, and some consolidation following the failure of several regional airlines. The results of these developments are evident in the continent achieving the highest average passenger load factor in 2017 to date - 84.3 per cent.
34 JANUARY 2018
Latin America Airlines in Latin America are forecast to generate a US$ 900 million net profit in 2018 (up from US$ 700 million in 2017). Passenger demand is expected to grow by 8.0 per cent in 2018, outpacing announced passenger capacity growth of 7.5 per cent. The region will approach 2018 with momentum provided by the moderate recovery in the Brazilian economy, reasonable growth in Mexico and the weaker US dollar over the last year. Middle East The Middle East is expected to report improved profitability in 2018 and to see demand growth outpace capacity expansion. Middle East carriers are forecast to see net profits improve to US$ 600 million in 2018 (up from US$300 million in 2017). Demand in 2018 is expected to grow by 7.0 per cent, outpacing announced capacity expansion of 4.9 per cent (the slowest growth since 2002). The apex body also points out that the region’s carriers face challenges to their business from low oil revenues, regional conflict, crowded air space, the impact of travel restrictions to the US and competition. Despite the challenges, on the whole, there is positive momentum heading into 2018. Africa African carriers are expected to continue to make estimated cumulative losses of US$100 million in 2018 following a collective net loss of US$ 100 million in 2017. Stronger forecast economic growth in the region is expected to support demand growth of 8.0 per cent in 2018, slightly outpacing the announced capacity expansion of 7.5 per cent.
• An improvement in net margin to 4.7 per cent (up from 4.6 per cent in 2017). • A rise in overall revenues to US$ 824 billion (+9.4 per cent on 2017 revenues of US$ 754 billion). • A rise in cargo carried to 62.5 million tonnes (+4.5 per cent on the 59.9 million tonnes in 2017). • Relatively slower growth for cargo demand (+4.5 per cent in 2018, +9.3 per cent in 2017).
IATA attributes the biggest challenge to profitability for airlines in 2018 to rising costs • Oil prices are expected to average US$ 60 per barrel for Brent crude in 2018 (up 10.7 per cent from US$ 54.2 per barrel in 2017). Jet fuel prices are expected to rise even more quickly to US$ 73.8 per barrel (up 12.5 per cent on US$ 65.6 in 2017). The fuel bill is expected to be 20.5 per cent of total costs in 2018 (up from 18.8 per cent in 2017). • Labour costs have been accelerating strongly and are now a larger expense item than fuel (30.9 per cent in 2018). • Overall unit costs are expected to grow by 4.3 per cent in 2018 (a significant rise on the 1.7 per cent increase in 2017). This will outpace an expected 3.5 per cent increase in unit revenues.
6-7 February 2018 Abu Dhabi National Exhibition Centre Abu Dhabi, UAE
THERE’S ONLY ONE PLACE IN THE MIDDLE EAST where project cargo professionals from around the world meet for new business.
It’s an important opportunity to meet our customers, show our commitment to the region and use it as a building platform for our presence in India, the Red Sea and beyond.”
SERVING THE FULL PROJECT CARGO VALUE CHAIN: Shipper or beneficial cargo owner (BCO) | Ocean carriers Inland carriers (road/rail/inland waterway) | Stevedores Ship agents | Freight forwarders | 3PLs Port/terminal operators | Lashing/packing | Customs Equipment providers | Government entities Financial services
– Matthew Luckhurst, Liner Director, Bahri Breakbulk Middle East 2015, 2016, 2018
To exhibit, sponsor and sign up for event alerts, visit www.breakbulk.com/bbme2018.
SPONSORED BY: GOLD
GOLD & BREAKBULK STUDIOS
FEATURE - PRECIOUS STONES
The supply chain of
36 JANUARY 2018
Dev Shetty, President and CEO, Fura Gems, holds forth on the challenges and shines a light on the logistics of the arcane and byzantine world of gems and coloured precious stones and how they are aiming to put the sparkle back on the gems logistics industry
lawless diamonds when extracted from the bowels of the earth may be an extreme rarity, but ‘conflict diamonds’ are fairly ubiquitous. Much has been written and documented about ‘blood diamonds’. Sadly, diamonds and gems have been at the centre of conflicts and the ‘currency of war’ as best exemplified in the celebrated Hollywood flick ‘Blood Diamond’.
Dubai-headquartered Fura Gems sustainably sources gemstones from carefully selected mining sites around the world, using industry best practices. President and CEO Dev Shetty believes that the rightful route to the market is at the heart of the company’s business and sourcing strategy. “There is no denying that ethical sourcing and transparency in the supply chain are foremost when it comes to the
JANUARY 2018 37
end-to-end value chain of coloured precious stones,”he observes in an exclusive interview. “Health and safety, environmental upkeep, adhering to local mining laws and fair trade practices are areas that we do not compromise on. When we set up Fura Gems, the one thing that we were very clear on was that as we grow, the country and the community that we operate in, should also prosper and that’s something we are working on,”he continues. A listed company on Canada’s TSX Venture Exchange in Toronto, Fura Gems is a startup and rapidly putting internal and external processes in place. Relentless and uncompromising on adherence to regulations and business principles, Fura Gems has a very strong way of vetting its suppliers and clients, affirms Shetty.“These checks are very thorough and it takes us almost three to four weeks before we sign on with a new supplier. We work with suppliers who share our ethos,” he emphasises.
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Coloured gem stones usually come from small scale artisanal mines, many of these in the unorganised and unregulated sectors. These present challenges to the supply chain continuum for the diamonds, gold or platinum sector. Shetty is mindful of the constraints confronting the industry.“In the case of diamonds almost 90 per cent of the supply chain is controlled by organised large players and established mining companies.” However, in case of colour gemstones, only 10 per cent of the industry is organised, 90 per cent is not. This is a constraint and an opportunity as well.“According to our best estimates, the overall size of the colour gemstone industry is about US$ 2 billon, and US$ 1.8 billion of that are small-scale miners, governments and illegal entities,”he notes.
Setting systems in place Shetty wants to ensure that over the next few years, the colour gemstones industry
can take the organised 10 per cent of the sector to about 30 per cent. Since Fura Gems alone cannot take it to 90 per cent eventually he says that there is a need for other large players to come in and work in this segment, and hopes that over the next decade things will be much better. The coloured gem stones supply chain is complicated and fraught with risks and hazards admits Shetty. This indeed has been a historic problem. Until the 1940s, diamonds and coloured gemstones were at par in terms of production. However, while largescale investments were made in diamond sector, the coloured gemstones industry regressed. This is because there was no largescale player like De Beers in the coloured gemstone sector. The supply of coloured gemstone even now is very restricted and there is no certainty of regular goods coming to the market. Hence, even on the retail side jewelers were not
FEATURE - PRECIOUS STONES
keen selling coloured gemstones. So, whilst diamonds progressed, coloured gemstones were laggards.“However, the last few years have seen a major shift. We are seeing mid to large sized companies now interested in coloured gemstone mining and marketing. We are confident that the future is very bright for the coloured gemstone sector and colour stones will regain its lost glory,”he assures. By virtue of being a mining and marketing company, Fura Gems has endeavoured to establish ground rules for their partners to ensure the authenticity of the mine and secure the interests of all stakeholders involved.“This is still a work in progress. One thing that we insist on our business is complete disclosure. To give you an example, Rubies being a hard stone are sometimes heated to enhance the colour and clarity. Whenever we heat rubies, the disclosure about the same is made before the parcel is sold,”comments Shetty. Furthermore, he insists that Fura Gems clients also make complete disclosures about the product they are selling. Punitive action is also taken against violators.“In case we find out that if a client’s company has sold without disclosures, it is banned from our future auctions,” he states.
Education is key According to Shetty, it is also imperative to educate the market players, both trade and consumers, about the various treatments and manufacturing processes an accepted norm in the industry. This in his opinion can
instill confidence in both buyers and sellers, enabling them to know and understand what they are buying and can buy with confidence. “We are also working with a few international gem laboratories to come up with a consumerfriendly gradation system, which will inform the consumer about what quality of gemstones they are buying,”he assures. Shetty explains the stages of the coloured gemstones supply chain from source to possession.“We are talking about precious stones that were created about 500 million years ago, even before the dinosaurs walked on this planet; a product that is truly a miracle of nature. We can’t create natural products anymore, but we bring them out from the earth’s surface,”he enthuses. The way the process occurs is that Fura Gems mines for the product (emeralds in Colombia and rubies in Mozambique). Each gemstone that it mines is then graded at the first level at the respective mine site. The company has developed its own indigenous grading system. Once the stones are graded they are then shipped to its administrative headquarters in Dubai where they go through the final grading. In certain cases, if required, the rubies might be heated. All the gemstones will then be sold to gem stone cutters from across the globe through an auction or tender process which will take place in Dubai. These gem cutters will them cut and polish the gemstones and sell it to jewellery manufacturers, who will then set these stones
Fura Gems set up its Dubai office in July 2017. At present, it employs seven people in the office and the plan is to take it up to about 15 by June 2018. In Colombia, where it mines for emeralds, there are 20 employees currently and the plan is to ramp it up to about 150 by the end of 2018. In Mozambique there are 25 employees presently and plans to take it to about 200 by the close of 2018. It also has four employees in India.
in jewellery pieces and sell it to jewellery retailers. The retailers then sell it to the end consumer. The whole process from mining the gemstone to a consumer buying it could take anywhere between 12 to 24 months.“By streamlining and honing these processes and systems, we hope to put the spark back into the logistics and supply chain mechanisms,” concludes Shetty.
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40 JANUARY 2018
The buzz about
Roambee Roambee’s GPS portable, rugged trackers are enterprise grade and designed to monitor goods in the supply chain for multiple industry sectors. Muthanna, General Manager, Roambee Solutions tells us more about its real-time tracking and telematics solutions
uthanna, General Manager, Roambee Solutions, is upbeat about his company’s technological applications and industry solutions especially for the chemicals, automotive, F&B and pharma sectors as he makes the case for his company’s indigenous technologies in telematics and vehicular technologies. “For the automotive industry our services enable multiple real-time solutions. Examples include the tracking of vehicles from the manufacturing factory to all their dealer locations, predicting ETA (expected time of arrivals) for deliveries of all raw materials to improve JIT (just in time) and JIS (just in sequence) inventory, and management real-time vehicle inventory at VPCs (vehicle processing centres),” explains Muthanna. “Additionally, real-time condition monitoring of shipments ensures safety and damage, tamper, and theft-free transportation of hazardous, high-value, or fragile items such as batteries, engines, glass and other materials,” he continues. Since Roambee sensors also identify ‘shock’ impact in real-time they are used for the condition monitoring and tracking of fragile items transported in re-usable containers such as bins, totes between hubs.
JANUARY 2018 41
“For food and beverage Roambee offers better control and manage inventory through ‘virtual zone-level’ monitoring in warehouses through door to door delivery with real-time tracking of from containers to individual shipments, electronic proof of delivery (on ePod), time and quality reporting, and predictive ETA,”says Muthanna. “For pharma many of the advantages, solutions, and benefits outlined earlier may also be applied to the goods, assets, and needs for pharma, especially with regards to cold-chain monitoring and risk mitigation,”’ continues Muthanna.
For chemicals, Roambee’s real-time cold chain monitoring solutions works indoors, outdoors, and in transit for endto-end visibility.“Real-time monitoring alerts customers to issues and variances in temperature, humidity, or tampering thereby allowing them to take action before the issues with goods and assets become expensive problems,” Muthanna elucidates. From bulk container to individual packages, Roambee’s solutions keep companies informed with insights on prediction of theft risk hazard and spoilage risk, predictive ETA for all deliveries from hub to forward locations, as well as tracking of reusable containers between hubs.
Customers said they want to be able to upgrade ﬁrmware over the air, so Roambee now uses its twoway communication capability to support this need
Real-time Monitoring - Indoors, Outdoors, and In-Transit
For Your Enterprise Goods & Assets Worldwide
42 JANUARY 2018
Roambee Bees are unique in the following ways asserts Muthanna.“Bees have a sensor platform that includes temperature, humidity, tilt, shock, ambient light, motion, and pressure, all in one package that most market devices can’t begin to compare to. Plus, none have the additional end-to-end integrated visibility solution or on-demand business model that Roambee has,”claims Muthanna. Roambee supports three communications protocols whether cellular, Wi-Fi, Bluetooth and works indoors, outdoors, and in-transit with a high level of location accuracy due to its high performance active antenna. They have battery life of 100 days when transmitting at one-hour intervals. Furthermore, bees are portable and can be shipped through common postal carriers, specialised courier services, as well certified for airline transport on many carriers. Roambee’s global sim allows bees to function in 190 countries. “Bees are a two-way communication device, which allows Roambee to push new software or gather specific diagnostics if a device ever goes ‘rogue. Bees have a variety of operating modes, which makes the device suitable for road, rail, air, ocean, or multimodal shipments. Also, bees are certified ‘flight safe’, switching off automatically at certain altitudes, retaining important reporting data, then sending that data when Bees re-enter an approved altitude,” Muthanna points out. Additionally, the Roambee portfolio includes BeeBeacon which extend the Bee’s capability in by adding granular level tracking and monitoring capability; BeeLock for adding layer of security and accountability providing remote control on open/close, and
alerts on unauthorised access and BeeFleet, designed especially for fleets inventory management and optimisation.
Operating systems Roambee’s platform is cloud-based and simple to use. Right out of the box, it integrates with most ERP systems, using the brand’s open APIs (application programming interface). Also, the Roambee portal allows cross-team and multiple real-time access of information to multiple team members. Customer data is secure and private, complying with strict geo laws around data management. Since it is an on-demand service, there is no upfront CAPEX (capital expenditure) investment in hardware, software, or data connectivity.
Applications and upgrades “Roambee’s software is a simple to use as Facebook and WhatsApp, and the company has made it easy to ramp up quickly through Roambee’s tools and portal. Training is often accomplished through an on-line onboarding call, but can also be done on-site at companies’ facilities around the world if needed,” asserts. According to him, to date, response has been very favourable, as evidenced by our steady growth of business across broad range of businesses around the world. The company is highly responsive to customer input and values customer feedback, especially with regards to challenges they may be unique facing. As a case in point for example Muthanna indicated that customers told the company that feature releases need to be faster than what the marketplace offers, so Roambee now offers updated cloud releases every four weeks. “Customers said they want to be able to upgrade firmware over the air, so Roambee now uses its two-way communication capability to support this need. At the customers’ requests, Roambee is currently working on greater localisation of software for unique regional needs around the world,”says Muthanna. Internally, based on the realtime data, Roambee recognised a customer need for actionable information, both current and future, in addition to the real-time alerts. So the company developed proprietary pattern and predictive analytics
to identify and flag disruptions and risks in their current supply chain. In Muthanna’s opinion although Roambee is relatively new to the Middle East, reception in this region has been good thus far. “I recently had the pleasure of meeting more than 30 of Dubai’s industry leaders at a Roambee-hosted event. They said that better, real-time supply chain visibility is critical to collaborative and transparent operations, which in turn are critical to the UAE initiatives around growth and globalisation. Given our strong credentials, Roambee technology seems ideally suited to address needs,”avers Muthanna. Industry in the Middle East is well poised to embrace IoT (Internet of Things) in the supply chain and logistics. This is especially true given the need for cold-chain monitoring as well multi-modal global capability given the huge number of ports and airports moving goods and assets in, out, and across the country.“Also, last-mile delivery visibility is a critical consideration now in terms of meeting customer demands and service expectations,”notes Muthanna. “The business and supply chain landscape is rapidly changing, and businesses understand they need to be faster, more transparent, and better informed to stay competitive,”he concludes.
Roambee’s roaming technologies have the ability to go anywhere in the world. “Bee” because bees are hardworking, diligent, and work together for the good of the Hive. Their role as pollinators is critical to the success of the ecosystem, connecting a wide variety of plants and animals and being a part of their collective health, growth, and success.
JANUARY 2018 43
THE CHANGING FACE OF SHIPPING
New roles for
container lines in e-commerce Container lines must adapt or another entity will step in to fill the need. The opportunities for sea cargo lines lie in their ability to break away from homogenisation of their services and their brands. Tom Craig, President, LTD Management, discusses the need to develop and implement transportation solutions that work for ocean carriers
44 JANUARY 2018
ontainer lines are an important and an integral part of international logistics and the trade network. Yet they can be vulnerable and also be a weak link and player in supply chains, especially with e-commerce supply chains that require velocity and dependability. They are subject to supply chain erosion and are susceptible to performance risk. This situation is not new, but its impact has increased with e-commerce. Container lines formulate prices around ports and port services providers. It is part of the commoditisation of the service. What if they instead charged based on transit time and schedule reliability? It would elevate ocean carriersâ€™ role. Additionally, it would create the muchneeded differentiation for them and help customers to manage inventory velocity. It would distinguish customers and buyers, rate chasers from service chasers. It could also provide indirect assistance for vessel planning and utilisation. The challenge is more muddled. There are two buyers of sea freight - forwarders, OTIs (Ocean Transport Intermediaries)
and BCOs (Beneficial Cargo Owners). As a result of a devilâ€™s bargain made years ago, buyers and sellers traded rates and volumes in contracts. Now the weaknesses in those contracts have created a price and service slide. Parties are selling and parties are buying an undefined and non-premium service. The performance of BCOs is often measured by logistics costs, such as ocean freight. Fierce competition created a push for even lower pricing. Carriers, whether for market share or vessel utilisation, accepted that situation. With de facto revenue caps, lines formed larger alliances, reduced services (canceled sailings, slow steaming) and added larger ships--a push at both the P&Ls (profit and loss) and balance sheets. The result has seen financial chaos including losses, debt and a mix of M&As (mergers and acquisitions) and bankruptcies.
Cutting corners Part of the cost-cutting by lines included reducing customer service staff. Carriers raised the cut-off, defined by volume to have direct sales calls in the hope of meeting revenue targets. What happened
THE CHANGING FACE OF SHIPPING
Retailers are being ‘Amazoned’ from the Amazon effect and from Amazon (and select others) taking over their business. The retail bankruptcies and store closing validate the need for transformation--and that includes their supply chain. Transformation is not an option, it is a necessity. E-commerce, with Amazon, Alibaba, and a few others, has created a dynamic selling transformation. It is now about omnichannel---selling duality. And meeting customer order-delivery expectations is driven by the new Supply Chain.
Brace for changze
was that many customers experienced a lack of customer service employees to address grievances or queries. Thus businesses moved to forwarders. This gave more leverage to even lower rate pursuers than the BCOs. However, things are changing. A fresh wind has blown in with the e-commerce phenomenon. The global e-commerce
market, both B2C (business to customer) and the larger B2B (business to business) have to provide order-delivery velocity. That velocity requires inventory velocity. Retailers, manufacturers, and wholesalers that do not adapt and change to the customer demands and customer control of their buying will learn lessons perhaps the hard way.
The speed of the disruption, chaos, change, and transformation for BCOs, logistics providers, and logistics intermediaries is incredible. It is dynamic, not static. The gap between leaders, laggards, and those resisting change is widening. Amazon is not playing to the same ‘business model’ that all sides have become used to and ingrained as standard practices. Add in other factors, many tied to technology, and the future of all present players is filled with both opportunity and risk. Disintermediation from digitisation is possible for retailers and forwarders, even for retailers--so what does it mean for manufacturers? The need for new services, even 3PSCM (third-party supply chain management) and SCMaaS (Supply Chain Management as a Service) promise strong potential. Throw out the old strategy. Change, transform or face the consequences. E-commerce is growing. Its service demands are different than from what has been expected, offered, and accepted. Lines must adapt to this market segment and its service requirements. Or customers will find their own alternatives and new providers. This also presents a window to break the shortcomings for all stakeholders. The e-commerce sector with its robust future will expand. Global revolutions of selling and supply chain management are emerging. A fresh wind of change and transformation is blowing providing opportunities for those service providers willing to adapt and seize the challenges as they come along. -www.ltdmgmt.com. Tom Craig can be contacted on email@example.com
JANUARY 2018 45
Unilever gets key manufacturing recognition Proudly bearing the ‘Made in UAE’ label, Unilever’s mega Lipton Jebel Ali factory, counted amongst the top-tier manufacturing plants in the world, has been awarded a new, coveted professional accolade
46 JANUARY 2018
nilever’s Lipton Jebel Ali (LJA) factory has boosted its manufacturing credentials by becoming the company’s first production centre in the Middle East to be awarded the ‘World Class Manufacturing’ (WCM) Bronze-level status. Unilever attributed this to the recognition of its continuing commitment to operational efficiencies, waste reduction and creating costefficient processes by using the latest technologies and enforcing smart work practices. Currently only eight out of Unilever’s 260 factories have been conferred the WCM status, placing the LJA Factory in the top three per cent of all Unilever factories globally. The LJA factory is currently Unilever’s largest tea manufacturing facility producing more than 50 million tea cups daily and nearly 20 billion tea cups annually, with exports to 63 countries including Eastern Europe and Canada. “Achieving WCM certification places the Lipton Jebel Ali Factory in the league of premier manufacturing facilities in the world and
demonstrates our commitment to being at the forefront of sustainable solutions, excellence in manufacturing and innovative technologies,”said Sanjiv Kakkar, Executive Vice President of Unilever Middle East and North Africa (MENA), Turkey, Russia, Ukraine and Belarus. “We are proud of the achievements of the Lipton Factory which has been established as the leading industry benchmark for manufacturing performance. We have seen remarkable results ensuring the speedy delivery of premium quality products to global markets with minimal environmental impact,”commented Yasir Jamal, Unilever’s Vice President of Supply Chain for the MENA region. Developed after decades of research, by Japanese scientist Hajime Yamashina, professor emeritus at Kyoto University in Japan, WCM is centred on 10 specific technical and managerial factors to ensure extraordinary performance and manufacturing excellence.
Upon implementation of the WCM guidelines, the LJA factory has seen increased efficiency across all major processes and parameter, including a massive reduction in the time required for cleaning, inspection and lubrication of machines, and considerable improvements in work force efficiency and increase in effective factory layout, Unilever indicated. Following the WCM rollout, the LJA factory has also achieved zero waste to landfill status where all non-hazardous waste is diverted from landfills, including plastic, cartons, metal and liquid waste, thereby impacting the environment minimally. The LJA factory is two-time winner of the Mohammed Bin Rashid Al Maktoum (MRM) Award for ‘Best Manufacturing Unit’ in UAE in 2008 and 2013. As a responsible corporate citizen, Unilever is committed to reducing its environmental impact via increased efficiencies and smart use of resources and is on track with its global ambition of becoming ‘carbon positive’ by 2030.
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48 JANUARY 2018
Although still a net importer of crude, the United States’ growing place as an energy exporter and low-cost supplier could fundamentally change the country’s position in the global energy landscape. Furthermore, it could change its views on geopolitics and national security, writes John England, Vice Chairman, US Energy and Resources Leader and US and Americas Oil and Gas Leader, Deloitte, shares his thoughts on how the industry will fare this year
ome may see the United States’ new found energy strength as allowing the nation to go further down an isolationist path as it seeks the dream of energy independence. Another view might be that its strength as an energy supplier simply gives it more leverage in the global, free trade economy that the United States has historically supported. The first test of this may come in the form of NAFTA (North American Free Trade Agreement) renegotiation discussions. Mexico shows promise as a market for US natural gas and refined products but perhaps only if we are able to maintain a stable trading relationship. The outcome of this negotiation may be indicative of our future path.
US shale cost reductions are stickier than expected As I wrote in my previous industry outlook, the cost reductions achieved by US unconventional producers have been remarkable. The question coming into 2017 was whether these reductions are sustainable. The evidence seems to tell us they are, with breakeven costs across the major US shale plays still 30-50 per cent below the levels of early 2015.
outlook on oil and gas JANUARY 2018 49
In looking at cost reductions, it’s also worth considering how US natural gas producers have lowered and sustained costs, especially in the Marcellus and Haynesville gas plays in Eastern Texas and Louisiana. If this is indicative of the path for oil, costs may stay down (and need to) for a long time.
The rise of natural gas demand continued during 2017, but it was overshadowed by continued lowcost supply growth from a number of regions, such as the United States, causing global pricing to remain relatively low
50 JANUARY 2018
However, it’s also important to remember that a healthy industry also needs a healthy ecosystem of producers, service providers, manufacturers and associated suppliers. Although producers are surviving, and in some cases growing again, many in the oilfield services industry continue to suffer, and further consolidation may be in the cards.
OPEC may be running out of cards The rise of natural gas demand continued during 2017, but it was overshadowed by continued low-cost supply growth from a number of regions, such as the United States, causing global pricing to remain relatively low. The impact of US LNG exports (both
current and expected) on the global market has been significant and has helped quickly turn a seller’s market into a buyer’s market. While the long-term growth of natural gas and LNG still seems likely, the economics of investment in LNG is more challenging than ever as long-term oil-linked contracts are replaced by shorter ones, based on a variety of natural gas indices, as buyers exert more leverage in the market. As long as I’m talking about cards, OPEC still seems to be playing with the same hand. The production cuts announced last year, in coordination with Russia, which were then extended six additional months, seem to have helped start a re-balancing of the market.
However, although prices have recently moved up above the mid-US$ 50 per barrel range, slow demand growth coupled with supply increases in the United States, Brazil, Iran, Libya, and Nigeria have, as yet, limited the pace of a return to market equilibrium. At the end of November, it was announced that the current level of cuts would be extended another nine months to the end of 2018, with Libya and Nigeria adding a promise not to raise their production; but, at some point, the market still needs a real demand boost to get prices moving upward in a meaningful way. Unfortunately, right now it’s not clear if that card is still in the deck. Barring that, only a supply shock is
likely to move the market significantly, and that’s not really how we want to re-balance the market. OPEC’s role will likely continue to be a very important one for many years to come, but the rise of US tight oil has certainly changed the playing field and will likely continue to do so for the foreseeable future.
Natural gas—the fuel of the future The rise of natural gas demand continued during 2017, but it was overshadowed by continued low-cost supply growth from a number of regions, such as the United States, causing global pricing to remain relatively low. The impact of US LNG exports (both
current and expected) on the global market has been significant and has helped quickly turn a seller’s market into a buyer’s market. While the long-term growth of natural gas and LNG still seems likely, the economics of investment in LNG is more challenging than ever as long-term oil-linked contracts are replaced by shorter ones, based on a variety of natural gas indices, as buyers exert more leverage in the market. The digital cavalry is coming, right? Having now painted a less than rosy picture for the industry, I thought I’d migrate to the hopeful side of this piece: The digital revolution is here. So, what exactly does that mean? Actually, it could mean the difference between thriving, surviving, or just not making it. As previously mentioned, the efficiency gains on per barrel of oil equivalent since the downturn began in 2014 have been remarkable. However, we may be in the early innings of the game when it comes to the digital revolution and the opportunities it presents. In a world where the assumption that energy demand would rise forever seems to be wavering, one path to success is to be a low-cost provider, whether of energy commodities or of the equipment and services needed to produce these commodities and get them to market. The proliferation of increasingly lower-cost digital technology is already unleashing innovative ideas across the oil and gas value chain. From how we develop a field, procure goods and services, and move product to all the HR and back-office services to support the core businesses, digital technologies could change everything, resulting in radical efficiency gains and improvements of both top and bottom lines. This does not mean everyone will win. The digital age is seemingly moving faster than our previous industrial revolution did and could naturally create winners and losers. However, companies that are willing to innovate and invest can unlock tremendous value and may remain financially strong regardless of what happens to global supply and demand trends. So, the digital cavalry is coming, but it likely won’t rescue everyone— possibly only those who are brave enough to embrace it. -John England Vice Chairman, US Energy & Resources Leader and US and Americas Oil & Gas Leader Deloitte LLP email: jengland@ deloitte.com
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The agreement comes after an extensive 18-month process during which the Arab Air Carriers Association (AACO) rigourously assessed a variety of technology and distribution providers to support the long-term needs of its member airlines
he Arab Air Carriers Association (AACO), comprising 15 airlines from the Middle East and North Africa (MENA), have entered into a 10-year framework agreement with Amadeus for distribution services. The renewed contract follows a similar duration agreement with 13 AACO airlines signed in 2008. The airlines participating in the framework agreement to date carried 110 million passengers in 2016, and estimates are that these airlines will serve over one billion passengers during the decadelong duration of the agreement.
For the participating AACO airlines, the partnership will drive economies of scale, technological efficiencies and support the airlines’ vision for distribution in the future. Participating AACO carriers will work with Amadeus to explore how to further develop and maximise the potential of Amadeus’ travel agency network, including enhanced merchandising and retailing capabilities. Amadeus’ technological capabilities and innovations were key deciding factors. As a partner with clear commitment to airline distribution, evidenced by ongoing investment and a growing travel agency network, Amadeus will equip participating
AACO airlines with the tools to pursue the right distribution strategy to meet their individual business goals. “This efficient, long-term agreement represents a landmark for a number of our members with a technology partner dedicated to supporting new business strategies. This framework secures a solid foundation for AACO members as they continue to innovate and it will remain open for additional member airlines that wish to join in the future,” commented Abdul Wahab Teffaha, Secretary General, AACO. “Amadeus’ focus on innovation and technology, combined with a partnership
Arabian carriers partner with Amadeus 52 JANUARY 2018
approach were in close alignment with the requirements identified by the members of AACO’s taskforce for future distribution strategies,” affirmed Julia Sattel, Senior Vice President, Airlines of Amadeus. “Whether their focus is on providing travellers with a premium product, capitalising on the region as a hub between Asia and Europe, or pursuing a partnership approach, airlines in the Middle East see the value in an omnichannel distribution strategy, to maximise their sales with travellers across the world,”asserted Maher Koubaa, Vice President, Head of Airline Group, Middle East and Africa at Amadeus.
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ENHANCING THE BUSINESS OF LOGISTICS
ENHANCING THE BUSINESS OF LOGISTICS
ENHANCING THE BUSINESS OF LOGISTICS
OIL AND GAS Diversification is key
BALANCING CARBON AND CASH Greenhouse gases and the supply chain
CARGO CARRIER Emirates SkyCargo Tristar
Transforming the supply chain Is blockchain the answer?
The pharma chain
The talent shortage
Hellmann identiﬁes today’s trends
The value chain
Identification and practice
Of precious stones
From gap to crisis
Real time solutions
Emirates Sky Cargo and Cargolux
Genavco’s accolade Celebrating 50 years
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KUWAIT ENERGY OUTLOOK
Kuwait to pursue increased oil and gas output
A new expansion drive will see Kuwait invest US$ 120 billion in hydrocarbons projects through to 2030, with the aim of boosting both upstream and downstream production capacity ahead of an anticipated rise in energy demand. This Oxford Business Group report has the details
peaking at a recent industry conference, Nizar Al Adsani, CEO and Deputy Chairman of the board at the stateowned Kuwait Petroleum Corporation (KPC), announced plans to increase oil production capacity in the north of the country, with the aim of producing 4 million barrels per day (bpd) by 2020. At present, the country produces around 2.8 million bpd. Al Adsani told attending delegates that two such projects in the north of the country would be rolled out in the first quarter of 2018. The first consists of two oil-gathering centres, scheduled for launch in March next year, together with an enhanced recovery technology initiative, while the second project comprises new facilities
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KUWAIT ENERGY OUTLOOK
at the Fars reservoir in the Ratqa oil field, where operations are scheduled to begin in May 2019. The Fars reservoir holds the majority of the Ratqa fieldâ€™s reserves and is key to Kuwaitâ€™s production plans. Once on-line, the US$ 7 billion project is expected to add 60,000 bpd to capacity.
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Gas production to rise to 1bn cubic feet per day In addition to oil, KPC plans to increase gas output to 1bn standard cu feet per day (scfd), with higher gas production expected to come from the development of untapped deposits in the northern region. Operations are slated to launch in 2023.
KUWAIT ENERGY OUTLOOK
Kuwait expects demand to rebound in 2019, with the countryâ€™s oil output reaching levels witnessed before the OPEC cuts were implemented, thereby helping to boost overall economic growth As of late October Kuwait Oil Company, a subsidiary of KPC, was producing 210 million scfd, with volumes forecast to surpass 500 million by January 2018.
Investing in refining capacity In tandem with the upstream developments, Kuwait is investing downstream, aiming to boost refining capacity from current levels of 900,000 bpd to 1.4 million by late 2019 or early 2020. Planned projects include the rehabilitation and upgrade of two existing
refineries, Mina Al Ahmadi and Mina Abdullah, as part of the Clean Fuel Project run by Kuwait National Petroleum Company, the downstream arm of KPC. The upgrades are expected to boost the facilitiesâ€™ combined capacity by 64,000 bpd to 800,000 bpd. -www.oxfordbusinessgroup.com
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Genavco turns 50
Genavco, one of the UAE’s oldest and most recognised companies, pulls out all the stops to celebrate and showcase its 50 years of accomplishments and successes
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ong-established General Navigation and Commerce Company (Genavco) recently celebrated 50 years of its founding in the UAE with a sumptuous commemorative reception at a major five-star hotel venue in Dubai. The occasion and gala ‘Golden Jubilee’ celebrations was attended by especially invited VIPs, select company guests, principals, customers, heads of various Juma Al Majid (JAM) Group companies, business unit chiefs, current and resident ex-employees. The well-known company was established in 1967 in Dubai by the visionary and pioneering entrepreneur Juma Al Majid, a towering corporate personality, as the flagship company of the eponymous Juma Al Majid Group. It commenced operations as the representative agency for Detroit Diesel Engine (DDC), Allison Transmission and Terex Construction Equipment followed by BP,
Isuzu, Wirtgen, Liebherr, JLG, John Deere and CompAir among others. In its 50-year passage the company has grown exponentially in the UAE and has become one of the largest and most trusted names in the region’s commercial vehicles and heavy equipment markets in the country. “Genavco has and continues to play a prominent role in building the UAE and has left a lasting imprint in the country’s trade and construction sectors. Our highly diversified company has been involved and associated with several landmark and infrastructural development project including airports, seaports, highways and race tracks. Genavco’s contribution and enduring growth is attributable to the professional leadership and guidance provided by our founder and Chairman, HE Juma Al Majid,” stated Vice Chairman HE Khalid Al Majid.
King of road construction With a current employee force that exceeds 300, multi-award winning Genavco has acquired top credentials and set itself on the road to success in the UAE by emerging as a leading representative name in road construction equipment. It has acquired the franchises of leading equipment brands for road construction and quarries from renowned manufacturers as Wirtgen, Vogele, Hamm, Weiro, Kleemann and Benninghoven. The company also has also successfully partnered with the best brands in material handling and access equipment. It has forged relationships with Crown, Stow, Flexi and JLG to name a few leading names to become a leading provider of material and services in this sector. Since its introduction in 1982, the presence of the key Isuzu brand has been the highlight of the Genavco portfolio. It has considerable
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applications in the industrial, construction, transportation and distribution segments. Genavco’s association with BP dates back to 1968 immediately after the inception of the company. BP has also been inextricably linked with the discovery of oil in the country. With the wide range of BP
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Lubricants led by Visco and the Vanellus family of engine oil, Genavco’s BP products continue to enjoy a strong market share in the country. “The continuing legacy of Genavco lies in our core corporate values of passion and commitment and our zeal to inspire
and excel. Our successful story bears all the hallmarks of principles we cherish and implement. We are 50 years young and as we enter 2018 we are more determined than ever to accomplish even more and to be the perfect partner for our many associates and principals,” affirmed Khalid Al Majid.
SUCCESS IS CLOSER THAN YOU THINK
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A DP World Company
Published on Jan 11, 2018
Published on Jan 11, 2018
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