July/August 2017 Issue 39
ENHANCING THE BUSINESS OF LOGISTICS
Ports Abu Dhabi
UAEâ€™s key resource
Aviation and shipping
Needs the right distribution partner
Driving to success
KHALIFA PORT FREE TRADE ZONE
THE FUTURE OF TRADE IS HERE A new Free Trade Zone is emerging. The Khalifa Port Free Trade Zone in KIZAD spans 100 square kilometres of prime industrial real estate. Representing 25% of the total land mass of KIZAD, the new Free Zone is in the heart of our integrated offering of industrial clusters at the doorstep of the technologically advanced Khalifa Port. It is the most sought after industrial address in the UAE due to its highly competitive leasing rates, dedicated customer support and world-class multi-modal transport infrastructure that provides outstanding access to local, regional and international markets through its existing sea, air, road and future rail infrastructure. Join the portfolio of investment sectors doing business in the largest industrial zone in the region, and now with access to Free Zone land, this is indeed the Future of Trade.
This is the Khalifa Port Free Trade Zone.
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Challenges lead to growth SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: +971 4 3795678/2698011 Email: email@example.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven firstname.lastname@example.org Manager: Brian Cordeiro email@example.com Managing Editor: Munawar Shariff firstname.lastname@example.org Art Director: B Raveendran email@example.com Production Manager: Roy Varghese firstname.lastname@example.org
Printed by United Printing Press (UPP) – Abu Dhabi Distributed by Tawseel Distribution & Logistics – Dubai
This rings true to all aspects of a business or industry. If we look at the articles inside this issue, this will ring true to most stories as well. Our UAE country report with a focus on Sharjah looks at its two core industries aviation and ports and shipping and how these baseline core businesses of the emirate are steadily moving on and up despite global challenges and its local repercussions. That’s because given all its odds these businesses have chosen to adapt to all situations the market forces throws at them and continue moving even if progress is not at desirable levels. Because eventually growth will appear and progress will begin. It is these times of slowdown that companies can really sit back and focus on and identify what needs to be done for that forward surge. Our cover story on Abu Dhabi Ports takes a comprehensive look at the port operations as well as the many businesses it handles. We got an exclusive opportunity to speak with CEO Captain Mohamed Juma Al Shamisi about all aspects of the entity’s activities as well as a perspective on its vision for the year and near future. This government entity is at the core of the growth and prosperity of the emirate, country and region. All of this and so much more in our combined July/August issue. So as most of us try and take sometime off in these summer months, I hope we can also take stock, think about our next moves and return rested and re-energised. See you in September!
Munawar Shariff Managing Editor email@example.com Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused. Articles and information contained in this publication are the copyright of Signature Media FZ LLE & SIGNATURE MEDIA LLC and cannot be reproduced in any form without written permission.
JULY/AUGUST 2017 3
July/August 2017 Issue 39
ENHANCING THE BUSINESS OF LOGISTICS
22 06 News 16 Country report - UAE Sharjah’s growth trajectory Sharjah has somewhat been left behind by its neighbouring emirates’. But the government and business community are taking steps to fix this
22 Cover Abu Dhabi Ports - UAE’s key resource Captain Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports, talks about the growth of the maritime industry in the region and its impact on the UAE, the Middle East and the world
32 Air freight analysis Strong start for air freight IATA’s David Oxley presents a timely update on the status of the air freight industry 4 JULY/AUGUST 2017
36 Technology The ultimate enabler for a digital supply chain The digital revolution is enhancing and even transforming existing process within supply chains
38 Technology How can we build a Smart City? A city of the future, where street lights are controlled by motion sensors and sat navs tell you where to find a parking space, isn’t a farfetched dream any more
42 Shipping Container database - five million and counting Douglas Owen, Secretary General of the BIC’s non-profit BoxTech Technical Characteristics Database on the company’s exponential growth
44 Guest column You snooze, you lose Despite the industry-wide slump, GEFCO has grown. Here’s how
50 Ecommerce Distributing with the right 3PL partner A guide on how to get it right
58 UD Trucks Driving to success UD Trucks - lucky and successful despite the shrinking GCC market
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DP World and Kazakhstan to build Port Community System for Eurasian Transcontinental Trade Corridor Two Memorandums of Understanding (MoU’s) were signed between global trade enabler DP World and the Kazakhstan government for the development of a Port Community System (PCS) and to integrate customs processes ahead of the Astana Economic Forum. PCS is a one-stop electronic platform developed by DP World company Dubai Trade,
that enables the exchange of information between organisations involved in maritime, inland and airport processes. The aim is to improve ease of doing business in Kazakhstan’s ports and freezones through paperless transactions that remove long queues in administrative offices, delays and duplication. The first agreement was signed between DP World and the National Company“Kazakhstan
Temir Zholy”(KTZ) for the establishment of a joint venture company to implement and manage the PCS system with the aim of creating a multimodal transport corridor (the Eurasian Transcontinental Corridor), featuring automated logistics processes for cargo delivery and the unification of logistics centres, sea and dry ports into a single transport and logistics network. The second MoU was signed between DP World, KTZ and the Committee of State Revenues of the Ministry of Finance of the Republic of Kazakhstan (Customs) to ensure the integration of customs processes into the online portal. Earlier this year, DP World also announced its involvement in the development of a Special Economic Zone (SEZ) in Aktau to boost trade and logistics in the country. It builds on DP World’s management advisory services contract with the Port of Aktau, Kazakhstan’s main cargo and bulk terminal on the Caspian Sea. The company also provides advisory services under a separate contract with Kazakhstan Temir Zholy (KTZ), Kazakhstan’s national railway company, for the development of the Khorgos SEZ and Inland Container Depot.
Munich Airport CEO to head ACI Europe Dr. Michael Kerkloh, the President and CEO of Munich Airport (FMG), was elected president of Airport Council International (ACI), the umbrella organisation of Europe’s international airports. Dr. Kerkloh has served on the board of ACI Europe for many years, most recently as the organisation’s first vice president. ACI Europe represents the interests of more than 500 airports in 45 European countries. “European airports face major challenges today. These include the escalating capacity crunch at the big European hubs, the steadily rising costs for aviation security, the structural transformation within the airline industry, and the need to cut emissions. These issues are at the top of the agenda, and
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cross-border cooperation among airports will play a key role in addressing them,”said Dr. Kerkloh as he accepted the appointment. Dr. Kerkloh recently completed a four-year term as the president of the German Airports Association (ADV) and is a member of the executive committee of BDL, the German Aviation Industry
Association (BDL). He has been in charge at Munich Airport since September 2002, serving as FMG’s president and CEO as well as the company’s labour director. Under his leadership, Bavaria’s gateway to the world has moved up to join the ranks of Europe’s top air transportation hubs, with annual traffic exceeding 42 million passengers in the most recent operating year. FMG (Flughafen München GmbH), incorporated in 1949, operates Munich Airport, which opened at its present site on May 17, 1992. It is jointly owned by the Free State of Bavaria (51 percent), the Federal Republic of Germany (26 percent) and the city of Munich (23 percent). The FMG corporate group, with its 15 subsidiaries, employs more than 9,000 people.
With a total workforce of about 35,000, employed by about 550 companies, Munich Airport is one of Bavaria’s largest workplaces. Within just a few years of opening, Munich Airport developed into a major air transportation hub and was firmly established as one of Europe’s 10 busiest airports. Munich Airport now offers connections to more than 250 destinations all over the world. In 2016 Bavaria’s gateway to the world has handled approximately 400,000 flights with over 42 million passengers. Bavaria’s gateway to the world became the first – and is so far the only – airport in Europe to be honoured with the prestigious title of“5-Star Airport”by the London-based Skytrax Institute.
Emirates SkyCargo, the freight division of Emirates, transported the first car designed and built entirely in the U.A.E. to France where it will be exhibited during the prestigious ‘24 hours of Le Mans’ endurance race. Called Design-1 the sports car was built by Jannarelly Automotive with Equation Composites LLC – the first company to have acquired a car-manufacturing license in the country. Inspired by the classic sports cars of the 1960s, the Jannarelly Design-1 is a lightweight retro-futuristic car built using hi-tech composite materials. Equation Composites uses a small team of specialists to build each car, valued anywhere between US$70,000 and US$90,000, allowing for a high degree of customisation according to the specific requirements of customers. Emirates SkyCargo worked with Prodex worldwide, a specialist freight forwarding company providing specialist transport, logistics and warehousing services across a number of domains including the aerospace and automotive industry, to transport the Jannarelly Design-1 from Dubai to Lyon. Emirates SkyCargo offers a specialised transportation solution - Emirates SkyWheels – to transport high value and premium automobiles. Freighter service to Luxembourg begins Emirates SkyCargo has operated the first of its scheduled weekly freighter service to Luxembourg on 12 June 2017. On arrival at Luxembourg, the freighter was welcomed with a traditional water cannon salute. Emirates SkyCargo’s freighter operation between Luxembourg and Dubai World Central is one of the first steps in the implementation of the strategic operational partnership between Emirates SkyCargo and Cargolux Airlines announced in May this year. Emirates SkyCargo will operate its Boeing 777 freighter aircraft on this route providing a total cargo capacity of over 100 tonnes. The Boeing 777 freighter aircraft is one of the most modern and technologically advanced freighters available with one of the lowest fuel burn of any comparable size aircraft. The partnership between Emirates SkyCargo and Cargolux allows for customers of both carriers to access a wider range of destinations and services through block space
Emirates SkyCargo transports the first car designed and built in the UAE and interline agreements between the two players. Emirates SkyCargo’s new freighter service facilitates increased connectivity between Cargolux’s hub at Luxembourg and Emirates SkyCargo’s hub at Dubai adding to the thrice weekly freighter service that Cargolux operates to Dubai World Central.
At Luxembourg, ground handling of the Emirates SkyCargo’s freighters will be carried out at the same facility as Cargolux and at Dubai, Cargolux freighters are handled by Emirates SkyCargo allowing for seamless transit of cargo between the two air cargo operators. Smooth movement of cargo is also enabled by other factors including the common EU Good Distribution Practices (GDP) certification of both hubs. Transporting horses across three continents Emirates SkyCargo has successfully transported some of the world’s best show jumping horses across three continents in the space of a month. The horses were transported from Liege in Belgium to compete in the first three legs of the Longines Global Champions Tour in Mexico City, Miami and Shanghai in April 2017. The air cargo carrier operated a total of 10 dedicated freighter flights each carrying 25 horse stalls to transport the equine champions and their grooms. Emirates SkyCargo worked closely with Peden Bloodstock, a specialist in horse transportation to manage the complex logistics involved in flying close to 100 horses across four different countries within the space of a few weeks.
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14,000 TEU Tampa Triumph Vessel makes maiden call at Gulftainer’s Northern Container Terminal in Saudi Arabia Gulftainer, the world’s largest privately owned independent port operator, marked the maiden call of Evergreen Marine Corporation’s (Evergreen’s) 366 m long Tampa Triumph vessel with a capacity of 14,000 twenty-foot equivalent units (TEU) at the Northern Container Terminal (NCT) in Jeddah Islamic Seaport. Taiwan-based Evergreen currently operates the fourth-largest container fleet in the world, comprising over 190 ships
Al-Futtaim Logistics launches exhibition logistics services
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with a combined capacity of approximately 850,000 TEU. Its first ultra-large container vessel (ULCV), the Tampa Triumph, was deployed for the new Ocean Alliance MED1 eastbound service and is scheduled to call to Jeddah Port on weekly basis. Tampa Triumph was built at the Japanese Imabari Shipyard and was delivered to Evergreen on the 31st March 2017. This vessel is the second of five 14,000 TEU vessels to be delivered to Evergreen this year.
Gulftainer expanded its business to Saudi Arabia in 2013 through the acquisition of a majority stake in Gulf Stevedoring Contracting Company (GCSSO). The company now operates the Northern Container Terminal in Jeddah, the Jubail Industrial Port (JIP) and the Jubail Commercial Port (JCP). Gulftainer’s Saudi Arabia terminals registered a strong performance in 2016, with NCT and JCP collectively achieving an impressive 10 per cent spike in container volumes.
Al-Futtaim Logistics now extends its competence to individual and corporate customers throughout the Middle East who require local and international moving services, handyman service, and storage/ warehousing solutions to hold stock for their events in the nearby markets. Committed to making the logistics process of exhibitions and events effortless for its customers, the company offers easy payment solutions.
Al-Futtaim Logistics’ global reach in 150 countries through a key strategic partnership, extends to turnkey freight solutions which include bespoke handling for sporting, automotive and retail events, as well as product launches, roadshows and local/ international trade fairs and exhibitions. Thanks to its well-established strategic advantage, Al-Futtaim Logistics recently signed its first partnership agreement with Dubai Export Development Corporation, (Department of Economic Development, Dubai’s Export Promotion Agency), extending logistics support to Dubai Exports and its members, as well as during their exhibitions, missions and promotional activities overseas. Making light of special heavy-lift requirements for venue launches such as high-end restaurants, as recently seen with the installation of Lexus cars to refresh the conceptual display every quarter at the world’s 2nd Intersect by Lexus, the team takes in its stride regular event requirements such as moving containers of fabric and parcels of marketing collaterals.
Bahri adds 38th VLCC to its growing fleet of multipurpose vessels Bahri, a global leader in transportation and logistics, reinforced its position as the world’s largest owner and operator of Very Large Crude Carriers (VLCCs) with the addition of ‘MAHARAH’, a 300,000-dwt carrier to its fast-growing fleet. Built by Hyundai Heavy Industries (HHI) in South Korea, ‘MAHARAH’ is Bahri’s 38th VLCC. Built to the latest environmental and fuelefficient technical specifications,‘MAHARAH’ was handed over to Bahri during a delivery ceremony held at HHI’s Mokpo shipyard in South Jeolla Province, South Senior officials from both organisations attended the special event. Bahri Oil, one of Bahri’s six business units, will be responsible for the commercial operation of ‘MAHARAH’. Bahri Oil has several long-term contracts with first-class charterers, with volumes exceeding its owned fleet capacity.
Hitachi content platform portfolio transforms cloud Infrastructure to achieve over 60 per cent TCO savings versus public cloud Hitachi Data Systems (HDS), a wholly owned subsidiary of Hitachi, Ltd. announced major updates to the Hitachi Content Platform (HCP) portfolio, providing a path to digital transformation for enterprises while achieving significant cost savings over public cloud. The integrated portfolio offers the capability to increase profitability and productivity through cloud economics and by applying analytics to uncover new opportunities and insights. It also
can reduce risk by enhancing security, availability and data protection. With this release, HCP gains a 400 per cent increase in usable storage per cluster, 67 per cent more storage node capacity via 10TB drives, a 55 per cent increase in objects per node and simplified software licensing so customers can achieve over 5x
lower storage costs than public cloud, which leads to over 60 per cent TCO savings than public cloud for enterprise use cases. The HCP portfolio is a unique endto-end solution that eliminates silos; promotes collaboration; enables governance and compliance; provides safeguards for sensitive data; automates management in
private, hybrid and multicloud environments; and surfaces insights through sophisticated search and analytics. The HCP portfolio includes Hitachi Content Platform for software-defined object storage; HCP Anywhere for file synchronisation and sharing and data protection capabilities; Hitachi Data Ingestor (HDI), an elastic-scale cloud file gateway; and Hitachi Content Intelligence, where rapid insights emerge from your data.
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Dubai Airports selects Quintiq for automated planning solution to deliver world-class passenger experience Quintiq, a Dassault Systèmes brand and global leader in supply chain planning and optimisation (SCP&O), has been selected by Dubai Airports to plan and schedule its fixed resources at Dubai International and Dubai World Central. The Quintiq solution will automate the planning process for airport stands, gates, baggage belts and checkin counters to increase overall efficiency, reliability and passenger satisfaction. The solution went live at Dubai International on April 18, with implementation at Dubai World Central to follow soon. Dubai International is the world’s busiest airport for international passengers. It serves 90 airlines flying to more than 240 destinations across six continents; in 2016, it served 83,654,250 passengers. Dubai World
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Central, slated to be the region’s airport of the future, launched cargo operations in 2010 and passenger flights in 2013. Quintiq enables automated planning of all of Dubai International’s fixed resources. From its 260 airport stands to 143 gates, 561 check-in counters to 28 baggage belts, airport planners will have full visibility of resource allocation. They adapt this allocation to fit specific airline preferences and further streamline passenger flow. Improved passenger flow means that the two airports can now handle increasing traffic without sacrificing passenger experience. A positive experience ensures that passengers and airlines continue to choose the airports for their needs within the region, resulting in increased revenue for the company.
Siemens and TCS join forces for industrial IoT on MindSphere Tata Consultancy Services a leading global IT services, consulting and business solutions organisation, and Siemens unveiled a new collaboration around Internet of Things (IoT) innovation. Focused on customers in the manufacturing, energy, building technology, healthcare and railway industries the partnership will enable customers to benefit from new data insights and services based on MindSphere, the cloud-based, open IoT operating system from Siemens. Customers will benefit from new applications for MindSphere by TCS, enabling new digital and analytical services such as predictive maintenance and energy monitoring. Siemens and TCS solutions will enable customers to explore new models that capitalise on IoT innovation and realise the opportunities presented by the digital economy. The digitalization of industry - in which digital technologies are radically reshaping entire industries - is set to create significant opportunities for businesses of all shapes and sizes around the world. Initially, the program will be focused in the manufacturing sector, where IoT has already gained significant traction due to the immense data volumes generated in the production process, enabling major innovations in system performance and connectivity. Through this partnership, TCS will also support developments around MindConnect Nano, the cloud gateway that can be used to connect production to cloud-based analysis of machine and production data. In addition, this new partnership will see Siemens and TCS work to explore implementing the MindSphere core platform, including operation and support services such as application and infrastructure management as well as analytical and testing services.
Customs World showcases Dubai Customs experience to Ghanaian Vice President In a step to develop relations with Ghana and to build up more momentum towards an official business partnership, a delegation from Customs World, a subsidiary of Ports, Customs and Free Zone Corporation (PCFC), has recently visited the Republic of Ghana to attend the Port Efficiency Conference in the Ghani capital Accra. The delegation included Faisal Eissa Lutfi, CEO of Customs World, and Adolphe Chaiban, Head of Development at Customs World. Ghana organised this conference and invited Customs World to learn about the best practices followed in customs and ports as
part of a reform national program. Customs World was selected to inspire and talk about the best useful customs practices adopted at Dubai Customs, which has the best customs experience in the world. As part of the visit, Customs World delegation met with Dr Mahamodu Keerimatin,VicePresident of Ghana, Cuaco Aufori, Minister of Transport, Alan Kerematin, Minister of Trade and Industry, Mohammed Awal, Minister of Business Development and Cufi Niti, General Commissioner of Revenue Authority in Ghana. The Ghanaian ministers and senior officials listened to a presentation from
Faisal Lutfi on Dubai Customs experience in promoting customs procedures and services, and its global distinctive role in innovating new customs services and products. The presentation also included information on the advanced applications and experiences that Customs World can provide to advance customs procedures and services in the friendly countries. The Customs World visit will be followed by other visits and meetings with highest Ghanaian officials towards an official partnership that will see Ghanaian adopt the best practices followed by Dubai Customs.
Solar panels to power four more Majid Al Futtaim malls by 2018 Enova – the regional leader in integrated energy and multitechnical services – will supply solar power to four Majid Al Futtaim malls, delivering expected savings of AED 80 million (about USD 21 million). Enova’s first solar power deal with Majid Al Futtaim Properties was signed on World Environment Day, the United Nations’ annual initiative to promote sustainability. The deal is set to cut the four malls’ carbon dioxide emissions by 3,200 tons per year – the equivalent of taking 700 cars off the roads – and will see the
technology installed at Dubai’s Mall of the Emirates, City Centre Deira, City Centre Mirdif and City Centre Fujairah. Following City Centre Me’aisem and My City Centre Al Barsha, the first malls to be fitted with solar panels a year ago, this new agreement covering
four more UAE malls strengthens Majid Al Futtaim’s pioneering role in the region and is the first solar project to involve Enova. Solar panels contain photovoltaic cells, which absorb energy from the sun and convert it into electricity. The power
generated is then fed directly into the malls’ electrical network. Under this deal, about 12,500 panels will be installed across the buildings, covering an area of 25,000 square metres, including 1,020 carports. Feasibility studies are underway with a view to rolling the project out across other assets. The scheme will enable Majid Al Futtaim Properties to generate 6,000 MWh of electrical energy annually, earning it points with the LEED certification system (Leadership in Energy and Environmental Design), the globally recognised green building benchmark.
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UAE Ministry of Health & Prevention partners with Jafza to develop pharmaceutical sector The UAE Ministry of Health and Prevention along with Jafza, a DP World company, have signed a Memorandum of Understanding (MoU) for the development of the healthcare and pharmaceutical sector in the country. Under the agreement, Jafza will develop details for the licensing of pharmaceutical factories within the Free Zone and help them promote public health. The Ministry will approve licenses for existing factories based on the industrial license issued by Jafza, regardless of the nationality of their owners. Factories need to register their products and declare whether they are for export or distribution. For use in the UAE, companies need to obtain a medical warehouse license. Both organisations will exchange knowledge and remove any barriers to the development of the pharmaceutical sector in
the Free Zone. They will also review the process of obtaining approvals and permits from the Ministry, enabling Jafza to attract more foreign investment in the sector. The agreement is part of Jafza?s efforts to enhance the healthcare sector by providing the environment for companies to grow and establish“Made in Dubai”pharmaceutical products, using Jebel Ali’s infrastructure to access regional and international markets. In 2016, the market value of drugs in the UAE amounted to USD 2.6 billion. By 2020, spending on medicine is expected to reach USD 3.5 billion and by 2025 USD 3.4 billion, driven by population growth, changing morbidity and the use of modern medicines such as biotechnology drugs. The UAE currently has 17 pharmaceutical factories with
34 expected by 2021. The Ministry supports them in establishing strategic partnerships with international manufacturers to produce innovative medicines and has five such agreements in place. The total medicine market in UAE reached USD 2.6 billion in 2016, according to a recent report by Business Monitor International. It predicts that the medical equipment market in the Middle East and North Africa will grow 8.8 per cent year-on-year from 2015-2020, opening up opportunities for health care and pharmaceutical companies. Multinational companies in the healthcare and pharmaceutical sector are currently based in Jafza, such as Johnson & Johnson, Colgate, Roche, Sanofi, GlaxoSmithKline and Quest Vitamins.
Dubai Free Zones Council approves joining Taqdeer Award, supports 10X Initiative In his capacity as Chairman of the Dubai Free Zones (DFZ) Council, His Highness Sheikh Ahmed bin Saeed Al Maktoum, Chairman of Dubai Civil Aviation Authority and Chairman of Emirates Group, presided over the sixth council meeting, held at the Executive Council Office in the Emirates Office Tower. The meeting approved proposals for DFZ Council to join the Taqdeer Award and support the Dubai leadership’s 10X Initiative. The session kicked off with a brief about the Taqdeer Award that recognises companies for their progressive labour policies
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and seeks to inspire them to improve their labour practices. Launched by His Highness Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, Crown Prince of Dubai and Chairman of Dubai Executive Council, the
award seeks to position the UAE among the world’s top businessfriendly and worker-friendly countries. Council members agreed to participate in the award, as its message aligns with the free zones’ drive to foster a
culture of employee happiness within their communities. As the next step, a representative of the Economic Statistics Department at the Dubai Statistics Center updated the council on the progress of the database that the centre is collating in partnership with the free zones. The presentation included a demonstration of phase one that comprises open data accessible to authorised personnel of all free zones in Dubai. The members unanimously agreed to step up the efficiency of their collaboration in providing the Dubai Statistics Centre with the information required.
AGCO Smart Logistics closes digital gap The ELA, a federation of 30 national organisations from across Europe, awards the most innovative logistics and supply chain transformation projects each year. The contest is played out amongst award-winning projects from national competitions. This year, the ELA jury selected AGCO’s initiative as the best. The AGCO Smart Logistics initiative consists of innovative and collaborative processes building on an integrated Supply Chain Management IT solution and by joining forces with 4flow as our neutral 4PL partner. The approach is based on the principle of combining an intelligent transportation management system, a standardised supplier development process, and risk management into a central cloud-based IT solution. The innovative approach utilizes smart algorithms that dynamically optimise the network requirements holistically, including capacities, supplier shipping requirements, lead-times, as well as monitoring a wide range of geopolitical, weather, and economic factors on a real-time basis in order to optimise the material flow. The solution enabled AGCO to reduce significantly the cost of the inbound supply chain during the past years. Furthermore, both on time delivery performance and process conformance have been enhanced with great success. Paired with significant improvements in Supply Chain agility, AGCO now has a competitive advantage in the marketplace. In addition to the significant improvements in costs, performance and quality, the initiative is reducing the CO2 footprint through improved capacity utilisation and therefore it not only benefits AGCO but the environment as well.
Etihad Cargo and Royal Air Maroc Cargo to increase cooperation Etihad Cargo and Royal Air Maroc Cargo have signed a Memorandum of Understanding (MOU) which will see the two airlines cooperate in a number of areas including network development, freighter deployment and increasing traffic on several trade lanes over the next nine months. The MOU was signed at Royal Air Maroc’s headquarters in Casablanca by David Kerr, Senior Vice President, Etihad Cargo, and Amine El Farissi, Vice President Cargo, Royal Air Maroc. Abdelhamid Addou, Chief Executive
Officer of the Moroccan national airline, also attended the signing ceremony. The airlines will spend the next nine months growing traffic through joint network development, including freighter deployment, and identifying further areas of cooperation. Royal Air Maroc Cargo operates one Boeing 737 freighter, which will be complemented by Etihad Cargo’s freighter fleet of 10 aircraft – five Boeing 777Fs and five Airbus A330Fs – as well as belly hold capacity on a combined fleet of more than 150 passenger aircraft from both airlines.
David Kerr, Senior Vice President, Etihad Cargo, and Amine El Farissi, Vice President Cargo, Royal Air Maroc, sign the MOU to increase their cooperation
Goh Choon Phong New IATA Chairman The International Air Transport Association (IATA) announced that Goh Choon Phong, CEO of Singapore Airlines, has assumed his duties as Chairman of the IATA Board of Governors (BoG) for a one-year term, effective from the conclusion of the 73rd IATA Annual General Meeting (AGM) in Cancun, Mexico. Goh is the 76th Chair of the IATA
BoG, and the third CEO of Singapore Airlines to hold this position. Goh succeeds Willie Walsh, CEO of International Airlines Group. Walsh will continue to serve on the BoG and the Chair Committee. Goh joined Singapore Airlines in 1990 and held senior management roles in Singapore and overseas before being
appointed CEO in 2011. He was President of the 68th IATA AGM which was held in Singapore in 2011 and has served on the IATA BoG since then. IATA also announced the BoG agreed to appoint Akbar Al-Baker, CEO of Qatar Airways, to serve for a one-year term as Chairman of the IATA BoG from June 2018, following Goh’s term.
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UAE drives global free trade zone GDP doubling to US$ 117 billion The UAE’s free trade zones are using advanced information management tools to drive the doubling of the global free trade zone GDP, experts announced. Globally, the contribution of free trade zones to the Islamic Economy is set to double to USD 117 billion by 2021, according to a recent report by researchers Salaam Gateway. The UAE hosts 4 of the world’s top 10 free trade zone cities for the Islamic Economy. Industry-watchers agree the new Ras Al Khaimah Economic Zone is showing global best practices in using digital transformation to support its more than 13,000 companies. “Digital transformation is vital for UAE free
trade zones to drive the country’s economic growth. Using the latest information management solutions, trade zones can deliver digital services to boost the business competitiveness of small businesses,”said Andrew Calthorpe, CEO at the free trade zone consultancy In the UAE, Condo Protego has seen strong success in driving digital transformation for one of the region’s largest free trade zones. By replacing legacy infrastructure with automated software-defined and scale-out infrastructure, the free trade zone can publish its own business applications and move closer to cloud and mobile app delivery.
Airlines commit to air cargo modernisation The International Air Transport Association (IATA) 73rd Annual General Meeting (AGM) adopted a resolution to accelerate the modernization and transformation of the air cargo industry. The resolution builds on the momentum created by the entry into force of the World Trade Organization’s (WTO’s) Trade Facilitation Agreement (TFA). The IATA resolution calls for the air cargo industry to take a customer-centric approach to transformation to meet the evolving needs of shippers. Recognising that partnerships are critical in driving industry transformation especially for a business where global standards are so vital, the resolution also calls on governments to support the industry’s modernization process. The resolution reinforces the role of IATA to facilitate and support the modernization and transformation process through its industry transformation program, Simplifying the Business (StB) Cargo. The StB Cargo program is taking the lead in bringing several initiatives for data-led innovation forward. The program also includes a Smart Facilities initiative designed to enhance ground handling service quality.
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ATS launches its new storage tank terminal in India ATS commences operations for the new storage tank terminal which is strategically situated in the emerging oil storage & trading location of New Mangalore Port, India. Mangalore Port is a modern all-weather port situated at Panambur, Mangalore (Karnataka State in South India), on the West Coast of India, 170 nautical miles South of Marmagao & 191 nautical miles North of Cochin Port. The prominent features of the strategic location are a hasslefree single-window clearance, simplified documentation
system, around the clock pilotage, land and marine security and a congestion free port with all-weather navigation. The new storage tank terminal will be under the name of Raftaar Terminals and has adopted the GREEN POLICY by providing 33 per cent of total land for developing green belt around the terminal. It has LED Lights for the complete terminal, VFDs for saving power consumption in machineries, solar energy for lighting system and water heating system.
Bahrain International Airport relies on Thales and SITA to enhance security of 14 million passengers
With 14 million passengers a year expected by 2020, Bahrainâ€™s Ministry of Transportation and Telecommunications has chosen Thales and SITA to provide the security and operations management system for Bahrain International Airport. The Airport Modernization Programme was launched in 2015 with an overall aim to elevate Bahrain International Airportâ€™s infrastructure and services and make it one of the most important hubs for tourism and services. This ongoing programme includes the construction of a
new passenger terminal and the expansion and refurbishment of the existing terminal. With a growing passenger flow, airport authorities face two challenges: enhancing the security and safety of all the passengers, airlines and staff, and making the airport operations more manageable and more efficient. As the master system integrator, Thales will deliver an innovative and trusted security system ensuring continuity of operations, centralising the airport operations management and meeting all of the safety and security requirements. Thanks to smart
data processing, the system will provide the operators with a real-time security and operations situation awareness. This security system will be embedded with all the cuttingedge technologies needed for airport management such as smart video-protection, access control and biometrics, IT and telecommunication infrastructures. The airport operators will rely on decision support tools and procedures to enable for a better and faster response time in case of emergency. The system will also allow operators to monitor airport performances.
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Web: www.tranzone.ae JULY/AUGUST 2017 15
COUNTRY REPORT UAE - FOCUS ON SHARJAH
Sharjahâ€™s growth trajectory
16 JULY/AUGUST 2017
COUNTRY REPORT UAE - FOCUS ON SHARJAH
Sharjah had its first airport in 1936 and seaport four decades later in 1976. From then till now, Sharjah has somewhat been left behind by its neigbouring emirates. But the government and business community are taking steps to fix this. Here Oxford Business Group speaks to the heads of Sharjahâ€™s two main industries - port and aviation for a closer look at the situation on the ground
JULY/AUGUST 2017 17
Badr Jafar, CEO, Crescent Enterprises; and Executive Chairman, Gulftainer What needs to be done to consolidate Sharjah as a regional logistics centre? Badr Jafar: There are two dimensions worth exploring here in Sharjah and in the broader UAE. The country enjoys a strategic location in the middle of the socalled new Silk Road, connecting the Far East and Central Asia with Europe and Africa. With this geographical advantage, its logistics sector has grown rapidly over the past few decades. Looking at Sharjah in particular, the emirate has always been an early pioneer in logistics, pioneering the landsea-air concept. Sharjah opened the first international airport in the region in 1936, and established the Gulf region’s first seaport and the Middle East’s first container terminal, notwithstanding the opening of Khorfakkan in 1976 — the first port on the eastern coast and thus outside of Gulf waters. Other competitive advantages include Sharjah’s position as the only emirate in the UAE sharing borders with all six emirates other as well as Oman. Despite these early achievements, one cannot help but feel that Sharjah has been losing its competitive edge in this sector over the years. However, the emirate’s business community, working alongside the local government, has an excellent opportunity to pick up that pioneering spirit again. This is particularly true in an era when the logistics industry is being disrupted by technology. On the one hand, new technologies have improved efficiency; but on the other hand, they are challenging the status quo and the “business as usual”approach. That represents a challenge to everybody, but also an excellent opportunity to those who get there first. For example, we now see established global players such as FedEx and UPS investing heavily in start-ups that are disrupting the existing logistics business model.
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Infrastructure systems are living and breathing, and what happens over time is that if you do not maintain and rethink the systems themselves, you will find congestion becomes a major challenge to growth, and we have also seen this in Sharjah. The free zones in Sharjah were built for a smaller industrial landscape, and because small and medium-sized enterprises have thrived here over the decades, we are seeing increasing congestion, which hinders their ability to receive and send out goods. Other than improving road infrastructure, we need to see improved zoning of the city, which is
something I am aware the government is working hard to deliver. Retroactive zoning is obviously more difficult than proactive zoning, so we need to think ahead on the use of spare land. How has the recent decline in global trade affected cargo handling at Sharjah’s ports? Jafar: The whole region, and in fact all ports globally, had a tough year. Sharjah was no exception and experienced a 10 per cent drop in volumes in 2016. A large percentage of volumes handled in Sharjah’s ports are
COUNTRY REPORT UAE - FOCUS ON SHARJAH
Adel Ali, CEO, Air Arabia
trans-shipment, and those volumes tend to get hit first when you experience market consolidation. That said, our Sharjah-based management has made the most of the global slump by using the strategic advantage of Port Khorfakkan on the east coast of the Gulf. As shipping liners are striving to improve cost efficiencies, we provide them with the opportunity to offload transshipment cargo without having to go all the way down and around the peninsula. There is no getting away from it. The shipping industry overbuilt capacity during buoyant economic times. However, over
the last couple of years the large players in the sector have realised that strategy has not served them in an environment of more constrained growth, and so they are either banding together or dying out, which is why you are seeing these super-consortia being created. The knock-on effect is that shipping liners are trying to pass that pain onto port operators through rate reductions. The problem we are currently facing is that many of these ports are already overextended because of the massive investments that were made in order to build facilities to receive these huge vessels.
What are the prospects for regional expansion in the industry in the coming years? Adel Ali: We have consistently been achieving between 10 per cent and 14 per cent growth year-on-year (y-o-y), and I have no reason to believe that trend will not continue. Travel is part of peopleâ€™s lives now and, despite what happens with regards to the geopolitics and the economy of the region, people will continue to travel. In 2017 we are expecting to grow by around 12 per cent in terms of both fleet and operations, and we hope that the number of passengers grows at a corresponding rate. This growth is going to come from a combination of new markets and existing ones. We now have our headquarters in Sharjah and hubs in Morocco, Egypt, Jordan and Ras Al Khaimah. In our business you always need a few more airports and a few more aeroplanes every year. In 2015 we opened 15 new airports and in 2016 we have opened five so far. We have also announced the opening
JULY/AUGUST 2017 19
COUNTRY REPORT UAE - FOCUS ON SHARJAH
of new routes, such as the one to Baku in Azerbaijan for 2017. If we look at new possibilities for growth, North Africa has a sizeable population and only a few airlines, especially compared to a country such as the UAE with its four big players. So as soon as the political instability settles down in the region, that is where new opportunities should arise from, and we will be able to capitalise on the thirst that the Arabs have for travel. How does Sharjah position itself relative to other airports in the region? What are its main competitive advantages? Ali: First, Sharjahâ€™s location is itself a main advantage. The citizens from the Northern Emirates have to pass through Sharjah if they want to go anywhere else. Second, the airport is designed to be userfriendly. Today, in many airports, whether in
the UAE or elsewhere, it takes travellers lots of time to go through the processes, meaning that more time is needed in the airport between check-in and take-off, or between touch-down and reaching your car. Sharjahâ€™s size means this time is significantly cut down, making the whole journey more pleasant for the passenger. What are your thoughts on the current business environment in Sharjah and the region? Ali: I believe Sharjah has been successful in establishing itself as a cargo hub and has benefited from this. In terms of proportionality, it continues to be a good cargo hub. The business volume goes up and down according to global trends because cargo is a global business, but this is not the only time we have seen this. Business goes through cycles and these last for a year or so and then move forward. If the infrastructure
is there, then when business comes back, Sharjah will be a good centre for operations. As a result of its core industries, the Gulf region has traditionally been an import market. But what we have seen in terms of agriculture in the UAE is that y-o-y it continues to grow. You also find that between the Sharjah International Airport Free Zone and the industrial areas, new small and medium-sized enterprises are growing. So with the help of the ports and the airport, the relative size of exports is steadily growing. How would you asses the state of regulations in Sharjah, and how have they benefitted the aviation sector at both the federal and local level? Ali: From a regulation perspective, the aviation sector in the UAE is one of the best that I have seen in the MENA region. Since it established an open skies policy, companies have been welcome to enter the sector, thereby increasing competition. This is reflected in the countryâ€™s four major airlines and the competitive environment that pushes innovation forward. The UAE applies a business approach to the industry in terms of encouraging tourism. They have made it easy to enter from a visa point of view, and we have the facilities to accommodate these visitors. -www.oxfordbusinessgroup.com
20 JULY/AUGUST 2017
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Abu Dhabi Ports
UAE’s key resource
Captain Mohamed Juma Al Shamisi
Munawar Shariff speaks to Captain Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports, about the growth of the maritime industry in the region and its impact on the UAE, the Middle East and the world 22 JULY/AUGUST 2017
bu Dhabi Ports the master developer, operator and manager of the Emirate’s commercial and community ports as well as Khalifa Industrial Zone Abu Dhabi ( KIZAD), has shown an impressive growth rate since it was established in 2006. Even the global financial crisis of 2008 couldn’t slow its progress. In the 11 years since its inception, Abu Dhabi Ports has steadily grown and gained
a prominent position in the logistics and trade sectors on local, regional, and international levels. Last year, Abu Dhabi Ports signed its first international management services agreement with Guinea Alumina Corporation (GAC), a wholly-owned subsidiary of its strategic partner Emirates Global Aluminium (EGA). The agreement gave the port the right to operate and manage a cargo terminal at Port Kamsar in the Republic of Guinea.
JULY/AUGUST 2017 23
This agreement is a three-pronged masterstroke. Firstly, apart from general trade, the terminal serves EGA’s purpose of development of a bauxite mine in Guinea. Secondly, the Abu Dhabi-managed terminal is capable of receiving vessels stretching up to 170-metres and weighing in at 10,000 tonnes, which in turn means it can now moonlight as a hub for the export of bauxite to the Middle East and global markets. This coupled with the expansion of the Khalifa Port – which allows for cape size ships to bring bauxite into Abu Dhabi – means the UAE is at the forefront of the growing aluminium manufacturing industry, which uses bauxite as a key raw material. Here’s why all this is so impressive: this sound investment and unprecedented growth is why Abu Dhabi Ports contributed to more than 70 per cent of the Emirate’s customs revenue. At a time when the Middle East is looking for non-oil sources of income, Abu Dhabi Ports is developing into one of the leading contributors. The company is using this as a launching pad. Captain Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports, says,“As a result of our strategy Abu Dhabi Ports has achieved remarkable results in 2016 having registered over 152 per cent increase in net profits and about 90 per cent increase in EBITDA (Earnings before interest, tax, depreciation and amortisation) compared to 2015.” As the shipping industry begins to pick up in 2017, the company intends to scale new heights and has set its sights on the GCC markets as well as certain markets including China, India, South Korea, Europe, and Singapore. At the moment, global competition isn’t much of a concern. According to the World Trade Organisation (WTO), global trade growth should rise to 3.6 per cent in 2017. This will have a positive impact on Port operations across the globe. Capt Shamisi reckons,“the company’s unique strategic location offers access from Abu Dhabi to the US$7.8 trillion market of the Middle East, Africa and South Asia region. The One Belt One Road initiative launched recently by China is one that Abu Dhabi Ports supports as we feel it will change the maritime business, encouraging more trade to the region and allow for organic growth of all commercial ports.”
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The vital cogs in the business wheel A master developer of ports, Abu Dhabi Ports manages ten commercial, logistics, community and leisure ports, and is responsible for over 39,400 Abu Dhabi jobs. The secret to its continued success, however, is the seamless functioning of its many smaller business units and ports.
Business Units Ports Khalifa Port The crowning jewel behind Abu Dhabi Ports’ success though is its state-of-the-art Khalifa Port. The region’s first semi-automated container terminal is also the second fastest growing port in the world. In fact, Khalifa Port handled 340,452 TEUs (twenty-foot equivalent unit) in the first quarter of 2017 compared to 316,995 TEUs that was handled during the same period of 2016 with a seven per cent increase. Zayed Port The Khalifa Port may be the flagship port now, but before its plans were even laid
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out, there was the Zayed Port. The oldest commercial port in the Emirate of Abu Dhabi was established in 1972 and served as the main city port for more than 40 years. Since transferring all container traffic to Khalifa Port, Zayed Port has expanded its status as a premier regional hub to encompass cruise tourism, as well as general and bulk cargo. Fujairah Terminals In June 2017 Abu Dhabi Ports signed a 35 year concession agreement to invest in and operate the port of Fujairah a new facility for containers, General Cargo, RORO, and Passengers. As part of the agreement, Abu Dhabi Ports has announced the establishment of “Fujairah Terminals”, a new operational arm wholly owned by Abu Dhabi Ports. Musaffah Port In terms of age, Musaffah Port is only second to Zayed Port. Located in the industrial town of Musaffah south-west of the city of Abu Dhabi, the 53-km long Musaffah Channel is the 2nd longest in the region after the Suez Canal.
Abu Dhabi Terminals (ADT) The Private Joint Stock Company (PJSC) owned by Abu Dhabi Ports, Mubadala and Mubadala Infrastructure Partners manages and operates the Khalifa Port Container Terminal (KPCT). Most recently, ADT diversified to expand its supply chain operations, which now has a comprehensive package of logistics solutions to aid trade partners and shipping lines. It is a business opportunity enabler for organisations establishing themselves in KIZAD, Musaffah Port, as well as free zone areas across the UAE. Abu Dhabi Cruise Terminal Designed to welcome the surge of passengers visiting the Emirate in search of a winter sunshine getaway, Abu Dhabi Cruise Terminal at Zayed Port welcomed over 260,000 tourists in the 2015/2016 season, compared to 35,366 passengers who arrived at the port 10 years ago during cruise season 2006/2007. This growth has set expectations for the 2016/2017 season, projecting a 21 per cent increase in vessel calls compared to last year with 137 cruise ships, 10 of which will be calling in Abu Dhabi for the first time.
Community Port Extending from Shahama, near Abu Dhabi city, to the Western Region of the Emirate, all ports play their role in serving the local community, with the Al Dhafra Ports of Al Mirfa, Mugharraq, Delma, Al Sila and Sir Bani Yas specifically supporting the fishing communities and facilitating the current redevelopment on the surrounding islands. Maqta Gateway The wholly owned subsidiary of Abu Dhabi Ports was established to provide smart and innovative solutions enabling trade and transforming port communities. Maqta Gateway is the developer and operator of the first Port Community System (Maqta PCS) in the Emirates and the region facilitating the exchange of goods and movement of people. This innovative digital single window facilitates information flow between all the port stakeholders and customers, including shipping agents, shipping lines, exporters, importers, freight forwarders, ports, customs and other government entities. Currently, 100 per cent of the shipping agencies operating in Abu Dhabi use Maqta PCS digital services.
Khalifa Industrial Zone Abu Dhabi (KIZAD) Unveiled in 2010, KIZAD is the Abu Dhabi Government’s brainchild to establish an industrial zone with the largest Free Zone in the Middle East that is fully integrated with the 2nd fastest growing port in the world. KIZAD’s masterplan envisages a 410 square kilometre greenfield development that is designed for socio-economic sustainability and long-term industrial growth. Last year, agreements and partnerships for KIZAD registered stable growth in leasing activity that resulted in 20 new standard Musataha Agreements (SMAs) with local, regional, and international customers, increasing the total number of investors to over 130. Abu Dhabi Marine Services (SAFEEN) Wholly owned by Abu Dhabi Ports, SAFEEN provides a comprehensive range of worldclass marine services and ancillary quayside services for vessels calling at all Abu Dhabi Ports. SAFEEN represents a team of over 160 certified and extensively trained professionals who work together to ensure a superior, costeffective service.
Maritime Training Centre The Maritime Training Centre offers internationally recognised maritime courses delivered by accredited instructors and boasts the highest standard of maritime training for masters of vessels. It is the only International Association of Marine Aids to Navigation and Lighthouse Authorities (IALA) recognised training provider in the region. The catalysts of the great expansion Since Abu Dhabi Ports’inception in 2006, the company has been a story of success, made possible by two fully launched mega-projects: Khalifa Port and Khalifa Industrial Zone (KIZAD). Location is key for business success and KIZAD - the largest Free Zone in the Middle East – is strategically located to offer customers access to major regional and international markets. With the introduction of KIZAD, investors can enjoy the possibility of shipping goods at competitive prices and smooth customs procedures, world-class integrated infrastructure, outstanding access to global markets through full integration with the 2nd fastest growing port in the world (Khalifa Port), dedicated investor support, low operating cost, and even tax exemptions.
JULY/AUGUST 2017 27
It’s no surprise then that Abu Dhabi Ports also signed a 50-year Musataha Agreement with Emirates Aluminium Rolling (Emiroll), a joint venture between DUBAL Holding, Dubai Investment Industries (a subsidiary of Dubai Investments PJSC) and Madar Aluminum Rolling Singapore (MARS), to set up a manufacturing plant with a total investment of AED 440 million (about US$120 million) on a 83,554.58 sq metre plot in KIZAD’s downstream aluminium cluster. Elsewhere, a Musataha Agreement was signed with ADNOC Distribution to strengthen its capacity to develop new projects at KIZAD and another with Sobha Group, one of the largest and most highly reputed real estate developers in India and the Middle East, to launch SAFNON ITALIA, a furniture factory-cum showroom in KIZAD. In January 2016, Polysys Additive Technologies Middle East (PAT ME), Songwon Industrial Co. Ltd’s joint venture commenced the operations of its state of the art manufacturing plant in KIZAD, in February, Al Masaood group along with its partner KSB AG of Germany opened their new facility in KIZAD and in December, Al Dahra Holding opened the Gulf region’s largest and only rice factory of its kind at
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KIZAD with a capacity to produce up to 120,000 metric tonnes of rice per annum. Since the launch of KIZAD Logistics Park, KIZAD has signed agreements with Spinneys, the UAE’s leading retailer, Juma Airlink LLC, a leading provider of supply chain and logistics solutions, All Prints Distributor & Publishing, one of the main suppliers of educational materials and Hygienetech, specialised in professional distribution of commercial cleaning equipment and products. Another highly anticipated project in the year ahead is the construction of 35 free zone warehouses, as part of the Khalifa Port FTZ, with a total area of approximately 17,000 sq metres. On the other hand, as we mentioned earlier, Khalifa Port is currently ranked second in the world in terms of speed of growth. With the recent signing of COSCO Shipping Ports Limited to operate a new terminal in Khalifa Port, Abu Dhabi Ports will see significant further growth once they are operational. Despite all the dizzying developments and the phenomenal strides made, Capt Shamisi remains grounded.“Being the number one port in the UAE is different from being the number one port in the region and, of course, in the world,”he says.“We have very high aspirations to be the best in our field and
constantly work hard towards this goal and I believe we have a great chance to win future accolades based on sheer hard work and great customer experiences.” The way forward Like most industries in the world right now, technology is a key aspect in the future of the maritime business. Ports around the world have embraced technologies and solutions that increase levels of automation in order to improve productivity and reduce operational costs, and this fact is not lost on Capt Shamisi. “The increased and highly focused use of technology in Abu Dhabi Ports is a key part of our business strategy and has been for some time now,”he says.“As a relatively young company, Abu Dhabi Ports does not have to contend with issues related to ‘legacy’ systems, a problem which can affect other more established ports.” Over the past 18 months, Abu Dhabi Ports has rolled out new Terminal Operating Systems across all its port operations for improved planning and management of cargos. It has introduced new Asset Management Platforms to increase asset availability and utilisation and has developed a new innovative Marine Operating System to support SAFEEN.
the strategic role it plays in enhancing the UAE’s economic growth. We look forward to working closely with Abu Dhabi Ports in making this strategic partnership mutually beneficial both in the short and long term and enhancing Fujairah Port’s capabilities and strengths both regionally and internationally”.
Supporting development efforts Dr. Sultan Al Jaber said,“We strongly believe that developing Fujairah Port and increasing its capabilities will enable it to keep up with the industry’s constant growth.” “Abu Dhabi Ports will utilise all its capabilities and expertise to enable Port of Fujairah to achieve its objectives, based on best practices. In particular, we plan to leverage the geography of this strategic port to contribute to the development of the UAE’s commercial and tourism sectors.”
Concession agreement signed to develop, manage and operate Fujairah Port H.H Sheikh Hamad bin Mohammed Al Sharqi, Supreme Council Member and Ruler of Fujairah, witnessed at Al Remailah Palace on Monday, the signing of a 35-year concession agreement between Abu Dhabi Ports and the Port of Fujairah. As part of the agreement, the entities have announced the establishment of “Fujairah Terminals”, a new operational arm wholly owned by Abu Dhabi Ports. Also in attendance were Sheikh Saleh bin Mohammed bin Hamad Al Sharqi, Chairman of the Department of Industry and Economy, Fujairah and Chairman of the Board of Port of Fujairah, and Dr. Sultan bin Ahmed Al
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Jaber, Minister of State and Chairman of Abu Dhabi Ports. The agreement was signed by Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports and Captain Mousa Murad, General Manager of Port of Fujairah.
Enhancing the positioning of Fujairah Ports Sheikh Saleh bin Mohammed bin Hamad Al Sharqi said,“This agreement comes in line with the directives of H.H Sheikh Hamad bin Mohammed Al Sharqi, Supreme Council Member and Ruler of Fujairah, to further develop the Port of Fujairah and support
Operation and development excellence The announcement is a testament to Abu Dhabi Ports’ efforts to strengthen the development and operation of ports and terminals across the UAE and its contribution to the growth of a diversified, knowledgebased economy. Through the establishment of ‘Fujairah Terminals’, the agreement will grant Abu Dhabi Ports the exclusivity to enhance existing infrastructure in addition to managing all container, general cargo, RoRo and cruise ships in the port. It further extends this exclusivity throughout the emirate of Fujairah for Container business. The agreement also includes deepening of berths to enable the Port, which already serves clients and companies in the entire Gulf Region, Indian Ocean and Indian Subcontinent, to cater to larger vessels.
Abu Dhabi Ports will be investing in the infrastructure of Fujairah Ports, further enhancing its capabilities. Development includes deepening of berths to -16.5 metres to allow bigger vessels to come to the Port of Fujairah, building an approximate 300,000 sq metre yard of storage space, as well as an additional one kilo metre quay to accommodate the expected growth in the number of ships arriving at the port, increasing shipping operations in the process. Abu Dhabi Ports will also work on equipping Fujairah Ports with new and advanced equipment such as STS post panama quay cranes, RTG’s as well as new IT systems, bringing efficiency to operations and better equipping it to meet the needs of global shipping companies and service operators in line with the highest international standards. Maqta Gateway, a wholly owned subsidiary of Abu Dhabi Ports will be engaged to develop a Port Community System that links port communities with various departments, facilities and operations.
A strategic investment Commenting on the agreement, Captain Mohammed Jumaa Al Shamsi said, “Signing with the Port of Fujairah marks a major milestone for Abu Dhabi Ports. This significant investment will see Abu
Dhabi Ports share best practices with Port of Fujairah, which is one of the most important economic and commercial ports operating in the UAE, to further complement services offered at both Khalifa Port and Zayed Port. This agreement will offer clients on the east coast more options, it will also allow the re-export of goods that arrive at Khalifa Port to India, Pakistan and East Africa in addition to receiving general cargo for clients in the northern emirates.” “The agreement has numerous mutual benefits, including the witnessing of significant growth in the Port of Fujairah in the coming years with the objective of being able to receive vessels of all sizes, in addition to an increase in freight operations, general cargo and passenger services.”he added. “This agreement was the culmination of the joint efforts and extensive research conducted by Abu Dhabi Ports and Fujairah Port Authority, including economic and environmental studies, to implement the best means to enhance the capacity of Fujairah Terminals. Abu Dhabi Ports will utilise all its capabilities and expertise to enable Fujairah Terminals to achieve its objectives,”Al Shamisi added. Abu Dhabi Ports will commence with the development of berths and yards in 2018. The port will remain operational during this time to service existing and new clients.
Additional capacity and new quay cranes will begin operations in 2021, including the post panama quay cranes.
A significant leap in services Commenting on the signing, Captain Murad said:“We are confident that working with Abu Dhabi Ports, which manages and operates one of the most important and largest ports in the region, will allow the Emirate of Fujairah and future generations to benefit from this strategic agreement. We will benefit from the experience in developing and strengthening the infrastructure of Fujairah Port, which will contribute to a significant leap in the services provided to our customers and complement the achievements and successes of the port in the future.” The Port of Fujairah is the only multipurpose port on the Eastern seaboard of the United Arab Emirates and is strategically located on the UAE’s Indian Ocean coast, close to the east-west shipping routes. Its location offers shipping lines efficient transhipment options and an excellent platform to serve the entire Gulf Region, the Indian Subcontinent, Pakistan, the Red Sea, East Africa and several neighbouring countries. The port’s capacity is expected to reach 1 million TEUs and 700,000 tons of general cargo by 2030.
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Strong start for
air freight There continues to be a large divergence in the performance on the major segment-based routes to and from the Middle East finds IATAâ€™s David Oxley
trong start to 2017, but have we passed the cyclical growth peak? Global freight tonne kilometres (FTKs) grew by 8.5 per cent year-on-year in April, down from 13.4 per cent in March. FTK growth has made a strong start to 2017, but the best of the cyclical upturn may be behind us. The upward trend in seasonally adjusted (SA) traffic has slowed to a four per cent annualised pace since the end of last year. Year-on-year growth in international FTKs slowed from March in all regions except Latin America. Having outpaced capacity in H2 2016, demand has now trended in line with supply since the end of last year.
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Growth eases back in April but remains robust Global FTKs grew by 8.5 per cent yearon-year in April, down from 13.4 per cent in March. Industry-wide FTKs have now grown by 9.3 per cent in annual terms so far this year to date. Adjusting for the extra day in February 2016 owing to the leap year, this is an equivalent annual growth of just over 10 per cent. Airlines registered in Asia Pacific and Europe accounted for more than 70 per cent
of the annual increase in freight volumes, with North American airlines accounting for much of the rest. Middle Eastern and African airlines contributed positively, but Latin American carriers detracted from annual FTK growth for the 25th time in 27 months. (See Chart 1.)
Chart 1 – Contributions to year-on-year growth by airline region of registration Chart 1
Contributions to year-on-year growth by airline region of registration
Percentage points 16% 14%
Lan America Middle East Europe Total
12% 10% 8%
Africa North America Asia Pacific
2% 0% -2% -4% -6% -8%
Chart 2 – FTK levels
Sources: IATA Economics, IATA Monthly Statistics
Industry FTKs (billion per month) 21 20 19
18 Seasonally adjusted
17 16 15
Chart 3 – Air freight growth vs. global new export orders
Sources: IATA Economics, IATA Monthly Statistics
Air freight growth vs. global new export orders % year-on-year
30% Global PMI new export orders component (RHS, adv. 2 months)
Growth in industry FTKs (LHS)
-10% Implied PMI series if the index remains flat at its April 2017 level over the next six months
-20% -30% -40%
Sources: IATA Economics, IATA Monthly Statistics, Markit Sources: IATA Economics, IATA Monthly Stascs, Markit
JULY/AUGUST 2017 33
Chart 4 – Air freight growth vs. inventory-to-sales ratio
Air freight growth vs. inventory-to-sales ratio
% year-on-year 40%
A solid backdrop for freight in Q2 2017… To be clear, this is still a relatively solid rate of growth. Indeed, it is slightly ahead of the average pace seen over the past five years (3.5 per cent). Moreover, business indicators continue to offer encouragement: the new export orders component of the global purchasing managers’ index (PMI) remains close to a six-year high and indicative of healthy export order books for global manufacturers. At current levels, the measure is consistent with year-on-year FTK growth remaining in the region of 7.5 per cent for the remainder of Q2 2017. (See Chart 3, overleaf.) However, the loss of momentum in SA FTKs over recent months does raise the question as to whether the best of the cyclical upturn in air freight may now be behind us. Indeed, it is worth noting that the new export orders component of the global manufacturing PMI peaked in February and has actually fallen back slightly since. In the absence of further gains in manufacturing export order books, support for freight growth looks likely to moderate towards the end of 2017. (Again, see Chart 3.) More generally, the ability of air freight to move goods quickly around the world comes into its own at the start of economic cycles when firms rush to restock. The decline in the inventory-to-sales ratio between May and December 2016 looks to have
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10% 0% 0% -10%
Inventory to sales rao (RHS, inverted scale)
Global FTKs (LHS)
As we noted last time, developments in SA terms are not quite as strong as the annual growth rate would suggest. Indeed, as was the case last month, around two-thirds of April’s year-onyear FTK growth rate relates to gains that took place during the second half of last year. In fact, while industry-wide FTKs trended upwards at an annualised rate of more than 12 per cent in the second half of 2016, the annualised trend growth rate has slowed to around 4 per cent since the end of last year. (See Chart 2.)
Fall in inventory to sales rao, increase in FTK growth
The upward seasonally adjusted trend has slowed
Year-on- year change -15%
*Rolling 3 month periods
Chart 5 – International FTK growth by airline region*Rolling of 3 month periods registration Chart 5 International FTK growth by airline region of registration
Sources: IATA Economics, IATA Monthly Statistics
Mar 2017 9.8%
15.1% 27.3% 37.5%
N. America 9.4%
Middle East L. America
5% 10% 15% 20% 25% Internaonal freight tonne kilometres (% year-on-year)
Chart 6 – International FTK growth by route (% year-toSources: IATA Economics, IATA Monthly Statistics date, segment basis) Chart 6 Intern 60%
International FTK growth by route (% year-to-date, segment basis)
FTK growth by route (YTD, % year-on-year, up to Mar 2017) Africa - Asia
Within Europe Americas - SW Pacific
30% Europe - Middle East
Africa -Middle East Middle East - North America Middle East - Asia Africa -Europe North - South America North -Central America
10% 0% -10%
Within Asia Europe - North America
Europe - Asia Asia - North America
Within South America
6% 8% Share of total inter
Sources: IATA Economics, IATA Monthly Sta
10% 12% 14% 16% l FTKs (%, Year-ended Mar 2017)
Sources: IATA Economics, IATA Monthly Statistics by Route
helped to underpin the outperformance of air freight relative to wider world trade over the past year or so. (See Chart 4.) But while the inventory-to-sales ratio remains lower
than it was a year ago, it has now stopped falling. To the extent that this translates into less need to restock quickly, this may start to dampen the demand for air freight.
Looking further ahead, rising protectionist in March but was still well ahead of the divergence in the performance on the rhetoric remains an ongoing concern. five-year average (3.5 per cent). The region’s major segment-based routes to and from Structural concerns about the relationship robust performance continues to be helped the Middle East: FTKs flown to and from between global trade and output haven’t by the ongoing weakness in the euro, which Europe have grown by more than 20 per gone away either. But the hope is that niche is visible in very strong order books for cent so far this year, but traffic to and from areas such as cross-border e-commerce may European exporters. FTK volumes across Asia has grown by just 0.9 per cent over the yet help air freight to de-couple from global between Europe and North America – the same period. (Again, See Chart 6.) trade conditions. The freight load factor has other key market for the region’s carriers increased in 2017 so far Available freight – grew by 9.2 per cent year-on-year in Q1. A strong April for North tonne kilometres (AFTKs) grew by 3.9 per (Again, see Chart 6.) SA volumes on this American demand cent year-on-year in April. The industryroute recently reached levels last seen in North American airlines posted annual FTK wide load factor has risen by nearly three early-2011, although the upward trend has growth of 12.5 per cent year-on-year in April. percentage points over the past year and, in weakened in recent months. Volumes jumped in SA terms from March. seasonally adjusted terms, is currently back to That said, the movement was within the levels last seen in early 2015. However, given normal range of monthly volatility so it is Volatility in Middle East the slowdown in the upward trend of SA too soon to say whether this is the start of growth rates FTKs in recent months, demand is once again International FTKs flown by Middle Eastern lasting pick-up. As we have noted before, the trending upwards at a similar rate as capacity. airlines grew by 3.1 per cent year-on-year in strength of the US dollar is likely to continue International FTK growth outpaces the total to support US inbound air freight. However, April. This was a sharp slowdown from the again International FTK growth slowed to 9.8 16.3 per cent rate seen in March, although it is also expected to continue to keep per cent year-on-year in April, from 15.1 per outbound flows under pressure. this appears to relate to volatile monthly cent in March. (See Chart 5.) Year-on-year developments last year rather than any growth slowed from the previous month in pronounced recent downturn. (Note that Ongoing divergence in the all regions except Latin America. such developments boosted the year-onsmallest regions Strong growth for both Asia Pacific… year growth rate in March 2017 too.) The African and Latin American airlines fly a The SA trends in freight volumes in the two bigger picture is that international freight relatively small proportion of global air cargo largest regions – Asia Pacific and Europe – have volumes have increased by eight per cent between them (less than five per cent of total echoed that seen in industry-wide traffic. Air so far this year to date, which is slower international FTKs). The two regions have freight is a key part of airline business models than the five-year average pace (around seen a big divergence in performance of late. in Asia Pacific, and the region is the biggest inChart 11 7per cent). There continues to be a large International FTKs flown by Latin American – Freight load factors by region terms of international FTKs flown. International airlines fell yet again in annual terms in April. freight volumes grew by 9.4 per Having recovered partly during H2 Chart 7 Freight load factors by region cent year-on-year in April, which 2016, freight volumes in SA terms was a slowdown from 13.5 per remained close to a seven-year low Apr 2017 Apr 2016 All-me Apr low* All-me Apr high* cent in March but still well ahead in April, around 18 per cent lower 49.1% 46.7% Industry of its five-year average (1.7 per than their 2014 peak. However, cent).Volumes in SA terms recently the region’s airlines have managed 59.9% 56.6% Asia Pacific surpassed the levels reached to adjust capacity, which has 49.3% 46.4% Europe following the global financial limited the impact on the region’s, crisis in 2010. Business confidence admittedly, comparatively low, load 43.8% 43.2% Middle East surveys from much of the region factor. (See Chart 7.) Meanwhile, have continued to indicate strong African carriers’ international traffic 42.5% 39.3% N. America order books. There has been a surged by 27.3 per cent year-on38.2% 38.0% L. America modest weakening in demand year in April, and by more than 25 conditions on the route to and from per cent so far this year to date. 24.1% 22.5% Africa North America in recent months. The performance has continued However, international FTKs flown to be helped by rapid growth on 20% 30% 40% 50% 60% 70% within Asia have grown by 15 per the trade lane to and from Asia. Internaonal freight load factors (% of available freight tonne kms, actual) cent in annual terms so far this year FTKs between Asia and Africa have Sources: IATA Economics, IATA Monthly Statistics to date. (See Chart 6, overleaf.) jumped by nearly 55 per cent so far this year. (Again, see Chart 6.) That said, the region’s load factor remains ... and European Airlines the lowest out of all the regions, well under International freight volumes flown by half the level of carriers based in Asia Pacific. European airlines grew by 13.1 per cent (Again, see Chart 7.) year-on-year in April. Similar to Asia Pacific, this was a slowdown from the pace seen -David Oxley firstname.lastname@example.org
JULY/AUGUST 2017 35
IoT: The ultimate enabler for a digital supply chain Tarik Taman, General Manager IMEA, Infor explains how the digital world is not simply taking over, but also helping supply chains
he internet of things is coming to a supply chain near you. There will be 50 to 200 billion connected â€œthingsâ€?by the end of this decade. Regardless of which research numbers you follow, we are about to be inundated by connected devices and things. IoT will be throwing off mountains of data - even more information to be added to our existing mountain of big data. This information will take on a new form and pace. Possibly smaller data points, but at a more rapid pace and coming from parts of our supply chains that were otherwise dark. The promise of this is to not only light up these dark parts of the supply chain but also to fundamentally change how our supply chains operate. We should view this as a key component of the digital transformation of supply chains.
The digital journey is only beginning. IoT will be a vital part There is very little in our day-to-day lives that has not seen the impact of the digital revolution. How we think of point-to-point transportation will never be the same due to Uber. Where and how we stay when we travel has been radically changed due to Airbnb. How we listen to music no longer revolves around CDs, records or tapes. The very idea of purchasing a full album is foreign to many who have been accustomed to accessing music via services such as Pandora, Spotify, Apple and Amazon music. Watching television is not limited to our family rooms, nor is the activity restricted to time slots. Commercials, in some ways, are becoming a thing of the past.
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While these are consumer-centric examples, the digital revolutionâ€™s impact is felt throughout B2B commerce, specifically in the supply chain. Supply chains are beginning to reap the benefits of digitisation. How? From greater visibility throughout the supply chain. Industries from agriculture to automotive and consumer goods, heavy industry and retail, have all started to extract value from enhanced digitisation throughout their supply chains. In the chocolate industry, brands such as Mars have a greater view into cocoa production in sub-Saharan Africa through greater usage of connected farms. Companies such as Harley Davidson are more in tune with their manufacturing facilities thanks to
IoT. Logistics firms lean on telematics to do a better job with fleet and asset management, and to capture greater efficiencies with regards to load management and routing. However, many of these digital enhancements are being felt in pockets of supply chains. The digital revolution is not a tidal wave impacting all aspects of the supply chain with a giant bang. Rather digital, and in large part IoT, is taking hold in specific parts of the supply chain. At times this is being leveraged to enhance existing processes, while in other situations we are seeing new transformative business models emerging. A good start. The exciting opportunity for supply chains will be when they are fully
connected, fully networked. For this IoT holds out much promise.
IoT is a vital step towards a truly digitised and networked supply chain A truly digital supply chain is one where processes and business models are centred on digital communications. It’s a world where the mechanical and digital are integrated in such a way as the physical world has a digital mirror of information and data. This digital mirror allows the physical to be more efficiently managed, to be used in different ways and to allow the physical world to take on new business models otherwise not possible. This digitisation revolves around a greater access to, and usage
of, data. This data is rich with information, consumed in a timely fashion and leveraged to make greater business decisions. Supply chains shouldn’t simply look to place sensors on objects and assets, but rather, understand why being able to“see”more from these objects can benefit their business. IoT plays an important role in this vision. It will add a layer of visibility and access to data that supply chains are otherwise blind to. As supply chain professionals continue to work down the digital road, they need to take into consideration a number of these technologies and innovations. IoT is just one cog in an otherwise complicated and dynamic ecosystem.
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How can we build a
Smart City? Rasheed Al Omari, Business Solutions Strategist for the Middle East and North Africa at global Smart Cities enabler VMware, enunciates
magine a city where sensors monitor everything from temperature to traffic patterns; where street lights are activated and deactivated using motion sensors; where water pipes can shut off leaks remotely and where security can be improved using automated surveillance. Imagine a city where your sat nav not only tells you where to go but also directs you to the nearest available parking space. This reality is being enabled by the continually expanding Internet of Things (IoT), a web of objects and sensors connected to the internet which are able to seamlessly communicate with one another, in realtime. The city of the future will be able to communicate with itself, track and respond to the movement of its residents, and automatically optimise conditions. Data will be the lifeblood of these cities. And as such, the key to their success will be to
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ensure that data is kept secure, manageable and accessible. For this to happen, certain steps need to be taken:
Building an infrastructure fit for purpose The first critical step towards shaping a smart city involves the creation of a reliable shared-services platform that aligns all of a city’s services. Acting as a foundation, it will connect all of a city’s smart technologies – from electricity grids through to water metres and, of course, all other utilities. This works best when managed by a single large body. Take Dubai’s IoT infrastructure for example, where success comes largely from its ability to create a shared central IT organisation, called Dubai Smart Government (DSG) that joins all the other smart initiatives together, acting like an IT
services enablement division for the rest of Dubai’s eGovernment. When the infrastructure layer isn’t managed by a single body, the journey to becoming a smart city is more challenging. Take London as a prime example. While the city is keen to progress on that journey, the political differences characterising its 32 boroughs present something of an obstacle in establishing a shared central IT organisation, which can join the capital’s initiatives and services into a single entity. It is a challenge, no doubt, that the new Mayor of London, Sadiq Khan will be looking to overcome.
Connecting services Once a shared service platform has been created the opportunities are endless. The sharing of information between services can be used for anything from easing traffic congestion to saving lives. Imagine
that a reckless driver was to cause a traffic accident which badly injures the driver of another car. CCTV footage could be shared with the police and relevant insurance parties, a transportation service could reroute traffic based on real time data and a nearby ambulance could be alerted to the incident, immediately pulling up the driver’s medical history so that he/she receives the best possible medical care. While we may not be quite there yet, certain elements are beginning to be put into practice. For example, VMware AirWatch already works closely with Tel Aviv Municipality to provide its traffic wardens with an AirWatch-managed Samsung Note 5, essentially providing them with a digital workspace that allows them to work from any location. They can use the devices for ticketing by logging tickets and filling reports that include pictures, time and GPS stamps
Gartner projects that 6.4 billion connected things will be in use worldwide this year, and forecasts that the number will grow by more than three times, to nearly 21
2020 billion by the year
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of the parking contraventions, all while on the go. Other cities including the likes of Singapore and Songdo, South Korea are also leading the way when it comes to smart city development, with the latter already using technology to improve sustainability, citizen well-being and economic development.
Security Cities becoming smart means deploying, even more, IoT devices to connect infrastructure and resources. Gartner projects that 6.4 billion connected things will be in use worldwide this year, and forecasts that the number will grow by more than three times, to nearly 21 billion by the year 2020. This surge in connected devices and the amount of data being shared wirelessly will provide huge opportunities, but could also pose serious risks. Itâ€™s not just personal data, such as medical records which are at risk, but also critical services such as transportation systems or electricity grids. It is, therefore, crucial to ensure the security of all devices
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which could have access to this type of sensitive data, whether they are corporate or employee-owned.
The Final Componentâ€Ś One essential ingredient is needed in order to create a secure network of devices across a smart city: a robust enterprise mobility management (EMM) solution, that guarantees the end-to-end management of all connected devices. This enables the IT organisation upon which smart city services are built to grant, limit and revoke access to corporate resources - including email, content and applications - based on whether or not the device requesting access has a compliant and trusted status. Additionally, an EMM solution with a reliable compliance engine must continuously monitor endpoints and perform preconfigured escalating actions to prevent noncompliance or to bring the offending device back into compliance. Think of the number of devices, used in the finance or healthcare sectors for
example, which could have access to sensitive resources and information. Itâ€™s crucial that organisations in these industry verticals have the ability to communicate securely with their networks of trusted devices. The same can be said for the amount of information that is exchanged at airports to keep the various airport facilities running safely and effectively. The control tower needs to be able to pass information quickly and securely to ground operations, who need to be able to communicate with immigration services, border control and the police service. The opportunities presented by smart cities for both citizens and businesses are both as exciting as they are endless. With proper implementation, a well-managed infrastructure, a robust EMM solution and plenty of imagination, smart cities will provide huge economic, cultural and social advantages for their residents, meaning each and every one of us has an exciting future ahead.
Container database five million and counting BIC’s non-profit BoxTech Technical Characteristics Database reaches five million containers - that’s 20 per cent of the global fleet
undreds of shippers, forwarders, terminals and other organisations are moving towards digitalisation with access to details of around five million containers through BoxTech, the database of container technical details provided by the Bureau International des Containers (BIC). Since its launch in July 2016, the BIC’s non-profit BoxTech Technical Characteristics Database has been supporting shippers, carriers, leasing companies and container owners by providing a simple, single source of container details. Most recently, leading container leasing companies Florens and Blue Sky Intermodal, Taipei-based carrier TS Lines and Korean carriers Pan Ocean and CK Line uploaded their fleet details. Combined with the information already added by many other global ocean carriers and container leasing companies, the BoxTech database now holds the details for five million shipping containers, approximately 20 per cent of the global fleet. Continuously expanding, the database has also now reached over 1,000 total users, including 800 major shippers, forwarders and terminals. “BoxTech was initially intended primarily as a platform to provide tare weight information to support organisations’ compliance with new SOLAS* rules around VGM (verified gross mass) declarations,”says Douglas Owen, Secretary General of the BIC, explaining that the database is specially designed to support carriers, shippers, forwarders and other stakeholders with reducing manual tasks and enable better integration with other digital systems. “However, BoxTech’s 1000+ users are now also utilising the database for a wide variety
42 JULY/AUGUST 2017
of purposes, such as verifying container size and type or maximum gross weight,”he continues.“New features are on the way, so leasing companies and carriers will soon also be able to upload ‘alert lists’ of various types.” This forthcoming status alert list functionality is just one way that BoxTech is constantly evolving to best meet the needs of the shipping industry. The BoxTech Alerts system will enable container owners to create alert lists that quickly flag specific units in case of bankruptcies and other recovery situations, such as lost or stolen units, or to simply inform users whenever a special status exists for a given unit. Container sale and scrap lists will allow carriers and lessors to indicate containers that have permanently left their fleets, and help prevent improperly-marked containers from continuing to circulate with their markings. This will improve safety, reduce potential risk and liability, and encourage the proper neutralisation of containers when sold. Signing up to BoxTech is quick, simple and user-friendly. The initial file of container fleet technical details is uploaded easily using a CSV template. Subsequent data uploads can then be automated via APIs, saving time and removing the need for a manual process while ensuring the database is always up to date. An automated API can also be put in place for conducting database queries, eliminating manual tasks completely for shippers and other parties needing tare weight, size and type or other container characteristics. Accessing data in BoxTech is also extremely
simple for those using the website. Users simply sign-up online and query the database by typing in a container number. “The Global Shippers’ Forum welcomes steps taken by BIC to establish a comprehensive global database for containers and encourages container carriers to support this much-needed initiative by providing information about their pool of containers on the database”, says Chris Welsh, Secretary General of the Global Shippers Forum. Chris Welsh continues,“Shippers want
online information about the details of the container, including the tare weight of the container to make accurate VGM declarations, but also details regarding the container’s dimensions and suitability for the cargo to be carried. The database will enhance maritime safety, improve efficiency and reduce costs for both carriers and shippers by speeding up processes and reducing liability, and cargo claims”. “With over 25 million containers frequently interchanging between operators and strong
demand to move our industry into the era of digitalisation, a central, neutral, non-profit, data repository is essential,”explains Douglas Owen, Secretary General of the BIC.“Many key players within the industry have foreseen the future benefits and potential for BoxTech and we are thankful that several major container owners and operators, such as CMA-CGM, SeaCo, and Touax, provided leadership as early supporters. With the fleets of over 100 container owners and operators now on the platform, BoxTech has reached 20 per cent of all containers, and
interest continues to grow throughout the supply chain.” Douglas Owen concludes,“The closer BoxTech gets to having the entire global container fleet in the database, the more beneficial it will become for shippers, terminals, and others throughout the supply chain.” The BIC supports the international container industry with multiple registration databases and operates the BoxTech Technical Characteristics Database for the industry on a non-profit and non-commercial basis.
JULY/AUGUST 2017 43
Stefano Pollotti, Managing Director, GEFCO Middle East, explains how the GEFCO Group has thrived despite the slump within the automotive industry
44 JULY/AUGUST 2017
Hundreds of shippers, forw arders, terminals and other organisa tions are moving towar ds digitalisatio n with access to details of ar ound five mill ion containers through BoxT ech, the databa se of containe technical deta r ils provided by the Bureau International des Container s (BIC). Since its laun ch in July 2016 , the BICâ€™s nonBoxTech Tech nical Character profit istics Databas supporting sh e has been ippers, carriers , le asing compani container owne es and rs by providin g a simple, sin container deta gle source of ils. Most recent ly, leading cont companies Fl ainer leasing orens and Blue Sky Intermod carrier TS Line al, Taipei-based s and Korean JULY/AUGUST 2017 45
Although we’d all rather have less spare time, we should use what we have to plan for the future 46 JULY/AUGUST 2017
carriers Pan Ocean and CK Line uploaded their fleet details. Combined with the information already added by many other global ocean carriers and container leasing companies, the BoxTech database now holds the details for five million shipping containers, approximately
20 per cent of the global fleet. Continuously expanding, the database has also now reached over 1,000 total users, including 800 major shippers, forwarders and terminals. “BoxTech was initially intended primarily as a platform to provide tare weight information to support organisations’ compliance with new SOLAS* rules around VGM (verified gross mass) declarations,”says
With over 25 million containers frequently interchanging between operators and strong demand to move our industry into the era of digitalisation, a central, neutral, non-profit, data repository is essential
48 JULY/AUGUST 2017
Douglas Owen, Secretary General of the BIC, explaining that the database is specially designed to support carriers, shippers, forwarders and other stakeholders with reducing manual tasks and enable better integration with other digital systems. “However, BoxTech’s 1000+ users are now also utilising the database for a wide variety of purposes, such as verifying container size and type or maximum gross weight,” he continues. “New features are on the way, so leasing companies and carriers will soon also be able to upload ‘alert lists’ of various types.” This forthcoming status alert list functionality is just one way that BoxTech is constantly evolving to best meet the needs of the shipping industry. The BoxTech Alerts system will enable container owners
to create alert lists that quickly flag specific units in case of bankruptcies and other recovery situations, such as lost or stolen units, or to simply inform users whenever a special status exists for a given unit. Container sale and scrap lists will allow carriers and lessors to indicate containers that have permanently left their fleets, and help prevent improperly-marked containers from continuing to circulate with their markings. This will improve safety, reduce potential risk and liability, and encourage the proper neutralisation of containers when sold. Signing up to BoxTech is quick, simple and user-friendly. The initial file of container fleet technical details is uploaded easily using a CSV template. Subsequent data uploads can then be automated via APIs, saving time and
removing the need for a manual process while ensuring the database is always up to date. An automated API can also be put in place for conducting database queries, eliminating manual tasks completely for shippers and other parties needing tare weight, size and type or other container characteristics. Accessing data in BoxTech is also extremely simple for those using the website. Users simply sign-up online and query the database by typing in a container number. “The Global Shippers’ Forum welcomes steps taken by BIC to establish a comprehensive global database for containers and encourages container carriers to support this much-needed initiative by providing information about their pool of containers on the database”, says Chris Welsh, Secretary General of the Global Shippers Forum.
Chris Welsh continues,“Shippers want online information about the details of the container, including the tare weight of the container to make accurate VGM declarations, but also details regarding the container’s dimensions and suitability for the cargo to be carried. The database will enhance maritime safety, improve efficiency and reduce costs for both carriers and shippers by speeding up processes and reducing liability, and cargo claims”. “With over 25 million containers frequently interchanging between operators and strong demand to move our industry into the era of digitalisation, a central, neutral, non-profit, data repository is essential,” explains Douglas Owen, Secretary General of the BIC.“Many key players within the industry have foreseen the future
benefits and potential for BoxTech and we are thankful that several major container owners and operators, such as CMA-CGM, SeaCo, and Touax, provided leadership as early supporters. With the fleets of over 100 container owners and operators now on the platform, BoxTech has reached 20 per cent of all containers, and interest continues to grow throughout the supply chain.” Douglas Owen concludes,“The closer BoxTech gets to having the entire global container fleet in the database, the more beneficial it will become for shippers, terminals, and others throughout the supply chain.” The BIC supports the international container industry with multiple registration databases and operates the BoxTech Technical Characteristics Database for the industry on a non-profit and non-commercial basis.
JULY/AUGUST 2017 49
Distributing with the right
3PL partner Outsourcing warehousing, distribution, and order fulfillment could be one of the smartest moves a retailer makes - if it knows how to create a collaborative 3PL partnership for every stage in the process. Sean T Monahan, Partner; Chris Shriver, Principal; Alberto Oca, Principal and Brian Lindquist, Consultant all at AT Kearney have written this comprehensive article to highlight how to establish the right distribution network 50 JULY/AUGUST 2017
ompanies that couple brickand-mortar stores with an e-commerce channel share a common dilemma with online-only retailers: In-house distribution can be extremely costly and inefficient for both. While old distribution networks may have handled traditional logistics just fine, they are not designed to accommodate the complex and labor-intensive fulfillment of online orders. Online sales growth calls for expanding scale, too, which leads to costly capex investment that retailers may not want or are unable to make. The Wall Street Journal recently noted that nine of 15 major retailers (including Lululemon and Kohlâ€™s) tracked over a two-year period saw margins decline while e-commerce grew as a percentage of overall sales. Retailers that made investments in their e-commerce supply chain saw declines of up to 25 percent in operating earnings as a percent of total sales. Using a third-party logistics (3PL) provider is a logical and increasingly advantageous alternative. The global 3PL market is
expected to grow 4.4 percent year-over-year, from $734 billion in 2014 to just over $1 trillion by 2022. There are opportunities and pitfalls for retailers to consider, however, on the way to choosing the right 3PL, from establishing the relationship to maintaining it for optimal performance and costeffectiveness. Here we evaluate each step in the process and outline five of the most important things that both traditional and newer online retailers should consider for beefing up their e-commerce distribution capabilities.
Donâ€™t throw the brick at your network Consumersâ€™ online expectations are forcing retailers to evolve their distribution networks. The typical reaction is to use or retrofit what retailers have used for years, but that is a bit like trying to shop online with a rotary-dial phone. Old systems support truckload or less-than-truckload shipments into retail or wholesaler operations. Pallets contain case, layer, or full picks of typically homogeneous products that are shipped
together. E-commerce orders, on the other hand, are direct-to-consumer smallparcel orders requiring extensive each picking, order management, packaging, and personalization. Depending on what you sell, e-commerce orders can contain a range of product types, from heavy to fragile, which adds another challenge during picking and shipping the product in a single package so that everything arrives safely and damage free. Directing more labor or capex investment into a traditional operation may achieve these goals, but such moves are usually inefficient and cost-prohibitive in the end. Scaling up requires automation, wave planning, and other expertise that most traditional retailers - and even newer online-only ones- lack. Weathering the ebb and flow of fluctuating sales can make purchasing pricey materialhandling equipment (MHE) and other systems risky, as Amazon so famously found when it invested heavily in its own distribution model for years before seeing a profit.
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Outsourcing e-commerce, on the other hand, gives retailers several advantages: 1. An optimised footprint by leveraging existing 3PL networks 2. Deep expertise in warehouse operations, MHE design, and systems integration 3. Economies of scale, reduced overall costs, and minimized capex investment When it comes to labor, 3PL providers tend to achieve more cost-effective terms, including pay and benefits, than individual companies can. Managing a contract-bound 3PL can be easier than managing oneâ€™s own employees. Regarding scale, 3PL providers can spread the cost of building automated e-commerce facilities across clients if the
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facility is shared. Should a company want to have its own facility, it still may reach a point where 3PL management of that asset makes more sense due to the providerâ€™s competitive labor rates.
Five keys to the perfect 3PL match Here are the five crucial areas for traditional and newer online retailers to focus on when outsourcing an e-commerce operation. 1. Define and align service levels and their cost to meet the customer promise. What does the customer care about across channels and order types and what will it cost the business? Fast delivery and free returns processing, including shipping costs,
are two examples that top most customer expectation lists. While shoppers ordering from a big-box store may be fine with a 10-day lead time from the order to the warehouse to the store, online customers expect delivery within two days or even four hours in urban areas. Yet if it is a replenishment order online, they may relax their expectations for delivery, which lets the distribution center be more flexible. Understand how seasonality and other forecasting patterns relate to the business
The global 3PL market is expected to grow 4.4 percent year-overyear by 2022. There are opportunities and pitfalls for retailers to consider, however, on the way to choosing the right 3PL, from establishing the relationship to maintaining it for optimal performance and cost-effectiveness
as well. A 2015 survey of 200 retailers across the United States and the United Kingdom revealed that 34 percent of retailers identify fulfilling orders on time as their biggest challenge during the holidays. If holiday demand causes online orders to spike three to 10 times higher than normal, consider two choices based on your customersâ€™ desires: double down to fulfill your promise during those periods or relax the delivery promise if customers are more lenient. It is important to guide the 3PL on actual requirements to avoid overbuilding or underbuilding the e-commerce solution for critical times of the year. A $2 billion retailer we work with took this course of action when it hired a 3PL provider
to handle e-commerce orders during peak demand. It outsourced a portion of its operation that had been performing poorly. Its tight working space and picking process worked for the brick-and-mortar business but was inadequate for e-commerce. The 3PL not only handled peak demand well, but also bulky items that had not flowed easily through the existing warehouse. The retailer is now considering outsourcing all of its brick-and-mortar and e-commerce operations to the 3PL. 2. Define your omnichannel strategy. Consumers expect multiple delivery methods (such as same-day or next-day shipping) along with network channel integration (including click-and-collect and ship-to-
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store), all of which require a nimble and branding expert? A rapidly growing company flexible supply chain. Define the road map will probably want to completely outsource and the impact that an omnichannel strategy to a 3PL. A smaller or slower growing will have on the broader supply chain. What company may decide to outsource selectively. will product type and mix, along with choice In evaluating its options for insourcing and of channels, look like in the outsourcing, a global wine future? Will the business and spirits company we develop them organically or work with recently decided If holiday demand that it was most efficient through acquisitions? What are you providing via e-commerce: to consolidate a number causes online many product types such as of domestic functions, orders to spike Amazon or a single category including co-packaging such as the Gap? three to 10 times and several 3PL warehouse Next, determine the level of locations, under a single higher than 3PL sourcing needed across roof. It built a North the network-e-commerce, American distribution normal, consider brick-and-mortar, and cocenter and outsourced two choices based to a 3PL to perform both packaging. Does the business want to invest in logistics and on your customersâ€™ customer-fulfillment warehousing or focus entirely shipping and marketingon being a manufacturing and driven co-packing, which desires: double
down to fulfill your promise during those periods or relax the delivery promise if customers are more lenient
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allowed it to realize more efficiencies through truckload and multiproduct shipments to customers. 3. Provide transparency into warehouse operations. Retailers tend to focus on sources of supply and manufacturing, while 3PL warehouses remain an afterthought. Yet it is important to understand what the company is doing upstream that could impact effective management of a 3PL warehouse. These facilities are best viewed as an extension to the existing internal supply chain that will engage with procurement and analytics. In a 2014 chief supply chain officer survey, 65 percent of respondents reported that big data analytics is the most disruptive and important trend in supply chain strategy. The right level of visibility for decision-making becomes crucial, so select a partner with sophisticated B2B integration and reporting capabilities.
Beyond technical transparency, 3PL providers should be prepared to develop a comprehensive concept-of-services document. It could include operating parameters such as footprint, number of orders, and peak versus average order volume. End-to-end services to be performed—such as kitting and returns processing—along with the client’s responsibilities in enabling them, are more factors to define. Aligning services such as these is an important step in finalizing the working relationship’s design and associated costs. Site visits can provide additional clarity, but perform these only with capable and cost-effective 3PL providers that you have selected after first rounds at the request-forproposal stage. 4. Develop a mutually beneficial contract. Proper contracting is one of the best ways
to ensure a fruitful 3PL partnership. A strong contract will hold the 3PL provider accountable for driving continuous improvement. We have seen brick-andmortar and online-only retailers treat these firms as transactional partners, with agreements based on volume and operational key performance indicators (KPIs). While both are valid, we recommend rewarding the provider for removing cost from the network and operating as efficiently as possible. If the 3PL does not deliver, it faces a financial penalty. This can be a delicate balance to strike and not something that retailers often consider, but it lays the groundwork for a successful relationship. Here are a few more recommendations for effective contracts: Duration. The average 3PL contract ranges from three to five years. According
to a recent Global Supply Chain Institute survey, 16 percent of companies reported having 3PL contracts of two years or less, 51 percent were written for three years, and 33 percent for four years or more. Contracts are driven by a variety of factors including size of investment, real estate solution, and the time period allowed for transition and ramp-up. Consider how these factors impact both parties and include a specific, equitable termination clause. Pricing. Two pricing structures prevail, depending on operational size and scale. A transactional structure bases price on throughput across fixed storage, handling and picking, co-packing cost per case, and any accessorials. In a pass-through structure, all costs are clearly specified and agreed to annually, budgets are set, and a portion of the management fee can be dependent on performance. We recommend a semi-variable
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contract that makes the 3PL provider whole on its fixed costs but puts its profit at risk if service or costs are not in line with the budget or KPIs. Performance management. Conduct frequent reviews that hold the 3PL provider and the company’s management team accountable for containing costs and operational performance. In an annual business review, the chief operating officer or vice president discusses long-term strategic plans, the annual renegotiation of rates, and service-level requirements (which may have shifted with major changes to the business model) with the 3PL. On a quarterly basis, directors review performance, financial aspects (if applicable), and partner satisfaction scorecards, among other things. Managers join directors and their 3PL counterparts for monthly reviews of performance trends and share updates on other factors, including business and customer feedback. A global consumer packaged goods (CPG) company we advise and its 3PL e-commerce provider are an
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excellent example of the above approach. The CPG owns the facilities and land for its large distribution centers but recognizes it is not a warehousing expert. It monitors and manages the 3PL very closely, putting the provider’s profit margin at risk for underperformance while offering it an upside if it realizes operational improvements. The CPG uses the provider’s tier-one warehouse management solution to unlock all such opportunities. It also holds frequent touchbase meetings to review KPI dashboards. 5. Lay the groundwork for a sustained strategic partnership. Be clear about the level of strategic support and thought leadership you expect from your 3PL partner and in what areas you desire input, including systems, operations, or changes in footprint. Potential questions to ask your 3PL include: Is there new functionality in warehouse management solutions that would benefit our organization? To what extent should we adjust our operations to respond to any change in our order profile? Does our current footprint still make sense, considering any changes in our outbound customer shipments? (Be sure that any recommendation
your 3PL offers suits your footprint rather than theirs.) Then, establish a joint processimprovement program and culture with equitable share to ensure that the 3PL provider helps your company realize maximum improvement in operations, service, and cost. Creating clear incentives, including performance bonuses, volume discounts, and cost-improvement sharing helps keep both parties on track. And forget clauses that allow termination for convenience. Instead, use a material breach or other agreed-to business condition, such as operational underperformance or financial bankruptcy, as the trigger.
Worth it now and down the line Traditional stores venturing online and new online-only retailers will find that 3PL providers are a point of strength in e-commerce distribution in the short and long term. Within a few months, a 3PL can turn around a struggling operation, performing more cost-effectively while meeting the retailer’s customer promise, the most vital link in the supply chain. The retailer may find a short-term increase in distribution cost is worth it if customers go from being regularly disappointed to consistently thrilled. Working with a 3PL is also one of the fastest ways to access deep experience in managing e-commerce across multiple businesses, along with tier-one WMS systems, which open up opportunities for making advanced warehouse improvements. For the long term, 3PL providers lend a valuable outside perspective that can constructively challenge internal thinking. They see what has worked and what has not for other companies while also knowing where the overall industry is heading. For growing retailers, they can provide step-change opportunities, required capex, and gain-share where they have skin in the game. So whether you are a long-time retailer adding online to your channel mix, or an online-only company, pairing up with an e-commerce 3PL could be the best solution to some of the most important distribution challenges. The authors would like to thank Nick Sowell for his valuable contributions to this paper. -www.atkearney.com
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U success Driving to 2016 was a very good year for UD Trucks. While the rest of the GCC market was shrinking, the commercial vehicles company saw its sales soar improving in all the major GCC markets. Munawar Shariff quizzed Mourad Hedna, UD Trucks Middle East President, about the secret to the company’s success
D Trucks has been present in the Middle East region for more than 60 years, the Japanese company is (somewhat) headquartered in Dubai. Besides the dedicated operational and management team in Dubai, UD Trucks also has an 8,000 sq metre modern warehouse for spare parts in Dubai with more than 60,000 parts available, which is an important asset that provides greater availability of spare parts to the company’s partners and customers across the region. UD Trucks also runs an advanced Competence Development Centre that supports MENA customers and dealers with all the technical and commercial training that they need. Lately, UD’s all-new Quester range has proven to be most popular in the MEENA region. It’s no surprise really the multipurpose truck was specifically built for Middle East customers.“We wanted to develop a truck that met the wide variety of needs specific to the region,” Mourad Hedna, President UD Trucks Middle East, says.“Including off and on-road use, construction, distribution and long-haul transportation.” Hedna – and by extension UD – believes that the Quester’s success stems from the fact that it was developed focusing on essential key areas, it excels on the functional key needs of a typical truck user in Middle East. It is a truck that offers the best of two worlds: the flamboyant European touch coupled with the durable Japanese quality.
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Along with the Quester, UD is also banking on the recently-launched Croner to score big with consumers and drive demand – which was also designed with Middle East customers’ demand and business needs in mind. The Croner has been engineered to help customers stay ahead of the competition through the simple concept of saving time. “Quite simply, it is a reliable and versatile truck range built with robust and quality components to deliver extra productivity and superior uptime,” Hedna says. The driveline in particular with both Croner and Quester is very much appreciated by customers. The launch of the new Croner model is the latest important step taken by UD Trucks to ensure that it offers the best solution to the region’s transportation needs The one thing that still grinds the commercial vehicles company’s gears is the rapidly changing market in the Middle East region.“(Over the years) we have seen significant shifts in trends,”says Hedna.“Our customers are increasingly aware of the total
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cost of ownership rather than the price of the truck alone and they want their business to be more efficient and profitable. Our role as a truck manufacturer is to give them all the tools to succeed, not only when it comes to the products, but also the services.” Of course, that’s not to say that the decrease in the price of oil has not had an impact on truck manufacturers. That’s a problem that has affected infrastructure projects across the region. UD, however, is seeing signs of an uplift in the market. “With our great model line-up we are in an ideal position to offer customers the perfect solution to their transportation requirements,” says Mourad Hedna. “Customers are paying more attention to their investment and total cost of ownership is becoming more important.” That is where UD Trucks’ new products, the Quester and Croner, come in. Recently, the company opened a“UD Experience Centre”within the test course of the Ageo Headquarters in Saitama, Japan.
The powers that be believe that the center will help customers, business partners and media learn more about UD Trucks’ heritage as well as its products and after services to enhance further understanding of the UD Trucks’ brand philosophy and get practical advice on how to improve business operations and address logistics issues. UD Trucks is big on the environment front. From basic research and planning, materials used, the production process, vehicles used by customers right down to final disposal, the company is said to carefully consider the environmental impact of all its activities. The company aims to provide products that are created with forethought for the environment, and are focused on the effective use of resources and reduced environmental impact. Every UD product is developed with euro3 and upwards emission standard. In order to improve cost of operation, UD focuses on fuel efficiency while reducing CO2 emissions. Despite what Donald Trump will have you believe, global warming is real.
Published on Jul 11, 2017
Supply Chain, Supply chain management , logistics and supply chain segmentation, warehousing, RFID, healthcare logistics, 3PL, 4PL, six sigm...