June 2015 Issue 16
ENHANCING THE BUSINESS OF LOGISTICS
DWCâ€™s key role in business and revenue
Sharjah and Gulftainer In a growth synergy
Driven by fuel?
ENOC on industry, economy and profits
TAKING CARE OF TALENT And how Gen Y is enhancing productivity
Introducing Temp-Check, the fastest and safest way to get pharmaceuticals across the world.
As the winners of the â€˜2014 Air Cargo Industry Customer Care Awardâ€™, Etihad Cargo proudly announces Temp-Check, our newest service designed specifically for pharmaceutical cargo requirements. Using the latest technology in temperature-controlled cargo equipment and prioritised ground handling, we ensure product quality and integrity at all touchpoints. And we have invested extensively in training across our global network, so that your cargo reaches its destination in the safest and quickest way possible.
Visit etihadcargo.com for more information.
New Heights in
OPERATE & INTEGRATE WORLD
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SQM TERMINAL WAREHOUSING
The journey that started with a single truck seems a distant memory. Since 1965 our fleet grew over 1,800 trucks and 2,200 various types of trailers such as flatbed, low bed, extendable and semi-hydraulic. In addition to other types of trailers such as conventional hydraulic, SPTs and SPMTs. Our terminal and storage capacity is over 2 million SQM with more than 6.9 million MT of exports a year. Our formula of success is to keep everything 'in-house' starting with employing the right calibers, owning state of the art equipment and utilising the latest technology. Then, we are left with the daily task to integrate all of our resources to offer our clients a holistic logistics & SCM solution.
Heavy Lift Transportation Freight Forwarding Terminal & Warehousing
Please visit www.almajdouie.com to find out more about our integrated services. Tel: +966 13 8198111
Taking care of your workforce SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3978847/3795678 Email: email@example.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven firstname.lastname@example.org Director: Deepak Chandiramani Deepak@signaturemediame.com Managing Editor: Munawar Shariff email@example.com Art Director: B Raveendran firstname.lastname@example.org Production Manager: Roy Varghese email@example.com
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The most important aspect of any business is its workforce. So how do you ensure their productivity? By implementing on valuable feedback? Gen Y (people born in the 1980s and 1990s) are demanding more flexible work hours, compressed work weeks, and the freedom to telecommute. To attract the most talented young workers in the market, many leading companies have taken note, adjusting their policies, taking advantage of technology, and eliminating the stigma that workers have traditionally borne for tapping into these benefits. These changes are having a profound impact on the workplace – and women’s role in it. Flexible work requirements that afford all employees more leeway to meet their commitments outside of work allow more women to seek more demanding jobs while still meeting their family commitments. The longterm result will be a pipeline of women primed for leadership roles – a boon not only to working women but also to companies that benefit from a more diverse pool of talent. According to one Pew Research study, 80 per cent of Millennials expect regular feedback and recognition, 70 per cent expect flexibility and“me time,” and one-third say they would choose these over higher pay. Additionally, Millennials have demonstrated that they will switch jobs more freely than past generations. Moving to another of our prominent stories - on Dubai World Central - the entity completes five years of operation this year and with most of its patrons expanding their facilities, new initiatives specific for SMEs with streamlined processes, a one-stop-shop concept and the recent shift of freighter operations of air cargo giant Emirates SkyCargo has only added to DWC’s credibility not to mention this has been the most powerful endorsement by Dubai’s government to its strategic role as a key economic enabler. As Mohsen Ahmad, VP, Logistics District, Dubai World Central, told me in our last meeting – the alignment of the soft infrastructure is the key to success. And only in Dubai can this be done at the speed at which it has. Hope you enjoy this issue.
Munawar Shariff Managing Editor firstname.lastname@example.org
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June 2015 Issue 16
ENHANCING THE BUSINESS OF LOGISTICS
COVER ILLUSTRATION: B RAVEENDRAN
22 06 News 14 Saudi Arabia – Developing beyond petrol
Saudi Arabia is enhancing beyond its primary revenue source – petrol as it invests in diversification and growth
22 Taking care of talent GSC talks to two industry leaders to understand the growth of the procurement industry and a report on Gen Y and enhancing productivity
30 Driven by fuel? Zaid Al Qufaidi, Managing Director – Marketing, ENOC, talks about the impact of lower oil prices on the industry and economies that depend on its revenue
34 Sustained growth Mohsen Ahmad, VP, Logistics District, Dubai World Central, tells GSC what it takes to create an entity that changes the face of an industry 4 JUNE 2015
40 Sharjah and Gulftainer – in a growth synergy
Iain Rawlinson, Group Commercial Director of Gulftainer, talks to GSC about how the company has grown with the Sharjah’s economy
46 Ahead on all fronts As businesses in the logistics industry look for ways to be more productive, Al-Futtaim Logistics has relied on innovation, technology and people to achieve success
52 The search for professionals
The 2015 CIPS Middle East Conference saw record attendance and a positive outlook for the future
54 Taking in technology Middle East IT spending is projected to increase by 5.2 per cent from last year, according to the latest forecast by Gartner, Inc
56 Celebrating a milestone Dubai World Central marks Kuehne + Nagel’s 125th Corporate Anniversary with a unique showcase of the company’s history and association with the UAE
58 A healthy investment Hellmann Calipar expands operations at Dubai World Central, becoming the largest dedicated healthcare logistics facility in the ME
60 Unwind Safety first Paul Kinsella, Senior Director and Country General Manager, CHEP, talks about how his employees’ safety is on the top if his agenda everyday
We can help your business grow. When it comes to integrated logistics solutions across the supply chain, you can trust Al-Futtaim Logistics to get your business moving ahead. Automotive: Vehicles, Spare Parts, Machinery | Retail: Fashion, Hanging Garments, Electronics, High Tech, Furniture Engineering | Industrial | Project Cargo: Heavy Lift and Break Bulk | Humanitarian
P.O. Box 61450, Dubai, United Arab Emirates. Tel: +971 4 881 8288, Fax: +971 4 881 9157 e-mail: email@example.com www.aflogistics.com
DHL increases global visibility with CNN Following its successful sponsorship of CNN’s The Circuit, DHL is extending its brand campaign with the network spanning multiple platforms, and new CNN feature strand Traders. CNN is DHL’s exclusive international media partner as the leading logistics company positions its solutions to a wide range of global businesses – from large enterprises to SMEs. The campaign includes sponsorship of The Circuit and Traders linear TV content and all online components on CNN.com and CNN Money, as well as spot advertising across the network. DHL is expanding its relationship with CNN due to the results delivered through its existing campaign focused around The
Circuit. DHL’s new sponsorship is of Traders, a feature strand that tells the extraordinary stories of trading goods and services worldwide. Covering the human stories behind the global import and export markets, Traders is a segment airing fortnightly during CNN International’s The Business View with Nina Dos Santos and on CNN domestic’s CNN Newsroom Weekend.
Megan Collinicos, Head of Advertising and Public Relations for DHL Express SubSaharan Africa)
DHL contest to send five lucky children from Africa to London As the Official Logistics Partner for Rugby World Cup 2015 (RWC2015) to be held in England, DHL has announced the launch of the DHL Match Ball Delivery competition across Sub Saharan Africa. This platform offers a once-in-a-lifetime experience to five children and their guardians to become a part of rugby history by delivering the official Match Ball onto the field at Rugby World Cup 2015 in London. This forms part of DHL’s global competition where 48 lucky children aged eight to 15 years from all over the world will win the opportunity to deliver the official Match Ball onto the field of play at Rugby World Cup 2015 matches. In addition to delivering the official Match Ball on to the field, the prize package includes flights and accommodation for the winning child and their guardians, RWC 2015 DHL Merchandise and an official Match Ball delivery photo as a memento. Rugby World Cup 2015 will consist of 48 matches played by 20 nations over 44 days. Visit www.facebook.com/DHLAfrica to enter.
Swisslog develops its presence in the Middle East
Warehouse automation specialist, Swisslog, is extending its presence in the Middle East with a new office based in Dubai and new legal entity, Swisslog Middle East LLC. The new business is intended to provide
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stronger local support to allow the growing number of Middle Eastern automation customers to stay ahead of their competition. The Dubai office will be headed by Frédéric Zielinski, General Manager of Swisslog Middle
East LLC who joined the business in 2004. Swisslog’s portfolio consists of different key technologies, such as conveyor systems, ASRS, AGVs, monorails, and software to help businesses maximize their
intralogistics potential. Swisslog hopes to develop the market yet further, with its range of modular solution portfolios that provide order fulfilment, split case picking, returns management and other common warehouse processes.
Middle East Policy Makers urged to embrace technology
Workers at the event
JAFZA celebrates Worker’s Day Jebel Ali Free Zone organised a fun-filled Worker’s Day to celebrate the workers’ huge contribution in building a healthy and prosperous society and a thriving community. More than 50,000 workers are living in seven high-class multi-storeyed staff accommodations in Jafza. The event, which took place in massive football ground in Jafza South, aimed to raise awareness among workers about the significance of healthy food, balanced lifestyle for their
well-being, and also provide them a platform to show their talent. Several senior Jafza officials joined the well-attended event, which included a Talent Show, several game outlets, and an open-air theatre. There was also a medical-camp in collaboration with Cedars-Jebel Ali International Hospital to provide workers basic health check and also educate them on the healthy food and a balanced lifestyle that has room for physical exercises and also leisure activities.
Technology will be a ‘game changer’ in tackling youth unemployment in the Middle East and North Africa’s emerging Digital Economy, but only if the government, private, and people sectors collaborate effectively, according to a new report released on the eve of the World Economic Forum on the Middle East and North Africa (MENA) 2015. The report, titled ‘Re-Dynamising the Job Machine: Technology-Driven Transformation of Labour Markets in MENA’, has been produced jointly by INSEAD Business School, the Centre for Economic Growth in Abu Dhabi, and SAP. With 40 million under-unemployed youth and 27 million not in education, employment, or training, the Middle East and North Africa has the highest rate of youth unemployment in the world at 27.2 percent, according to the World Economic Forum, presenting a serious problem for a region where more than half the 369 million inhabitants are under 25. As Internet penetration has jumped 294 per cent in the region between 2007 and 2012, technology has the potential to impact every aspect of labour markets, including better matching of jobs across all sectors, facilitating up-skilling, empowering entrepreneurs, and providing actionable data to decision-makers. MENA companies are increasingly generating ‘ITintensive’ jobs that produce information or knowledge for increasingly digitised business processes, across mobile platforms, cloud-based services, analytics and citizencentric applications – all of which require new skills. Online technologies support the process of upskilling as they can reach more segments of society, and allow people to self-educate, according to the report.
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Air Arabia’s opens new City Terminal Check-in at Dubai’s Al Ghurair Centre Air Arabia has expanded its City Terminal Check-in network with the opening of a new facility at the Al Ghurair Centre in Dubai. City Terminal Check-ins were created in 2012 to provide passengers flying with the airline with increased convenience and flexibility by enabling them to simply drop off their bags and collect their boarding pass before journeying to the airport. The latest facility, located on the ground floor of the Al Ghurair Centre in Deira, will operate seven days a week, from 10.00 am to 10.00 pm. It is equipped to accept baggage from 24 up to three hours before departure, which is then transported straight to Sharjah International Airport. An Air Arabia bus service is also available to take passengers from the Al Ghurair Centre directly to Sharjah International Airport.
Oracle celebrates 20 Years of Java Oracle users and the development community worldwide are celebrating 20 years of Java. Java serves as the critical backbone of software that touches both our work and personal lives. From innovations in enterprise big data, cloud, social, mobile and the Internet of Things, to connected cars, smartphones and video games, Java continues to help developers push the boundaries in technology innovation. “Java has grown and evolved to become one of the most important and dependable technologies in our industry today. Those who have chosen Java have been rewarded many times over with increases in performance, scalability, reliability, compatibility, and functionality,” said Georges Saab, vice president of development, Java Platform Group at Oracle. Introduced in 1995, Java is the programming language of choice for nine million developers and today powers seven billion devices.
8 JUNE 2015
Air Arabia Jordan goes operational with first flight to Kuwait A new era of low-cost aviation in the Levant was ushered in as the first Air Arabia Jordan flight departed its base at Queen Alia International Airport in Amman. The airline’s inaugural flight to Kuwait City was marked by
a ceremony attended by senior executives from the airline, the Jordanian aviation industry and member of the press. Inaugural flight 9P 301 departed Amman QA International Airport at 12:00 pm local time, and was received upon arrival by officials at Kuwait International Airport. Air Arabia Jordan has subsequently launched its services to Jeddah, Erbil and Sharm El Sheikh. The new airline offers customers comfort, reliability, and value for money air travel from and into The Hashemite Kingdom of Jordan. In addition to increasing international connectivity for people living in Jordan, Air Arabia Jordan aims to support the on-going development of the local economy by bringing more tourists and business people into the Kingdom. It will also create a significant number of skilled jobs in the fastgrowing aviation sector. The newly established carrier is managed by Air Arabia Group and will operate a fleet of new Airbus A320 aircraft equipped with the world’s most spacious economy seat pitch.
Etihad Airways and Alitalia welcome UAE Foreign Minister at Expo Milano 2015
HH Sheikh Abdullah bin Zayed Al Nahyan, UAE Foreign Minister (sixth from right) is joined by Abdul Qader Hussein Ahmed, Etihad Airways Vice President Government and International Affairs (sixth from left), and a group of the airline’s Emirati graduate managers, outside the Etihad Airways and Alitalia pavilion at Expo Milano 2015
Airways and Alitalia’s two-storey pavilion by Abdul Qader Hussein Ahmed, Etihad Airways Vice President Government and International Affairs, and members of the airline’s Emirati graduate management programme, who are part of the onsite team at Expo Milano 2015. Highlights of the ground floor, which is open to all visitors, include a multimedia Social Hub and an Imagination Lounge, where cooking demonstrations are conducted by celebrity chefs. In addition, visitors can test their pilot skills on two fully operational flight simulators, while a Kids Area is packed with interactive games, an augmented reality experience, and a 360° Collective Map with Oculus Rift technology. An exclusive lounge on the first floor provides a luxurious and comfortable environment for selected guests to relax and experience the airlines’ awardwinning products HH Sheikh Abdullah bin Zayed Al Nahyan, UAE Foreign Minister (left) first hand. tours the Etihad Airways and Alitalia pavilion at Expo Milano 2015 Etihad Airways and Alitalia welcomed His Highness Sheikh Abdullah bin Zayed Al Nahyan, Foreign Minister of the United Arab Emirates, to their joint pavilion at Expo Milano 2015 last month. The airlines are the Official Global Airline Carriers of Expo Milano 2015, with the theme of ‘Feeding the Planet, Energy for Life’, on till October 31. A total of 20 million visitors are expected to attend from across the world, with Alitalia and Etihad Airways’ pavilion serving as a highlight of the Expo experience. HH Sheikh Abdullah bin Zayed Al Nahyan was given a tour of Etihad
Etihad Airways appoints new GM for Kazakhstan Etihad Airways has announced the appointment of Robert ‘Dougie’ Douglas as its General Manager for Kazakhstan. Douglas, who assumes his new role in July, will lead the airline’s commercial operations in Kazakhstan based in Almaty. He will also be responsible for further growing Etihad Airways’ relationships with its travel trade and corporate customers. With a career spanning more than three decades, including over 10 years with Etihad Airways, Douglas is hailed as an expert airline manager who knows Kazakhstan and the region very well, having previously worked and lived in Almaty. Etihad Airways currently flies daily between Abu Dhabi and Kazakhstan, with five weekly services to Almaty and two weekly services to Astana.
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Emirates Raises Commitment to Portugal with Benfica Shirt Sponsorship Emirates has announced a three-year shirt sponsorship agreement with Portugal’s most successful football club, Sport Lisboa e Benfica (Benfica). Just ten months after Emirates partnered with the club as the Official Airline, Sir Tim Clark, the airline’s President, joined Luis Filipe Vieira at the Estadio da Luz to sign the deal to become the Main Sponsor. Among other benefits, this sponsorship will see the iconic Fly Emirates on the front of the SL Benfica jersey until the end of the 2017/18 season. A special version of the new season kit, featuring the Emirates branding, will be on sale from July 1, 2015. Along with the Benfica agreement, Emirates’ on-going commitment to expand its presence in the country has been emphasised with the confirmation of a second daily flight to the city, starting in early 2016.
NAVTOR AS and Nautic AB join forces E-navigation specialist NAVTOR has joined forces with Nautic AB, the leading provider of navigational equipment, charts and publications to the Swedish market, to launch NAVTOR NAUTIC AB. This jointly owned operation, based in Gothenburg, Sweden, will now leverage the expertise of the two businesses to offer a fully comprehensive navigational data package to the international shipping industry. NAVTOR Managing Director and CEO Tor A. Svanes says there is an obvious synergy and the potential for real customer benefits, adding,“NAVTOR
10 JUNE 2015
is focused on providing navigators with user-friendly digital solutions that reduce their administrative burden and enhance safety, while increasing efficiency for ship managers, owners and operators worldwide. Nautic, with its 100-year track record of success in this segment, was the perfect partner.” The newly formed business will be based in Gothenburg, Sweden. NAVTOR will continue to operate separately from the new entity, marketing its industry leading e-navigation solutions, including its Pay As You Sail (PAYS) ENC service, and the recently launched NavStation, the world’s first digital chart table.
Emirates flies ‘Family Tree’ star to Milan Expo 2015 Emirates helped Mahra Mustafa, star of ‘Family Tree’ make a special visit to the UAE Pavilion of Milan Expo 2015 for a viewing of the film. The ‘Family Tree’, an eight minute long mini feature film, follows a young girl, Sara (played by Mahra Mustafa), as she learns that values and experiences of past generations can help in the quest for a sustainable future. It also sheds light on the palm tree, which forms a major part of the UAE Pavilion, as it is considered to be the backbone of life in the country. The movie is in Italian with English subtitles. Emirates has a dedicated lounge within the UAE Pavilion at Milan Expo 2015. The lounge can accommodate for up to 60 guests, and is anticipated to receive over 27,000 guests during the course of the six month Expo. The airline currently operates three flights per day between Dubai and Milan.
Mahra Mustafa visits the Emirates Lounge at the UAE Pavilion of Milan Expo 2015
logistics & Storage ad.pdf 1 26/05/2015 15:22:11
Dubai Customs and DC World ink agreement of cooperation Dubai Customs and Dubai Customs World (DC World) have inked an agreement of cooperation to boost ties between the two and devise a clear regulatory framework of cooperation. The signing ceremony was attended by HE Sultan Ahmed bin Sulayem, Chairman of DP World and Chairman of Ports, Customs and Free Zone Corporation (PCFC). The agreement was signed by HE Ahmed Mahboob Musabih, Director of Dubai Customs, and Faisal Issa Lutfi, Executive Director
of DC World, in presence of executive directors and heads of departments. Under the agreement, Dubai Customs will support the activities of DC World and help boost its organisational and administrative capacities to ensure it can successfully develop customs administrations on regional and global scales. Dubai Customs is to provide DC World with administrative, technological and technical services and make available the human resources needed to meet its goals.
Dubai Customs and DC World ink an agreement of cooperation in presence of Sultan Ahmed bin Sulayem
Public Transport Agency makes progress in saving power last year The Public Transport Agency, Roads and Transport Authority (RTA) made remarkable progress in saving water consumption last year, according to a report published by the Agency marking UAE celebrations of the World Water Day. Dr Yousef Mohammed Al Ali, CEO of Public Transport Agency, said:“The water consumption in public transport facilities last year amounted to 32 million gallons, recording a drop of about 2.77 million gallons from levels reported in 2013, which were 34.7 million gallons. The Agency succeeded reducing consumption by eight per cent between 2013 and 2014, despite the rise in the number of employees and growth achieved in the business of the Agency.”
GT USA to open Port Canaveral office GT USA announced that it is all set to open its Port Canaveral office in the coming months and has made two key recruitments to drive the operations. Joe Cruise is the commercial manager at the company’s new container and multipurpose cargo terminal, and senior-level administrator Heidi Shafer is the executive personal assistant to Gulftainer Group’s managing director Peter Richards, who oversees the company’s US expansion. Said Richards,“We are committed to building longterm relations with shipping
12 JUNE 2015
lines and cargo enterprises, as well as with the business partners of Port Canaveral Port Authority to establishing Port Canaveral as the terminal of choice. This is highlighted by the opening of our office and the new qualified and experienced personnel who will play key roles in driving our business.” The expansion into the US is part of parent company Gulftainer’s strategic vision to increase its global portfolio and triple its throughput to 18 million TEUs (20-foot equivalent units) within 10 years.
Emrill unveils innovative Emrill Specialist Services Emrill has unveiled Emrill Specialist Services, a new subsidiary, self-delivering special technical skills and services to its prestigious portfolio of clients. Managers for communities and buildings have faced serious challenges when outsourcing specialist services as the processes are complex and quality of service is often not up to required standards. With the addition of Emrill Specialist services, new and existing clients can benefit by recruiting the services of a single vendor, which provides a central point of contact and a service with Emrill’s quality standards. Processes, including communication, billing and costs, are impacted positively through quicker response times, reduced rates and easier accounting procedures. Emrill Specialist Services, is offering world-class annual maintenance contracts, supply and installation, technical consultation, engineering solutions, technical evaluation, risk assessment, life cycle costing and training services. Emrill Specialist Services is enabling strong controls on the quality of service delivery and is projected to not only provide cost savings to clients but also positively impact the company’s profits.
Dubai Investments Park: One-stop multipurpose destination
Dubai Investments Park (DIP), the largest integrated business and residential community in the Middle East, was set up in 1997 with a mission to create a self-contained and master-planned business complex to provide investors with facilities and professional services that set new standards in the region. DIP is owned by Dubai Investments PJSC and is today the premier business park in the entire region that offers investors the right environment for success; their staff with a wholesome working environment and their families with a comfortable community lifestyle. Strategically located within minutes from the Jebel Ali Port and Al Maktoum International Airport, DIP is well connected to Dubai’s key business districts and redefines the idea of a community. Spread across an area of 2,300 hectares, DIP is a city-within-acity offering world-class infrastructure across its three zones – residential, commercial
and industrial, and extending a one-stop destination for manufacturing, housing, academic, research and development, distribution and logistics purposes. Each of these zones has set the benchmark for high quality projects in a well-planned, fully-integrated master community development with unique characteristics and features. As on date, DIP accommodates over 4,500 tenants representing a wide array of industrial establishments, commercial entities and residential units. One of its key offerings, the Residential Zone extends a wide selection of accommodations ranging from villas and town houses to an array of apartments built to the best international standards in terms of design, quality and space. Within the Commercial Zone, companies can design and construct as per DIP standards and tailor-made to their requirements. The zone offers all amenities for international and local investors by providing a range of offices, showrooms and retail outlets.
On the other hand, the Industrial Zone has quickly emerged as a powerhouse in manufacturing ideal for any kind of industry – from light to medium and heavy. The zone provides investors and manufacturers the perfect breeding ground with the world’s most advanced infrastructure. The benefits of quality and ease of access within Dubai and to potential markets in neighbouring emirates and the wider region makes DIP an ideal investment destination. With a 140 kilometre internal road network, the park offers excellent leisure and recreation facilities. In particular, DIP offers a multitude of options in staff and labour accommodation, setting new benchmarks in a quality, lifestyle experience. The infrastructural growth within DIP continues to transform the park into a selfcontained city within a city – reinforcing its identity as the most sought-after development for tenants and businesses looking to invest in Dubai.
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COUNTRY REPORT KINGDOM OF SAUDI ARABIA
Developing beyond petrol
14 JUNE 2015
COUNTRY REPORT KINGDOM OF SAUDI ARABIA
The largest industrial power in the Middle East region, Saudi Arabia, is enhancing beyond its primary revenue source - petrol. Although heavy industry and petrochemicals still dominate, other segments are fast catching up as the country invests in diversification and growth
growth in 2010 and 2011. Industry accounted he largest industrial power of the for 10.1 per cent of GDP in 2013, or 7.7 per GCC states by far, Saudi Arabia is cent, when refining is excluded from the figure, also one of the leading industrial more or less unchanged from the two previous powerhouses of the world in a years. Despite such growth, the Kingdom number of key sectors. National still has a negative industrial trade balance. industry is dominated by petrochemicals and Manufacturer exports were worth AED 128 the country ranks as the third-largest global billion (US$ 35.08 billion) in 2012, according to producer of basic petrochemical ethylene, due data from the CDSI, representing 9.03 per cent in large part to the availability of extremely of total Saudi exports by value, in comparison to cheap natural gas feedstock. manufacturer imports of AED 379 billion (US$ State-backed Saudi companies, in 103.35 billion), or 67 per cent of total imports. partnership with foreign investors, are also However, industrial exports and industrial moving to significantly boost other heavy output more generally are set to grow industrial activity, through the construction of substantially. Under the new large-scale projects Kingdom’s National Industrial and industrial cities in Strategy, ratified in 2009, the the metals and fertilisers There are authorities aim to raise the segments in particular. contribution of industry (including As a result, the Kingdom increasing signs heavy industry) to GDP to 20 is now also one of the that plans are per cent by 2020, as part of wider largest producers of key to diversify the economy fertilisers. The authorities coming to fruition, efforts away from its reliance on are also hoping that downstream lighter with several foreign hydrocarbons production, as well as to increase industrial exports to manufacturing activities firms currently 35 per cent of total exports. will expand on the back of Said Fahad Al Kaffary, the the increasing availability considering major general manager of Falcon of domestically produced investments Company for Plastics Industry, raw materials, boosting “Saudi Arabia has the potential local employment. to be a manufacturing hub thanks to There are increasing signs that such plans are government support, low input costs and the coming to fruition, with several foreign firms Kingdom’s strategic geographic location.” currently considering major investments. One of the main goals of the strategy is to improve job prospects for Saudi nationals, and Sector growth the authorities are also targeting an increase Industrial activity has been growing rapidly in the contribution of industry to overall in Saudi Arabia in recent years. After taking employment from 15 per cent to 30 per cent. inflation into account, industrial output In order to achieve these goals the (referred to by the Central Department authorities established the industrial clusters of Statistics and Information, CDSI, as initiative, which is overseen by the Ministry manufacturing, but including heavy industry) of Petroleum and Mineral Resources and excluding oil refining grew by 4.9 per cent in the Ministry of Commerce and Industry; the 2012 and 4.7 per cent in 2013. This followed programme aims to attract foreign investment two years of double-digit real annual industrial
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in five key areas. These are the automotive sector, home appliances, minerals and metals processing, plastics and packaging, and solar energy products. The authorities also aim to raise the level of the Kingdom’s industrial technical know-how in a range of fields by attracting increased manufacturing foreign direct investment (FDI).“Partnering with foreign companies allows for knowledge transfer, helping to create a professional environment that encourages further development and improvement of local industry,”said Mohammed Al Meshal, the CEO of the Saudi Food and Drug Authority.
Industrial workforce The industry employed nearly 637,000 people in 2013, according to figures from the CDSI. As with many sectors in the Kingdom, the majority of employees in the sector are expatriates; Saudi nationals accounted for 23.9 per cent of the industrial workforce in
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2013. The government is seeking to increase this figure, and in 2011, the Kingdom introduced the Nitaqat programme, which sets mandatory minimum proportional quotas for Saudi workers in private sector firms based on factors such as company size and sector of activity. Companies that fail to meet their requirements are subject to administrative sanctions such as being barred from renewing employees’ work permits, obtaining visas for new workers and opening new branches. Under the programme, all companies with foreign workers have been divided into three different categories – red, yellow or green. Firms with an adequate number of Saudis employed come under the green category, and they get preferential treatment such as expedited services while handling foreign workers’ visas.“The colour system regulating visas has improved the environment for labour-intensive industries,”explains Loai Nassem, the CEO and founder of fashion company Lomar Thobe.
Heavy industries such as refining and petrochemicals are less affected by Saudiisation initiatives as they tend to already employ high proportions of nationals. As a result, while the government is investing strongly in heavy industry, it is also working to expand downstream lighter manufacturing in sectors such as those targeted under the industrial cluster programme. Industrialists are also calling for increased on-the-job training in order to help boost Saudiisation.“Improving the skill level of the Saudi workforce goes beyond education.You’re not ready to work from day one, you have to learn and grow as an employee. There needs to be investment in the training of employees to help them accomplish this,”said Nasser Al Qahtani, Group CEO of holding company Abdullatif Alissa Group. Supporting local small and medium-sized enterprises (SMEs) also serve as another way of boosting local employment.“To solve employment issues, and to build a
COUNTRY REPORT KINGDOM OF SAUDI ARABIA
stable and diversified economy, you need to support SMEs. They are an important growth engine for any modern economy,”said Abdullah Al Onezi, CEO of the Saudi Paper Manufacturing Company.
Industrial cities The Kingdom’s industrial strategy is heavily based on the development of so-called industrial cities, which are dedicated zones that provide ready-made infrastructure to tenants, including, in some cases, residential and commercial areas for workers. Prior to 2012 investors were free to build industrial facilities on appropriately zoned land anywhere in the Kingdom. However, since then they have been required to establish new facilities within the industrial cities only. The Royal Commission for Jubail and Yanbu (RCJY) operates the largest two industrial cities in the Kingdom in terms of output by value. Jubail, the larger of the two, and Yanbu are
together thought to account Together the cities infrastructure and total for around 12 per cent of planned investment in under MODON’s GDP and between them industrial facilities to be have attracted about US$ located within it stands at purview cover a 144 billion of investment around US$ 80 billion (AED total of 163m sq to date. The two cities are 293 billion). Major projects dominated by heavy industry, in the new zone include the metres of land in particular petrochemicals Saudi Aramco Total Refinery and host around and refining. and Petrochemical Company’s Jubail Industrial City, which (SATORP) refinery, which 5400 tenants alone is thought to account is part of the second phase for around 7 per cent of GDP, of Jubail II and which has is currently being expanded under a project already begun production, and the Sadara known as Jubail II, which began in 2006 and petrochemicals joint venture between Dow which will increase the size of the city by some Chemical and Saudi Aramco, which is being 53 sq km (including a 17-sq km fourth and built as part of the third phase of the project. final phase, work on which has yet to begin). The RCJY is currently developing a new The venture, which is due to be completed by industrial city at Ras Al Khair on the Gulf 2024, is one of the largest construction and coast in Eastern Province. The city will be engineering projects in the world. focused on minerals and metals processing RCJY has committed US$ 3.8 billion – in particular aluminium and phosphates (AED 14 billion) to developing the city’s – with a US$ four billion (AED 14 billion)
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aluminium smelting complex currently under construction to be its centrepiece. Plans for a new heavyindustry-focused industrial city that will not fall under the purview of the commission, Waad Al Shammal Mineral Industrial City, were announced in 2012. The centrepiece of the zone, which is near the northern town of Turaif close to the border with Jordan, will be a US$ seven billion (AED 25 billion) phosphate complex being built by the Saudi Arabian Mining Company (known as Ma’aden), Saudi Basic Industries Corporation (SABIC) and US-based Mosaic.
Under the Kingdom’s National Industrial Strategy, ratified in 2009, the authorities aim to raise the contribution of industry (including heavy industry) to GDP to 20 per cent by 2020
In the zone Another major operator of industrial cities in the Kingdom is the Saudi Industrial Property Authority (MODON). The authority was established in 2001 to take over the supervision of a number of existing industrial zones, and since then has rapidly expanded the number and size of cities under its control, which generally focus more on lighter industry and manufacturing than the RCJY’s cities. MODON currently operates 32 industrial cities, including four or five of which are still in the initial phases of development. It also supervises six privately owned industrial cities. Together the cities under MODON’s purview cover a total of 163m sq metres of land and host around 5400 tenants. The size of the cities varies substantially, from 500,000 sq metres to 25m sq metres for completed cities; two planned cities (Sudair and Al Ahsa II) will be vastly bigger, at 260m sq km and 300m sq km, respectively. Initially most of MODON’s sites were established in and around large and medium-sized cities; however, it is now concentrating on less developed parts of the Kingdom in order to stimulate economic growth. The authority previously focused on providing infrastructure and land, but has recently begun building ready-made factories for tenants, aimed at small and medium-sized
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enterprises. The factories are built to a single standard model and have 1500 sq mts of space, including a 600 sq metre production area. The authority aims to have completed 200 such factories by the end of 2014, and 1,000 by the end of 2015. The largest of the authority’s cities in terms of current production value is Riyadh Second Industrial City. The 300 sq km Salwa Industrial City, also known as Al Ahsa II, when completed, will be the biggest of the cities under MODON’s management. The zone, the first phase of which is due to be completed in late 2014, is located on the Gulf coast near the border with Qatar, and is intended to attract investment from both countries.
Economic centres The Kingdom also has four privately funded ‘economic cities’ that contain industrial cities of their own, the development of which is being overseen by the Saudi Arabian General Investment Authority. The largest of these is King Abdullah Economic City (KAEC) on the Red Sea coast near Rabigh, which is being developed by real estate firm Emaar, The Economic City. KAEC includes a 63 sq km industrial zone, known as the Industrial Valley, with a focus on fastmoving consumer goods, pharmaceuticals, plastics, construction materials and automotive manufacturing. Construction on KAEC began in 2006 and the three phases of its development are due to be completed by 2020. The development of infrastructure for the first phase of the industrial valley has been completed. “The infrastructure of the industrial cities is generally good,”said Yousef Abdullah Al Motlaq, CEO of local manufacturing firm Alessa. However, he said there was an excessive focus on industrial infrastructure in such zones at the expense of other strategic needs.“The industrial cities only address physical requirements such as securing
premises, which are not the main problems for industry,”he added, continuing,“The country’s industrial strategy needs to focus more on issues such as training, the integration of local industries with each other, and ensuring that industrial investments bring real value to the country, protecting local manufacturing from dumping, which is going to kill many of the local industries if no serious actions are taken.”
Financing A key source of funding for national industry is the Saudi Industrial Development Fund (SIDF), a finance institution under the control of the Ministry of Finance that provides medium- and long-term loans to companies undertaking industrial projects in the Kingdom. The fund finances itself through fees charged for evaluating loan applications and for consulting services that it provides to borrowers. At the end of 2013, the fund’s total commitments stood at AED 109827173902.18 (US$ 29.9 billion), with AED 6611669331.90 (US$ 1.8 billion) of loans having been committed to 120 new projects and the expansion of 24 existing projects during the course of 2013, according to SIDF, down from AED 9917503997.86 (US$ 2.7 billion) in 2012. This drop in commitments was mainly attributed to the increasing number of applications received from smaller projects, especially in less developed areas, which stood at 60 per cent of total projects approved in 2013. The segment to have received the most funding from SIDF in 2013 was building materials and cement, on US$ 613.18 million, followed by the chemical industry on US$ 560 million. Makkah Province accounted for nearly half of the total value of loans approved in 2013, at US$ 781.1 million; however, over the past five years, the country’s oil-rich Eastern Province has attracted the most financing from the fund, at US$ 3.9 billion, equivalent to 40.1 per cent of total SIDF funding of US$ 9.7 billion. The maximum loan available to individual projects in major cities is US$ 240 million; this rises to US$ 319.9 million for projects in less developed areas, with the fund providing financing to both Saudi and foreign-backed projects. Industrialists say that financing from other sources is available. Further, in March 2014 the government approved the establishment
COUNTRY REPORT KINGDOM OF SAUDI ARABIA
a European subsidiary, SABIC Europe, with by Saudi Aramco, SABIC and million tpa at the end of 2012, In 2007, around five million tpa of basic chemical the Public Investment Fund ahead of Dow Chemical in the firm also production capacity and two million tpa of (which is controlled by the second position on 13.04 acquired GE Plastics for polymers capacity. SABIC Europe was created Ministry of Finance) of a million tpa, according as a result of the firm’s acquisition of DSM new industrial investment to Oil and Gas Journal Petrochemicals in 2002, followed by that of fund, the Saudi Arabian figures; the firm has a Huntsman’s European chemicals business Company for Industrial further 10.27 million tpa in 2006. In 2007, the firm also acquired GE Investment. The fund will of ethylene capacity at its Plastics for US$ 11.6 billion. have capital of AED 1,957 partially owned sites. million (US$ 533 million) and, SABIC also describes according to the Saudi Press itself as the world’s thirdOil giant Agency,“will focus on conversion largest producer of basic plastics National oil, gas and refining company Saudi industries that rely on petrochemicals, polyethylene (PE) and polypropylene (PP) Aramco is also active in the petrochemicals plastics, fertilisers, steel, aluminium and basic and the world’s largest producer of several industry and has ambitious expansion plans industries.” other petrochemicals including monoethylene in the sector. In 2011, Saudi Aramco launched glycol (MEG) – with production totalling 6.46 its so-called Accelerated Transformation Plan, million tonnes in 2012 – and methyl tertiarywhich aims to transform the company into the Petrochemicals butyl ether. The firm’s total production across top integrated energy and chemicals firm in Unsurprisingly, in view of the Kingdom’s all products stood at 61.1 million tonnes in the world by the end of the decade and one of enormous hydrocarbons reserves, 2012, up from 58.6 million tonnes in 2011 and the world’s top-three aromatics producers by petrochemicals production represents the 47.8 million tonnes in 2008. This included just 2018. In January 2014, Saudi Aramco’s CEO, largest individual branch of Saudi industry. under 40 million tonnes of chemicals, as well Khalid Al Falih, said that the firm also intends While the authorities are keen to develop as 9.1 million tonnes of polymers. to become one of the world’s top-three other areas, petrochemicals remain a key The firm also has stakes in various metals petrochemicals companies. focus.“We should not be ashamed of being and fertiliser outfits. The Saudi government The firm produces petrochemicals at its specialised in petroleum and petrochemical holds a 70 per cent stake in the company, Petro Rabigh joint venture with Sumitomo industries. We are blessed with comparative which is also listed on the Saudi Stock Chemicals, which in addition to making advantages in these areas and should utilise Exchange; SABIC registered a total sales refined products also operates a 1.3 them,”said Ahmed Al Ghannam, the directorturnover of US$ 50.4 billion in 2012 and million tpa ethane cracker and has around general of the Saudi Export Programme. profits of US$ 6.7 billion. three million tpa of total petrochemicals As of end-2012, Saudi Arabia was the SABIC’s newest major petrochemicals production capacity, including 700,000 tpa world’s third-largest producer of basic complex, the Saudi Kayan complex located of MEG capacity, 600,000 tpa of linear LDPE petrochemicals and plastics precursor in Jubail (in which SABIC (LLDPE), 300,000 tpa of HDPE material ethylene, on capacity of 13.16 holds a 35 per cent equity and 300,000 tpa of PP. The million tonnes per annum (tpa), behind stake), came on-stream in facility is also currently China on 13.78 million tpa, and the US on Companies that 2011. The complex is one of being expanded under a 28.1 million tpa, according to Oil and Gas the largest petrochemical US$ seven billion (AED 25 Journal. Jubail Industrial City is the world’s fail to meet their facilities in the world, with billion) project known as largest petrochemicals cluster, and the requirements 1.48 million tpa of ethylene Rabigh II, which includes Kingdom also hosts two of the world’s largest production capacity, 630,000 construction of a new ethane ethylene complexes, namely the Arabian are subject to tpa of propylene capacity, cracker and aromatics Petrochemicals Company in Jubail in third administrative 350,000 tpa of PP capacity, complex and which will see place, with capacity of 2.25 million tpa, and 400,000 tpa of high-density Yanbu Petrochemical Company in ninth place, sanctions such as it start to produce additional PE (HDPE) capacity, 300,000 petrochemicals including with 1.71 million tpa. being barred from paraxylene/benzene, methyl tpa of low-density PE (LDPE) capacity, 566,000 tpa National company renewing employ- methacrylate monomer and of MEG capacity, 550,000 ethylene propylene rubber The largest player in the country’s ees’ work permits, in 2016. tpa of ethylene oxide petrochemicals industry is SABIC. The capacity and 260,000 tpa Together with Dow company describes itself as the largest non-oil obtaining visas of polycarbonate capacity, Chemicals, Saudi Aramco firm in the Middle East; it is also the world’s for new workers among other products. is also working on the largest petrochemicals firm, both by market In addition to its Saudi of a massive capitalisation and in terms of ethylene and opening new construction facilities, SABIC also has new petrochemicals complex production capacity at its wholly owned operations abroad including in Jubail Industrial City complexes. This latter figure stood at 13.39 branches
US$ 11.6 billion.
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II, known as Sadara, which is being built at an investment cost of around US$ 19.3 billion (AED 70 billion). The project, which Saudi Aramco describes as the largest petrochemicals complex to have ever been built in a single phase, will have a total production capacity of around three million tpa, including around 1.5 million tpa of ethylene output capacity and 400,000 tpa of propylene capacity, utilising a multi-feed cracker – the first in the Middle East – that will be able to use naphtha as feedstock as well as ethane. The complex will also produce numerous other petrochemicals, including LDPE, LLDPE, propylene glycol, amines and polyurethanes. The project is due to be completed in 2015 and to enter into full production in 2016. Dow and Saudi Aramco plan to launch an initial public offering for a stake of 30 per cent in the project, though it is currently unclear when this will take place. Other firms are also active in the sector. October 2012 saw the operational launch in Jubail of Saudi Polymers’ petrochemicals complex, a joint venture between privately owned Saudi firm National Petrochemical Company, which holds a 65 per cent stake in the project, and Chevron Phillips (which holds the remaining 35 per cent). The complex uses natural gas and propane as feedstock and has 1.22 million tpa of ethylene production capacity, as well as 1.1 million tpa of PE, 440,000 tpa of propylene, 400,000 tpa of PP and 200,000 tpa of polystyrene.
Feedstock issues Petrochemicals production in the Kingdom is largely based on the use of locally produced natural gas as feedstock, which is provided to producers for the effectively subsidised price of US$ 0.75 (AED 2.75) per million British thermal units. This is the lowest price for gas feedstock in the world, giving the industry a substantial competitive advantage. However, several developments suggest this advantage may be somewhat reduced in coming years. For example, there has been recent speculation that the authorities might raise the price of gas to incentivise more efficient use of the commodity as well to encourage foreign energy firms to step up gas exploration, and in November 2013 the assistant minister for petroleum affairs, Prince Abdulaziz bin Salman, said that prices
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for petrochemicals firms were under review. The National Commercial Bank also issued a report suggesting that increasing global production of shale gas, in particular in the US, could push down international gas prices, which in turn could effectively reduce the comparative advantage held by Saudi petrochemicals producers. However, such fears are likely overplayed to an extent. It is unclear if any change to domestic gas prices will actually occur, and given their extremely low current base, the Kingdom may be able to increase prices substantially without seriously undermining the industry’s competitiveness. As regards international gas prices, in December 2013, Saudi merchant bank Jadwa Investment issued a report arguing that US production of unconventional hydrocarbons will have a smaller impact on international markets than is widely believed, and that the shale gas boom will likely be comparatively short-lived. In the meantime local industry players are looking to take advantage of the trend; SABIC in October 2013 said it was in discussions with
a number of potential partners as regards the use of shale gas as feedstock for expanding its petrochemicals output in the US. Nevertheless, in light of concerns that rising gas consumption for electricity generation could reduce the availability of ethane for petrochemicals production in the Kingdom, Sadara’s choice of a mixed-feed cracker that can use naphtha as a feedstock may be a sign of things to come. Saudi Aramco and Total are undertaking a feasibility study to examine increasing production of naphtha at their new SATORP refinery in Jubail and, according to media reports in September 2013, a decision to go ahead could see as many as six new naphthafed crackers constructed in the country, each with a production capacity of at least two million tpa. Furthermore, in March 2014, Saudi Petroleum and Mineral Resources Minister Ali Al Naimi said that SABIC plans to build a new petrochemicals facility in Yanbu that would use crude oil directly as a feedstock, without first refining it. Saudi Aramco has reportedly
COUNTRY REPORT KINGDOM OF SAUDI ARABIA
been carrying out research on how to achieve this for many years, and US oil firm ExxonMobil opened up the first petrochemicals facility to do so in Singapore in 2013.
Saudi Cement Company, with production of around
8.75 million tpa in 2012.
The US Geological Survey puts 2012 cement production in the Kingdom at an estimated 43 million tonnes, ranking Saudi Arabia as the 12th-largest cement producer in the world. Production has been growing rapidly over the last decade or so, from around 22 million tonnes in 2002, and several major new factories have come on-stream in recent years.“Population growth, and government and private sector spending on megainfrastructure projects are helping to drive the expansion of the building materials segment,” said Ali Al Ayed, director-general of SIDF. Population growth is currently running at around two per cent a year. The government in 2011 announced plans to build 500,000 new housing units in order to address a shortage in the country, which should add to demand, though the initiative has been slow to get off the ground. Major construction and investment projects such as the various industrial and economic cities being built in the Kingdom are also helping to push up consumption levels. In order to avoid domestic shortages, and amid concerns about price rises, the government in recent years has repeatedly intervened in the sector by, for example, instructing cement producers to operate at full capacity and periodically putting in place export bans.“Reform efforts to decrease handling charges and adjust export tariffs could open significant potential for export of building and construction materials,”said Khalid Al Amoudi, the vice-chairman of Saudi Red Bricks. The largest cement producer in the Kingdom by output is Saudi Cement Company, with production of around 8.75 million tpa in 2012. The firm operates two plants in Hofuf and Ain Dar, both of which are located in Eastern Province. Other prominent producers include Southern Province Cement Company and Yamama Cement Company. The sector has also attracted international
investment in the form of French building materials major Lafarge’s stake in Al Safwa Cement Company, which was established in 2007 and which operates a two million tpa facility north of Jeddah.
Crude steel production stood at 5.2 million tonnes in 2012 and 5.35 million tonnes in 2013, according to the World Steel Association. Output has been increasing steadily over the long term, from 2.98 million tonnes in 2000. The Kingdom is the largest producer of the commodity in the GCC. While the global steel industry is still suffering from over-supply, construction activity in Saudi Arabia is driving demand for the commodity, and the Kingdom relies to a significant degree on imports. Sharjeel Azhar, the CEO of Al Ittefaq Steel, said,“Demand for steel and other construction materials is strong thanks to all the mega projects such as the new metros, which will sustain high demand for several years.” SABIC is the major player in the national crude steel industry, via its wholly owned subsidiary Hadeed Saudi Iron and Steel Company, which describes itself as the leading steel producer in the region. The firm, which is based in Jubail Industrial City, has more than 3.3 million tpa of long products production capacity and 2.2 million tpa of flat products capacity. Recent developments in the sector include the inauguration in January 2014 of a new 600,000-tpa joint venture factory in Jubail by ArcelorMittal, the world’s largest steel-maker, and its local partner Al Tanmiah Company for Industrial and Commercial Investment. The plant, which was built at an investment cost of more than US$ one billion (AED 3673149628.84), will produce seamless tubular products and pipelines. In the aluminium sector, Ma’aden and Alcoa World Alumina and Chemicals (a joint venture between American firm Alcoa and Australia’s Alumina) are currently building an integrated aluminium complex in Ras Al Khair industrial city, at a capital investment cost of US$ 10.4 billion (AED 3820075613.99). Ma’aden has a 74.9 per cent stake in the project, which it says will be the largest
vertically integrated aluminium complex in the world, with Alcoa holding the remaining equity. The complex includes a 740,000-tpa aluminium smelter that began producing metal in 2012 and that has single-handedly brought the Kingdom into the ranks of the top 20 aluminium-producing countries. The refinery will be fed by a 1.8m-tpa alumina refinery due to enter into operation by the end of 2014; in the meantime the smelter is being fed by imported alumina. The refinery in turn will use bauxite extracted from a four million tpa new mine at Al Baitha in Qassim Province that is due to begin production in the second quarter of 2014; a newly constructed railway line will transport the bauxite from Al Baitha to Ras Al Khair. An aluminium rolling mill is also under construction and will begin operations towards the end of 2014. The mill will produce sheet aluminium for use in the food-canning, automotive and construction industries. The new complex is part of Alcoa’s strategy to reorient its aluminium production capacity towards the Middle East to take advantage of lower electricity costs.
Outlook Heavy industry and petrochemicals are set to retain their dominance in Saudi industry for the foreseeable future, with several new large projects due to come on-stream in the coming years. However, these projects will also expand the domestic availability of raw materials for downstream manufacturing, and there are increasing signs of interest from major foreign investors in a range of lighter, less traditional industrial segments. Whether or not expanding activity will see industry’s share of GDP rise in line with diversification targets will depend to a large extent on oil prices, and the authorities will also face challenges in turning industrial growth into jobs for nationals. However, industrial output appears set to increase substantially in absolute terms, and to become increasingly diversified, in coming years. - Originally published by Oxford Business Group (OBG) in The Report: Saudi Arabia 2014, published in August 2014, Industry Chapter. For economic news about The Kingdom of Saudi Arabia and other countries covered by OBG, please visit http://www.oxfordbusinessgroup.com/ economic-news-updates
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Taking care of GSC talks to two industry leaders to understand the growth of the procurement industry and creating suitable talent for the same.
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ith advancements in the procurement and supply industry, driven by dramatic global political and economic developments, professionals are expected to deliver more value, for both their organisation, and the wider region. The 2015 CIPS Middle
East Conference addressed this topic, and GSC spoke to Sam Achampong FCIPS, Chairman, CIPS UAE Fellows Committee: How has the procurement industry for professionals in the logistics and supply chain industry changed over the last five years, and what is the outlook for the next five? Increasingly, procurement professionals are
having to demonstrate value over and above bottom line cost savings. The global financial crisis of five years ago and other headline incidents such as the Tescoâ€şs Horsemeat incident, fatalities in factories in Bangladesh and the recent plunge in oil prices, has put into focus the need for buyers with the requisite skills to be in place to manage all aspects of the supply chain to ensure value is maintained and risks mitigated.
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How have businesses changed their strategies to embrace the changing market? There is definitely a shift towards long term sustainable strategies as opposed to previous short term â€šfixesâ€ş. Where previously an organisation would be seeking the lowest bottom line costs for supply of goods and services, nowadays we see that increasingly, ensuring cost certainty over the short to medium term, is becoming a preferable strategy.
What is the biggest challenge the market currently faces, and how should this be addressed? The downward shift in oil prices is the main headline right now, but in my mind, the market faces an ongoing challenge to create and maintain the talent needed to navigate the modern day issues we are facing. More appropriately, skilled people are needed within the procurement and supply industry to ensure that strategies can be devised and implemented, to ensure the solutions are sustainable.
Where does the procurement market currently stand? What are potentials that need to be tapped by governments and businesses in the region? In the Middle East region, procurement is gaining increased recognition. However, the profile of the profession still has some way to go to ensure the right people, with the relevant skills, are in place. Unlike, for example, the recent London Olympics, where the procurement contribution was widely acknowledged, a
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With the drive to reduce the reliance on expatriate talent, and to ensure long term employment for their native population, this has to be a key way forward. benchmark does not yet exist in this region to inspire those moving out of academia to choose procurement as their first career choice. What is the situation for top talent in the region, and how are businesses attracting and retaining these professionals? Highly skilled and qualified procurement professionals in this region are already highly sought after. This means that where the incumbent organisation cannot satisfy an individualâ€™s aspirations, retention is difficult. Whilst this is not particularly unique to this region, the relative lack of recognition of the function at C level means that top talent are increasingly drawn to large multinationals as opposed to local or regional organisations. Which industry would you say is most in need of this talent because of expansion? As procurement spans all industries, it is hard to specify a sector. However, traditionally the oil and gas sector has always
invested highly in the upskilling of its human resource, including those in procurement. Whether the current pressure on oil prices changes this paradigm remains to be seen. Some inputs by Duncan Brock, FCIPS, Group Customer Relationships Director, CIPS What’s the best way to develop capabilities in the local supply base in the Middle East? One way is to help suppliers with tendering processes, ie, what they need to do to comply with corporate processes. Training programmes can be of huge benefit to understanding such processes. We also need to help businesses understand and access local funds to help them invest and grow. When their efforts are unsuccessful, they need to have the correct feedback so they know what to do better next time – this will ensure an environment of continuous improvement. One also needs to look at total cost of ownership when considering bids – local suppliers might be a slightly higher price but the same or lower total cost. There are great benefits to be had by encouraging international suppliers to partner with local ones. However, an environment and culture must be created to enable this to happen. What progress has there been for women working in procurement and supply management? There has been tremendous progress on gender equality in the workplace in the GCC countries in the last ten years, as all different kinds of organisations and governments realise the importance and necessity of including and promoting women in the workforce. With the drive to reduce the reliance on expatriate talent, and to ensure long term employment for their native population, this has to be a key way forward. One of the best examples I have seen is an all-female cohort going through a CIPS programme at SABIC in Saudi Arabia to support the development of local female functional leaders.
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Gender matters for Generation Y Workplace flexibility not only accommodates a new generation of workers, but also provides a hidden opportunity to draw and keep women in the workplace. In a world of dual-income households, the struggle to balance family responsibilities and rigid work requirements is common. Faced with the challenge, many women (and men) have opted for less demanding professional roles. But Generation Y – also known as the Millennials – is upending that trend. As adults born in the 1980s and 1990s come into their own, they are demanding more flexible work hours, compressed work weeks, and the freedom to telecommute. To attract the most talented young workers in the market, many leading companies have taken note, adjusting their policies, taking advantage of technology, and eliminating the stigma that workers have traditionally borne for tapping into these benefits. These changes are having a profound impact on the workplace - and women’s role in it. Flexible work requirements that afford all employees more leeway to meet their commitments outside of work allow more women to seek more demanding jobs while still meeting their family commitments. The long-term result
2015 Source: US Census Bureau
will be a pipeline of women primed for leadership roles – a boon not only to working women but also to companies that benefit from a more diverse pool of talent.
A changing landscape By 2025, Generation Y and its successors will comprise more than half of the global population and 75 per cent of the workforce (see figure 1). Employers will not be able to ignore the demands of these workers. When it comes to their careers, the Millennials (and we assume the generations that follow) want to be productive in a different way. They want to work when and where they work best, whether at home, on the road, after hours, or part-time, and they want recognition for what they do (see figure 2). According to one Pew Research study, 80 per cent of Millennials expect regular feedback and recognition, 70 per cent expect flexibility and “me time,” and one-third say they would choose these over higher pay. Additionally, Millennials have demonstrated that they will switch jobs more freely than past generations
Millennials will comprise the majority of the workforce by 2025
2030 Generation X
2040 Generation Y
– turnover is nearly double the rate of Baby Boomers. Fortunately, it is easier than ever for companies to adjust to these demands, thanks to technology that includes wireless connectivity, video conferencing, and social networking tools such as Yammer. Technology facilitates communication and collaboration within companies and with customers, partners, and suppliers.
Adjusting to new demands
80 per cent of Millennials expect regular feedback and recognition, 70 per cent expect flexibility and “me time,” and one-third say they would choose these over higher pay
As Baby Boomers begin their retirement in earnest – the oldest are just a few years away from 70 – many companies have already begun adjusting policies to attract and retain Millennials. According to the National Study of Employers, 79 per cent of companies report periodically giving employees at least some flexibility to adjust their start and finish times, and roughly one-third report doing so on a daily basis. Thirty-eight percent of companies also report allowing employees to work longer hours but fewer days for at least part of the year. Google, perhaps the archetype of Generation Y workplaces, has been first on Fortune’s Best Companies to Work For list for four years running. The company has enhanced its undisputed productivity and creativity in part by giving employees free
reign over 20 per cent of their work week. Its renowned onsite perks (in 2012, it added three wellness centers and a huge sports complex) provide work-life balance even while at the office. Canada’s Royal Bank Financial Group reports that flexible work arrangements not only support its work-life and diversity efforts but also improve business performance, enhance customer service, reduce expenses, and position the company as a desirable place to work. Ocean Spray Cranberries scrapped its 8 a.m. workday start and implemented more flexible hours to accommodate young hires who make the one-hour commute from Boston, where they prefer to live, to Ocean Spray’s headquarters in Lakeville, Mass. And Chegg Inc., a Silicon Valley online textbookrental service that was struggling with high turnover, introduced unlimited paid vacation – a perk that no one has abused. In a world of dual-income households, the struggle to balance family responsibilities and rigid work requirements is common. But Generation Y is upending that trend. These changes have been a particular boon to working women. Biopharmaceutical giant Bristol-Myers
Squibb discovered that of the employees hired in the past three years, 30 per cent of women report that flexible work arrangements drew them to the firm, compared to just 12 per cent of men.
Shifting the burden For reasons both cultural and institutional (for example, many countries offer longer parental leaves for mothers than fathers), women still shoulder most of the burden of childcare. However, changes in workplace flexibility could shift the balance. For example, better work-life balance programs will attract more female workers. And companywide, gender-neutral flexibility can give both males and childless colleagues (men and women) the same options as programs traditionally designed for women with childcare responsibilities. Refocusing the childcare issue as one about parents rather than about mothers only, and strengthening both parents’ ability to combine work and home responsibilities, will enable more women to stay in the workforce. The business strategy, therefore, is focused on capturing and retaining the widest array of talent. As more employers offer these opportunities, the result will be the best young workers coming through their doors, a stronger pipeline of women leaders, and more diversity in the top echelons of organisations worldwide. - A report by A.T.Kearney. Authored by Beth Bovis, Lolo Cardoso, Robyn Wright and Johan Gott with contributions from Amanda Kozlowski and John Walsh.
Generation Y workers demand greater workplace flexibility
Degree of impact on attracting and retaining Generation Y workers
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في اختيار صناعة املشتريات لتكون أول محطة في حياتهم املهنية ما هو وضع أفضل املواهب في املنطقة ،وكيف تعمل الشركات على اجتذاب واستبقاء هؤالء املواهب لديها؟ املوارد البشرية عالية املهارة واخلبيرة في هذا املجال محل بحث وتنقيب واستقطاب وإغراء مستمر في هذه املنطقة .هذا يعني أنه حيثما وجدت شركة /مؤسسة ال تلبي تطلعات العاملني لديها ،ساعتها سيكون االحتفاظ بهؤالء العاملني أمرا شديد الصعوبة .هذه احلالة ليست فريدة من نوعها أو مقصورة على املنطقة هنا، وهذا يعني فعليا أن أفضل املواهب البشرية يتم جذبها على نحو متزايد للعمل لدى الشركات الكبيرة متعددة اجلنسيات ،مقارنة مع املؤسسات احمللية أو اإلقليمية ما أكثر صناعة – في رأيك -في أشد احلاجة إلى هذه املواهب البشرية بسبب التوسع؟ ألن املشتريات تخدم وترفد جميع الصناعات ،فمن الصعب حتديد قطاع بعينه .مع ذلك ،لعل الرد التقليدي على سؤالك هو حتما قطاع النفط والغاز ،والذي يستثمر بشكل مستمر في مجاالت حتسني مهارات املوارد البشرية لديه ،بالطبع ذلك يشمل املهارات البشرية العاملة في قطاع املشتريات .هذا ما لم تؤدي الضغوط احلالية على أسعار النفط إلى تغيير هذه الصفة في هذه الصناعة 28 JUNE 2015
حتدثنا في مجلتكم مع قادة صناعة املشتريات واإلمداد لنتعرف على تطورات منو قطاع املشتريات وآلية اكتشاف واستقطاب أفضل املواهب البشرية املالئمة للعمل في هذا القطاع مع التطور احلالي في صناعة املشتريات واإلمدادات ،املدفوع بالتطورات السياسية واالقتصادية العاملية املتسارعة ،فمن املتوقع من أطقم املوظفني والعاملني أن جتلب املزيد من القيمة والعوائد للشركات واملؤسسات التي يعملون فيها. تناول هذه النقطة على وجه التحديد مؤمتر الشرق األوسط للمشتريات واإلمداد 2015والذي أقيم في CIPSفي العاصمة أبوظبي في شهر مايو ،2015 حيث حتدثت مجلتكم على هامش املؤمتر CIPSمع سام اكامبونغ ،رئيس جلنة مؤمتر في اإلمارات ودار بيننا هذا احلوار س :كيف تغيرت صناعة املشتريات من وجهة نظر املهنيني والعاملني في صناعة اخلدمات اللوجستية وسالسل اإلمداد على مدى السنوات اخلمس املاضية ،وما هي التوقعات للسنوات اخلمس املقبلة؟ في الوقت احلالي ،وبشكل متزايد أكثر من ذي قبل ،أجد أنه على املهنيني العاملني في مجال املشتريات تقدمي القيمة قبل توفير التكاليف .ركزت األزمة املالية العاملية قبل خمس سنوات، وغيرها من األحداث العاملية األخرى مثل حادث تيسكو وحاالت الوفاة في مصانع بنغالديش والهبوط األخير في أسعار النفط ،كلها ركزت الضوء على JUNE 2015 29
حاجة املشترين املؤهلني باملهارات املطلوبة الالزمة ملواجهة القضايا املعاصرة التي ليكونوا في موقع إدارة كافة جوانب نواجهها .هناك حاجة ماسة للعمالة املاهرة سلسلة التوريد للتأكد من احلفاظ على والقوى العاملة اخلبيرة واملهنية في صناعة تقدمي القيمة وتخفيف املخاطر املشتريات واإلمداد ،لضمان الوصول إلى استراتيجيات ميكن وضعها وتنفيذها، كيف غيرت الشركات استراتيجياتها لضمان استدامة هذه احللول ملواكبة السوق املتغيرة؟ ال خالف على أننا نشهد اآلن حتوال عامليا أين يقف سوق املشتريات حاليا؟ وما نحو تطبيق استراتيجيات مستدامة طويلة هي اإلمكانيات التي حتتاج احلكومات املدى ،عوضا عن إجراء «إصالحات» والشركات في املنطقة إلى استغاللها؟ قصيرة املدى .في املاضي كنا جند في منطقة الشرق األوسط ،تكتسب املؤسسات تسعى لتحقيق أقل تكاليف صناعة املشتريات املزيد من االعتراف ممكنة لتوريد السلع واخلدمات ،وأما في واالهتمام مبرور الوقت .مع ذلك ،ال يزال الوقت احلاضر فأصبحت -وبشكل متزايد هناك الكثير من التطوير الالزم لتنمية اإلستراتيجية السائدةمهارات العاملني في هذه قائمة على ضمان التكلفة الصناعة لضمان توظيف يجب أن يكون على املدى القصير التوجه الحالي للحد وتشغيل أفضل املهارات واملتوسط البشرية املتاحة ،ووضعها في من االعتماد على املواهب الوافدة ،مكانها الصحيح ،وتوفير ما ما هو أكبر حتد يواجه ولضمان فرص العمل حتتاجه لتنتج وتبدع وتبتكر. السوق حاليا ،وكيف على املدى الطويل مثالي في ذلك دورة االلعاب ينبغي معاجلته؟ للسكان األصليني ،االوملبية التي أقيمت مؤخرا انخفاض أسعار النفط في لندن ،حيث شهدت الوسيلة األساسية هو التحدي الرئيسي في االعتراف مبساهمة صناعة للمضي قدما الوقت احلالي ،ولكن املشتريات على نطاق واسع في رأيي ،يواجه السوق في جناحها ،رغم عدم كذلك حتديا مستمرا إليجاد واستقطاب وجود مرجعية قياسية تعمل مبثابة اإللهام وحتفيز واحلفاظ على املواهب البشرية للمتخرجني من اجلامعات والذين يفكرون
fuel? Driven by
Zaid Al Qufaidi, Managing Director â€“ Marketing, ENOC, talks about the impact of lower oil prices on the industry and economies that depend on its revenue. He also discusses the possibilities of alternate fuels and the black market for illegal diesel
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Oil prices and the economy
Zaid Al Qufaidi
The recent dip in oil prices have led to many speculations about how the industry will be affected in the short and long term. From an economic point of view, lower oil prices are favourable for oil importing countries. Since oil is an essential commodity in today’s world, lower oil prices always help in reducing inflationary pressure and boosting economic development.“We have seen in the past that with lower oil prices, demand for goods generally increases. Hence, the transportation/ logistics sector benefits from lower commodity prices. Other aspects remaining constant, lower oil prices boost inter country trade flows. The profitability for the aviation industry will also depend on the level of hedging carried out by individual carriers and flexibility that they have kept to take advantage of the current lower prices,” explains Zaid Al Qufaidi, Managing Director of Marketing, Enoc. Having said that, the impact on the economy is hard to quantify. For the GCC oil exporters specifically, Al Qufaidi feels that they have huge reserves that can serve as a cushion against lower oil price in the short term.“The UAE in particular has a lower fiscal breakeven oil price compared to other oil producers. Hence, the country is able to absorb the current prices and continue development initiatives as planned,”he adds.
Diversification for non oil revenue dependance Another factor to keep in mind is the UAE’s focus on diversification, with various sectors contributing to GDP growth. A key government strategic development
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The UAE has a lower fiscal breakeven oil price compared to other oil producers. Hence, the country is able to absorb the current prices and continue development initiatives as planned
priority is to steer the economy away from oil dependence by developing the non-oil economy. The development of the non-oil economy is heavily linked to the development of Dubai, which has become a regional trading and financial powerhouse as well as one of the Gulf region’s prime tourism destinations. The government has also greatly increased spending on infrastructure expansion. In addition, the UAE has attempted to create commercial ties with foreign countries outside of the region in order to attract FDI, with a focus on Asian markets. Oil prices have declined by about 55 per cent since September 2014, and in late November, the Organisation of the Petroleum Exporting Countries (OPEC) decided not to cut production. Since then, markets expect oil prices to be around $57 (AED 209.37) per barrel on average in 2015 (a decline of about 43 per cent from October 2014). “Uncertainty remains over the future path of oil prices, pointing towards the possibility of short-term volatility. Downside risks stem from the possibility of weaker-than-expected demand growth in key advanced or emerging economies. Upside risks relate to the possibility of supply disruptions – for example, in Iraq – or to a decision by the OPEC to cut production,” states Al Qufaidi.
Alternate fuel sources Nonetheless in the long term, development of alternative fuel sources can potentially dampen the demand for oil from traditional sources. “However, this also is very much dependent on the investment that goes into the development of alternative
sources at the producer level, and ultimately at the consumption level. Until and unless there is greater push from the government’s side, the use of alternative fuel can remain minimal at best,”he adds. From an environmental perspective, alternative sources of energy must be encouraged, as from the supply perspective, traditional sources of energy are depleting. It is important to note here that, in the last decade, the demand for oil was driven largely by emerging and developing economies. Since economic growth of emerging economies outpaces that of advanced countries, it comes as no surprise that oil demand growth is moving in tandem too.“Over the next few decades, Asia and the Middle East regions will remain key growth regions, since the scope for economic expansion in these two particular regions is quite good. Governments are set to continue increasing the GDP per capita, which will require tremendous amount of investments and will ultimately keep demand for petroleum products high,”he says.
Black market for illegal diesel But this is not all there is to the story. Illegally acquired diesel is also a serious issue that affects prices.“We have worked closely with local authorities to control this practice, and have achieved a great level of success. Going forward, we will continue our efforts in this direction, and will also be promoting the use of high quality diesel, which, in the long run, has environmental and financial benefits for the customer,”explains Al Qufaidi. Also, as the decline in oil prices could be persistent, most oil exporters in the region may well need to adjust their fiscal positions to the new realities of the global oil market to ensure that they maintain fiscal sustainability. The regional political instability also remains a major issue for the Middle East. Various dialogues are taking place between regional and international authorities to find means to restore stability.“As a bare minimum, we should be able to support basic amenities like proper food, education and means of living to the citizens of this region, and this is where great leadership comes into the picture. We always wish that a proper vision is set in place for each country and prosperity of citizens is given prime importance,” concludes Al Qufaidi.
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Mohsen Ahmad, VP, Logistics District, Dubai World Central, tells GSC what it takes to create an entity that changes the face of an industry.
What have been your major achievements for 2014, in terms of the logistics sector in Dubai? We measure our achievements, first and foremost, by our contribution to Dubai’s positioning as a regional and global trade and logistics hub. Second, we focus on providing our partners and customers with more efficient services that allow them to either set up or grow their businesses. The year 2014 marked the start of Emirates SkyCargo freighter operations at Al Maktoum International Airport (AMIA). The introduction of this dominant logistics provider is a definite game-changer for the Logistics District – it anchors DWC as Dubai’s main air cargo hub. We also launched key initiatives that reinforced Dubai’s logistics offering, particularly in terms of speed and connectivity. One of these initiatives is related to the pilot stage of the Virtual Corridor, a pioneering project by Dubai Customs and the Department of Economic Development. This corridor is a virtual freight and logistic passage that connects seaports, airports and free zones in Dubai on a single platform, enabling hasslefree customs clearance and making the entire process more streamlined, time saving and cost efficient without any financial burden. Several of our partners such as DB Schenker, Panalpina, DHL-Danzas and Aramex participated in the pilot stage, which began in September 2014. We have now
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established seamless truck movement between the Al Maktoum International Airport and the Dubai International Airport. Another key initiative in 2014 was the testing related to the free-zone local gate pass system, which we subsequently launched in March this year. This was a joint pioneering effort by Logistics District and Dubai Customs, and comprised the implementation of a smart electronic system that facilitates quick and easy movement of trucks through the free zone gates. We were involved in extensive research as well as in facilitating feedback from our clients and partners.
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and DB Schenker advanced its general cargo warehousing facility project – both are due for completion this year. Among the SMEs, Total Freight International inaugurated its logistics centre in November, while the 15,800 square metre RSA-Talke warehouse, which has space for 19,000 storage pallets, storing a cornucopia of dangerous chemicals, is programmed to fill completely from floor to ceiling with flame-retardant foam in just three minutes at the sign of a spark. RSA-Talke said that the warehouse, which will handle class 3, 4, 5, 6, 8 and 9 dangerous goods, cost AED 50 million (US$ 13.6 million) to build and construction took 345,000 man hours. RHS Logistics commissioned two of its facilities.
Can you elaborate on the private sector investment you had in 2014? In 2014, our approach was twofold: facilitating the expansion of existing clients and attracting new ones to Logistics District. We also aimed for a good mix representing multinationals and SMEs. Existing clients who initiated the expansion of their business included Aramex, Hellmann Calipar and RSA-Talke. Hellmann Calipar launched a new facility that introduced additional capacity to their state-of-the-art healthcare logistics centre.
RSA-Talke opened the region’s first-of-itskind warehouse for dangerous substances – an explosion-proof facility capable of handling industrial goods such as cyanide, arsenic and hydrochloric acid. Aramex is expanding their logistics facility, which is scheduled for completion in Q4 2015. IKEA, DHL-Danzas and DB Schenker were among the larger clients we welcomed in 2014. IKEA is building a massive regional distribution centre, expected to complete in Q3 of 2015. DHL-Danzas progressed its new airfreight and chemical logistics facilities,
Are there any specific focus areas that Logistics District is emphasising on? We believe Logistics District offers the best ecosystem that is suited to the needs of fast-cycle businesses. Factors contributing to this ecosystem include proximity to the Al Maktoum International Airport, unrivalled connectivity to the Jebel Ali Port, and excellent links to all parts of the UAE, including the Dubai International Airport via the trans-emirates highways. We are particularly looking at accommodating companies associated with the following industries: life sciences and pharma, perishables, fashion, IT and telecom, spare parts and oil and gas sectors. Each of these sectors plays a critical role in Dubai’s economic diversification strategy. As I indicated earlier, we are aiming at both multinationals and SMEs. We have designed specific products to suit the latter sector, because we understand the relevance of SMEs to sustainable economic growth. All in all, since the Logistics District launched in late 2009, we have created 600,000 sq mts of facilities. What initiatives have you planned for 2015? In fact, 2015 is our fifth year anniversary, and we are marking the occasion by celebrating the many partnerships we have forged with public and private sector entities. We are also pushing ahead with developing new products to meet the special needs of the aforementioned six sectors in a way that appeals to larger players as well as to SMEs.
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What is the Logistics District doing to attract more SMEs? Logistics companies from the SME sector are critical to the ecosystem we wish to create at DWC. For them, we have created an incubator environment. We have kept in mind their limited ability to invest in building customised facilities, which is why we have developed plug-and-play offices and warehouses for them at prices that are very competitive. We are streamlining processes for them, such as our one-stop-shop offering, which saves on a lot of their set-up time. We also serve as their voice as we channel their concerns to various regulatory bodies with the goal of finding practical solutions. A point in case is RSA Logistics. It was the first company to start operations at the Logistics District in 2009. At that time, it was a fairly new, family enterprise. We supported their growth plans as the company created new verticals in chemicals, automotive and oil and gas sectors. Today, it has grown to become one of the region’s leading 3PLs. Last year, Emirates’ SkyCargo operations move to DWC. How has that attracted companies to DWC and enhanced cargo activity? The decision to shift Emirates SkyCargo’s freighter operations from Dubai International Airport to the Al Maktoum International Airport in May 2014 was, in effect, a powerful endorsement by the Government of Dubai of the increasingly strategic role that DWC will play on the emirate’s economic landscape. The introduction of such a dominant logistics player creates a whole new level of synergy between the Dubai’s two key airports, which more logistics companies are keen to leverage on. What other milestones are you aiming for in the run up to 2020, in terms of infrastructure development of the District and in terms of new partners coming on board? All of our efforts are aligned with Dubai’s plans to position itself as a premier trade and logistics hub, with Expo 2020’s focus areas, which have been defined as ‘mobility, sustainability and opportunity’. We have translated this within the Logistics District by developing infrastructure
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– both hard and soft – so our clients are fully positioned to leverage on the increased cargo activity at AMIA. By 2020, the airport’s cargo handling capacity will have increased manifold. This will open up exciting avenues to underserved markets, and also deepen cargo flows to existing routes. Another priority is the nurturing of talent and next generation of leaders within our industry. We are working towards establishing an academic platform in partnership with topnotch education establishments.
Mohsen Ahmad is Vice-President of the Logistics District at Dubai World Central. He has played an instrumental role in developing this district, setting up the free zone and creating the Dubai Logistics Corridor, which connects the Jebel Ali Port with Al Maktoum International Airport in a single custom-bonded zone. Currently, he is responsible for the entire Logistics District including all operations, maintenance and business-related activities. Ahmad joined DWC after more than a decade of experience with supply chains and logistics, including management positions with Al Futtaim Logistics and Dubai Aluminum Company (DUBAL) where he served as Head of Inbound Logistics. Currently, he is a Fellow Member and previous Secretary General of the Chartered Institute of Logistics and Transportation (CILT) in the UAE.
Tell us a bit about the category and origin/destination of cargo that is offloaded Jebel Ali Port, passing through the Dubai Logistics Corridor to Al Maktoum International Airport. The categories of goods coming and leaving DWC is no different to the logistics flows experienced across the wider emirate. Having said that, a significant amount of our sea-toair cargo relates to fashion, IT and telecom. In terms of arrival and destination, the cargo is westbound, originating in the east. What are the benefits of the Corridor in serving logistics originating in the area? The singular aim of the Dubai Logistics Corridor is to enable sea-to-air movement of cargo from the Jebel Ali Port to Al Maktoum International Airport in a record timeframe. Companies are able to move their goods from ship to aircraft in four hours, which is the quickest in the world as far as I know. There are ancillary benefits as well, in terms of cost savings and convenience related to lesser man hours, quicker turnaround time of cargo vehicles and minimal paperwork since the entire area is a single customs bonded zone. How is Logistics District gearing up for the introduction of Etihad Rail? Etihad Rail will change the dynamics of trade within the UAE as well as across the GCC. Clients in the Logistics District will enjoy ringside benefits, since Etihad Rail will have a dedicated terminal at Dubai World Central – in fact, very close to the Logistics District. Discussions with Etihad Rail are ongoing, and we look forward to engaging with all relevant stakeholders in creating a seamless cargo movement.
14 â€“ 16 September, 2015 Dubai, United Arab Emirates
The 8th edition of the International Exhibition for Intralogistics, Warehousing, Supply Chain, Ports, Port Equipment â€“ Products & Services www.materialshandlingME.com
Sharjah and Gulftainer – in a growth synergy Iain Rawlinson, Group Commercial Director of Gulftainer, talks to GSC about how the company has grown with the Sharjah’s economy. And with the emirate set to make more significant enhancements in all areas, Gulftainer is its very able partner in progress and success Khorfakkan Container terminal
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ulftainer has been part of the fabric of the emirate of Sharjah for 39 years. The company is fully aligned to the culture and heritage of the emirate, and committed to its sustained development. Over the years, the Emirate has undergone a significant transformation to become one of the region’s most vibrant business and investment hubs, led by its ports and free zones.
“We have achieved a significant milestone with the Sharjah Container Terminal (SCT) surpassing 400,000 TEUs (Twenty Foot Equivalent Units) in annual throughput during 2014. SCT is also on track for double digit growth compared to last year’s volumes,” says Iain Rawlinson, Group Commercial Director of Gulftainer. The Khorfakkan Container Terminal (KCT), the only fully fledged operational container terminal in the UAE that is
located outside the Straits of Hormuz, is one of the most important transhipment hubs for the Arabian Gulf, the Indian Sub-continent, the Gulf of Oman and the East African markets. KCT serves as a costeffective and time-saving option for megacontainerships that can save valuable transit time by calling Khorfakkan and enjoy a quick turnaround to continue their onward journey. “Gulftainer’s success over the years has
closely matched that of the Emirate, and our growth has only been made possible led by the belief, trust and foresight of the authorities, whose support has been invaluable to us,” says Rawlinson. The logistics and transport sector has played a major role in Sharjah’s growth with the predicted market potential of AED 1.82 billion (almost US$ 5 billion) in 2013, estimated to rise to a remarkable AED 3.43 billion (US$ 9 billion) in 2020.
Given the importance of trade and manufacturing to Sharjah’s economy, the region’s key geographical location between Africa, Asia and Europe will continue to support this market. “Gulftainer has developed a strong relationship with the Sharjah Port Authority, a relationship that has proved to be the backbone of the success of the company. We take nothing for granted, and commit ourselves fully to meet and exceed
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Sharjah container terminal
the trust and expectations the authorities have placed on us. We will focus on strengthening the relationship and continue to contribute to the economy of Sharjah,â€?he says. The Sharjah Port Authority has a clear vision and mission to invest in and grow ahead of demand. In recent years, the government has invested heavily to ensure the capacity in all its three major ports is ready to cope with the growing size of the emirate and the growing size of the vessels the shipping
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community is bringing into use. The multi-purpose port facilities in all Sharjah ports have been extensively developed, making Sharjah the home to three of the finest ports in the United Arab Emirates. This is a clear statement of intent by the government that they want to continue developing the region as a major import/ export hub. The location of the ports of Sharjah, in particular Khorfakkan, offers strategic
advantage to ships calling into the region, making Sharjah unique among the emirates of the UAE in that it has ports on both the east and west coasts. Cargo volumes handled at all these ports have been recording consistently steady growth over recent years. Reports indicate that the Emirateâ€™s economy grew by eight per cent in 2013, the highest in five years.â€œThe Sharjah government, along with the Federal government of the UAE, has been a major force in the development
From top to bottom: Sharjah container terminal
of trade and hence growth in the region. The expansion of the labour force and the ease of doing business in this part of the world have contributed significantly to the economic growth,”he explains. Sharjah is very proactive in encouraging new business to the region. At a recent World Economic Forum FDI conference held in the emirate, which Gulftainer supported, the investment arm of the Sharjah government – Shurooq – highlighted their plans and
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Khorfakkan Container terminal
initiatives to encourage growth of local businesses in the region, particularly in the areas of logistics and transport, as well as tourism; along with other initiatives. “In recent years there has been a multimillion dollar investment in ship-toshore (STS) cranes, reachstackers, empty container handlers and tugmaster and trailer combinations at Khorfakkan. In addition to the investment in equipment, the yard capacity at KCT has been substantially increased, adding 55,000 sq mts of additional container stacking area,”explains Rawlinson of the company’s expansion plans. The new facility has increased the total handling capacity at the port by in excess of
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50,000 TEUs. The layout of the terminal has been reviewed and revised to ensure the best use of space and facilities. A new container freight station (CFS) has been created for additional container packing and unpacking services, with additional handling equipment to support these activities. “In order to meet continued growth forecasts from its existing customers, Gulftainer plans to undertake developments of additional quay facilities and generate further yard area, to reach a capacity of six million TEUs by 2016,”he adds. Five Rubber Tyred Gantries (RTGs) and the three Mobile Harbour Cranes (MHCs) located at Sharjah’s Mina Khalid were retro-fitted
with the necessary high voltage hardware to enable the machines to connect to the high tension power supply from the port’s new, main substation for E-drive capability. In November last year, the Khorfakkan Container Terminal took delivery of four state-of-the-art STS and 12 RTG cranes, which significantly strengthens the terminal’s operational efficiency and increases overall productivity. Marking an investment of over US$ 60 million (AED 220 million), the equipment has already entered operations, having been delivered on-site fully-assembled and have been commissioned. “Gulftainer’s vision is to grow its global footprint significantly during the next 10 years, and such ambitious plans require secure and streamlined operations. This will be done with a mixture of operational equipment and software upgrading. During the coming year, Gulftainer will add a new Terminal Operating System to all its facilities to update the current systems, enabling the company to implement compliance standards, application standardisation, and provide real-time information about cargo flows through our terminals with our IT infrastructure,”he says. Gulftainer as a company has recorded consistent growth over the past decade, averaging over 12 per cent compared to global market growth of 8.6 per cent during the same period.“We expect that this positive growth will continue in the near future. This, no doubt, contributes to further strengthening the economy by boosting the logistics and transport sector. The impact of the logistics sector is also felt across all other key growth sectors, including manufacturing & industries and retail and trade, which contribute significantly to Sharjah’s GDP,”says Rawlinson. The scaling up of equipment today positions KCT as mega-ship ready, which will further boost the trade dynamics of Sharjah, complementing the ongoing growth of the UAE as one of the major centres for global trade and transhipment business. The emergence of new markets in Asia for supplies from the region, and strong reexports to meet the demand from African and Middle East markets will continue to catalyse the transportation and logistics industries in the region.
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fronts Ahead on all
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ut of stock. Insufficient choices. These are not situations that todayâ€™s consumers are comfortable with, or even tolerate. That puts pressure on retailers, especially in fast-moving consumer goods sectors like fashion, foodstuff and electronics. The key to avoiding these problems is managing the supply chain and making it flexible enough to respond to consumer choices quickly and cost-effectively. Thatâ€™s the logistics challenge. Al Futtaim Logistics is creating solutions to these challenges on its way to becoming a global player in the logistics arena, which extends beyond retail. Al-Futtaim logistics was incepted 30 years ago to service the Al-Futtaim Group of companies. The company has grown substantially over the years, and today, is a leading player in the logistics sector, focusing on a wide scope of businesses including automotive, contract logistics, freight management and general transportation.
They have extensive geographical coverage through a wide network, which includes 14 established locations throughout the UAE, with a workforce comprising of over 1,000 highly qualified associates that cater to the diverse needs of customers. Their client portfolio ranges from retail to fashion, food, humanitarian, electronics, telecom, industrial and hi-tech.“Within these different industries, customers’ requirements are quite diverse, and we accordingly customise our solutions. Goods that require transportation range from very tiny hardware commodities to heavy machinery. In terms of technology, we employ a very robust automated process that enables all clients to be informed about the status of their shipment in real time,”says Binoy George, General Manager, Contract Logistics at Al-Futtaim Logistics. George defines logistics as a system that provides end-to-end supply chain solutions for clients from point A to B. “What’s important is to ensure that the solutions are delivered quickly, in a cost-effective
manner, while offering some value-added services before a product reaches the end consumer,” he states. In order to do this, Al-Futtaim Logistics has invested heavily in their distribution centres in terms of the technology, people, equipment handling and compliance with the regulatory bodies.“Since we do not compromise as far as our clients’ requirements are concerned, we ensure that our facilities conform to international best practices in logistics,”he says. As consumer preferences are changing rapidly and individual requirements are evolving, one can see consistent patterns emerging. In the old days, logistics firms would execute a fixed delivery schedule from point A to point B. Today, companies have to pick smaller quantities, move them faster, and engage in more frequent drops. This is seen as a drastic shift in the way the business is done. “Traditionally, Al-Futtaim Logistics has adopted a DC concept, whereby our team would be required to move a multi-product
F&F Store at Yas Mall
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line to one single location. For instance, in the fashion sector, we move multiple apparels based on season, style and size to a single store. Today, we are expected to deliver single units to a wide network of addresses. This is quite challenging because we have to adapt to the change in processes as we now touch the end consumer,”explains George. Individual order picking, packing, VAS and distribution direct to consumers require more storage space than retail distribution.
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It is important to note as well that, in some cases, the point of sale has shifted from the store to the logistics provider, especially in the case of online purchasing. An online purchase sees the logistics provider dealing directly with the end-consumer. There are many more factors to consider – such as size, shape, style and wrapping – because the consumer wants the product ordered to be packaged in a certain manner and delivered at a convenient time.“These are value-added
services that we provide – as quickly as we can, the idea being to minimise turnaround time and continuously improve our end-toend solutions. The key is to offer a customised solution that suits each distinct customer requirement, which means it can never be a one-size-fits-all solution,”George points out. Al-Futtaim Logistics have built their business performance based on a culture of innovation and continual improvement. Innovation and utilising the right technology,
along with good knowledge of industry are very important factors for success. Innovation is of the essence in this industry, as businesses are always looking for ways to be more productive. The ultimate logistics goal is to have a seamless automation process that leads to a quick and efficient service delivery to the consumer. “We plan the journey from the time the goods are in our hands, to when they are delivered smoothly to the end customer.
Their client portfolio ranges from retail to fashion, food, humanitarian, electronics, telecom, industrial and hi-tech.
We begin by first analysing our customer requirements, then have trigger points along the supply chain to ensure the activity is completed within the scheduled time-frame. We also study the industry we are dealing with so we can allocate the required resources and technology,”George explains. The company also engages in new ways of doing business by keeping up-to-date with market volatility and customers’ changing needs, constantly adapting to new trends in the logistics sector. Recently, Al-Futtaim Logistics commissioned a 30,000 sq mt distribution centre for their home delivery fleet. This facility offers a centralised platform for customer deliveries with real time management and efficient route optimisation. “We introduced these new features as part of our 2014 strategy to meet customers’ requirements in the fast moving retail division,”he says. Customers are looking for solutions dedicated to minimising handling and faster lead times. Once you learn what the customer wants, you have to find new supply chain solutions to service the client, which is what Al-Futtaim Logistics have done.“First, we assess the needs of the customer, and then work backwards up to the time in which the goods are in our hands in order to make the entire process seamless,”he explains. Quick turnaround time requires automation, which is where technology comes into the picture.“Actually it’s not technology per se, but how technology is used. Today’s consumer has zero tolerance for stock out, so you need an optimal level of product width and depth to ensure stock availability. But it’s not enough to hold a limited amount of inventory.You’ve got to ensure the inventory moves along the chain and doesn’t stagnate at a particular touch point. This is where you exploit technology,”George says.“Our stateof-the-art, best-of-breed software solutions permit end-to-end scanning of the supply chain so we can manage stock in warehouses by remote access, keep tabs on our vehicle fleet with GPS, and let our customers track their shipments in real-time. They can also make changes along the chain to suit their requirements,”he elaborates. Setting up distribution centres requires huge investment that’s not limited to infrastructure alone. The people element
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has to be factored in as well as handling equipment and adhering to rules set by regulatory bodies. Al Futtaim considers its human capital as its biggest asset. With this objective in mind, they are on path to develop its associates to create a culture of innovation, continuous improvement and success recognition. They have thus created a unique operating culture that delivers results consistently that meet and exceed their customers’ expectations. “People are what differentiates one business from the next. Our philosophy is simple when it comes to managing talent – we believe engaged employees help make our customers happy. We have built up a multi-cultural group of over 1,000 associates who work to keep our customers satisfied,”says George, adding, “We have also put in place development programmes to bring our associates up to
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speed with the latest developments in the logistics industry, letting them choose their growth path from the retail and automotive academies within the Al-Futtaim Group.” While talent acquisition is one of the biggest issues the industry faces, keeping up with technology and staying on top of the competition are equally challenging. The GCC logistics sector consists of major players that hail from Saudi Arabia, the UAE and Oman. The UAE has an air-sea concept, whereby a company that brings a product by sea can warehouse on location. In the second leg of the journey, the product is air freighted to other destinations in Europe and the rest of the world. Sea-air shipment is growing in the region at a rapid pace due to the lead time and efficiency gains, and Al-Futtaim Logistics is able to contribute to this requirement
with their local presence in key ports and airport locations in the UAE.“Our facilities in Jebel Ali give us an edge to extend our offering and expand regionally. In terms of our expansion in the UAE, we are focused on vertical growth into Food, Fashion & Records Management. We have 14 locations in the UAE today, which gives us the required geographical coverage to meet the needs of our customers. We also have a network of strategic alliances and memberships of internationally recognised professional associations. We have a strong foothold in the Middle East, and are gradually expanding our footprint beyond. Our focus is to grow into a global player offering robust end-to-end supply chain solutions, handling the goods of our customers in all sectors, anywhere across the world,” he concludes.
Y A D O T E IB
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June 2015 Issue 16
ENHANCING THE BUSINESS OF LOGISTICS
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Sharjah and Gulftainer In a growth synergy
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The search for professionals The 2015 CIPS Middle East Conference saw record attendance and a positive outlook for the future.
rocurement and supply as a profession has advanced significantly on a global level in the last few years, even more so in the Middle East. Due to dramatic global political and economic developments, professionals are facing new expectations to deliver even more value, for both their organisation, and the wider region. The 2015 CIPS Middle East Conference, held last month at the InterContinental Hotel in Abu Dhabi, focused on these expectations. The conference was sponsored by Abu Dhabi Airports. The attendees, which numbered at over 200, were shown how procurement executives and experts in the Middle East tackle these challenges, take advantage of the opportunities and what the future looks like for the profession. Twenty-eight local and global speakers presented their views, and delegates participated in practical workshops as well as networked with peers. The conference was followed by an awards ceremony and dinner. Nineteen companies were shortlisted for awards.
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CIPS Middle East Awards 2015 winners International Procurement Project of the Year & Overall Winner - Etihad Airways Best Contribution to Corporate Responsibility TNT Express UAE Best Cross Functional Teamwork - Jumeirah International LLC Best People Development Initiative Etihad Airways Best Supplier Development Initiative Dragon Oil Most Improved Procurement Operation â€“ Start Up - First Gulf Bank Most Improved Procurement Operation â€“ Step Change - Dubai Municipality Best Supplier Relationship Management Transguard Group LLC Procurement Team of the Year - Atlantis, The Palm, Dubai CIPS Middle East Young Procurement and Supply Chain Management Professional of the Year - Mohammed Zakir, The Petroleum Institute CIPS Middle East Procurement and Supply Chain Management Professional of the Year Hariharan Laxminarayan, Emirates Global Aluminium Company
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y g o l o n h c e t n i g n Taki I se o increa t d e t c je e g is pro ccording to th in d n e p a s East IT rom last year, le d id f M t . per cen y Gartner, Inc by 5.2 recast b latest fo
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t’s a technology-dominated world out there, and every business is dependent on some level on IT. While each one’s needs are different, more and more companies are now investing in technology to run their businesses more smoothly and efficiently. In fact, during the Gartner Symposium/ ITxpo 2014 held last month, analysts say every business unit is becoming a ‘Technology Start-up’. Middle East IT spending is projected to reach US$ 214.7 billion (AED 789 billion) in
or is in the medium to long term planning. Robotics and 3D printing are not priorities in the Middle East in 2015.” The spending on devices in the ME is forecast to reach US$ 36 billion in 2015, up 16 per cent from 2014 (see Table 1). Devices are represented by mobile phones, media tablets, PCs, and printers. Telecom services continues to be the largest segment, accounting for 74 per cent of ME IT spending in 2015. Gartner defines digital business as new business designs that blend the virtual world and the physical worlds, changing how processes and industries work through the Internet of Things.“The impact that the digital business economy is having on the IT industry is dramatic. Since 2013, 650 million new physical objects have come online. 3D printers became a billion dollar market; 10 per cent of automobiles became connected; and the number of Chief Data Officers and Chief Digital Officer positions have doubled. In 2015, all of these things will double again,” said Sondergaard. He also predicts that enterprises will spend over US$ 40 billion (AED 14692200000) designing, implementing and operating the Internet of Things.“Every piece of equipment, anything of value, will have embedded sensors. This means leading asset-intensive enterprises will have over half a million IP addressable objects in 2020,”he explains. Analysts can also see a dramatic shift in IT spending power. There is a shift of demand and control away from IT and toward digital business units closer to the customer.“Thirtyeight per cent of the total IT spend is outside of IT already, with a disproportionate amount in digital. By 2017, it will be over 50 per cent,” states Sondergaard, adding,“Digital startups sit inside your own organisation, in your marketing department, in HR, in logistics and in sales.Your business units are acting 2015, a 5.2 per cent increase from 2014, says a forecast by Gartner, Inc. Peter Sondergaard, senior vice president and global head of research at Gartner, provided the latest outlook for the IT industry to an audience of more than 500 CIOs and IT leaders at Gartner Symposium/ITxpo. Said he,“Business intelligence and analytics, infrastructure and data centre, and cloud are the Top three CIO technology priorities in the ME region. Sensor/Internet of Things (IoT) are on the radar with no action planned, and/
as technology start-ups.”Gartner estimates that 50 per cent of all technology sales people are actively selling direct to business units, not IT departments. Millions of sales people and hundreds of thousands of resellers and channel partners are looking for new money flows in the fluid digital world, and they are finding eager buyers. Bimodal IT fills the digital divide between what IT provides and what the enterprise really needs. Mode 1 is traditional, and the systems that support them must be reliable, predictable, and safe (like a great IT organization). Mode 2 is non-sequential, emphasising agility and speed (like a start-up) because disruption can occur at any time. Sondergaard offers the example of smart machines to highlight the disruption caused in digital business. Smart machines are an emerging ‘super class’ of technologies that perform a wide variety of work, of both the physical and the intellectual kind. For example, school computers have been grading multiple tests for many years, and now they are grading essays, unstructured tests that require analysis. “Not only is the grading more accurate, but students actually worked harder on their essays when they are graded by a smart machine,”claims Sondergaard, adding, “Other professional tasks won’t be far behind: financial analysts, medical diagnostics, and data analytics jobs will be impacted. Knowledge work will be automated.” His prediction is that smart robots will appear not just on the manufacturing floor, where they do physical work, but in the workplace and even in the home. Smart machines will automate decision making. Therefore, they will not only affect jobs based on physical labour, but they will also impact jobs based on complex knowledge worker tasks.
Table 1. Middle East - IT Spending Estimates (Billions of U.S. Dollars) Devices Data Center Systems Software IT Services
(Gartner, May 2015)
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Celebrating a milestone Dubai World Central marks Kuehne + Nagel’s 125th Corporate Anniversary with a unique showcase of the company’s history and association with the UAE
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s Kuehne + Nagel mark their 125th corporate anniversary, Dubai World Central (DWC) hosted a celebration for the company. Kuehne + Nagel has a special place in UAE’s history, being the first global logistics company to become fully operational at DWC in 2009. The event was graced by HH Sheikh Ahmed bin Saeed Al Maktoum, President of Dubai Civil Aviation Authority, Chairman of Dubai Airports, Chairman and Chief Executive of Emirates Airline and Group. The high-profile event was held at Kuehne + Nagel’s facilities at DWC, and also saw attendance by Majid Saif Al Ghurair, CEO of Al Ghurair Group of Companies, Lothar Alexander Harings, Member of the Board of Management and Chief Human Resources Officer, Kuehne + Nagel International AG, Mustafa Sener, Managing Director, Kuehne + Nagel UAE
& Oman, in addition to the company’s customers and business partners. Showcasing their history in the UAE, Mohsen Ahmad, Vice President, Logistics District at DWC, said,“Kuehne + Nagel began operations in Dubai in 1978, and since then, the emirate has served as the gateway that has facilitated the company’s growth in the region. The company has played a definitive role within Dubai’s logistics landscape, differentiating itself by offering comprehensive and integrated logistics solutions to global customers, especially in the aerospace, pharma and healthcare, perishables and hotel sectors.” “We are particularly proud that Kuehne + Nagel’s facility at the Logistics District now serves as the principal hub that oversees the company’s Middle East and Africa operations,” he added. Kuehne + Nagel operates across 20 countries, employs more than 2,500 specialists, and has more than 230,000 sq ft of warehouse space in the Middle East and Africa region. The Logistics District at DWC is a 21 sq km. district designed to be an enabler of fast-cycle businesses, and of value-added services such as light manufacturing and assembly. As a true multimodal hub, the Logistics District
integrates Dubai’s sea, land and air transport systems, actively promoting the emirate’s reputation as a key global logistics centre. Peder Winther, President, Kuehne + Nagel Middle East & Africa, thanked their
stakeholders, including the Government of the UAE, for presenting them with a dynamic business environment, facilitating their expansion in the region.“We are particularly proud of our partnership with Dubai World
Central, which offers us a strategic location between the Al Maktoum International Airport and the Jebel Ali Seaport, equipping us to better serve our customers, optimise efficiencies, as well as plan for robust growth,”he said. The most interesting part of the celebration was the showcase of a 40-foot ‘anniversary container’, which began its around-the-world journey in January 2015 from the German port city of Bremen. The container, scheduled for stopovers in selected cities, features four multimedia stations, each displaying information about the history, service portfolio, innovations and career options at the Kuehne + Nagel Group. Guests at the event became a part of this journey as they had the opportunity to look inside and experience this first-hand. With over 63,000 employees at around 1,000 locations in over 100 countries, Kuehne + Nagel is one of the leading global logistics service providers. It focuses on sea and air freight, contract logistics and land transport with a clear focus on areas that add significant value such as IT-supported integrated logistics offerings.
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A healthy investment Hellmann Calipar expands operations at Dubai World Central, becoming the largest dedicated healthcare logistics facility in the ME
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ellmann Calipar is a strategic joint venture established in 2009 between Hellmann Worldwide Logistics of Germany and Calipar Integrated Logistics (part of the Parekh group) of India. It offers a unique concept of healthcare logistics services aimed at maintaining product integrity throughout the supply chain, using Dubai as the hub. The company now plans to expand its operations in Dubai World Central (DWC) to add an additional 10,000 sq mt to its existing 10,000 sq mt facility, making it the largest healthcare logistics facility in the Middle East. The expansion includes capacity for an additional 12,500 temperature and humidity controlled pallet positions, along with a mezzanine floor of around
600 sq mt, bringing the total warehouse capacity to 21,500 pallet positions. The facility sets high standards for the environment and safety of the products stored, due to unique features like cooling walls and floors, as well as modern chiller units. Hellmann Calipar offers its range of specialised healthcare products across the region through its state of the art logistics centre located at DWC. Respective chairpersons of both organisations â€“ Jost Hellmann and S J Parekh â€“ were present at the inauguration ceremony, along with Mohsen Ahmad, VP, Logistics District, DWC. Founders of the joint venture, Madhav Kurup, CEO - MENA, and Rajiv Merchant, Director, Calipar Integrated Services, DWC-LLC, inaugurated the new facility. Kurup took the opportunity to state,
“Hellmann Calipar Healthcare Logistics has achieved a leadership position in healthcare logistics in the Middle East over the last five years by creating state of the art dedicated infrastructure, processes, validated systems, and above all, continued investment in our people.
We are committed to ensure product integrity of our customers’ products until it reaches patients through a validated warehouse and freight management using Dubai as hub. By recognising the Middle East healthcare industry needs, we have embarked on this expansion journey.”
Ahmad congratulated the company on the launch, and said, “As Logistics District celebrates its fifth anniversary this year, we cherish our longstanding partnership with Hellmann Calipar, which goes back to 2009, when they planned and ultimately launched their first warehouse facility here. We are happy to facilitate the company’s unique and stringent needs that call for a fast-cycle logistics environment. The facility’s proximity to the Al Maktoum International Airport goes a long way to satisfy the company’s requirement for high-speed and global connectivity in a cost-effective way.” Healthcare products require a validated temperature-controlled storage and distribution process. Global Pharma companies have realised the importance of taking control of their cool chain until the product reaches the patient. This thought process has triggered the need for keeping stock closer to market, and of course, Dubai is the right hub for supplies to in the Middle East, North Africa and South Asia.
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Safety first Paul Kinsella, Senior Director and Country General Manager, CHEP, talks about how his employees’ safety is on the top if his agenda everyday
1) Which school and university did you go to? I attended the University of Western Sydney in Australia for my undergraduate degree in Applied Science, and the University of Wollongong for my MBA. Going back to study still further is something I’ve contemplated for a while, but I think I’ll wait till my daughter gets a bit older. 2) What was your first job? I worked extensively in the retail sector paying my way through university, initially I flipped burgers at McDonalds, and then moved to a commercial window furnishing store and then on to work at a sport store before I moved into full time employment following my graduation from university. 3) What do they not teach you in business school? I would say university didn’t and couldn’t teach me initiative. Unfortunately, I think in the current business environment many people lack initiative as they fear it could lead to failure. I’m very lucky that CHEP’s leadership supports my team and I in what I would call“measured risk taking”. I believe in the credo to spend a little to learn a lot, so I encourage my team to experiment where possible. Working in such a dynamic market as the Middle East means there’s plenty of opportunity to try new things. 4) Who is your role model? Why? I’m not particularly fixated with anyone in particular. My parents have always been a great source of inspiration for me both in the way they worked hard to give me a great education, and also for the example they set as parents. Lately I have been following Elon Musk with some interest mainly because he is driving innovation in sectors which have been stagnant for decades. That said, I don’t particularly like his leadership style but I do admire the way he is dragging the status quo forward and challenging the paradigm. 5) What is your leadership style? I believe my leadership style is quite direct. I treat people fairly, and ask from them no more than I would do myself. I also believe that safety is a core value that I bring to my team, and to our contractors – it’s a personal belief that my staff should return home the way they came to work (except maybe a little more tired :)) 6) What do you think is most important for being an effective manager? Personal power - One of my old managers told me many years ago that there are two types of power a leader has. Positional power, and personal power. Positional power comes from the role/status you have in the organisation, personal power is in the ability to have your team follow
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the direction you set because they believe in you and the strategy you have set. The best leaders in history have personal power irrespective of their position. I also believe in walking the talk, particularly when it comes to the safety of our staff. My management team and I are committed to ensuring the safety of our employees and I believe this translates into a team who believe in what we do as an organisation. 7) How well do you handle stress? What is your fool proof method of de-stressing? I think I handle stress well, my wife might disagree though! My foolproof way to reduce stress is ironically to occupy my mind with something else. Typically a DIY project at home I find releases my stress and has a productive output at the end of the weekend. I also find discussing whatever it is that’s bothering me with my wife Kelly lets me thrash out the problem, and ultimately leads me to a resolution. 8) What do you find encouraging? We are seeing a definite shift by the market in realising the sustainability aspects of pooling equipment – sustainability for a long time was something that the market saw“no value”in, that is definitely changing with time. CHEP is an organisation that places a high value on its sustainability credentials, and we are proud of sourcing our raw materials from 100 per cent sustainable sources. With sustainability being a core theme of Dubai 2020 it offers us a unique opportunity to demonstrate to the market that Equipment Pooling is a sustainable business solution, as well as providing tangible savings for our customers supply chains. 9) How do you spend your free time? I have a“nearly”three year old, so our weekends are very much orientated around her. On a personal side I have wide range of hobbies ranging from computers, radio controlled aircraft to home DIY projects. 10) What is at the top of your agenda right now? As a business we have over two million assets in circulation across the GCC, and have been growing quickly. We are seeing a better understanding of the benefits of equipment pooling, and the efficiency it brings the supply chain as more customers have joined the program. We see there are some easily transferable learnings from our other markets in Europe and Africa which would benefit the local supply chain. We are keen to bring our last mile solution portfolio of products into the region, whereby our customers can improve their on shelf availability of product by being able to move product into a retail store more efficiently. We also have a large expansion program for Africa ongoing which offers us great opportunity to bring our services to a much wider market.
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Published on Jun 2, 2015
Supply chain management , logistics and supply chain segmentation, warehousing, RFID, healthcare logistics, 3PL, 4PL, six sigma, kaizan inve...