November 2015 Issue 20
ENHANCING THE BUSINESS OF LOGISTICS
BUSINESS Aramex gets it right
Chews up the competition
Finding the right anchor The OSV industry changes course
Indian logistics In redesign mode
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Sustainability is the buzzword today, no matter what the industry, and logistics is no different. Aramex is doing a lot to promote a sustainable manner of operations, they are investing heavily in the youth to equip them with the skills they need to thrive in the job market, and build long-term, sustainable careers. Nearly 10,000 children and youth have benefited from their CSR programmes, which have included scholarships, training, mentorship and internships. Many of these interns and youth have come to work at Aramex after completing their education. Aramex is also committed to supporting the development of entrepreneurs through their unique SME Programme to support their business stability and longevity. Supporting SMEs so that they can build sustainable businesses, and also potentially become Aramex’s business partners in the future is a valuable thought. Through their SME programme, they intend to mutually share and transfer knowledge with budding entrepreneurs. In 2014, they supported and trained over 1,200 start-ups. Page 32. Another article on the offshore marine services industry and the impact of low fuel prices on their businesses. As major oil companies cut down their spending budgets, and put off an estimated USD 200 billion (AED 734.6 billion) worth of projects due to the oil price slump, the offshore marine services industry has felt a big impact. The Middle East however has remained relatively insulated.‘Cost management’ has become the latest buzzword in the offshore and marine industry, as operators have begun implementing a number of measures to lower costs. There are difficult times ahead of in light of dropping day rates. However, companies need to be careful that any new business model they adopt does not compromise safety or operational efficiency. Page 38. Lots more interesting articles have made it to this issue. Have a great November.
Munawar Shariff Managing Editor firstname.lastname@example.org
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November 2015 Issue 20
ENHANCING THE BUSINESS OF LOGISTICS
24 06 News 16 Country report – India Indian logistics in redesign mode Insights into mega trends that are shaping the Indian logistics industry
24 Managing facilities sustainably
A chat with Satinder Singh, Director of Operations - EFS Facilities Services, Dubai, about the facilities management industry
30 Responsible business Aramex tells GSC how the company is making a serious effort towards more sustainable operations
38 Finding the right anchor Falling oil prices have forced companies to reassess their 4 NOVEMBER 2015
business models. Vivek Seth, CEO, Halul Offshore Services Company, tells GSC about future expectations
44 Handling special cargo Eugene Mayne, Tristar, shares with GSC the intricacies involved in transporting liquids
48 Qatar Cargo – chewing up its competition
To be at the top of the air cargo game is everything at Qatar Airways Cargo. This highly ambitious airline has invested heavily and is now maximising returns
51 Urbanisation and city logistics
A look at logistics trends in cities of the future
56 Simplifying business Global CIOs urge Middle East enterprises to recruit higher level strategists to drive digital transformation at GITEX
58 To automate or not to automate?
Walid Khoury Managing Director, ALS Logistic Solutions, attempts to answer this question
60 Unwind High on ambition Mustapha Kawam’s philosophy is to dream big. As President & CEO of Globe Express Services, he fuels his attitude with hard work and persistency
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
‘Investment opportunities in Algeria’ seminar opens in Dubai
An electronic port community system to make all trading transactions paperless in Algerian ports, based on the
Dubai Trade portal, has been unveiled at a major seminar in Dubai on investment opportunities in the country. The
new system will be introduced under a joint venture agreement signed between DP World, Dubai Trade, the ports of Algiers,
Oran and Skikda, offering integrated electronic services from various trade and logistics service providers under a single window. Over 100 investors and business leaders attended the ‘Investing In Transports and Logistics in Algeria: Opportunities and Challenges’ seminar, the first of its kind to be launched by the newly established Algerian Business Council in Dubai and the Northern Emirates and the Dubai Chamber of Commerce with support from global marine terminal operator DP World. The event also focused on opportunities under the new USD 47 billion (AED 172.6 billion) five-year development plan, 2015-2019, recently approved by the Algerian Government to boost public investment in key economic sectors such as transport and logistics, and to improve economic performance, modernise infrastructure and build partnerships for a long term diversified and sustainable economy.
Empower delegation led by HE Ahmad Bin Shafar visits Milano Expo In line with the vision of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, and to support the Government of Dubai’s efforts in hosting the best World Expo in history, HE Ahmad Bin Shafar, CEO of Empower, led a delegation to Milano Expo 2015 to exchange expertise with global peers, and review successful case studies at the exhibition in particular,
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and Milano and Italy in general. Over three days, the delegation studied the evolution of DC sector in the city of Milano, in addition to the best achievements in cooling and heating technologies, and quality of materials used in distribution networks. It was also briefed on the level of reliance on renewable energy solutions, with an eye on future implementation in Empower’s operations.
DEWA selects preferred bidder for Hassyan Clean Coal Power Project HE Saeed Mohammed Al Tayer, MD & CEO of Dubai Electricity and Water Authority (DEWA), has announced the ACWA Power and Harbin Electric consortium as the Preferred Bidder for the first phase of the 1,200 MW Hassyan Clean Coal Power Project. The consortium bid a Levelised Cost of Electricity (LCOE) of 4.501 cents/KWh based on May 2015 coal prices. The conference at which the announcement was made was attended by HE Mohammad Abunayyan, Chairman of ACWA Power, Waleed Salman, Executive Vice President of Strategy and Business Development at DEWA, Jamal Alhammadi,
VP of Special Projects at DEWA, David Lloyd – EY – Consortium Leader at DEWA’s financial consultant EY, Margaret Cole from legal consultant White and Case, John Elanjickal from technical consultant Pöyry, and Executive Vice Presidents and Vice Presidents from DEWA, project’s consultants, energy company representatives, and local and international media. The first phase of the project comprises two units of 600 MW each and will be operational by March 2020 and March 2021, respectively. DEWA is planning to launch two additional projects, to bring the total capacity to 3,600 MW.
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Ooredoo Group and Brightstar Corp sign strategic agreement Ooredoo has announced a new agreement with Brightstar Corp, which will see the two companies work together on end-to-end supply chain management across its footprint, bringing the latest and best mobile technology to Ooredoo’s markets. Under the strategic agreement, Brightstar will provide support in a range of areas, including procuring the latest mobile devices, forecasting, channel management and distribution, offering accessories, mobile digital solutions, device insurance and protection solutions. The agreement will enhance Ooredoo’s strategic focus on the mobile sector, particularly as the company looks to expand the range of wearable technology available for customers, and enrich their digital lifestyles. Ooredoo Maldives and Facebook have also partnered to connect more people in the Maldives to the internet with the launch of Free Basics in the Maldives. Free Basics, a Facebook-led initiative, is aimed at making internet access available to the two thirds of the world’s population who have never been connected to the internet before. Ooredoo customers in the Maldives will be able to receive free access to a number of essential services by logging onto FreeBasics.com, or downloading their mobile application via the Google Play Store.
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Etihad Airways signs technology services, cloud collaboration with IBM to transform global operations
Left to right: Robert Webb, Etihad Airways’ Chief Information and Technology Officer; and Martin Jetter, Senior Vice President, IBM Global Technology Services; sign $700M technology cloud, services agreement
Etihad Airways and IBM have announced a ten-year technology services agreement worth approximately USD 700 million (AED 2.6 billion). This will allow the airline to enhance guest experience, develop world-class infrastructure and security, and improve efficiency. The transformational agreement, one of the most important strategic collaborations by Etihad Airways, will provide access to the latest cloud-based technologies and services for the airline, its group companies
and equity partners. IBM will deliver a range of secure and efficient technology services, allowing Etihad Airways and its partners to transform their IT infrastructure into global, flexible and agile cloud-based platforms to better serve their guests and employees. The agreement includes plans for the creation of a new cloud data centre in Abu Dhabi. The centre, to be developed and operated by IBM, will be one of the most sophisticated technology facilities in the Middle East.
RTA inks MoU with Cisco to boost cooperation During Gitex Technology Week, Abdullah Ali Al Madani, CEO of Corporate Technical Support Services Sector signed an MoU on behalf of the RTA with Cisco, represented by Rabee Dabboussi, General Manager Cisco UAE. Al Madani praised the MoU, considering it an important step towards stepping up the partnership with a renowned ITC solutions provider at the local, regional and international levels; which would help the RTA build effective partnerships, and deliver improved services. He pointed to the already existing solid working
relationship between the two entities where the RTA is using Cisco products and solutions in automating procedures and exchanging services in this field. “In accordance with the MoU, the RTA will work with Cisco International Limited on improving and keeping abreast of the technological trends worldwide. This will help streamline smart and e-services, and achieve excellence in customers’services to further enhance customers’satisfaction. Additionally, it will set the base for joint business in support of projects aimed at upgrading services to public transport users in the Emirate,”said Al Madani.
Huawei: Middle East driving Digital Transformation agenda
Looking to the future of the region’s connected digital economy, senior executives for across the technology industry joined Huawei to commemorate the company’s 15-year anniversary of operations in the Middle East. Huawei hosted a number of commemorative activities over a week, culminating in a gala event held at the Armani Hotel in Downtown Dubai, UAE. Driven by a desire to build a better connected world, Huawei Middle East is, today, a strategic partner to leading telecom operators, governments and enterprises in enabling the Middle East’s digital society. The event was attended by over 300 senior government and business leaders, including HH Sheikh Hasher bin Maktoum Al Maktoum, Director General of Dubai’s Department of Information, with speakers including Dr Aisha Bin Bishr, Assistant Director General of The Executive Office and Smart Dubai Taskforce Leader, Hatem Bamatraf, Chief Technology Officer at Etisalat Group, Eng Nasser Sulaiman Al Nasser, Senior Vice President of Technologies & Operations at STC, and Guo Ping, Deputy Chairman of the Board and Rotating CEO of Huawei.
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SITA named ‘Best Airport IT Service Provider’ for 2015
SITA was named the ‘Best Airport IT Service Provider’ at the Emerging Markets Airports Awards (EMAA), held in Kuwait recently. This is the fourth time SITA has won this prestigious award. SITA was recognised for its unique system integration capability – leveraging its own world-class technology with bestof-breed third party systems – helping airports manage their operations more proactively and efficiently.
Over the past few years SITA has provided new technology to several emerging airports, including upgrades to Istanbul Sabiha Gokcen International Airport, IT improvements to Livingstone’s airport, the main tourist gateway to Zambia’s Victoria Falls as well providing new solutions to GRU Airport in Sao Paulo to help accommodate the influx of passengers during last year’s FIFA World Cup.
US to bring largest international contingent to ADIPEC 2015 Against a dynamic backdrop of low oil prices, surplus supply, heightened environmental pressures and shifting global fortunes, the United States of America is banking on big business opportunities at the Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC), to be held from November 9 to 12. The US is projected to account for more than 200 exhibitors – 10 per cent of the total 2,000 expected at the once biennial, now annual event. The US presence at ADIPEC, featuring such industry giants as ExxonMobil, Schlumberger and Baker Hughes, is organised by Kallman Worldwide, Inc, the official US Representative of the show, in coordination with numerous government agencies, including the US Commercial Service. Of the 104 US companies participating in the Pavilion, 35 are new to the show, and ten of those are also new to the market. Ranging from publicly-traded stalwarts to privately-held innovators, Pavilion exhibitors represent a cross-section of leading American suppliers looking for new export opportunities and to strengthen regional business relationships.
Platts Survey: OPEC pumps 31.2 million barrels of crude oil per day in September Oil production from the Organisation of the Petroleum Exporting Countries (OPEC) totalled 31.2 million barrels per day (b/d) in September, down 60,000 b/d from August, as Saudi Arabia further reined in supply, according
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to a just-released Platts survey of OPEC and oil industry officials and analysts. Saudi supply fell back to 10.26 million b/d in September from 10.4 million b/d in August, the survey estimated. But participants in the
survey see Saudi Arabia’s September dip as a response to market conditions rather than as indicative of a downward trend in output that might signal a policy change. The high prices of recent years have enabled independent
producers to develop high-cost reserves, including shale oil in the United States. The International Energy Agency has already forecast a drop of 400,000 b/d drop in US shale oil output - the main driver of non-OPEC growth - next year.
logistics & Storage ad.pdf 1 23/08/2015 16:17:04
Etihad announces new UAE National airport appointments in US and Egypt
Omar Al Memari
Etihad Airways has announced the appointment of three new UAE nationals at airports across the airline’s network. Omar Al Memari has been named Etihad Airways’ Airport Manager at San Francisco Airport, and Khaled Al Mazrouei has been named Assistant Airport Manager at Los Angeles Airport. Rashed Al Sharji, has been appointed to the role of Assistant Airport Manager for Etihad Airways in Cairo. More than 190 UAE nationals now hold airport management roles at Etihad Airways’ destinations across the Middle East, Europe, Asia, Australia and the Americas.
Khaled Al Mazrouei
Rashed Al Sharji
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Emirates Group Embarks on Enterprise-Wide Transformation Strategy Emirates Group has unveiled its plans to undertake an enterprise-wide transformation initiative aimed at placing data at the heart of the organisation, re-inventing business processes using smart technology, and underpinning decisions with big data and real-time analytics. The goal is to transform Emirates and dnata into the leading customer-centric, technologyenabled travel experience enterprises. This enterprise-wide transformation strategy will see benefits cascade every area of business from customer experience, to commercial, to several back-office functions. In order to execute on this transformation, the Emirates Group is establishing a centralised Enterprise Change Management team that will be headed by a seasoned senior executive with the mandate, resources and funding to drive this long term strategic change across the organisation.
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Oracle adds more than 1300 enterprise resource planning cloud customers in recent months
Emirates SkyCargo named ‘Overall Carrier of the Year’ Emirates SkyCargo continues to lead the air cargo industry by winning the coveted ‘Overall Carrier of the Year’ award at the Payload Asia Awards 2015. This is the third consecutive year Emirates SkyCargo has received this prestigious award. The honour was accepted by
Ravishankar Mirle, Emirates Vice President of Far East and Australasia, Cargo, at a gala dinner at the Crowne Plaza Changi Airport, in Singapore. The ceremony took place in conjunction with the 2015 Payload Asia Conference, an annual trade event for the air cargo industry.
DMCC Recognised as The Best Free Zone in the World DMCC has been named ‘Global Free Zone of the Year’ 2015 by The Financial Times fDi Magazine. The annual global survey, considered the most prestigious free zone rankings, are based on
criteria such as outstanding performance year on year, growth and expansion plans, and presence of high growth industries. The DMCC Free Zone was hailed for its unrivalled digital and
physical end-to-end services and infrastructure model which offer businesses everything they need to set up, whether a branch office or full operations, in one place.
Over 1300 customers - with more than 300 in production - have turned to Oracle ERP Cloud in recent months including Athenahealth, Australian Finance Group, Boise State University, Evite, Irving Materials, Lumosity, and Tower Ventures. Customers are looking to Oracle ERP Cloud for complete ERP capabilities across financials, procurement, and project portfolio management, as well as Enterprise Performance Management (EPM), Governance Risk and Compliance (GRC) and Supply Chain Management (SCM). Native integration with the broader Oracle SaaS portfolio for Human Capital Management (HCM), and Customer Experience (CX) offer customers a practical, business-driven, rapid adoption path forward. As companies strive to stay competitive in today’s challenging business environment, they are increasingly turning to Oracle Enterprise Resource Planning (ERP) Cloud for the complete, natively integrated solution they are seeking to scale and support their growth. Oracle ERP Cloud delivers the most complete breadth and depth of functionality needed for large enterprises as well as fast growing midsize firms.
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Maritime companies and personalities celebrate excellence at industry awards ceremony in Dubai Individuals, organisations and companies from across the Middle East, Africa and the Indian Subcontinent maritime and shipping industry were honoured at the annual Seatrade Maritime Awards in Dubai, held under the patronage of His Excellency Sultan
bin Sulayem, Chairman of Dubai Ports, Customs and Free Zone Corporation and Chairman of Dubai Maritime City Authority. Hosted by international broadcaster, Stephen Marney, with a guest personality appearance from Ex-F1 winner, Damon
Hill, the Seatrade awards programme is widely recognised as the regionâ€™s premier maritime awards. Over the course of the evening, 25 awards were announced, which included individual special awards. All the awards remained a secret until the unveiling on the night.
Seatrade Maritime Industry Award was given to His Excellency Shaikh Daij Bin Salman Bin Daij Al Khalifa, Chairman, Arab Shipbuilding and Repair Yard (ASRY) (L-R) Chris Hayman, Chairman, Seatrade; Ali Shehab, Deputy CEO, Fleet Operations, KOTC; Sheikh Talal Al-Khaled Al-Sabah, Chief Executive Officer, KOTC; His Excellency Shaikh Daij Al Khalifa, Chairman, ASRY; Andrew Williams, General Manager, Seatrade; Vanessa Stephens, Seatrade Middle East Managing Director
Winners of the Seatrade Maritime Awards held yesterday in Dubai
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COUNTRY REPORT – INDIA
India logistics in redesign mode Frost and Sullivan’s recent report of the Indian logistics sector provides insights into mega trends that are shaping the industry for this year and the next. Gopal R, Global VP Transportation and Logistics Practice and Srinath Manda, Programme Manager have more details
he Indian logistics market recorded revenues of about USD 104.10 billion (AED 382 billion) in 2014, witnessing a growth of about 4.9 per cent over the previous year. Transportation accounts for about 60 per cent of the market revenues. The Indian logistics market is likely to witness consistent growth of around six to seven per cent every year during the period 2014-2020, and reach revenues of about USD 150-160 billion (AED 551 billion – 588 billion) by 2020.
Exhibit 1: Segmentation of Indian Logistics Market, 2014
Source: Frost & Sullivan Research
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COUNTRY REPORT – INDIA
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COUNTRY REPORT – INDIA
Mega Trend 1: GST Impact and Preparing for Post GST Scenario Trade Tax Reforms in India and the Introduction of GST The trade tax system that prevailed in India until 2005 was described in an expert committee report as “archaic, irrational, and complex – according to knowledgeable experts, the most complex in the world”, thus needing a major overhaul. Over the past several years, significant progress has been made to improve the trade tax structure in India, broaden the base, and rationalise rates. To address the issues with existing tax structures, several initiatives have been taken by the Government, with the first major initiative being the introduction of a Value Added Tax (VAT) System. Burden of multiple taxation existed at the Centre and states prior to introduction of VAT in 2005. Subsequent to the success of the VAT regime, the Government embarked on efforts for implementation of a much more refined and globally preferred tax system known as Goods and Services Tax (GST) in 2007. GST is defined as a ‘nationwide uniform taxation system’, which replaces multiple taxations by central and state governments in a country. The concept is that a specific product or service would have the same level of taxation across the entire country, irrespective of being manufactured and sold in different sub-national territories (states). Across the world, GST is the most popular trade tax regime, practiced by over 150 countries. Two models of GST are prevalent – one with a single level national tax system, and another with two component tax structures, with one component being levied by the central government, and another by state governments, but both being taxed together simultaneously as a single transaction. The single level tax system is the most prevalent system across the world. However, it is considered suitable for countries where the central government holds absolute unilateral power of administration, and taxation and state (or provincial) governments depend on the central government for all resources. Since India is a sovereign nation where both Central and State Governments have distinct administration and taxation powers
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awarded by the Constitution, the single level taxation system is not considered suitable, and hence the dual model of GST is being adopted by the country. Prominent Features of India’s GST Model The proposed GST model for India is expected to subsume (absorb or replace) most of the existing direct and indirect taxes levied by the Central and State Governments on all products and services. Currently, power to levy service tax lies only with the Central Government, however, with GST, even State governments will be privy, so necessary constitutional amendments are being worked out to provide States with appropriate power. The GST system works on the basis of taxing only the component of value addition at each level of goods or services supply by off-setting the tax paid already at the previous level of the value chain. Thus, it automatically incorporates a mechanism that compels every level of the value chain to ensure that the appropriate tax has already been paid in the previous level. Certain products such as petroleum and gas, alcoholic products, and farm produce are exempted from GST’s purview. The uniform GST regime in India is likely to be implemented, in all likelihood, by early 2016. The new Government has progressed from the efforts initiated by the previous Government, and has been able to address/ clear most concerns of various states whose incomes are likely to be affected due to this regime. Given that the onset of GST would require transformation of distribution (and therefore logistics) practices of most industries, both logistics service providers and users need to prepare for the change. Such a nation-wide uniform tax regime is expected to have a profound and permanent impact on most manufacturing industries in the country and their logistics operations. As a result of this new tax model, the individual state administrative borders are expected to become nullified / irrelevant for most industries, thereby driving them towards rationalisation of their logistics operations and infrastructure. This would eventually require the logistics service providers to restructure their operations and infrastructure.
Impact of GST on Manufacturing (Logistics Service User) Industrie In case of a majority of consumer goods industries, manufacturing plants are placed in locations or states that offer tax rebates or lowest tax structures, even though the locations are non-optimal from a geographic distribution perspective. For example, several companies have put up their production units in states such as Uttarakhand, Jharkhand, and Jammu and Kashmir. In the post GST scenario, no tax rebates or varying tax structures would be allowed across states, and there would be uniform taxation across the country. As a result, manufacturing plants are likely to be placed in locations that have close proximity to raw material production hubs, and multiple transportation networks. Most of the consumer goods industries (including FMCG, Pharma, electronics, etc) are expected to follow these new regional hubs for their distribution. However, industries that are highly concentrated in select locations (including automotive, minerals, metals) due to source material proximity are likely to continue their current operational model. Impact of GST on Logistics Service Providers (LSPs) In general, LSPs are likely to need restructuring of their assets and operations to create an optimal network and infrastructure for fulfilling changed operations of customers in the new scenario. LSPs serving any specific industry would have to realign their operations to match the restructuring of those respective industries. Expected Major Benefits and Challenges Due to GST Based on the potential impact of GST, a few major benefits and challenges for the logistics sector as a whole have been listed below:
Mega Trend 2: Impact of Revised Land Acquisition Act on Logistics Infrastructure Growth Land Acquisition – The Most Prominent Challenge for Logistics Infrastructure Projects in India The primary reason for delay of most infrastructure projects (including those
from logistics sector) in India has been the challenge of land acquisition. A report presented by the Planning Commission to the Prime Minister during November 2014 stated that 83 per cent of about 707 central sector projects have sustained delays of up to 12 years, with cost overruns of nearly INR 1,90,000 crore (USD 3.17 billion â€“ AED 12 billion). Among these delayed projects, 274 are from railways, 118 are from roadways, 26 are from ports and inland waterways, and a few more from other segments of the logistics sector. As a result of these delays, the Government was able to realise only about 10-15 per cent of its actual targeted infrastructure development in these segments. Challenge in land acquisition, and the related relief and rehabilitation issues, including adverse law and order situations in some cases, was touted as the primary reason for delay. The Center for Monitoring Indian Economy (CMIE) outlook of February 2015 on ongoing projects in the country stated that land acquisition problems led to stalling of 11 projects during December
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2014 quarter, with an estimated investment of INR 265 billion (USD 4.42 billion â€“ AED 162 billion). As per a research article published by Shri J L Narayan, Joint Adviser, Infrastructure and Project Monitoring Division of the Ministry of Statistics and Programme, the primary reason for delay of road transport and highway projects in India is land acquisition, followed by realignment of
public utilities like water supply, power supply line, etc. A number of projects have suffered due to lack of proper response or support from state government authorities in resolving the issue of land acquisition. Revisions in Land Acquisition Act On December 30th, 2014, the Central Government introduced an ordinance to effect major changes in the existing
Exhibit 2: Expected Major Benefits and Challenges for Logistics Sector Due to GST Major Benefits
Primary and secondary distribution activities might get streamlined
Understanding the new tax structure could be highly challenging, especially for LSPs serving multiple user industries
Interstate movement will become simplified and presume importance
Obtaining / establishing regional distribution hub infrastructure in optimal locations could mean high investment burden / risk
Simplified distribution network with optimal regional warehousing hubs supported by satellite facilities
Need to revamp fleets, get new mix of vehicles etc., could mean a large investment burden / risk
Rationalization or revamp of transportation fleets
Matching the realignments in transport routes and volumes of goods would be major challenge
Immense scope for optimizations of costs
Will lead to national level competition for smaller companies which were protected earlier Source: Frost & Sullivan Research
COUNTRY REPORT – INDIA
Land Acquisition, Rehabilitation and of logistics infrastructure within industrial Resettlement Act 2013. Among the multiple corridors. Further, investors participating revisions made in the Act through this in PPP projects would also be benefitted ordinance, the following key revision has from this revision, and since most logistics significant implications for the logistics (especially transportation) infrastructure sector. projects are of PPP model, all the potential Removal of the consent clause and Social participants of such projects would be Impact Assessment for five more sectors, encouraged to take up new projects. due to which assessment and mandatory As a result of this revision in the Act, consent of 80 per cent land owners will not several delayed logistics infrastructure be required. projects such as dedicated freight corridors, Rural infrastructure and industrial highways, private ports, and airports are corridors are among the five sectors. In expected to be completed quickly, and addition, public private partnership (PPP) new planned projects are expected to be projects where ownership of land continues launched. Other smaller logistics projects to be vested with the Government are also such as inland container depots, container covered in the five sectors. freight stations, warehousing zones, and Omitting the social assessment part logistics parks are also expected to gain enables the Government to surpass a very momentum. important hurdle in such projects. As per A significant level of this momentum the earlier law, the assessment was meant to related to delayed project completion as find out how many people will be impacted. well as new project launch is expected to be Hence, apart from the land owner, the social witnessed during 2015-16, thereby creating group (family, associates, employees, and all a Mega Trend for the logistics sector. those who are dependent on the land) also needed to be compensated. But the new Mega Trend 3: Impact of ordinance ensures that only land owners Enhancing Regional Transport are compensated. In addition, the case of Links in South Asia whether the land is fertile or not will not Evolution of South Asian Regional be taken into consideration while acquiring Economic Cooperation it for these five specific sectors. So even if The idea of specific regional cooperation in the land is extremely fertile, as was the case South Asia was first mooted in May 1980, in Tata’s Singur project, it can be acquired and the formal economic and political if it fits the criterion of these five sectors. Exhibit 3: Map of SAARC Countries A uniform central policy of rehabilitation and resettlement for all types of projects covered under this Act is the other notable revision. This eliminates the variations and confusions in the form of different compensations applicable based on the type of project for which land is being acquired. Impact of Revised Land Acquisition Act on Logistics Infrastructure Removal of the consent clause and Social Impact Assessment provides significant relief for developers of logistics infrastructure in rural areas, and also the developers
co-operation organisation in the name of the South Asian Association for Regional Cooperation (SAARC) was established on December 8, 1985. While SAARC’s key aims are to promote peace, trade, and development among its members, one of its major goals is to create a South Asian Economic Union by 2020. Establishment of the SAARC Preferential Trading Arrangement (SAPTA) in December 1995, and the South Asia Free Trade Agreement (SAFTA) framework in January 2006, have given new dynamism to the association and further stimulated intra-regional trade and integration. SAARC’s internal (intra-SAARC) trade as a share of its global trade is significantly low when compared to that of two other neighbouring trade blocks – the Gulf Cooperation Council (GCC) and Association of South East Asian Nations (ASEAN). Transportation Connectivity Issues within South Asia South Asia’s economic integration is primarily being inhibited by the poor state of transport connectivity between member countries. Lack of cross border transport networks and constraints ‘at the border’ and ‘behind the border’ have tended to undermine the prospects of reaping the benefits accruing from closer economic cooperation. Despite actively pursuing regional economic integration through SAARC, almost all member countries focused only on development of the transport system in a national context, with little consideration given to crossborder issues of compatibility, uniformity of standards in infrastructure, and in acquisition of rolling stock and equipment.
Source: Frost & Sullivan Research
Impact of India’s South Asian Regional Trade on its Logistics Sector Key products / commodities traded by India with its neighbours include agricultural produce, food products, textiles and garments, consumer goods, electronics, automotive, and engineering goods. Average
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logistics cost for all these products is estimated to be in the range of 11-12 per cent of their sales value. Accordingly, the value of logistics market opportunity from Indiaâ€™s South Asian regional trade as of 2014 was about USD 2.3 billion (AED 8.45 billion). This involved facilitating the movement of goods across borders and earning revenues from the services of transportation, warehousing, freight forwarding, and value-added services related to this goods movement.
Mega Trend 4: Impact of e-commerce on Logistics Sector
Exhibit 4: Segmentation of Indian Logistics Market, 2014
Rise of e-commerce in the Indian Retail Sector The Indian retail sector size in FY 2014 was about USD 450 billion (AED 1,653 billion). Traditional retailing still occupies around 93 per cent of the total organised retail sector in India. Online retailing currently occupies just around seven per cent of the pie, however, this sector is witnessing a strong growth and receiving heavy investments. Urbanisation is leading to expansion of cities, creating the need for a wider retail footprint around the country, and consumers are increasingly moving from just shopping for needs, to looking for an experience while they shop. This will also push for growth of organised retail formats around the country, consequently occupying a share of around 20 per cent of the total retail pie by 2020, from the current 7.5 per cent. Source: SAARC Secretariat
Exhibit 5: Share of Organized Sector and Online Retailing, 2014 Online Retailing 7.0%
Organized Retail 7.5%
Unorganized Retail 92.5%
Source: SAARC Secretariat
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Traditional Retailing 93.0%
Logistics Practices of the e-commerce Industry The logistics practices of the e-commerce industry are significantly different from the traditional business channels. The value chain itself is significantly shorter than traditional business channels and the logistics dynamics playing on this industry are primarily driven / triggered by a customerâ€™s purchase / transaction on the e-commerce website. In that context, this is a pull based value chain unlike the push based value chain employed in traditional business channels. Outlook for e-commerce and Impact on Logistics Sector Organised retail companies are looking to improve in areas relating to supply chain
COUNTRY REPORT – INDIA
Exhibit 6: Traditional Business Channels’ Value Chain – Primarily Push Based System
modes of payment collection. The versatility and agility of this sector presents unique opportunities for innovative value-added services that can be offered at various echelons of the logistics delivery value chain. -Reprinted with permission from Frost & Sullivan. Original report titled - Megatrends in the Indian Logistics Sector 2015-2016
Source: Frost & Sullivan Research
efficiencies and inventory management. This will open doors for LSPs to support in creation of new and innovative logistics and supply chain models. Considering the dynamic and high technology dependent operations, the online retail segment needs to make supply chain management models much more efficient and advanced than those of organised retailers. The e-commerce segment is poised for strong growth in India, with online retailers competing not only on product price, but also on shorter delivery times, creating opportunities for bespoke express logistics services and a host of value added services. Some of the key characteristics of the logistics services for e-commerce sector are network reach, timely express delivery, efficient sourcing, standard packaging practices to facilitate easy and secure shipping, ability to service a high number of stock keeping units (SKUs) and multiple
Exhibit 7: E-commerce Value Chain – Primarily Pull Based System
Source: Frost & Sullivan Research
NOVEMBER 2015 23
Managing facilities sustainably Satinder Singh, Director of Operations â€“ EFS Facilities Services, Dubai, tells GSC about how the company has changed with the changing needs of client requirements and UAEâ€™s newer regulations over the years since it began operations When we speak of the sustainable supply chain, how can an industrial / manufacturing company achieve that with the support of it facilities management?
Satinder Singh, Director of Operations, EFS Facilities Services, Dubai
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For industrial and manufacturing industry companies, facilities management service focuses on the environmental space requirements of facilities. That involves integrating people, places, processes and systems across a facility. Integrating facilities management can bring to the table innovative solutions that deliver energy savings, extend life cycle and longevity of valuable assets, and help ensure a sustainable supply chain essential to maintaining facility operations.
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We create opportunities for current employees to progress in their careers and move up to new positions, ensuring we have consistency and experience executing the EFS model in all new projects. 26 NOVEMBER 2015
How long has EFS been in the market, and how have market needs changed since then? What are EFSâ€™ plans for the future, since all indicators point to a growing economy, and hence demand?
EFS entered the market in 2000, which coincided with a major shift in the FM market, from reactive maintenance to proactive preventive and planned maintenance. In 2005, the market began a move toward fully Integrated Facilities Management (IFM), where one firm leads
the implementation and orchestration of all building services and systems needs to deliver maximum efficiencies. Implementation of the IFM model sparked a period of significant growth and expansion across the Middle East, South Asia and Africa. The EFS model is to expand, with trusted, long-term clients, as they open in new markets across the region. Over the past five years, EFS has expanded to 14 new countries, while maintaining a client retention rate of greater than 95 per cent.
When talking about market share and competition, how poised is EFS to offer better customised solution to clients?
EFS is a preferred service provider for full IFM solutions. We currently provide 80 per cent of all integrated services in-house, and we continue to expand our service offering. The foundation of our ability to deliver such a broad range of services and maintain operational excellence comes from our dedicated focus on our people as our most important assets. Our ability to recruit, train and retain the talent needed to deliver quality execution across 17 service categories and 75 service lines is what sets us apart and keeps us well positioned for future growth.
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Tell us a little about the challenges you have faced, and overcome.
Human capital is the greatest challenge EFS and all FM companies face across the region. Resources are limited, and the market is highly competitive. The greatest challenge is to bring in and keep the best talent, while ensuring that we apply best practices based on international standards for labour welfare. And do that while staying cost competitive. We have built a culture that emphasises constant training and creating career pathing opportunities for our employees to develop and progress within the organisation. We maintain a dedicated training facility, where we provide a range of technical, housekeeping and HSEQ training programmes. Till date, we have provided
Tell us about your fleet of vehicles, and how do you train your drivers?
We currently have over 100 vehicles in our fleet in the UAE, which range from hatchback compact vehicles, sedans, double cabin pick-ups, buses and vans. Training is provided in our own facilities, and all employees handling specialised equipment are required to obtain relevant certification for each type of machinery. How do you manage your workforce, from sourcing to providing benefits that adhere to international standards?
Headquartered in Dubai and operating in 20 markets, EFS Facilities Management Services is a trusted value-add partner for multi-national companies navigating the immense range of challenges and risks faced as they scale operations to capitalise on the tremendous business growth opportunity this diverse region presents. EFS is the only fully integrated facilities management partner capable of bringing international best practices in asset, non-core labour and supply chain management quality standards to companies expanding in local markets across the Middle East, South Asia and Africa. EFS provides services across 17 service categories and 75 service lines to help its clients maximise and protect the long-term value of assets, reduce operating costs, limit risk and exposure to local labour, health and safety, environmental and other regulatory issues faced that are beyond their core areas of expertise.
more than 50,000 hours of training annually. This approach has helped us maintain a stable employee base, which we believe has a direct correlation to our high client retention rate. Letâ€™s talk about the value proposition that a company gets signing up with EFS for their services.
Alignment, performance management, optimisation of costs, risk management, innovation and technical support are the core elements of satisfaction. We work as close partners with our clients, focusing on continuous engagement on site, and providing customised service models, built to meet the specific and unique requirements and situation of each client. We create a mind-set with our people to take ownership of the property and collaborate with clients to deliver consistent end results.
With more than 11,000 existing staff, we have a huge, well-trained resource pool that helps position us to efficiently expand locally and to new markets with our clients. For every new project, we employ a hybrid staffing approach. We create opportunities for current employees to progress in their careers and move up to new positions, ensuring we have consistency and experience executing the EFS model in all new projects. Our human resources group fills out the project team with new recruits that come from a well-defined recruitment process, working with agents in various countries, as well our own online portal, to build a CV database. All staff have to go through training process through our training facilities. This model has enabled us to efficiently start up projects for clients as we expanded to new markets, including India, Sri Lanka, Egypt and Turkey. In terms of labour management, we meet and exceed all local labour regulations, while striving to meet international best practices. EFS provides accommodations that meets ILO standards of providing a balance of living space and recreational activities. We also ensure all EFS employees receive regular benefits such as laundry service, food, air tickets and other benefits. What facility does ESF use to dispose of waste?
EFS has established a specialised division that provides waste management services for our clients. We currently do not have our own plant. We partner with carefully selected third-party waste management service providers across different markets to collect and dispose waste as per municipality requirements.
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Raji Hattar, Chief Sustainability Officer, Aramex, tells GSC how the company is making a serious effort towards more sustainable operations, leading to more efficiency and better business
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ustainability is the buzzword today, no matter what the industry, and logistics is no different.“Aramex’s commitment to sustainability is embedded in our values, and at the heart of our business. We recognise that, to meet our business objectives, and to continue to grow, we must serve and sustain the markets and communities we operate in. Our sustainability strategy, ‘Delivering Good’, is crucial to our commitment to helping communities grow and adding value to the
strategy successfully, and have been incorporated into the daily running of the business. The company has a number of programmes and initiatives that cater to these three focus areas. In the past five years alone, Aramex has spent over USD 3.5 million (AED 12.9 million) on environmental related initiatives worldwide.“The major impact of our operations result from four key areas: emissions released in our operations, the use of our facilities, the use of our vehicles, and delivering our shipments. This negative impact on the environment is a concern for us, which is why we are continually looking for ways to optimise operations, reduce resource consumption and source alternative technologies,”says Hattar.
business markets where we work,”says Raji Hattar, Chief Sustainability Officer, Aramex. There are three key areas of focus that support and drive the Delivering Good strategy of the company: 1) Education and Youth Empowerment 2) Entrepreneurship 3) Environment All of these are critical to upholding and executing Aramex’s sustainability
In addition to their business operations, Aramex has also made significant progress in the communities they operate in.
From a business perspective, most recently, they have achieved the following: Paper consumption for 2014 was reduced by 16 per cent Electricity and fuel consumption per shipment in 2014 decreased by 13 per cent for fuel and nine per cent for electricity 78 per cent of their fleet is now made up of low emission vehicles As a result of using teleconferencing to reduce the number of business trips across the network, business travel related emissions has decreased by 33 per cent The size of Aramex’s waybills has been reduced by 70 per cent Since 2009, they have saved 179 tonnes of paper from reducing the usage of domestic shipment AWBs Since 2006, when the first sustainability report was released, Aramex has made significant progress.“Each year our figures improve, as we are continually looking for ways to make the Aramex business more environmentally-friendly and efficient from an operational perspective. Year on year, our overall energy output reduces,” explains Hattar. He gives the example of one important initiative he and the sustainability team have helped implement to ensure their energy output is continually reducing was to make sure that Aramex is
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building warehouses and other facilities in accordance with Leadership in Energy and Environmental Design (LEED) standards. â€œOur LEED certified buildings have lowered our electricity consumption significantly, which resulted in cutting down our emissions. We were also the first company in the region to calculate and report our carbon footprint, and make an active effort in measuring, reporting and managing our environmental footprint. Since we published our first carbon footprint report back in 2010, we have been
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expanding and improving our carbon footprint measurement and management techniques, in order to increase our accuracy and monitor our operations, so that our environmental and process efficiency initiatives tackle the correct sources of emissions in the most effective manner,â€?he explains. The sustainability team has also helped to ensure that Aramex spends a minimum of one per cent of their pre-tax profit on social projects, excluding their spending on environmental investment and expenditure. They continue to
exceed this goal, and, in 2014, spent 1.5 per cent of pre-tax profit on social projects. In addition to their business operations, Aramex has also made significant progress in the communities they operate in.â€œWhen we first launched our sustainability programme in 2005, we only had one project in Jordan. Now, we are involved in over 180 projects across our network through partnerships with communities, social entrepreneurs, governments, NGOs and corporations. Our programmes have evolved in their manner
of operation as well, ensuring stronger, more effective partnerships, long term and sustainable projects and compounding positive impact on our communities,”he adds. At Aramex, they understand how important sustainability is across a number of different issues. Their Delivering Good strategy has been developed to positively impact a number of areas, such as environment, education, youth empowerment, business operations and entrepreneurship.
give back to the communities they live in,” explains Hattar. Aramex is also committed to supporting the development of entrepreneurs through their unique SME Programme to support their business stability and longevity. Says Hattar,“We support SMEs so that they can build sustainable businesses, and also potentially become Aramex’s business partners in the future. Through our SME programme, we intend to mutually share and transfer knowledge with budding entrepreneurs.”In 2014, they supported and trained over 1,200 start-ups. In cases of emergency and disasters, Aramex also mobilises their operations and leverages their network to help in relief efforts. They have been able to aid thousands of people in times of emergency across the globe. And these are just some of the key components in their sustainable business model. By investing in This negative the communities Aramex operates impact on the in, they also benefit by being the recipient of new hires and valuable environment is a business partners that come out concern for us, of their training and development programmes.“In this way, we are which is why we building a solid and productive are continually network, are able to understand the communities’ needs, playing looking for ways a role in socio-economic to optimise development and strengthening the markets we are in,”he smiles. operations, Globally, there is a concentrated reduce resource effort to tackle climate change, raise environmental awareness and consumption and improve sustainable management source alternative of natural resources. There is increasingly more deliberate action technologies. by companies and governments to debate and address environmental For example, they are investing heavily in issues, from climate change, water and food the youth to equip them with the skills they scarcity, and pollution, to the need for innovation in developing sustainable business models. need to thrive in the job market, and build “This trend is also mirrored in the region, long-term, sustainable careers. “Nearly as we are seeing more governments and 10,000 children and youth have benefited companies rally behind sustainability from our CSR programmes, which have efforts.”The region’s rapid development, included scholarships, training, mentorship however, is having an impact on the and internships. Many of our interns and environment, both globally and locally, as its youth have come to work at Aramex after increasing population and growing middle they complete their education. We believe class contribute to significantly increased that by investing in the youth, they will consumption. This is, in turn, placing more not only excel in their careers, but also
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pressure on the logistics industry to meet increasing demand in an efficient and environmentally friendly way. “So, from a logistics perspective, we are extremely aware of our energy expenditure and how we can lower it, both regionally and globally. We are very conscious of our carbon footprint as we continue to move goods from country to country,” says Hattar. The GCC countries often act as hubs for facilitating regional and global trade. As the region prepares to host upcoming major international events, including Dubai Expo 2020 and the FIFA World Cup 2022, Aramex understands that global conferences and events will put pressure on the logistics industry to move goods and services more efficiently, so they fully support the region’s goal to reduce energy consumption.
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“One way we are taking action is by updating and converting our fleet to include low emission, environmentally friendly vehicles. We also do our best to utilise vehicles that rely on natural gas to further reduce our emissions. In 2014, we also hosted our eco-driving training in Dubai. This training includes different ways to reduce emissions from fuel through driving techniques. We are currently measuring the effectiveness of the training on our fuel consumption, and plan to expand the scheme in the future. We are also continually improving our route optimisation software in order to increase efficiency of deliveries,”explains Hattar. Long term, Aramex is committed to continuing to adopt innovative technology solutions, both internally for their processes and systems, and externally for their businesses and consumers. This
will help them reduce their overall energy consumption, and to continue to grow sustainably in the industry. Broadly, when one considers developing a new solution for businesses and consumers, assessing its impact on the environment is critical now more than ever. Global climate change action is becoming increasingly critical, and the logistics and transportation industry has a crucial role to play in reducing GHG (Greenhouse Gas) emissions, oil and gas consumption, and reducing its environmental footprint. One trend that is growing, and will be important to watch for in the future, is surging mobile penetration in emerging economies in the Asia-Pacific and Africa. This is because more consumers are buying goods from their mobile phones instead of visiting retail outlets, increasing the demand
With these e-commerce customer bases growing rapidly, this is putting pressure on the logistics industry to find transportation solutions that are effective, efficient and sustainable.
for last-mile delivery. With these e-commerce customer bases growing rapidly, this is putting pressure on the logistics industry to find transportation solutions that are effective, efficient and sustainable. Says Hattar,“An increase in online shoppers means there will be an increase in trucking and courier activities, which will increase emissions and negative environmental impacts. Therefore, we see there is a significant opportunity for us to develop innovative technologies that appeal to this demand, while making sure that they are environmentally friendly.” “And while our global presence continues to rapidly expand in these emerging economies, we recognise how crucial it is to ramp up our sustainability efforts. That’s why our ambition is to reduce our fuel and electricity consumption
per shipment by 20 per cent by 2020. We also are expanding our initiatives for youth and entrepreneurs in the markets we operate in, and engaging more of our employees in our sustainability efforts,”he adds. From a business operations perspective, one way to assess one’s sustainability standards, and how they are positively impacting the business, is by relying on the benchmarks and guidelines developed by international groups. By executing international best practice across their operations, and effectively reducing their energy output to a level that meets the criteria of these groups, Aramex has increased their operational efficiency, reduced overall energy output, and minimised costs. “In fact, relying on these benchmarks, and making sure we are committed to
adhering to them, has supported our sustainability programme so much that we have not received any non-compliance fines related to the environment to date. This is a significant achievement as we are recognised by leading international bodies as a credible and reliable business in the field of sustainability,” he says proudly. Hattar credits their success to the team’s sheer dedication to ensuring that Aramex’s compliance programmes fully adhere to the highest international standards, and it’s certainly had its benefits, both operationally and financially for the business. The team at Aramex is always working
to expand and update their policies to include environmental considerations. Moreover, they are working to ensure they are compliant with local, regional and global laws and regulations. “For example, we adhere to the principles of various global organisations, including the UN Global Compact, Caring for Climate, the World Economic Forum’s framework on the de-carbonisation of the logistics industry, Social Accountability 8000, and the International Labour Organisation’s convention. These are just a few examples of our commitment to adopting only the highest standards of compliance in sustainability. Aramex also holds LEED certificates for most of its newly-built warehouses; almost all Aramex offices are ISO 19001 certified,”he concludes.
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العمل التجاري املسئول
حتدثنا في مجلتكم مع راجي حتر ،الرئيس التنفيذي لالستدامة ،ارامكس، والذي أخبرنا كيف أن شركة ارامكس تبذل جهودا جادة لتكون عملياتها أكثر استدامة ،مما يؤدي لتحقيق املزيد من مستويات الكفاءة وحتسني األعمال. االستدامة هي الكلمة املنتشرة هذه األيام، بغض النظر عن طبيعة الصناعة التي تنتشر فيها ،واخلدمات اللوجستية ال تغرد خارج السرب ،وعن ذلك يقول راجي حتر ،الرئيس التنفيذي لالستدامة ،ارامكس« :التزام ارامكس بتحقيق االستدامة محفور في قيمنا ،وفي صميم عملنا ،ونحن ندرك أنه من أجل حتقيق أهداف أعمالنا ،ولالستمرار في النمو ،يجب علينا أن نخدم األسواق واملجتمعات التي نعمل فيها وأن نحافظ عليها .استراتيجية االستدامة لدينا تقوم على حتقيق شعارنا «التسليم اجليد» وهو أمر بالغ األهمية اللتزامنا مبساعدة املجتمعات احمللية على النمو وحتقيق قيمة مضافة في األسواق التي نعمل فيها».
هناك ثالثة مجاالت رئيسية نركز عليها والتي من شأنها أن تدعم وتقود استراتيجية التسليم اجليد للشركة: - 1التعليم ومتكني الشباب - 2ريادة األعمال - 3البيئة
كل هذه املجاالت حاسمة لدعم وتنفيذ استراتيجية االستدامة في ارامكس بنجاح ،وهي عنصر أساس في ثنايا اإلدارة اليومية للشركة. ارامكس لديها عدد من البرامج واملبادرات التي تلبي احتياجات هذه املجاالت الثالثة. في السنوات اخلمس املاضية وحدها، أنفقت ارامكس أكثر من 3.5مليون دوالر ( 12.9مليون درهم) على املبادرات البيئية NOVEMBER 2015 37
في جميع أنحاء العالم ،وعن ذلك أخبرنا راجي« :األثر الكبير لعملياتنا ينجم عن أربعة مجاالت رئيسية وهي :انبعاثات نتجت عن عملياتنا ،استخدام مرافقنا ،استخدام سياراتنا ،تسليمنا للشحنات .هذا التأثير السلبي على البيئة هو مصدر قلق بالنسبة لنا ،ولهذا السبب نبحث باستمرار عن سبل لتحسني سير العمليات ،وللحد من استهالك املوارد والعثور على تكنولوجيات بديلة».
من منظور األعمال ،حققت ارامكس ما يلي:
• تخفيض استهالك الورق في عام 2014 بنسبة 16في املائة • تخفيض استهالك الكهرباء والوقود لكل شحنة في عام 2014بنسبة 13في املائة للوقود وتسعة في املائة للكهرباء • 78في املائة من أسطول شحن ارامكس يتكون من مركبات تصدر انبعاثات منخفضة • نتيجة الستخدام االجتماعات عبر الهاتف والفيديو للحد من احلاجة للسفر إلى فروع الشركة ،انخفضت االنبعاثات من السفر لغرض األعمال في الشركة بنسبة 33في املائة • منذ عام ،2009أنقذت ارامكس 179 طن من الورق كانت تستخدم في طباعة بواليص الشحنات احمللية منذ عام ،2006عندما أصدرنا تقرير االستدامة األول ،وشركة ارامكس حتقق تقدما كبيرا ،يخبرنا بذلك راجي قائال« :كل عام تتحسن أرقامنا ونحن نبحث باستمرار عن
أفضل السبل جلعل أعمال ارامكس صديقة أكثر للبيئة وفعالة من الناحية التشغيلية .على أساس سنوي ،ينخفض استهالكنا للطاقة بشكل دوري». ثم يعطينا راجي مثاال على مبادرة مبدئية مهمة ،قام هو وفريق عمل االستدامة في الشركة بتنفيذها لضمان خفض استهالك الطاقة وذلك من خالل التأكد من بناء الشركة ملستودعات تخزين ومرافق أخرى وفقا ملعايير الريادة في الطاقة والتصميم البيئي (. )LEED ولتوضيح أهمية ذلك أضاف راجي قائال: «حققت منشآتنا املبنية وفقا ملعايير LEED خفضا في استهالكنا من الكهرباء بشكل كبير ،مما أدى إلى خفض االنبعاثات لدينا. كنا أيضا أول شركة في املنطقة تقوم بحساب ونشر تقارير عن وإدارة بصمتنا الكربونية. منذ أن نشرنا أول تقرير لبصمتنا الكربونية في عام ،2010ونحن نتوسع في ونعمل على حتسني تقنياتنا لقياس وإدارة انبعاثات الكربون ،من أجل زيادة دقة القياس وملراقبة عملياتنا ،بحيث تتعامل مبادراتنا البيئية مع املصادر الصحيحة النبعاثات الكربون بالطريقة األكثر فعالية». أيضا ساعد فريق االستدامة لدى ارامكس لضمان إنفاق الشركة ما ال يقل عن واحد في املائة من أرباحها قبل خصم الضرائب على املشاريع االجتماعية ،دون حساب اإلنفاق على االستثمار البيئي ،وهم استمروا في جتاوز هذا الهدف ،إذ أنه في عام 2014أنفقت ارامكس 1.5في املائة من األرباح قبل خصم الضرائب على املشاريع االجتماعية.
Finding the right
anchor The falling oil prices have forced companies to reassess their business models and find new ways to build a more sustainable set-up. Vivek Seth, CEO, Halul Offshore Services Company, tells GSC what we can expect in the next few years
s major oil companies cut down their spending budgets, and put off an estimated USD 200 billion (AED 734.6 billion) worth of projects due to the oil price slump, the offshore marine services industry has felt a big impact. “The Middle East though has remained relatively insulated,” says Vivek Seth, CEO, Halul Offshore Services Company. In 2016, it is estimated that the E&P spending will be reduced further against 2015 expenditure. Rig owners are slashing their charter rates by up to 30 per cent, are deferring buying new rigs, and, in some cases, deferring deliveries on rigs that they had already ordered. Utilisation of jack-up rigs has dropped globally by nearly 30 per cent, and this has a direct impact on the OSV segment. “Operators of offshore supply vessels (OSVs), which provide a wide range of services, have not been spared from the effects of the oil price decline, and the subsequent cost-cutting measures employed by oil companies. Across the board, ship owners have had to discount their rates in order to keep the fleet employed,” says Seth.
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But all is not lost. OSV companies have refocused their business strategy to cope with the effects of lower oil prices. “‘Cost management’ has become the latest buzzword in the offshore and marine industry, as operators have begun implementing a number of measures to lower costs. There are difficult times ahead of us in light of dropping day rates. However, companies need to be careful that any new business model they adopt do not compromise safety or operational efficiency,” he warns. Daily vessel operating expense is also an important criterion as it affects
a company’s costs and earnings. When operating efficiency is high, companies will generally generate higher margins and returns on investments, and vice versa. However, there is a limit to stretching your cost management, and it is important to be wary of compromising on key areas such as health and safety, as a major incident can have a serious direct and indirect impact on your business and reputation.“Cost cutting through head count reduction should not be the only way to manage expenses,”adds Seth. Low oil prices have recently prompted quite a few major oil companies to ask
Survival is the key in the current market scenario, and the focus has moved beyond proﬁtability, to generating sufﬁciently strong cash ﬂow to ride out the storm.
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to renegotiate day rates on even existing contracts, putting offshore marine companies at the risk of losing those contracts. The market has now become very competitive since there are way too many players willing to take the contract on the revised rates.“It has simply become a question of survival, and some ship owners have been obliged to offer discounts. At this point, it is more about keeping the vessels working rather than maintaining profitability,”shrugs Seth. The situation has prompted players like Halul Offshore to relook at their business strategy. Halul Offshore has a strong reputation in the market, not only on its
own merits, but from the achievements of its parent company, Milaha.“Clients are aware of the level of service we are able to provide, and have confidence in our ability to partner with them to deliver a safe operation. The current downturn has forced ship owners and operators to take a long, hard look at the way they do business. We also need to examine ways we can spread our wings by diversifying our operations beyond our home country,” says Seth. Seth believes that cost management, or ‘fiscal efficiency’, as he likes to call it, is the key to weathering the storm. However, having a solid financial standing is also
important to affirm the company’s ability to face current challenges. On the ground, this means knowing exactly where and how you are spending your money to guarantee maximum return on your investment. Survival is the key in the current market scenario, and the focus has moved beyond profitability, to generating sufficiently strong cash flow to ride out the storm. “One can also look at consolidation, the purpose of which is to boost revenues, while becoming more efficient through achieving scale, thus improving the overall profitability and long term sustainability of the business,” he muses.
M&As may look good on paper, but that does not ensure that there will be perfect synergy between two companies.“This can be crucial, as we have seen major M&As fail simply because of different work cultures. This is an essential component that must be addressed early on, as it can erode the profitability -- and eventually shareholder value – of both the companies,”says Seth. Halul Offshore has a wide range of vessels to cater to the unique and particular needs of their clients. They currently have a total of 40 vessels - eight Safety Standby Vessels with 1,300 to 4,000 Break Horse Powers (BHP);
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six Anchor Handling Tug Supply Vessels with 5,150 B to 5,510 BHP; three DP1 Anchor Handling Tug Supply Vessels with 6,000 BHP; three Wireline Support Vessels 1,800 BHP to 4,000 BHP; one Well Head Maintenance Vessel 2,000 BHP; five Construction Support Vessels at 2,000 BHP to 5,150 BHP; four DP 2 Anchor Handling Tug Supply Vessels at 6,800 BHP to 7,300 BHP; five DP 2 Platform Supply Vessels at 2,500 Dwt to 3,450 Dwt; two DP 2 Multipurpose Support Vessels at 4,900 BHP; and three DP 2 Dive Support Vessels at 5,550 BHP to 12,500 BHP.“We have a few other PSV/AHTS in the order book, including two lift boats, which we will be among the first in the region to own and operate,”he says. Initially established to meet the increasing demand from the burgeoning oil and gas industry in Qatar, the company has grown to be recognised by major international players, evident by the size and diversity of their fleet, as well as the extensive range of services they offer. With a diverse fleet – more vessels are to be added in the next few months – Halul is able to offer a complete range
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of diving services, including saturation diving.“We also own and operate the most advanced offshore maintenance, diving and underwater inspection equipment, such as Remotely Operated Vehicles (ROVs). This reflects our capacity to meet and exceed the requirements of the region’s major oil and gas producers,”boasts Seth. Of course, it’s not just about owning and operating a large fleet, but also ensuring it is well-maintained and efficient. A modern vessel has a typical life span of about 15 - 20 years, if working for an NOC/IOC. Effective technical management plays a large role in determining the life of the vessel, and it is recommended that it goes in for repairs every two and a half years, give or take six months, as per classification society regulations. However, ongoing maintenance is critical, and a special survey every five years is the industry norm. When not in use, the vessels are kept at the anchorage or alongside a berth. Once the ship has reached its natural end, it is sent to scrap yards for demolition and recovery of the metal. Scrap is governed by
weight of steel.“Our OSV fleet has limited value compared to ocean going vessels, from a steel perspective. In 2011, almost 92 per cent of ship scrapings took place in developing Asian countries such as China, India, Bangladesh, and Pakistan. However, environmental and human health concerns have been raised concerning this practice, prompting the industry to find a balance between economic and environmental aspects,”informs Seth. Looking towards the future, Seth believes that the OSV market will continue to be affected by weak oil prices, as well as oversupply in the global OSV sector, at least until the second half of 2017.“Hopefully, this will give ship owners the chance to reassess their business models and become more sustainable in the face of similar downturns in the future. It is also crucial to find a way to rationalise supply through a more focused strategy. This should eventually bring down the number of speculative owners of OSVs, who were building assets without the intention to actually run them commercially,” he concludes.
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cargo Eugene Mayne, Tristar, shares with GSC the intricacies involved in transporting liquids, and how they need to stay at the top of their game
What is the size of Tristarâ€™s oil and gas fleet?
Eugene Mayne, Group CEO, Tristar
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We own and operate a fleet of more than 1,000 road tankers, trailers, and pick-ups in the GCC, Africa and Asia. Most of our vehicles are dedicated to downstream oil and gas logistics as we are predominantly a liquid logistics company serving the Petroleum Industry. We also have six new vessels that will be commissioned next year as part of our investment into medium range tankers, as we look to expand our oceangoing shipping operations. At Tristar, we orchestrate a truly global and a truly multimodal operation covering road, river, sea, and train liquid logistics.
What are the different types of vehicles that are needed, and how do you ensure seamless workflow?
We are working with diverse customers, handling multiple petroleum and chemical products, and each has their unique requirements for product delivery. Certain liquids and gases require a bespoke trailer set-up to carry something like Liquid Nitrogen or Bitumen, so it is important to have the right equipment for the products you carry. For example, for Customer A, we do bulk transportation in ISO tanks, as well as in road tankers, and their packed products through specially-designed trailers and pick-ups.
demand nor supply changes very much in reaction to a change in price. We are all aware of the fall in oil prices over the last 12 months. The need for logistics and for transport services of the industry has remained consistent though. The US Energy Information Administration (EIA) recently estimated global consumption of petroleum and other liquids grew by 1.2 million b/d in 2014, averaging 92.4 million b/d for the year. The EIA expects global consumption of petroleum and other liquids to grow by 1.3 million b/d in 2015 and by 1.4 million b/d in 2016. So demand for the products we carry is there, and is growing. The EIA also notes that ‘global liquids production continues to outpace consumption’. This means we also face the challenge of providing the same service levels and same safety levels, but with less cash in the industry, to be shared with everyone in the supply chain. Therefore, how a company adapts to the market changes, how it improves its processes, and how it manages its operational costs, are key to maintaining the company’s revenue in this challenging economic environment. How have demands changed in the last few years, and how has Tristar prepped to keep on top of demand and forecasted trends?
We have all sorts of vehicles and equipment available with our own 24/7 vehicle maintenance facility to ensure seamless workflow for our customers. All our vehicles are fitted with GPS technology, and our dedicated Journey Management team monitors vehicle movement on 24/7 basis, again, to ensure seamless workflow. What are challenges you are currently facing with regards to transport in the oil and gas industry?
The oil and gas market is traditionally a market where both demand and supply are price inelastic. This means that neither
Our stringent recruitment process ensures that we hire experienced and competent drivers, who are then given exhaustive safety induction training before driving.
Technology, and the pervasive availability of internet connections, have changed the way we work and the way we expect others to work. We live in an ‘on-demand’ society, where real-time information is now the norm. Customers increasingly want real time knowledge of their deliveries. All our systems and business processes need to interface with our Customers’ ERP system for orders, invoicing and payments. Tristar has invested heavily in Data Management, Information Analysis Tools, Mobility Applications, Network Security and Data Protection for today, and for tomorrow. It might seem a usual topic, and not related perhaps to supply and logistics, but the rapid advancement in autonomous technology and connected devices means we can expect these devices in our homes, offices and warehouses within five to seven years.
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How many of your employees are currently assigned to oil and gas transportation?
We have more than 500 management and staff in the UAE. Globally, we are around 2,000, spread in 15 countries across the Middle East, Africa, Asia, the Pacific and Central America. How has this number changed in the last four-five years?
As the business grew, we added more people, and we expanded our footprint, such as in the Kingdom of Saudi Arabia and our continental African operations. In 2012, we were around 1,800 and operating in 13 countries. What kind of training is required for these jobs?
The company abides by the highest standards of safety and compliance, and it is our constant endeavour to implement industry best practices, with a strong commitment to continuous improvement. This makes our company a logistics provider of choice and a role model for aspiring startups in the logistics Industry.
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Tristar has rigorous policies, and a comprehensive road safety management system in place to ensure safety of its transport operation. Our stringent recruitment process ensures that we hire experienced and competent drivers, who are then given exhaustive safety induction training before driving. The regular trainings and open dialogue have increased awareness and extend the safety culture within the organisation. To continue promoting a safety culture, our drivers and management are always refreshed with policies and procedures related to HSE at our quarterly safety meetings, where safety knowledge is shared and safety performance is reviewed against our targets. All our drivers carry the HSE Passport for ready reference. The passport contains the drivers’ personal details, emergency contact numbers, and precautions to take in case of untoward situations. It also contains records of trainings attended, as well as any safety violations the passport holder was involved in. Each driver has the authority and responsibility to immediately stop any work or action that is unsafe for our personnel,
equipment or the environment. We have issued ‘stop work cards’ to all our employees as an empowerment tool to stop or refuse any unsafe work during the course of our operations. In addition, we maintain a strict policy for our drivers on minimum and maximum working hours, all monitored through the vehicle GPS tracking system. What kind of training do they receive, and how often do these skills need to be updated?
We have implemented recruitment and training schemes to support the selection of suitable, capable drivers, and once ‘on-board’, their driving skills are assessed and improved during their service with the company. We recognise that our safety performance is heavily influenced by our drivers’ behaviour and professionalism, and for this reason, we have developed a comprehensive drivers training cycle as well as a specific recruitment process. All our drivers are trained in accordance with the Drivers Training Cycle, which starts with the Induction, covering company
rules, HSE policies, Journey Management, Incident Reporting and Emergency Response Plan; followed by an Initial Training on familiarisation with vehicles, daily inspections, and border and customs formalities. The Advanced Training requires defensive driving, fire-fighting, and emergency response training, while the Operation Training is about customer rules, terminal rules, product knowledge, site familiarisation, and truck loading and unloading. The training programmes are refreshed once a year, and evaluated every six months for effectiveness. We also conduct ‘toolbox meetings’ and ‘driver syndicate sessions’, where drivers discuss risks and the causes of accidents in order to raise awareness, enhance practices and reduce the likelihood of re-occurring incidents. What, according to you, are the most prominent transport trends in this industry today?
Adaptability, and the flexibility to embrace change and new technology or methodology will make a company stand out as we move forward. We can expect to be moving
towards cleaner fuels, such as LNG or CNG, for trucks or ships, which will have a major impact on lowering CO2 emissions. And by using local LNG biogas sources, a Landfill for example, to stabilise consumer costs so that companies have stability for financial planning is also an option. The move towards cleaner carbon-based fuels such as LNG is likely to be the biggest change for the logistics industry in trucks and ships. While electric engines are making great strides, the ‘bang for the buck’ and portability of carbon fuels mean that they are here to stay for the foreseeable future. LNG is cleaner than other carbon-based fuels, with great calorific content. Integrated and connected technologies will affect both, the way we work in logistics, and the way we interact with our customers. Understanding these new technologies, while still keeping an eye on the traditional basics of a transport company, will be the hallmarks of future successful SME’s. We have already invested in modern safety equipment for all our vehicles, including the Rollover Warning Device (RWD), which is designed to prevent road tanker rollover accidents. The benefits of the rollover warning system implementation is substantial, as transport operators can eventually create smoother driving behaviour among their drivers, which will result in lower fuel consumption, lower maintenance costs, and ultimately, eliminate the potential for rollover incidents. How should providers such as Tristar be prepping to stay on top of industry requirement for the next five years?
There are unlikely to be any great changes over the next five years in our business. It is forecasted that oil prices will remain at current levels for the foreseeable future, and the advent of fast, almost ‘pop-up’ fracking operations that don’t require huge investments of time and money will ensure that overproduction of oil will be a new ‘norm’ for the next couple of years at least. So big barrel price swings are unlikely in the near future. These continuous low prices will, of course, affect the way we work. We can expect that, as a company, we will need to be more flexible in our approach to our customers and our own employees. We can
Tristar is a fully-integrated Liquid Logistics Solutions provider that offers a comprehensive list of services to cater to the needs of the petroleum and chemical industries, both in the region and globally. Their core expertise lies in handling hydrocarbons, lubricants, chemicals and liquid gases. Tristar has a worldwide network with dedicated facilities to manage road transport, warehousing, operation of fuel farms, turnkey fuel operations, into plane aviation fuel services, and ship owning and chartering for clean petroleum products. Tristar was born out of a need for road safety. The company was established in Dubai in 1998, with limited resources and a strong commitment to place safety at the forefront of all decision making. The company initially started off as a road transport company, hauling bulk and packed petroleum products, but today, it is a diversified and integrated Liquid Logistics Solutions provider, offering services from surface transport to ocean transport, fuel farm management, specialised warehousing, and turnkey fuel solutions to a host of national and international oil companies and NGOs. The company operates in 15 countries, spread across the Middle East, Africa, Asia, the Pacific and Central America. Tristar has the vision to be a globally recognised fuel logistics company, offering superior service without compromising their core values and commitment to manage their business to the highest health, safety and environmental standards. Their mission is to develop and retain a qualified workforce, to offer pre-eminent customer service, grow shareholder value and respect the communities in which they operate.
expect that we will need to deliver a higher degree of customisation when providing solutions for our clients. The focus of Tristar is on people development, and our ability to adapt quickly to new market conditions, locally and globally. Coupled with this will be the ability of our staff to interact with new technologies and learn new skills as these changes arrive. As an example, the US is already looking at the negative effect on the employment market, and knock-on effects, on selfdriving vehicles today, in 2015, before they are even commercially available. This is because not preparing for future change will be even more expensive than in the past.
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AIR CARGO UPDATE
chewing up its competition
To be at the top of the air cargo game is everything at Qatar Airways Cargo. This highly ambitious airline has invested heavily and is now maximising returns. Recently announced at being on the third position in the World Airline International Cargo Carrier Rankings by IATA, the carrier is all geared up to chew up its competition
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n the last week of October, Qatar Cargo announced its latest position as number three in the World Airline International Cargo Carrier Rankings compiled by IATA. The airline has a strategy and single focus to be the best. Growth in the air cargo industry isn’t easy, and sustained, fast-paced growth is even more difficult to achieve. The rapidly expanding company has risen to the number three position from 16th place in just five years, and now boasts a freighter fleet of six Airbus 330, eight Boeing 777 and one Boeing 747.
“Being in the top three international cargo carriers in the world reflects the hard work and commitment of the Qatar Airways Cargo team over the past five years,”said His Excellency Akbar Al Baker, Group Chief Executive of Qatar Airways, adding,“Our cargo capability is a major component in driving our group success and growth, and it will remain a focus of our expansion in the coming years.” Al Baker has also revealed plans to create a second, even larger cargo terminal at the airline’s hub. The new 110,000 sq metre,
AIR CARGO UPDATE
double decker facility will have the capacity to handle three million tonnes of cargo a year, increasing the facility’s overall annual capacity to 4.4 million tonnes. “The new cargo terminal, which is scheduled to open in 2018, underlines our commitment to continued growth and expansion in line with the airline’s group objectives for the future,”said Qatar Airways Chief Officer - Cargo, Ulrich Ogiermann. “Having the ability to handle 4.4 million tonnes of cargo a year will put Qatar Airways Cargo into another league, and enhance the efficiency and service already offered at our existing state-of-the-art facility,”he added. The airline has also revealed plans to launch two new speciality products: QR Equine and QR Express. QR Equine offers a five-star service and world-class facility for the transportation of horses, managed by a dedicated team of experts. With Qatar Airways Cargo’s modern fleet of Airbus and Boeing freighters with controlled temperature zones, a network of more than 150 destinations, comfortable and spacious horse stalls, and dedicated grooms that accompany the horses, the airline guarantees the care, comfort, safety and reliability for the smooth transportation of every equine guest. On the ground, at its state-of-art hub in Doha, Qatar Airways Cargo’s Live Animal facility offers an equally sophisticated environment with air-conditioned holding stalls, a paddock and on-site veterinary personnel. QR Express provides clients the opportunity to book through a simplified system with high boarding priority and rapid handling, guaranteeing the speedy delivery of their cargo. Other key features include short and flexible close outs, quick and dedicated ramp transfer (for transit express), as well as priority loading at origin and unloading at final destination, and speedy retrieval at final destination (approximately 90 mins). Qatar Airways Cargo commenced operations in 1997, and has since experienced phenomenal growth in both its fleet size and network. This expansion shows no signs of slowing down with delivery of five new freighters scheduled for the next year, and significant network enhancement to destinations such as Durban, Boston, Adelaide and Sydney in the coming months.
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Y A D O T E IB
R C S SUB
November 2015 Issue 20
ENHANCING THE BUSINESS OF LOGISTICS
PLEASE FILL IN ALL FIELDS IN BLOCK CAPITALS
Aramex gets it right
Company Name: Position: PO Box: City: Country:
Chews up the competition
Finding the right anchor The OSV industry changes course
Indian logistics In redesign mode
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Urbanisation and city logistics
Petra Kiwitt, executive Vice-President, DHL Solutions and Innovations, Deutsche Post DHL, Germany and Martin Brown, Programme Director, City Logistics, Deutsche Post DHL, Germany give their insights into future trends
It is widely estimated that by 2050 the world’s population will reach nine billion, with 70 per cent of people living in urban agglomerations. Such urbanisation will undoubtedly trigger an increased demand for accommodation, healthcare, space for recreation and, of course, for consumer goods and services – and therein lies one of many challenges.
Challenges, similar and unique
rbanisation will be a tour de force that will define the next century geographically, politically and economically. But will this trend occur uniformly across the globe? What new models will be required to manage logistics operations in expanding cities? Today’s cities offer employment, education and healthcare to many of their citizens. The megacities of tomorrow promise unprecedented lifestyle opportunities for those who can gain access to them.
Megacities face many similar challenges. However, geographical and cultural differences give rise to specific issues which need to be addressed locally. What becomes increasingly apparent is that there is no“one-size-fitsall”approach that adequately tackles all the likely challenges. So what are likely to be the requirements of these cities of unparalleled size? For all cities, the need to provide the basic elements of security, sustenance and shelter for their residents, irrespective of the political system, is universal. But urban areas are not growing at uniform rates or in the same way. In the digital age, with the distribution of Information and Technology Services, some cities in emerging regions like Africa (such as Addis Ababa or Nairobi) are leapfrogging the classic developmental path that western cities followed during their maturation, and at a rate few could have anticipated.
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All cities are concerned with flows: of people, vehicles, goods and services, waste, energy and even data – all necessary to enhance cities’ liveability and economic growth. Larger cities are becoming
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increasingly complicated ecosystems. The movement of both people and services within them is emerging as one of the most difficult challenges of our time. While urban congestion was merely an inconvenience
some 20 or 30 years ago, it is now a source of competitive disadvantage for a city and its businesses. The negative repercussions of traffic gridlock affect almost every aspect of a city’s performance.
and office. And, of course, finding space to accommodate new infrastructure within a dense urban environment is in itself challenging. Scarcity of space has helped to drive one major trend, particularly in Asian cities – the “verticalisation”of central business districts and city centres. For city planners and logistics service providers alike, this means solutions have to anticipate deliveries to a variety of operations and stakeholders stacked in vertical columns. And these vast towers themselves need maintaining. Away from the downtown area, the landscape differs greatly as skyscrapers give way to urban sprawl incorporating residential areas, and, in some cities, the quasi-official districts such as the favelas of Rio de Janeiro and Sao Paulo. In different parts of the world, these residential areas look, feel and operate in differing ways, each posing different types of retail logistics challenges. A defining characteristic of commerce in the 21st century may be that of megacities competing against each other for the import of natural resources, the export of finished goods, the attraction and retention of a talented and skilled workforce, and for much-needed investment, both from the local government and foreign investors. Many megacities aim to become more sustainable, but this term lends itself to multiple interpretations. Does this mean being more ecologically and environmentally friendly by, say, creating fewer environmental externalities and operating with a lower carbon footprint? Or does it mean drawing upon just enough natural resources to allow for sustained growth? Is long-term economic prosperity compatible with ecological responsibility within large cities?
Building risk resilience
Varied responses Traditionally, the answer to this challenge has been investment in fixed assets: such as roads, railways and ports. Such an approach has its limitations: while the cost of capital
has not been so low in over 30 years, large, capital-intensive infrastructure projects will not by themselves ease congestion and facilitate efficient flows, particularly on the so-called “last-mile”to the home, shop
Regardless of location, megacities increasingly need to be able to respond to a variety of tumultuous events, be they environmental (Tokyo’s 2011 earthquake) or sociological (the London riots of 2011). The imperative to build resilience is forcing city officials to prepare for unplanned shocks to their systems and daily life. They hope to maintain continuity in the supply of goods and services, often by conducting risk assessment and contingency planning
NOVEMBER 2015 53
similar to that found in many multinational corporations, who have made these key elements of their supply chain management. While megacities increasingly have mature strategies for personal and public transportation, freight is sometimes an afterthought. Well-run freight services significantly facilitate commerce – they can ease congestion and pollution problems. The integration of freight into a city’s wider transportation and infrastructure system often follows no prescribed master plan and is done on an ad-hoc basis. Standard policy tools such as congestion charges in London or number-plate quotas in Mexico City and Singapore can have unintended consequences. So megacities need to plan across a spectrum of policies, ranging from tactical measures – such as ensuring that streets have sufficient parking bays for delivery vehicles – to strategic infrastructural investment. State-subsidized logistics clusters are now commonplace, enabling economies of scope to be realized through shared vehicles, IT platforms, manual equipment handling facilities, labour availability and even shared marketing. Some of the principles formerly applied to urban logistics are now being revisited and challenged. Asset flexibility is the new buzzword, with the use of nonpermanent assets for logistics activities, including redundant municipal spaces and even former church car parks in some European cities, all of which is now enabled through more widespread technology integration. Larger cities, with ever-greater complexity, will require increased levels of control to coordinate freight flows, and possibly eliminate extraneous vehicle movements. The situation today in many cities is sub-optimal with, on average, trucks plying less than halffull and many businesses receiving numerous deliveries over the day, when one or two full truckloads (FTLs) would suffice.
Some tried and tested solutions The logistics sector has developed a number of solutions to these problems over the last 20 years, sometimes in partnership with the public sector. Consolidation centres serving a variety of sectors have sprung up mainly across Europe on the edge or outside of a city.
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Here, goods bound for the same location can be aggregated and stored until the optimal time for delivery, often during off-peak periods. By bundling deliveries, it is possible to double the average truck utilization (from the current 40-45%), effectively halving the
number of freight-related vehicle movements, especially during peak times. While consolidation centres have a proven record of improving delivery accuracy and timeliness, they generally need a direct government subsidy and/or other economic incentives.
About the Outlook on the Logistics & Supply Chain Industry
Each year, the World Economic Forum’s Logistics and Supply Chain Global Agenda Council publishes the ‘Outlook on the Logistics Supply Chain Industry’ containing a collection of short essays highlighting some of the topics discussed by the Council over the past year. These papers can now be downloaded from the Transport Intelligence website individually. Each paper focuses on a unique topic, promoting interest and discussion on pertinent themes concerning the future of the sector. The essays are clustered around the issues of trade facilitation, opportunities and threats, notably climate change adaptation, connectivity and the intelligent use of data. They also focus on specific applications, particularly food supply chains and regional imperatives.
About Transport Intelligence
John Manners-Bell, CEO of Transport Intelligence, is Chair of the World Economic Forum’s Logistics and Supply Chain Global Agenda Council. Transport Intelligence is a world leading provider of expert research and analysis dedicated to the global logistics industry. Utilising the expertise of professionals with many years of experience in the mail, express and logistics industry, Transport Intelligence has developed a range of market leading webbased products, market reports, company profiles and news services used by all the world’s leading logistics suppliers, consultancies and banks as well as many users of logistics services. www.transportintelligence.com.
Joint enterprises between the public and private sectors are likely to offer new solutions to new urban logistics problems. The private sector develops technological innovation, which enhances current processes, an example being DHL’s Smart
Truck which allows freight deliveries not only to be tracked but planned and updated in a real-time environment. Each route is constantly recalculated based on traffic flows and is optimized for incoming pick-up requests so that trucks can avoid congestion.
This advancement allows demonstrable improvements in customer satisfaction while reducing the total cost of delivery. Other ecomobility solutions are emerging at the local level in cities, with the use of cargo cycles permitting near-zero carbon deliveries.
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Jonathan Becher Chief Digital Officer SAP
Dr Aisha Bin Bishr Asst Dir General TEO-Dubai
Simplifying business Global CIOs urge Middle East enterprises to recruit higher level strategists to drive digital transformation at GITEX.
56 NOVEMBER 2015
s the Internet of Things era advances in the Middle East, it is time for enterprises to recruit higher level strategists to drive digital transformations. This was the general consensus among global CIOs, discusses during GITEX Technology Week 2015â€™s conferences programme. Frost & Sullivan predicts that there will be 50 billion global connected devices by 2020, spawning new services, data streams, and control over customer and supplier products. However, Middle East enterprises face increasingly complex business processes. Global and regional experts have debated how best to embrace digital disruption at the GTX Ignite conference and GTX
Oliver Bierhoff GM German National Football Team
Innovation Tech Talks, which had 150-plus global futurists discussing this topic. “Over the next five years, business leaders in boardrooms across the Middle East will face a tough challenge in the digital economy, requiring them to disrupt themselves or lag behind. They need to simplify operations through real-time analysis of data from different divisions, such as HR, logistics and marketing,”said Jonathan Becher, Chief Digital Officer and Head of SAP Digital. In other sessions, Chris Brown, Director of Innovation, Vodafone Global Enterprise, emphasised collaboration with multi-national companies, giving examples of how Vodafone has opened new opportunities and fostered an innovation culture.
HE Raavi Toivas Prime Minister Estonia
Michael Gibbs CIO BP
Addressing Smart Cities, government leaders such as HE Taavi Roivas, Prime Minister, Estonia; Dr Aisha Bin Bishr, Assistant Director General, The Executive Office – Dubai, and Mayor Wade Brown of the City Council of Wellington, New Zealand, shared the key pillars for Smart City framework, and the power of publicprivate partnerships. Supporting innovation in oil and gas and aviation, Michael Gibbs, CIO, BP and Dr Jassim Hajji, CIO, Gulf Air, explained how real-time insights can transform businesses and enhance the customer experience. Oliver Bierhoff, General Manager, German National Football Team, spoke on how Big Data analytics helped the team win 2014 World Cup Brazil.
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To automate or not to automate? Walid Khoury Managing Director, ALS Logistic Solutions, attempts to answer this question
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he first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.” – Bill Gates Every logistics service provider when taking a strategically important decision in relation to warehouse management needs to weigh the pros and cons. With the help of the internet, people can read about different case studies, and evaluate the similarities and differences for their particular needs. “With open borders and global economic developments, business is always changing
and people are looking for innovative solutions to stay up-to-date and competitive on the market. Warehouse automation, with its sophisticated technologies, such as ASRS, variety of conveyor systems, transfer vehicles and modern IT-solutions, is one of the attributes of the successfully operating distribution and production centres,” says Walid Khoury Managing Director, ALS Logistic Solutions. Automation in logistic centres brings many benefits to operational processes, including space savings, lower building costs, improved productivity, more efficient material flow, less manpower, safer operations, reductions in inventory, increased reliability, reduced running costs, better ROI and lower lifecycle cost, etc.
Walid Khoury joined ALS in 2001 as a Regional Manager for the Middle East, and after six years, he took over the management of the company. Khoury has over 15 years of experience in the aviation industry, including Project Management and Equipment Fabrication, airport systems and design consultancy for Automation Projects. He has been involved in air cargo terminal projects worldwide, and has, in the past, managed several large International air cargo terminal projects with ALS. Apart from being the Managing Director in ALS, he is also the Senior WHS Consultant.
“Talking about advantages, we need to mention that automation implementation is a very costly process, and the financial aspect is usually the main concern. That’s where an experienced and reputed consultant would offer the proper advice. With our clients, we often advise them to look into their capacity, which is mainly ignored or mis-measured – they assume that their facility has enough capacity; but often that is not the case. One of the main aims of ALS consultancy is the reverse logistics, which include optimisation of aftermarket activity, such as customer service, quality inspection and storage warehousing, which can produce a new revenue stream to our clients, improve customer satisfaction and help the environment,”he explains.
ALS Logistic Solutions has been operational in the market for many years now, with installations in nearly all the airports in the Middle East. Their clients include Government bodies, Airlines, Logistics groups and distribution centres, architects and Real Estate Companies, Consultants and Hotel Chains, etc everywhere where automation and logistics solutions are required with local support and a professional approach. ALS prides itself on timely delivery and customer satisfaction, stating this is what has helped them bag clients like Emirates Airlines, Dubai Duty Free, DNATA, Abu Dhabi International Airport, Qatar Airways, Sharjah International Airport, Kuwait Airways, Saudi
Arabian Airlines, Baku International Airport, DANZAS, Panalpina, to name a few. “Automation requires a holistic approach. That’s why the decision should be based on individual requirements. Our practice shows that preliminary evaluation and research build a basis for successful development, planning and design of automated solutions for logistics and distribution centres and 3P logistics groups,”says Khoury. Generally speaking, most companies prefer to implement automation via a two-phase approach, believing that, first, this strategy allows for better distribution of their budget, and second, the team will get used to the new technology, and will be more familiar in the next phase.“This is not always ideal though, and we need to look at the material flow and estimate the final outcome prior to making this decision,”advises Khoury. Automation is not easy, and, at the same time, not as complicated as commonly believed either. It involves co-operation and hard work, and, like when working on a puzzle, all the pieces need to fit together properly for it to work. “So if you are still thinking about whether to automate or not, our experienced opinion is that yes, automation has a lot of benefits and does increase efficiency; however, it is only recommended in the right place and with the right process,”concludes Khoury.
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High on ambition Which school and university did you go to? I did my schooling at the Notre Dame des Frères Maristes – Rmeyleh school in Mount Lebanon and obtained my Bachelor’s Degree in Business Marketing from the Lebanese American University. Later, I joined the University of Sharjah for my Master’s Degree in Business Administration.
Mustapha Kawam’s philosophy is to dream big. As President & CEO of Globe Express Services, he fuels his attitude with hard work and persistency. And ensuring the success of each member of his team is what satisfies him
What was your first job? My first job was with Globe Express Services (GES) at their office in Dammam, KSA. I joined the company as a Sales Representative in January 1995 and now 20 years later, I am the President and CEO of Globe Express Services. During the course of the years, I have had the pleasure of working with some outstanding people who have both inspired and encouraged me along the way, in different positions, and on different sites and have found that wherever I have worked and with whoever I have worked with, GES core values are always reflected. What do they not teach you in business school? A Master’s in Business Administration helps most when your company is well established but business-school training isn’t much help during the start-up stage. Business school teaches us about the process of establishing a new business, finding sources of capital, recruiting and hiring employees, scrambling to make that all-important first sale, and learning how to outmanoeuvre larger competitors. What we are not taught at the business school is how to deal with customer behaviour - you are bound to run into all kinds of customers, at the end of the day, the key objective is to make sure that your customer is happy and satisfied with the products and services that you offer. Who is your role model and why? My father. He has always set an example for us to
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follow. He always taught me and made me realise what I deserve and that how I should never settle for anything less than that. What do you think is most important characteristic in becoming an effective manager? An “effective” manager takes responsibility for ensuring that each individual within his department succeeds and that the team or business unit achieves results. Two characteristics which come to my mind for being an effective manager is to have ambition and persistency – as it is rightly said, ambition is the path to success while persistence is the vehicle you arrive in. How well do you handle stress and what is your fool proof method of de-stressing? Stress is a normal and expected part of our lives. We learn how to handle stressful situations by watching our parents and peers as we grow up. As I have always been in a calm and composed environment, I generally tend to look at the positive side of every situation I come across with. To de-stress, I usually hit the gym or play a round of tennis. What do you find encouraging? Achieving success and the appreciation from your peers, customers and the people around you. These emotions are of the highest vibrational frequency, and they will attract even more to be thankful for. How do you spend your free time? In my free time I look forward to catching up with my daughters Mariam and Nada. What is the top of your agenda right now? Right now, the agenda is to bring GES to the next level by maximising industry opportunities and sustaining GES’ global success, expanding our presence and developing more products and services that can address the demands of our customers. I am also looking at various ways to increase employee engagement and promoting a culture of integrity and trustworthiness throughout the organisation.
Fully Automated multi-temperature and multi-user 3PL logistics solution
40,000 m2 40,000 m2 36,000 m2 18,000 m2 of high bay storage facility
of fully automated frozen (-18 to -30 degrees) pallet positions with state of the art crane & conveyor system
pallet positions of standard racking controlled at +25 degrees for general cargo
of mezzanine storage or added value area within the facility
metric tons of Bulk Stack
of rentable ofďŹ ce area to customers that use the facility
INL is a Third Party Logistics Provider (3pl) focusing on food service solutions to the end customer, it has a freight department and custom broker to assist in clearing and delivering shipments to the market. Located at Dubai South with easy access to road, sea and air ports.
Plots W5, W6, W7 Dubai Logistics City, Dubai South P.O. Box 3139, Dubai, U.A.E.
Telephone: +971 4 Fax: +971 4 8879195
8160600, +971 4 8160601 email@example.com
Published on Nov 16, 2015
Supply chain management , logistics and supply chain segmentation, warehousing, RFID, healthcare logistics, 3PL, 4PL, six sigma, kaizan inve...