Li f t i t h i g h
Down the lane
DHL Express in the hot seat
Demand is constantly rising for the regional forklift industry
A visit to UPS facilities in Germany
Connecting trade professionals with industry intelligence
Top five industry leaders come together to discuss the automation revolution taking place in the regional logistics market
MAN Truck & Bus Middle East & Schmitz Cargobull are partnering up to offer you tailor-made transport solutions to meet your business needs.
For more information, please contact our sales team: email@example.com +971 4 880 7129
ST IR DS , F AN ND BR HA ITY AL
THE PERFECT PACKAGE! TOP GERMAN QUALITY TRUCK AND TRAILER AT SPECIAL RATES!
Start 8 | News 16 | Op-ed
A focus on emerging technology trends influencing the regional job market
Features 20 | Cover Story:
Logistics News ME Roundtable Top five industry players sit together to discuss automation in logistics and supply chain
24 | Interview Honeywell SPS talks about its new products to support the regional e-commerce boom 28 | UPS Facility visit
A visit to UPSâ€™ Cologne Air Cargo hub and healthcare facility in Netherlands
32 | Interview DHL Express discusses efficient customer service to retain the leadership
34 | Lift the load Demand for the forklifts industry has seen a surge in the last two years 40 | Interview
RAK Hospitality Logistics talks about operational efficiency and streamlining processes
48 | Viewpoint
How to develop agile concepts to gain more business output?
50 | Report
The findings of Logistics Confidence Index reflect an improved trade environment
52 | Supplier News 54 | Diary Logistics News ME | June 2017 | 3
his month I would like to begin my note by extending a heartfelt thanks to five of the biggest names in the logistics and transportation industry for participating in our CEO Roundtable and making it a success. The roundtable delved into a subject which was unanimously supported by all the participants – adoption of technology in the Middle East. The logistics industry is going through an unprecedented era of change. Few years back, we couldn’t even think about drones delivering packages to our doorstep, but now even that seems a distant past. The future of logistics is paved with innovation and technology. Today, the industry is cautiously adopting these technologies to provide faster, cheaper, more reliable and sustainable delivery. At the same time, their customers - primarily the manufacturers and retailers - are wasting no time urging their 3PL logistic providers to integrate these technologies into their service. In the words of one panellist, “Technology has already entered the business world. It’s all over the place, be it in logistics or freight. Companies are integrating technology in all their process to get optimum results.” The roundtable took an interesting course when one of the panellists mentioned that the logistics industry is a labour-intensive one, especially in the Middle East, still considered as one of the most attractive labour markets in the world. He observed: “In the Middle
East, the personal touch is very important. Labour is still way too cheap in the region as compared to the cost of technology. You can either have more technology or more people.” Finally, the participants agreed that a balance needs to prevail with regards to technology and labour in these industries in order to get the best results. All five of them came to a conclusion that the labour-intensive Middle East market will slowly and steadily put itself in the global technology map. Read the full coverage inside and we look forward to having such interesting discussions in the future.
CEO Wissam Younane firstname.lastname@example.org Managing Director Walid Zok email@example.com Director Rabih Najm firstname.lastname@example.org Group Sales Director Joaquim D'Costa email@example.com +971 50 440 2706
Group Commercial Director Fred Dubery firstname.lastname@example.org Business Development Director Rabih Naderi email@example.com +966 50 328 9818
Editor Paromita Dey firstname.lastname@example.org Art Director Aaron Sutton email@example.com Marketing Executive Mark Anthony Monzon firstname.lastname@example.org Qatar Office Manu Parmar email@example.com
Paromita Dey Editor firstname.lastname@example.org @paromitadey1 linkedin.com/in/paromita-dey
SUBSCRIBE email@example.com PO Box 502511 Dubai, United Arab Emirates P +971 4 4200 506 | F +971 4 4200 196 For all commercial enquiries related to Logistics News ME contact
On the web Keep up to date with all the latest news, features and much more on our website.
www.cbnme.com/logistics-news 6 | Logistics News ME | June 2017
All rights reserved © 2015. Opinions expressed are solely those of the contributors. Logistics News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Logistics News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher. Images used in Logistics News ME are credited when necessary. Attributed use of copyrighted images with permission. All images not credited courtesy Shutterstock. Printed by International Printing Press www.ippuae.com
WHO GIVES YOU THE BEST STORAGE SYSTEM SOLUTION? SSI SCHÄFER is the only company in the market that can offer a total solution in Intralogistics. Being a specialist in our field, customers get the added advantage when working with us as we can provide a customised solution that meets your future intralogistics requirement. Contact us and have a chat with our specialist to learn the best solution that suits your needs. The right solution can help you achieve: ·
P.O. Box 37600 Dubai Logistics City – Plot WB54 Dubai South, Dubai | United Arab Emirates | +971 4 804 8100 | ssi-schaefer.com
Re g i on a l N e w s
Regional News An update from around the region
For News, features and more, Visit www.CBNme.com/logistics-news Follow us on twitter for breaking news: @logisticsnewsme Follow us on Facebook for up-to-the-minute breaking news
Agility reports 11% growth in its Q1 2017 net profits
lobal logistics provider, Agility, reported a net profit of KWD14.6mn, an increase of 11.4% over the same period in 2016. Agility reported a revenue of KWD320.5mn, a 7.3% increase over Q1 2016. The results represent the fifth consecutive quarter of double-digit growth in Agility’s EBITDA, in line with the company’s long-term guidance. Tarek Sultan, Agility vice chairman and CEO, said: “Our performance has been driven by strong growth in our infrastructure companies in emerging markets and by the steady progress we have made in improving the underlying fundamentals of our commercial logistics business.” Revenue for Agility Global Integrated Logistics (GIL), the company’s core logistics business, grew 6.5% in the year’s first quarter, to KWD240.3mn. Revenue growth was driven by all products. Air freight volume grew 16% and ocean freight volume grew 12.5% this quarter, both outpacing the market average. GIL net revenue grew 2% in Q1, increasing in most products and showing a 9% increase in contract logistics over the same period a year earlier. Net revenue margins, 26% in Q1 2016, declined to 25%, mainly because of pressure on rates and tightening capacity on major trade lanes. Sultan said: “GIL is winning new business and
8 | Logistics News ME | June 2017
containing its costs by driving productivity increases. We believe our strategic focus on trade lanes, solutions, and sales excellence will lead to continued growth in freight forwarding volumes this year.” GIL is investing in profitable and growing contract logistics businesses. New facilities are coming online in the Middle East and Singapore over the course of 2017. GIL is also investing in transforming its business through technology and further strengthening its online solutions for customers. Agility Real Estate, the largest contributor in the group, increased revenue by 10.8% in Q1. In Kuwait, Agility is developing more than 900,000 sqm of warehousing over the next three years. Tristar is a fully integrated liquid logistics company serving the downstream oil and gas industry with surface transport, ocean shipping, dangerous goods warehousing, fuel farm
management, and other services. Tristar reported healthy growth in the first quarter, driven by new shipping business complimented by its recent e-ships acquisition. National Aviation Services (NAS) has become one of the largest ground handling and airport services companies in emerging markets. NAS’s Q1 revenue growth was driven by its Cote D’Ivoire operations, which saw double-digit increases in flight volumes. NAS is also launching operations in Morocco and working on improving yields in its Kuwait business. UPAC, a public-listed commercial real estate company, announced revenue increase by 7.4% to KWD3.5mn. UPAC continues to improve its managed projects at the Kuwait airport and Discovery Mall, increasing footfall and demand for space, and achieving 100% utilisation.
A global business model demanded by international companies requires technologies that can be used anywhere – especially in logistics.” Daniel Hauser, managing director for Central Europe and Middle East of Swisslog WDS division
Gulftainer highlights supply chain at Sharjah Business Summit Gulftainer, in conjunction with its logistics subsidiary Momentum Logistics, co-hosted the Sharjah Business Summit with prominent local government entities, to explore the investment outlook in Sharjah and showcased logistics and supply chain solutions. Jointly organised by Sharjah Investment and Development Authority (Shurooq), Sharjah Chamber of Commerce and Industry (SCCI), Sharjah Municipality, Sharjah Ports Authority (SPA), and the emirate’s freezone authorities, the event at the Sharjah Chamber of Commerce drew the participation of more than 100 key government stakeholders and prominent industry professionals from across the emirate. Among the esteemed guests were HE Sheikh Fahim bin Sultan Al Qasimi, executive chairman of the Department of Government Relations; HE Sheikha Shatha Al Mualla, director of the Public Health Department at Sharjah Municipality; HE Sheikha Dr Rasha Al Qassimi, deputy director general of Public Health and Central Laboratories at Sharjah Municipality; and Saud Al Mazrouei, director of Hamriyah Free Zone Authority and Sharjah Airport International Free Zone Authority. Speaking on the significance of the event, Qasimi said: “Within the Sharjah government structure, we focus on a triple
bottom line – carefully assessing financial, environmental, and social returns to determine our overall performance. We appreciate the fact that it takes investment, time, and human resources for global companies to innovate. I hope the discussions will enable to find new ways to invest in Sharjah so that we can continue to develop our unique position as a centre for education, research, and innovation in the region.” Welcoming the attendees, Flemming Dalgaard, CEO of Gulftainer, said: “Sharjah has become a powerful magnet for companies and foreign investors – a testament to the government’s openness in encouraging enterprise and its concerted efforts to diversify the economy. Our discussions will offer a glimpse of supply chain innovations that
can generate greater value for customers and accelerate business growth in Sharjah. Through providing a platform to share best practices in innovation, the Sharjah Business Summit seeks to establish a deeper understanding of how Gulftainer can effectively harness our regional capabilities and identify new avenues for growth.” For his part, Abdelaziz Mohamed Shattaf, assistant director general for members services sector at the Sharjah Chamber of Commerce, said: “The Sharjah Business Summit is aligned with our vision to support trade and business in the emirate. As part of this vision, we aim to create new opportunities for exporters in Sharjah that will require increased cooperation and coordination with the transport and logistics sector.”
The sale and purchase agreement for Maersk Line’s acquisition of Hamburg Süd for $4bn was approved by the boards of Maersk Line and the Oetker Group, owner of Hamburg Süd.
Damen Shipyards Group has entered a co-operative consortium with RamLab, Promarin, Autodesk, and Bureau Veritas to develop the world’s first class approved 3D printed ship’s propeller.
Global food giant, Nestlé, announced the opening of its 18th factory in the Middle East region at Al Maha area in Dubai South, which will produce its coffee and Maggi cooking aids for the regional market.
Qatar-based maritime transport and logistics conglomerate, Milaha, has launched a door-to- door shipping service between Qatar and UAE, and vice versa to support SMEs. Logistics News ME | June 2017 | 9
Re g i o n a l N ew s
DP World signs MoU with India’s NIIF to develop logistics infrastructure
Global trade enabler, DP World, and the National Investment and Infrastructure Fund (NIIF) of India have signed a memorandum of understanding (MoU) to develop the logistics sector in the country. The agreement comes as a result of the visit to India in February 2016 of HH Sheikh Mohammed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces of the UAE and Sultan Ahmed bin Sulayem, DP World Group chairman and CEO. DP World announced at 10 | Logistics News ME | June 2017
the time that it was seeking opportunities in the country worth over $1bn over the next few years. This will be aimed at the development of port infrastructure of the Sagarmala project, creation of the Delhi – Mumbai Industrial Corridor, river transportation and cold chain storage, investing in port-led special economic zones, free trade zones, ICDs, and cruise terminals. Sulayem said: “We have been a part of India’s growth story for nearly two decades now and we are delighted to further strengthen this relationship with NIIF.
The NIIF plays a crucial role in financing India’s infrastructure and we welcome their approach to encouraging development in the sector. “The agreement is a direct result of the visit last year of HH Sheikh Mohammed Bin Zayed and both our organisations will work together in backing suitable projects. This will further develop Prime Minister Modi’s Make in India and Invest India campaigns by encouraging foreign direct investment (FDI) and funding for landmark projects like Sagarmala and Bharatmala.
“One of the key priorities of the Indian Government is preventing the loss of agricultural produce. This can be managed through adequate marine and warehousing infrastructure including cold storage as well as development of inland waterways and reducing logistics costs at the same time. We are proud to partner with the government and share our expertise and experience in these areas and the global supply chain to provide cost effective logistics and warehousing solutions to India’s growing export and import trade.” www.cbnme.com
Re g i on a l N e w s
Saqr Port purchases new tug boat to support expansion plans
Saqr Port Authority has taken a further step in its planned capacity expansion by signing a deal with Dutch shipbuilding and engineering conglomerate, Damen Group, for the delivery of a new ASD 2913 tug. The announcement comes in quick succession of Saqr Port’s recently publicised deal with German machinery manufacturer, Liebherr Maritime, for two Liebherr LHM 800 mobile harbour cranes. Both contracts have been signed in support of Saqr Port’s plans to establish new berths to create additional capacity in response to rising demand for import/export movements through the port. In addition to the increased capacity planning, RAK Ports recently opened the Marine Training Institute to deliver FTA accredited training courses to the growing maritime community within the Northern Emirates. Captain Cliff Brand, RAK Ports general manager, commented: “The addition of a new tug to our existing fleet is another building block in the execution of our strategy to significantly expand the capacity and service portfolio at Saqr Port, which includes being able to handle capesize class vessels. We already operate seven Damen tugs as part of our fleet and are confident that expanding our partnership with Damen Group will help the port to handle the expected increased cargo movements with the same high levels of efficiency that our clients have become accustomed to over the years.” The new vessel will be built just a short distance away at Albwardy Damen in Sharjah and will be delivered in time for the opening of the new bulk terminal at Saqr Port in mid-2018. Saqr Port handled in excess of 55 million tonnes of cargo in 2016, mainly consisting of limestones and aggregates which serves the majority of the construction projects within the Middle East and makes it the largest bulk-handling port in the region.
12 | Logistics News ME | June 2017
Saudia Cargo wins industry award in Air Cargo Europe
Saudia Cargo won the Industry Achievement at Air Cargo Europe 2017 awarding ceremony by Air Cargo Week World Air Cargo Awards in recognition of its contributions and innovations in the air freight industry for many decades. On behalf of Saudia Cargo, executive director commercial, Rainer Muller, received the award during the four-day Air Cargo Europe 2017 from May 9-12. He expressed thanks to the organisers and industry experts for their trust in the company which has been flying cargo since Saudia Airlines was established in Saudi Arabia in 1945. Commenting on Saudia Cargo’s latest achievement, Muller said: “We share this momentous occasion with our customers for their continued trust and confidence on our products and services. This
award also goes to every Saudia Cargo employee for their relentless commitment to serve with utmost care and excellence. This award also sets precedence for us to strive harder and perform even better as the digitalisation trend sets in, changing the face and the pace at which cargo is moved around the world.” Saudia Cargo is one of the leading companies in the Middle East and across the globe which has pioneered in using the electronic or e-airway bill, among other cargo transactions. “It was a busy year for us at Saudia Cargo,” said Muller referring to 2016. “We thank our customers for putting their trust to us all these years. We pledge to keep on serving them with utmost care and dedication. Their cargo is in good hands no matter how and where they want it delivered.” www.cbnme.com
The big Picture
Hong Kong Air Cargo Terminals Limited (Hactl), Hong Kong’s independent cargo handler, has scooped the Air Cargo Handling Agent of the Year award at the latest World Air Cargo Awards. Partnership
Emirates SkyCargo signs global agreements for pharma customers Emirates SkyCargo, the freight division of Emirates, has increased the range of solutions available to its pharma customers by entering into agreements for global container rental services with SkyCell and va-Q-tec, in addition to its existing cooperation with Envirotainer. The agreements allow Emirates SkyCargo to offer its customers a variety of specialised temperaturecontrolled containers for the transportation of pharmaceutical or life sciences products. Emirates SkyCargo’s customers can have temperature sensitive pharma and life sciences products shipped using one of SkyCell’s temperature controlled containers. The Swiss-made containers are designed to maintain products at +2°C to +8°C and +15°C to +25°C safely even under extreme outside temperatures such as –35°C to +65°C for several days. The patented containers use innovative material technology to recharge in Emirates SkyCargo’s cool chain network thus enabling door-
to-door for a closed supply chain and have close to real-time temperature monitoring capability. Pharma customers across Emirates SkyCargo’s global network of 155 destinations can also choose to have their temperature sensitive shipments transported in va-Q-tainer’ containers – advanced passive containers providing temperature-controlled solutions for six temperature ranges from -70°C to +25°C in extreme ambient conditions. va-Q-tainer rental containers are available in five different sizes taking up to two US pallets inside
and offer constant and deviation-free temperature control for several days without using external energy sources. Emirates SkyCargo’s agreements with SkyCell and va-Q-tec supplement its existing in-house pharma offerings which include the Emirates SkyPharma Cool Dolly which transports cargo from aircraft to storage areas in Dubai maintaining temperatures as low as -20°C and the White Container, a special container coated with insulators to counteract high external temperatures, giving customers a wide variety of transportation options for their pharma shipments. Logistics News ME | June 2017 | 13
Re g i on a l N e w s
Oman Air Cargo successfully concludes participation at Air Cargo Europe
Oman Air Cargo brought its participation at Air Cargo Europe 2017, held in Munich last week, to a successful conclusion. More than 55,000 visitors from 124 countries attended the event. Mohammed Al Musafir, senior vice president – commercial cargo, along with a number of commercial cargo managers welcomed visitors to the Oman Air Cargo stand, which showcased a number of the division’s special products, with specific focus on Secure Vault, Oman Air Cargo’s VAL product offering, as well as the airline’s expanding global network and innovative Cargo IT solutions. Oman Air Cargo worked alongside Oman Airports Management Company (OAMC) to promote the country as a strategic regional cargo hub, with major logistics projects and developments, as the Sultanate shifts its focus towards logistics as a major pillar for economic growth. Musafir said: “It’s been a pleasure participating at Air Cargo Europe 2017, the leading air cargo industry event, which has given us the platform to highlight a number of our special products, with particular focus on our valuable cargo offering, discuss possible partnerships and agreements to further expand our network, and the pleasure to welcome a great number of visitors to our stand.” Participation at Air Cargo Europe 2017 comes at a time for the airline, which has seen recent significant increases in the size of the airline’s fleet, a major expansion of its network to include more than 56 destinations, and the introduction of a range of new products and services. The upcoming cargo handling facility at its hub in Muscat will also offer the airline the opportunity to carry more consignments than ever before, further specialise its product offering, and support the cargo division’s growth strategy.
14 | Logistics News ME | June 2017
DP World clarifies the Jebel Ali Port incident
On May 4, while berthing, a CMA CGM container vessel collided with the harbour wall striking the leg of a quay crane, causing it to fall at Terminal 1 of Jebel Ali Port, confirmed Dubai-based DP World. A second crane was also shifted off its rails during the incident but remained upright and stable. The company issued a statement saying: “Our first priority is the safety and wellbeing of our employees and all visitors to the port. DP World’s terminal safety teams responded immediately to the incident and head office global safety teams joined them on site within five minutes. Working with external emergency response teams, the area was evacuated and an exclusion zone created. Safety drones were also deployed to survey the area, locate anyone in need of medical assistance, and to ensure the safety of the responding crews.” The incident resulted in one moderate and nine minor injuries, but no fatalities. Medical treatment for all minor injuries was received at
the DP World Medical Clinic at the terminal, while the gentleman with the moderate injury – a fractured arm and leg – was taken to the hospital and is currently in a stable condition. DP World said that an investigation is currently underway to establish the cause of the incident. The collapsed quay crane will be removed following all the necessary safety procedures once the investigation has been completed. The second crane is under assessment for structural integrity and not in use until further notice. “All necessary measures were taken to minimise disruption of service to customers during the emergency response activation and in the subsequent investigation phase. We thank the CMA CGM crew, external emergency response services, and the DP World safety and operations teams and who worked together, ensuring no serious injuries and no fatalities,” concluded the statement. www.cbnme.com
LOGISTIC SYSTEMS TAILORED FOR YOU.
Turnkey solutions for your intralogistics As experienced general contractor Unitechnik takes over the total responsibility for your logistics center. Let us analyze your individual processes and we will show you optimization potentials. We offer you a tailored logistics center, which will meet your requirements.
materialsSTh MIDDLE EA
17 ptember 20 tes 11 - 13 Se ira Em b ra A ted Dubai, Uni
Your local partner: Unitechnik FZE Dubai Airport Free Zone, Building 6WA Dubai, United Arab Emirates Fon +971 4 2146 723/4 www.unitechnik.com
O p -E d
Wheels of change
DP World Group chairman and chief executive, Sultan Ahmed Bin Sulayem, highlights the trends in the current job market, which is heavily influenced by technology
became a part of office life. It’s quite possible that AI could take over some relatively repetitive jobs while unlocking tremendous opportunities in fields that require human expertise. But one thing is for certain. Just as happened with agriculture and industrialisation, a new wave of smart machines will be in a position to make swathes of current jobs obsolete. Whatever the outcome, the fact remains that we need to prepare for a new wave of disruption and use it to society’s collective advantage.
any of the jobs that are common today didn’t exist 10 years ago. A decade ago, no one had ever heard of an app developer. There was no such thing as an Uber Driver. And if you were a social media manager, you would be a gregarious archivist of film reels. Cloud computing engineer? No one knew what that meant. There were no big data analysts, drone operators, or vloggers either. A decade can change a lot in the job market. And we are heading for another upheaval in the next five years. There’s a new paradigm in town – automation. This automation is driven by better machine learning and artificial intelligence (AI). Preparing for a new job market While truly autonomous AI systems are still a thing of the distant future, the impact of machine learning is going to be felt very soon. By 2021 – a mere five years away – robots will have taken 6% of all the jobs in the United States (US), according to a research by Forrester. There are more ambitious figures also being predicted, including a professor at Houston’s Rice University has estimated as many as 50% of current jobs being the preserve of AI by 2045. Structured jobs are the first in line because these can be broken down, simplified, and codified by rules. Customer service representatives, truck, train, and taxi drivers are certainly under threat. But more complex jobs are still safe – for now. Business analysts and doctors are very difficult to automate. A school of thought predicts that professions requiring knowledge to operate will actually benefit from AI, with more jobs being created – just as when the humble computer first
16 | Logistics News ME | June 2017
Eventually, I expect machine learning to play a vital role in simplifying logistics and adding another layer of safety to our processes.” Sultan Ahmed Bin Sulayem
A brave new world At DP World, we are preparing for the future. Our global education programme for eight to 14 year olds, being rolled out across our network worldwide, aims to inform young, smart, and tech-savvy children about our industry and how trade makes the world move, bringing prosperity to nations. Elsewhere, we are already experimenting with the cutting edge of automation – for instance at the Rotterdam World Gateway (RWG) terminal that we manage and looking at the possibility of Hyperloop technology in a research study in the UAE. All of this in a climate where we are already seeing autonomous vehicles, big data, the Internet of Things (IoT), and simulation unlocking tremendous benefits. Eventually, I expect machine learning to play a vital role in simplifying logistics further still, and adding another layer of safety to our processes. But I suspect that our human capital will remain as crucial as ever – and even assume more strategic importance as we focus on work-life balance, leadership, innovation, and strategy. That’s why, we are investing in our people for the changing world of work. Training through the internationally re-
O p -E d
nowned DP World Institute offers a wide mix of formal training, e-training modules, and development of new skills. Preparing for the advent of AI Nations need to start debating the ethical and moral implications of mass layoffs – if they do happen. How do those succeeding in this brave new world support those with outdated skills? Nations that start planning in advance will hold the competitive edge. I suggest that we collectively start taking steps towards: Capacity building: Young people should prioritise skills that will hold them in good stead in the new economy. Engineering, architecture, design, medicine etc. are all machine-resistant
18 | Logistics News ME | June 2017
jobs, while technology and programming jobs will actively become more in demand. Train today to be ready for tomorrow. Re-training those impacted: It’s not enough to say that human truck drivers may not be needed in ten years. There needs to be a plan to retrain people and get them to engage economically with their new skills. Emphasise creativity, leadership, and decisionmaking: The industrial revolution reduced the number of people needed to fill fields. But observers were still needed to make decisions, calibrate outcomes, and keep the machines running. Nations have the responsibility of getting their people ready for roles that don’t compete with machines. A World Economic Forum
(WEF) research shows that data scientists, SEO managers, and talent acquisition specialists are very much in current demand. And as AI changes the nature of jobs yet again in the next five years, one thing remains certain. Leadership, creativity, innovation, and knowledge will still command a premium. We are at a crossroads in the nature of employment. We can decide to play defensively and hold out against inevitable change. Alternatively, we can proactively design, train, and empower to accommodate the inevitable – by ensuring our populations and citizens have the skills to win in a brave new world where they will compete not just against each other but also against machines.
C ov e r Sto ry
Logistics News ME sits down with five of the biggest names in the logistics and transportation industry to discuss the importance of technology and how to balance it with labour 20 | Logistics News ME | June 2017
n today’s world of cut-throat competition, logistics companies have been faced with an era of unprecedented change where automation has taken over as customer expectations evolve. According to a recent study by PwC, new technologies are enabling greater efficiency and more collaborative operating models; they’re also re-shaping the marketplace in ways that are only just beginning to become apparent. New entrants, whether they be start-ups or the industry’s own customers and suppliers, are also shaking up the sector. Technology is changing every aspect of how the logistics companies operate. The PwC report further suggested that digital fitness will be a prerequisite for success, the winners will be those who understand how to exploit a whole range of new technologies, from data analytics to automation and platform solutions. Those who don’t, risk obsolescence. But with so many technologies competing for management attention and investment, defining a clear digital strategy that’s integrated into business strategy will be critical. There are vast opportunities in the region to improve performance and serve customers better; the potential is huge, but the industry has thus far been slow to seize it. Against the backdrop of this, Logistics News ME hosted its first CEO Roundtable at The Oberoi Dubai. The event got together five of the biggest names in the logistics and transportation industries to discuss the adoption of technology and the roadblocks impeding the development. Participants included Christian Juul-Nyholm,
We do have a mandate from the government to balance modernisation along with the human element.” Mohsen Ahmad, Dubai South managing director for UAE, Qatar, Oman, and Iran, Maersk Line; Bassel El Dabbagh, chief executive officer, Agility Abu Dhabi; Mohsen Ahmad, vice president for logistics at Dubai
South; Mohammed Kamal, general manager for Indian Subcontinent, Middle East, and Africa (ISMEA), UPS; and Tom Nauwelaerts, managing director for Momentum, the logistics division of Gulftainer Group. During the course of the discussion, each participant was asked about the importance of the adoption of technology for the logistics and transportation sectors. And apparently, it turned out that all that were present voiced nearly the same opinion. Dabbagh commented: “The way technology has been around brings in a significant change that will allow us to do things differently. At Agility, we have an internal and an external approach. Internally, we are continuously working on our existing operating platforms. We have our warehouse management system (WMS) that is standardised and we deploy it across all our warehouses and distribution facilities across our portfolio.” He mentioned that internally, Agility have been actively developing a website/portal that is dedicated towards small and medium enterprises (SMEs). “Their requirements are different from well-established and bigger organisations. Hence, we are trying to automate and dedicate certain features for these SMEs, which will be live very soon.” “UPS invests about $1bn in technology globally, which shows how serious we take technology,” said Kamal. “Millions of shipments go from point A to point B throughout the day. It is not only about the movement of the packages,
Logistics News ME | June 2017 | 21
C ov e r Sto ry
but also the data and the analysis that comes with it. In UPS, we look to provide end-to-end solutions to our customers. “On the internal side, we are always looking into investments for the next level of development in the logistics industry. We are currently seeing self-driving vehicles, which is an area where we believe that in 2018-2022, we will see more of that for package delivery.” “New technologies are coming in the market like cameras are getting installed and drivers are being monitored to name a few. And all the information is fed to the control room to enhance customer engagement,” said Ahmad. “We always sit around with companies to talk about disruptive technology. Within the last decade, the contribution of the industrial sector in Dubai’s gross domestic product (GDP) ranged between 11% to 14%, thus placing it as the third largest sector after trade and logistics. “According to the Dubai Industrial Strategy 2030, the industrial sector demonstrated solid growth over the last few years, even within the global financial crisis. The strategy aims at making Dubai an international hub for knowledgebased innovation and sustainable industrial activities, through enhancing industrial coherence and integration with other economic sectors particularly strategic ones, and to create an attractive investment environment through a set of initiatives and incentives.” One message that echoed across all the participants was the slow adoption of technology in the Middle East. Nyholm said: “In terms of technology, the Middle East has a long way to go; we are a fairly slow adopter. The most important decision to make in the near term is the integration of technology, which becomes the key for success in the Middle East. It looks quite simple to move a shipment from point A to point B, but the entire document flow along with the integration and handovers is not simple and sometimes not automated. And even if they are automated, the systems don’t speak for each other. A lot of small and medium enterprises (SMEs) are very slow adopters of technology; it’s very difficult to get them to move to electronic devices.” Even Nauwelaerts agreed to the above. He said: “The Middle East still has a long way to go. Till date, we see that the shipping and ports are still very traditional sectors. There are interesting start-ups in these fields, but for sustainable business, it’s still long way to go.” But he also mentioned that the UAE is performing better in terms of adopting technology as compared to its regional peers. “The UAE is better than other regional countries in terms of adopting technology. I am personally hopeful that the value-added tax (VAT) will force the emirates and the entire region to have higher
22 | Logistics News ME | June 2017
The UAE is better than other regional countries in terms of adopting technology.” Tom Nauwelaerts, Momentum
In terms of technology, the Middle East has a long way to go; we are a fairly slow adopter.” Christian Juul-Nyholm, Maersk Line standards of adoption. The markets are trying hard to adopt to the latest technologies by living in the real world. But who will be the driving fac-
tor pose a big question. Technology has already entered the business world; it’s all over the place, be in logistics or freight.” Labour is a critical element of the logistics and transportation sectors, and up till now there’s always been a trade-off between service levels and costs. But automation has changed this equation, allowing firms to offer better service and save money at the same time. Some of the industry’s most labour-intensive processes are on the way to being fully or partially automated, from warehousing to last-mile delivery. On the contrary, the roundtable participants have a very different outlook on the Middle East labour market. Kamal said: “Labour is still way too cheap in the Middle East compared to the cost of technology. I think the UAE could be a leading player in terms of technology adoption and labour costs. 80% of the labour comes from the outside the UAE. You can either have more people or more technology. The UAE is a small country; we all have regional titles here. We are serving a handful of people here, hence we must make sure of the ways we want to serve the region and make a hub out of it. “Most the businesses are owned by thirdparty logistics (3PLs) providers. They know their business model, and when they do the cost comparison, the labour is still cheap in this part of the region.” The future of logistics in the Middle East is autonomous vehicles, 3D printing, and automated technology in warehouses and vertical logistics solutions. “But I would still say that the Middle East is the most attractive human labour market,” added Ahmad. “I would say that an important factor to that is the cost to benefit. Talking about US, Europe, and Middle East, comparing the cost of labour to the cost of technology, the former is still cheaper. We do have a mandate from the government to balance modernisation along with the human element.” The panellists unanimously agreed that no matter how high the level of adoption of technology is, the human touch will always remain of high priority in the Middle East. Nyholm added: “In the Middle East, the personal touch is still very important. We do have a lot of people walking into our office every day and a lot of resources are deployed in serving those customers. We need to do it efficiently and we are working hard to do that. It’s a non-value added part of our business. Maersk still has a legacy and reputation of being slightly better than our competitors and that’s what takes us forward.” Dabbagh concluded: “The Middle East has a particular ecosystem, which will help them to achieve things in the long run. And at Agility, we continue to introduce new features to keep ourselves continuously updated.”
The way technology has been around brings in a significant change that will allow us to do things differently.â€? Bassel El Dabbagh, Agility Abu Dhabi
UPS invests about $1bn in technology globally, which shows how serious we take technology.â€? Mohammed Kamal, UPS Logistics News ME | June 2017 | 23
i n t e rv iew
Edmond Mikhael, general manager for Honeywell SPS in the Middle East, Turkey, and Africa (META), discusses automation to support the growing regional e-commerce market How is Honeywell SPS contributing to the Middle East’s growing e-commerce sector? In the Middle East, e-commerce continues to grow at a rapid rate, resulting in the ongoing development of the region’s manufacturing, retail, and logistics sectors. As such, manufacturers, distribution centres, logistics providers, delivery firms, and retailers are looking for ways to streamline operations, improve efficiency and productivity and, ultimately, achieve better bottom-line results. As a result, companies are increasingly turning to data capture technology such as mobile computers, scanners, printers, and voice at the point of order processing, to support and enhance their omni-channel strategies. Having access to the latest technology allows those working in supply chain management to plan better, run multiple operations, and drive collaborative decision-making, therefore improving delivery and response times. The Honeywell offering includes a complete portfolio of integrated workflow solutions that optimise distribution centres and digitise supply chains, which is essential for supporting the growth of the Middle East’s e-commerce sector. Our technologies enable a connected workforce that’s faster, more accurate, and more flexible, resulting in improved performance and reduced operational costs. Is the region well-equipped to handle the pressure of the growing e-commerce market? What kind of pressure is it exerting on the logistics and the manufacturing sectors? The Middle East is a pioneering region in terms of adopting automation for the logistics industry. This is partially due to the region’s ambition to be the first at introducing new technologies. It is also because the Middle East is typically not dragged down by legacy technology and has the opportunity to implement the latest solutions on a blank canvas. This trend is largely driven by consumer demand. With greater internet penetration and
24 | Logistics News ME | June 2017
sure on the retail and supply chain industries to deliver efficiently. To cater to these demands, retailers must find ways to ensure faster sorting, dispatch and delivery, while keeping the operational costs as low as possible. To achieve this, the industry needs to be equipped with the right tools at the front- and back-end of operations. By deploying advanced automation and process technologies throughout their supply chains, Middle East’s logistics, manufacturing, and retail professionals can manage this demand more successfully. What new products are being planned by Honeywell SPS to be launched in the regional market in ? At Honeywell, we are continuously deploying connected solutions which address a range of customer challenges. Our automation, software, and hardware solutions are helping retailers meet growing customer expectations for faster and cheaper delivery. Our cloud technology is helping logistics providers better track and route deliveries. And, our connected safety solutions make workplaces safer by enabling better monitoring of workers in high-risk situations.
The Middle East is a very important market for us and we are committed to delivering cuttingedge technology to our customers.” the availability of more seamless logistics, shopping from the comfort of one’s own home is becoming more and more attractive. In addition, with retailers such as noon.com promising three-hour door delivery, consumer expectations are high, putting additional pres-
The solutions we have announced so far, this year include: • The Xenon 1902g wireless battery-free scanner – a 2D area-imager, which makes wireless scanning more convenient with fast, ready-to-scan charging in less than 15 seconds. The new lightweight scanner eliminates the need for replacement lithium-ion batteries and reduces the amount of heavy metals sent to landfills. • The AutoCube – a 3D-depth sensing technology which instantly and automatically captures the volume of an object with extreme precision. This eliminates time-consuming and error-prone manual measurements. The cost-effective dimensioning solution allows customers to cap-
profitability at large manufacturing and services companies, by empowering workers to deploy nimble and dynamic strategies in the field. The Moviliser Cloud connects and orchestrates field operations, even across company boundaries. • Intelligrated – a certified robotics integrator with more than 20 years of robotic material handling experience, which Honeywell acquired last year. Intelligrated designs, manufactures, integrates, and installs complete material handling automation solutions including conveyor, IntelliSort sortation, Alvey palletisers and robotics, and automated storage and retrieval systems – all managed by advanced machine controls and software. • Honeywell Vocollect – provides solutions that empower distribution centres with mobile workers worldwide. Through its voicedirected software, Vocollect technology enables tens of thousands of warehouses to communicate efficiently with workers, resulting in jobs completed more efficiently and accurately, through automating workers’ tasks in distribution centres and guiding them through their workflows. What kind of demand have you observed for your products in the region? While we don’t release specifics regarding our sales figures in the region, we continue to grow our sales and market share year-on-year, witnessing a good increase in 2017 over our 2016 numbers. The Middle East is a very important market for us, and we are committed to delivering cutting-edge technology to our customers, as we continue to grow our business in the region. ture more revenue, reduce bottlenecks, and shipping errors as well as optimise storage space and workflows. • CN75 and CN75e – Mobile handheld computers offer the versatility companies demand, providing the choice of a Windows or Android operating system on a single device to meet changing enterprise business demands. The no-compromise design is powered by a 1.5 GHz dual-core, multi-engine processor with 2 GB RAM for the highest degree of future-proofing. What are the effective ways of streamlining the supply chain? Are there enough methods being adopted in the Middle East to cater to the same? Deploying effective automation and process technologies, which are powered by Internet of
Things (IoT) is vital in helping to streamline the supply chain. We are seeing more and more of these being implemented as the region’s e-commerce industry continues to grow. These technologies open new possibilities through cloud-based mobile solutions, and Honeywell is well placed to reinvigorate the sector though its vast portfolio of software solutions that drive efficiencies through the power of connected. In addition to cloud solutions, other technologies such as barcode scanners, mobile computers, and voice technologies are key to ensuring more efficient and productive operations. Honeywell’s comprehensive product range includes solutions to address a variety of customer demands. These include: • Honeywell Moviliser – our Cloud for Field Operations solution that drives enterprise
Any future strategies for in the region? In 2017, Honeywell will continue to focus on developing technology that is ahead of the curve, particularly within the e-commerce, distribution centre, and logistics sectors. With a strong focus on Industrial Internet of Things (IIoT) technologies, we will work with our customers and partners to deliver advanced solutions that create truly connected retail environments, driving productivity, and improving the bottom-line. The next generation of manufacturing will be driven by connectivity through embedding physical objects with the capacity to communicate. This opens new possibilities for safety, productivity, organisational responsiveness and, ultimately, profitability throughout the entire supply chain.
Logistics News ME | June 2017 | 25
P re s s R el eas e
Competitive advantage Digitisation identified as key for region to retain leadership in global logistics landscape during the three-day GPCA Supply Chain Conference in Abu Dhabi
he importance of supply chain optimisation took centre stage at the 9th GPCA Supply Chain Conference, which took place between May 2-4, 2017, in Abu Dhabi. During the event, speakers highlighted logistical efficiency as a top industry priority in the GCC as traditional supply chains across the globe are evolving towards a connected, smarter, and increasingly more efficient ecosystem. Held under the theme ‘Agile and Efficient GCC Supply Chains - The Role of Technology’, the conference brought together industry experts who discussed the benefits of supply chain digitisation in a complex and changing marketplace. In addition to logistical efficiency, other challenges such as nascent infrastructure, complicated protocols, and mounting geopolitical risks were also drawn attention to at the conference. Within digitisation, the role of technology in enabling petrochemical companies in the region become leading global players and distinct opportunities to leverage technology to improve agility and efficiency of a supply chain were also discussed. The GCC is currently the second fastest growing region in terms of petrochemical production globally after China, growing by 9% per annum between 2005-2015. Going forward, expansions are set to continue, driven primarily by Saudi Arabia, Oman, and the UAE, which collectively plan to add about 14 metric tonnes per annum (MTPA) of petrochemical capacity by 2025. To address these factors, companies are working on several programs, including streamlining documentation and attestation. The role of digitisation in enabling this shift was highlighted, with technology making supply chain operations more efficient from the point of view of a petrochemical producer as well as that of logistics providers. The conference was officially opened by Mohammad Husain, president and CEO, Equate, with Ziad Labban, CEO, Sadara Chemical Company, delivering the keynote session on building an agile and efficient GCC chemicals supply chain. The session outlined challenges facing new petrochemical companies in the GCC, focusing on the importance of robust supply chains in enabling growth.
26 | Logistics News ME | June 2017
Hosnia Hashim, deputy CEO – olefins and aromatics, PIC and board chairperson, Equate, touched upon the role of organisational structure in driving efficiencies. She also stressed the importance of business team connectivity, citing that supply chains are the sum of several cross-functional collaborations and emphasising how streamlining the shipping industry can result in a lesser surplus of empty containers at GCC ports. Dr Abdulwahab Al-Sadoun, secretary general, GPCA, commented: “Through close collaboration with industry partners, including logistics service providers, GPCA has been advancing service standards that enable more sustainable and transparent operations. These are furthering national visions of regional governments and reinforcing the GCC’s position as a distinctive logistical gateway. To remain a competitive global player, a collective focus on
investment, innovation, policy, and human capital will be needed. GPCA will continue to champion its key initiatives such as Responsible Care and Gulf SQAS to encourage collaboration across the industry and contribute to the creation of a sustainable regional world-class supply chain network.” A workshop on procurement on the inaugural day discussed procurement transformation and the prerequisites to embark upon a transformation program alongside key success factors for the implementation of e-procurement platforms. The same day, the conference also hosted the third edition of Leaders of Tomorrow, the GPCA’s latest initiative aimed at building local human capital in the region. The seminar was especially designed for GCC students who wish to pursue a career in the supply chain field, and providing them with key insights into how to build a career in the industry.
EFFICIENT MACHINES FOR CLEAN FACILITIES
Kärcher sweepers/vacuum sweepers are a state of the art solution for clean floors.
UAE’s Choice 2017
Studies show that: 94% of the dust & soil in a facility comes from foot traffic. As few as 1000 people per day, over 20 days, can track 50kg of dust. Dust abrades the surfaces with the effect of 120 grit sandpaper. As few as 1500 people walking across a finished floor can remove 42% of the finish. 66% reduction of dust & soil reaching into a building by sweeping around the outside.
For more Information, Please visit www.karcher.ae or email us at firstname.lastname@example.org
Fam V is it
Logistics News ME travels with UPS to visit its healthcare facility in Roermond, Netherlands, and its European Air Hub located in Cologne/Bonn Airport
lobal leader in logistics, UPS, made a big announcement recently that it had been selected as the official logistics partner for Expo 2020 Dubai. Jim Barber, president, UPS International, revealed while addressing the journalists over the phone during a visit to the company’s logistics hub located at the Cologne/Bonn Airport in Germany. Headquartered in Atlanta, UPS serves more than 220 countries and territories worldwide with over 434,000 employees around the world. Since becoming a publicly traded company in 1999, UPS has expanded the scope of its capabilities primarily through the acquisition of more than 40 companies, including industry leaders in trucking and air freight, retail shipping and business services, customs brokerage, finance and international trade services. As the official logistics partner, UPS will provide more than 27,000 sqm of warehouse space, equivalent to four soccer fields, and a team of 1,000 employees during the Expo. The team will rely on expertise as logistics sponsor in the 2012 Olympic Games in London and the 2008 Olympic Games in Beijing. The partnership agreement was signed by HH Sheikh Ahmed bin Saeed Al Maktoum, chairman of the Expo 2020 Dubai Higher Committee, and Jean-Francois Condamine, UPS president of the Indian Sub-continent, Middle East, and Africa (ISMEA). The Expo 2020 theme, Connecting Minds, Creating the Future, provides a platform to foster creativity, innovation, and collaboration globally. Operating in the region since 1989, UPS will help establish Dubai as a transportation hub for global commerce connecting trade from the Middle East to China, Africa, Europe, and the US. Barber said: “It is an exciting day for us. In our past, we have a history of supporting Olympic Games. When we choose to partner with such events and put our brand up as a support mechanism to them, they are for very specific purposes. In 2014, we created our business unit for the Indian Subcontinent, Middle East and Africa (ISMEA) and started our discussions to work for Expo; but the question was whether we will be selected. We moved forward and worked with the leadership of Dubai to under-
28 | Logistics News ME | June 2017
stand the objectives of the Expo. And a few months later, we were selected.” Overcoming challenges for such events is a mammoth task, but Barber mentioned: “The unique part of these global events is that when a firm chooses to engage with such names, it shouldn’t be a one-time affair. What it does mean that the capabilities and competencies it takes to pull one of these events off is one that
a firm should be thinking about connecting overtime – labour, IT support, and learnings from previous global events to make it stronger and better. So, we will bring IT support and a lot of customised infrastructure from London with us. These are all complex processes but I am sure we are equally equipped to deal with the challenges associated with it. We are looking forward to getting ready for that.”
UPS Healthcare facility Our next visit was to the healthcare distribution centre for UPS in Roermond, the Netherlands. The facility measures close to 2.8ha and provide approximately 41,000 pallet places. According to Jan Denecker, healthcare marketing director at UPS Europe, the Roermond facility was part of UPS’s ongoing growth plan in Europe. He said: “With its close proximity
to UPS’s European air hub at Cologne/Bonn airport in Germany, it allows for short transit times, including next-day and two-day service, to global destinations. “If you look at the problems that healthcare is facing today is that they need to work with few resources. Need for healthcare continues to increase, may be because of ageing population and a stressful life. We believe that over the next decade, the need for temperature sensitive logistics will also increase. Hence healthcare is one of our strategic priorities.” He continued: “In the healthcare environment, licensing and compliance is very critical. In terms of our capabilities, we invest a lot in our systems and people. We have compliant systems and warehouses in place.” The building, which is fully compliant with EU Good Distribution Practice (GDP) guidelines and licensed by the Dutch Ministry of Health, provides inventory management, temperature-sensitive storage, and quality assurance services with a direct feeder connection to UPS’s air hub at the Cologne/Bonn airport. It also further broadens the company’s global healthcare distribution network, which now encompasses more than 50 locations
throughout Europe, Asia-Pacific, North and South America. Denecker mentioned that UPS recently acquired Marken, a global provider of supply chain solutions to the life sciences industry. He added: “Clinical trials require strict regulatory compliance, streamlined logistics services, and global reach. Marken operates a global network of clinical supply chain services to meet the increasingly complex demands of its clients. The acquisition of Marken follows multiple UPS acquisitions that have expanded the company’s healthcare logistics services portfolio.” UPS European Air Hub in Cologne The next leg of our journey was the UPS European Air Hub located at the Cologne/Bonn Airport. With more than 2,800 employees working in the operating facility round the clock, the logistics giant has been present in the location for more than 30 years. The facility features approximately 10.5ha of operating area and has a package sorting capacity of 190,000 packages per hour, or around 53 packages per second. Automated technology ensures the hub’s efficiency and processing
Logistics News ME | June 2017 | 29
Fam V is it
reliability. The conveyor system covers a distance of about 40 km, with a package taking an average of just 15 minutes to move through the hub from unload to load point. Martina Biron-Karp, tour guide, UPS Welcome Centre Cologne/Bonn Airport, said: “We started here in 1986, and in 2006, we had our first facility expansion completed with an investment of $135mn. Historically, it is one of our biggest investments out of the United States. Then again 2014, we invested $200mn for another facility expansion. Currently we use two package bridges to connect both sides of the road. “We have more than 300 trucks coming in every day for delivery. In addition, each night, 41 flights arrive and depart the European Hub, linking Europe with the Americas, Asia and other European destinations in a matter of hours. The facility has three independent sorting systems, one for each regular package, smalls (envelopes), and irregulars (odd shaped/heavy shipments).” She also mentioned that UPS currently has fleet of 19 jet aircrafts, comprising two Boeing B747-400F, three Boeing B757-200, 10 Boeing B767-300 ER, and four MD-11F. The Cologne/Bonn facility serves as an international logistics hub for both major multinationals as well as small and medium-sized enterprises (SMEs) in Europe wishing to tap into UPS’s trading network. The hub helps UPS customers to successfully compete and do business on the important trading lanes within Europe and linking Europe to North America and Asia in an era when free trade agreements on the horizon promise growth for businesses of any size. Karp continued: “UPS originally chose Cologne/Bonn as the location for its European air hub on account of its excellent location at the heart of Europe’s most productive economic region, the area’s well-developed road network and infrastructure, local weather conditions for year-round flight operations, the airport’s excellent runway system (the largest one is 4km long), and its proximity to a skilled and flexible workforce. These conditions have not changed since the hub’s inception in 1986 as it remains the main European gateway in an international network that includes the UPS Worldport in Louisville, Kentucky, and Asian hubs in Shanghai, Shenzhen and Hong Kong.” Once the four-day visit concluded, I remembered what Barber mentioned on the first day: “Once you leave Cologne, you will possess a different view of UPS and how it feels to move around 2% of the world’s GDP around.” Can’t agree more!
30 | Logistics News ME | June 2017
Logistics News ME | June 2017 | 31
Int e rv iew
We are also seeing a large development in new technologies being introduced to the logistics industry.â€? Geoff Walsh, senior vice president and UAE country manager, DHL Express
32 | Logistics News ME | June 2017
Together with passion Geoff Walsh, senior vice president and UAE country manager, DHL Express, highlights the importance of good customer service to maintain leadership in the regional logistics market
How has been the performance of DHL Express regionally in the first quarter of ? During the first quarter of 2017, we have witnessed positive growth across the Middle East and we are expecting this to continue throughout the remainder of the year. Generally speaking, there has been a positive sentiment across the various industries and the economy seems to be gaining traction once again. Globally, 2016 was a good year for our parent company, DPDHL, as revenues rose to $64bn (â‚Ź57bn), with DHL Express having a strong contribution to this amount.
Has the average price increase in the UAE affected the companyâ€™s business in any way? Fuel prices are always fluctuating according to the market price and that is obviously accounted for in our prices via a surcharge mechanism.
DHL has a transparent process by linking fuel price changes to an index that is available to the public. The fuel surcharge is linked to the monthly average of the daily mid-spot price for a gallon of kerosene type jet fuel (US Gulf Coast). Overall, the fuel surcharges do not have a significant impact on our overall prices or volumes. What trends are emerging in the regional logistics market in ? The region is continuing to see steady growth during 2017 in the logistics market which is partially to do with the continued support for the Expo 2020, the UAEâ€™s 2021 vision, and the 2030 industrial plans which are in place. Late last year, we also witnessed the launch of the first Authorized Economic Operator (AEO) program in the region right here in the UAE. This makes the UAE one of the 63 countries worldwide that facilitate trade and customs and supply chains. Only a handful of
Logistics News ME | June 2017 | 33
Int e rv iew
companies have been chosen by the UAE government to represent certified economic operators, and DHL Express is the first and only logistics provider in the UAE to be chosen and certified. This certification means that we are recognised by customs as a trusted supplier and transportation company, and that the government views us as a market leader. With regards to the rest of the Middle East and North Africa (MENA) region, we also expect the logistics industry to expand and grow,
34 | Logistics News ME | June 2017
thanks to the various initiatives in Saudi Arabia with the futuristic Vision 2030 and the Egypt 2030 economic vision to support businesses and the countryâ€™s overall economy. We are also seeing a large development in new technologies being introduced to the logistics industry. Five trends that we believe will shape the logistics industry over the short-, medium-, and long-term are unmanned aerial vehicles (UAV), low cost sensors, big data, ecommerce, and self-driving vehicles.
In what ways are you going to expand your network in the region in ? DHL Express was the first express logistics provider with over 40 years in the UAE and the wider MENA region. Since then, we have mirrored the regionâ€™s growth and continue to invest in our facilities and capabilities to make sure that we remain the undisputed market leaders. We are currently underway to finish off our expansion in the Dubai hub, which is located
Which is your strongest performing market in the region and why? At DHL, we operate in more than 220 countries as one connected network and that is one of our key strengths, which means every country plays a vital role in making the network succeed. The MENA region, overall, is very important for DHL Express as it is continuously growing and maturing. The region has a lot of potential and opportunities for development and that is why we continue to invest in our capabilities and facilities across the Middle East.
in Terminal 2 and is a $17mn investment. This will increase our build space to over 7,000 sqm and enhance our capacity to handle more than 5,000 shipments an hour. It will feature a consolidated export; transit and import operationâ€™s facility with on-site customsâ€™ clearance; and bond hold area feeding intercontinental and region-wide air- and land-network distribution. The facility will also include an automated conveyor system with in-line dual-view X-ray screening of parcels
and pallets and more than 170 cameras spread across the facility. On a regional level, we have just inaugurated our new SAR100mn ground and airside operation facility in Jeddah located in King Abdulaziz International Airport, which also features state-of-the-art clearance capabilities to cater for the entire western region. The expansions in Jeddah and the UAE will positively affect many regions and countries around the world.
What kind of stiff competition does DHL Express faces from other big names in the market? At DHL, we strive to offer our customers the best service possible and be customer centric in everything that we do. One way to differentiate ourselves is through service leadership to achieve customer loyalty. That is why, we are constantly in a state of innovation and creation to be able to meet future customer demands and cope with the changing logistical trends and expectations. We are always looking for new ways to provide easy access to global markets with cost-efficient and flexible logistics solutions, while ensuring clients have complete control and visibility across their supply chain. The logistics industry is a fast-moving sector with many challenges, however, we always make sure that we are close to our customers and provide the highest-quality service, which always starts with our people being motivated and engaged. This allows us to remain the market leaders across the region.
Logistics News ME | June 2017 | 35
F o rk l if t
Carry it low The forklift industry in the GCC has seen substantial demand in the past two years despite several challenges posed by the supporting sectors. Logistics News ME finds out
he global forklift market was valued at $35.3bn in 2014 and is projected to expand at a compound annual growth rate (CAGR) of 6.9% during the forecast period to reach $55.9bn by the end of 2021. These are among the findings of the report by Persistence Market Research (PMR), titled Global Market Study on Forklift Trucks: Asia-Pacific to Witness Highest Growth by 2021. The report mentioned that the key driving factors identified in the global forklift truck market include expansion of warehouse space globally, growing e-commerce business across the globe, strong demand for forklift truck re-
36 | Logistics News ME | June 2017
placement in developed markets, and bulk investments in purchase of low-cost forklift trucks in emerging markets. Assessing the various factors driving the market growth, a PMR analyst said in the report: â€œThe global material handling equipment market is growing significantly at an annual growth rate of 3% to 7%. Electric type forklift truck is one of the prominent segments in this market. These trucks are gaining traction due to the implementation of various advanced technologies and their growing application across various industries worldwide.â€? Being one of the major industry, the logis-
tics and transport sector of the GCC countries have generated $47bn in 2016. According to a report by Frost & Sullivan, the materials handling market of the GCC was valued at $3.8bn in 2015. Saudi Arabia accounted for 46%, the UAE accounted for 35%, and the remaining 19% was shared by other four countries. Also, the report forecasted that the GCC material handling market would be valued at $5bn by 2020. The report further added: â€œThe increasing complexity and evolving market dynamics in the regional logistics sector is fuelling demand for more technical innovations in materials han-
dling equipment, ranging from pallets, forklifts, automated storage and picking solutions, labelling devices, warehouse trucks, telehandlers, tow tractors, cranes, and packaging equipment.â€? Industry experts believe the UAE has become a major logistics player by being an industrial and tourist hub in the region. The government spending on infrastructure and investment-friendly business environment and policies have attracted global business players to the country. Currently, the UAE is experiencing an exponential growth in the economy. In 2015, the export value of the country was $147bn and import value was $217bn with a
gross domestic product (GDP) per capita of $70k. The real GDP of UAE grew by 2.7% in 2016 and it is expected 3.1% growth in 2017. JK Sathivel, market analyst for supply chain at B2G Consulting, said: â€œThe forklift sector is one of the main materials handling market in the UAE. In 2014, the total exports from the UAE was valued at $65.1mn and in 2015, the same was valued at $12.9mn; it declined by 80.1%. This was mainly due to the weak economic performance between 2014 2015. On the contrary, the total forklift import market was valued at $217mn, which implies the strong domestic forklift reselling market in
the country. As the economic performance of the UAE slowed in 2014-15, the forklift imports remained almost constant. But compared to the import value of 2011, there was a 66.9% improvement in the total forklift import value in the country.â€? The United States, China, Japan, and the UK are the top countries from where the UAE imports forklifts. In 2014, out of the total forklift imports, Japan constituted 17%, China accounted for 15%, the UK for 11%, and the US accounted for 9.1%. In 2015, these numbers changed, where the UK constituted 16% of the total imports, Japan ac-
Logistics News ME | June 2017 | 37
F o rk l if t
counted for 15%, the United States for 14%, and China contributed 13%. In addition to it, the neighbouring Oman remains one of the leading forklift export markets for the UAE with 53% of total forklift export value.
Demand for forklifts is derived from the demand for other industries such as consumer goods.” JK Sathivel, B2G Consulting
38 | Logistics News ME | June 2017
Market trends According to Forklift Market Size - Application Potential, Competitive Market Share and Forecast, 2016 – 2024 by Global Market Insights, huge warehousing spaces have mandated machine utilisation for transferring heavy goods to ensure efficient productivity and reduce mishandling. Increasing adoption of fast charging batteries in trucks to help end-users overcome long distance barriers, reduce the downtime, and improve productivity is estimated to fuel the overall forklift market growth. Experts say that demand for forklifts are highly depended on other industries in the UAE. In 2014, the GDP growth rate was 4.5%, but as a result of performance of other industries, it reduced to 3.1% in 2015. Sathivel further said: “Compared to the reduction in GDP, a reduction of money spend on forklifts was expected but it remained almost the same between 2014 and 2015. It implied that an oversupply of forklifts in the market added immense cost for companies.
“Demand for forklifts is derived from the demand for other industries such as consumer goods. A decline in demand for consumer goods will result in a sharper decline in demand for forklifts, which creates disturbances in forklift market. Therefore, it is a challenge to observe market changes very closely.” The UAE is planning to spend AED7mn to install robot concierge automated forklifts in the airports, which is an evolving trend in the country’s forklift market. Another trend, according to industry players, is telematics, which combines telecommunication and data collection technologies like RFID to observe the performance of lift trucks. As the fuel prices in the UAE is constantly rising, companies can plan to overcome these challenges by using telematics. Last but not the least, forklifts with integrated mobile applications make it easier to handle and scan packages. Forklifts are the most popular forms of mechanisation in the GCC logistics industry. The major factors behind the growth of the forklift market is the increase in e-commerce and warehouse segment and the technological advancements being acquired by the industries and warehouses. With all the emerging trends, it becomes a wait and watch game to observe the path that the forklift industry will adopt in the coming years.
THINKING AHEAD â€“ MOVING FORWARD ...in Dubai.
Hellmann Worldwide Logistics is a family run business with offices in more than 150 countries around the world. Our proximity to our customers is what allows us to build long-lasting partnerships and tailor made solutions for all your logistic needs.To learn more go to: www.hellmann.net
Int e rv iew
The right connection
Ghada Stefir, operations manager at RAK Hospitality Logistics, talks about the company’s strategies to effectively streamline its logistics operations on a day-to-day basis How is RAKHL placed in the market as compared to its counterparts? Give us a brief about its operations in the emirate. RAK Hospitality Logistics (RAKHL) is a subsidiary of RAK Hospitality Holding (RAKHH). Formed in 2015, RAKHL provides logistics and support services to Ras Al Khaimah’s hospitality sector, covering guest transportation under our recently launched destination management company, Safarak, as well as employee transportation
40 | Logistics News ME | June 2017
and employee accommodation solutions. Safarak, which means ‘your travel’ in Arabic, operates exclusive guest transportation and sight-seeing tours throughout the UAE, while employee transportation and accommodation services are provided across Ras Al Khaimah. How has been the business for RAKHL in ? During 2016, we focused on Safarak and developed our tailored services while planning the expansion of our fleet of vehicles to ac-
commodate our customers’ needs. We have signed several contracts in 2016, partnering with other destination management companies, offering services to their clients in Ras Al Khaimah. Towards the end of the year, we pursued an opportunity to partner with the Al Wadi Desert, a Ritz-Carlton partner hotel, for the provision of guest and staff transportation services. We also continued to provide employee accommodation and transportation solutions for Hakaya Collection, the dining and leisure subsidiary of RAKHH.
Int e rv iew
Managing the volume of guests effectively, caring to individual needs, and ensuring high levels of customer service are among our top priorities.â€? What are the future strategies for the company in ? Any other partnerships that the company is eyeing? Our strategy for 2017 is to extend our services to all the hotels owned by RAK National Hotels (also a subsidiary of RAKHH) and then expand further in Ras Al Khaimah. In addition to the Al Wadi contract, we have signed two contracts with the Hilton Garden Inn for guest transportation and shuttle services. During the second quarter of 2017, we anticipate
42 | Logistics News ME | June 2017
partnering with the Tulip Inn and provide guest transportation services in Ras Al Khaimah. Starting from July 1, we will begin working with Rixos Bab Al Bahr on their staff transportation. Another goal for 2017 is to solidify the position of Safarak as the leading provider of tailored tours and excursions. And, of course, we continue to expand our team and our fleet of vehicles in order to accommodate the increased demand and maintain our levels of service to our clients. What strategies do you adopt to effectively streamline the logistics procedure for the hospitality and leisure sectors? We have our standard processes and procedures in order to streamline services, but the most important goal in our market right now is to offer the right product. At Safarak, we have carefully crafted sight-seeing tours and exclusive transportation services to ensure that our guests in Ras Al Khaimah enjoy a seamless experience and remain engaged throughout their journey. Choosing the right partner is also important; working with a good hotel or leisure operator can make providing transportation much simpler.
Any challenges do you face while effectively managing the logistical operations on a day-today basis? There are always challenges associated when working with large hotels and international operators. Managing the volume of guests effectively, caring to individual needs, and ensuring high levels of customer service are among our top priorities. Being easily adaptable is also important, as with guest transportation, things can change any minute. Having a strategy that keeps the staff aware, responsive, and accountable is at the heart of tackling the change. Maintaining our perfect safety and comfort record is of paramount importance and our number one priority. Any plans for expansion outside RAK in ? We are focused on building our base in the emirate and are constantly presented with ample opportunity for expansion, as Ras Al Khaimah continues to attract more visitors and investments in new hotels and resorts. Across all our commercial activities, we aspire to provide quality hospitality logistics solutions.
THE SAFETY AND EFFICIENCY OF YOUR FLEET
IS IN YOUR HANDS
/HDGLQJÃ€HHWRSHUDWRUVKDYHVRPHWKLQJLQFRPPRQ WKH\FKRRVHWHFKQRORJ\WKDWHQDEOHVWKHPWRSULRULWLVHGULYHUDQG URDGVDIHW\ZKLOHERRVWLQJSURGXFWLYLW\DQGHIÂ¿FLHQF\OHYHOV )RUH[DPSOH0L;7HOHPDWLFVFXVWRPHUVVDYHXSWRRQ WKHLUIXHOFRVWV7KLVEHQHÂ¿WLVDFKLHYHGSULPDULO\E\LPSURYLQJ GULYHUEHKDYLRXU$QGZLWKWKLVDFFLGHQWUDWHVDUHVLJQLÂ¿FDQWO\ GHFUHDVHGÂ±LPSURYLQJVDIHW\DQGIXUWKHUOHVVHQLQJEXVLQHVVULVN
7RÂ¿QGRXWPRUHRUDUUDQJHDFRQVXOWDWLRQ FRQWDFWXVRQ ZZZPL[WHOHPDWLFVDH
E v e n t r ev i e w
Experts highlight aviation industry challenges and opportunities during the Global Airport Leaders Forum, co-located with the Airport Show 2017
viation leaders and experts highlighted key aviation industry issues, challenges, and opportunities for the industry worldwide during the 5th Global Airport Leaders Forum (GALF). Held under the patronage of HH Sheikh Ahmed bin Saeed Al Maktoum, president of Dubai Civil Aviation Authority, chairman of Dubai Airports, and chairman and CEO of Emirates Airline and Group, the two-day forum was co-located with the Airport Show. Uncertain oil price is one of the major concerns for the aviation industry and advanced technology will play an important role to increase the customer experience, which is most important, said the industry specialists, who also discussed challenges in airport capacity, next-gen technology facilitation, financing of airport projects and innovation, and refining the airport role. The aviation industry experts highlighted that the industry is facing short-term and longterm challenges and there are also opportunities on increasing travel demand in the wake of competitive price on lower oil price. Paul Griffiths, chief executive officer, Dubai Airports, in his keynote address, talked about oil price, global economy, political unrest, and consumer confidence as short-term factors. “If oil price goes up, it will be another problem for the industry,” he said. He added that technology, urbanisation, economic balance of power, and resource scarcity are the long-term factors. He appreciated the role of technology to increase the customer experience at the airports. The cost of infrastructure improvement is phenomenally high for any airport, he said, adding that smart technology can play an important role to improve the capacity and service. Dubai invested around $7.8bn during the last two years to improve the infrastructure.
44 | Logistics News ME | June 2017
Griffiths said: “We are planning to increase the capacity of Dubai Airports to 118 million passengers by 2023 and we are expecting the number of passengers to increase at both the airports to 90 million by the end of 2017.” Dubai International ranked the world’s busiest airport for international traffic. Aviation sector is contributing a lot in Dubai’s gross domestic product (GDP) and creating a lot of employment opportunities. He mentioned that
the aviation will contribute $88.1bn or 45% of the Dubai GDP by 2030. During another keynote address, General Civil Aviation Authority (GCAA) deputy director general, Omar Bin Ghaleb, talked about UAE Aviation Outlook 2025. He hoped that by 2025, the country will successfully address many of the challenges to the industry by adopting corrective measures. Aviation industry is going through a lot of changes in the wake of some uncertainties but
it is a very interesting place to be, said Peter Harbison, executive chairman of CAPA- Centre for Aviation. During his presentation at the GALF, he said it’s a relatively benign environment with low interest rates, low oil prices, and economies performing adequately. He added that the main driver of profit growth since 2014 has been lower fuel costs. But he also mentioned that in a competitive market place, lower costs because of fuel price have a strong tendency to drive prices down. So, instead of pushing profits up, lower prices squeeze margins. A recent IATA business confidence survey says: “On the demand side, the survey responses were consistent with the robust growth seen in both passenger and freight volumes at the start of 2017. Our respondents remain very
positive about demand prospects for the year ahead. More than three-quarters expect passenger volumes to rise, while the forward-looking weighted-average score for freight has now risen in each of the past four quarterly survey.” The initial financial results from Q1 2017 highlights the extent that airline profit margins were squeezed in the opening months of the year by a combination of higher costs and weak yields. Harbison said that the uncertain direction of oil price is one of the major concerns for the aviation industry. Nobody really knows where fuel prices will go. “Only three months ago, projections were for a range of $55-65 for 2017. Any airline that is not making money now is at risk if fuel prices rise.” Talking about low cost capacity, he said the
bulk of LCC orders are in Asia Pacific. This promises a very competitive market for the next decade. India has more LCC orders than any other country and they will stimulate the growth domestically and in East Asia. He also added that China will become the world’s biggest ever aviation disruptor. It’s a massive and still rapidly growing domestic market. Its airlines are going international at an accelerated rate. They have very low costs and new equipment. The 17th edition of the Airport Show at the Dubai International Convention and Exhibition Centre (DICEC) with over 300 exhibitors from 50 countries, witnessed a wide line-up of latest smart and innovative technologies and solutions set to transform the rapidly growing aviation industry.
Logistics News ME | June 2017 | 45
E v e n t r ev i e w
Automechanika Dubai The three-day Automechanika Dubai 2017 proved to be a success as it hosted 30,000-plus trade visitors and 1,954 exhibitors from 57 countries. Logistics News ME presents key highlights
his year’s Automechanika Dubai opened on May 7 at the Dubai International Convention and Exhibition Centre, where 1,954 exhibitors from 57 countries are looking to make inroads in a regional market where spare parts revenue will be worth $14.8bn by 2021. The 15th edition of the Middle East and Africa’s largest auto aftermarket trade fair was flagged off by HE Mattar Al Tayer, director general and chairman of the board of executive directors at the Roads and Transport Authority (RTA). Spanning 69,089 sqm of exhibition space, the annual three-day event’s global footprint was underlined by the presence of 25 country pavilions and 36 international trade associa-
tions, while more than half of the 30,000 trade visitors came from outside of the UAE. Ahmed Pauwels, CEO of Automechanika Dubai’s organiser Messe Frankfurt Middle East, said: “It’s estimated that 44.5 million pas-
senger vehicles will ply Middle East roads by 2020, while a further 1.8 million commercial vehicles in the GCC will pave the way for some impressive opportunities for the automotive services industry. The event presented the key to this dynamic market, offering a unique platform for global and local players alike to look for new regional distributors, open up new markets, or expand on existing customer bases where there’s still plenty of room for growth.” Automechanika Dubai covered the six product groups of parts and components (1,125 exhibitors); tyres and batteries (230); accessories and customising (205); repair and maintenance (200); electronics and systems (140); and car wash, care and re-conditioning (55).
German manufacturers expand Middle East presence According to organiser Messe Frankfurt Middle East, a total of 116 German aftermarket brands occupied 6,000 sqm, a 15% increase over the previous year, while 107 of these were part of a government-backed German pavilion. The biggest names in the aftermarket business brought the reputed power, performance and precision of German engineering this year, spearheaded by the likes of Karcher, LIQUI MOLY, MAPCO, MAHLE, MIPA, Schaeffler, WEICON, and Wilhelm Schwenker. Olaf Henning, managing director of MAHLE Aftermarket, said: “Our products are well-known in the Middle East and have been admired for decades. Especially under the severe climatic conditions in the region, customers have been relying on the high standard of quality and service of MAHLE and will continue to do so in the future. “The African and especially the Middle East market is a keystone of our Aftermarket business. Besides our very strong presence in the field of engine parts, turbochargers, filtration and thermostats, our newer segments – for example, mechatronics and workshop equipment – offer customers products and services with the added value they are used to.” LIQUI MOLY is another leading German brand ubiquitous in service stations and auto workshops across the Middle East. The engine oil and additive producer has exhibited at Automechanika Dubai for several years, and has reaped the benefits of persevering in the vast Middle East market. Thomas Sailer, export area manager at LIQUI MOLY for the Middle East, said: “The Middle East has always been
46 | Logistics News ME | June 2017
important for our business, and it’s becoming even more important. Some companies raise the white flag when they face difficult conditions or smaller markets, but we see the opportunities in the region and we’re very successful in this. For instance, our turnover in Iraq is greater than in many European countries. “LIQUI MOLY produces exclusively in Germany, so drivers in the Middle East get the same top quality products as those in Germany. We have around 4,000 items in our portfolio, motor oils and additives are the core products, then there’re gear box oils, service products, car care, underbody protection, a/c cleaners and many more.” Elsewhere, WEICON is a Muenster-headquartered com-
pany, which showcased its range of adhesives and technical sprays that are widely used for automotive manufacturing, repair and maintenance. Thorsten Lutz, managing director at WEICON Middle East, said: “WEICON products are suitable for nearly all sectors of industry, and we’ve been exhibiting at Automechanika Dubai for years. The show is an important event in our schedule, and is a leading international trade fair for the automotive service industry. Many of our customers visit the show and we can inform them about our latest products. The exhibition is the perfect event to show our products to potential customers, to make new business contacts and to establish our company and our products in the Gulf region.”
Wabco showcases aftermarket solutions range at Automechanika Dubai
Global supplier of technologies that improve the safety, efficiency and connectivity of commercial vehicles, Wabco, showcased its comprehensive range of advanced aftermarket solutions for commercial vehicle fleets at Automechanika Dubai 2017. Wabco featured a broad range of advanced technologies that improve vehicle safety and efficiency. In addition, the company demonstrated how its technologies support commercial vehicle fleets in reducing their operating costs, thereby improving their overall profitability. Philippe Colpron, Wabco vice president, aftermarket, said: “The Gulf region is an attractive market for fleets. Customers in these markets are continuously looking for new ways to grow their global presence and that growth requires the support of the transport and logistics industry in the region. This includes, for example, meeting the logistical needs of several massive infrastructure projects such as the Expo Dubai 2020 and the Qatar 2022 FIFA World Cup. Our role is to support these transport and logistics operators and fleets, helping them to reduce vehicle downtime while maximizing vehicle safety and operational efficiency. “We are also seeing a growing demand for a broader and smarter range of solutions in the Middle East to meet the variety of fleet needs there. It’s an evolution we are ready to support through the introduction of both our Reman range as well as ProVia, our reliable and safety-focused budget parts range.” Addressing the fleet management needs in the market, Wabco also showcased its advanced suite of fleet management solutions, which directly address the Middle East’s fleet management needs with software, hardware, and services that lead to more efficient operations with improved customer experience and environmental performance. The company experts demonstrated the capabilities of the TX-SKY on-board computer, a fully integrated component of a fleet management system that enables commercial vehicle fleet owners to monitor their entire fleet in real time. Abdallah Harati, Wabco vice president, fleet management solutions, said: “At Automechanika Dubai, we were thrilled to demonstrate how our technology leadership is supporting the growth of commercial fleets in the Middle East and Africa region. From introducing more and better options for replacement parts to industry-leading fleet management solutions and high-quality original products, Wabco’s comprehensive range of solutions empowers fleets to operate more efficiently.”
ZF Middle East showcased its new strategy at Automechanika Dubai 2017 At this year’s Automechanika Dubai, ZF Middle East showcased its new premium brand strategy, including ZF, Sachs, Lemförder, TRW, Boge, and Openmatics. The broad and steadily growing product portfolio of new products such as torque converters and the semi-compound brakes as well as a firmly established regional footprint positions ZF Middle East as a leading aftersales provider in the region. Dr Alexander Sabbah, managing director of ZF Services Middle East, stated: “Through our well established footprint in the region currently comprising the regional head office in Dubai, paired with a fully equipped technical centre, a central logistics centre and branch offices in Kuwait and Qatar, we perfectly meet the rising local demand well into the future. “At Automechanika Dubai, we display a broad variety of ZF’s product portfolio. The 9 HP automatic transmission for vehicles with front-transverse mounted engines will be among the key exhibits displayed. Additionally, ZF Aftermarket showcases special motorsports products from the Sachs Performance program for race car applications.” For the visitors inclined towards the commercial vehicle segment, the first automatic commercial vehicle transmission of its kind – the ZF AS Tronic was on display. Fine-tuned
gears enabling the engine to always operate in the most economical range and an optional intarder that ensures reliable, fadingfree deceleration, which preserves the brakes and increases safety, are just some of the interesting features of the field leader – AS Tronic. Spare parts for the AS Tronic transmission including the clutch actuator and transmission actuator was displayed as well. ZF Services Middle East also presented customers with its range of premium grade transmission oil solutions for passenger cars. The individual kits contain all the line items needed for the oil change – the filter, the seals and screws, the magnets and oil pans, as well as the optional seven litres of ZFLifeguardFluid suited to the transmission. Ravi Kumar, head of IAM sales – Middle East, added: “At Automechanika Dubai this year, customers in the passenger car segment were happy to see us showcasing the Sachs shock absorbers, as well as the tie rod end, control arm and ball joint under the Lemförder brand or TRW corner module alongside the ZF spare parts and other highlights. This is a clear indication to the market of where we are headed in the near future and the opportunities we plan to explore.” Logistics News ME | June 2017 | 47
V i e wp o i n t
Doing it right Carlos Cordon, professor of strategy and supply chain management at IMD, explains how companies such as Spotify and Hilti have adopted agile concepts to gain more output
he writing is on the wall - if you want to innovate in the digital world, you must be agile. Four of the top five companies by market cap (Microsoft, Apple, Alphabet, and Amazon) use agile methodologies. They are thus able to deliver a stream of tightly-integrated product systems. Yet, agile doesn’t stop at Silicon Valley. Traditional companies are also realising the downside of their linear processes’ efficiency. The steering of new products by heavyweight committees can be very good at suffocating innovation. Over the time, the result is a lowrisk and low-return product portfolio. Agile is the opposite - a more adaptive, speedy, and cost-effective approach to innovation for digital and non-digital products. Agile is a set of principles, methods, and organisational structures needed to put them into practice. Its most distinctive principles are: • Work iteratively and incrementally. Focus relentlessly on adapting to changing consumer needs, regulations, and competitors. • Build conceptual and real prototypes early and regularly. Use these as experiments, to gather stakeholder insight, and increase customer value.
48 | Logistics News ME | June 2017
• Empower self-organising teams to make decisions without steering committees. Support them in delivering product increments at regular intervals. Agile teams consist of five to eight people. As the interface to stakeholders and customers, the product owner regularly evolves a high-level backlog of prioritised requirements, feedback, and feature requests. There is no project manager in the classical sense. Instead, an agility coach assists the team in putting the agile principles into practice to execute on the vision. Each team develops new product increments in sprints of two-to-four weeks. Each sprint begins with the team converting highpriority backlog items into crisply-defined granular tasks. Team alignment is frequent, short, and result-oriented. The team daily tracks task completion, shares sticking points, and balances its workload. The agility coach also protects the team from arbitrary interruptions by the product owner or management. The output of each sprint is a potentiallyshippable product increment that users can test. The product owner, management, and
customers share their feedback in an informal setting. The team will use those insights to further improve the product/service. Finally, in retrospective, the team figures out how to make the next sprint more productive. Changes are opportunities Heavily-controlled phase-gate processes promote the sunk-cost fallacy. Companies, therefore, stick to plans even as those become outdated and risky. Moreover, teams waste time, effort, and trust on low-value activities, such as bullet-proofed gate documentation and negotiating with stakeholders as adversaries. The results are time and budget overruns for products that customers do not desire as much as initially envisioned. In contrast, agile teams focus on customer value and not process bureaucracy. They achieve increments of valuable output, thanks to regular customer interaction and collaboration. Educated experiments with prototypes mitigate risks and lower overall development costs. Reliably regular releases also increase customer engagement. Agile principles drive these benefits by making companies responsive to change. In
the pursuit of innovation, changes to requirements and the feasibility of specifications or features, or in the product’s context, are highly probable. Executives and teams can treat change as either an abnormal nuisance or as an opportunity. In the non-agile world, changes are bemoaned as moving targets that spoil best-laid plans. Teams try to block them by freezing what customers should want years down the road. Premature decisions are made using stale information from market research conducted years ago or by using hasty evaluations of technology maturity and supplier capability. As the project progresses, questioning its key assumptions becomes increasingly painful. Teams and steering boards inevitably find themselves at an impasse. With every passing gate, steering boards hesitate to make bold business-minded decisions such as stopping the project. The escape manoeuvre is to forge ahead and begrudgingly undertake late, major, costly rework as a form of damage control. In comparison, agile teams welcome and regularly adapt to changes. They progressively discover and address customers’ needs through experiments and feedback in small batches. This earlier and stronger involvement of customers in shaping the product can enhance its value perception. It also increases customers’ anticipation, satisfaction, and positive word-of-mouth. Consequently, the impact of agile principles is not limited to the bottom-line. Spotify and Hilti, two dissimilar adopters of agile concepts, are experiencing these positive effects. Spotify is the most popular music-streaming service. The company relies on a company-specific agile approach at a large scale to continuously innovate. Teams generate new ideas continuously and tweak the service’s features and the software’s user interface accordingly, to create new product increments. These are deployed as experiments targeting different customer sub-groups. By diligently capturing, analysing, and adapting to usage metrics and user feedback, Spotify continuously enhances its differentiation and, at the same time, avoids alienating its entire user base with big-bang updates. Agile also works beyond software. Hilti supplies the professional construction industry with largely tangible products such as electric tools and fastening equipment, but its recent strategy called for new services. Its aims were to increase customer engagement, enhance product differentiation, and support profitable growth. Instead of resting on its decade-long phase-gate laurels, the company
As Spotify and Hilti show, to achieve lasting adoption of Agile, it is key to experiment with its concepts and progressively adapt tailor their application for each company. Spotify is famous for scaling up agile practices. It now focuses on using problem-solving teams that are loosely coupled and tightly aligned to each other. To manage complexity, members of autonomous teams share knowledge in various communities of practice that span the entire organisation. Spotify still describes its widely-publicised approach as a pragmatic mix between the current state and the company’s aspirations. Hilti practiced agile to develop, adapt, and establish its processes and methods. Senior leaders empowered the process manager to act as a curating product owner. The target users became co-developers in a loosely-coupled network of motivated problem-solvers. In sprints of two-to-three weeks, the team piloted pre-release elements in actual projects, generated insights, and collaborated on concrete improvements. Consequently, all elements were in full productive use within only six months.
Agile techniques enable teams to frequently and reliably feed customer insights back into their development efforts and vice versa.” took inspiration from agile, mixing it with past project experience and its culture. In less than a year, it had created new agile-inspired processes to develop, launch, and manage global service products. Agile teams have achieved impressive results, improving product quality, and speed of service development. Adapt to adopt The implementation of Agile is fundamentally a change and improvement initiative.
What got us here won’t get us there Until recently, companies have grown successful with linear phase-gate approaches. Tight planning, management, and control of projects have more than served their purpose, with unintended consequences such as risk aversion and wishful thinking. With these approaches, companies tend to only fast-track endeavours with predictable lukewarm outcomes, or those too big to fail. For many companies, the potentially lucrative and disruptively innovative step-changers remain on the drawing board because they are uncertain in nature. To deal with this uncertainty, companies need to create a feedback loop between market and technology, and drive it much faster. Agile techniques enable teams to frequently and reliably feed customer insights back into their development efforts and vice versa. Only in this way can companies deliver breakthrough customer value with quality products at the right time and with larger profit margins. An agile approach delivers exactly that and more. It also promotes teams’ task ownership and entrepreneurial spirit. Complex knowledge work thus becomes more experimental, flexible and rewarding. Beyond measurable improvements of project metrics, this approach immeasurably energises the organisation — quite unlike steering meetings.
Logistics News ME | June 2017 | 49
R e p o rt
On a steady path David Buckby, economist from Transport Intelligence, discusses the findings of the logistics confidence index reflecting an improving trade environment
n recent filings, logistics companies like UPS, CH Robinson, and Kuehne + Nagel reported volume increases in their freight forwarding businesses for the first quarter of 2017. The latter recorded a striking set of results, with air freight volumes up by 16% and sea freight up by 9%. Our Logistics Confidence Index (LCI) has rebounded from the slight dip experienced in March this year, with the present index scores demonstrating a continuation of volume growth. This appears to tally with the recent results from leading players involved in global freight movements. The LCI surveys air and sea freight market participants (mainly forwarders and shippers) on volume conditions. On Europe-based trade lanes
50 | Logistics News ME | June 2017
only, the survey questions respondents whether their volumes are higher, lower, or as expected in the current month (present situation index), and whether they expect volumes to increase, decrease, or be the same in six months’ time (expected situation index). The LCI is an average of the present and expected indices. Specifically, the trade lanes covered are Europe to Asia, Asia to Europe, Europe to US, and US to Europe. Meanwhile, the latest IATA monthly results (for February) recorded an 12% year-on-year increase in freight tonnes kilometres. Following on from an increase of 8.4% in January, IATA’s director general, Alexandre de Juniac, has stated that this warrant “cautious optimism”, with yields rising. Nonetheless, he has cited the current protectionist rhetoric of leaders in several
countries as a very real ongoing concern. Within the sea freight industry, another carrier appears to be foundering. On April 20, Yang Ming, the world’s ninth largest container shipping line, suspended trading on the Taiwanese stock exchange until May 4. The carrier has been the subject of intense scrutiny for a while due to its financial position; the company is loss-making, with a debt to equity ratio of 482%. A crucial difference between Yang Ming and the collapsed Hanjin Shipping is that the Taiwanese Government has offered financial support to keep the company afloat. Yang Ming has reiterated this to investors and media, but shippers are nonetheless starting to avoid the carrier over fears that the events of last year will repeat themselves. Yang Ming’s losses were re-
duced in the fourth quarter of 2016, but the companyâ€™s problems illustrate that whilst the sector, as a whole, is beginning to tackle its capacity issues, we are not out of the woods yet. Air Freight The air freight index registered a month-onmonth rise of 0.6 points to 53.0 for April 2017. Whilst this score reflected a year-on-year improvement of 3.4 points, it stood 4.0 points below the April 2015 total. The air freight logistics situation index noted a month-on-month improvement of 1.5 points to 53.0. Month-on-month changes were driven by a strong performance on the Europe to Asia lane, which saw a 4.4-point improvement to 57.8. Nonetheless, two other lanes also recorded gains over the same timeframe; Asia to Europe, which noted a 0.9-point gain to total 57.4, and US to Europe, which improved by 0.5 points, though at 46.6, still remained in negative territory. Europe to US was the only lane to record a decline, falling by 0.6 points to 48.3. The performance of the index was decidedly more mixed, with two lanes displaying gains, and two recording losses. Europe to US was the most significant mover month-on-month, with a 6.2-point decline to total 46.2. A more moderate decline was seen on the US to Europe lane, which fell by 3.1 points to 46.8. In contrast to these results, expectations were strong for Asia to Europe, which was up by 4.8 points to 63.5, and also for Europe to Asia, which scored 53.6 following a 2.2-point improvement. Sea Freight The sea freight logistics confidence index recorded an overall score of 56.0, having increased by 0.4 points against the previous monthâ€™s score. The result was 10.7 points greater than the score registered in April 2016, and 0.4 points below that recorded in April 2015. Standing at 53.7, the index improved by 0.8 points against the previous month. This result was driven by a significant monthly improvement in one lane, Europe to Asia, which improved by 6.4 points. This was the only lane to note an improvement, with declines registered on the Asia to Europe (down 2.5 points to 60.4) and US to Europe (down 1.8 points to 44.2) lanes. The Europe to US Lane was unchanged, with a score of 50.7. The index was unchanged from March, totalling 58.2. This outcome was derived from a mixed performance amongst the lanes surveyed. Whilst Europe to Asia saw a point increase of 1.7 to 57.7, Asia to Europe declined by 2.0 points to 65.5. Similarly, the US to Europe lane improved by 4.2 points to 55.1, whilst the reverse lane, Europe to US, declined by 1.8 points to 53.1.
A crucial difference between Yang Ming and the collapsed Hanjin Shipping is that the Taiwanese Government has offered financial support to keep the company afloat. â€? Air and sea freight Summary
Air freight Summary
Sea freight Summary
Logistics News ME | June 2017 | 51
Sup p lie r N e ws GAC Qatar opens new office at Port of Ras Laffan
RSA Cold Chain opens new facility in Dubai South
lobal provider of integrated shipping, logistics and marine services, GAC Qatar, has set up an office at the world’s largest LNG export port, Ras Laffan. It is one of the few companies offering full agency services at the port, which is operated and managed by Qatar Petroleum (QP). It is the latest expansion of the company; previously, GAC handled operations at Ras Laffan in an Owners’ Protecting Agency (OPA) capacity. Daniel Nordberg, general manager of GAC Qatar, said: “The Port of Ras Laffan receives nearly 1,200 port calls from LNG, LPG, and hydrocarbon-carrying vessels yearly. This is a market with vast potential and being one of the first few ship agencies in the country to enter this market marks exciting times ahead for us.” Fredrik Nystrom, GAC Group vice president for the Middle East, said: “Once again, GAC’s proven track record of excellence puts us at the forefront of the industry, at a time when agency work at this important port is opening up to the private sector.” The new GAC operations office is manned by a team of ten dedicated to providing full agency and complementary services for vessels calling at Ras Laffan. Being based on-site puts GAC Ras Laffan in an even better position to serve the needs of their customers with round-theclock operations. GAC Qatar has more plans in the pipeline, including the development of upstream oil and gas yards in the Port of Ras Laffan to support field operators and EPC contractors.
52 | Logistics News ME | June 2017
Third-party logistics provider (3PL), RSA Logistics, opened the doors to its new cold chain facility in Dubai South, mainly targeting the fast-moving consumer goods (FMCG) sector. The new facility from RSA Cold Chain will house 21,000 pallets, with phase one offering an initial capacity of 10,800 pallets, coupled with end-to-end 3PL services for packaged food, fresh fruit and vegetables, dairy products, and frozen food. The warehouse comprises eight independent chambers, with an ammonia-based chilling system, allowing each chamber to accommodate temperatures as low as -25˚. HE Khalifa Al Zaffin, executive chairman of Dubai Aviation City Corporation and Dubai South, officially opened the new facilities, and said: “We are excited to welcome RSA Logistics’ latest venture, RSA Cold Chain, as part of our Dubai South community. RSA Logistics and Dubai South have shared a warm association since the inception of the free zone. We have enjoyed watching the company break frontiers with its expansion projects and look forward to seeing it grow more alongside the development of this dynamic zone. RSA Cold Chain represents a best-in-class example of an efficient and effective distribution solution to propel growth for food and beverage industry customers. At Dubai South, we are ideally placed to support companies in meeting their logistical challenges. We do so by offering purpose built, fully customisable solutions, giving them the freedom to operate and grow their businesses in the best way possible.” The site for the new facility is strategically located just outside the bonded zone in Dubai South, maximising ease of access and minimising delays in the movement of food products. RSA Cold Chain will also provide temperature-controlled transportation, providing an end-to-end solution designed to meet the most stringent requirements for food storage and transportation. Speaking at the event, Abhishek Ajay Shah, co-founder and managing director of RSA Logistics, said: “We are immensely proud of our latest project, RSA Cold Chain, which fills an important gap in our customer service offerings. The cold chain sector is still in its infancy in the Middle East and we believe we are in the right place at the right time. We will now be able to offer a scalable and fast growing solution to quality-focused food companies in the region.”
Swisslog launches new pallet shuttle system in the Middle East
Almajdouie Logistics wins MEED’s Supplier of the Year award
Saudi-Arabia based Almajdouie Logistics won the Supplier of the Year award in MEED’s GCC wide category. This award reflects Almajdouie Logistics’ track record in innovation, contribution to exemplary projects, and most importantly nurturing a progressive and rewarding work culture. Baheej Al Biqawi, CEO of Almajdouie Logistics, expressed his gratitude to the company employees for their continuous contribution to its growth. He said: “This is truly a recognition of our innovative approach to the market and customers’ needs and the stand-out performance by everyone of us at Almajdouie.” Almajdouie Logistics has a strong presence in the GCC region, providing integrated logistics solutions to the major industries, including oil and gas; petrochemical; FMCG; and manufacturing. The 52-year old business focuses on exceeding clients’ expectations with its services such as 3PL, transportation, distribution, freight forwarding, project logistics, terminals handling, warehousing, and in-house customs clearance.
SOGEFI renews its contract with CEVA for three years Swisslog, headquartered in Buchs, Switzerland, introduced its PowerStore in the Middle East market. The intralogistics provider’s technology centre in Sweden has adapted the PowerStore automated pallet shuttle system to the region’s standards and Swisslog’s Middle East product portfolio. Daniel Hauser, managing director for Central Europe and Middle East of Swisslog’s Warehouse and Distribution Solutions (WDS) division, said: “A global business model demanded by international companies requires technologies that can be used anywhere – especially in logistics. The company expects rapid acceptance of PowerStore in the Middle East market because the shuttle system offers an excellent cost-benefit ratio with maximum resource savings. It follows Swisslog’s Fresh concept, which promises outstanding flexibility, reliability, efficiency, sustainability and a holistic approach.” PowerStore from Swisslog is an automated compact storage system for pallets. Previously, it was compatible only with block and stringer pallets based on the North American UL standard; now it can accept Euro 1, Euro 2, GKN, and CHEP Blue pallets. The compact system supports storage depth up to 20 times and beyond per channel within a rack design. This rack design can have ten or more levels and adapts to virtually any building topography, accommodating existing support walls as well as sloped, multi-level and barrel roofs. “PowerStore utilises virtually every square meter,” confirms Hauser.
Supply chain provider, CEVA Logistics, has renewed a specialist automotive supplies contract with SOGEFI Filtration Spain for an additional three years. SOGEFI Group, the Italian Company which designs and manufactures filtration, air intakes, cooling systems, and flexible suspension components, and CEVA first began their working relationship in 2009 and the new contract is a further extension of their existing partnership. Under the new deal, CEVA will continue managing receipt, storage, order picking activities, and shipment preparation, as well as SOGEFI’s spare parts delivery to customers. All these activities were previously carried out at the CEVA Logistics Center in Subirats, Barcelona, but earlier this year they were moved to CEVA’s multi-user hub at Ontígola, near Madrid. Marco Galbusera, managing director of CEVA in Iberia, said: “The renewal of this contract highlights the excellent service CEVA has been offering to SOGEFI over the past seven years. SOGEFI’s trust in CEVA has been growing every year and the decision to move the operations to our multi-user hub in the centre of Spain, will allow SOGEFI’s goods to be closer to their main customers in this region.” SOGEFI’s general manager in Spain, Matilde Raso, added: “SOGEFI pursues continuous improvement to optimise service and evolve towards integrated logistics with major partners. For this reason, we continue the partnership with CEVA, that we experienced to be committed towards excellence and towards solutions. It allows us to ensure zero-defect processes that rely both on best practices and accurate planning.”
Logistics News ME | June 2017 | 53
Save t he dat e
The Month Ahead
The key exhibitions, conferences, and seminars coming up this month AIR CARGO 2017
4-6 June June
One of the leading events every year that offers a relaxing start to three intense days of education and networking, this year at the beautiful Hawk’s Landing Golf Club at the Orlando World Center Marriott, the world’s largest Marriott. Exhibitors will have the opportunity to speak and network with senior managers and decision makers across companies who are involved in air cargo. Whether it is a surety, technology company, asset offering 3PL, airline or other company, the event will present a chance to expose the brand to thought leaders, managers and operations people in air cargo. LOGISTICS AND SUPPLY CHAIN FORUM 4-6 June Miami, USA A two-day invitation-only event designed by senior level executives for senior executives. Weeks before the event, the attendees will be able to choose educational sessions, personal development activities, meetings with services provider, and even golf and wine tastings etc. Conference sessions will be led by peers or industry experts, who have a clear understanding of the business obstacles inherent in controlling large logistics and supply chain departments, and how they can be managed and resolved. The conference program is based on research and feedback from the senior logistics and supply chain professionals who are dealing with critical issues on a daily basis.
54 | Logistics News ME | June 2017
3PL AND SUPPLY CHAIN SUMMIT 14-16 June Chicago, USA The summit brings together the industry’s brightest minds to decide the future of supply chain and the driving force behind the transformation. With more than 700 supply chain executives in attendance, the attendees will gain actionable insight and best practices from a well-researched agenda for the business to succeed. It will also bring together the leading thinkers and practitioners in logistics and supply chain to network, learn, debate challenges, discuss trends, and share ideas. The summit will feature three exclusive workshops to drill down on the supply chain challenges and opportunities that matters to the industry. EMEA SUPPLY CHAIN AND LOGISTICS SUMMIT 19-21 June Barcelona, Spain The last few years have seen supply chains face untold pressures from consumer demands, volatile markets, and political uncertainty. With high internal expectations, it is vital to remain aware of the latest trends, tools, and opportunities to utilise the competitive edge. Bringing together over 600 industry leaders from supply chain for three days of inspiring, relevant, and challenging content, the summit will give its attendees a chance to take stock and plan their next step. With interactive sessions and multiple opportunities to speak directly with the peers, the summit is a unique situation that focuses on the impact one can make today.
The June issue of Logistics News ME features the CEO Roundtable as the cover story along with our visit to UPS' healthcare and cargo facilit...
Published on Jun 1, 2017
The June issue of Logistics News ME features the CEO Roundtable as the cover story along with our visit to UPS' healthcare and cargo facilit...