Store it all
Rising demand for storage spaces
SOHAR Port is quenching Omanâ€™s thirst
Trucks mean business
Connecting trade professionals with industry intelligence
Nabil Sultan explains how Emirates SkyCargo has revolutionised the freight cargo scene in the region
Start 8 | News 18 | Op-ed A focus on why companies should adopt new technology to impress the modern consumer
Features 22 | Cover Story Nabil Sultan talks about Emirates SkyCargo’s success story 26 | Country focus
Oman’s SOHAR port serves as an essential economic source for the nation
30 | Interview
ATS Shipping provides insight into the challenges being faced by the sea freight industry
32 | Storage Solutions Growing need for more space to store excess belongings 36 | Road Transport
Trucking continues to enjoy a favourable position in the world of road freight
48 | Viewpoint Emerging brands like OPPO and Vivo are challenging the goliaths of China’s smartphone industry 50 | Report
Swisslog explains how virtualisation is transforming warehouse operations
52 | Supplier News 54 | Diary
52 Logistics News ME | September 2017 | 3
CEO Wissam Younane email@example.com
here is a saying that time just flies, and time and again, it has always proved to be true. We stepped into 2017 and already eight months of the year have gone by. Globally the logistics industry has seen its own share of ups and downs, with the bankruptcy of the South Korean Hanjin Shipping Co Ltd in February and AP Moller-Maersk selling its oil unit to France’s Total for $7.5bn. In the Middle East, the picture of the industry has been stable. According to a recent analysis by the Dubai Chamber of Commerce and Industry, expansion projects and new investments are expected to fuel growth within the UAE’s logistics sector over the next five years. The positive outlook is supported by expectations of strong growth in the country’s air and sea freight markets. The analysis forecasts that the UAE’s air freight market to expand by a compound annual growth rate (CAGR) of 4.8% over the 2017-2021 period. It also showed demand within the country’s air freight market increasing at a CAGR of 8.6% between 2012 and 2016. Global trade enabler, DP World, announced strong financial results for the first six months of 2017. In a report, the company declared that revenue grew 9.6% and adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 4.2%. The company was recently ugraded by Fitch
ratings to BBB+ from BBB, with stable outlook for the rest of the year. DHL Supply Chain also increased its Middle East revenues by 18% year to date, attributing the growth to current market demands for large scale first time outsourcing of supply chains and the related operational efficiencies, the company said in a statement. Going forward, the recent financial performances of the companies and the expansion of the ports will strengthen the sector and provide fodder for growth for the rest of the year. Time will tell!
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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
Abu Dhabi Ports unveils AED170mn Delma Port
bu Dhabi Ports officially inaugurated the new AED170mn Delma Port, strategically located on the Eastern side of Delma Island, to better serve the community as an upgraded multipurpose port capable of handling cargo, passenger ferries, and ﬁshing vessels. The inauguration took place in the presence of HE Dr Thani Ahmed Al Zeyoudi, Minister of Climate Change and Environment; Captain Mohamed Juma Al Shamisi, CEO of Abu Dhabi Ports; the Diwan of the Ruler; and representatives from Al Dhafra region, in addition to other senior government and media representatives. Commenting on the occasion, HE Staff Major General Pilot Faris Khalaf Khalfan Al Mazrouei, said: “The development of Delma Port comes in line with the Abu Dhabi Plan, which calls for an effective transportation system to serve the community and economy, with an emphasis on the development of sustainable sea transport as per the directives of HH Sheikh Khalifa bin Zayed Al Nahyan, President of the UAE, and HH Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces.” He added: “The Delma Port project is one that promises to be a foundation stone in the development of the Al Dhafra region through its focus on
meeting the highest quality standards. In addition, the deep foresight and strategic thinking that has gone into the planning of this project is evidence of Abu Dhabi Ports’ commitment to the success of Delma Port in accordance with the objectives of our government.” HE Dr Sultan Ahmed Al Jaber, Minister of State and chairman of Abu Dhabi Ports, said: “Delma Port will play an active role in promoting economic and social growth in the Al Dhafra region, through its use as a multi-purpose port for cargo vessels, ferries, and fishing boats. In addition, this port will help support the growth of the tourism sector in Delma, the islands, and the surrounding areas.” The new Delma Port covers a total area of 280,725 sqm, with 58,500 sqm of pavement for easy transport. It features an accessible breakwater with platform to integrate the operation of ferry terminal and CICPA facilities. The ferry terminal has 103m long quay wall with three fixed ramps that serve as berthing
8 | Logistics News ME | September 2017
areas for ferry vessels. A marina with 160 wet berths and 104 dry berths for fishing and recreational craft was provided to support the local boat population. Buildings and facilities such as an administration building, fish market, restaurant, public building, sheltered storage area for fishing equipment, ADNOC Marine fuelling facility, ferry terminal building, and CICPA inspection facility accentuate services for the New Delma Port. A repair yard, CICPA inspection facility, ADNOC Marine Fuelling Facility, fishermen’s building, marina workshop, a multipurpose operations building, and a restaurant complete the port’s revamped ecosystem. Abu Dhabi Ports worked closely with its strategic partners, Abu Dhabi Urban Planning Council, Department of Municipal Affairs and Transport, Critical Infrastructure and Coastal Protection Authority (CICPA), Abu Dhabi National Oil Company (ADNOC) and several other government entities, to execute its master plan.
Dubai launches food park Dubai’s status as the region’s hub for food trade has been reaffirmed as prominent government officials such as Abdulla Al Habbai, the chairman of Dubai Holding as well as HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE, and Ruler of Dubai, endorsed the development of a gigantic food park in close proximity to the Expo 2020 site at a projected cost of AED5.5bn. Food trade has always been a significant factor in the UAE’s economy, constituting 11% of the country’s gross domestic product (GDP). Recent projections reveal that the industry is expected to develop astronomically in the near future, growing by 70% by 2030. A futuristic facility of this magnitude and scale that aims to assimilate innumerable varieties of food-related services under one roof would help boost the food industry enormously. The planned area of construction is situated within a hair’s breadth of the Expo 2020 site, merely 10 minutes away. This is clearly a strategic manoeuver, designed to attract and encourage investments. While the expense of developing such a bold idea into reality may be steep, officials believe it is an intelligent, calculated operation that will reap benefits for the nation. At its briefing, Al Habbai said: “The park will benefit from Dubai’s worldclass infrastructure in land, marine, and air transport; and is set to play a vital role in supporting food security in the country. The development projects by Dubai Holding strongly support the emirate’s economic diversification and are strategically designed to help ensure Dubai is well equipped for the future.” www.cbnme.com
SOHAR Port and Freezone breaks container throughput record SOHAR Port and Freezone has released new figures showing a solid first-half of 2017, as it continues to play a crucial role in the diversification and globalisation of Oman’s economy. Despite ongoing issues in the maritime industry and the continued lull in global oil prices, container volumes in Q2 2017 grew by 11% from the same quarter last year, as the company emerges as one of the region’s prime logistical hubs. Container throughput at the Hutchison-managed terminal has grown threefold over the past five years, in line with significant investments to increase efficiency to the highest international standards. The new Terminal C features remote-controlled quayside cranes, ready for next generation 20,000 twentyfoot equivalent units (TEU) vessels; an automated appointment system to reduce truck waiting times and increase turnaround speed; and new auto-gates that cut paperwork and delays for drivers entering and leaving the new terminal facilities in SOHAR. Significant government investment in new and uncongested highways, connecting SOHAR to the UAE, Saudi Arabia and beyond is also adding to the attraction of the new hub for the region’s third party logistics (3PL) operators. Dry bulk cargo also grew significantly at SOHAR Port in the first half of 2017, up by 24% in comparison to the first six months
of last year. Liquid bulk, general, and project cargo figures were down slightly compared to 2016, however, SOHAR has exceeded one million tonnes of sea cargo each week, a significant threshold that the Omani logistical hub crossed at the end of 2016 for the first time. Oman’s logistics strategy 2040 is now in full swing, as the Sultanate continues to invest across the board in measures to position Oman as a formidable hub for regional trade and an ideal place to invest and do business. Thanks to the prime location at the crossroads of East and West, the Sultanate is moving forward fast with plans to transform itself into a major industrial and logistics centre for tomorrow’s global economy. Mark Geilenkirchen, CEO of SOHAR Port, said: “SOHAR is playing an
important role in the diversification of Oman’s economy as we start to take full advantage of our prime strategic location in the region, outside the Strait of Hormuz but close to the main consumer markets of Iran and the Gulf States. We remain fully committed to building a modern and sustainable logistics infrastructure that will support Oman in achieving all our Vision 2020 objectives.” Jamal Aziz, CEO of SOHAR Freezone, added: “As the port continues to grow in size and regional significance, so does our freezone. Our efforts here focus on valueadded downstream manufacturing industries that can leverage the availability of feedstock from the port and benefit significantly from the firstclass logistics on offer in SOHAR, by sea, land or air.”
Adil Toubia was appointed as the new CEO and vice chairman of Ecolog, a Dubaibased provider of construction, technology, supply chain, facility management and environmental services.
Armani Hotel Dubai received the prestigious Green Globe certification for their efforts to promote a sustainable environment and community, as part of its focus on enhancing energy and water efficiency.
Sharjah International Airport (SIA) witnessed a 2.9% increase in passenger count for the first six months of 2017, going from 5.3mn to 5.5mn as compared to the same time period in 2016.
UAE-based travel website, Musafir.com, has signed a new regional GCC agreement with Amadeus, a technology partner in the global travel industry, to further enhance its e-commerce offering. Logistics News ME | September 2017 | 9
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DP World reports volume growth in Q2 2017
Global trade enabler, DP World, handled 34 million TEU across its global portfolio of container terminals in the first half of 2017, with gross container volumes growing by 8.2% year-on-year on a reported basis and 7.7% on a like-forlike 11 basis. Second quarter growth rates accelerated to 10.7% year-on-year on a reported basis and 10.4% on a likefor-like 22 basis, ahead of Drewry Maritime’s upgraded industry estimate of 4% throughput growth in 2017. The first half of 2017
witnessed an improvement in global trade and all three DP World regions saw growth rates accelerate in the second quarter of 2017, particularly the terminals in Europe and the Americas. The UAE handled 7.7 million TEU in H1 2017, growing 4.3% year-on-year, implying a Q2 2017 growth of 6.6%. At a consolidated 44 level, the terminals handled 17.9 million TEU during the first half of 2017, a 22.4% improvement in performance on a reported basis and up 4.7% year-onyear on a like-for-like 55
10 | Logistics News ME | September 2017
basis. Reported consolidated volume in the Asia Pacific and Indian subcontinent region was boosted by the consolidation of Pusan (South Korea) at the end of 2016. Group chairman and CEO, Sultan Ahmed Bin Sulayem, commented: “Our portfolio has delivered ahead of market growth benefiting from the improved trading environment in 2017 and market share gains from the new shipping alliances, driving volumes in the second quarter. The robust performance was
delivered across all three regions, which once again demonstrates that we have the right strategy and the relevant capacity in the key markets. “We are pleased to see our terminals in the Americas and Europe continue to deliver growth. Encouragingly, the UAE volumes have improved and we continue to expect our portfolio’s volume growth to outperform the market. Given the encouraging first half performance, we remain well placed to meet 2017 market expectations.” www.cbnme.com
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Gulftainer handles largest vessel at Iraq port
YM Wealth, deployed by Taiwan-based shipping company, Yang Ming Marine Corporation (Yang Ming), was the largest vessel to be received at Iraqi ports to date, and was handled by Gulftainer, the largest privately owned independent port operator. The event was commemorated by the presence of Omran Radhi Thani, director general of the National Ports Authority of Iraq, Osama Ali al-Maliki, director of the Umm Qasr Customs Authority, and Rafi’e Yosif Abbas, director general of the Iraqi State Company for Maritime Transport. Representatives of the Basra Governorate, shipping agencies in Iraq, and other senior officials were also in attendance as the welcoming party received the vessel. Yang Ming’s fleet consists of 98 vessels, with a combined capacity of 590,000 TEU. Iraq’s Umm Qasr port was a call on the YM Wealth’s revised route for the China Gulf Express (CGX) service. This shows a direct link between the Far East and Iraq, one that the nation could use to its advantage. On her maiden call to Iran Container Terminal (ICT), the 5,551 TEU vessel discharged and loaded over 2,500 containers. Speaking on the occasion, Flemming Dalgaard, Gulftainer’s CEO, said: “The arrival of the YM Wealth marked a major milestone for Gulftainer as well as the Umm Qasr Port. This achievement reinforces Gulftainer’s commitment to providing Iraq with bestin-class container-handling facilities. Having witnessed the tremendous potential this market offers, we remain dedicated to enhancing our capabilities in Iraq to attract the world’s leading operators and take on largercapacity vessels.”
12 | Logistics News ME | September 2017
Emirates SkyCargo transports first car designed and built in the UAE
Emirates SkyCargo, the freight division of Emirates, transported the first car designed and built entirely in the UAE to France, where it will be exhibited during the 24 hours of Le Mans endurance race. Design-1 is a sports car designed and built entirely in the UAE by Jannarelly Automotive with Equation Composites, the first company to have acquired a car manufacturing license in the country. Inspired by the classic sports cars of the 1960s, the Jannarelly Design-1 is a lightweight, retro-futuristic car built using hi-tech composite materials. Equation Composites uses a small team of specialists to build each car, valued anywhere between $70,000 and $90,000, allowing for a high degree of
customisation according to the specific requirements of customers. Emirates SkyCargo worked with Prodex Worldwide, a specialist freight forwarding company providing specialist transport, logistics, and warehousing services across a number of domains including the aerospace and automotive industry, to transport the Jannarelly Design-1 from Dubai to Lyon. The company regularly transports highvalue premium and luxury automobiles on both its passenger aircraft and freighters across its global network of over 155 destinations. The transportation of these vehicles is managed by experienced staff who are specifically trained on loading and unloading vehicles from aircraft with utmost attention to care and safety. www.cbnme.com
The big Picture
DP World has secured an agreement with the Indonesian government to aid in the development of Kuala Tanjung greenfield port and logistics zone and Belawan port in North Sumatra. Growth
Agility sees 12% rise in Q2 2017; infrastructure group boosts profit Kuwait’s Agility, a global logistics provider, reported a 12% rise in second-quarter net profit, driven by its infrastructure division. Net profit in the three months to June-end was KWD16.8mn, compared with KWD15mn a year earlier. Agility’s earnings before interest, taxes, depreciation, and amortisation (EBITDA) grew 14% to KWD32.6mn, while revenue increased 10.9% to KWD342.1mn. The infrastructure group, which was the primary contributor to the surge in revenue, saw its EBITDA rise 7.4%, to KWD27.5mn in Q2. Group revenue grew 12.1% to KWD89.1mn. Agility Real Estate, National Aviation Services (NAS), and Tristar were the main factors in the group’s growth. Real estate business saw increased revenue of 11.6% in Q2, while air and ocean revenue was driven by volume growth of 14.7% and 12.9% in air tonnage and ocean TEUs respectively. Tarek Sultan, vice chairman and CEO, Agility, said: “Agility’s infrastructure group was the primary driver of
performance in Q2. Our industrial real estate business and aviation services company delivered particularly strong results. Revenue in our logistics business is growing because air and ocean volumes are increasing and contract logistics revenue is expanding, but rate pressure continues to affect profitability.” To achieve its 2020 EBITDA target of $800mn, Agility has two areas of focus. First, it is investing in its infrastructure businesses in emerging markets.
Second, it is pushing to improve the technology-driven transformation of its business and development of online solutions for customers, according to a statement on Dubai Financial Market (DFM). According to the report by Reuters, Agility said it expected lower legal fees following the settlement of a US court case and that this would be partially reflected in its third-quarter results, with the full impact of the reduction starting in the fourth quarter. Logistics News ME | September 2017 | 13
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Abraaj acquires significant minority stake in Turkish Netlog
One of the world’s foremost investors in growth markets, the Abraaj Group, has announced their acquisition of a significant minority stake in Turkish company, Netlog Lojistik Hizmetleri AS, an integrated logistics firm with a presence in Europe and Asia. The logistics sector will continue to play a vital role in the long-term strategic development of Turkey, reinforced by the government’s plans to further upgrade its logistics infrastructure by 2023, with a focus on high-speed rail, motorways, and container port facilities. As the most diversified logistics company in Turkey, Netlog is competitively placed to benefit from these growth drivers. Utilising Abraaj’s experience in the sector, Netlog will accelerate its growth by investing in infrastructure and extending its footprint across MENA and Europe through organic and inorganic opportunities. The group will continue to institutionalise the business through implementation of best in class corporate governance, environmental, and social standards. Commenting on the transaction, Ahap Çak, chairman, Netlog, said: “Having grown Netlog to become one of Turkey’s top 100 companies, we are excited to embark on this new journey with Abraaj. They recognise the value the Netlog leadership and senior management team have brought to the business and are fully aligned with our growth plans. We look forward to utilising Abraaj’s expertise as we seek to achieve our vision of becoming the pre-eminent logistics player in our target markets.” Gökalp Çak, vice chairman, Netlog, added: “Since 2003, Netlog has not only grown to become Turkey’s leading logistics company but also the most diversified through our niche offerings. With Abraaj, we have found a partner that shares our commitment to accelerate Netlog’s growth and widen our value-added services, such as temperature-controlled logistics and e-commerce logistics, across Europe and the Asia region. Our partnership with Abraaj will also enable us to transition from a familybusiness to an institutionalised corporate with a sustainable and long-term future.”
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Aramex declares 4% revenue growth in Q2 2017
Logistics and transportation global giant, Aramex, has announced its financial results for the second quarter and first half of 2017. Aramex has seen a 4% growth in revenue to AED1.1bn for its second quarter compared to AED1.1bn in Q2 2016. Net profits for Q2 2017 decreased by 23% to AED97mn compared to AED125.7mn in the corresponding period of the previous year. The Q2 2017 results were negatively impacted by the one-time fair value adjustment related to Aramex’s investment in AMC Logistics joint venture in Egypt in Q2 2016. Excluding this adjustment, Q2 2017 net profits would have grown by 15%. The 2017 half year revenues increased to AED2.2bn, up by 6%, compared to AED2.1bn in the first half of 2016. Net profits in the same
period of 2017 decreased to AED188.7mn, down from AED222.5mn in the first half of 2016, a year-on-year decrease of 15%. Slow performance in the GCC for Q2 2017 was attributed to the holiday season and reduced number of working days, as well as the ongoing economic uncertainty. However, Aramex revenues grew at a healthy rate across Asia and the AsiaPacific, the US, and Africa. Hussein Hachem, CEO, Aramex, said: “Despite the ongoing global and regional economic uncertainty, we delivered strong results in Q2 2017. Our asset-light business model and use of innovative technologies to upgrade our operations enable us to successfully manage capacity through a variable cost model, both regionally and globally and maintain our position as the disruptive logistics player.” www.cbnme.com
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France’s Total buys Maersk Oil for $7.45bn Total has announced that it will be buying Maersk Oil, the oil and gas company owned by the AP Moller – Maersk Group, in a $7.45bn deal. According to Total, this will strengthen its operations in the North Sea, and raise its output to three million barrels per day by 2019. Under the agreed terms, AP Moller – Maersk will receive a consideration of $4.95bn in Total shares, and Total will assume $2.5bn of Maersk Oil debt. Total will issue to AP Moller – Maersk 97.5 million of shares, based on the average Total share price on the 20 business days prior to August 21 (signing date), which will represent 3.75% of the enlarged share capital of Total. Underpinning this share-based partnership, subject to Total shareholders’ approval, Total has also offered the possibility of a seat on its board of directors to AP Moller Holding, the main shareholder of AP Moller – Maersk. The transaction is expected to be complete in the first quarter of 2018. It is subject to regulatory approval from relevant authorities, including the Danish minister of energy, utilities, and climate, and competition authorities, plus the required consultation and notification processes with Total’s employee representatives, Maersk said in a statement. This will give Total another foot into the North Sea, using Denmark as a regional hub for its operations in the region. It also gives Total the ability to ramp-up production should oil prices rebound. Patrick Pouyanné, chairman and chief executive of Total, said: “We have an exceptional opportunity to boost the combined competitive position in several core upstream regions and deliver growth, value creation, and career opportunities.” Total said it expected to generate operational, commercial, and financial synergies of more than $400mn annually by combining the assets of the two firms. Pouyanné said that the additional value to the company’s portfolio would help it reach a lower breakeven oil price. The deal could see some job cuts particularly in Britain where there are overlaps, Total said, adding that it could make additional cost savings of about $200mn per year. The deal ranks among the largest that a super-major has done since oil prices crashed in 2014. Energy deals have picked up pace more broadly in recent months as the industry puts the worst of the slump behind it, although major oil companies have tended to be sellers.
16 | Logistics News ME | September 2017
Hyundai gives peek of nextgen fuel cell vehicle
Automobile manufacturer, Hyundai, has offered an early glimpse of its nextgeneration fuel cell vehicle, ahead of the hydrogen-powered SUV’s official launch early next year. The near-production-ready prototype embodies Hyundai’s commitment to a new era for advanced eco-friendly vehicle development, offering impressive capabilities and futuristic design. Hyundai announced that the yetto-be-named model will be Hyundai’s second commercially produced hydrogen model, and uses the company’s fourth generation of hydrogen fuel cell technology. The vehicle, its capabilities, and fuel cell technologies are an evolution of Hyundai’s global research, development, and real-world evaluation programs, engineered with expertise honed through the world’s first commercial production of a fuel cell vehicle in 2013. The new fuel cell model was developed on four key pillars that focus on fuel cell system efficiency, performance (maximum output), durability, and tank storage density. By enhancing fuel cell performance, reducing hydrogen consumption, and optimising key components, the vehicle’s efficiency is greatly improved compared with its predecessor, the Tucson Fuel Cell. It boasts an efficiency level of 60%, or a 9% increase from the Tucson’s 55.3%, and targets a driving range of more than 580 km on a single charge based on Korean testing standards.
The new model’s maximum output is enhanced by 20%, boasting an impressive 163PS of power. Enhanced components – such as MEA (membrane electrode assembly) and bipolar plates – have helped to reduce production costs. Lee Ki-Sang, senior vice president of Hyundai Group’s Eco Technology Centre, said: “With exceptional efficiency, serene styling, and uncompromised performance, our next-generation fuel cell SUV is the true epitome of an ecofriendly vehicle of the future.” He added: “Hyundai Motor will take the lead in developing and producing green energy vehicles that would ultimately complement a near-zero emission society.” The new model, introduced at the 2017 Geneva Auto Show, builds on the earlier concept’s design, taking an organic and flowing form, inspired by nature – namely water, the car’s only emission – with the clean design emphasising its non-polluting nature. The new model will spearhead Hyundai’s plans to accelerate development of low emission vehicles, in line with Hyundai Motor Group’s renewed goal of introducing 31 ecofriendly models across both the Hyundai and Kia brands to global markets by 2020. Hyundai will reveal the new hydrogen SUV early next year in Korea, while the official name will be announced in January at the 2018 CES. www.cbnme.com
Julphar announces revenue of AED639mn for H1 2017 Ras Al Khaimah-based Julphar Gulf Pharmaceutical Industries (Julphar), the largest generic pharmaceutical manufacturer in Middle East and North Africa (MENA), announced sales revenue of AED639mn ($173.97mn) in the first semester of this year. The company also revealed a net profit of AED64mn
($17.42mn) for the same period. Sheikh Faisal Bin Saqr Al Qasimi, chairman at Julphar, said: “We are very proud of the success we have achieved since the beginning of the year. Dandasha has been launched during Q1 in the UAE to treat erectile dysfunction in adult men, and by Q2, it
has become a leader in its segment.” He further added: “And our flagship product, Mebo, is still leading the Saudi market. Furthermore – the company has kept its leading position in the UAE by achieving a robust double digit growth in Q2.” Al Qasimi also mentioned that despite
the tough conditions impacting the pharmaceutical market in Saudi Arabia and currency headwinds in Egypt, good results were actually achieved in the MENA region, where the market has steadily improved during the second quarter. Julphar has registered 34 new products in the first half of this year.
Dubai: dnata advocates recycling; projects AED13mn savings Dnata has reduced waste generated from its ground services equipment (GSE) by 110 tonnes, and the company says it is on track to reach its 250 tonne waste reduction target for the year. The air service provider has ramped up its recycling programme for its fleet of 12,000 units of GSE in both of its Dubai hubs – DXB and DWC. Since the launch of the recycling programme this year, over 80 units of GSE have been renewed at the GSE maintenance base, reducing waste generated. The projection for 2017 is an estimated 140 pieces of GSE being recycled, saving the company approximately over AED13mn ($3.5mn), and reducing waste by 250 tonnes. GSEs are typically replaced as they reach the end of their life cycle. However, dnata has found that most GSE simply require a mechanical overhaul to be put back into service, and doing so can extend the lifespan of equipment by up to 18 years. The dnata GSE maintenance facility, located at DXB airport, spans 36,000 sqm and employs 1,145 dedicated team members who carefully check the GSE for any faults before replacing parts that need renewing. Gary Chapman, president, dnata, commented: “Our reality is that sustainability is a necessity, not a choice, and at dnata, we endeavour to meaningfully fulfil our environmental responsibility wherever we operate. We are extremely motivated by the success of our GSE recycling programme in Dubai. It
provides us with a tangible way to reduce our carbon footprint at the source, rather than carbon offsetting as a way of merely clearing the corporate conscience.” He added: “It has been rewarding to see the impact of this initiative, and it is the start of many initiatives dnata has in the pipeline to bring about a change in the way we use resources, in our effort to promote sustainability. We are getting creative and innovative when collaborating with our equipment suppliers, to seek more environmental efficiencies for our fleet.” Other initiatives for a greener operation also include the conversion of all forklifts in dnata’s cargo operations to electric. Out of a fleet of 102 forklifts in Dubai, 73 are electric, the rest being diesel powered. The plan is to replace all current diesel forklifts by the end
of 2017 with electric alternatives. This will reduce the carbon footprint at dnata’s cargo operations by 80%, generating a fuel savings (consumption) of 200,000 litres per year, and CO2 emissions reduction of 47 tonnes per year. Globally, over 300 pieces of environmentally-friendly electric tow trucks, forklifts, conveyor belts, and push back tractors are in dnata’s operations today, a number on the rise. In May 2017, the full leadership team of dnata in Dubai replaced their fleet of company-provided vehicles with Lexus hybrid cars supplied by Al-Futtaim. Of the senior executives in the leadership team, 21 drive a hybrid car with 50% lower CO2 emissions compared to regular vehicles in the same category, resulting in fuel savings of 1,200 to 1,500 tonnes over five years. Logistics News ME | September 2017 | 17
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Turning to Digital
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18 | Logistics News ME | September 2017
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odayâ€™s customers are digitally connected, engaged, and influenced. The phenomenon of the e-commerce industry has grown beyond comprehension in terms of volume, scale, markets, and countries. With simultaneous online and retail shopping becoming a reality coupled with devices connecting every aspect of consumersâ€™ lives, the shift is making way for the tidal wave of industry transition in the Middle East. This has given a push to the e-commerce markets, with the market size expected to reach $20bn by the year 2020. To embrace the customer and provide a seamless delivery experience on-demand, e-commerce and logistics players are going mobile to ride high on the technology wave. In a quest to provide superior customer experience, the companies are incurring huge operational costs. The cost of last mile constitutes 28%-32% of the total logistics costs and these are usually borne by the customer when he places the order or at the time of delivery. The growing popularity of e-commerce has given rise to accommodate a new business model, known as tech driven logistics. Logistics players today are adopting unconventional solutions, smarter analytics, and advanced processes to serve the digitally-empowered customer. With an eye on the growing base of ever-so demanding customers, enterprises today are resorting to tailor-made solutions to suit their expectations. To reduce the delivery time and in order to enhance the customer experience, enterprises must focus on adopting the right mobility solution that aids in running their field operations seamlessly. For example, last mile deliveries in the region are time-consuming with the delivery cycle easily lasting for six to seven days or more. The longer delivery window poses a challenge for the delivery personnel to carry the details of each and every parcel delivery. With the help of mobility solution, that functions in 2G networks or even offline mode, the delivery personnel can save the information and update his manager real-time. Adopting a flexible and future-oriented solution helps in generating automated reports on cash reconciliation, updating the task lists, and the progress of the jobs allotted after the run-sheet is generated. While aligning with new mobility partners, logistics companies have to keep a
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With an eye on the growing base of ever-so demanding customers, enterprises today are resorting to tailor-made solutions to suit their expectations.â€? Kushal Nahata check if the solution is able to blend the operational and customer requirements in accordance with the region. For instance, customer preferences in the Middle East insist on a mandatory call before the courier guy reaches the customer location and informing the customer regarding the status of shipment in regular intervals. Preferably, to reduce the delivery cycles and to cut down on the operational expenses, companies have to give customers the feasibility to tag themselves. Based on the geo-coordinates, the routing can be done by optimising all the nodal points where the delivery personnel should attend during the day. Integration with multiple payment modules will give the flexibility to the customer to pay and finish the purchase. By using multiple payment options like cash on delivery and card on delivery, companies can reduce the cancellation at the time of delivery. Ac-
cording to a recent report released by PayPal, cash on delivery in the Middle East is around 60%, while card payments and online payments occupy 25% and 15% respectively. These numbers have gone up from 15% and 5% in 2012. Customers expect convenience and speed which entices logistics firms to venture into the possibilities of the virtual world. Innovative last-leg solutions help in improving connectivity to ensure speedy and affordable delivery. In order to ensure customer loyalty, logistics companies must adopt track-andtrace systems, efficient last-mile delivery methods, integrated technology, and smarter delivery management systems. With e-commerce being the driver of future growth, the journey ahead promises to be truly exciting for the logistics industry, as it shifts gears to take on a different mindset of riding high with mobility.
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C ov e r Sto ry
Emirates SkyCargo has successfully emerged as the worldâ€™s largest airline cargo operator. Logistics News ME catches up with Nabil Sultan, divisional senior vice president, cargo, to understand the nitty-gritty of the trade 22 | Logistics News ME | September 2017
mirates is no amateur when it comes to the aviation industry. With more than three decades of stronghold in the region, the airline is now the largest in the Middle East, catering to 154 airports in 82 countries from its hub in Dubai. In the 2016-2017 period alone, Emirates saw 56.1 million passengers and carried 2.6 million tonnes of cargo worldwide - these are no small numbers. Emirates SkyCargo was launched the same year as the commercial airline (1985), and is now the largest international airline cargo operator in the world. It boasts a route network spanning over 150 destinations, including 15 cargo-only destinations – Atlanta, Basel, Ciudad del Este, Columbus, Djibouti, Eldoret, Erbil, Liege, Lilongwe, Mexico City, Ouagadougou, Phnom Penh, Quito, Viracopos, and Zaragoza. SkyCargo operates a young and modern fleet of 255 aircrafts, including 13 Boeing 777Fs. The Boeing 777 freighter aircraft has the capacity to carry over 100 tonnes of cargo at any given point of time. The aircraft is one of the most modern, technologically advanced freighters available, and has the lowest fuel burn of any comparable sized aircraft. Route network With an extensive network reaching out to even remote parts of the world, SkyCargo has seen business pickup in many important markets, despite economic downturns. Nabil Sultan, divisional senior vice-president, cargo, at Emirates SkyCargo, remarks: “We’ve seen demand pick up out of Hong Kong and other parts of China. We had to add additional capacity in Hong Kong, going from 24 to 26 freighters per week, in addition to our 28 passenger flights out of Hong
Our current goal is to understand the industry stress points, finding the answer to: how do we create the right products to ease the challenges that these industries face today?” Nabil Sultan, Emirates SkyCargo Kong. In other parts of China, we’re operating almost 10 freighters per week between Shanghai and Guangzhou. “We’ve also seen some demand emerging from Europe in the last four to six months. We’ve
added some capacity in Amsterdam and Frankfurt, following a surge in demand. In the US, we’ve aligned more capacity in Chicago. We also established a new route in the US late last year in Fort Lauderdale (Florida). This shows that we’ve ramped up our fleet capacity in some of the key production markets to ensure that we’re capable of meeting their demand.” He further continues: “In markets like Africa, where we almost operate as though a national carrier, we have several flights, at high frequencies to key metropolitan and secondary cities. This gives us the capability of moving consistent, regular volume into these markets. With our solid product and reach into key consumer markets like Middle East, Africa, and the Indian subcontinent, it has given us a lot of flexibility. We are able to penetrate these markets, delivering regular, consistent capacity, undistracted. That has given us an edge in terms of securing volumes on a consistent basis. “We’ve also started operations in Vietnam, since we saw a shift in some of the manufacturing of products from China into Vietnam. We’ve seen some increase in demand from places like Bangladesh, where we’re operating additional flights. We’re also studying new markets, for instance in South America, where we’ve been launching flights into Quito, Bogota, and various other destinations. But it is still under study.” In June 2017, Emirates SkyCargo announced the beginning of weekly freighter flights to Luxembourg, as part of an operational partnership with the Luxembourg-based Cargolux Airlines. Both carriers will use each other’s networks, offering customers, of both carriers, an enhanced global reach for transporting cargo from key production markets to consumer markets. Cargolux will have access
Logistics News ME | September 2017 | 23
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to Emirates SkyCargo’s high frequency distribution network through the belly-hold of its passenger flights, whilst Emirates will have access to the main deck 747 capacity on Cargolux’s network. Sultan comments on the partnership: “The cooperation that we have with Cargolux is quite unique in the industry. Probably because this is the first partnership where you have an airline that is a specialised freighter operator, pairing up with a traditional airline that has a daily capacity. In this cooperation, there is a clear objective and benefit for both organisations. As we (Emirates) continue to expand our passenger belly, we will always require additional freighter capacity. And they (Cargolux) are fully fledged in freighter capacity. This is a great match. We’ve embarked on this partnership, whereby they position one aircraft for us at Dubai World Central (DWC), for our utilisation. And we use it according to our schedule into our market, where we bring in cargo and then feed it into our passenger belly. “And we do the same thing for them. We bring in cargo on our passenger belly, and feed it to their freighter. To make sure this cooperation becomes meaningful, we had to start operating into their hub, and they had to start operating into our hub. Which is why the Dubai - Luxembourg route emerged.” Dual hubs Emirates SkyCargo operates state-of-the-art cargo facilities at its dual hub locations in Dubai International Airport (DXB) and DWC. Emirates SkyCentral at DXB sprawls over 43,600 sqm, with an annual capacity of 1.2 million tonnes. It has an extensive handling area, comprising a five-storey automatic storage and retrieval system (ASRS) with more
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than 10,000 loose cargo storage locations, and a sizeable seven-storey pallet container handling system (PCHS) for 2,500 unit load devices (ULDs), 220 of which are dedicated positions for temperature-controlled ULDs. On the other hand, Emirates SkyCentral at DWC, the carrier’s dedicated freighter terminal, began operations in May 2014, and is equipped to handle 700,000 tonnes of cargo per annum. It was developed and built to meet the future growth requirements of Emirates SkyCargo, featuring an extensive cool chain facility. With belly hold cargo being managed at its mega terminal at DXB and freighter cargo at DWC, cargo is moved 24/7 by truck between the two airports via a bonded virtual corridor. SkyCargo has 47 trucks that link the virtual corridor between the two airports, with each truck being equipped with satellite tracking to ensure the safety and security of cargo and staff. The movement of cargo between the two airports is achieved seamlessly, with a transit time of just five hours between the arrival of goods to their departure, from freighter to belly hold and vice versa. Specific Verticals SkyCargo is known for its specialist approach to freight handling. They have utilised their expertise to expand services into various industry verticals, from pharmaceuticals to floriculture, to automobiles, oil and gas industries, and even animals—be it pets or an entire zoo. Sultan states: “For us, it is no longer the case where we simply have to move cargo from point A to B. Now, we must focus on understanding specific industry requirements to be able to move specialised products. For example, oil and gas companies often require oddlysized, enormous equipment, where even a sin-
gle item can easily weigh 15-20 tonnes. You must understand the industry to be able to effectively serve it. “Our current goal is to understand the industry stress points, finding the answer to: how do we create the right products to ease the challenges that these industries face today, to make their whole supply chain logistics seamless, easy, and cost-effective? There is a lot of work that goes into understanding these details. We’ve got specialists for pharma, zookeeping, flora, even though we are a cargo company. For us, it is essential to recruit people who are specialists in these verticals to add value to the service.” In April 2017, Emirates launched a suite of solutions to help maintain the freshness of perishables and fresh consumables during transportation. There are three levels - Emirates Fresh, Emirates Fresh Breathe, and Emirates Fresh Active - offering varied levels of cool chain protection for different kinds of perishables. The basic solution, Emirates Fresh, is geared towards temperature-tolerant fruits and vegetables, and ensures quick ramp transportation and thermal protection through Emirates SkyCargo’s White Cover blanket. Emirates Fresh Breathe provides protection for temperature-sensitive perishables such as fresh cut flowers, ready to sell cut fruits and vegetables, and fresh fish. Unique features include prioritised ground handling as well as the use of the Emirates Fresh Ventilated Cool Dolly. Emirates Fresh Active offers the highest protection for perishables that cannot withstand any temperature deviation, using specialised temperature controlled containers during transportation. Emirates SkyWheels, another division of SkyCargo, was introduced towards the end of 2016. The service offers specialised transport for classic, luxury, and sports cars. In May 2017, Jaguar Land Rover cars were transported from Birmingham to Chicago. SkyCargo has constantly captured headlines for its unique cargo; in March 2017, it transported thoroughbred horses from all parts of the world to Dubai, for the Dubai World Cup, one of the world’s most prestigious horse racing events. In June same year, it transported the first car designed and built entirely in the UAE to France, where it was exhibited during the prestigious 24 hours of Le Mans endurance race. The carrier is also involved in e-commerce deliveries, working with international online shopping giants such as Amazon. Sultan notes: “One of the biggest products that we see emerging today is e-commerce, be it regional companies like Souq.com or inter-
A Rosy Picture
On Valentine’s Day 2017, Emirates SkyCargo unveiled a decal featuring a rose on one of its Boeing 777-F freighter aircraft’s. The decal, installed at the Emirates Aircraft Appearance Centre in Dubai, is the first of its kind for Emirates SkyCargo, and was meant to highlight the strong contribution made by the carrier to the floriculture industry through its transport of fresh flowers across the world. Every day, the cargo operator transports fresh flowers across its global network. This includes flowers transported on board dedicated freighters from major flower exporting countries such as Kenya and Ecuador, directly to Amsterdam, as well as flowers transported in the belly hold of the aircraft from countries as far and diverse as India, New Zealand, Vietnam, Zambia, and Ethiopia. Between January and December 2016, Emirates SkyCargo transported over 70,000 tonnes of fresh flowers around the world.
national giants like Amazon. We work with both, and they both have different requirements, logistics, and supply chain. We need to map all of that and understand what it would take to deliver the goods efficiently. Because, for all of these companies, the biggest USP is: how do I deliver the purchased goods in the fastest way possible?” Pharmaceuticals Emirates SkyCargo has a dedicated facility, launched in 2016, for the handling and transport of pharmaceutical shipments, located at DXB. Emirates SkyPharma includes two temperature controlled zones (2-8oC and 15-25oC), 88 temperature-controlled individual positions in the automated pallet handling system, and five temperature-controlled acceptance and delivery truck docks.
“Three years ago, not a single pharmaceutical would approach us, because we just did not have the capability to handle pharmaceuticals,” says Sultan. “And with the stereotype about the weather conditions in Dubai, it became really difficult for us to get a chance to work with the product. But we’ve tackled that issue. We’ve ensured that all the temperature mapping is in place, created the right infrastructure, maintained at the right temperature, and even enhanced the capability on the ramp in terms of the priority of offloading the pharmaceuticals. “We did a complete product revamp, which has encouraged a lot of pharma companies to come in, conduct an audit, and they are very comfortable with what we offer today. Thanks to this, our pharmaceuticals handling has grown roughly 56% over last year. And, it doesn’t stop there. We’re looking at new
things now to offer a completely different product offering, because for a pharma company, this isn’t just about securing a hub. Their priority is that their products deliver from origin to destination, completely intact, and at the right temperature.” Some of Emirates SkyCargo’s product innovations for temperature control include White Cover Advanced for valuable temperature-sensitive cargo such as vaccines, and White Container for cargo like fruits and vegetables. The Emirates SkyCargo Cool Dolly is a special piece of equipment that transports cargo from the aircraft to cool storage areas, while maintaining temperatures of as a low as -20°C “With Emirates’ network and reach across the globe, our entire airline is being designed to connect passengers in the easiest way, from point A to B,” says Sultan. “Transferring this same thinking to cargo operations and e-commerce, so as to bring the same efficiency in this segment, becomes part of the priority that we need to look at.” He concludes: “There are endless opportunities. It is a huge learning curve as we venture out into these verticals. It is an ongoing challenge and a very exciting time for all of us.”
Logistics News ME | September 2017 | 25
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Continual evolution SOHAR Port and Freezone enjoys an enviable position when it comes to maritime geography, constantly looking to expand Oman’s logistics horizons
ocated in the South-Eastern quarter of the Arabian Peninsula, Oman is the only member of the Gulf Cooperation Council (GCC) situated outside of the Gulf. Its strategic location acts as a pivot, around which infrastructural efforts to transform Oman into a global logistics hub revolve. While less abundant in oilreserves than its GCC neighbours, shipping, tourism, and industrial manufacturing are a driving force behind Oman’s economic growth. Logistics plays an important role in the nation’s economic policies; during the 2nd GCC Supply Chain and Logistics Conference held in Oman in 2015, Warith al Kharusi, chairman of Oman Logistics & Supply Chain Association (OLSCA), said: “Logistics is embedded in the DNA of Omanis.” Be it the Oman National Rail project, or adding logistics hubs in all parts of the country, Oman is constantly pushing for logistic growth. And one such venture is the SOHAR Port and Freezone. ECONOMICS OF FREEZONE The first phase of SOHAR Freezone is already leased out and the second phase is now being planned in detail. It offers an advantageous base for warehousing and logistics operations in industries like steel, food, ceramics, petrochemicals, pharmaceuticals, and FMCG, either for transit through Oman, or for fine maze dis-
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tribution into the region. Established free trade agreements with the United States and Singapore offer more possibilities to lower costs and create efficiencies. The freezone offers incentives to investors that include 100% foreign ownership and free repatriation of capital and profits; corporate tax holidays of up to 25 years; no personal income tax, currency restrictions or duty on imports and exports; no restrictions on sales to the GCC market on payment of 5% local duty; low initial capital requirements; and relaxed Omanisation (process of replacing expatriates with trained Omani personnel) requirements. Besides this, overseas investors can utilise the one-stop-shop team in SOHAR. The one-stopshop is a single window clearing facility through which all licences, permits, and approvals can be obtained. SOHAR Port and Freezone coordinates with the Oman government for all the requirements to set-up and operate a working company, including initiating the pre-contract clearances for environment and utilities; incorporation of a working company; issuing freezone licenses and permits; preparing and submitting the utility applications and providing follow-up until completion; co-ordinating the environmental approval process and advising when it is required; organisation of visas and other immigration related documents; registration and licensing
of service providers; and acting as the freezone authority administration centre. This means that freezone clients require very little interaction with governmental institutions. INNOVATION FEEDS GROWTH “Innovation is in the DNA of SOHAR,” comments Geilenkirchen, “and mega-development has been pushing the boundaries of maritime logistics since it was first established, finding new ways of doing business, making its tenants’ operations more efficient and convenient along the way.” SOHAR has its share of technological developments. The new container Terminal C features remote-controlled quayside cranes, ready for next generation 20,000 twenty-foot equivalent unit (TEU) vessels; an automated appointment system to reduce truck waiting times and increase turnaround speed; and new auto-gates that cut paperwork and delays for drivers entering and leaving the new terminal facilities in SOHAR. SOHAR also reveals plans for an innovation zone; working in close cooperation with PoRint, it will try to find ways to solve tomorrow’s logistical problems. Together with private sector companies, international research institutes and some of the world’s top universities, the zone will explore solutions across a broad range of issues that affect the shipping, logistics and industrial hub at SOHAR - from innovative ways to track containers and their loads moving between the port and freezone through the use of 3D metal printing to create high quality industrial parts on site. The zone will particularly focus on sustainability,
and will operate as the world’s first self-sustaining freezone cluster, sustaining itself on renewable energy sources and recycling all waste. The innovation zone is not a theoretical, futuristic concept. It will use proven and trustworthy techniques to demonstrate the full potential of Oman’s technology sector. Steam will be generated inside glasshouses using thin, concave mirrors and water pipes, a proven technique that is already in use in Oman’s oil industry. This steam will be used to create cold water, which will be used to cool the tanks in a fish farm, further increasing Oman’s food security. When exiting the fish farm, the water will still be cold enough to be used for cooling the freezone office complexes and warehousing. The capacity of an onsite solar park will be higher than needed during daytime operating hours. Excess electricity will be used to pump water 400m up into the mountains behind the freezone to be stored in a large holding pond, from where it will be released at night to drive hydroelectric generators to produce the electricity required in the zone during the hours of darkness. Furthermore, new ways of manufacturing will also be put into practical operation for the first time. 3D computer-aided design (CAD) data is used to build a metal part layer-by-layer. The printing machines distribute layers of metallic powder that are then fused together by a highpowered laser to gradually form the finished part. Urgent spare parts for port and freezone businesses can be produced in this way, saving time
SOHAR had a solid first-half of 2017, despite on-going overcapacity in the maritime sector and the continued lull in global oil prices.” Mark Geilenkirchen, SOHAR
and money. All of this will increase efficiency, making the port smarter through innovation. OMAN AS A FOOD HUB Geilenkirchen says: “The outlook for the GCC food sector is bright. An expanding consumer base and increasing tourism are expected not only to increase food consumption, but will also lead to a change in consumption patterns.” The food retail market in the GCC is estimated to be worth over $100bn annually, with more than 70% of food products imported from overseas. Santanu Datta, director of global sales at ATS Shipping, remarks: “An expanding population base is a key driver of the rise in food consumption. The population of the GCC region is ex-
Logistics News ME | September 2017 | 27
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pected to reach about 57 million in 2020, registering a CAGR of 1.8% over 2014-20. Increasing tourist inflow into the region could also stimulate food consumption, particularly of packaged foods and restaurant meals.” The region is preparing to host mega events such as Dubai Expo 2020 and FIFA World Cup 2022 to boost the tourism sector, which will also have a positive upside on the food sector. International tourist inflows to the GCC are expected to reach 83 million annually by 2026, up from 46 million in 2015. Apart from being one of the key drivers of population growth in the GCC, expatriate residents add a variety to demand in the food segment, the largest consumer expenditure segment in the region. More women entering the GCC workforce coupled with a rapidly increasing urbanisation rate will further accelerate sales of convenience foods. All of these factors, combined, are the driving force for the construction of a $170mn food zone at SOHAR, combining the region’s first dedicated agro-bulk terminal with a flourmill, sugar refinery, silos for grain storage, as well as the infrastructure for downstream food processing, packaging, and specialised food logistics. It will be adjacent to the Hutchison operated container terminal, featuring remote-controlled quay cranes and 450 reefer plugs. The new agro-bulk terminal will be equipped for an initial throughput of 1.6 million tonnes per year. The food zone will offer tailor-made warehousing and cool storage solutions to investors. This combination of food storage facilities; available packaging materials from a $6bn food-grade plastics facility, due to open by 2020, as well as available steel and aluminium feedstock; and world-class logistics, makes SOHAR an attractive option for investors looking for the perfect Middle East food industry hub.
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An expanding population base is a key driver of the rise in food consumption. The population of the GCC region is expected to reach about 57 million in 2020.” Santanu Datta, ATS Shipping
INTERNATIONAL RELATIONS The World Port Network opens up a world of opportunities for businesses by connecting them to strategic markets around the world. PoRint’s
involvement has ensured world-class port facilities, safe, reliable, and efficient operations as well as a transparent business environment. Porto Central is a major greenfield port development, strategically located in proximity to the economic heartland of Brazil, a region that accounts for around 65% of Brazil’s GDP and provides access to more than 100 million people. The World Port Network continues to grow and attract partnerships in Southeast Asia and in the Indian subcontinent. Indonesia’s growing population and prosperity offers many interesting business and investment opportunities. PoRint supports Indonesia’s ambitions to expand and upgrade its port infrastructure through various projects and has recently set up a representative office in Jakarta and signed an agreement for the joint development of Kuala Tanjung port in North Sumatra. Kuala Tanjung is part of a comprehensive regional development strategy encompassing hinterland development as well as the Port of Belawan and the Sei Mangkei Special Economic Zone. A joint venture will develop and manage the port according to the same landlord port management model successfully deployed in SOHAR. PoRint also recently started cooperating with Adani, India’s largest port operator. Both parties are jointly working on the further development of the port and Special Economic Zone of Mundra, located in Gujarat. The expansion of the World Port Network will only boost Oman’s ties with the rest of the world, significantly impacting trade in the surrounding region. “SOHAR had a solid first-half of 2017, despite ongoing overcapacity in the maritime sector and the continued lull in global oil prices,” declares Geilenkirchen. “Container volumes in the second quarter of 2017 grew by 11% from the same quarter last year. Container throughput at the Hutchison-managed terminal has grown threefold over the past five years. Dry bulk cargo also grew significantly at SOHAR Port in the first half of 2017, up by 24% in comparison to the first six months of last year. SOHAR has exceeded an average of one million tonnes of sea cargo a week in 2017, emerging as one of the region’s prime logistical hubs.” Oman’s logistics strategy 2040 is now in full swing as the Sultanate continues to invest across the board in measures to position the nation as a formidable hub for regional trade and an ideal place to invest and do business. Thanks to the country’s prime location at the crossroads of east and west, the Sultanate is moving forward fast with plans to transform itself into a major industrial and logistics centre for tomorrow’s global economy.
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i n t e rv iew
Highs and Lows Natasha Dmello, general manager - strategy and projects, ATS Shipping talks about the challenges faced by the sea freight industry in 2016
riers, including Maersk, Overseas Ocean Container Line (OOCL), and the three Japanese carriers, all reported strengthening demand. Maersk said demand growth was low in the first three months of 2016, but saw improvement in the second half, especially in the last three months.
How has the performance been for ATS Shipping in in the region? Has it been affected by the regional economic instability? ATS has seen a steady growth over the last couple of years and 2016 has had its ups and downs due to the economic instability. But we have been fortunate to garner plenty of support from our customers and service providers. In 2016, we participated at the Maritime India Summit, a maiden flagship initiative by the Ministry of Shipping.
What kind of growth have you observed in sea freight in the region in ? Global container shipping lines collectively lost an estimated $13bn in 2016 because of a rate war in the first half of the year, which drove freight rates on all the major trade lanes to record lows. Rates began to rise up towards the end of the year following Hanjinâ€™s August bankruptcy, which tightened capacity as Hanjin ships were removed from the market.
What are the trends that you have observed in the sea freight sector in the region? Although shippers expect rates to stay about the same as last year on most trade lanes except the Trans-Pacific, container lines are growing increasingly optimistic about boosting rates. These carriersâ€™ bullish expectations come after a fourth quarter when several car-
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We have used our strength in building strategic partnerships, asset design, and management to deliver to our customers.â€?
Describe your operations in the region. Also, can you give us an idea about your market presence? We have been identifying gaps in the market, and providing niche services that bridge these gaps to cater to the pressing needs of customers. We have used our strength in building strategic partnerships, asset design, and management to deliver to our customers. For example, our partnership with Raftaar Terminal in India is a new tank storage facility based in Mangalore, India; it is the first tank terminal to be constructed in stainless steel, consisting of a storage tank with a capacity of 316l and a jetty pipeline suitable for all acids. We also offer packing, labelling, and assembly services, catering to global shipping, logistics, and marine industries. Our new warehouse based in Jebel Ali South Zone can accommodate 10,000 pallet positions for general and temperature controlled cargo. We take pride in owning our own dedicated fleets and have an international network of services across the globe. We ensure and maintain enviable service standards across all the verticals.
How do you place the Middle Eastern operations in comparison to your presence in the other regions? The Middle East is where our base is and we will continue to expand in the region with a new office planned in Saudi Arabia by the end of 2018. However, whilst we
continue our focus in the Middle East, we also plan to expand in the US, Europe, and the Far East. What are your plans for the remainder of with respect to the region? 2017 has, no doubt, thrown challenges at us
and our industry; however, we believe in the wider macro-economic outlook approach. Thus, we shall continue to deploy our strategy and build the right technology to support and propel our growth in the coming months. Further, development of a highly enriched and empowered team will forever continue to be a focus area.
Logistics News ME | September 2017 | 31
Store the extr 32 | Logistics News ME | September 2017
The facilities are temperature controlled, so whether you’re storing products for your business or your personal record collection, your goods will be kept in a good condition.”
With an emerging culture of buying more than you need, storage warehouses have become a norm amongst all communities in the UAE.
Wadih Haddad, The Box
odern homes are shrinking at a rapid rate and purchasing power is doubling by the minute. It only seems all too familiar when the average UAE resident is faced with the dreaded question— where do I store all my stuff ? What started as a Western concept has now descended onto our Arabian shores. A 1999 New York Times article advertised the concept of ‘self-storage’, where people could make space in their downscaled New York homes by renting space to store extra furniture, clothes, antiques, and all possessions. And while such a concept felt laughable at that point, it has become a necessity today. According to a recent Khaleej Times report, scores of self-storage warehouses exist in Al Quoz, with plenty of expatriates willing to pay monthly rents to temporarily stow away their possessions and with it, their troubles. Wadih Haddad, CEO of The Box, says: “The public are becoming more aware of this service, which is still fairly new in the region. The more
they are educated about the services offered, the more they realise that they need storage services, especially as Dubai is such a transient city, with expats coming and going all the time.” The Box is one-among-many self-storage service that offers private, lockable storage units in various locations, allowing customers easy access to their goods 24/7. Haddad adds: “The facilities are temperature controlled, so whether you’re storing products for your business or your personal record collection, your goods will be kept in a good condition. With the harsh climate of the desert, it is important that the storage facility can offer these state-of-the-art facilities in order to preserve their customers’ goods.” The Box also offers a namesake ‘store a box’ option, whereby a customer can rent a box to store a smaller number items. “This service is cost effective, starting at just AED75 per box, per month, and is perfect for customers who need to clear out a few things which are not needed on a regular basis at
Logistics News ME | September 2017 | 33
home, and therefore, make room for more important items,” says Haddad. For items requiring more space, The Box offers larger areas, and the customers are charged accordingly. Prices range from AED550 for 2.3 sqm, to AED2,400 for a space as large as 20 sqm, per month. The Box even offers a price match guarantee and offers discounts on advance payments. Some companies have taken it a step-forward and revolutionised the storage process. MakeSpace, a US-based storage company, gives customers a pick and drop facility anywhere within the States, dropping storage bins at the client’s house and picking them up once ready. A set of four bins cost only $25. Customers can even request for photos of their containers on the app, so that they don’t forget what they’ve stored away. Storage is not, however, the only solution to all your extra assets. Organising is another way of ensuring things fit in the space accorded to them. DeCluttr Me is a Dubai-based decluttering and organising company for home and office, which helps clients make best use of available space and reduce waste. Shelina Jokhiya, founder of DeCluttr Me, says: “There is a lack of space in a lot of
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Shelina Jokhiya, DeCluttr Me
homes, which means it is difficult to store items that you do not use regularly, but will need at some point, for instance, sports equipment. The second issue is that a lot of people move here with everything from their old homes or home-towns and many items are not required here, such as winter clothing. “Thirdly, and the biggest issue is that, people have too much stuff. Instead of reviewing the items and decluttering things that are not used, required or wanted, they are thrown into a storage room and forgotten about. Sometimes people leave countries and forget they even had items in their store room.” Shelina is aware that the concept of a professional organising your personal space, whether home or office, is quite a strange thought. But it is an idea that is picking up. She concludes: “I think due to programmes such as Hoarders and the success of Marie Kondo from Japan, people have realised that there are professionals who can help them to get organised and that there is no shame in getting help. Some people are able to organise and declutter with no worry, but some can’t. For those who can’t, we are there to help them get more organised, more productive, and live clutter free.”
For those who can’t (declutter), we are there to help them get more organised, more productive, and live clutter free.” Shelina Jokhiya, DeCluttr Me
Wadih Haddad, The Box
Logistics News ME | September 2017 | 35
R oa d t r ans p o rt
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A long road ahead The market predicts that the demand for road freight will increase over the next five years, with industry revenue expected to grow to $59.8bn in 2018-19
oad freight transport is the most widely used transport infrastructure globally and is vital to the economic development of various countries. Road freight is a mode of shipping used widely across Europe, Africa, North America, and even the Middle East. With a single customs document, one can transport material across various states and countries, making it wholly cost effective and flexible. Even in modes involving sea and air, the last mile delivery usually constitutes of truck deliveries. THE ROLE OF OIL The recent drop in oil prices is a resounding advantage for the trucking industry. According to a report, The Future of Trucks: Implications for energy and the environment, by the International Energy Agency (IEA), trucks are the secondlargest source of all global oil demand. Today, trucks account for almost a fifth of global oil demand, or around 17 million barrels per day, equivalent to the combined oil production of the United States and Canada. According to Vinit Malhotra, general manager of the Middle East Road Network (MERN) with ATS Shipping, the lowered oil prices have been quite profitable for transportation companies. “Lower fuel pricing really benefits truckers. It narrows the price gap with rail and makes it (the market) more competitive. In fact, it’s helping trucking companies recapture customers they lost. In longer term, lower fuel costs mean truckers can adjust their networks and routes to better serve their customers. And it allows trucking companies to keep older, less fuel efficient vehicles on the road for longer. “We, in fact, expect to see more and more opportunities for us as a result of the lower
oil prices. As oil prices go down, you can refuel your trucks and run your assets in a less expensive way.” Lower fuel costs allow trucking companies to streamline operations around demand rather than fuel savings. In particular, these companies can adjust their networks and routes to better serve their customers on the basis of speed and convenience. “The entire logistics industry is having to contend with rising energy costs and seasonality of customer volumes,” says Bassel El Dabbagh, CEO of Agility Abu Dhabi. “Customers are increasingly demanding turnarounds of large cargo volumes at short notice, adding to cost pressures. The solution is to incorporate more innovation, especially in terms of developing efficient customer supply chains.”
The effective usage of communication technology is also helping the industry make savings on manpower, local travel and financial transactions, along with higher levels of transparency.” Bassel El Dabbagh, Agility
TRUCKING AND GCC Malhotra comments on ATS’s growth in the region, a direct result of a burgeoning logistics industry. “In recent years, governments within the GCC have launched major initiatives to shift to a knowledge-based economy, digitise industries, and create technology-based jobs for nationals. As per a recent report, trucking is the predominant mode of freight transportation in the GCC. We receive a majority of our business from across the GCC countries, some from around the world too, but our major business hubs are KSA, Oman, and Kuwait. Domestically, we move 2,500 containers per month and an average of 13,000 full truckload (FTL) approximately across GCC. “Having said this, there will be various roles in documentation, customer services, operations etc which will be needed in the coming months and years to enhance the services within the industry.”
Logistics News ME | September 2017 | 37
R oa d t r ans p o rt
Dabbagh believes that rampant road freight requirement is a driving force for logistics companies in the region. “In the coming years, a lot of projects are slated to come online, as the region undergoes a wave of initiatives geared towards economic diversification. This bodes well for the Middle East as far as the generation of jobs is concerned. Agility has maintained a strong track record in making the right investments to build logistics capabilities in the region. “In the GCC, the huge infrastructure pipeline means that the transport and logistics sectors can be expected to play an increasingly important role for the region’s economies, generating significant value in the form of efficient supply chains, delivery of goods and personnel across borders, and supporting the activities of the travel and tourism industries.” STRIDES IN TECHNOLOGY Technology is a vital factor in driving growth in this sector. Innovations in the field play a big role in cost optimisation and operational efficiency. Dabbagh says: “Technological innovations mitigate the impact of recent fuel prices and ensure positive cash flows. The sector is also focusing on refitting fleets with technologies that consume less fuel and generate more productive outcome due to their lower carbon emissions. New engine technologies are providing more power at a lower carbon footprint, with renewable energy resources playing a bigger role in the industry and providing improved returns. “The effective usage of communication technology is also helping the industry make savings on manpower, local travel, and financial transactions, along with higher levels of transparency. Smart technologies and applications are also enabling logistics service provider and customers to improve day-to-day transactions and operations.” Another important technological development in the road freight sector is truck platooning. It involves trucks driving one after the other, with minimal distance between consecutive vehicles, enhanced by automatic braking, reduced fuel consumption and emissions as the trucks drive close together at the same speed, with less overall space taken up on the road. The UAE is a major logistics hub in the region and in line with its smart initiatives in cities such as Dubai, platooning would be a welcome addition to the region’s push towards smart services. According to Agility’s data, autonomous platoon driving will increase productivity by around 30%, with fuel efficiency for the trucks rising by a rate of around 15% to 20%. The technology, however, is still in the nas-
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cent stages of development and is yet to be fully developed. It will require regulatory framework as well as new road infrastructure to be used by commercial vehicles.
In recent years, governments within the GCC have launched major initiatives to shift to a knowledge-based economy, digitise industries, and create technology-based jobs for nationals.” Vinit Malhotra, ATS Shipping
FUTURE CHALLENGES According to a study by Lucintel, a global management consulting and market research firm, retaining drivers, shortage of drivers, high cost of truck downtime, and highway funding are among the biggest challenges for the industry. Asia-Pacific markets are expected to grow rapidly over the next 10 years due to the presence of high growth potential markets such as China, India, Vietnam, and others. However, investment in transport infrastructure, increasing global trade activity, high demand for import and export of goods, increase in consumer demand for goods, and expanded mining activities can boost the industry in the future. Dr Fatih Birol, IEA’s executive director, is pressing for reforms in the trucking industry. IEA’s road freight report highlights the negative impact of road freight on the environment, accusing it to be a major contributor to global carbon dioxide and air pollutant emissions. “For far too long, there has been a lack of policy focus on truck fuel efficiency. Given they are now the dominant driver of global oil demand, the issue can no longer be ignored if we are to meet our energy and environmental objectives,” says Birol, in the above report. IEA suggests moves such as global positioning systems to improve logistics efficiency, aerodynamic retrofits, and alternative fuels such as natural gas and electricity, to reduce the strain that global road freight puts on the world’s resources. But it seems like autonomous vehicles is the way to go, combating several problems in one move, and improving the industry efficiency as a whole.
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Int e rv iew
Ruth Waugh, international business development director at Twintec Middle East, explains why joint-less slabs are the latest rage for warehouses
ing the preferred choice for logistics operators trying to avoid multiple straight cracks in their warehouse floors that come with traditional saw cut slabs, as they (operators) recognise the savings to be made on floor and MHE maintenance, together with improvements in business efficiencies by specifying a joint-less floor slab.
Describe your presence worldwide. What kind of market share do you command in your sector? Twintec Middle East is part of the Twintec Group of Companies with operations across the globe including USA, Europe, Egypt, Saudi Arabia, Australia, Morocco, and UK. Twintec Group design and construct approximately 600ha per year worldwide and remain the world leader in steel fibre concrete floor slab design and construction. What are the current projects that the company is working on in the region? Twintec is working on a number of projects currently throughout the GCC; specifically, over the next three months in Dubai and Oman. Logistics warehouses that require a super-flat floor is the main area of activity, with end users insisting that contractors provide them with a concrete floor slab that meets their operational requirements in terms of flatness for Very Narrow Aisle (VNA) racking and smooth operation of Material Handling Equipment (MHE). Joint-less floor slabs are becom-
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How has been the companyâ€™s performance in and the first half of ? Twintec has firmly made its mark on the local market over the past two years in the GCC with the establishment of a permanent regional office in Dubai and strong local presence in Oman and Bahrain. A quantifiable track record has been achieved for internal joint-less Steel Fibre Reinforced Concrete (SFRC) floor slabs with a healthy order book for the remainder of 2017 and into 2018.
End users demand flexibility; their business needs will change over the years and future proofing the floor slab is the key.â€? Ruth Waugh
Have you devised any strategies in terms of your product offerings for the remainder of the year? The ultimate requirement for an internal floor slab is no-joints, as these are singularly, the big-
The 9th edition of the International Exhibition for Intralogistics, Warehousing, Supply Chain, Ports, Port Equipment â€“ Products & Services
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11 â€“ 13 September 2017 Dubai, United Arab Emirates
Visit and meet leading suppliers providing smart solutions for supply chain and warehousing. From logistics and robotics to automation and innovation, connect with game changers that are transforming the materials handling industry. www.materialshandlingME.com
Int e rv iew
gest problem for warehouse operators year-onyear. This has led Twintec to develop the Twintec Ultimate slab, which is now being introduced to the GCC market having successfully been designed and constructed in Europe for the past few years. The Twintec Ultimate slab is designed to have no opening construction joints, and therefore delivers a totally seamless floor slab throughout the warehouse. Projects of up to 65,000 sqm have been constructed using this system for major international brands to date and is being offered by Twintec throughout the GCC. What trends have you observed in terms of specialist flooring contracting in the region? Developments in logistics technology (higher racking and specialist MHE) requires a tight specification for the floor slab to ensure safe and efficient operations. A general contractor might not have the internal skills and experience to be able to satisfy these demands, even by employing specialist supervisors or consultants. A specialist flooring contractor is just that â€“ a specialist in their area of expertise â€“ and is the right choice to deliver the floor slab to meet the end users specific business needs. End users demand flexibility, their business needs will change over the years and futureproofing the floor slab is the key â€“ joint-less or totally seamless floor slabs meet these demands.
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What keeps you ahead of the competitors in the region? Twintec offers a unique total offer concept of design-build-insure, that takes total responsibility for the floor slab from initial design through to providing a 10-year warranty on the floor slab. In-house engineers design the slab and Twintec procures materials via a well-established supply chain with a quantifiable performance track record, and employs concrete specialists to ensure this key component is managed correctly. Skilled experienced staff (both on and off site) are a critical success factor and this, coupled with stringent quality control measures and state-of-the-art in-house developed machinery, ensures site operations are high performance. Twintec production teams delivers up to 2,500 sqm per day, six days a week, providing significant contract build time advantages. The security of a Product Liability Insurance and PI Insurance complete the package. Twintec never sits still and the owners of the business are committed to continuous research and development on design, new construction product components, and environmental sustainability and execution methods. This keeps Twintec ahead of the competition and provides the end users with ongoing improvements to meet their business demands.
6-7 February 2018 Abu Dhabi National Exhibition Centre Abu Dhabi, UAE
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Int e rv iew
Sky is not the limit
Sonja Strand, general manager for global airports business at Honeywell, discusses solutions that are helping the modern-day airport evolve
What kind of solutions does Honeywell offer for airports globally? Our vision is of a connected airport, where all areas of an airport are able to communicate with each other and work as one. We offer solutions such as baggage and scanning technologies, smart cameras, public address systems, security systems, fire sensors and detectors, and so forth. Our controlling command suite is a one-stop solution which brings together all these different solutions to one dashboard. You can visualise all aspects of the airport in one system and also take necessary actions as required. For example, if you receive a security breach notice from one portion of the terminal, perhaps a set of open doors, you will be able to send out a command through your system to that area to shut the doors. This effectively brings all the responsible parties to one platform and you can relay instructions accordingly. Third party systems can also relay commands, apart from Honeywell’s own system commands. Do you have solutions targeted specifically at airports in the Middle East? We do, especially for an airport like the Dubai International Airport, which has one of the busiest runways in the world. To help ease their workflow, we offer systems such as the integrated tower control, which basically integrates
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a variety of systems such as fueling, catering, ground control, etc., with the tower control’s system. Thus from one spot, the controller can manage everything, avoiding constant distractions. This makes everyone’s life much easier. We also implemented the ‘follow the greens’ airfield guidance system at DXB, a state-of-theart ground traffic management (GTM) solution, which helps pilots to safely navigate through the airport’s complex network of taxiways. The system checks all aircraft traffic on the airfield, identifies the best route from runway to gate or vice versa, and activates a series of lights on the tarmac. Instead of following radio instructions from the air traffic control tower, pilots simply follow the green lights. This saves time and fuel. We also have what is known as the visual docking guidance system (VDGS), which guides the aircraft along the airfield apron to its final docking position, using a dynamic range video sensor and a powerful 3D image processing system. How has the aviation sector fared in the birth of the recent economic changes, especially in the MENA? While the aviation sector has been impacted, the implications have not been that large. This is a sector that is rapidly growing and expanding. Take for instance, Emirates, which continues to grow its fleet. The Middle East and North Africa (MENA), as a whole is a region that doesn’t have the word impossible in its dic-
tionary. The airports here are always 10 steps ahead of everyone, and economic downturn has not marred their enthusiasm. What are Honeywell’s strategies for the remainder of and the first quarter of ? Taxiway guidance signs is a new solution that we’re offering. We also have GBAS, also known as ground-based augmentation system, which basically offers a flight operator the correct landing technique through precise approach details. The airplane can also turn at angles, for instance, around a mountain or even land at shorter angles, thus saving fuel and time. We’re also trying to shift from halogen lamps to LEDs, installing them at runways to reduce energy use. All of these add to Honeywell’s vision of a safe, secure, and green airport.
Are there any important upcoming trends that will be vital to devising solutions? Yes, one trend would be data management and data storage. Big airports like DXB tend to have a lot of data on their hands, and Honeywell can help effectively manage and exhibit this data. Another trend would be cyber security; cyber-attacks can wreak havoc for especially an airport, and Honeywell’s cyber security hardware and solutions will ensure that sensitive data remains safe.
MENA, as a whole, is a region that doesnâ€™t have the word impossible in its dictionary. The airports here are always 10 steps ahead of everyone, and economic downturn has not marred their enthusiasm.â€? Sonja Strand, Honeywell
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E v e n t p r ev i e w
Materials Handling Middle East 2017 As the region’s only exhibition for the materials handling industry, the three-day event will focus on materials solutions for automation, Industry 4.0, and information technology
ith automation and Industry 4.0 as its core themes, the ninth edition of Materials Handling Middle East will take place from September 11-13, 2017 at the Dubai International Convention and Exhibition Centre. Several of the world’s top 20 materials handling systems have already signed on, with more than 130 exhibitors from 21 countries expected to be in place. Leading local companies such as SPAN Group, GENAVCO, United Motors & Heavy Equipment, and Eternity Technologies will be in attendance too. World’s top ranked supplier, Daifuku from Japan, is spearheading an international exhibitor charge that also features top 20 players from Switzerland – Swisslog and Kardex. While last year’s exhibition looked into the aspects of automation, this year’s exhibition will revolve around the themes of Industry 4.0. According to some industry professionals, the next step in the evolution of materials handling is Industry 4.0 – the merging of automation and data exchange in manufacturing technologies, combining cyber-physical systems, Internet of Things (IoT), and cloud computing. Frederic Zielinski, general manager of Swisslog Middle East, says the logistics industry is in a state of flux, with new themes such as Industry 4.0, digitalisation, and constantly changing consumer habits demanding new concepts. “Industry 4.0 has the potential to reshuffle the cards in how businesses operate,” says Zielinski. “With networked intelligence in manufacturing and self-organising production processes, the factory of the future will perform a quantum leap in productivity, flexibility, and efficiency. “The focus in the future will no longer be on the manufacturing process of purely mass-produced goods, but on the customised product manufactured to industrial standards, and thus
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on customers’ requirements. This evolutionary step can only succeed, however, if we finally break down the barriers between the digital and real worlds.” The Swisslog booth at the exhibition will offer a look into their warehouse management system, something Zielinski feels will be pivotal in the dawn of Industry 4.0. GENAVCO, one of the UAE’s leading suppliers of warehouse storage and material handling solutions, is another exhibitor launching its end-to-end warehouse solution engineering capabilities. Neeraj Mahajan, the director of GENAVCO, says that material handling equipment represents an integral part of the supply chain of diverse industries for storage, control and movement of items – from the raw material
stage to the distribution of finished products. Analysts Frost & Sullivan estimate the Gulf Cooperation Council’s (GCC) materials handling equipment market to grow 4% annually up to 2020, when revenues will reach between $4.8bn to $5bn. Saudi Arabia, with about 46% regional market share, and the UAE with 35%, make up the largest markets in the region and are expected to continue to lead market expansion going forward. “The rising need for global production companies to automate operations and foster flow of goods in an efficient manner is the key force driving growth in the materials handling equipment market,” says Mahajan. “The main challenge for customers in this region is to get a complete solution from a sin-
gle source. They have to approach two or three companies for a complete warehouse solution. This process itself is time consuming and most of the time they are facing great difficulty to get an optimised solution meeting their needs. “Here we play a vital role with our warehouse solution engineering to overcome this challenge by offering end-to-end solutions. We design and develop custom made concepts as per customer requirements, so projects are delivered from one source and in the timeliest manner.” The biennial event will focus on solutions for the six main sectors that are impacted by the materials handling industry, including logistics, FMCG, automotive, retail, pharmaceuticals, and the oil and gas industries. Ahmed Pauwels, CEO of Messe Frankfurt
Middle East, the organiser of Materials Handling Middle East, says: “Automation and the merging of digital and intelligent processes and systems will steer the future of regional intralogistics and materials handling. “By implementing fully integrated, effective, future-proof automation solutions and keeping their facilities modernised, companies can not only speed up their processes and satisfy changing customer needs, but also stay profitable by adding greater productivity to their supply chain. “At Materials Handling Middle East 2017, the spotlight will shine on the latest technologies that solve key challenges that warehouse and supply chain managers face today. These range from eco-friendly pallets, automated storage and picking solutions,
and warehouse mapping using 3D virtual reality, to more traditional equipment such as warehouse trucks, telehandlers, tow tractors, cranes, and packaging.” Materials Handling Middle East 2017 will feature the 2nd edition of the Supply Chain and Logistics Forum, an interactive summit bringing together regional industry professionals along with their international counterparts, government bodies, and policy makers to discuss key challenges and growth opportunities for logistics in the Middle East. The event will also return with the highly popular Forklift Operator of the Year, a unique competition where the UAE’s most skilled forklift jockeys go head to head to be crowned the country’s most skilled, safest, and efficient forklift operator.
Logistics News ME | September 2017 | 47
V i e wp o i n t
Mutation for the win Ralf W. Seifert, director of digital supply chain management program at IMD, explains how emerging brands are proving to be fighters in China’s ever-changing smartphone market
he Chinese market accounted for a third of worldwide smartphone sales in 2016, with about half a billion units sold. However, the size of this market didn’t offer much protection to market leaders. As recently as last year, newcomers were still muscling in and snatching market share from under the noses of more well known, established brands. In the early stages of this market’s development, after the launch of the iPhone in 2007, Apple and Samsung dominated. Then in 2015, two Chinese brands, Xiaomi and Huawei, crashed on to the scene and changed the story. By the end of that year, they had pushed Apple into third position and squeezed Samsung out of the top five. Just one year later, OPPO and Vivo (together known as OV), two unfamiliar Chinese brands that had nevertheless been cultivat-
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ing the market for years, overturned the ranking again. OV took first and third positions in 2016, pushing Apple to fourth place. Samsung’s market share shrunk to just one third of that of the new market leader OPPO. And what happened to Xiaomi, briefly the market leader? Well, its business model was built around outsourcing most of its value chain and managing only retail, customer experience, and brand image. It sold its products exclusively online and offered extremely competitive prices. However, the strategy later proved to be a huge drawback. In 2016, the Chinese mobile market was booming, and every player was seeking to expand production to meet growing demand. This resulted in a shortage of key components and fierce competition among brands to obtain them. The fully outsourced model meant Xiaomi had less bargaining power than its competitors. Because of
a shortage of processors and DRAM, Xiaomi suffered a shipment shortage of eight million units and its market share plunged. In this market, it would seem, the business model really matters. What are OV getting right for now? Let’s start with their supply chain. OV have worked hard on cultivating fruitful and respectful relationships with suppliers including Sony for cameras, Samsung for displays, and Qualcomm for processors. It is well known in supplier circles, for example, that OV will pay for suppliers’ dinner and offer free accommodation to technical staff sent from suppliers. The support from high quality global suppliers not only helps OV to implement their product strategy but also secures delivery support for OV during the peak season, when compo-
nent shortages are common with competitors. This helps OV overcome their smaller supplier penetration compared with the global volumes of the competition. Let’s move on to their manufacturing. Unlike Xiaomi or Apple, OV built up their manufacturing capability from the outset. In fact, OV source every one of their mobile phones from their own factories. There are a number of advantages to this strategy. It ensures product quality, planning and capacity control. Plus, by developing and investing in their own efficient manufacturing, OV are better equipped to respond to increased demand without competing for precious capacity at outsourcers. Next, there’s the distribution strategy. OV, for now, appear happy to let the other big players battle it out for the sophisticated city consumers’ Renminbi. On the other hand, they are targeting the smaller cities, towns and rural areas, socalled ‘tier three and four’ locations. They back this up with sponsorship deals with pop stars, soccer clubs, and TV dramas to appeal to this market. The smartphones themselves are sleek, simple, and fast-charging. And most of them are sold via an enviably wide-reaching network of 200,000 reseller retail stores – bigger than that of any of their competitors – supported by warehouses at a local level. And finally, OV are willing to share profits with their distributors, forming a foundation for a long-term cooperation. The rebate that OV provides to distributors is very high for the industry, ranging from 5% to 10%. This is a powerful motivator for distributors and retailers to promote OV devices. Now where to for OV? OV has ambitions outside China. OPPO recently invested $200mn in building a new production site in India, taking its cue from Vivo which set one up in the country several years ago. However, OV’s strategy of building up proprietary production capacities poses risks. OV has already doubled their businesses in just one year; but such dramatic growth in the future could challenge their 100% in-house production strategy. This could mean they need to collaborate with outsourcers. Furthermore, should business growth slow down or decline, the cost of investing in production overcapacity might be difficult to absorb. OV need to keep an eye on what the competitors are up to, too. OV might control its manufacturing tightly, but it does not produce every component itself. It still relies on suppliers for key core components such as processors – and Xiaomi and Huawei are now
OV have worked hard on cultivating fruitful and respectful relationships with suppliers including Sony for cameras, Samsung for displays, and Qualcomm for processors.” starting to manufacture these themselves. By investing in these technologies, Xiaomi and Huawei can add new revenue streams and increase their bargaining power with upstream suppliers. OV’s lack of competence in key component technology exposes them to the risk of a supply shortage. OV’s competence rewarded them with fabulous growth in 2016, but also gives cause for concern. Competitors are starting to build their retail chains around OV. And overseas, a local
village-centric distribution strategy might not work as well as in China, where OV benefited from historical business alliances. How sustainable is OVs strategy and will it enable them to justify their increased production capacity? With the blend of players and diverse supply chain and marketing strategies, this market is far from settled and big shifts in market share could easily happen in the future. It will be interesting to see how the next year unfolds.
Logistics News ME | September 2017 | 49
R e p o rt
A Virtual Model Frédéric Zielinski, general manager at Swisslog Middle East, explains how virtualisation is transforming warehouse operations
irtulisation is a key component of the Industry 4.0 available to us today. Imagine if you could model your warehouse virtually and run through what-if scenarios to better anticipate changes in demand or precisely determine the impact of new equipment on material flow? You no longer have to imagine it, for it is happening today. Virtulisation is one of the design principles— along with interoperability, decentralisation, modularity, service optimisation, and real-time capability— that is shaping Industry 4.0 solutions. If you are thinking about Industry 4.0 as something coming in the future, it is time to change your thinking. New material handling solutions, such as Swisslog’s SynQ software
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platform, are bringing Industry 4.0 design principles, including virtulisation, to the present-day warehouse. Virtulisation allows a copy of the warehouse to be created digitally, by merging sensor data acquired from monitoring physical processes and equipment with virtual warehouse models and simulation models. The virtualised view of operations helps to monitor physical processes, and is then visualised through a 3D interface that allows warehouse operators and managers to better manage growing complexity, reduce equipment downtime, and optimise processes. Virtulisation is enabled in SynQ through its decentralised architecture, real-time data management capabilities, and a 3D user inter-
face. Working with SynQ’s business intelligence tools, the interface improves planning, operation, and maintenance by presenting a virtual view of existing conditions or modelling future conditions based on planned changes to equipment or processes. Here are four examples of how the virtulisation capabilities within SynQ are changing the way warehouses are managed today: • Material flow monitoring: Visibility of products in the warehouse has become essential to efficient material handling. But, until recently, this was limited to knowing the location of a product in the inventory. SynQ virtulisation technology allows you to monitor products as they move through the process to im-
prove accuracy and identify opportunities for optimisation. • Condition monitoring: Condition monitoring uses real-time data from material handling equipment to identify equipment wear before it becomes noticeable in operations, enabling warehouse staff to accurately predict when maintenance is required to prevent failure. Instead of scheduling regular maintenance at preset intervals, whether the equipment needs it or not, or adopting a strictly reactive approach to maintenance which addresses problems as they occur, virtulisation enables a smarter approach to maintenance in which service is performed only when it is needed and before failures occur. • Availability management: In the modern day warehouse, equipment and processes are interconnected in ways that can amplify the impact of downtime of any one piece of equipment. Through virtulisation, you can model the impact of downtime of any piece of equipment to better understand the effect of its failure on warehouse operations, and avoid unanticipated consequences. • Process modelling: One of the challenges many organisations face in deploying new automation systems is getting a full understanding of the impact of new equipment on existing process flows, before the equipment is installed. This can lead to a prolonged start-up phase in which processes are refined to accommodate the new equipment, delaying return on investment. With virtulisation, you can add new equipment to your models to accurately predict their impact on throughput, understand exactly what process changes are required prior to implementation, and shorten deployment and start-up times.
If you are thinking about Industry 4.0 as something coming in the future, it is time to change your thinking.” Frédéric Zielinski, Swisslog The intelligence network
Industry 4.0 continues to generate a buzz in the industry, but too often the concept is presented in abstract, futuristic terms. This does the current state of the technology a disservice. Sensors are now common in many warehouses, and software platforms, built on Industry 4.0 design principles, such as SynQ, can create virtual models of warehouse operations that support smarter maintenance, improved planning, and process optimisation, bringing the benefits of industry 4.0 to your warehouse today.
Logistics News ME | September 2017 | 51
Sup p lie r N e ws Access World Logistics to build facility at JAFZA
Access World Logistics, a joint-venture between the UAE-based Rais Hassan Saadi (RHS) Group and Switzerlandheadquartered Access World Group, inaugurated the site of their upcoming third-party logistics (3PL) facility at Jebel Ali Free Zone. The multi-product warehousing facility, scheduled to be commissioned during the second quarter of 2018, is being constructed at a strategically located plot of 4ha, with an overall investment in excess of AED40mn. Peter M Waszkis, CEO, Access World, said: “Our vision is to deliver value to all our stakeholders by providing comprehensive logistics solutions in a competitive, safe and friendly environment.” According to the report by WAM, the site will include a warehouse of 1.5ha, with an apex height of 13.7m and eaves height of 11.5m split into three chambers offering bulk-storage and ambient-temperature, as well as air-conditioned storage, with very narrow aisle racking systems. Kishore Natarajan, general manager, Access World, added that the facility will be listed with the London Metal Exchange (LME) and the Dubai Gold and Commodities Exchange (DGCX); in addition to non-ferrous metals, steel, OCTG, polymers, and other industrial goods, the company will provide efficient logistics solutions for soft commodities, FMCG retail products, machinery and spares, and project and general cargo. 52 | Logistics News ME | September 2017
Swisslog experts stress on energy efficiency, e-commerce
Integrated automation solutions company, Swisslog, recently presented two whitepapers, aimed at highlighting the importance of energy efficiency in the warehouse, as well as the need for a dedicated e-commerce fulfilment centre to improve small order fulfilment. The first paper, Goods-to-Person Solutions: Solving the Challenges of Small Order Fulfillment, explains how a business utilising a streamlined, highly-efficient automated goods-to-person solution can expect to see a doubling or tripling in picking activity over conventional manualbased picking methods. The report also discusses Swisslog’s latest innovation, AutoPiQ, and how it enables direct cooperation between pickers and robots. When networked with Swisslog’s automated goods-to-person warehouse systems, such as CycloneCarrier, AutoStore or CarryPick, AutoPiQ is able to assist human workers with picking tasks, permitting workers to focus more on value-added services. As for improving energy efficiency, the second paper, Energy Efficiency in Automated Distribution Facilities, recommends positioning power monitoring devices throughout materials handling equipment, giving logisticians the ability to measure, visualise, and track energy consumption throughout the distribution facility in real time. The Swisslog report finds that refrigerated warehousing, while an expanding sector, is the most energy intensive. Energy is one of the largest expenses for the sector, second only to labour costs. To counter this, Swisslog recommends: “The most efficient shuttle and robotics systems have been engineered to reduce carrier weight and optimise weight/payload ratios for lessened energy requirements; since these systems provide dense storage capacity, they are also ideal for minimising refrigeration energy costs, when compared to manual small quantity picking in traditional refrigerated warehouses.”
Blue Dart, FarEye partner to cut down costs, carbon
FarEye, a global logistics management solution, announced its partnership with Blue Dart, an express air and integrated transportation and distribution company, to further enhance the latter’s customer experience and reduce its carbon footprint. Blue Dart is the largest express courier company with a 46.5% market share in the organised air express segment in India and a 13.5% market share in the organised ground express market. FarEye’s technology platform is managing deliveries for Blue Dart along with making their IT infrastructure more flexible and agile. This has improved overall customer experience and made operations paperless, thus saving carbon energy. Anil Khanna, managing director, Blue Dart, said: “We are a highly focused and insanely customer centric brand and this partnership will only enable to enhance the experience for our customers. FarEye’s platform is scalable, future-oriented, and flexible, and has enabled us to have complete visibility of each shipment and keep the customer informed at every step, ‘realtime’. It has also helped us in automating first mile pickups and last mile deliveries and going almost paperless, a small step in reinforcing our goal to have zero emissions by 2050.” Kushal Nahata, co-founder and CEO, FarEye, said: “The dawn of digitisation created the need for enterprises to adopt mobility solutions in order to overcome the operational complexities with the help of an added visibility layer. Our association with Blue Dart has been a massive learning for us and we have tried to put in our best and rolled out innovative solutions based on challenges faced by their team.”
TMW Systems’ tools enables fleet efficiency
Transportation Management Software (TMW) Systems introduced TruETA, a powerful new trip planning and execution tool that calculates estimated time of arrival for each stop along a commercial truck’s route. The new solution was demonstrated during the 2017 in.sight User Conference + Expo in Nashville, USA. TruETA is a cloud-based solution that automates the calculation of estimated time of arrival (ETAs) based on current vehicle position, driver hours of service, and real-time and predictive traffic patterns. The solution also generates red-yellow-green alerts indicating the likelihood of each vehicle to meet its customers’ scheduled delivery times, reducing the need for dispatcher-driver phone calls, and mobile communications messages. Ray West, senior vice president and general manager, TMS solutions for TMW, said: “Hitting the customer’s delivery window is no longer an aspirational goal for carriers – it is imperative from a customer service score and financial standpoint. TruETA helps eliminate much of the guesswork and manual data that comes with the trip planning process, and helps fleets reduce the risk of a dissatisfied customer.” Commercial and private fleets can use TruETA to help reduce operating costs while improving on-time delivery performance, according to West. TruETA even utilises the ALK Maps commercial mapping platform to visualise live traffic flows, while also analysing weather conditions. It also accounts for required driver rest breaks and calculates remaining hours of service at each destination.
TPG Capital signs acquisition deal with Transplace Transplace, a third party logistics provider (3PL), is being acquired by private equity firm, TPG Capital, for an undisclosed sum, buying out Greenbriar Equity Group, which acquired the 3PL back in 2013. The deal is expected to close in late September and will combine TPG’s history of creating cross-sector value, including software, technology and industrials, with Transplace’s customer base of over 1,000 and gross revenues topping $1.8bn, according to the two companies. Jack Daly, global head of industrials and business services for TPG, said: “As customer expectations for fast and transparent service and delivery increase, the supply chain is quickly becoming more complex. As a result, many companies have started to outsource freight spend in order to achieve better procurement at a lower operating cost.”
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The Month Ahead
The key exhibitions, conferences, and seminars coming up this month Maritime Nation India 2017
14-16 September 2017 September
The 2nd edition of Maritime Nation India Conference will have conferences focusing on seven key sectors of the maritime and logistics ecosystem: trade lanes, shipping; ports, CFS/ICDS, SEZs, logistics parks; shipbuilding, ship repair and ship recycling; multimodal connectivity- road, rail and inland waterways transport, and coastal shipping; investments and advisory for the maritime and logistics ecosystem including legal aspects; technology and training; cruise and lighthouse tourism infrastructure. The conversations with industry stalwarts, round table conferences, and association meetings will provide an opportunity to formulate views on emerging issues in the industry. 8th GPCA Fertilizer Convention 26-28 September 2017 Manama, Bahrain Under the theme New beginnings: Return to growth, the 8th GPCA Fertilizer Convention will offer exclusive insight into the likely impact of new market changes on fertilizer trade, and highlight the key drivers behind future growth. It will further delve into the topics of how to create a stable environment, reinvent global distribution channels, link business and innovation, and learn about the latest technological advancements both in the region and globally.
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Materials Handling Middle East 2017 11-13 September 2017 Dubai, United Arab Emirates As the regionâ€™s dedicated trade show for warehousing, intralogistics, and supply chain solutions, the biennial three-day event will focus on solutions for various dynamic industries including the six main sectors that are impacted by the materials handling industry such as logistics, FMCG, automotive, retail, pharmaceuticals, and the oil and gas industries. The 2017 edition will see a strong emphasis on automation, Industry 4.0, and information and communication technology. The Supply Chain and Logistics Forum held alongside the exhibition will witness industry experts share their insights on strategies, policies, trends, innovations and key growth opportunities in the supply chain and logistics sector in the Middle East. Seatrade Offshore Marine & Workboats Middle East 25-27 September, 2017 Abu Dhabi, United Arab Emirates Seatrade Offshore Marine & Workboats is the largest workboat and offshore marine event outside of the US, attracting more than 200 offshore marine and workboat companies. The conference programme will include top-level discussions on the important trends within the industry, as well as technical and practical discussion forums. Attendees will also be able to track ongoing projects within the oil and gas, ports, and marine civil engineering sectors. www.cbnme.com
Published on Sep 3, 2017
The September issue of Logistics News ME features an exclusive interview with Emirates SkyCargo, an analysis for road transport, and a sneak...