Logistics News ME - October 2018

Technology

Warehouses

Viewpoint

The future of truck platooning

Optimise design for productivity

Long term benefits of cost-to-serve

Connecting trade professionals with industry intelligence

Awards 2018 Shortlist unveiled for Logistics & Transport Awards 2018

October 2018

Site Visit

L’Oréal Egypt reports dynamic growth in consumer demand

Industry Steve Allen, divisional senior VP at dnata, partakes the discussion on the air service provider’s success over the years

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Contents

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Website: www.CBNme.com/logistics-news twitter: @logisticsnewsme Facebook: /LogisticsNewsME

October 2018

R e a d a l l t h e l at e s t i s s u e s o n I s s u u

Start 10 | News 20 | Op-ed

An insight on the role of truck platooning in the near future

Features 22 | Cover story

dnata’s admirable growth parallels with Dubai’s success

38 | Awards

The much-awaited shortlist for Logistics & Transport Awards 2018

34 | Site Visit

L’Oréal’s Egypt factory is witnessing dynamic growth on all fronts

38 | Warehouses

Efficient design of logistics spaces is integral to optimum productivity

46 | Viewpoint

The downfall of over-promising in fulfillment operations

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48 | Supplier News 50 | Diary Logistics News ME | October 2018 | 3

Regional News

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E d i to r ’ s L e t t e r

O cto b e r 2 018

A note from the editor

Pa r o m i ta d e y @paromitadey1 |

linkedin.com/in/paromita-dey

CEO Wissam Younane wissam@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net

It has been an absolute pleasure serving as the editor of Logistics News Middle East for the last 19 months and bringing you the best of the news. As I present to you my last issue for LNME as an editor, I want to sincerely thank you, the readers, whether this is the first or the nth edition you’ve picked up this year.

In my tenure, I have observed the logistics industry in the region slowly move away from the traditional methods and embrace the digital tech-savvy approach.

According to the World Bank’s latest Logistics Performance Index, the UAE ranked 13th out of 160 countries, outdoing the likes of Canada, France, Finland, Denmark, and Australia. Against its emerging market peers, the UAE ranks first.

Similarly, a January 2018 report by Kuwait-based logistics firm, Agility, placed the UAE as the third best logistics centre among 50 emerging markets, behind China and India.

Bahrain was ranked fifth, with Oman in sixth and Saudi Arabia in seventh position.

Today’s third-party logistics (3PL) players have become more digitally connected, influenced, and

engaged. This has given a boost to the already up and coming e-commerce industry in the region. From artificial intelligence (AI) to blockchain, and Big Data to Internet of Things (IoT), logistics players constantly try to understand and implement new and developing technologies in the most efficient ways possible.

We have tried to bring to you the best from the industry in the most effective way possible. For this, I also have to credit my writer, designer, and members of the fellow editorial team. Being the editor has also had its share of ups and downs, but it has been one of the most rewarding and informative phases in my career, and I am thankful to have been offered this opportunity. Most of all, to every person I have had the experience to meet, collaborate, or be affiliated with during my tenure, I cherish that experience from the bottom of my heart.

Signing off!

Paromita Dey Editor

Group Sales Director Joaquim D'Costa jo@bncpublishing.net +971 50 440 2706

Senior Sales Manager Vishvanath Shetty vish@bncpublishing.net

Business Development Director Rabih Naderi rabih.naderi@bncpublishing.net +966 50 328 9818

Editor Paromita Dey paromita@bncpublishing.net Reporter Mehak Srivastava mehak@bncpublishing.net Art Director Aaron Sutton aaron@bncpublishing.net Marketing Manager Mark Anthony Monzon mark@bncpublishing.net Photography Naveed Ahmad

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On the web Keep up to date with all the latest news, features and much more on our website.

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Opinions expressed are solely those of the contributors.

Logistics News ME and all subsidiary publications in the MENA region are officially licensed exclusively to BNC Publishing in the MENA region by Logistics News ME. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission of the publisher.

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Regional News

Regional News A n u p dat e f r o m a r o u n d t h e r e g i o n Cargo

Emirates SkyCargo notches new Dubai hub milestone

Emirates SkyCargo announced the transportation of the one millionth Unit Loading Device (ULD) through its bonded corridor trucking service connecting Dubai International Airport (DXB) and Dubai World Central (DWC). The trucking service allows for rapid connection of cargo between Emirates’ passenger and freighter aircraft.

Emirates SkyCargo launched the trucking corridor in April 2014, when the air cargo carrier first commenced freighter flights from Dubai World Central. A fleet of 49 trucks, including 12 refrigerated trucks for temperature sensitive goods, link cargo between the two airports on a 24*7 basis.

The movement of cargo

between the two airports is achieved seamlessly through the bonded trucking service, with a transit time of 4.5 hours between the arrival of goods on freighter aircraft to their departure from passenger aircraft and vice versa. Quick transfer of cargo from the trucks is ensured by the availability of 40 loading and unloading docks at the Emirates SkyCentral cargo terminals.

Henrik Ambak, Emirates senior vice president, Cargo Operations Worldwide, remarked: “Emirates SkyCargo is the only air cargo carrier to operate a two-airport cargo hub capable of handling close to 3MT of cargo in a year. Our fleet of 49 trucks function similar to a continuously rolling conveyor belt, allowing connection

10 | Logistics News ME | October 2018

times of 4.5 hours between cargo arrival at one airport and departure from the other, thereby effectively integrating two airports into a single hub.

Moving one million ULDs through Emirates SkyCargo’s bonded virtual corridor in just four years is a testimony to the critical importance of this service to our total offering.”

Over the last four years, the trucking service has helped connect more than one million ULDs over more than 272,000 trips between the two airports.

A total of over 1.2MT of cargo, ranging from temperature sensitive pharmaceuticals and perishables to luxury cars, has been shuttled by the fleet of trucks. The fleet of trucks are maintained and operated by

Allied Transport Company, based out of Dubai South, on behalf of Emirates SkyCargo.

“In order to ensure the safety of cargo in transit, all the trucks in the fleet are equipped with satellite tracking and operate in a pre-determined geo-fenced route between the airports.

The operation of the trucking service, which carries close to 1,000 tonnes of cargo every day, is planned and monitored round the clock by a dedicated team. The trucks are also fitted with tamper-proof locks for each journey, verified by Emirates Group Security and Dubai Customs, providing an additional layer of security of transit shipments,” added Percis Paghdiwalla, Emirates Road Feeder network manager. www.cbnme.com

O cto b e r 2 018 Smart Dubai

RTA trials autonomous vehicles in Sustainable City

Dubai’s transport authority has started a trial run of a driverless vehicle with Sustainable City in Dubailand.

Dubai’s Roads and Transport Authority (RTA) said it has recently embarked on phase 4 of the Driverless Vehicles Project on a track extending 1,250m.

The step is a part of RTA’s efforts to boost the Dubai Government strategy to raise the share of autonomous transport to as much as 25% of public transport means by 2030.

Ahmed Bahrozyan, CEO of RTA’s Public Transport Agency and chairman of Smart and Sustainable Transport Committee, said: “The trial run of the autonomous vehicle has

started in the Sustainable City following three stages of successful test runs.

The new phase, which will continue until the end of this September, is part of RTA’s plan to test the driverless technology means under Dubai’s climate conditions.”

The smart vehicle, which was manufactured by EasyMile Company, can accommodate eight riders.

It travels on short distances on pre-programmed routes under multi-user environments. It moves on virtual tracks that can be configured easily to make abrupt changes to meet demand. The latest trial run is part of an agreement signed recently with Diamond

Developers Company, the developer of the Sustainable City project.

“The Sustainable City has endorsed the use of electric and sustainable vehicles as a mean of public transportation and also as service vehicles throughout the City,” said Faris Saeed, CEO of Diamond Developers Company.

“The introduction of driverless vehicles in Sustainable City is a future step towards using the smartest public transport means. It supports Dubai’s Smart City initiative and the Government’s strategy for driverless mobility, which will pave the way for more sustainable solutions in this regard,” he added.

The Smart Vehicle is 100% environment-friendly and has electric powered batteries that can operate for eight hours. It can accommodate eight riders (six seated and two standing) and travel at a speed of 20kmph. The vehicle is designed for travelling on closed internal streets, such as those within residential communities and entertainment venues.

The data Bahrain-origin exports in July 2018

BHD229mn

Value of home-origin exports, versus BHD145mn in July 2017

Saudi Arabia, Oman, Egypt Top three countries importing from Bahrain

BHD48mn

Value of re-exports, versus BHD44mn in July 2017

Saudi Arabia, China, UAE Top three countries reexporting from Bahrain The value of imports increased by 12% as it reached BHD486mn during July 2018, versus BHD433mn in July 2017.

As per statement by Information & eGovernment Authority (iGA)

Quick news

Kuwaiti officials begin work on the 111km railway project that will connect the country to the rest of the GCC, at an estimated cost of $3bn.

FedEx Express introduces new flight linking hub in Guangzhou, China to Hanoi, improving transit times to two business days between the UAE and Vietnam.

Uber dropped the development on its selfdriving trucks project, deciding to focus solely on autonomous technology for cars.

Volvo Trucks unveils its first all-electric driverless freight truck, intended “for regular and repetitive tasks characterised by short distances, large volumes of goods, and high delivery precision.”

Logistics News ME | October 2018 | 11

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Regional News

Etihad introduces new cold chain solution Etihad Cargo introduced its latest cold chain solution, FreshForward, with the company affirming its support for a cold chain industry that is also responsible for importing perishable goods to the UAE. The new product ensures items such as fresh fruits, vegetables, dairy, fish, meat and flowers move seamlessly across Etihad Cargo’s global network until they reach their final destination. More specifically at the Abu Dhabi hub, it prioritises the transfer of perishable cargo from the aircraft into a dedicated centre, and subsequently onto reefer trucks to be delivered directly to the customer’s doorstep anywhere in the UAE. This marks a milestone in the expansion of Etihad’s value chain offering to include last-mile delivery in its home market for select products, itself a key pillar of Etihad’s refreshed strategy to expand services beyond its conventional airport-to-airport model.

Abdulla Mohamed Shadid, Etihad Airways managing director, Cargo and Logistics, said: “Etihad Cargo plays a vital role in stimulating the UAE’s imports and exports via our Abu Dhabi hub, and today we are delighted to introduce yet another product that will act as a further catalyst to this. Safe, efficient, and timely transport is critical for the UAE’s major importers of fresh produce including supermarket chains, F&B wholesalers, restaurants, and florists.”

Etihad Cargo transported over 90,000 tonnes of perishables over the last 12 months. Fruits and vegetables made up more than 37% of the total, whilst meat (15,000 tonnes), flowers (19,000 tonnes), and fish (8,000 tonnes) were the other major categories carried by Etihad.

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14 | Logistics News ME | October 2018

Jotun launches cargo industry specific tank coating

Norway-based Jotun has launched a cargo tank coating that allows greater cargo flexibility, long-term performance, and vessel utilisation with the launch of Tankguard Flexline.

Tankguard Flexline will be revealed at SMM, an international maritime trade fair to be held in Hamburg, Germany. The unique product is built on the Flexforce technology, ensuring excellent cargo resistance, quick port turnarounds and lengthy, and hence cost effective, maintenance intervals.

Marc Giesselink, global director – tank coating, Jotun, said: “In the ultra-competitive tanker market, optimal vessel flexibility, efficiency and utilisation are top of the ‘wish list’ for our global customer base. However, the aggressive nature of some cargo types, which can be absorbed into tank coatings, stressing and ultimately damaging them, as well as leading to lengthy ventilation periods after unloading, has, until now, been problematic. This has obvious knock on effects upon vessel availability and utilisation.”

He added: “Tankguard Flexline has been developed to solve this pressing industry problem, with its Flexforce technology designed for effective operation enabling vessels to carry critical and aggressive cargoes shipped

in coated cargo tanks. That provides full flexibility, leading to full vessels and real business advantage for our customers.”

Jotun’s Solvoxirane chemistry is at the heart of the solution. Standard tank coatings typically absorb low molecular weight, aggressive cargoes leading to swelling that stresses the structural network of the coating film.

However, the composition of the Solvoxirane chemistry provides greater coating flexibility, minimising structural stress over repeated absorption/ desorption cycles. Faster desorption times also lead to decreased ventilation requirements, quicker turnaround, and enhanced vessel earnings.

Typically, one day saved on ventilation equates to $14,000 in increased earnings.

The durable nature of Tankguard Flexline also extends maintenance intervals.

Jotun states that prolonged coating lifetime can save up to $600,000 in maintenance costs on a typical tanker vessel.

Jotun developed the new product after an approach from long-standing customer Stena Bulk, which was looking to shorten vessel turnaround times and enhance cargo flexibility for its IMOIIMAX fleet.

Tankguard Flexline is made to order in selected colours – grey, green, and pink – and is now available worldwide. www.cbnme.com

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Quote

Trade

KIZAD launches new free zone warehouses, LIUs

The full potential of the transport industry is yet to be seen. Everything suggests that the global need for transportation will continue to significantly increase in the coming decade.”

Claes Nilsson, president, Volvo Trucks

B&H Worldwide signs service cargo agreement with airBaltic

B&H Worldwide signed an agreement to handle AOG and routine traffic as service cargo to and from London Gatwick on behalf of airBaltic.

AirBaltic operates a fleet of 34 aircraft offering direct flights from the Latvian capital, Riga, to more than 70 destinations with additional direct flights from Tallinn and Vilnius to various European destinations. AirBaltic has been recognised as the most punctual airline in the world for several years in the row.

Under the new contract, which is effective immediately, B&H will exclusively manage all AOG traffic, time-critical spares and routine shipments.

B&H will take care of the entire shipping process providing a new level of shipment transparency to airBaltic through the use of its unique OnTrack system to provide track & trace and reporting with an option to include full inventory management in the future. The contract will be managed through the B&H London Heathrow Control Tower providing round-the-clock 24*7, 365-days service to the customer globally.

Responding to the needs of distributors, manufacturers, shippers, and logistics companies, Khalifa Industrial Zone Abu Dhabi (KIZAD) has further expanded its product offerings with the launch of new free zone warehouses and light industrial units (LIUs).

Located within KIZAD Logistics City, and adjacent to Khalifa Port, the new free zone warehouses will cater to trading and export companies, third party logistics, freight forwarders, and distributors, while the pre-built and flexible LIUs will serve various light manufacturing businesses and workshops. Due to be completed in October, the modular units are available for pre-booking with early bird incentives and competitive prices.

Spanning 1.7ha, KIZAD’s free zone warehouses offer flexible sizes from 380761sqm, high power capacity for air-conditioning, and cold storage with cost efficient utilities rates. Built to high standards, the warehouses

come with mezzanine offices, 7m height to eaves, integrated fire and safety features, a dedicated loading area for each unit, and raised floors for ease of loading.

The LIUs encompassing a total of 3.1ha come with ample power capacity for industrial activities, competitive utilities rates, 6m height to eaves, and fire alarm and sprinkler systems.

Flexible modular unit sizes start from 320-1,148sqm and can be combined for larger requirements.

Captain Mohamed Juma Al Shamisi, Abu Dhabi Ports CEO, said: “Primed to become one of the leading warehousing centres in the region, KIZAD Logistics City and its range of product offerings are fast responding to the needs of the logistics and manufacturing sector.

The ongoing investment into KIZAD, Khalifa Port Free Trade Zone, and Khalifa Port has been instrumental in the rising market demand for services within our integrated logistics hub and greater opportunities for growth.

Logistics News ME | October 2018 | 15

Regional News

Sustainability

DHL Express teams up with Al Nabooda to launch electric delivery vehicles

DHL Express partnered up with Al Nabooda Automobiles to introduce for the first time in the region the allelectric Volkswagen e-Golf for deliveries and collections.

This is in line with DHL’s latest announcement on the Cubicyle, a cargo bike with a specialised container for clean pick-up and delivery. The introduction of sustainable solutions into the business are a leg up towards achieving DHL’s zero emissions target by 2050.

The fully customised 134-horsepower electricGolf car will initially be used for documents’ delivery and collection specifically throughout areas with a reputation of high volume traffic, such as Dubai International Financial Centre and Downtown Dubai, followed by gradual expansion to remaining UAE regions in the near future. Running entirely on electrical current with a 100kW AC electric motor, re-chargeable on standard power supply, it is also the only fully customised commercial vehicle in the UAE with a segregated cargo bay separated from the driver.

With its full adaptation to DHL’s duties, the e-Golf has the capacity to complete a 250km journey operating on just a single charge aswell-as boasting advanced endurance capabilities when exposed to extreme, warm weather climates. The innovative vehicle also uses a regenerative braking system, allowing the conversion of stored kinetic energy to be used to recharge its batteries.

Highlighting the significance of the launch, Geoff Walsh, UAE country

(L) Geoff Walsh, UAE country manager, DHL Express, and (R) Mike Barrett, UAE vice president operations, DHL Express

manager for DHL Express, commented: “DHL Express is paving the way towards a green future with the aim of bringing our logisticrelated emissions to zero by 2050. The introduction of e-Golf is an important step towards implementing our vision to protect the environment, and inspire the entire logistics industry in reducing the impact of dayto-day operations. We are confident that this new and advanced method of delivery will contribute significantly

16 | Logistics News ME | October 2018

to a more sustainable way of operating in the region.”

Commenting on the partnership with Al Nabooda, Mike Barrett, UAE vice president operations for DHL Express, said: “We are pleased to collaborate with Al Nabooda Automobiles, who supported us in our mission to reduce carbon emissions.

We express our gratitude for their extraordinary efforts in customising the e-Golf electric car into a commercial vehicle. With this launch, our goal is to implement eco-

friendly delivery services across the entire country in the future.”

Thierry Seys, general manager – Volkswagen, expressed: “Al Nabooda Automobiles Volkswagen is thrilled to be associated with DHL for this project aiming at reducing drastically CO2 emissions in the express delivery sector. We will be monitoring closely the activity of these vehicles in search of improving their efficiency as well as increasing the fleet of zero emissions vehicles.” www.cbnme.com

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Kanoo Logistics launches distribution centre in Dammam Kanoo Logistics launched its brand new, state-ofthe-art logistics facility near the King Abdul Aziz Port in Dammam, Saudi Arabia.

The new distribution centre features a 10ha yard and a 1ha warehouse. The multipurpose facility contains 500sqm of elevated staging area and 5,000sqm of parking space.

Fawzi Ahmed Kanoo, YBA Kanoo’s acting CEO, said: “We at YBA Kanoo, and through Kanoo Logistics, are always looking for solutions that will ben-

efit our customers and will help their businesses grow, therefore we chose the area near King Abdulaziz Port in Dammam to build the new warehouse since it is an ideal location to store both imported and exported goods.”

Top 5 online

1

Etihad introduces cold chain solution FreshForward

2

Emirates SkyCargo notches new Dubai hub milestone

3

GBA backs up business confidence with +£4mn fleet expansion

4

Volvo unveils self-driving, electric vehicle Vera

5

P&O Marinas signs MoU with Dubai SME

(Jebel Ali, DAFZA, and Al Quoz), Oman (Muscat), and Bahrain, which have a combined capacity exceeding 4ha of storage space. It also holds open yard storage facilities in Saudi Arabia, comprising over 32.5ha.

The network provides storage for a variety of products including the petrochemicals and automotive industries, as well as fast moving consumer goods (FMCG) and has a specialised hazardous chemicals facility in Dammam.

Kanoo Logistics is a business division of Bahrainbased Yusuf bin Ahmed Kanoo (YBA Kanoo) Group.

Kanoo Logistics’ network includes both dedicated and multipurpose warehouses in KSA (Dammam, Jeddah, and Riyadh), UAE

Factory

Chinese investment worth $98mn planned for manufacturing plant in Duqm Chinese investors are planning a major blankets and carpets manufacturing project worth about $98mn in the upcoming China-Oman Industrial Park at the Special Economic Zone (SEZ) in Duqm, Oman, according to a report by Oman Observer.

The giant plant, envisaging a total of six production lines, will manufacture and supply blankets and carpets made from synthetic fibres that are a value-added product associated with the petrochemicals and refining industry.

Raw material for the project will be initially procured from China, but subsequently sourced locally when a world-class downstream petrochemical industry materialises in the SEZ. Ali Shah, chairman of Oman Wanfang LLC, the main developer of the ChinaOman Industrial Park, said

Raw material for the project will be initially procured from China

the proposed blankets and carpets plant will come up on a 20ha site within the park.

Output is estimated at 12 million pieces of blankets and carpets per annum.

The synthetic fibres constituting the raw material for the project are manufactured only by a handful of countries in the region that possess the requisite technology, Shah added.

Logistics News ME | October 2018 | 17

Regional News

O cto b e r 2 018

Free zone

DAFZA announces strong 2018 H1 business results

Transport

Study reveals Dubai Metro garnered $18bn in 8 years of service

Dubai Airport Freezone Authority (DAFZA) announced strong business results for the first half of 2018, showing an 11% growth in the EBID in comparison with the same period of 2017 and a growth of new rental revenues by 27%.

The results include a 10% increase in licensing revenues and a 31% increase in revenues from government services, resulting in a total revenue growth of 8% in comparison to 2017 H1.

According to the company statement, the positive figures have been delivered as a result of DAFZA’s strategic plan set in early 2017, which comes in line with the objectives of the Dubai Plan 2021.

The success witnessed by DAFZA came with a steady increase in leasable area reaching 43% compared to 2017, with a 63% growth in warehouses and 29% increase in office space. DAFZA Industrial Park, the first expansion project outside DAFZA’s boundaries located

in Al Qusais Industrial Area, witnessed an occupancy rate of 82% during the first half of this year.

DAFZA achieved a solid 15% growth in the number of registered companies over the same period in 2017. A 5% increase was also seen in the number of multinational companies at DAFZA, which is a direct result of the highquality services provided by DAFZA that enable businesses to expand in the Middle East, Africa and Central Asia markets, and explore the high investment opportunities in the region. In the same context, the first half of 2018 also witnessed an increase in the number of registered SMEs by 17%.

In 2018 H1, DAFZA continued to attract foreign direct investment which helped boost its regional competitiveness and revive various key sectors. DAFZA recently announced a 65% reduction in business startup fees.

18 | Logistics News ME | October 2018

Accumulated benefits of Dubai Metro in the period between its establishment in 2009 and end of 2016 reached AED66bn, compared to accumulated capital and operational costs of about AED41bn, i.e. the costbenefit ratio reached 1.6 by the end of 2016, a report said.

Dubai Roads and Transport Authority (RTA) carried out a comprehensive study, the Economic Impact of the Dubai Metro Project, including both its Red and Green Lines, in collaboration with Henley Business School, University of Reading, one of the longest-established universities in the UK. The study analysed the direct and indirect economic benefits of the metro and calculated the internationally recognised economic indicators in this regard including the benefitcost ratio.

Mattar Al Tayer, director general and chairman of RTA, said: “At a time when RTA celebrates the ninth anniversary of Dubai Metro, this study underlines Dubai’s keenness to invest in improving and widening its infrastructure,

since it is the backbone of driving the competitiveness of cities and countries.

“The infrastructure in general and roads in particular play a massive role in supporting economic, social, and tourist activities, boosting the integration of the local economy, and enhancing GDP. The Dubai Government is aware of the paramount importance of investment in infrastructure, and the government has therefore consistently maintained this policy. As a result, the emirate’s investments in roads and transport infrastructure have touched AED100bn.

“Such a trend has been rewarded with clear dividends that have propelled the competitiveness of the emirate and the UAE in general, making Dubai a global benchmark for the quality of infrastructure. The sustained improvement of roads, as well as transit systems and services witnessed by Dubai since the establishment of the RTA in 2005 have generated savings of as much as AED125bn in the cost of fuel and time.” www.cbnme.com

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Op-Ed

Opinion

Kivanc Arman, vice president of Automotive Aftermarket, Robert Bosch Turkey, Iran and Middle East, introspects on platooning and the future of supply chain in freight forwarding

Leading the way O

ver a million trucks are currently in operation across the region, with virtually all land cargo within the region being transported by road. The staggering number of trucks on the GCC’s roads increases by 5–9% every year. While this is a good indicator of growing inter-GCC trade, an increase in truck traffic invariably raises the likelihood of roadside errors, driver fatigue, strain on vehicles, and ultimately, carbon footprint.

An example of transformative innovations expected to change the face of the logistics sector is one that will contribute greatly towards alleviating the aforementioned issues: platooning.

Platooning enables multiple trucks to connect electronically along a virtual longitudinal axis, where the lead vehicle is ‘in charge’, with all the following trucks synchronising their movements, such as accelerating, braking, and turning, in tandem with it. Truck platooning is complex and requires advanced and reliable inter-vehicle connectivity to ensure that acceleration, braking, and steering for each vehicle in the fleet follows that of the first truck in the convoy. In order for this to work, we first have to ensure that each individual truck is automated, and the powertrain, assistance, and steering systems are all connected.

Platooning will play an important part in the future of overland transport, as the logistics industry continues to leverage technology to improve efficiency and cut costs. Connectivity is the keyword for the future of the trucking industry, and the logistics sector in the region stands to benefit greatly from this next leap forward in autonomous transportation. According to a study by Frost & Sullivan, autonomous transportation is set to be a key driver of growth in the UAE’s logistics sector.

Even though platooning is still in its early stages, we anticipate that it will reach maturity

20 | Logistics News ME | October 2018

Kivanc Arman

in the next five to 10 years. Though our Bosch VisionX truck study – which demonstrated what commercial vehicles will be capable of in just a few years – is still in its conceptual phase, parts of the study are already being trialled, with the testing of driverless cars on freeways in the U.S., Germany, and Japan for the last few years through our highway pilot test-driving program. Although commercial vehicles are larger in size, and truck platooning would still see a driver in each cabin at this stage,

many of the technology components that are required are similar.

This will have several positive implications for freight forwarding companies where every cent counts in the supply chain. These companies often operate huge fleets that traverse thousands of kilometers – which drives the need to cushion their bottom line by finding ways to streamline efficiencies and reduce costs. The longevity of a vehicle, for example, can have such an impact. Eliminating unprof-

www.cbnme.com

O cto b e r 2 018

itable downtime is an important part of this, but so is reducing fuel spend. Both of these things can be achieved through platooning; the vehicles can travel closer together and leverage the fuel-saving benefits of travelling in the slipstream of the lead vehicle. Increased connectivity can also help optimise route scheduling as well as visibility of the location and state of the cargo for both the freight-forwarder and the end-customer.

At Bosch, our accident researchers estimate that 90% of injuries caused by trucks that involve physical injury could be avoided using automation systems in the future. The technology isn’t fully mature yet, but depending on how it is configured, automated platooning could be ready to roll out within the coming decade. Truck drivers will experience several direct benefits to their work environment, with their jobs becoming less stressful, enabling them to take breaks and remain focussed, as well as taking on other tasks such as route planning.

Successfully implementing platooning is no small task, but we are adding function after function to the automation process. As part of our extensive work in the field of automated and connected mobility, we showcased a concept for fully connected and semi-automated vehicles that would enable truck drivers to take on other tasks.

It is not only the transport and logistics industries that stand to benefit; society as a whole will as well. A lot of cities experience increased pollution, road accidents, and traffic congestion due to the high volume of trucks on the roads. Imagine if the majority of accidents that cause physical injury could be eliminated through increased truck automation, and every truck could use up to 10% less fuel with each run. Reduced heavy vehicle congestion and accident risk would benefit drivers of all vehicles on the road, and efficient trucks help reduce environmental impact. Vehicle connectivity can also aid drivers in finding suitable parking areas along major freeways, as well as ensure that available spaces are used more efficiently.

The region has long enjoyed a favourable position as a logistics and transshipment hub.

The UAE’s central geographic location, coupled with world-leading infrastructure, a focus on exports, and the construction of businessfriendly free zones, makes it the ideal trade and distribution hub. This has enticed many leading logistics players to set up their regional operations in the country. The UAE is currently home to the world’s largest container port, and according to the World Bank’s latest Logistics Performance Index, ranks 13th among the 160

“Platooning will play an important part in the future of overland transport, as the logistics industry continues to leverage technology to improve efficiency and cut costs.” listed countries – an impressive feat for a nation that is less than fifty years old.

A rise in construction projects, particularly those in support of the highly awaited Expo 2020, has also boosted the demand for logistics services. According to the Dubai Chamber of Commerce and Industry, the UAE’s logistics sector is expected to fuel economic growth over the next four years. Alongside these developments is a wave of technology innovation, which in turn is part of a wider narrative within the region: increasing digitisation of businesses and governments, the emphasis on mobility and connectivity, and the transition to knowledge-led economies.

Of course, as with any new innovation, legal conditions need to be created to make automat-

ed vehicles a reality on the production lines.

This is something that would require collaboration between vehicle manufacturers and lawmakers – the latter making decisions on whether automated driving is permissible within the nation’s laws. However, there could perhaps be no better place to incubate this pioneering technology than on the roads of the UAE. With driverless transport being a key element of the vision of HH Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and taking into consideration that the Roads and Transport Authority (RTA) just concluded the fourth trial run of its Driverless Vehicles Project last month, the future of platooning in the country looks promising indeed.

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At the

forefront Mehak Srivastava speaks to Steve Allen of dnata, delving into the air service providers’ successful growth and plans for the near future Photos by Naveed Ahmad, Xtreme

O

riginating as an acronym of Dubai National Air Travel Agency, dnata has been an integral link in the growth of Dubai International Airport. Offering best-in-class services in ground handling, cargo management, catering, and passenger services, dnata has emerged as a global name in the world of aviation.

LNME meets Steve Allen, divisional senior vice president, UAE Airport Operations, a key partaker in the success story that is Dubai Airports. Allen oversees the ground handling and cargo operations at both Dubai International Airport (DXB), as well as Al Maktoum International Airport (DWC) in Dubai World Central.

“We have an operation of about 20,000 staff, across both airports,” remarks Allen.

“And accounting the over 3,500 pieces of motorised equipment, it is actually the biggest ground handling operation in the world.

It’s a good challenge, a fair challenge, and more so, it’s a great place to be doing it.

[Dubai] is so positive and innovative in terms of their approach.”

Commenting on in his years in Dubai, he adds: “There have been massive changes, yes. But the one thing that actually hasn’t changed is that this airport [DXB] still remains the main hub for Dubai and the main hub for the Middle East. DXB used to initially be on the edge of the town but is now right in the middle of town— and is still able to cope with being [one of] the busiest airports in the world. I think the great thing is that it has been instrumental in the growth of Dubai. They have both complemented

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each other, with DXB bringing people to Dubai, while the emirate’s growth has in turn helped sustain the airport and airlines.”

Mega growth In the fiscal year ended March 31, 2018, dnata’s UAE airport operations recorded revenues of AED3.15bn, representing 4.3% growth year over year. The growth primarily relates to ground handling operations at DXB, with the introduction of several new services from the current year. Their teams handled over 211,000 aircraft movements, more than 89 million passengers, and in excess of 731,000 tonnes of cargo at DXB and DWC. On being queried on the rapid demand for specialised cargo services, Allen explains: “The growth of airlines and air travel is relentless, and when you talk about [markets] like China, India, and Africa, there’s plenty of potential for growth. You’ve got your traditional markets like Europe and the US, and new markets like the Middle East. Middle East has been one of the fastest growing regions in the world, in terms of growth of airlines, mainly helped by the hub carriers. Middle East is right in the centre of the major landmasses of the world. The growth in the region has been extremely strong over the course of the last 10-15 years, even when accounting for the slight slow-down of late.”

A recent report by Global Market Insights, Inc reveals that the aircraft ground handling system market is predicted to reach $185bn by 2024, in keeping with the growing demand for quality solutions and products, due to technological advancements and changing consumer behaviour.

“When you look at the entire ground handling market, it’s all continuing to grow as air travel grows,” notes Allen. “I think the interesting thing is that only about 35% of the world’s ground handling market is actually outsourced or given to a ground handling provider. A lot of it is either run by the airlines themselves or by the airport. The trend now, however, is to consider this as a professional industry that requires specialised companies to do a safe and quality job, and so in dnata we look to fill that void and sort of say ‘here we are’. We’ve got a great reputation. We’ve got the ability to expand our knowledge and capability to take charge in airports around the world.”

In recent years, dnata has made significant investments which expanded its capability and global presence. In 2017, dnata entered the US cargo market with its acquisition of AirLogistix USA. The investment includes state-of-the-art specialised perishable cargo handling facilities in Houston and Dallas Fort-Worth. dnata also expanded its cargo handling capabilities at Gatwick, opened an additional cargo warehouse in Schiphol, and a new airside cargo facility in Adelaide.

In the US, it received a new license to provide ground handling services at John F. Kennedy International Airport’s (JFK) Terminal 4, in addition to the already existing licenses to operate at JFK’s Terminal 1, 7, and 8. In Singapore, dnata began operations at Singapore Changi Airport’s new Terminal 4, and opened a new maintenance base for ground service equipment.

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About Steve Allen Allen comes with over 15 years of experience in British Airways and helped design Heathrow Airport’s Terminal 5, prior to joining dnata in 2008 as vice president operations, where he was instrumental in the birth of the One dnata Strategy. He then moved to lead the Performance Development department in 2011 as senior vice president and led a number of major programmes across the group, including the ongoing design for phase 2 of DWC. Allen is part of the Emirates Group Innovation board, and currently serves as a board member at two UAEbased companies.

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Initiatives for success “The challenge that comes with expansion here in Dubai is that the growth has been very quick,” says Allen. “The growth is driven by passenger demand, which is obviously then reflected in airline demand, and ground handling tends to be the last thing along the line of logistics chain. We’ve had to grow and adapt quickly along the way, and luckily, we’ve been successful at it. And as we’ve grown, we’ve not just multiplied the number of people or equipment. We’ve also used technology to optimise the process. DXB’s footprint, in terms of space, remains the same, but operations continue to grow. We had to find a way to work better in the same area, but with greater responsibilities.”

Allen emphasises that the advanced baggage systems were initiated to keep up with DXB’s growing operations. Robotic systems were added to lift heavy bags, reducing pressure on workers. Plus, anti-collision technology was introduced to prevent ground equipment from colliding into aircrafts and each other.

“The other big thing for all airports is the concept of airports ‘working together’. And I think we’re one of the most advanced airports in the world, where the stakeholders all work very closely together and we have common control systems that plan all of the resources, all of our activity, and share information about what’s going on. Everything is very well joined up.” dnata has recently completed a host of key initiatives aimed at significantly improving the efficiency of its processes and infrastructure in ground handling and cargo management. The company opened a state-of-the-art customer service centre and cargo integrated control centre located in the Dubai Airport Free Zone, as well as another cargo warehouse, increasing their processing capacity by 25%.

“In DWC, we began testing new equipment and processes at the passenger terminal, which has been undergoing significant expansion works to serve the future growth of travellers and flights. The learning from these tests is also being applied to enhance the efficiency of our operations at DXB.” dnata also partnered with flydubai to trial remote control electric vehicles used to service narrow-body aircraft.

“We accelerated the recycling programme for our fleet of 12,000 units of ground services equipment (GSE) at DXB and DWC,” further highlights Allen.

Instead of replacing the equipment at the end of their life cycle, dnata now performs a mechanical overhaul to put them back in service. Over 100 units of GSEs have been renewed to-date, reducing waste generated from

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this category of equipment by 250 tonnes, while passing all safety and quality checks and achieving savings in excess of AED14mn.

“In addition, we completed the conversion of all diesel-powered forklifts to electric ones.

This is reducing the carbon footprint of cargo operations in Dubai by 80%, saving 200,000l of fuel per year, and reducing CO2 emissions by 47 tonnes per year.”

Investing in innovation Intelak is a travel, aviation, and tourism incubator, led by the Emirates Group in partnership with GE and Dubai Tourism to support the UAE’s aviation ambitions.

It was through Intelak that dnata became familiar with DUBZ, a mobile technology service offering passengers the option of checking in their baggage from the luxury of their home or hotel. Allen voices that dnata believed DUBZ had successfully devised an application which struck a chord with their technology advancement plans. dnata acquired a majority stake in DUBZ in June 2018.

“We are now offering Dubai passengers a home check-in service where they have their baggage collected at home or the hotel, get their baggage checked-in on the spot, and collect their boarding passes from DUBZ. Passengers using this service can proceed straight to airport immigration, avoiding any potential queues at the check-in counters with the assur-

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ance that their bags have already been checked in with the airline.” marhaba, international airlines, flydubai, flynas, and Saudia, as well as several hotels and malls have already added DUBZ services to their offering and there are ongoing discussions with other partners as well.

Allen adds that the service has especially seen demand from GCC families, who travel in larger groups and with a substantial amount of luggage.

“I think we need to focus on getting the message out there about the service, because people don’t know about it. We’re seeing month on month growth, but we’re obviously hoping for exponential results. We want customers to trust it and share great stories about it. It’s a pretty new concept worldwide. People still think you have to go to the airport to check in your baggage, and now you don’t.”

For the future Allen believes that autonomous is the way to go and highlights that it is one of the things topping the roster for dnata.

“We’re working with some consultants from San Francisco, looking at how we could introduce autonomous within the airport, in terms of ground equipment, busses, anything airside.

Autonomous is beneficial from all sides—be it environmentally, cost-effectively or even safety.

“There’s a lot of hurdles to pass along the way, regulatory hurdles especially. We’ve started to work with a number of partners on how we can introduce them here, and we want dnata to lead the way in terms of innovation.

The best thing is that Dubai is the perfect place to innovate.”

He also mentions plans to introduce an appbased booking system for freight forwarders, cutting down their waiting times and improving overall efficiency.

“As one of the world’s largest air services provider, we are always on the lookout for new ways to expand our service portfolio and improve customer experience, while embracing innovation and new technology.”

Allen speaks for the team and is positive that DWC is the answer to Dubai’s long-term expansion plans in the aviation sector.

“From a dnata perspective, we have to make sure DXB runs smoothly with a great customer experience, despite the fact that it’s very busy.

For DWC, we want to help Dubai Airports grow DWC for the future, and make it the biggest and best airport in the world.”

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Arabian hospitality Starting out at DXB in 1991, marhaba has become a reputable and intrinsic part of dnata’s portfolio. From fast-track clearance through arrivals or departures to helping with transfers and baggage, marhaba ensures a swift, smooth, and safe passage through the two Dubai airports. This summer (June-August) 65,000 passengers were welcomed and assisted by the helpful marhaba agents in Dubai.

Besides its popular meet and greet services, marhaba operates 12 departure lounges at seven airports in five countries, inviting travellers to enjoy its excellent international cuisine and relax or catch up with work in a peaceful environment. marhaba’s ever-growing network includes five departure lounges at Dubai International Airport, two at Singapore Changi Airport, and one each at Al Maktoum International Airport at Dubai World Central, Geneva Airport, Zurich Airport, Melbourne Airport, and Jinnah International Airport (Karachi). “marhaba has become an icon for everyone who lives in Dubai,” remarks Allen. “I remember when I first arrived here and wondered in awe about the ladies in stylish uniforms, greeting us at the airport, which was truly an epitome of Arabian hospitality.

“Many airports have come to us since then, for us to establish a similar service at their premises, because it’s got a really good reputation. We know there’s a demand for it. When people get to an airport, they get a place to relax and wait for their flight. When you travel, you have these moments that you always remember, and we want marhaba to be one of those moments.”

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PERFECT CROSSING

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A w a r d s S h o rt l i s t

Date: Tuesday, 16 October 2018 Venue: Habtoor Palace, LXR Hotels and Resorts, Al Habtoor City We bring to you the much-awaited shortlist for the first ever Logistics & Transport Awards. The list comprises of both industry stalwarts, as well as those with promising potential, across several diverse categories.

Company Awards Express Logistics Provider of the Year • Century Express • DHL Express Middle East and North Africa • FedEx Express • Fetchr Warehouse Facility/Firm of the Year • Al-Futtaim Logistics • GAC Dubai • Hellmann Worldwide Logistics • Premier Logistics Corporation 28 | Logistics News ME | October 2018

Freight Forwarding Company of the Year • Pentagon Freight Services • Ports Shipping FMCG Logistics Provider of the Year • GAC Dubai • Hellmann Worldwide Logistics • Trilogi Most Innovative Technology for Logistics • ALS Logistic Solutions • Block Gemini • FedEx Express • Honeywell • Swisslog Middle East www.cbnme.com

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Cold Chain Service Provider • Allied Transport • RSA Global • Trilogi Port Safety Initiatives • APM Terminals • Gulftainer • SOHAR Port and Freezone

Sponsors P r es ent ed by

Ethical Supply Chain Initiative • Al-Futtaim Logistics • Flora Express Flowers Trading (Floranow) • Mars GCC • The Camel Soap Factory

Tr ans p ortati on A lly Trade Facilitator/Free Zone of the Year • Dubai Airport Free Zone Authority (DAFZA) • Dubai Multi Commodities Centre (DMCC) • Khalifa Industrial Zone Abu Dhabi (KIZAD) • SOHAR Port and Freezone Innovation in Transport • Al-Futtaim Logistics • ASAS Transport • Honeywell • Trukker Logistics Startup of the Year • Fetchr • Premier Logistics • Trukkin

Individual awards Supply Chain Manager of the Year • Angad Singh from Fetchr • Mohamed Shalaby from Mondelēz Bahrain • Neil McMaster from GAC Dubai Women Professional in Logistics & Transport • Alexandra Deeva from ALS Logistic Solutions • Joy Ajlouny from Fetchr • Moaza Al Falahi from Emirates SkyCargo Lifetime Achievement in the Logistics & Transport Sector • Idriss Al Rifai from Fetchr • Rayan Qutub from King Abdullah Port • Walid Khoury from ALS Logistic Solutions

#LtA2018 @ logi sti csn e wsme /logi sti csn ewsme Logi sti cs Ne ws M E

Sponsorship enquiries: Joaquim D’Costa Group Sales director Mobile: +971 50 440 2706 Direct: +971 4 4200 506 JO@bncpublishing.net

Nomination enquiries: mehak srivastava reporter Direct: +971 4 4200506 mehak@bncpublishing.net Logistics News ME | October 2018 | 29

Trucks

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Success unveiled The F-MAX, the all-new tractor developed by Ford Trucks, launched at the 67th IAA Commercial Vehicles 2018 in Hanover, Germany

T

he all-new Ford Trucks F-MAX launched at the 67th IAA Commercial Vehicles in Hanover, Germany. The FMAX takes its name from Ford’s legendary F Series, and stands out in terms of its size, high level of comfort, and durability. These attributes helped the F-MAX win the prestigious International Truck of the Year award, a competition adjudicated by 23 judges from 23 European countries. This award marks outstanding success for the new F-Max. The F-MAX will set a new benchmark and will make a name for itself among the leading global brands in the heavy commercial segment.

The new F-MAX was designed and tested by 500 Ford Otosan engineers over a five-year period. Tests were carried out in 11 countries on four continents using 233 prototype units. This involved 15,500 hours of lab testing and five million kilometers of road testing.

“Saying “sharing the load” as a brand promise, we commit our self to understand customers’ needs and share all kind of load that they might have,” said Haydar Yenigün, CEO of Ford Otosan. “We developed our new tractor with Ford’s principles of comfort, power, efficiency, and technology at its heart. To ensure that the design guarantees the most, in terms of efficiency and practicality, we examined every part and every detail over and over again.”

Comfort of home The F-MAX offers comfort and luxury with its 2.5m-wide cab along with its modern design and driver-focused approach. The design of the cockpit-style dashboard ensures all functions are within easy reach. Even minor details are incorporated to enhance the pleas-

30 | Logistics News ME | October 2018

ure of the driving experience. The sense of spaciousness in the cab is key.

The F-MAX provides all of this with its flat floor providing 2,160mm of floor-to-ceiling height and 260 mm of seat adjustment. Furthermore, the F-MAX offers drivers very generous airplane-style patented storage, and an innovative and groundbreaking 90˚ foldable upper bed. It even has a braking feel that is similar to that of a car. Furthermore, it offers best-in-class NVH and interior quietness thanks to its best-in-class torsional cab stiffness, lower engine noise, and sound absorptive trim design.

The new F-MAX storage that is roomy

and easily accessible. Airplane-style overbed storage, spacious overhead storage, and exterior storage areas on both sides of the vehicle are all easy to use and easy to clean. The vehicle’s three-level door opening angle means that when it comes to getting into and out of the cab, the F-Max amongst the leaders. The fully sealed and water/dust-proof step cover make drivers feel that they are stepping into their own homes.

Powered interior lightning controls from the bed area and driver compartment, automatic climate control systems, and steering wheel adjustment features all offer comfort in the cabin.

A mini fridge and coffee maker included in

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We take great care of your vehicle.

Let Ford Trucks help you extend the life of your vehicle and reduce maintenance costs.

With special deals on wear and tear parts, now is the perfect time to visit your Ford Trucks authorized dealer.

Bahrain Iraq Jordan Kuwait Oman Qatar Saudi Arabia United Arab Emirates United Arab Emirates

– Almoayyed Motors – Manama / sheehanford@almoayyed.com.bh – Al Kasid Commercial Agencies Ltd - Erbil, Baghdad / ahmed.ali@al-kasid.ae – The Commercial & Industrial Company - Amman / w.albajjali@cic.com.jo – Alghanim Auto – Kuwait City / ford@alghanim.com – Mohsin Haider Darwish LLC - Muscat / shivkumar.b@mhd.co.om – Almana Motors Company W.L.L – Doha / oghobrial.aa@almanagroup.com – Al Jazirah Vehicles Agencies Co Ltd – Riyadh / mbuhsuli@aljazirahford.com – Al Tayer Motors – Dubai / selzokm@altayer.com – Premier Motors – Abu Dhabi / selzokm@altayer.com

TRUCKS

Trucks

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some models offer drivers additional comfort.

The F-MAX also offers a 90˚ foldable upper bed, an inclined head frame on lower bed, comfortable and large bed mattresses, and a remote-control unit in the bed area, which provides an ideal area for drivers to relax when taking a break. The F-MAX’s driver’s seat provides maximum comfort. This topof-the-range seat with a 260mm adjustment range, high-quality, breathable fabric and ergonomic design provides optimal lumbar support on the road.

Power and efficiency Cost of ownership is a key factor for the new F-MAX. F-MAX covers the three areas of cost of ownership. Production and product development combined with increasing vertical integration give Ford Trucks a competitive edge in terms of its cost base.

The new F-MAX offers a high-performance engine with 500PS, 2500Nm, and 400 kW braking power. Superior aerodynamics, powertrain calibration, and technical features also ensure outstanding performance in terms of fuel consumption with a 6% margin of improvement over previous models. Technical features include E-APU technology, eco-roll function, and predictive cruise control (Max Cruise). Up to 7% reduced maintenance costs and long service intervals reduce the total cost of ownership. F-MAX’s Ecotorq engine offers maximum performance and minimum fuel consumption under any road conditions.

12-speed ZF automated transmission and different drive modes such as Eco-Mode and Power-Mode help optimise fuel consumption. The new F-MAX is also empowered by a variable-geometry turbocharger, a water pump and compressor with multiple working speeds, and a 400 kW engine brake power which achieves 1000 kW total braking power with the optional intarder.

Cutting-edge technology Ford Trucks offers a revolutionary technology ‘’ConnecTruck’’ with the new F-MAX. ConnecTruck offers wide-ranging benefits. These include remote monitoring of the vehicle using remote diagnostic and over-the-air software.

The special topographic map means that FMAX is able to analyse road conditions, allowing the vehicle to drive at optimum speeds, thereby reducing fuel consumption by up to 4%. FMS Integration allows the ConnecTruck Module and Ford Trucks cloud to act as a data gateway for third-party fleet management systems to access selected vehicle data.

The F-MAX offers drivers invaluable as-

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sistance on the road thanks to features such as adaptive cruise control, predictive cruise control (max cruise) with speed tolerance choices, advanced emergency brake system, hill launch assist, lane departure warning, adjustable speed limiter device, and electronic stability control.

The 8” TFT color wide cluster screen allows everything from tire pressure, temperature status to driver evaluation functions to be displayed on the same screen. Control switches on the leather steering wheel allows the driver to navigate between cluster screens. Truckspecific embedded navigation, web link, and Apple CarPlay implementation, and Bluetooth connection functions are presented within the 7.2” LCD multimedia soft touch screen.

The F-MAX’s spectacular headlight design

illuminates the road more brightly, making sure nothing escapes the driver’s line of vision.

Maneuver-assist lighting, LED daytime running lights, and optional LED also enhance the vehicle’s lighting features.

The Ford Trucks F-Vision Future Truck The F-Vision is the first concept truck from Ford Trucks. This is the prototype of a level 4 autonomous truck. The concept model reveals Ford Trucks’ future vision on electrification, autonomous and connected drive, lightweight, and zero carbon emission products. It cares about humans’ priorities both inside the cab and on the road, as well as the load being carried, and aims constantly to connect with the environment and users.

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W W W. S H A R J A H E F. C O M

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Beauty in Business Four years since its launch, L’Oréal Egypt is witnessing dynamic growth in consumer demand from the MENA region, while keeping up with trends in e-commerce and sustainability

By Mehak Srivastava

I

n order to attract global investors, Egypt introduced a number of key incentives in 2017 under its new investment law, including tax exemptions, subsidised utilities, guaranteed residence for investors, and more.

France is a leading economic partner for Egypt, with the former’s significant economic venture in the Middle Eastern nation bolstered by the presence of 160 subsidiaries of French companies, employing more than 30,000 people. According to French Customs, in 2017, France and Egypt posted an increase of 21.8%

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in their trade, which totalled €2.5bn. French multinationals like Schneider Electric, Saint Gobain, Carrefour, and L’Oreal, plus several others, recently announced that they would increase their investments in Egypt.

An article in Cosmetics Business, penned by Paul Cochrane, highlighted that Egypt’s cosmetics market “maintained steady growth over the past year [2017] despite the downturn in the economy, the depreciation of the Egyptian pound and some serious regulatory challenges.” With the International Mone-

tary Fund (IMF) projecting Egypt’s economy to grow 4.5% in the fiscal year 2017/18, Cochrane expects that there is much room for the beauty industry to bloom and grow.

In fact, research carried out by Euromonitor International suggests that the market actually grew by 18% year-on-year, in value terms, in 2016, totaling LE1.6bn ($90.5mn at the time).

The study suggests that the positive performance of lip products, most notably, lipsticks, and brands growing ability to tailor their products and their adverts to attract more

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customers, especially those under 15 years of age, whom constitute 31.3% of the Egyptian population, according to the Central Agency for Public Mobilisation and Statistics, has significantly increased their sales.

L’ORÉAL EGYPT With a unique international portfolio of 34 diverse and complementary brands, the L’Oréal Group generated sales amounting to €26.02bn in 2017 and employs 82,600 people worldwide.

L’Oréal is present across all distribution networks: mass market, department stores, pharmacies and drugstores, hair salons, travel retail, branded retail, and e-commerce.

L’Oréal’s first factory in the Arab World, located near Cairo in 10th of Ramadan Industrial City, was opened in 2014. The plant mainly serves as the production hub for L’Oréal’s consumer products division in the Middle East and North Africa (MENA) region. In keeping with the increasing demand from consumers across the region for innovative and high-quality beauty products, the production site includes manufacturing, packaging, and warehouse facilities. Today, the subsidiary covers a range of brands from the group’s four divisions, offering to the Egyptian market 14 of its 34 global brands, including L’Oréal Paris, Maybelline New York, Garnier, Lancome, Giorgio Armani, Ralph Lauren, Vichy, La Roche, Posay, L’Oréal Professionnel, and Kerastase.

Yassine Bakkari, operations director, L’Oréal Middle East, remarks: “Our efforts in Egypt stem from the significance of MENA as a strategic market for L’Oréal’s growth. We set out to accelerate our development in the region by rapidly innovating consumer-centric products tailored to the region’s consumers. That’s why we built the L’Oréal Cairo Factory.”

Bakkari explains that in 2010, L’Oréal conducted an in-depth study of the location to decide on the most efficient place to have our factory, considering infrastructure, industrial expertise, and supply chain network to provide the highest flexibility to all markets; and Egypt emerged as a candidate with clear potential.

Production site With initial investments of €50mn, the facility is spread over an area of 17,000sqm, and was among the top three brands in the Egyptian market. The factory started production in 2013 and has since increased its production to reach almost 100 million units with an average annual growth of 10%. During a 2017 conference,

tubes, bottles, and sachets thanks to the 13 new-generation packing lines. The current production capacity of the factory is 120 million units, but it can handle more than 300 million units in peak capacity.

The plant features modern technologies such as fully automated processing skids with automated recipe control, automated packing lines, and fully integrated worldwide enterprise resource planning (ERP) to optimise supply chain and quality management. The factory is an ISO 9001 (Quality) and ISO 22716 (Cosmetic Manufacturing Good Practices) certified facility. In addition to this, the factory features a robust safety infrastructure and culture, which is periodically reviewed and improved internally by the group.

“Our efforts in Egypt stem from the significance of MENA as a strategic market for L’Oréal’s growth.”

Yassine Bakkari, operations director, L’Oréal Middle East Benoit Julia, managing director for L’Oréal Egypt revealed that the facility has 473 employees, 99% of whom are Egyptian, plus 200 factory employees.

“This factory primarily serves as an export unit, exporting 85% of the products out of Egypt,” notes Bakkari. “Featuring state-ofthe-art technology and automation lines, the factory contributes significantly to the local community by procuring 80% of its packaging material and 25% of raw materials locally.”

The L’Oréal Cairo Factory produces hair care, hair colouration, and skin care products that are packaged in various types of jars,

Sustainability The brand’s social and environmental responsibility programme “Sharing Beauty With All”, was launched in 2013, aimed at making L’Oréal a model company in terms of sustainable innovation, production, and consumption.

By 2020, the company aims to have 100% of its products to have an improved environmental profile, plus reduce the environmental footprint of its plants and distribution centres by 60% from a 2005 baseline.

The L’Oréal Cairo plant is the first LEED – Leadership in Energy and Environmental Design – certified plant in Egypt. These consist of a US quality standard which defines excellence in terms of design and building construction process with regard to key aspects of sustainability, including water and energy efficiencies, atmosphere management, materials and resources utilisation, and environmental quality.

Bakkari mentions: “As with all of L’Oréal’s global stakeholders, L’Oréal Egypt too has followed the principles of “Sharing Beauty with All”. At our Egypt Facility, in just two years we have reduced CO2 emissions by 33%, water by 28% and waste by 28%.

In early 2017, L’Oréal Egypt received the Top CSR Industrial Leaders Award, presented by the Federation of Egyptian Industries 2016.

The award came in recognition of the company’s efforts in protecting the environment and supporting the communities where it operates.

E-commerce In 2017, L’Oréal global noted that e-commerce accounts for 8% of group sales, with social networks, influencers, consumer engagement playing a vital role in their marketing strategies.

“E-commerce has changed the game drasti-

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Site visit

Sustainability key results in 2017 The plant has reached the following environmental performance in 2017 vs 2015: -36% in CO2 emission | -28% in water reduction|-28% in waste reduction

Energy efficiency

Water reduction

Validated strategy to Development of a solar reduce and offset electrical water basin to consumption using onsite recycleevaporation treated waste water solar PV farm by end 2020

Waste reduction

Community Support Member of the FrenchEgyptian ARBORUS alliance promoting women in professional employment

0 waste to landfill

Working with the HELM foundation for raising awareness on disability

Local Ecosystem

>%80 localised packaging supply %99 Egyptian workforce

Working with TEROUS on empowerment of orphaned children

cally in the Middle East,” remarks Bakkari.

“It is expected to grow at 20% CAGR by 2020 with beauty as the most dynamic category, growing at 61% CAGR. With this assumption, beauty is estimated to grow from 3% to more than 10% of the total e-commerce market in the Middle East.”

An article by Beauty Business Journal reveals that while consumers in the developed and emerging markets of the Middle East are happy to shop for beauty products online, brands have yet to attract the enthusiasm of these consumers to the benefits of online shopping. Although overall online product sales in

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the region may be growing, however slowly, beauty products still only make up a fraction of the total spend.

Shopping in physical stores is regarded by many consumers in the Middle East as a source of entertainment; going to malls and markets is seen as a form of recreation.

One of the key motivations to online shopping, namely lower prices, does not provide enough incentive to change and the prospect of saving money online is unlikely to modify this behavior. This preference for brickand –mortar stores is a key reason why major international beauty brands—including

L’Oréal— have been reluctant to set up their own e-commerce sites in the region. L’Oréal markets its products in the region through existing e-commerce channels.

Bakkari continues: “To meet the demand of the online and offline market, we have developed an omni-channel approach. As for supply chain, e-commerce is a disruptive change as we need to deliver anything that the consumer needs, anytime and anywhere.

In line with the trends, we have restructured our supply chain operations with agility, costcompetitiveness, and time to market (last mile delivery) in mind. To strengthen our position

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within the e-commerce universe, we developed our e-commerce business through pure players such as Souq.com, Namshi, Boutiqaat to name a few and e-retailers such as Sephora, Lifestyle, and Faces; as well as our own direct to consumer platforms such ae.Kerastase. com, www.kiehls.ae and many more that we will announce very soon.”

Market growth Last month, L’Oréal announced plans to invest in the fund Partech Africa, an investment fund launched in early 2018 within Partech, and dedicated to the development of tech projects

in Africa. This investment is in addition to L’Oréal’s previous equity investments in venture capital funds (Partech International Ventures, Founders Factory, Raise Investissement).

L’Oréal plans to forge partnerships with start-ups and entrepreneurs active in the development of innovative products and services that facilitate access to consumers located in remote areas or informal environments.

The brand’s market share in the countries that it operates in Africa and Middle East is 9.8%. According to the company’s annual report, despite substantial declines in these markets, the situation is stabilising

in the Gulf states. Egypt’s growth was declared “dynamic”.

Says Bakkari: “The Middle East continues to be a dynamic market with significant opportunities, particularly in Saudi Arabia and UAE. Our upcoming innovations linked to the diversification of distribution channels and e-commerce will play a key role towards achieving our ambition and strengthening our leadership in the industry. Part of that is accelerating the opening our free-standing stores across the region including Nyx Professional Makeup, Kiehl’s, Urban Decay and Roger & Gallet.”

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Warehouses

Photo courtesy Siraj Power

Structural quality Productivity is directly correlational to the design of a warehouse.

Mehak Srivastava finds out why

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or any logistics service provider, ensuring optimal usage of the given space is a must to achieve full potential. Designing a warehouse in a manner that prevents the company from using it to its full accommodative capacity, failure to understand how technology and software could enhance operations, and turning a blind eye to sustainability are some of the common roadblocks.

Giolog is a consultancy and project management company, focussed on the turnkey delivery of logistics and industrial facilities in the

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entire Middle East. General manager Lionel Haggard remarks: “The minimum requirement in designing logistics facilities is to ensure that all aspects which are operationally relevant for the user of the warehouse or distribution centre are incorporated into the design of the facility from the beginning. Even for simple logistics facilities this includes the structure and quality of the floor, layouts that support smooth flows of products, up to the many details in docking solutions that may have an impact on daily operations.”

Haggard believes that if this understanding of logistics operations can be reflected in the design of a logistics facility, it will help to reduce costly changes (variations) during construction, and prevent excessive maintenance and operational costs for the user once handed over.

“Intra-logistics processes and building designs for logistics facilities are far more complex than an initial look at a general warehouse would suggest,” adds Haggard.

For projects, Giolog has established a strategic partnership with the architect Planquadrat

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Middle East (PQME) and ADI, a company active in cargo services, e-commerce for flowers, business development, consulting, and advisory services. ADI is also known for developing the master plan for Dubai Logistics City in Dubai, which is now being replicated by other international developers. In addition, Giolog also partners with several MEP, fire protection consultants, and material handling equipment/automation systems suppliers that can complement the scope of services depending on the client’s approach to a new logistics facility project. Giolog and its partners translate the operational and logistics requirements into facility layouts and manage the project from start to handover as one point of contact for the client. This includes land utilisation plans, logistics feasibility studies, preparing project time schedules, architectural and structural designs, finalisation of tender process, awarding the contract to suitable contractors, value engineering, construction supervision, costs, quality, and time control during the entire phase of construction and handover. For the past 10 years, Giolog has embraced the role of consulting different clients and managing a number of unique logistics facility projects in the region.

“We see two main topics that definitely affect the landscape of logistics facilities in the Middle East,” notes Haggard. “One of these is the effect of e-commerce on logistics operations and facilities; the other is the effect of deregulation, that requires importers/distributors and retailers to rethink their logistics strategy.

Both topics lead to a trend away from simple standard and multi-use facilities, towards facilities that need to enable specific and tailormade logistics operations.

“For the design and planning of a logistics facility, this has serious implications and instead of designing and planning just a space that leaves the user with a certain flexibility to incorporate logistics operations into and predesigned “box”, now the logistics processes and flows need to be designed and planned first, thus the facility design needs to be ‘from inside out’.”

The initial design ideas of logistics facilities would also incorporate authority guidelines, on plot usage and client requirements for parking, external storage, office areas etc.

“We at Giolog, look to utilise the plot area effectively and efficiently,” continues Haggard.

“So, for example, there is often a dead internal space above the docking/loading bays and we might suggest a mezzanine level that could incorporate offices or different storage options.

Lionel Haggard

Considering local authority and industrial zone regulations, the site proportions should allow for future extensions, mandatory small vehicle parking, sufficient space for truck movement, plot position on the road (distance from junctions, roundabouts, etc.) to ascertain building placement and allowable entrance and exit by Dubai RTA.” Apart from following the overall national regulations, designers have to respect and take into consideration codes that may apply specifically for certain areas, activities, and type of logistics facilities. Haggard stresses that this is one of Giolog’s areas of expertise.

“For example, in Dubai, the design has to satisfy Dubai Green Building codes, local authority regulations on plot coverage, facility usage, plot access, building height, appearance, and connection to services. Other government bodies whose codes must be adhered to are Dubai Civil Defense, Dubai Electricity & Water Authority (DEWA), Roads & Transport Authority (RTA), communications providers like Etisalat and Du, as well as various free and

industrial zone authority representatives, such as Smart World in Dubai South and Airport Aviation Authority.

“In addition, Giolog will follow guidelines on choosing a future-proof site, ensuring labour friendly environments, assessing weather and natural related risks and potential fire hazards.”

Civil Matrix Contracting is a Dubai-based turnkey contractor for design and construction of industrial projects in the UAE. The company’s portfolio includes warehouses, workshops, factories, labour camps, plus several technology-precedent and green building solutions.

Director Manish Kashyap highlights common infrastructure trends in his sector: “Warehouses tend to prioritise things like nearness to the airport and port, location as per a free zone or industrial area, access from main road, turning radius of containers inside the plot, total number of loading-unloading docks, etc.”

Despite the growing distance of Dubai’s logistics hubs from the main city, Kashyap believes that construction costs have not been impacted significantly.

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Warehouses

Laurent Longuet

David Auriau

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“For the operator, [the location] depends on whether he is catering to local market or exporting. From a traffic point of view, it is better to have the logistics hub outside the city. Modern day logistics hubs are properly planned and based on modern infrastructure, making them easier to access and supply services to.”

Kashyap adds that when it comes to implementing a design, some of the challenges that emerge include height of the facility (number of pallets that can be stored) versus cost; number of containers that can load-unload simultaneously versus maximum total built up area, since more container loading numbers reduce built up area; and construction of special design parameters such as temperature-controlled warehouses.

Technology Kashyap remarks: “Specific technology systems are studied and designed right from the design stage and are incorporated during construction, based on the plans. For example, for high logistics facilities, we have in-rack sprinkler system in the racking system, which needs to be installed during construction stage only.”

Haggard is confident that quite a number of logistics facilities currently being planned and implemented in the region will host semi-automated or even automated logistics operations.

“We do not see that this is necessarily caused by the increase in cost of labour the Middle East, we rather see that the markets demand logistics operations to deliver faster and more reliable output, often covering very large numbers of small shipments at a high service level for their customers.

“If in a project it becomes clear that a logistics facility may require any automation or mechanisation, it is mandatory to plan it from inside out. This does not only apply to highbay warehouses, where this approach is clear anyway, but any type of the automation or mechanisation in a logistics facility. Thus, the logistics processes and (alternative) technologies need to drive the design process.”

Giolog and its partners include the discussion and study of utilising automation and mechanisation technology into the scope of our offering.

“Our experience not only reflects logistics technology in itself but also the specific market situation in the region, such as verifying processes, supply chain set-up of various industries, etc., which may be relevant for projects of global players— what works in their home country may not be suitable in the Middle East.”

Most facilities are designed within authority guidelines to client requirements, which

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usually only come down to usability, longevity of function, budget, and return on investment. Haggard points out that logistics facilities with temperature-controlled areas are very energy intensive.

“Specialised buildings with temperaturecontrolled areas are considered in the same way as regular logistics facility structures, but with more technical consideration on specialised elements, for example high standards of thermal insulation, air tight control of air infiltration through external building envelope, control of temperature loss through internal and external doors and openings, electrical loads, fire codes, MEP, and customised heating, ventilation and air conditioning.”

Sustainability Low-carbon and environmental-friendly designs with maximum energy savings for logistics facilities become increasingly important.

Haggard mentions: “A variety of technologies can be suggested by Giolog and its partners to be employed to projects, which ensure the greatest possible comfort with lowest possible energy consumption. We encourage the dialog and presentation from providers in the eco section of the market.

Our approach is to suggest possible eco options to the client at the initial design stage, with an assessment of the pros and cons, and to conduct client-provider meetings. If required, Giolog and its partners would then incorporate the systems into the overall design for both MEP and civil applications.

“An example would be roof mounted solar panels, where we may have to consider extra load on the roof and a roofing system to which the solar panels could be fixed, without penetrating the roofing sheets. In addition, a sophisticated ventilation system can use heat recovery technology to keep the air at a pleasant temperature throughout the building. Therefore, Giolog and its partners recognise environmental audit systems, such as LEED (Leadership in Energy and Environmental Design) already in the beginning of the design stage.”

Dubai-based SirajPower was born out of the partnership between Corys Environment, the environmental investment arm of Green Coast Enterprises, a family owned business established in 1977, and Akuo Energy, a leading French independent renewable energy power producer. The joint venture is devoted to net metering and provides comprehensive turnkey net metering solutions on solar rooftops in the UAE. Whilst the partners have been operating in the field for a number of years and across multiple geographies, SirajPower officially launched its operations in Dubai in January

Manish Kashyap

2016, and since then has secured a number of large and prestigious projects ranging from 0.5MW to 3.5MW, all with blue chip names in the region, including RSA Global, Al Abbar, and Landmark Group.

David Auriau, director, believes that when it comes to sustainability in the region, the trend is extremely positive.

“While 10 years back it was nearly impossible to develop any solar project in the region, things have changed completely now. All countries in the region have started to implement regulations allowing for solar projects to be developed and, accordingly, we have seen this activity peaking up over the last years. Given the

very strong commitment of the leadership in the UAE, we are extremely confident that this will continue its upward drive.”

Auriau highlights that this trend works especially well in the case of logistics companies.

Given the large size of their facilities, these companies can reduce drastically their carbon footprint to nearly zero and at the same time, reduce substantially their energy bills.

He says: “The carbon footprint reduction can give them some competitive advantage when it comes to attracting customers, who are sensitive to environmental aspects and, moreover, it has a very positive impact on the staff: people are proud to work for a company that has nearly zero carbon footprint.”

Laurent Longuet, director, SirajPower, explains how a sustainable solution, such as solar panels, are fit into the overall design of a warehouse: “The design of the solar system can be done on existing buildings as a retrofit. However, for new buildings, we generally propose to our partners to work alongside the building architect or designer to optimise the design of the building to maximise the energy that can be produced by the solar system.

“There are no specific challenges for installing solar system on logistic facilities. On the contrary, as long as it is done in a professional manner, logistic facilities, due to their large sizes, offer the best opportunities for solar production. We at SirajPower have partnered with some of the biggest players in the logistics industry in Dubai and we do strongly promote such solutions with others.”

Photo courtesy Giolog

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R e p o rt

Champion the cause A brief by BSR on the most relevant, urgent, and probable human rights impacts for the transport and logistics sector and opportunities for positive impact

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uman rights are inherent to all human beings. They are defined and established in more than 80 international legal instruments and include fundamental protections of human dignity, needs, and freedoms, such as food, housing, privacy, personal security, and democratic participation. Since the adoption of the Universal Declaration of Human Rights (UDHR) in 1948, the responsibility to protect human rights has primarily fallen on governments. Beginning in the early 2000s, however, it became increasingly clear that the freedom enshrined in the human rights

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framework could also be violated—and promoted—by the private sector.

In 2011, the UN Human Rights Council unanimously endorsed the UN Guiding Principles on Business and Human Rights (Guiding Principles), the first international instrument to assign companies the responsibility to respect human rights. The guiding principles state that governments must put in place good policies, laws, and enforcement measures to prevent companies from violating rights; that companies must refrain from negatively impacting rights even when governments are failing to

create or enforce necessary laws; and that victims of corporate abuses must have access to effective remedy. As part of this responsibility, the guiding principles require companies to undertake due diligence to identify and manage their negative human rights impacts.

This issue brief identifies the 10 most relevant, urgent, and probable human rights impacts for businesses operating in the transport and logistics (T&L) sector. The information here is gathered from BSR’s direct engagement with T&L companies, as well as our 25 years of experience helping companies in all

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sectors manage their human rights risks.

The T&L sector comprises a wide range of operations and sub-sectors, including aviation, freight forwarding, railroads, trucking, and shipping. While each of these sub-sectors will have its own human rights profile and challenges, this brief highlights risks universal to the sector as a whole.

T&L is a major provider of employment and a key partner in global trade and manufacturing. This provides both challenges and opportunities when it comes to human rights.

Top 10 human rights risks for the transport and logistics sector 1. Greenhouse gas emissions As a major emitter of greenhouse gases, issues of air pollution, and especially climate change, are of high salience for the T&L sector. Climate change generates impacts far beyond the environment, including restricted food supplies, reduction in potable water, mass migration, and, potentially, political upheaval, all of which hold severe human rights implications.

2. Human trafficking The movement of goods and passengers often takes place along the same road, sea, and air networks as human trafficking rings. In countries around the world, particularly autocratic and failed states, local shipping companies may be linked to human trafficking in a number of ways, both visible and invisible. T&L companies should ensure that they know the local trafficking context where they do business and engage with forced labour and migration NGOs to ensure that their operations do not contribute to these violations.

3. Forced labour T&L companies rely on large, low-skilled workforces and often use recruitment companies to find and train employees. These companies, especially in poor, autocratic, or highly informal economies, are at high risk of employing workers under forced labour conditions. Indirect workers may be coerced into paying recruitment fees, may work illegally without visas, or may have their passports confiscated and wages withheld. This is even a higher risk where logistics companies hire manpower suppliers: proper vetting of those labour agencies is critical to minimise the risks of forced labour in the supply chain.

4. Working conditions In every sector, global expansion, technological progress, and consumer expectations have pushed companies to compete on flexibility and responsiveness. While this has re-

sulted in significant gains in development in some places, it has also applied downward pressure in others to reduce wages and degrade working conditions. This is especially acute for road transport workers, and the T&L sector should ensure that international norms on rest breaks, hours, and overtime pay are respected, regardless of local norms or competitive pressures.

5. Collective bargaining As seen above, competitive pressures affect the workplace in myriad ways. In recent years, this has become especially acute for the issue of collective bargaining. In many countries, independent unions are not only rare, but illegal. This applies still more pressure on employers—and their suppliers—to restrict the ability of workers to voice their concerns and identify workplace violations. Regardless of the extent of their outsourcing or use of contractors, T&L companies should ensure that workers have access to effective means of collective bargaining, whether through a union, works council, or employee association.

6. Discrimination The T&L sector has historically been a maledominated industry, which has at times resulted in unfair hiring practices, pay disparities, workplace harassment, and unfavourable treatment for minority groups in promotion and professional development.

For companies operating in global markets, respecting employees’ rights means guaranteeing equal opportunities for every member of their diverse workforces.

7. Security forces The T&L sector relies heavily on private security companies to protect staff and inventory.

If local security staff are not vetted, trained, and accountable to their employer’s social values, they represent a severe risk to local communities. T&L companies should ensure that they avoid security abuses by private contractors by actively engaging with them to ensure their practices, training, and equipment are compliant with human rights.

8. Land acquisition and resettlement Infrastructure is critical to the T&L sector.

Roads, ports, canals, and other transport networks are often built by third parties, however, and may be developed without adequate consultation and compensation for land expropriated from local communities.

9. Grievance mechanisms and remedy The UN Guiding Principles not only require companies to identify and manage their human rights risks, but to actively engage with the people who may be affected and ensure that victims have access to effective remedies. For the T&L sector, this means installing grievance mechanisms that allow workers and communities to point out how the company is impacting them. For some companies, this may be a hotline for employees. For others, it will be a town hall meeting for communities near an infrastructure project. Regardless of the form they take, effective grievance channels are essential for preventing human rights violations and providing remedy to affected parties if they are harmed.

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10. Bribery and corruption The T&L sector engages with government extensively, from single vans passing through customs checkpoints to fleets of ships accessing government-owned canals and ports. This makes the sector a high risk for both grand corruption and petty bribery. These acts are inherently human rights violations, as they skew government attention and resources away from the needs of the people they are entrusted to serve. Almost every link in the logistics chain, from where a road is built to how a procurement contract is awarded, contains risks of corruption.

Top 3 opportunities for positive impact 1. Enable trade While trade expansion and access to global markets are crucial to generate growth, transport infrastructure connects people to jobs, education, and health services. For example, the sector can play a great role in promoting access to health by supporting efficient movement of sensitive cargo, such as vaccinations, medications, and technical equipment.

2. Combat human trafficking Given their proximity to the issue of human trafficking, T&L companies can play a vital role in raising awareness about it and work with their suppliers and government partners to identify high-risk areas and telltale signs.

Proper labour programs, including a code of conduct, fair labour policies, training, due diligence, and supplier management, are essential to improve practices in the supply chain.

3. Improve road safety In nearly every country, traffic accidents are among the top 10 causes of death. In recent years, a number of international agencies have begun to see this as a development issue, as the poorest and most remote populations are often at the greatest risk. T&L companies can promote road safety through awareness campaigns for the public and their suppliers, and in doing so, achieve positive impacts on employees’ and communities’ right to life, health, and safety.

Emerging human rights issues Working conditions in ship breaking NGOs are increasingly highlighting the risks of child labour, forced labour, and environmental pollution in ship breaking. The T&L sector is seen as responsible for impacts throughout the entire lifecycle of its operations, and this includes disposal of material and equipment.

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Transport of migrants Every year, millions of people decide to leave their homes to escape conflict or persecution— or simply to improve their lives. This decision often involves transport and carries with it huge risks. T&L companies should understand the increasing human rights risks they face due to this worldwide trend, as well as the opportunities to promote and secure the rights of this often highly vulnerable population.

Accessible and affordable public transport For many poor people, public transport is their only link to jobs, family, and social services—and one of their greatest costs. The T&L industry can play a key role in promoting access to public transport and, ultimately, access to opportunity.

Conflict-affected areas Building or restoring transport infrastructure is one of the first steps in the post-conflict recovery process. While these environments can be extremely challenging, they also represent one of

the most significant ways that T&L companies can contribute their expertise to development.

Promoting the circular economy Logistics plays a critical role in implementing “circular economy” models that minimise the use of resources and reduce carbon footprint. As a technology-intensive industry, the T&L sector should be at the forefront of developing innovative models to reduce waste, reuse industrial byproducts, and invest in renewable energies.

This brief was originally published on bsr.org/ our-insights.

BSR is a global nonprofit organisation that works with its network of more than 250-member companies and other partners to build a just and sustainable world.

From its offices in Asia, Europe, and North America, BSR develops sustainable business strategies and solutions through consulting, research, and cross-sector collaboration.

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World-class truck drivers compete for the title in Volvo Trucks Driver Challenge 2018

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ho will claim the title of the world’s best all-round truck driver?

This was the question asked at the world final of the Volvo Trucks Driver Challenge 2018, that took place in Gothenburg from 13-14 September. This year’s competition involved more challenges than ever before, attracting professional drivers from 33 countries.

The winner was Piotr Krahel from Poland, while the second and third places were bagged

by Bert Johansson of Sweden, and Simo Laukkanen of Finland, respectively.

“The Volvo Trucks Driver Challenge brings together all the different challenges that truck drivers face every day. Their skills are often the decisive factor in the productivity and profitability of our customers. Drivers also make a major contribution to road safety. The final gave us the opportunity to see incredibly skillful drivers doing an impressive job of handling their trucks,” said Maria Bergving, SVP brand, marketing, and communication at Volvo Trucks.

The competition took place for the sixth time and this year it focussed on three areas: fuel efficiency, productivity, and safety.

Bergving added: “The drivers competing for the title achieved excellent performances in each area. They showed that it is possible to have a highly fuel-efficient driving style, deliver a fragile load quickly in good condition and, at the same time, follow the road safety regulations to the letter.”

It was the first time that drivers from the United Arab Emirates and Saudi Arabia participated in the World Finals, after winning the local competitions in their respective countries.

The aim of the Volvo Trucks Driver Challenge is to draw attention to the important work done by truck drivers. It is also a way of attracting young people to the job, which offers good career opportunities. The logistics and transport industry is constantly growing, but there is now a shortage of trained drivers all over the world.

Lene Larsen, Volvo Trucks Driver Challenge project manager, explained: “To help our customers to recruit and retain skilled drivers, we

Facts about Volvo Trucks Driver Challenge • The competition has been held every two years since 2009.

• This year’s competition involved more than 12,000 drivers. A total of 33 qualified to the world final.

• The final was held at the Volvo Trucks Experience Center in Gothenburg, from 13-14 September.

• The competition aims to put the driver in focus and reinforce the importance of skilled and competent drivers.

• The set up for the World Final was based on two truck models (FH and FMX) and two tracks (fuel and productivity) in a closed off area.

The winner had the highest combined score from the two different driving stations measuring safety aspects, as well as fuel efficiency and productivity. have been focussing for many years on the design of the driver’s environment and the drivability of our trucks.

“Driver support systems, which make it easier for drivers to maneuver trucks safely, and driver training covering everything from handling trucks to a fuel-efficient driving style, are other examples of how we help drivers to do a

first-class job and to grow and develop.”

Winner Piotr Krahel remarked: “Winning the Volvo Trucks Driver Challenge is a big achievement for me! The final was really tough and I was up against a lot of very experienced drivers. I’m impressed that Volvo Trucks stages this motivational event which attracts so many drivers from all over the world.”

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Ta l k i n g p o i n t

Tried and tested Experts Ralf Seifert and Richard Markoff believe cost-to-serve’s benefits are so clear, but are rarely applied in a sustainable, repeatable way

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very supply chain executive has had the frustrating experience of witnessing inefficient practices in their fulfillment operations. One of ours was during a tour of a consumer product manufacturers’ distribution center. Workers were carefully taking products that were shrink-wrapped by three, cutting off the plastic film, putting two units in a box, and returning the third to storage. The distribution centre (DC) manager, when asked about this seemingly slightly-dangerous and low-added value task, explained that their biggest customer had requested an order minimum of two for this product, even though it arrived from the factory shrink-wrapped by three. Later, we discovered upon arriving at the order preparation area, that the floor was filled with pallets with only a few boxes on each. Here the manager sheepishly explained that another big customer had requested mono-SKU pallets, despite the wasteful effort and space it required. These were promises made by the sales force without

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consulting him, and his operating costs were spiralling as a result.

Simple, intuitive and hard This story is a common one. In an effort to please customers, supply chain services replace price rebates by offering non-monetary benefits in operations. These often take the form of high delivery frequencies, small order multiples, direct-to-store deliveries, and customised shipping conditions.

Another manifestation may be allowing a customer to engage in inefficient operations practices such as manual ordering rather than EDI, suboptimal delivery slotting, excessive claims or tailored product offerings.

The most well-known approach to try to understand and address this dynamic is cost-toserve. At its core, cost-to-serve is an application of activity-based costing. A company would look at its fulfillment processes from reception, put-away, storage, order treatment, order picking, shipping, and eventual returns. Activity keys

are selected for each step, for example orders and order lines for order treatment, or pallets and weights for shipping, as a means of breaking down each step into granular activities and their associated costs. Each customer can then be evaluated by tallying up the activities executed on their behalf and the costs this generates. The total is the cost-to-serve for that customer.

Cost-to-serve is one of those supply chain ideas that is so intuitive and the benefits so clear, yet in speaking to supply chain executives we have seen that in fact it is rarely applied in a sustainable, repeatable way.

The first hurdle to cost-to-serve – as is the case for many analytical approaches – is in securing reliable, clean data from which to start the analysis. The basic required data of number of orders, order lines, units per line, type of picking, and shipment type and cost seem reasonable enough. Yet one partner at a major supply chain consulting company told us that even in mature, large companies that have

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invested extensively in Enterprise Resource Planning (ERP) getting satisfactory data sets is difficult, and almost impossible to do so repeatably. One key reason is the multitude of sources required for the source data: warehouse management system (WMS), customer relationship management (CRM), and transportation management system (TMS) to name a few. These are often discrete applications in a larger ERP footprint.

From there, managerial questions can bog down a cost-to-serve initiative. Disagreements can arise about what data to include as supply chain costs, for example the value of returned goods, or what activity key truly drives the cost of a given task. Some companies use a notion of ‘logistics rebate’ in place to capture the difference in fulfillment costs with different consumers. Its utility would be that the more the cost-to-serve a customer is optimised, the higher the rebate offered to the customer. We spoke to one consumer goods market leader who adds the logistics rebate to their internal supply chain costs, reasoning that lost revenue due to the rebate is an equivalent to logistics avoided. However, our impression is that this company’s sophistication in implementing the logistics rebate is an exception, and that most companies have allowed the logistics rebate to be polluted by other commercial variables and no longer reflects the true cost-to-serve.

There is a temptation to try to resolve this by implementing dedicated cost-to-serve tools, but that does not address these issues, or the need for buy-in from senior management to change underlying behaviors. However, when cost-to-serve is part of a larger effort to capture the full cost of doing business with a customer, including other expenses like trade and merchandising, these friction points can be avoided (Freeman, Blair, et al.

“Managing your cost-to-serve.” Supply Chain Forum: An International Journal. Vol. 1. No. 1.

Taylor & Francis, 2000.)

In one egregious example of the need for senior management sponsorship, we spoke to one company that was incurring elevated handling and transportation costs to deliver promotional displays to large retail accounts direct-to-store rather than through the usual customer DC. After much investigation, the supply chain manager discovered that it was the marketing team that insisted on the direct deliveries. The later shipping dates allowed marketing more time to define the promotional materials, and they were not concerned with the associated supplemental supply chain costs. Senior management intervention is often needed to resolve cross-functional situations like this that are

“Folding costto-serve into a broader managerial analysis can help overcome other potential obstacles.” exposed by cost-to-serve analyses.

Folding cost-to-serve into a broader managerial analysis can help overcome other potential obstacles. Looking back to our opening example, many supply chain cost drivers can be explained by the sales force promising services without bearing accountability for the costs they generate. Once these services are in place, it is a sensitive negotiation to return to the customer and claw them back. A full customer profit and loss approach, of which cost-to-serve is just one element, can help mobilise management to address the root causes of supply chain inefficiencies.

The supply chain consulting partner we spoke to echoes this view: “The tradeoffs between distribution efficiency and commercial costs are difficult to quantify. On top of that, the impacts of changes are hard to simulate in terms of changes to the DC footprint, transportation costs or in the case of omni-channel, the amount of returns.”

These challenges were confirmed by the head of the cost-to-serve initiative for another consumer goods company. This company is experiencing difficulty rolling out a sustained Europe-wide program: “We’ve only had success where there was a passionate champion for the project. But there is too much turnover in the supply chain and on the business side to maintain the analytics, much less get to root causes and remedies.”

Omni-channel impacts However, he offered the insight that omni-channel risks to be an inflection point for cost-to-serve.

“The rise of omni-channel changes the order portfolio, driving up costs and complexity. We are being challenged to explain the increased costs just as senior management is trying to determine the true profitability of our omni-channel business.”

Perhaps the advent of omni-channel will drive a willingness to push cost-to-serve efforts forward.

Countering that positive view of the influence of omni-channel, the supply chain consulting partner has found that omni-channel’s impacts are more negative.

“With many of our clients, omni-channel is not a choice, so we have to ‘go’ anyway, and prioritise implementing and execution. It’s a logic of desperation as much as it is of strategy.”

Even the champions are feeling the pressure of execution costs. Amazon just announced, for the first time, that the cost of Amazon Prime will increase by 20%. In fact, in the first quarter of 2018, Amazon’s shipping costs as a percentage of sales increased 260 basis points, helping to explain their first-ever increase in Prime membership rates. Yamato, the Japanese logistics company supporting Amazon in Japan, has announced its first shipping rate increase in 27 years, in large part due to the complexities brought on by the rapid rise of omni-channel sales.

Take aways The basics can be hard to do, and cost-to-serve would seem to be a fundamental, essential practice. But the realities of extracting data, complex ERP and management commitment can impede even the most foundational analysis. ‘Going digital’ with Supply Chain 4.0 tools will not help this old-school problem. The solution lies in disciplined application of data management along with clear sponsorship from senior management to address the identified root causes of supply chain inefficiencies.

The increasing cost pressures being brought to bear by the desire to meet the expectations of omni-channel may force companies to look at their operations differently and generate a readiness to call into question these business drivers. If the supply chain is truly to be an element in the formation and implementation of business strategy, then only analyses done through the lens of business practices can lead to true understanding of the underlying root causes of cost drivers and paths to improvement.

Ralf Seifert is professor of Operations Management at IMD. He directs IMD’s new Digital Supply Chain Management program, which addresses both traditional supply chain strategy and implementation issues, as well as digitalisation trends and new technologies.

Richard Markoff is a supply chain researcher, consultant, coach and lecturer. He has worked in supply chain for L’Oréal for 22 years, in Canada, the US and France, spanning the entire value chain from manufacturing to customer collaboration.

Logistics News ME | October 2018 | 47

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Up d a t i n g y o u o n t h e r e g i o n ’ s s u pp l i e r s

Continental introduces tyre solution for port application

Bigger, faster, safer, greener, smarter: based on the five major trends for the future of ports, Continental, the leading automotive, tyre, and technology company, has announced its latest developments for the port industry, unveiling new Port Plus compound for V.ply tyres.

With this advancement, Continental is expanding its port tyre portfolio which already includes innovative solutions – ContiConnect and ContiPressureCheck digital tyre monitoring platforms for commercial fleets. In addition to the V.ply tyres, Continental’s radial tyres for port applications and ContiConnect will be available in the Middle East by 2019.

Continental’s port tyre and solutions portfolio has been specifically engineered to meet the safety standards, weather, road, payload, and driving requirements in the Middle East. One of the causes of tyre failure in this region is

the build-up of heat in tyres due to lack of maintenance.

Ambient temperatures in the region often exceed 45°C in the summer, increasing wear and reducing durability of standard tyres.

Jose Luis de la Fuente, managing director of Continental Middle East commented on the new product offerings which will launch in the region next year: “Continental are always looking at ways to innovate technologies and improve safety standards for our customers. In the Middle East, over half of measured trucks and trailers are underinflated, resulting in road safety risks and unpredictable costs for fleets. We believe that the new port radial tyres coming to the region next year, combined with our new digital technology, ContiPressureCheck and ContiConnect, will contribute to enhancing tyre safety in the Middle East.”

48 | Logistics News ME | October 2018

Ajman Free Zone signs courier services agreement with Zajel

Ajman Free Zone has signed a logistics services agreement with Zajel, the leading national company in the UAE for courier services.

The agreement was signed by Fatima Al Falasi, acting director general of Ajman Free Zone, and Thani Abdulla Al Zaffin, director general, emaratech and Board Member of Zajel. The signing ceremony was attended by Khawla Kabanji, CEO of Zajel.

The agreement aims to upgrade the pickup and delivery of documents and records for companies and individuals dealing with the free zone, with the highest standards of efficiency, speed and reliability enjoyed by the highly experienced Zajel.

Al Falasi commended the agreement and noted that it comes in the framework of the free zone’s plans to develop this kind of services, taking into consideration that it involves great confidentiality and privacy due to dealing with documents and information that are very important to clients.

“The agreement will contribute to making clients happy, and this is what we aspire to do in a free zone that includes over 12,360 companies,” said Al Falasi.

In turn, Al Zaffin stressed that the agreement is a qualitative addition to the repertoire of Zajel, given the huge size of the free zone, which is one of largest national institutions in the UAE. www.cbnme.com

O cto b e r 2 018

WABCO provides advanced tech services to Hino trucks WABCO Holdings, a global supplier of technologies that improve the safety, efficiency, and connectivity of commercial vehicles, announced that it has entered into a strategic partnership with Hino Trucks, a premier commercial truck brand headquartered in Novi, MI, U.S. Under the agreement, WABCO will provide its latest generation braking control technology and a range of advanced driver assistance systems (ADAS) for Hino Trucks’ forthcoming heavy-duty truck debut in North America.

WABCO will furnish Hino Trucks with a range of technologies from its portfolio of industry-leading safety and vehicle control technologies to support Hino’s all-new XL Series line of Class 7 and 8 heavy-duty trucks which will begin series production in early 2019. These include WABCO’s breakthrough modular braking system platform mBSP to enable anti-lock braking (ABS), ESCsmart Electronic Stability Control, and products from its suite of industry-leading ADAS technologies.

Hino will offer their new XL7 and XL8 trucks with WABCO’s breakthrough OnGuardACTIVE collision mitigation system onboard.

With powerfully differentiating performance, particularly in low visibility conditions, OnGuardACTIVE assists truck drivers to recognise and respond to potentially dangerous traffic or weather conditions that could lead to a rear-end collision with moving or stationary vehicles ahead.

This radar-only system provides acoustic, visual, and haptic alerts to prompt the driver’s response to imminent collisions. If the driver does not take corrective action, OnGuardACTIVE can autonomously apply the brakes and can bring the vehicle to a complete stop.

Hino will also offer this range of heavy-duty trucks with WABCO’s powerful OnLaneALERT Lane Departure Warning System (LDWS). Helping drivers to avoid unintentional lane drifting, the most common accident involving heavy-duty vehicles, OnLaneALERT utilises a forward-looking, windshieldmounted camera to monitor the vehicle’s position within its highway lane. When the system detects the vehicle crossing its driving lane markings without a turn signal having been previously activated, OnLaneALERT provides an audible warning from the side of the vehicle affected. This alert prompts the driver to take corrective action to help prevent potential collisions or road run-offs.

“WABCO’s global technology leadership in the commercial vehicle industry makes it the perfect partner to support our entry to the North American heavy-duty truck segment,” said Yoshinori Noguchi, president and CEO, Hino Trucks North America.

“As we continue to expand Hino’s presence in the local Class 7 and 8 market, WABCO’s ADAS and innovative modular technologies offer distinct advantages that further differentiate the versatile and stylish Hino XL Series for fleet customers.”

“WABCO’s pioneering ADAS and modular braking system platforms provide significant advantages for global original equipment manufacturers seeking to penetrate new markets,” said Jon Morrison, WABCO president, Americas.

“We are honoured that Hino has selected WABCO to support the North American launch of its next-generation heavyduty trucks, underlining our technology leadership and relentless focus on delivering value for our customers wherever they choose to operate.”

Etihad Cargo, Trinity renew cargo partnership

Etihad Cargo and Trinity Logistics USA have renewed their air cargo partnership, with Etihad operating three weekly Boeing 777 Freighter services into Rickenbacker International Airport (LCK) in Columbus, Ohio, on behalf of the New York based global logistics provider.

Originally signed in June 2016, the extended partnership allows Trinity to continue to serve the high fashion industry for which it is most renowned, forwarding apparel from Colombo (Sri Lanka) and Hanoi (Vietnam), two of the world’s largest garment exporters, to Columbus Ohio in the United States.

In addition to these three weekly services, the partnership was further expanded to introduce an onward Etihad Cargo freighter connection between Rickenbacker Airport and East Midlands Airport (EMA) in the United Kingdom.

“The long-term extension of our agreement with Trinity is an endorsement of the positive working relationship we enjoyed over the past years,” said Abdulla Mohamed Shadid, Etihad Airways managing director, cargo and logistics services. It reaffirms Etihad’s commitment to fostering global logistics partnerships and enhances our network by focussing on key successful trade lanes.”

David Pereira, president Trinity Logistics, said: “We are happy to extend our agreement with a likeminded partner in Etihad. Our combined efforts to build a long-term sustainable solution for our clients has proved to be a success.”

Etihad Cargo has recently refreshed its strategy, gearing its fleet and network towards key trade lanes that leverage Abu Dhabi’s strategic geographical location, as well as increasing focus on high yielding segments with products like FlightValet (automotive), FlyCulture (arts and music), TempCheck (pharmaceutical) and FreshForward (perishables).

“Our efficient fleet of Boeing 777 freighters makes partnerships such as this with Trinity possible,” added Shadid. “Together with the belly-hold capacity of our passenger jets that provide access to 93 destinations globally, and our continued investment in digital and physical infrastructure, Etihad Cargo’s strategy brings commercial and operational benefits to both our partners and the end consumer and is a key element in Abu Dhabi’s aspiration to become a global logistics centre.”

Logistics News ME | October 2018 | 49

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The key exhibitions, conferences, and seminars coming up this month

October

3-4

October

9-11

Logistics & Distribution Brussels, Belgium The biennial event brings together professionals from the logistics and distribution sector, with a focus on innovation and automation.

This year’s edition will look into industry specifics like warehousing and layout of the warehouse of the future; handling internal/external storage goods, intralogistics, intelligent warehousing, material handling, etc.; tracking, data intelligence, IT and software, plus IoT, VR, AR; and last mile delivery and track and trace systems. The event is expected to see more than 150 exhibitors and 3,000 visitors, ranging from supply chain managers, warehouse managers, logistics managers, import/export managers, distribution managers, and IT managers. The event will take place simultaneously with the packaging fair Empack.

Post-Expo Hamburg, Germany Post-Expo is an international postal technology exhibition and conference, and one of the world’s leading events for the postal, express, and mailing industry. Exhibitors from home and abroad use the fair as a stage for presenting their new products and innovations to a professional audience of prominent engineers, business leaders, and directors from the postal, parcel and logistics sector. In addition, it provides an important business platform and a unique opportunity to build networks in the international postal industry. Sessions this year include e-commerce and last-mile delivery, logistics, digital disruption, strategic directions, autonomous futures, and expanding financial services, to name just a few.

50 | Logistics News ME | October 2018

October

11-13

October

23-25

China (Shenzhen) International Logistics & Transportation Shenzen, China Jointly held by Shenzhen Municipal People’s Government, China (Shenzhen) International Logistics and Transportation Fair (CILF) is a leading logistics and transport expo in Asia. Since its debut in 2006, CILF has been successfully held for 12 successive years and earned a popular reputation. Key events to watch out for at the event include the 3rd Sea-Rail Transport and Cross-Border Transportation Summit Forum; the 5th Cross Border E-Commerce Supply Chain Service Development Summit; the 4th Forum of 21st Century Maritime Silk Road; CILF networking days and one-on-one meetings; and the 7th Shenzhen World Port Chain Strategy Forum.

This year’s edition is expected to receive about 1,800 exhibitors from more than 50 countries and 130,000 visits from over 80 states and regions.

TransUkraine Kiev Kiev, Ukraine TransUkraine is an annual international trade fair for transport, transit and logistics. It is the only international event in the Ukraine, which represents the full range of opportunities in the transport industry as well as new technologies and logistical services. The fair will be accompanied by lectures and discussions on current topics such as integrated transport systems and solutions in logistics. Ukraine is geographically well situated at the junction of the traffic roads of Europe and Asia, ensuring comprehensive traffic and transport flow between the Western and the fast-growing Asian market. Part of TransUkraine is the fair InterStorage, the international exhibition for warehouses and stores. www.cbnme.com

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