Logistics News ME - April 2017

Interview

up the ante

Bold moves

FedEx in the hot seat

What does IoT have in store for the future?

Rapid growth for commercial vehicles

Connecting trade professionals with industry intelligence

April 2017

Despite the current economic challenges, Kuwait has lots to offer to the logistics and transportation sector in the future

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Start 8 | News 16 | Op-ed A focus on role technology plays in storing and retrieving warehouse items

Features 20 | Cover Story: Kuwait Is Kuwait well-placed for its logistics and transportation sector growth?

24 | Middle East Rail

2017 Take a look at the key highlights from one of the largest rail events in the region

20

28 | Interview

FedEx Express ISMEA chief talks about the company’s latest aerospace solutions

36

36 | Commercial

Vehicles The commercial vehicles market in the Middle East is ready for growth in the coming years

40 | Internet of Things Greater efficiency can be achieved with the help of IoT and digitalisation

24 50

46 | Viewpoint

How to eliminate oil and gas bottlenecks through supply chain analytics

50 | Report

How organisations rate themselves on 20 important trends in supply chain management

52 | Supplier News 54 | Diary Logistics News ME | April 2017 | 3

www.cbnme.com

Editor’s Note

I

t was quite a satisfying moment when I heard about Amazon finally agreed to buy the largest online retail marketplace in the Middle East, Souq.com. It is also likely that Amazon will now setup an office in the region. Well, it meant that online shopping enthusiasts like me will be able to buy Amazon products that aren’t currently available in the UAE. Amazon restarted talks to acquire Souq.com in a deal valued at as much as $650mn after walking away earlier this year when the two companies couldn’t agree on a final price, as reported by various media outlets. The retailer raised $275mn, making it the most valuable internet company in the Middle East, according to Standard Chartered Plc, which had invested in the company, reported Bloomberg. The Amazon deal is being driven by New York based Tiger Global Management which has a substantial stake in Souq. com. Souq.com’s smaller shareholder include South Africa’s Naspers Ltd, Standard Chartered Private Equity, IFC (a member of the World Bank Group) and Baillie Gifford.

But now since reports emerged of the potential buy-out, our very own Emaar Malls, the brain child of UAE-based business magnate, Mohamed Alabbar, has reportedly bid $800mn for the same acquisition. Alabbar had always been a contender to take over Souq.com, but through his own $1bn e-commerce

portal Noon.com, which is set to go live within weeks.

Currently the decision still lies in the hands of the shareholders who are yet to commit to sale bid from Amazon that will see Souq.com being undervalued by almost more than $200mn. Although this deal will prove beneficial to Amazon by which the global e-commerce giant is trying to get a foothold in the Middle East, one of the fastest growing e-commerce markets in the world.

Whether Alabbar will be able to restrict Amazon from entering his enclave is a factor that only time will decide. But for the time being, consumers can sit back and enjoy the ultimate clash of the titans in order to derive the best results.

CEO Wissam Younane wissam@bncpublishing.net Managing Director Walid Zok walid@bncpublishing.net Director Rabih Najm rabih@bncpublishing.net Group Publishing Director Diarmuid O'Malley dom@bncpublishing.net Group Sales Director Joaquim D'Costa jo@bncpublishing.net +971 50 440 2706

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www.cbnme.com/logistics-news 6 | Logistics News ME | April 2017

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Re g i on a l N e w s

Regional News An update from around the region

For News, features and more, Visit www.CBNme.com/logistics-news Follow us on twitter for breaking news: @logisticsnewsme Follow us on Facebook for up-to-the-minute breaking news

Contracts

RSA Logistics awards solar deal to SirajPower in Dubai South

D

ubai-based third party logistics (3PL) provider, RSA Logistics, and UAEbased SirajPower have signed a lease agreement to deliver a solar rooftop solution in the emirate.

SirajPower will develop a solar system of 1.1 megawatt on RSA logistics’ rooftop in Dubai Logistics City, Dubai South. The solar system will cover more than 90% of the energy consumption.

David Auriau, director at SirajPower, said: “This first-ofa-kind project will not only help cut energy expenditure, but will also help promote a green image among the public.

Logistics companies have a key role to play in transforming Dubai into the smartest city in the world, and we sincerely thank RSA Logistics for trusting our venture and partnering with us in this initiative of building a green economy.”

The agreement between RSA Logistics and SirajPower is in line with Dubai

8 | Logistics News ME | April 2017

Electricity and Water Authority’s (DEWA) Shams Dubai initiative, the new regulatory framework put in place by the Dubai government in order to encourage solar solutions across the emirate. It is part of the Smart Dubai initiative launched in 2015 by HH Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, to transform Dubai into the smartest city in the world.

The initiative encourages the development of grid connected rooftop solar capacity, and complements Dubai’s efforts to diversify energy sources and reduce energy demand by 30% by 2030.

Abhishek Ajay Shah, cofounder and managing director at RSA Logistics, commented: “We firmly believe in investing in sustainable initiatives that drive down our carbon footprint and help us act

responsibly towards our environment. While a project of this scale is a significant step for us, we are confident in its long-term benefits for energy saving.

“We are proud of our partnership with SirajPower and for being the first logistics company to engage in an environmental friendly project and are committed to contributing to the UAE government’s vision of making Dubai a global centre of clean energy, green economy, and sustainable development.”

SirajPower is devoted to net metering, and provides comprehensive turnkey net metering solutions on solar rooftops in Dubai. While the partners have been operating in the field for several years and across multiple geographies, SirajPower started operations on its first project in Dubai in January 2016, and since then has secured a number of large and prestigious projects, all with blue chip names in the region.

The role of technology is rapidly shifting from being a driver of efficiency to an enabler of fundamental innovation and disruption in air cargo management and ground handling.”

Brendan McKittrick, Chief Technology Officer, Mercator

www.cbnme.com

Logistics

Arcapita acquires $150mn yielding Dubai logistics portfolio Global alternative investment firm, Arcapita, acquired a portfolio of income-generating logistics assets in Dubai, for a total transaction value of approximately $150mn.

This transaction, together with eight warehousing facilities in the Al-Quoz area of Dubai acquired by Arcapita in 2016, will bring the value of Arcapita’s UAE logistics portfolio to $250mn.

The new portfolio will comprise up to 10 warehousing facilities, occupying a total built-up area in excess of 11ha, primarily in Dubai Investments Park (DIP).

As Dubai continues to consolidate its position as the Middle East’s commercial and logistics hub, Arcapita is utilising its sector knowledge to acquire assets that are located in close proximity to Al Maktoum International Airport, Expo 2020 site, and Dubai’s major transport and logistics arteries, read the company statement.

Approximately 60% of the assets are on a long-term lease basis to reputable firms that have undertaken significant capital improvements. The remainder of the assets comprises mixed-use facilities that are occupied by high-quality local and regional tenants and enjoy high electrical load capacities – a key requirement for many tenants.

Atif Abdulmalik, Arcapita’s CEO, commented: “We continue to present our investors with attractive investments in

sectors where Arcapita’s management team has significant expertise. We aim to capitalise on the burgeoning logistics sector of the UAE, which is increasingly being driven by the growth of e-commerce and the increase in regional trade to create a diversified logistics platform that covers the entire spectrum of the sector and deliver a stable yield and compelling returns for our investors.”

Martin Tan, Arcapita’s chief investment officer, said: “The Dubai logistics market continues to show signs

of growth.

The manufacturing, transport, and logistics sectors are major contributors to Dubai’s economy, accounting for approximately 22% of Dubai’s gross domestic product (GDP).

In the current low interest rate environment, our investors are looking for investments that provide a steady cash yield. In addition to providing a steady cash yield, we believe that this investment has the potential to be exited through a REIT listing in one of the regional bourses.”

Bitesize news

Integrated maritime solutions leader, Bernhard Schulte Shipmanagement (BSM), has taken the first ice class container feeder vessel, Eilbek, into management. Three other vessels – Barmbek, Reinbek, and Flottbek – will join the group.

Globe Express Services (GES) launched its new global corporate social responsibility (CSR) social campaign, ‘One Shipment One Dollar’, an initiative that seeks to help underprivileged children in pursuing their right to education.

Unipart Rail and Arabian Railway Company announced that they will form a joint venture (JV) company to deliver worldclass projects, supply chain services, and consultancy in Saudi Arabia.

ASICS has officially opened a subsidiary in Dubai as a part of the brand’s strategy to further expand its footprint in emerging markets while reinforcing its premium positioning in the region.

Logistics News ME | April 2017 | 9

Re g i o n a l N ew s

RTA signs deal with Ericsson for smart transportation Dubai’s Road and Transport Authority (RTA) has signed an agreement with Ericsson for deployment of its Regulatory Monitoring System, which will help transform and regulate the future of public transportation in the emirate.

The agreement will allow RTA to introduce the regulatory monitoring system that will provide greater consistency, transparency, and security for the authority. At the same time, it will help ensure high standards of services for public and private hire facilities in Dubai, the company statement added.

Ericsson’s offerings, as part of the agreement, will provide RTA with integrated cloud solutions based on a combination of suites including Advanced Transport Analytics, Connected Vehicle Cloud, Fleet Management products, services, and processes.

Adel Shakri, the director of public transportations systems at RTA, said: “This new agreement will have a major impact on the RTA’s end-user experience once the services are launched, and it will also further develop the Dubai Smart Transportation Services. We are pleased to be working once again with Ericsson, as Smart ITS system is the future of transportation in Dubai and we strive to enhance the experience for our customers. It marks as an exciting meeting point between traditional transport, new products, and services that are emerging.”

Wojciech Bajda, the head of industry and society unit at Ericsson (Middle East), said: “RTA’s transport system is driven by the needs of the people who move around the city and this transformation is the foundation for the future of Dubai’s smart transport system. Our latest agreement with RTA will deliver innovative and efficient services that will keep up with the current demand and growth of the market, and create a true multi-modal multi-agency transportation network to serve the general public of Dubai, in line with the Smart City Vision of the UAE.”

10 | Logistics News ME | April 2017

Results

Kuwait’s Agility reports KWD59mn net profit for 2016 Global logistics provider, Agility, reported a net profit of KWD59.1mn in 2016, an increase of 10.6% over the same period in 2015.

Revenue for the whole year stood at KWD1.2bn. For the fourth quarter of 2016, Agility reported a net profit of KWD15.7mn, an increase of 9.7% over the same period in 2015.

In view of growing optimism and ongoing progress to date with respect to Agility’s 2020 EBITDA target of $800mn, the board of directors proposed a three-pronged distribution recommendation to the annual general assembly of the shareholders, a cash dividend distribution of 15%; a bonus share distribution of 10% for the fiscal year 2016; and a share buyback program to increase its treasury share inventory up to 10% of its total share capital.

Tarek Sultan, Agility CEO, said: “We continue to steadily improve its financial performance, with Agility Global Integrated Logistics (GIL) closing the year with an EBITDA improvement of 17% and Agility’s infrastructure group showing an EBITDA improvement of 30.1%. The company generates healthy cash flows, and remains on track to reach its goal in EBITDA by 2020.

“To reach our target, we are focused on continuously improving our underlying performance in GIL, while also investing for the future in our infrastructure companies. We are growing its infrastructure businesses: undertaking several major industrial real estate projects in the Middle East and Africa over the course of the next few years,

expanding the shipping fleet of its Tristar business, and investing in the Reem Mall in Abu Dhabi. Our balance sheet will move towards a net debt position as our infrastructure companies fund their expansion plan.”

Agility GIL revenues decreased 7% to KWD928.4mn over the same period last year.

However, GIL’s net revenues grew by 1% on a constant currency basis.

Sultan added: “GIL continues to make progress.

Profitability is increasing, with EBITDA margins improving from 2.7% in 2015 to 3.5% over the course of 2016. Volumes are growing; air freight tonnage grew by 9.8% and TEUs grew by 9.3%, with better margins in both air and ocean. Our contract logistics business, with more than 186ha of warehousing space across the globe, also grew by 7.4% this year. That said, ongoing pressure on rates and a project logistics business,

that is impacted by low oil prices and subsequent delays in capital spending, have challenged the top line.”

Revenues for Agility’s infrastructure companies grew by 1.1% on a reported basis (14.8% on a constant currency basis). On the EBITDA level, this translates into a 30.1% increase driven mainly by Agility Real Estate and Tristar.

Sultan said: “Agility starts 2017 with a strong position and confidence in our direction. We have our challenges; however, we also see many opportunities on the horizon and are investing accordingly. We are making bets on the importance of using technology to better serve customers in GIL, as well as investing to grow our infrastructure companies exponentially. We are making good progress towards our 2020 target, and want to thank our customers, employees, partners, and shareholders for their ongoing support.” www.cbnme.com

Re g i on a l N e w s

partnership

Maersk Line, IBM sign blockchain digitisation deal Maersk Line signed an agreement with IBM to use a new blockchain solution to track and digitise the complex paper trail associated with the tens of millions of containers it moves annually.

The collaboration with IBM is the latest effort by the world’s largest container line to digitise the container shipping process.

Using the blockchain solution, the company aims to enhance the transparency and security of sharing of information among partners in the supply chain.

“When adopted at scale, the solution has the potential to save the industry billions of dollars,” the two companies said in a statement.

The solution between Maersk and IBM is aimed at reducing fraud and errors, the time products spend in the transit and shipping process, improve inventory management, which as a result will bring down waste and cost.

Ibrahim Gokcen, chief digital officer, Maersk, said: “The projects we are doing with IBM aim at exploring a disruptive technology such as blockchain to solve real customer problems and create new innovative business models for the entire industry.

“We expect the solutions we are working on will not only reduce the cost of goods for consumers, but also make global trade more accessible to a much larger number of players from both emerging and developed countries.”

Bridget van Kralingen, senior vice president, industry platforms, IBM, said: “We believe that this new supply chain solution will be a transformative technology with the potential to completely disrupt and change the way global trade is done.”

12 | Logistics News ME | April 2017

Renault-Nissan Alliance, Transdev to develop driverless fleet The Renault-Nissan alliance and Transdev will jointly explore development of mobility services with fleets of electric driverless vehicles for public and on-demand transportation.

The companies will collaborate to develop a comprehensive, modular transportation system to enable clients to book rides, and mobility operators to monitor and operate selfdriving car fleets.

Ogi Redzic, Renault-Nissan alliance senior vice president of connected vehicles and mobility services, said: “As the mobility services landscape keeps evolving, we have a great opportunity to offer innovative, connected mobility solutions for the evolving needs of our customers, fully aligned with our vision of a zero-emission, zero-fatalities society.

Partnering with Transdev allows us to share our knowledge as leaders in electric vehicles, autonomous drive and connected-car technologies with one of the largest multi-modal mobility operators worldwide. Together we will develop an advanced driverless mobility system that will enhance existing public and ondemand transport systems.”

The research will initially include field tests in Paris-Saclay with Renault ZOEs and Transdev’s ondemand dispatch, supervision, and routing platform.

Yann Leriche, chief performance officer at Transdev, said: “As a worldwide leader in public transport and on-demand shared services, we are committed to pioneer in mobility to always offer our clients the best solutions for their journeys. Our partnership with Renault-Nissan will reinforce our innovation capabilities and accelerate our time-to-market by combining our strengths with those of a global car manufacturer that shares the same willingness to enhance daily mobility to the benefit of clients.”

Ports

Dubai’s DP World 2016 net income crosses $1bn

Dubai-based marine terminal operator, DP World, announced its financial results from its global portfolio for the year ending 31 December, 2016, which saw the company achieve a huge net income of over $1bn for the first time.

On a reported basis, revenue grew 4.9% and adjusted EBITDA increased 17.4% with adjusted EBITDA margin of 54.4%, delivering profit attributable to owners of the company, $1.1bn, up 27.6%, said a company statement.

The company reported a revenue of $4.16bn, a growth of 4.9% supported by full year contribution of Jebel Ali Free Zone (UAE) and Prince Rupert (Canada). Like-forlike revenue increased by 1.3% driven by a 2.3% increase in containerised revenue.

The group reported a volume growth of 0.4% despite challenging markets.

Containerised revenue per TEU (twenty-foot equivalent unit) grew 4% and total revenue per TEU by 3% on a like-for-like basis. By the end of 2016, gross global capacity

was at 85 million TEU, an increase of approximately 15 million TEU since 2012, and the group expects over 100 million TEU of gross capacity by 2020, subject to market demand.

Sultan Ahmed Bin Sulayem, group chairman and CEO, DP World, said: “We are pleased to announce another set of strong financial results for 2016, as we delivered earnings in excess of $1bn and above 50% EBITDA margins for the full year for the first time.

“Encouragingly, our volumes have continued to grow ahead of the market with gross volumes growing 3.2%.

This is pleasing given the significant challenges parts of our portfolio have faced, and once again demonstrates the resilient nature of our diversified strategy.

“Disciplined investment throughout the economic cycle has been one of the keys to delivering consistent growth and in 2016, we invested $1.2bn across our portfolio in the markets with strong demand and supply dynamics.” www.cbnme.com

The big Picture

At Middle East Rail 2017, China Railway Rolling Stock Company showcased the world’s fastest high-speed train, which can accommodate 556 passengers, with 10 in business class, 28 in first class, and 518 in second class.

Retail

Souq.com unveils its first customer experience centre in Dubai One of the Middle East’s largest online retail and marketplace platform, Souq. com, has announced the launch of its first customer experience centre on Sheikh Zayed Road in Dubai, making life more convenient for customers as well as sellers across the UAE. Souq.com’s flagship customer experience centre serves as a multipurpose destination for customers to look and feel the products before buying them online and even collect them from there. Further, the customers can also return or service merchandise previously purchased from Souq.com.

One of the key features of this innovative offering is the Helpbit Service Centre, which enables customers immediate repair on smaller jobs like mobile phone screen changes, and acts as a pick up and drop off point for more extensive repair work that’s sent to the Helpbit HQ. The centre also serves as an extension of Q-Express, the logistics arm of Souq. com that provides an optimised e-commerce distribution service.

Adding to the existing vast chain of Q-Express outlets, the centre also offers customers the ease and convenience of picking up or returning their orders at a centralised location.

In addition, selling on the platform will now become even faster and easier as marketplace sellers will now have the option to drop off the new product orders or pick up any returned items directly at the customer experience centre. Ronaldo Mouchawar, co-founder and CEO, Souq.

com, commented: “At the heart of everything we do is our promise to make online shopping as easy and enjoyable as possible for our customers, sellers, and partners. The decision to bring everything together in one, convenient location – customer service, after-sales, repairs, and logistics – is synonymous with our drive to use innovation to continually enhance the online shopping experience and empower our users to overcome online shopping barriers. Our first customer experience centre will function as the heart of our regional operations bringing all the Souq.com services under one roof.

“The centre will provide a physical extension to the online shopping experience by bringing popular products and brands closer to the customers as well as deliver exceptional on-demand services. The omni-channel experience provides customers benefits of face-to-face interaction with our staff, ability to fully inspect products prior to purchase, and avail our post-sales support and services.”

Logistics News ME | April 2017 | 13

Re g i on a l N e w s

DAFZA achieves 16% net profit growth in 2016

Dubai Airport Freezone Authority (DAFZA) performed strongly in 2016, achieving 16% net profit growth and posting a 2% growth in its total revenue and a 28% increase in its total assets.

According to official reports, the total leasable area of multinational companies occupying the freezone rose by 44%, while total leased office space increased by 13%. The leased light industrial units grew as well by 25% due to growing confidence among international companies in DAFZA’s capabilities as well as the numerous business and investment opportunities available in Dubai.

DAFZA accounted for AED109.82bn of Dubai’s non-oil foreign trade for 2015, representing 9% of the emirate’s total trade and 20% of total freezones trade for the same period‬.‬‬‫‫‬ HH Sheikh Ahmed bin Saeed Al Maktoum, chairman of DAFZA, said: “DAFZA continues to move forward in terms of leadership and excellence, driven by its strong operational performance and positive financial results which have proven once again that it is one of the world’s top freezones. The uninterrupted success of the freezone affirms its exceptional ability to address challenges and maximise opportunities for supporting nationwide efforts to usher in a post-oil economy and turning Dubai into a major pillar of the global economy.”

He added: “DAFZA proved its instrumental role in enhancing the overall performance of Dubai’s freezones last year. It demonstrated the highest levels of competitiveness, excellence, and efficiency in overcoming a challenging global economic climate. Supported by an integrated portfolio of effective economic and investment solutions, DAFZA drew in significant foreign direct foreign investments from vital sectors. We are confident of even more promising prospects as we prepare to launch our strategic plan for 2017-2021 which will implement ambitious initiatives in line with the strategies and directives of the wise leadership of the UAE.” HE Dr Mohammed Al Zarooni, director general, DAFZA, said: “DAFZA’s strong performance in 2016 was not surprising and adds to already numerous achievements that have propelled DAFZA among the ranks of the most innovative and competitive freezones in the world. Our series of successes affirms our outstanding competitiveness and our ability to overcome emerging challenges within the regional and international markets.”

14 | Logistics News ME | April 2017

Technology

Gulftainer implements new terminal operating system

Independent port operator, Gulftainer, announced the successful implementation of the marine and container handling (MACH) terminal operating system (TOS), marking a major technology upgrade for the company.

MACH is an advanced industry-proven software used by port operators across the world. The new TOS upgrade is set to significantly enhance Gulftainer’s operating processes and customer service function through optimising job orders, vehicle routing processes for container pick-up and delivery, as well as the management of un-laden travel distances within the terminal.

The resulting efficiency of key operational processes will allow Gulftainer to boost terminal productivity, improve service quality, enabling the company to identify and solve problems before they occur.

Gulftainer is rolling out the MACH TOS across its terminals in the UAE in a phased manner in collaboration with Tata Consultancy Services (TCS).

The first full implementation took place at Sharjah Container Terminal (SCT).

Almost 1,000 employees and customers received end-user training and user acceptance training, with outstanding results being registered.

K Raghunathan, head of the ports and cargo business at TCS India, said: “TCS has significant experience working with port operators around the world to roll out this type of product and I am delighted to confirm that the MACH roll out at the SCT has been the most successful implementation of any we’ve facilitated globally.

The system went live on its scheduled date with no glitches at all. We are very excited to continue our partnership on this journey of innovation and digital transformation.”

Speaking on the achievement, Flemming Dalgaard, CEO of Gulftainer, said: “I am delighted with the achievements of everyone at SCT. Pulling together as one to complete the go-live in such a way speaks volumes about the team we have on site. With the implementation of MACH TOS, Gulftainer reiterates its continued commitment to improving its operational systems and enhancing customer experience.” www.cbnme.com

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O p -E d

Expanding Possibilities Frédéric Zielinski, general manager at Swisslog Middle East, talks about the awareness of the role technology plays in shifting, storing, and retrieving items in the warehouse

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deas, the origins of which stretch back to the start of the 20th century, have come to fruition and are highly in demand.

Together with the popularisation of the concept has come the availability of the technology. Automatic storage and retrieval systems (AS/RS) are no longer confined to the largest

16 | Logistics News ME | April 2017

distribution centres, but are now available at all levels of the supply chain.

The question today’s logisticians ask is “which one is right for me?” Typically, the journey begins with a measure of pallets to be stored and throughput demands. These dictate the scale of the system and its potential impact

on the bottom line, essential for the calculation of the return on investment (ROI).

Conventional wisdom would suggest a manual system could cope in situations, where throughput of below 50 pallets per hour, are required. However, the type of picking operation may be all important here, as

www.cbnme.com

O p -E d

The company’s Vectura cranes are used to accommodate a range of requirements

trying to achieve that from a warehouse with, say, 100,000 pallet locations or more, would make it incredibly demanding.

Similarly, a small number of pallets stored, but a relatively high level of single item picking or order throughput, and again the task becomes even more difficult. Back in the larger warehouses, Swisslog’s Vectura cranes, for examples, are used to accommodate a broad range of requirements. From 200 to 3,500 kg loads, with single and double mast options, and speeds of up to five metres per second, the ability to deal with high throughputs and high SKUs makes the system one of the most popular of its type. The efficiencies available in these ‘big sheds’ were not lost on low-to-medium throughput operations.

Midmarket organisations with medium- tosmall storage position requirements used their flexibility and agility to compete with these big boys, but scalability, as a result, would often prove elusive. Huge, purpose-built warehouses are, of course, less available at this level, and building layouts are perhaps less than ideal.

What these companies need is a low-cost and easily implemented system that could improve their operations at today’s levels, but be adaptable enough to grow with them.

18 | Logistics News ME | April 2017

Frédéric Zielinski, general manager at Swisslog Middle East

For example, PowerStore - a robotic storage and retrieval system designed for deep lane storage of palletised loads. The PowerStore is tailored to provide an attractive ROI for companies with small, medium, and large storage needs. This fully automated system is very adaptable in size and shape and can therefore be implemented using existing space to maximise density and efficiency in your current warehouse. The simultaneous use of automated storage and retrieval devices, along with lifts performing work independently, means that

Vertical lifts work together with row and aisle pallet retrieval

PowerStore has the ability to make your warehouse the world’s most efficient with the highest density and throughput in the industry (80 to 160 pallets per hour per module).

The system provides a warehouse where vertical lifts work in conjunction with automated row and aisle pallet retrieval and the delivery systems store and deliver palletised loads to the dock without the need for a forklift.

Cutting-edge technology, such as the use of batteries and laser positioning, assures performance, accuracy, and economic return whilst a short stroke of only two inches is needed to lift and carry the pallet out of or into the rack.

Balancing the sometimes-contrary demands of the finance, operations, and managing director once made the logistics manager’s life a difficult one. Today, providing the least cost-perpallet handled while maintaining customer satisfaction in quality and reliability can be done. Utilising space and reducing the number of times a pallet has to be handled before getting to the customer also means the lowest product damage, and highest order accuracy, coupled with on time delivery and correctly sequenced pallets. For those willing to embrace the technology, every operation can take advantage of the power of automation.

www.cbnme.com

www.twintec.ae Contact the Twintec Middle East business team for further information: Tel: +971 (4) 364 1220 Email: mail@twintecgroup.com

C ov e r Sto ry

Moving Global Industry experts discuss the current opportunities in Kuwait’s logistics and transportation industry despite the looming challenges of lower oil prices and reduced government spending

20 | Logistics News ME | April 2017

www.cbnme.com

U

nder the Kuwait Development Plan (KDP) which runs from 2015 till 2020, the country’s government has injected major investments to energise the national economy. According to Agility’s Emerging Markets Logistics Index 2017, in Kuwait, a steady rise in government spending and a surge in projects over the coming two years is expected as the country starts to implement a number of infrastructure projects.

With the low oil prices across the entire region coupled with global economic stagnation, the Kuwait government has directed major investments into transport and logistics infrastructure and services with the goal of establishing the country as a commercial hub for the northern Gulf. Anil Khurana, partner, US and ME lead for consumer and industrial products and

services, and strategy and innovation, PwC, said: “Across the region, we’ve seen a slowdown in transport investment projects due to lower oil prices and financial constraints, however, several initiatives still exist within Kuwait. Though Kuwait has an adequate aviation, marine, and road infrastructure – especially given it is a relatively small country in terms of land and travel distances are short – ongoing investments still create further opportunities.

“We consider that ongoing investments in infrastructure itself in Kuwait creates additional logistics business opportunities to service supply chain managers. These activities will further enhance the capabilities of logistics companies in Kuwait and create a stronger set of logistics services for the GCC.” In addition to public investments in trans-

port and logistics infrastructure, private firms are playing a growing role in many segments, ranging from airlines and bus services to commercial logistics.

Headquartered in Kuwait, one of the world’s largest integrated logistics providers, Agility, had a strong performance throughout 2016, despite the sluggish economic and trade growth, both regionally and globally.

The business reported a net profit of KWD59.1mn in 2016, an increase of 10.6% over the same period in 2015. Ali Mikail, senior vice president for Kuwait and Levant at Agility, commented: “Our profitability has benefitted from the continued financial performance and growth within our infrastructure group and progress within our global integrated logistics business.

Logistics News ME | April 2017 | 21

C ov e r Sto ry

Ongoing investments in infrastructure itself in Kuwait creates additional logistics business opportunities to service supply chain managers.”

Anil Khurana, PwC

We expect the government’s continuing support for infrastructure projects, driving the growth in the construction sector in 2017.”

Mustapha Kawam, GES

22 | Logistics News ME | April 2017

“A large part of our robust financial performance has been a result of our strategy to invest in disruptive technology and innovation, especially with respect to efficiency in customer supply chains. We are increasingly tailoring shipments to customers’ individual needs to boost efficiency. The cost structure is also being more closely managed with increased investments in high-growth markets, products, and verticals.

But beyond improving our current business, this strategy of disruption is about enhancing our current business; it’s about anticipating how the industry will change and invest in the future.”

Mikail also highlights the fact that Kuwait will need to keep up the work to reach the goals stated in the KDP to compete and secure growth. “From an Agility perspective, we hope to see healthy progress and will continue to keep an eye on investments that make sense to our business, which we feel, can tap into the potential the market offers.”

Operating out of Kuwait, supply chain solutions provider, Globe Express Services (GES), also had a good run in 2016, reporting around 7% increase in net profits for 2016 as compared to 2015. “We remain on track in terms of growth,” said Mustapha Kawam, president and CEO of GES. “The Kuwaiti government’s clear target of developing a highly-sophisticated infrastructure program as part of its economic diversification initiative, set under the Kuwait Vision 2035, is a significant source of economic activity for the transport and logistics sectors. We expect the government’s continuing support for infrastructure projects, driving the growth in the construction sector in 2017. All this will significantly contribute to our performance this year supported by the construction of Mubarak Al Kabeer Port, the $16bn mega container port located in Kuwait’s northern border with Iraq, and other industrial projects such as Al Jaber Causeway and the Kuwait International Airport expansion work.”

Sector challenges Despite the positive outlook, Kuwait’s transport and logistics industry faces some challenges going forward. The biggest of these come from complexity and delays in cross-border logistics, especially land transport. Khurana said: “This includes delays due to border cargo clearance processes (bureaucracy, customs capacity constraints, etc.), harmonisation of standards (trucking standards, HSE etc.), security concerns and processes, and changing rules and regulations (and even corruption) in the less developed countries.”

Even dealing with extreme weather is another challenge, as products are generally shipped through ambient transport where possible due

to high cost of cold chain transportation, mentioned Khurana. “Due to delays entering and navigating through countries, product quality can deteriorate. Also, for oil and gas and several other industries too, a shortage of warehousing capacity is an issue. Most of the suppliers and maintenance and field services firms have their infrastructure set up in Saudi Arabia and UAE, hence, resulting in lengthy procurement and support cycles.”

Industry experts believe that significant infrastructure investments in several areas in Kuwait like the new airport terminal, Kuwait metro, Jaber Al-Ahmad causeway, and the major updates of intersections, especially within the industrial areas, are contributing to the further enhancement of the transport infrastructure in the country. In the healthcare sector, several hospitals are under construction and a recent global third-party logistics (3PL) has invested to create a logistical backbone to service government hospitals.

In the oil and gas sector, ongoing investments and expansion of several clean fuel projects are currently underway in Kuwait. In retail, expansion of the key malls in the country is also a good sign. Kuwait is also a major retail market for private shopping and shipments from US and UK, hence thus, almost all international and many local firms provide shipment/re-addressing services including Postal Plus, Shop & Buy by Aramex, DHL, MyUS, etc.

Positive outlook Uncertainty and volatility characterised many emerging markets in 2016, coupled with the changing political environment in Europe and the US, which has affected the rest of the world.

Experts stress on the fact that in 2017, the market will continue to be challenged by oil price fluctuations, likely to impact fuel prices and sea freight offering rates.

Mikail added: “Agility will continue working with strategic carrier programs focusing on quality of services, project schedules efficiencies, and optimising our volumes and consolidation among carriers based on trade lanes, type of services, and capabilities. We will continue offering specialised services to clients at realistic prices while adding value to the carriers and our customers, delivering their material timely as per project schedule.

“We are also increasingly focusing and investing in new and disruptive technologies. We are doing these investments with an eye towards engaging our customers in a better way, either environmentally or from the perspective of improving their businesses. Technology is becoming an increasingly important part of what we are doing as a company.”

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The GCC, including Kuwait, will clearly continue to have an overhang from the global economic slowdown and lower oil revenues in 2017. Nonetheless, recent indicators suggest that the government and the private sector in the country are actively trying to tackle these issues. Kawam said: “At GES, we have set our targets this year to achieve 10% growth despite any challenges that might arise in the oil export sector. We have always been creating new opportunities for development, delivering tailored solutions to achieve the desired growth as part of our continuous efforts to add value to the market.”

Though the global economic outlook for 2017 is better than 2016, and it is expected to benefit the GCC in terms of both oil prices

and GDP growth, the member states will clearly be more directly dependent on oil revenues and, to some extent, on the ongoing diversification efforts in the region. Khurana expects that spending will continue to be constrained, with a few critical non-oil and gas projects may be continued or restarted towards the second half of 2017, considering expected improvements in oil revenues.

He added: “Both public and private sector investments will be more focused and seek impact and returns. The 2030 Upstream Strategy is expected to continue to require investment and there will be pressure to speed up procurement. Key oil and gas projects will continue considering the need to continue to prepare the firms for the future challenges and

the typical multi-year turnaround cycles.” As in Saudi Arabia and the UAE, Kuwait will need to take a stronger stance on diversification away from oil because a model of running a deficit budget, as it is the case for last three years, is not sustainable in the long-term.

Khurana concluded: “One aspect of this is ease of doing business like the recently enacted new laws that allow for 100% foreign ownership, reduction in red-tape barriers, and one-stop shop can be expected to lead to higher foreign direct investment (FDI). Over the last 10 years, FDI and government investment has been constantly growing, even during the time of low oil prices. We believe that Kuwait needs a clear strategy and roadmap for the future direction of the country and to help it grow.”

Logistics News ME | April 2017 | 23

E v e n t r ev i e w

On the right track

Logistics News ME takes a look at the important highlights of the two-day event, Middle East Rail, which brought together rail operators to source solutions to build the region’s railway network

O

ver 350 construction and engineering companies, contractors and solution providers, regional and international railway operators participated in the 11th edition of the Middle East Rail 2017 to offer their services and present their plans for the future systems.

Middle East Rail was held on 7-8 March, 2017, at Dubai International Convention in partnership with the Ministry of Infrastructure Development and the Federal Transport Authority Land & Maritime. Key exhibitors included Etihad Rail, X Rail, Greenbrier, Hyperloop One, Thales, RATP DEV, CAF, AECOM, Network Rail, Autodesk, and more.

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Commenting on the show, minister of infrastructure development HE Dr Abdulla Belhaif Al Nuaimi said: “Middle East Rail has grown from strength to strength over the past decade and we are truly proud to play a lead role in bringing together government ministers, thought leaders, innovators, and policymakers under one roof to coordinate progress in the rail industry as a whole. The show demonstrates our support and commitment to build a world-class transport infrastructure system in the region. Furthermore, we look forward to our continued work with Etihad Rail, which will boost economic and trade ties between the GCC states.”

Jamie Hosie, general manager, Terrapinn Middle East, said: “Ten years ahead, we will see a complete transformation of transport infrastructure across the region from west to east. The show brings together the biggest global innovators, futurists, and gurus to discuss disruptive forces that are reshaping the competitive landscape, and that augurs well for the industry’s future in the region by providing greater visibility of planned investments, driving productivity, and technological innovations.

“The show will host four country pavilions from Italy, China, Spain, and UK. This year, the Chinese and Spanish pavilion have in-

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creased in size by over 55%. We have seen a surge in the participation of railway-wagon manufacturers from Russia and the US, and we have also strengthened maintenance, signalling and communication, and the construction profiles of the show.”

This year, Middle East Rail introduced the Manufacturing Zone and Mobility Oriented Development Zone offering solutions providers and manufacturing suppliers an opportunity to meet with prospective buyers and build their brand.

One of the most important features at the event was a dedicated Career Zone, where university graduates learnt about exciting career prospects

within the industry as well as establish contacts with regional rail operators, government authorities and leading multinational rail suppliers.

MENA’s railway supply market to grow % annually to Industry players are upbeat about the region’s railway supply market prospects, noting that the sector will grow about 3% annually in the next four years, as announced by Middle East Rail.

According to Helmut Scholze, partner at Roland Berger: “Despite some setbacks and the economic complexities seen in the past year, the rail market is picking up speed in the Middle East

3

2021

and North Africa (MENA). We predict further investments in rail systems and this will lead to significant, long-term growth in the rail equipment market. The UAE and Iran will be the key growth markets, while Saudi Arabia will stay moderately flat at its current high volume.”

Munir Patel, CEO, XRail Group, agreed: “The region is still a very prosperous place as governments continue to realise the social, environmental, and economic benefits of incorporating railway and metro systems into the transport infrastructure. The key is to stay connected to stay ahead. We have now established offices in Dubai, Doha, and Riyadh, so we can be close to our clients to support them in their upcoming projects as we see stable growth in the market.”

The 15km extension of the Dubai metro to the Expo 2020 site and the Saudi Land Bridge linking Riyadh to Jeddah is progressing well. In Egypt, the modernisation of a metro line and a large order for new metro vehicles is expected in Cairo. For the GCC Railway Project, individual member states are currently assessing the details of continuation of the project as well as domestic alternatives. Oman Rail is now weighing up plans for the development of a domestic heavyhaul line that will transport minerals from Thumrait to Duqm Port. $69bn worth of projects are currently under construction in the GCC region.

Andreas Schwilling, partner and global head of Rail and Mobility at Roland Berger, added: “Private sector response to suggested public private partnerships (PPPs) in the region has been cautious and moderate. A clear demonstration on whether transportation projects can be built and operated in a way that generates the returns required by equity investors will define the future of PPPs in the infrastructure sector in the Middle East.”

Greenbrier Companies (GBX), one of the largest rolling stock providers, has expanded once again in the market with the acquisition of Astra Rail. Thomas P Jackson, VP of marketing, Greenbrier Companies, said: “With the Greenbrier-Astra Rail formation, we are keenly focused to support long term growth opportunities in the GCC region. Our entry into Saudi Arabia’s railcar market is a great honour and a great responsibility as we participate with the Kingdom in one of its premier economic development and engineering projects at Wa’ad al Shamal City.”

Hyperloop One reveals first images of DevLoop at Middle East Rail Hyperloop One, the global leader in developing the world’s first operational Hyperloop, released the first images of its development site (‘DevLoop’) in the Nevada desert at Middle East Rail 2017, held in Dubai.

2017

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E v e n t r ev i e w

Providing the international keynote address at the 11th annual conference, CEO of Hyperloop One, Rob Lloyd, shared a bird’s-eye view of how construction is progressing at the world’s only full-system and full-scale Hyperloop test site, proving the company is well-positioned to deliver the first working Hyperloop.

The 500m-long DevLoop, which has a diameter of 3.3m is located 30 minutes from Las Vegas in the Nevada desert. The company is expected to perform a public trial in the first half of 2017. The DevLoop trial will follow Hyperloop One’s first public test of a prototype propulsion system, which took place in the same area less than twelve months ago, in May 2016.

Speaking to Logistics News ME, Nick Earle, SVP global field operations, commented: “We have a test facility in the desert in the north of Las Vegas, which we call the DevLoop. We have already completed the build of the test track, which is about 500m long. What we want to prove is that all the pieces of technology are working together here for the first time.

“It’s not just the assembly of the technologies, it’s the IT platform that sits on top and links everything together. We plan to do our kitty hawk in the first half of the year before June.”

Dubai’s Roads and Transport Authority (RTA) has formed a committee to explore the potential for building Hyperloop rapid transit system between Dubai and Abu Dhabi, and commissioned the first provisional studies under its deal with USbased research firm Hyperloop One. The Dubai transport regulator signed an agreement with Hyperloop One in November 2016 to work together on ways to make the project viable.

Earle pointed out: “We have completed the Dubai study already. We are meeting with RTA while we are here for the Middle East Rail exhibition. We are quite active across the whole region, and have multiple conversations going on across the GCC.” Earle also mentioned that they are currently the only company who has been consistent with the engineering and the building of the hyperloop, and “to prove it to the public, we have released the images of the DevLoop”. The company has already raised $160mn with more fund-raising activity currently underway.

Thales confident of Middle East bouncing back in rail sector French transportation giant, Thales, expects the Middle East rail transportation sector to bounce back soon despite the economic downturn and the persistently falling oil prices. Speaking to Logistics News ME on the sidelines of the Middle East Rail 2017, Marc Duflot, vice president for marketing and sales, ground transportation sys-

26 | Logistics News ME | April 2017

tems, at Thales, said: “In 2016, the Middle East represented 15% to 20% of the annual turnover for the Thales Group depending on the business in that year. Since most of the rail projects in the region have been put on hold in the last two years, we had to live with that.

“It is not the only region affected by the low oil price, there are other countries as well. The fact is that Thales is a very resilient and big group. When we have a slowdown in the Middle East, we have other countries where the activity is booming. We hope that Middle East will resume soon.”

Duflot also mentioned that the company expanded its presence in the Middle East with their upcoming projects in Saudi Arabia, UAE, and Qatar. He continued: “In the UAE, we have been awarded the signalling, communication, and ticketing system for Dubai Metro’s Red Line and Green Line. In 2016, we have also been awarded the signalling, communication, and ticketing system contract for the extension of the Red Line in Dubai with Alstom being the prime contractor. It’s a big achievement for us and the renewal of trust with RTA.” Thales was also involved with Etihad Rail, but the project has been frozen for the time being. Duflot pointed out that the company still is interested in the project but didn’t want to comment on its recommencement date. He added that the Abu Dhabi Metro also holds significant importance for them.

In September 2016, Thales was awarded a one-year renewable maintenance contract for the 2,400 km lines – mineral and passenger - of the North South Railway (NSR) project, crossing Saudi Arabia. The maintenance contract includes the corrective activities as well as predictive maintenance, which will enable rail operators to fix assets before they fail. Asset performance will be constantly improved for a better service and an optimised cost of the infrastructure. This maintenance contract is extendable in the coming years.

The NSR project in Saudi Arabia is the world’s largest railway construction and the longest route to adopt the European signaling system (ETCS level 2). The project involves construction of a single 2,400 km track, sidings, yards, depots, stations, and administrative facilities, to create a line that has its origin in Riyadh, in the northwest of the country, to Al Haditha, near the border with Jordan.

Denis Laroche, VP sales and business development, ground transportation systems, Thales said: “With the economic difficulties in the last year in Saudi Arabia, the NSR program has never been disrupted and we are delivering it. It is not impacted by the prices as well. We are extremely proud to be a part of this project. We are talking about a line of 2,400km all around Saudi, passing through deserts in harsh conditions. We believe that this line will be considered as an icon of Saudi Arabia, with the help of which the kingdom can reach goals of Vision 2030 easily.”

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Int e rv iew

The Real Deal

David Ross, regional president of FedEx Express Middle East, Indian Subcontinent, and Africa, talks about the company’s latest aerospace solutions and its relevance to the regional market 28 | Logistics News ME | April 2017

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FedEx operates the fifth largest fleet in the world, and the largest among courier companies, counting 688 aircrafts, that operate globally.�

Could you please give me a brief about FedEx Aerospace Solutions? What are the features of the same?

FedEx Aerospace Solutions are designed to give aircraft operators service continuity with fast and reliable freight services that can resolve Aircraft on Ground (AoG) situations, whenever and wherever they happen. Using FedEx Aerospace Solutions, customers can express ship any item that is required to get a plane flying, from the smallest parts to oversized cargo such as engines, via our own fleet.

Besides shipping to more than 220 countries and territories worldwide, customers can benefit from our product, SenseAware, which provides end-to-end visibility into their supply chain. Using technological breakthrough in the world of sensor-based logistics, SenseAware enables customers to go inside their shipment in real-time through its journey, giving them the power to react to unexpected situations and improve their supply chain efficiency. More specifically, SenseAware can monitor information about the shipments, including current location, temperature, light exposure, relative humidity, shock thresholds, and barometric pressure.

According to FedEx, what are the best practices for moving large and over-sized shipments?

For more than two decades, our Dubai hub has handled oversized shipments for numerous customers, in compliance with the various aviation regulations. This has allowed the team to develop best practices to move large shipments. Time is a significant advantage while planning large shipments’ movements.

We are very familiar with some large items that are regularly shipped. However, when dealing with a new and unfamiliar shipment, we must understand its specific requirements to ensure a successful move, while following standard procedures.

FedEx has contingencies in place for several scenarios, enabling us to quickly and efficiently handle any new shipment that comes to us. Our teams also undergo continuous training to ensure they can deal with any situation they may face. Rigorous training allows us to speed up our processes when dealing with last minute or unusual requests.

In short, successfully handling large shipments means being prepared and understanding the various requirements, following safety and quality principles, and having contingen-

cies in place that enable us to meet our commitments in unforeseen scenarios.

What kind of response have you seen for FedEx’s latest aerospace solutions in the market?

Our Aerospace Solutions have been well-received in the Middle East. FedEx currently provides the solutions to most regional airlines and maintenance, repair, and overhaul (MRO) companies. Our capabilities enable us to provide critical services to airlines, especially when they have an AoG situation.

FedEx also developed services that are encompassed within our Aerospace Solutions to enhance the customer experience. For instance, the FedEx Global Returns solution provides our customers the control, flexibility, and customs documentation assistance required to ensure a streamlined process at all steps of their shipping process, when moving parts across the world.

Aerospace parts shipped with FedEx can also be tracked with our SenseAware product, which differentiates from traditional tracking solutions. These packages may require monitoring beyond the normal scope, to track conditions such as current location and light ex-

Logistics News ME | April 2017 | 29

Int e rv iew

posure for security reasons; temperature, relative humidity, shock, and barometric pressure for environmental reasons. Customers can choose how best to monitor their shipments based on their needs. This solution has been well received in the UAE market, from a wide array of industries where shipments are critical, high-value, extremely time or temperature-sensitive, or even irreplaceable objects – making it imperative that their location and temperature is known.

Some of these industries include healthcare and life sciences industries, covering scientific instruments, medical equipment, lasers and pharmaceuticals; aerospace such as AoG, MRO; high-value luxury items such as couture fashion, jewelry, and precious metals; and consumer electronics such as computers, smart phones, gaming systems, and televisions.

What kind of trends are emerging in the region for the logistics industry in ?

Consumers increasingly turn to technology to make their lives easier. E-commerce is a big trend in the Middle East, with around 43% of consumers using the internet for shopping, while four out of 10 UAE residents make at least one online purchase a week. The potential in e-commerce is significant as the majority of online purchases result in shipping requirements. A key component to any business successfully taking advantage of the potential of online retail is having a strong and reliable network of business partners to enhance their customers’ experience. This network can include cross-selling services through like-minded companies, or companies that can offer support in the areas that the business itself is lacking expertise such as logistics.

FedEx conducted a study across small and medium businesses around the world, which revealed that around 70% of consumers state shipping-related factors as the most influential in their decision to buy from online retailers in other markets. Engaging the services of a third-party, who has expertise in the logistics sphere as well as proven capabilities in potentially complex areas related to shipping, enables peace-of-mind for the business and its customer.

The Internet of Things (IoT) concept is 100% applicable in the logistics industry, and we expect sensor-based logistics to grow. The SenseAware solution developed by FedEx is a pioneer in this field and has been designed to offer end-to-end visibility on shipments. I am confident that customers will continue to see the benefits of enhanced visibility throughout their supply chains.

2017

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FedEx has contingencies in place for several scenarios, enabling us to quickly and efficiently handle any new shipment that comes to us.”

David Ross, FedEx Are you planning to add to your existing operational fleet from the GCC to the rest of the world?

If yes, by when?

We expand our fleet based on customers’ requirements. For instance, to accommodate growing demand, we have expanded our airnetwork to 44 FedEx flights per week in and out of Dubai. This is in addition to using in excess of 730 commercial line-haul flights per week at the Dubai International Airport.

What kind of competition does FedEx faces from the big names in the market?

The FedEx history of innovation is built on a series of ‘firsts’. For instance, the company was the first to install computers in delivery vehicles, providing sophisticated automation for corporate mailing services and developing capabilities and software. FedEx was also the first express courier provider to offer packagestatus tracking for improved customer service via fedex.com, which was launched in 1994.

In 1978, FedEx founder, Frederick W Smith, said that the information about the package is just as important as the package itself. The SenseAware device uses patentpending technology to control the device’s radio during takeoff and landing while logging and storing information during flight. SenseAware is the only cellular device permitted by the FAA to be used on FedEx aircrafts.

There are several other aspects of our business that set us apart from competition in the region. FedEx operates the fifth largest fleet in the world, and the largest amongst courier companies, counting 688 aircraft, that operate globally. Our company is the largest dangerous goods carrier, and we have strong expertise in handling oversized cargo, particularly in the Middle East. Our team in Dubai has significant experience in moving aircraft parts such as engines and helicopter rotor blades to various locations around the region.

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E v e n t P r ev i e w

This year’s Airport Show promises to be bigger and better with more than 7,500 aviation professionals attending the event. Logistics News ME presents key highlights

Key Facts: Gross exhibition space

15,000 sqm Aviation professionals

7,500 Exhibitors

300+ from 30+ countries

International pavilions

7

Networking platforms

3

32 | Logistics News ME | April 2017

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T

his year’s Airport Show has announced further expansion, which will take place from May 15-17, 2017, at Dubai International Convention and Exhibition Centre. Huge interest from the global aviation industry in the Middle East and the latest smart technologies showcased on this platform has led to an overall increase in year-on-year space bookings for the 2017 edition.

Held under the patronage of HH Sheikh Ahmed bin Saeed Al Maktoum, president of Dubai Civil Aviation Authority, chairman of Dubai Airports, and chairman and chief executive of Emirates Airline and Group, the last year’s edition was the most successful so far with a participation of over 300 exhibitors from over 55 countries and occupied a gross space of 15,000 sqm.

Daniyal Qureshi, group exhibitions director, Reed Exhibitions Middle East, said: “Airport Show has become the largest and the most sought after airport event for the industry and an ideal B2B platform for companies to showcase the latest aviation related products and services. There is a strong interest in this region from the global aviation industry, which has led to a double digit increase in year-onyear space bookings for the show over the last three editions. Last year’s edition was the most successful so far and we expect 2017 to be a milestone edition, especially as we bring the world’s latest and leading technologies to cater to the requirements of smart airports.”

The GCC countries continue with multi billion dollars’ worth of airport expansion projects to cater to the rapid growth in the number of air travellers, projected to double by 2035, and expanding fleets of airlines, particularly their national carriers. The UAE leads the Middle East growth in number of air travellers with over 6.3% annual growth, as per latest estimates by the International Air Transport Association (IATA). The region is projected to witness a robust 5% annual growth, according to IATA, which expects 7.2 billion passengers to travel in 2035, a near doubling of the 3.8 billion air travelers in 2016. The strong growth is expected to fuel further investments toward airport expansion projects.

The spectacular rise in the number of air passengers worldwide is also leading airports to actively invest in smart technology in a bid to ensure a comfortable passenger experience without compromising on security. According to industry reports, it is estimated that the global annual spend on airport security would surge to $12.67bn in 2023, up from $8.22bn in 2014. Representatives from airports across the region will talk about their expansion plans

and explore the latest technologies at the Airport Show, which can cater to their growing needs to enhance passenger experience while ensuring security at the same time.

More than 300 companies from around the world are expected to participate in the 2017 event, introducing their latest products and services to an estimated over 7,500 attendees.

The event will cover seven sectors including airport build and installations, airfield construction and installations, airport operations, airport security, airport technology and IT, ground support equipment and services, and air traffic management.

The show will continue to serve as the world’s leading B2B event for airport procurement, supplies, solutions, and technology and enjoys a solid support from both the government and private sectors and is an industry favourite.

Qureshi added: “The growth of the Middle East’s aviation sector, and a focus on investing in smart technologies has generated a strong interest from global players in showcasing the latest technologies and tapping into the opportunities the region presents.

Airport Show 2017 promises to be the platform which will offer not only the latest technologies to meet the requirements of regional decision-makers to source their requirements at their doorsteps but also offer them numerous options as it will have an outstanding international participation.”

Over the years, the show has expanded and caters to the requirements of diverse segments within the industry. Business Connect, through pre-scheduled meetings with key industry leaders from regional airport authorities and contractors of mega airports projects, will make participation in the show highly rewarding for the exhibitors. The collocated Women in Aviation Middle East conference will support and

enable women to adopt aviation as a career and features participation from leading female aviation officials from the UAE, GCC, Africa, and other countries.

This year, the show will have two new dedicated zones - Air Traffic Control and Airport Security. Airport Security will take centre stage at the show and feature a host of exclusive benefits for global airport security vendors.

The region’s top aviation security officials will attend it - including police, customs, immigration, and civil defense, and showcase cutting edge technologies from around the world.

Airport Show 2017 will also feature World Travel Catering and Onboard Services Middle East (WTCEME), one of the world’s most sought after dedicated events for the travel catering industry and Global Airport Leaders’ Forum (GALF), as co-located events.

WTCEME, the largest travel catering expo in the MENASA, will feature the most advanced technologies and latest products and services relevant to the travel catering sector, ranging from food and beverage, travel amenities, and accessories to catering equipment and technologies. WTCEME offers a dedicated platform for the travel catering industry in the Middle East, Africa, and Indian sub-continent. It provides leading suppliers, caterers, and experts with a dedicated platform to tap into the opportunities presented by its booming aviation catering business within these regions, thus ensuring the sector supports the growth and success of the region’s aviation industry.

Global Airport Leaders’ Forum (GALF), for which Reed has collaborated with CAPA - Centre for Aviation, will witness international airport and aviation leaders address strategic and geopolitical challenges and opportunities facing airport operators, regulators, and airport industry.

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Event

Panalpina opens logistics manufacturing hub in Dubai South The centre is the largest logistics and manufacturing facility in the world for the Swissheadquartered Panalpina Group, one of the leading providers of supply chain solutions Switzerland-headquartered Panalpina officially opened the company’s new logistics manufacturing hub in Dubai South, spread across an area of 4ha. The facility was opened in the presence of HH Sheikh Ahmed bin Saeed Al Maktoum, chairman and chief executive, Emirates Airlines and Group, and chairman, Dubai Aviation City Corporation, and HE Khalifa Al Zaffin, executive chairman, Dubai Aviation City Corporation and Dubai South.

Others present at the event included Ahmed Al Ansari, acting CEO, Dubai South; Stefan Karlen, CEO, Panalpina Group; Pascal Sieber, Panalpina country managing director UAE; and Mike Wilson, global head of logistics and manufacturing at Panalpina.

Speaking on the occasion, HE Zaffin said: “Congratulations to Panalpina on the opening of their new facility. Panalpina will always hold a special place in the history of Dubai South. One of the early adopters to believe and invest in our vision, it was the first partner to break ground at Dubai South.

Almost a decade later, the company has leveraged our excellent connectivity and worldclass infrastructure, thus enhancing its ability

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to harness the region’s growth potential.

“The new facility not only represents our long-standing relationship with Panalpina, but highlights our commitment to providing integrated solutions for global logistics providers. At Dubai South, we are building the world’s first master-planned aerotropolis, offering global industry leaders, such as Panalpina, a multimodal logistics platform that allows for seamless air-land-sea connectivity and world-class infrastructure.”

Speaking during the event, Stefan Karlen, CEO, Panalpina Group, said: “Panalpina is taking advantage of its global network and footprint to expand its logistics offering for its customers here in Dubai; from last minute logistics manufacturing services to modular assemblies. By embedding logistics manufacturing hubs close to our customers’ end-users, we are able to move products in from different regions and with the access to an unparalleled multimodal distribution network, we can then move these products out faster, and thus better serve both the current and future needs for all our customers. We will look forward to working with local universities, colleges, and au-

thorities such as Dubai South to assist us in attracting talented people to join our company.”

The new facility is Dubai South’s second built-to-suit product delivery, and is a fully air conditioned Grade A facility. The building has three partitioned sections, allowing for customer privacy, including a dust-free environment repair room, fully equipped with anti-static flooring, specialised lighting and temperature, and humidity control. The repair room will accommodate the hi-tech mobile phone, tablet, laptop, games console, diagnostics and repair operations, while the logistics manufacturing services area has special lighting and electrical supply points to accommodate the specific operations.

The logistics industry is undergoing tremendous change, with some logistics companies providing value-added services. Leading the change, Panalpina’s Logistics Manufacturing Services (LMS) is the company’s response to a swiftly changing global manufacturing and supply chain landscape, where speed to market, product customisation, and the influence of the end consumer are of paramount importance. The company’s move towards

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LMS is a keen reflection of Dubai South’s own development strategy that is focused on providing value added services to its stakeholders and partners.

In an interview with Logistics News ME, Anthonie Verploegh, regional head of logistics for Middle East, Africa, CIS, at Panalpina, said: “Regionally, from a turnover point of view, the Middle East contributes around 8% to the entire group. We see this as a growth region where the company would like to invest. In addition we see a tremendous growth opportunity in Saudi Arabia, where we believe that despite the oil and gas issues, it has its plans in place.

“Oil and gas has definitely hit the company as a whole. But we are currently diversifying into other industry verticals for us to accelerate in the region. We have facilities, either owned or outsourced, in the GCC. Within the region, we have our facilities in Istanbul, Russia, and Dubai.”

Agreeing to the above, Mike Wilson, global head of logistics, Panalpina, further added: “We are going to grow contract logistics, but our ultimate focus will be logistics manufacturing and all the innovation planned. We will convert some of our existing ones into manufacturing facilities. At the moment, we have a pretty strong portfolio in Central and South America. We are also considering South East Asia and Europe for future expansion.”

According to the World Bank International Logistics Performance Index, the UAE ranks 13th, a position that Dubai South is determined to raise. A multi-modal futuristic platform, the 18 sqkm Logistics District connects

land, air, and sea transport systems in a strategic effort to consolidate the emirate’s position as a leading global logistical hub. Including a free economic zone that meets the demands of local, regional, and international companies, the district is linked to Jebel Ali Port and the Al Maktoum International airport via the Dubai Logistics Corridor.

Mohsen Ahmad, vice president, logistics district, at Dubai South, concluded: “At

Dubai South, for 2017, we are working on several fronts. We are trying to get more companies to set up innovative technology hubs within the district. We are also working closely with regulators about how we can streamline our processes at the gate. We are upgrading each and everything to be in line with our customer demands. We are also building a lot of specialised warehouses keeping the logistics focus in mind.”

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C o mm er c i al V e hic l e s

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Shift Expectations The commercial vehicles market is poised for growth in the Middle East with new launches and extra focus on vehicle safety. Logistics News ME finds out

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ccording to recently published report, UAE Commercial Vehicles Market Forecast & Opportunities, 2021, the UAE truck market, which includes pickup and light duty trucks, medium and heavy duty trucks (M&HCV), is the dominating segment of the country’s commercial vehicle market. In comparison with other Middle East countries, which derive a large chunk of their revenue from the oil and gas sector, the UAE has diversified into non-oil sectors such as manufacturing, construction, power, wholesale, retail, and transportation, which has reduced its dependence on oil and gas sector.

Despite of such a positive contrast, the country’s truck market witnessed negative growth during 2011-2015 due to slowdown in construction projects across the country and tight liquidity situation. However, in 2014, $100bn investment was allocated for the housing and transport sector in Abu Dhabi, which was in line with country’s economic vision 2030.

In addition, Abu Dhabi’s Executive Council announced investment of $89bn, road development and other infrastructure projects in the housing sector in 2013. Further, around $2bn are estimated to be invested in developing housing establishments in the country. Various road construction projects such as 62-km highway connecting Dubai and Abu Dhabi are also scheduled for completion by 2017.

According to TechSci analysis, the country is expected to witness more investments in

energy, infrastructure, residential, and commercial projects over the next five years.

Moreover, the country would be hosting the Expo 2020, which means that the country is poised to witness large scale infrastructure development. Moreover, the UAE government is focusing on diversification of economy in the non-oil sector over the next decade, as per the government’s plan to trim down the share of revenue derived from the oil sector to around 20% by 2030.

Few of the prominent projects, which are likely to raise the demand for trucks in the UAE are Abu Dhabi Metro construction, Dubai Metro expansion, Emirates Roads Master Plan, Etihad Rail, Abu Dhabi Airport expansion projects, etc.

The average selling price (ASP) of trucks in the UAE is anticipated to increase at a low pace over next five years. Garnering support from the expected growth in the volume sales coupled with anticipated price rise, market for trucks in the UAE is projected to grow by 2021, thereby, exhibiting revenue growth at a compound annual growth rate (CAGR) of around 8.6% during 2016-2021.

Elsewhere in the GCC, according to global analysts Frost & Sullivan, there are currently 750,000 trucks and buses on Saudi Arabia’s roads, with this number growing 8.4% annually to reach 1.2 million by 2020. The influx of new and used commercial vehicles in Saudi Arabia means demand for spare parts is also on the rise, valued at $2bn in 2014, and esti-

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C o mm er c i al V e hic l e s

mated to reach $3.65bn by 2020, according to Frost & Sullivan.

New launch Recently, UD Trucks launched Croner, an all-new medium duty truck, to continue its rich Japanese legacy, specifically for its growth markets across Asia, Africa, Middle East, and South America. Croner is a reliable and versatile truck range, built with robust and quality components, delivering extra productivity and superior uptime. By understanding customers’ demand and business needs, Croner is engineered to help customers stay ahead of competition, through the simple concept of saving time.

In a company statement, Jacques Michel, president, Volvo Group Trucks Asia and JVs sales, said: “UD Trucks believes that more time spent on the road and less time in the workshop adds up to the success of our customers’ business. It is our aim for Croner to make every moment count, through maximising productivity and minimising downtime on every run our customers make.”

Croner has options for three gross vehicle weight (GVW) models, MKE, LKE and PKE; and their wheelbase variants, which can offer up to 21 different basic configurations to suit specific demands of various industries. Additionally, the air suspension on all variants is available as an option to protect customers’ cargo especially when travelling on rough road conditions.

Nobuhiko Kishi, senior vice president, brand and product, UD Trucks, said: “As drivers spend a good amount of time on the road, we, at UD Trucks, leave nothing to chance, and that includes safety and drivability. With superior braking and handling features, Croner keeps customers’ drivers and their fleets in prime condition.”

Vehicle safety Increasing safety awareness is the need of the hour, and this is a goal that all stakeholders manufacturers, owners, operators, NGOs, and the government – must work collectively towards, said MAN Trucks in a company statement. The statement further read: “We believe that strengthening vehicle safety and road safety legislations and ensuring their strict enforcement on the ground can have a profound and positive effect on making our roads safer for all users, including commercial vehicle drivers.

“As part of our commitment to the UAE Government’s 2021 road safety vision, MAN pledged its total support for introduction of road transport governance regulations, education for transport operators and enforcement officers, and enforcement of mandato-

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ry vehicle specification standards for new commercial vehicle deliveries.

“The use of fake spare parts is a major cause of auto accidents, with brake failures and tyre bursts being the most common causes. Enforcing strict regulations to eliminate fake products is therefore an absolute necessity if the UAE is to achieve its road safety goals. Studies have shown that the top factors that impact road safety from a commercial vehicle perspective are vehicle load, driver alertness, worn tires, and incorrect/incomplete maintenance. So, these are all areas that drivers and fleet managers need to pay attention to.”

Improved safety features with vehicles along with globalisation of vehicle concepts are anticipated to fuel commercial vehicles demand.

Steady rise in logistics and public transportation industry is expected to further boost sales in developing the region. Major companies are involved in continuous innovation and development of better vehicles, which exhibit higher fuel efficiency and light weight to capture untapped potential. Government incentive and subsidies, along with structural and functional improvements in design, drive sales of hybrid and electric trucks is another key development in commercial vehicles market.

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T e ch n o lo gy

Know How Industry experts discuss the benefits that IoT brings to all assets in order to achieve maximum productivity and good efficiency.

Logistics News ME finds out

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he Middle East is primed to become a global driver in Internet of Things (IoT) connected innovations, as the GCC’s cloud market is set to grow from $118.5mn in 2014 to $668.5mn in 2020, according to latest market reports. Connected cloud technology such as mobile apps, e-government, drones, 3D printing, and robotics will form the foundation of the region’s rapidly-growing smart cities.

In 2016, McKinsey Global Institute created an industry digitisation index to understand countries’ digital readiness and technological progress, including those in the Middle East.

In its report, Digital Middle East: Transforming the region into a leading digital economy, findings indicate that the Middle East’s progress on the digital front, in keeping with international benchmarks, is extremely high. Findings also reveal that citizens are leading the digitisation charge in terms of consumer adoption, smartphone penetration, and social media usage, being higher than the United States. UAE, Bahrain, and Qatar are doing particularly well in adapting to the digital disruption.

Thierry Chamayou, vice president for Middle East, Africa, Central and East Europe- IT business, at Schneider Electric, said: “Enhancing the region’s digital readiness and its ability to leverage IoT-based solutions will require participation from governments, who must design enabling technology regulations and data policies, as well as the private sector, who should invest in new technologies for longterm benefit and business value. It will also, to a certain degree, depend on consumers and their ability to change behaviour with trends.

Digitisation is already a core priority for some of the GCC governments.”

Schneider Electric has adopted a strategy, which bridges the IT and OT (operational technology) seamlessly to connect, collect, analyse, and action data findings to best deliver

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In terms of IoT investment, manufacturing and transportation are the vertical industries that are currently leading the way in the Middle East and Africa.”

Louay Dahmash, Autodesk

business value, mitigate risks, and protect the environment. This will be fulfilled through its next generation, EcoStruxure architecture and platform, which delivers IoT-enabled solutions at scale for building, grid, industry, and data centre customers.

Chamayou further added: “In a nutshell, it offers innovation at every level to improve areas of industries, communities, and homes. This strategy will be the bedrock of Schneider Electric’s operations both globally and in the newly structured Middle East and Africa (MEA) zone. We will integrate this offering with our smart solutions portfolio, which we have deployed for over 200 projects across the globe.

This approach prioritises energy management and progress through the 3Ds—digitisation, decarbonisation, and decentralisation.

Digital ready However, the McKinsey report reveals that more can be done in terms of integrating public services to digital platforms. Only

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Digitisation is already a core priority for some of the GCC governments.”

Thierry Chamayou, Schneider Electric around 6% of the Middle Eastern public lives under a digitised smart government – when considering Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, and the UAE. Middle East still falls short in business digitisation.

The report states that by 2020, there will be around two zettabytes (ZB) of data in the Middle East, which is not advancing quickly enough to capture its potential. This will change in the coming years and the region is on the right track towards change. Louay Dahmash, head of Middle East at Autodesk, said: “The Middle East has realised the exponential benefits that can be achieved with the IoT. In fact, according a recent study conducted by the International Data Corporation (IDC), IoT revenues in the region are expected to increase at a compound annual growth rate (CAGR) of 21.3% to total more than $14.3bn in 2020.

“In terms of IoT investment, manufacturing and transportation are the vertical industries that are currently leading the way in the

Middle East and Africa. Over the next few years, the manufacturing industry will use intelligent and interconnected input/output tools (sensors, actuators, drivers, and vision/video equipment) to enable different components in the manufacturing field (such as machine tools, robots, conveyor belts) to autonomously exchange information, execute actions, and control each other independently.”

Furthermore, Dahmash also stressed on the development of a highly-efficient freight monitoring system, which uses RFID, GPS, GPRS, and GIS, to create an intelligent, inter-connected transportation system. This system will carry out the intelligent recognition, tracking, location, and monitoring of freight cargo by co-ordinating information and real-time communications via wireless satellite or other channels.

The biggest advantage of IoT is its ability to enable companies to engage in predictive maintenance for both the final product or for any manufacturing or logistical component within the supply chain. It will soon give manufacturers

the ability to monitor the performance of products after being purchased by consumers enabling them to proactively identify maintenance or replacement opportunities, thus reducing the potential for asset loss.

Furthermore, with information being processed and shared in real-time, other components in the logistics system – railway, cargo ships, and more — can adjust and optimise their schedule to account for delays, additional stock, and calculate the exact amount of time they would need to wait prior to proceeding to avoid additional losses.

Dahmash said: “IoT will also have a significant impact on costs incurred during daily operations within the logistics industry. Soon, with various equipment and autonomous vehicles connected to each other, the system will be able to identify which machines require maintenance and deploy the necessary resources to reduce potential damage, downtime, and additional costs in order to ensure that operations run productively and efficiently.”

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T e ch n o lo gy

Gone are the days of manually collected data that only provides a snapshot in time and is prone to human error.”

Gert Thoonen, Rockwell Automation Middle East, in many ways, is a frontrunner for new technologies and in the IOT space.

There are many examples available that are implemented already yet, for example, remote metering of user consumption of district cooling and remote plant control or the longest autonomous metro system or the parking guidance for empty spots.

Gert Thoonen, business development network and security services – ME for Rockwell Automation, said: “Smart manufacturing is the gateway to digital transformation. Connected smart devices open new windows of visibility into processes. Data and analytics enable better and faster decision making. Seamless connec-

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tivity spurs new collaboration. “Gone are the days of manually collected data that only provides a snapshot in time and is prone to human error.

Real-time analytics software takes the data that is automatically and continually collected from several sources and contextualises it into meaningful information for workers. These analytics create greater transparency of your operations and provides better visibility into complex production processes. Operators and technicians can use the analytics for critical, real-time decision making to help boost productivity. Decision makers across functions also can monitor nearly every aspect of their

operations. This information allows them to resolve quality, safety, compliance, energy-usage, and downtime issues.”

The Middle East is on a quest to achieve maximum productivity, efficiency, and sustainability while minimising cost. Government leaders understand the significance of IoT and the exponential benefits it brings to building smart cities, smart countries, and a smart region of the future. Although the IoT is relatively young, given the pace of acceptance and the willingness to integrate the IoT, one thing is certain that the region will at least compete with their global counterparts if not surpass them.

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ICT PARTNER

Adv e rto r ial

Customer comes first MAN talks to one of its satisfied customers, Harjinder Singh, to find out how his construction business has grown leaps and bounds with the help of the company’s trucks

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Who are the company’s major customers? Which are the main projects that Image has worked on?

Our major customers are GTC, Tristar construction company, Al Naboodah, and NSCC. The main projects that the company has worked on include theme parks in Dubai including steel structure, civil and concrete work; Al Maktoum International Airport, including roadwork, pipeline, waterline; excavation projects for more than 60 buildings in Dubai; and currently more than 200 ongoing projects in Dubai and Abu Dhabi. All the jobs were successfully completed using MAN Trucks.

How has the range from MAN help you grow your business?

The quality of the trucks is essential for the successful running of the business. MAN Trucks give fantastic mileage along with economical fuel consumption, which makes it successful. MAN goes on and off road, which makes it flexible and better than other brands.

Workshop and after sales support is very good, thanks to the dealership in the UAE Darwish Bin Ahmed & Sons Co. MAN really helps the customer to run their business without any problems and offers efficient trucks with safety features.

Do you expect new products from MAN in ?

Yes, I do - a more powerful truck with safety features and good fuel consumption. Safety features should be good for a successful business, less accidents, and helps the driver to be cautious. Mobile phones are usually disturbing drivers and causing a lot of accidents. There should be an initiative taken by the government about the usage of mobile phones while driving. All the drivers are taking tests before they start driving based on ProfiDrive

2017

What are the current MAN Truck models that you are using?

Our business uses TGA and TGS trucks for different transportation and construction business needs. Our fleet management side of business has managers divided into groups, where one group uses tipper trucks and the other uses cement bulkers. We have separate teams where workshop supervisors check the vehicles before they start any projects and jobs during the day.

Company overview

Harjinder Singh, chairman, Image group of companies Harjinder Singh born in Hoshiarpur in Punjab, India.

Landed in the UAE in 1982, he has been working hard to develop his core construction business in the country. And after 28 years of hardship, he has made Image Group of Companies well-known in the UAE and Australia.

The vehicles are supplied with GPS so we can track the movements, driver behaviour, fuel consumption, safety, location of the truck, and deliver the materials on time.

How frequently you renew your fleet?

We renew our fleet every five years. Then the trucks are sold and we purchase new ones.

We have more than 200+ MAN trucks. We provide training for employees through the MAN training centre. It’s important to have good maintenance of trucks for the safety of drivers. Besides trucks, we have bulldozers,

Founded in 1995 in the UAE, Image Group of Companies comprises flagship and core civil construction operation, Image Contracting Co, supported by ancillary functions to provide esteemed business relationships with comprehensive suite of buildings, industrials, infrastructure works, general construction, and top-tier support services. Firmly grounded in a philosophy of mutual understanding and open collaboration, the company has continued to garner acclaim within the industry, translating into profitable ventures emphasising maximum returns on investment for the clients. The company’s idea was to help people and bring labourers from India and give them jobs. excavators, wheel loaders, graders for road work, boom loaders, and cranes.

What role can fleet owners have in highlighting the importance of being safe or cleaner and greener to the general public?

All the trucks are provided as per the UAE environmental standards and safety. Fire extinguishers are provided to ensure safety inside the safety box. Maintenance of tyres and tyre pressure are conducted regularly. Therefore, doing the job on the construction site gets easier and more efficient.

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V i e wp o i n t

Avoid the holdup Ali Hasan Raza, chief executive of Throughput Inc., talks about eliminating oil and gas bottlenecks in the Middle East through innovative American supply chain analytics

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s the energy downturn began in April 2014, many US-based oil and gas upstream players entered the survival game. Depending on the regional play, the new American breakeven price became $40 to $70 per barrel. To sustain breakeven operations, digital oilfield solutions were re-evaluated. From innovation stalwarts like General Electric (GE) to strategy consultants like McKinsey, thought leaders advocated using technology to achieve costcutting, consolidation, and vertical integration.

As per Oil and Gas Investor, “How do we do it faster, cheaper, and better?” was the frequent query. As recently highlighted by Accenture, technologists answered this with technology transfer proposals to automate activities.

However, even with the new technology enabling right-sizing, oil and gas operations are yet to resume wide-scale profitability. According to The Hill, while ‘sweet spots’ have allowed for special causation profitability, many service companies are still running at a loss. Thus, companies are now looking towards better asset management processes. More importantly, they are asking a better question: “How much is the critical need?”

By nature of upstream operations, the asset management problem is closely tied to the working capital problem. Often incorrectly, operations managers are held responsible for working capital results due to their involvement with asset management. However, the actual responsibilities lie with supply professionals who directly control logistics, warehousing, and inventory. Remarkably as per the Leadership Network, supply chain organisations lack tools, talent, and above all, internal trust to enable noticeable impact. Yet, supply chain divisions are expected to manage billions of asset dollars to enable online exploration and production (E&P) operations. It is our ignorance as oil and gas professionals that we don’t see that in modern business, everyone is a stakeholder in supply chain’s success. To solve the root cause of many of our money problems, we need to empower supply chains to do more.

While technical petroleum innovation is often prioritised as source to unlock profits, eliminating supply chain complexities has recently received attention. Companies are re-examining automation to enable more throughput. As per Cerasis, by 2018, more than 80% of organisations will have implemented supply chain automation. For example, GE is pursuing Enterprise Impact, a project that streamline operations and predictive maintenance. Six-sig-

While technical petroleum innovation is often prioritised as source to unlock profits, eliminating supply chain complexities has recently received attention. ” ma black belts, warehouse managers, and logistics experts are being consulted to optimise individual supply chains. However, the throughput objective remains a very tedious manual process. Besides the model building aspects, one of the primary reasons behind the lack of success is to quickly identify and eliminate bottlenecks to systematically put out fires.

While firefighting is inevitable in any industry’s supply chain, energy companies are

not borrowing techniques from supply chain leaders like UPS, Amazon, and Wal-Mart that successfully deal with real-time bottlenecks. Unlike oil and gas, these companies trust data analytics to discover problems. Remarkably, many of these platforms are industry-agnostic, and can be successfully transferred to oil and gas.

Supply chain data analytics tools are simply not the norm in oil and gas. Even at leading companies, IT analytics divisions prioritise reservoir optimisation to unlock value and have usually ignored supply chain. From a managerial perspective, divisions still function as individual units rather than addressing companywide bottlenecks to achieve global zero downtime. Current actionable insights tools can offer 70% improvement to strategy acceleration for zero downtime, and thus additional elimination of billions of dollars in waste.

This means notable reductions in insurance, logistics, and storage, while better EBITDA for business units. Nationally scaled, the results are lower breakeven American oil prices that are more competitive to Middle Eastern sources. Yet, oil and gas still trusts error-prone manpower over statisticsbased software systems. The obvious reason is because their core business is production, and not supply chain optimisation.

As a Middle East example, consider if the UAE became one of the regional pioneers of adopting supply chain predictive analytics for oil and gas. Considering CNBC’s estimate for the UAE’s current breakeven oil price to be around $70, if all the UAE-based oil and gas supply chains were synced on a single platform, unrealised efficiencies could lower the country’s overall fiscal breakeven price to be competitive with the $55 breakeven price of Kuwait and Qatar. Regionally speaking, optimising the Gulf ’s supply chain would reduce competitive advantage for American E&Ps. In conclusion, the supply chain analytics can create immediate global impact in the reduction of fiscal breakeven prices for oil. As Per MarketsandMarkets, the multi-billion dollar supply chain analytics market will provide immediate financial relief in the current environment and transform productivity across the global value chain. Corporations in the US are actively implementing solutions to accelerate upstream industry recovery, especially in the Middle East, globalising the transformational power of modern analytics to lowering the bar to achieve hydrocarbon profitability.

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V i e wp o i n t

The trust layer in blockchains, requiring authentication with each transaction before execution, allows for realtime validations of transactions.�

Samuel Thampapillai, financial services disputes and investigations associate, Eversheds

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Where are we heading?

From conducting payment and audits to tracking inventory and assets, blockchain technology is set to enable greater supply chain and procurement efficiency than ever before

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y its very nature, procurement has always been at the forefront of technological developments in commerce as companies constantly try to improve effectiveness at all levels. The recent surge in blockchain applications has, therefore, inevitably sparked discussions about how this technology can be used to enhance procurement and supply operations.

The most basic description of a blockchain is a secure digital ledger on which transactions can be made and recorded. Digital ledgers, of course, are not a new concept, but the difference with blockchain technology is that it is not based on a single or central ledger but decentralised ones in which stakeholders on all sides of a transaction can make and record them. The technology has so far been synonymous with the digital currency bitcoin but its practical uses stretch beyond financial transactions.

Practical applications of blockchain technology for the procurement and supply profession are numerous and can be grouped around two main areas, namely: -

2

Procure-to-Pay (P P) In the P2P sphere, blockchain technology would be perfectly suited to manage invoice payment and validation without the need for third party reconciliation. It could also be integrated into the management of ‘Smart Contracts’ whereby contracts are executed automatically and performance of suppliers against SLA’s are managed and verified automatically. The tamper-proof nature of blockchains can enable automated transactions when pre-set conditions are met, eliminating the need for masses of paperwork and man-hours, and in the long-term, helping to establish credible predictors of procurement patterns and budget and inventory requirements.

Supplier Relationship Management Risk management, pre-qualification, and supplier compliance are vital elements of the procurement cycle in the modern age. As blockchain allows continuous access to update records, data, and information, this would prove to be an intuitive method of managing supplier validation processes in real time.

From a legal perspective, while internet-based databases enable each stage of the supply chain process to be logged and transmitted across stakeholders, what is particularly significant about a

blockchain is that the verification and authentication of each transaction can be directly linked to the execution of the transaction itself.

The ‘trust layer’ in blockchains requiring authentication with each transaction before execution allows for real-time validations of transactions as they are processed and because blockchains cannot be unilaterally tampered with, the risk of fraud and malpractice can be reduced. Furthermore, the transparency and traceability features of blockchains can create a digital footprint with an interlocking set of digital passports throughout the entire production lifecycle enabling auditability and, from a regulatory perspective, enabling governments and regulators to monitor best practice from ethical supply routes to shipping standards etc.

Emerging challenges The major barrier to the effective adoption of blockchain in procurement processes and supply chains is the lack of common standards over blockchain use that are uniformly deployed crossborder and multi-jurisdictionally. Indeed, this has

been a core component of the conversation around regulations of blockchain in financial services and it is self-evident that the need for global standards are particularly required when dealing with international transportation and procurement processes. This will be the next frontier from a legal and regulatory perspective and key to whether blockchain technology becomes scalable commensurate with its potential.

Blockchains are already making their way into the field. Walmart experimented with the technology last year to track down contaminated food sources while Brighann Cotton are using blockchains to validate the delivery of cotton via sea freight with the information recorded on the blockchain automatically updating smart contracts linked to the transaction.

The practical uses of blockchains within the procurement and supply chain practice are numerous and there are ways that the technology can be used within the field that have not yet even been thought of. Such a solution with a ‘single version of the truth’ is a technology not for tomorrow but for today, and is here to stay.

The technology has so far been synonymous with the digital currency bitcoin but its practical uses stretch beyond financial transactions.”

Sam Achampong, regional director, Chartered Institute of Procurement & Supply (CIPS) MENA

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R e p o rt

Do you risk falling behind?

Ralf Seifert, professor of operations management at IMD, a top-ranked business school based in Switzerland, highlights key lessons from the second IMD Global Supply Chain Survey

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he second edition of the IMD Global supply chain survey examines how organisations rate themselves on 20 important trends in supply chain management. It shows that experts from leading European companies, in a wide variety of industries, expect the focus of supply chain management over the next three to five years to remain on traditional topics, such as applying sales operations and planning (SOP) throughout the chain and using specific key performance indicators (KPIs).

Interestingly, the experts give less importance to key areas of digital transformation, such as digitalisation of interactions with suppliers, channel partners, consumers, and the use of big data. New technological advances, such as robotics, the Internet of Things (IoT) and 3D printing, are seen as being of even less relevance in the period.

Is this a sign that – despite the feverish talk of disruption from digitalisation and new business models – supply chain management is still about focusing on the basics of a physical world business? Or do some business leaders believe that the nature of their physical world products shelters them from rapid technological shifts? Are these organisations holding themselves back by not paying enough attention to new technology and processes? Are they at risk of missing out on the rapid development of Supply Chain 4.0 or even Value Chain 4.0?

The survey More than 300 people across 30 industries participated in the survey, which was carried out between mid-September to mid-November last year. Main industries represented included speciality chemicals, food and beverage (F&B), pharmaceuticals, industrial goods, fast-moving consumer goods (FMCG), oil and gas, and

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mining and minerals. The study focused on identifying the gap between how important a key supply chain topic is perceived to be for a company over the next three to five years and how well it is seen as being addressed in the organisation. Respondents were also asked to name their top-of-mind, highest-priority initiatives for advancing supply chain performance in their organisation.

Senior supply chain leaders should embrace a holistic approach that aligns people, processes, and structures within the function to the challenges that a digital and increasingly automated world present to companies of all industries and in all stages of maturity”

Key takeaways We selected 20 topics – some old, some new – that are significant drivers of supply chain performance. Although different industries give different weight to different drivers, the overall trend is clear. Respondents feel generally comfortable with the way their organisations address the basics, such as aligning supply chain strategy with overall business strategy, supplier management, measuring supply chain performance using a set of KPI’s, and compliance and governance.

Few respondents see a high impact over the next three years from drivers such as the IoT, automation or robotics. Nevertheless, digitalisation seems to be a strong focus – in cooperation with suppliers and channel partners, or using big data for forecasting and demand planning – with more than 33% rating as important or very important for their organisation. But the same percentage rated the degree to which the organisation addresses the drivers as low or very low. Respondents were very clear that their organisations are not well prepared to address digitalisation drivers showing the largest implementation gaps as of today.

When it comes to key drivers outside of the tried-and-tested supply chain management basics, differences are to be expected between industries. For example, only 9% of respondents from the mining and metals industry considered the use of big data for demand forecasting

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an important driver. This figure rose to 60% for FMCG, freight and logistics, and retail. A B2B industry will place much lower importance than a B2C industry on availability of integrated data across all channels and partners or a customer-facing supply chain. But it would be short-sighted to believe that a company and its supply chain leaders do not need to stay abreast of opportunities and trends – change might be driven by your channel partners, i.e. players further down the value chain.

The question remains whether the low level of importance attributed by respondents to the IoT, robotics, 3D-printing and the like, points to a larger issue, namely that companies tend to plan for technological shifts only when that technology is ready to replace existing processes and methods. In our fastmoving and increasingly digital age, organisations may be waiting too long to prepare for disruption of their supply chain by digital and technology drivers.

Supply Chain Supply Chain Strategy/Integration with Business...

Applying Sales & Operation Planning (S&OP)...

Supply Chain Segmentation - Agility vs. Efficiency Supply Chain Performance Management and KPIs Supplier Management

4

6

2

Relative importance between now and 2020 (scale 1-7)

0

2

4

6

How well currently addressed (scale 1-7)

Digitalisation “Big Data”, using real-time, contextual data for increasing

Digitalisation of cooperation with suppliers Digitalisation of cooperation with channel partners

Impact of Internet of Things (IoT) on Supply Chain Artificial Intelligence (AI)

6

5

4

Relative importance between now and 2020 (scale 1-7)

3

2

1

Implementation gap

0

1

2

3

Conclusion Supply chain leaders must balance short-term benefits and the longer-term investments needed for an efficient and effective supply chain that is ready for the future. Based on our survey results, this involves the following three key activities: Getting the basics right – implementing supply chain best practices and improving supply chain performance using tried-andtested methods.

Having a strategy for an increasingly connected and digital world – no revolution, but continuous evolution of a digital supply chain where greater transparency and analytics leads to improvements in delivery times, reduction of inventory, reduction of supply chain cost and risk, and increased ability to create value for customers and, therefore, sales.

Being ready for big technology shifts – involving robots and autonomous vehicles, 3Dprinting and connected products, and the IoT, to improve product and service offerings and reduce costs.

Senior supply chain leaders should embrace a holistic approach that aligns people, processes, and structures within the function to the challenges that a digital and increasingly automated world present to companies of all industries and in all stages of maturity.

They should not focus only on implementing more and better technologies, but must inspire, manage complexity, and develop distinct cultures conducive to success in rapidly changing environments.

Logistics News ME | April 2017 | 51

Sup p lie r N e ws Schmidt opens AED20mn Middle East headquarters in Kizad

S

chmidt Middle East logistics, a wholly owned company by Schmidt Heilbronn, has launched operations of its multiuser logistics hub based in Khalifa Port Free Trade Zone (Khalifa Port FTZ) within Khalifa Industrial Zone Abu Dhabi (Kizad).

This multi-user chemical and petrochemical dedicated hub is set to offer its services to clients within the UAE and the rest of the Gulf region, and will act as the company’s Middle Eastern headquarters.

Schmidt Middle East Logistics has leased about 22,000 sqm of prime land at Khalifa Port FTZ to set up an economical and efficient solution to store, handle, and distribute different bulk materials like polyethylene, polypropylene, catalysts, and additives for the chemical and petrochemical industry.

The AED20mn facility allows Schmidt to open the gates for highly specialised logistics in this region, with the UAE playing an important role as a distribution hub for the GCC. The facility comprises a warehouse providing about 2,000 sqm of storage area, a silo battery containing nine silos, a tilting platform, a packaging line, a repair shop, and a service station, as well as offices and social rooms. In addition, the facility offers services such as truck transport and customs clearance. To and from its warehouse and silos bunker

52 | Logistics News ME | April 2017

storage, Schmidt ME Logistics will provide transport services for dry bulk products, packing dry bulk goods into maritime containers, and managing overseas long haul and short sea transport to end user locations.

Dr Hoppmann, CEO of Schmidt Middle East, commented: “Our hub in Kizad represents a key part of our expansion plans in the GCC to serve our customers better. We have also recently launched our facility in Bahrain, in addition to serving our existing customers for their onsite projects in Kuwait, Saudi Arabia, Qatar, and Oman.

“We continue to develop our infrastructure and facilities in the region as part of our commitment to our customers, and to facilitate the growth and efficiency of their operations in the region. We are confident of the future growth of this sector in the region, and we will continue to offer world-class services we are known for.”

Mana Mohammed Saeed Al Mulla, CEO of Kizad, commented: “We are delighted to contribute to the emirate’s business portfolio by welcoming Schmidt Middle East Logistics to Kizad’s Khalifa Port FTZ, now home to its regional headquarters. Schmidt is one of the world’s leading dry bulk logistics solution providers and its new facility will benefit from a strategic location that offers great regional and international transportation links.”

Hempel opens flagship showroom in Saudi Arabia

Global supplier of marine, protective and decorative coatings, Hempel, opened its flagship showroom at Jubail in Saudi Arabia, as part of its strategic regional expansion plan.

The showroom offers a complete solution for home exteriors and interiors in addition to floor coatings and protective paint, stated the company. The launch comes at a time when the development of the protective coatings’ segment has witnessed a boost through the oil and gas sector and infrastructural investments, said a top official.

Yusuf Al Sayed, country manager of Hempel, Saudi Arabia, said: “The showroom is a new addition to our assets to satisfy and meet the industry demand in Jubail, which hosts one of the largest industrial cities and is a home to the Middle East’s and world’s largest petrochemical companies. Our approach targets an extensive outreach spreading onto the corners of the kingdom to ensure satisfying our consumers’ needs with the increasing demand.

“We contribute towards the improvement of the paint industry and the development of this sector, through quality products in line with growth plans characterised by opening 56 shops in the Middle East including in Saudi Arabia, Kuwait, and Bahrain.”

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India’s Kale Logistics sets up new centre in Dubai India-based global IT solutions provider to the logistics industry, Kale Logistics, increased its international presence with a new a customer service and business development centre at the Dubai World Central (DWC).

The new centre will enable a deeper engagement for Kale with the logistics industry stakeholders in the region, the company said in a statement. “Logistics and transportation industry has been witnessing an interesting transformation.

Technology in logistics is changing the way the world does business. Kale Logistics Solutions has been enabling more than 2,000 of its clients globally to connect and do business digitally.”

Amar More, director, Kale Info Solutions DWC, said: “We continue to expand our footprint globally, and specifically in the Middle East. Dubai offers extremely lucrative opportunities for companies to take advantage of the region’s emergence as a global logistics hub and ease of doing business.

“We see a huge potential in this region with wider acceptance of our IT solutions. We will be further expanding our portfolio in air and maritime space to bridge the technology gap that currently the logistics industry is facing.”

BAS wins Saudi Arabian Airlines contract Bahrain Airport Services (BAS) signed a technical handling agreement with Saudi Arabian Airlines for the Bahrain International Airport.

Eng Osama Helmi, manager for line maintenance, said: “The agreement displays their confidence in our expertise and experience over the years and our commitment to provide the highest level of safety checks. We would be covering all aspects of the technical handling with the strict governance of the maintenance organisation exposition, which is a formal document describing how an approved maintenance organisation or MRO is structured to achieve delivery of its activity. This will ensure the timeliness of our processes and increase efficiency as we support our partners.”

Jalal Mohammed Jalal, chairman of BAS, said: “We are delighted to partner with international airlines for technical handling and remain dedicated towards strengthening the quality of our processes and procedures to ensure the most efficient on-time performance.”

The line maintenance team will provide technical handling support to most of the international airlines at the Bahrain International Airport. Technical handling addresses the technical service requirements of an airline between the time it arrives at a terminal gate and the time it departs onward to its next flight route.

Technical handling operations include various crucial checks that need to be carried out by a team of professional engineers and mechanics at BAS such as transit, arrival, departure, and other line management functional checks. Troubleshooting procedures are conducted, if necessary, to ensure the highest level of safety certification is done post-service to confirm that a flight is ready for take-off.

DHL, FedEx sign deal with Manateq to operate in SEZs Qatari developer and operator of specialised economic zones (SEZs), Manateq, has finalised deals with DHL and FedEx, to give them access to operate from its SEZs. Nermeen Abd al Aziz, business analyst at Manateq, said: “We are already building units for both companies in Ras Bufontas to open its first operational branches.”

Once the long awaited new law of Manateq gets the final approval, the deal would allow both companies to build large storage and distribution units to facilitate their work in Qatar. The companies can later expand to other GCC countries once the GCC railway network is completed, reported Qatar Tribune.

Aziz pointed out: “Ras Bufontas is located adjacent to Doha’s new Hamad International Airport and is considered an ideal location for businesses requiring international connectivity. The zone would provide a vibrant and inspiring workplace. It has a long-lasting, high-quality, and low-maintenance design and includes service hubs, public parks, labour accommodation, utilities access, versatile office, retail space, and also our headquarters.”

Aziz said Manateq has started to receive several applications from prominent international companies to invest in SEZs, adding that companies interested to invest in special zones will go through evaluation processes to check their business plans and financial stability.

Singapore’s Petroleum Specialties opens new plant in Sharjah Singapore-based Petroleum Specialties, a specialised manufacturer of industrial white oils, announced the opening of its new $18mn manufacturing unit at Hamriyah Free Zone in Sharjah.

The 30,000 sqm, fully-automated plant of Petroleum Specialities is the first completely-owned subsidiary of its parent company, Apar Industries Limited, outside India, reported state news agency Wam. It was inaugurated by Sheikh Khalid bin Abdullah bin Sultan Al Qasimi, the chairman of the Hamriyah Free Zone Authority (HFZA) in the presence of Saud Salim Al Mazrouei, the director of HFZA; Kushal Desai, the chairman and managing director of Apar Industries; and other senior officials.

Sheikh Khalid later toured the facility and was given a briefing by the officials on its various phases of production, stated the report.

Al Mazrouei said the plant will have a prestigious status in the Hamriyah Free Zone, as it is a subsidiary of India’s largest, and one of the world’s top manufacturers of special types of industrial oil. He pointed out that the launch of vital projects in the Hamriyah Free Zone would continue.

Al Mazrouei said: “We will continue our efforts to build partnerships and attract diverse investments to keep pace with the economic development in Sharjah, as the emirate enjoys one of the most diversified and attractive economies in the entire region.

“The inauguration of the plant, the first and largest-of-its-kind in the region, which is expected to meet the demand for quality industrial oil products in the regional markets, is proof of the HFZA’s successful strategy in attracting international firms.

“This will inspire us to increase our efforts to attract more thriving investments from across the world to the Sharjah. We will continue to improve our practices, services and facilities to achieve this goal.”

Logistics News ME | April 2017 | 53

Save t he dat e

The Month Ahead

The key exhibitions, conferences, and seminars coming up this month MIDDLE EAST PHARMA COLD CHAIN CONGRESS

April

10-12

April

26-27

10 – 12 April Dubai, UAE The Middle East Pharma Cold Chain Congress is the main platform for the pharmaceutical industry in the MENA region which gathers all the industry stakeholders to converge, discuss ongoing and future challenges, and come up with solutions to address these issues.

This year, the focus is on pharmaceutical companies in the Middle East and North Africa (MENA) facing several challenges such as globalisation of the pharmaceutical supply chain, developing GDP regulations updates, and maintaining global compliance for temperature-sensitive pharmaceuticals across different countries with varying regulations. This year’s congress places emphasis on overcoming these challenges with the most effective strategies including regulatory compliance, integrating cold chain management, selecting the appropriate partners, maintaining supply chain integrity, and achieving real time traceability.

GCC LOGISTICS CONFERENCE 26 – 27 April Manama, Bahrain Bahrain has recently liberalised the transportation and logistics market, so everyone can invest in almost all areas of this sector without restrictions. This has turned the Gulf state into a highly attractive location for the logistics service providers. The two-day conference reaches out to business professionals, politicians, media representatives, students, and to the public, making it a showcase of the service quality and the attractive jobs that the industry has to offer.

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May

9-11

May

15-17

9TH GPCA SUPPLY CHAIN CONFERENCE 9-11 May Dubai, UAE Held under the theme ‘Agile and Efficient GCC Supply Chains - The Role of Technology’, the 9th GPCA Supply Chain Conference will offer delegates an exclusive opportunity to explore the benefits of supply chain digitisation in a complex and changing marketplace environment.

Attendees will hear from global industry experts about how leading supply chain organisations have leveraged innovative technologies to improve the agility and efficiency of their supply chain operations. Experts will also shed light on the core capabilities required to embark upon a digital transformation journey.

AIRPORT SHOW 15 – 17 May Dubai, UAE The Airport Show provides an ideal B2B platform for companies to showcase airport and aviation-related products and services. In 2016, the event gathered 7,166 aviation professionals who networked and sourced their product requirements at the show. More than 300 leading companies from around the world are expected to participate in the 2017 event, introducing their latest product and service offerings to a projected 7,500 attendees. More than 200 hosted buyers and 60 regional aviation authorities are expected to attend. The Airport Show is the perfect place to exhibit or source the latest technology, learn about emerging trends, network with decisionmakers, and get first-hand knowledge about the region’s $170bn airport expansion and modernisation programmes. www.cbnme.com

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