Logistics News ME February 2016

N e w s A na l y s i s

Technology

T r an s p o r t

ICT and innovating port logistics

IoT in the spotlight at Rockwell Automation Fair

Driving the adoption of automated vehicles

Connecting trade professionals with industry intelligence

The Shipping Giants Ruling The Waves

February 2016

We deliver on Logisics The Rais Hassan Saadi (RHS) Group have been at the very front of the emergence of Dubai as a Shipping and Logistics hub since they started operations in 1910. Now over 100 years later, the company has evolved into the regional powerhouse it is today with diverse interests across the region.

RHS Logistics, the 3PL and supply chain systems integrator, operates from the Middle East, but with a truly global vision. Utilising the latest of technologies, and with a wealth of experience on diversified product handling, in high quality, sophisticated environments, it has cemented its status as an innovative market leader within the Logistics industry.

With cutting edge facilities in Dubai World Central, Jebel Ali Free Zone, Dubai Airport free Zone adjacent to the Sea and Air ports, housing a total of 100,000 pallet locations, RHS have and will continue to invest in first class infrastructure, ensuring they remain leaders in their field.

How can RHS Logistics help your Logistics business?

Call us on (971-4) 8810007, (971-4) 8082300 or visit rhslogistics.com

RHS Logistics represents the 3PL division of the RHS Group of companies operating out of Dubai, U.A.E.

RHS Logistics Established 1910

Start 8 | News 14 | News Analysis

The role of ICT in port innovations

Contents

18 | Technology Behind the scenes at the Rockwell Automation Fair

Features 22 | Cover story: Mari-

time Leaders The shipping companies ruling the waves

28 | In Focus: Emerging markets New data analysing the UAE’s standing against China and India 32 | Viewpoint

28

Contributions from SAP, GEFCO and Infor

42 | Transport

Driverless trucks and the future of automated vehicles

48 | Interview: KRS Logistics Face to face with the industry’s newest start-up

48 42

52 | Retail Focus: Alpha

Tech The secret to becoming an award winning distribution partner

14

34 Logistics News ME | February 2016 | 3

news

news

Editor’s Note Re-drawing the boundaries

I

n 2015, companies around the world spent an estimated $5tr on mergers and acquisitions (M&A) and the pace is set to continue into this year.

Not only was 2015 was the busiest year for M&A activity since 2007 but there are patterns emerging. PwC has reported that average deal values in transport and logistics continued to increase over the course of 2015; megadeals represented close to two-thirds of the total deal value for Q3 2015, despite a YoY decline in activity; and cross-border activity increased, driven by strategic investors, with many of these deals intended to build a global transportation network and expand operations.

In M&A terms, 2015 was a year of big money deals and a reshaping of the industry landscape. 2016 is likely to see the same, although individual transactions are due to be slightly lower in value on a case by case basis as more companies make the decision to outsource logistics services and efficiencies in scale and geographic reach become critical drivers of inorganic growth.

One trend that will continue is the appetite to travel to new markets in search of the right deal.

One of the most recent headline-making deals saw Aramex make its third acquisition, this time with Fastway Limited, a New Zealand based courier for which Aramex paid AED294m in a 100% buy out.

For Aramex, the reasons were simple – a ready-made business in a region where the company wasn’t already present – and the deal followed the acquisition of companies in Australia and Thailand last year.

Nader Museitif, director of M&A and franchising at Aramex, describes the process as more of a rescue than a buy-out, with his team assessing the financial health of an organisation before investigating how it can re-shape the operation.

Whatever the approach, the potential for individual companies to grow despite an overall slowdown in global growth is undeniable and, with enough equity, there is plenty of opportunity to take advantage of the ability to rapidly expand into new markets or services, through such methods.

Far from the gloom seen in the market in the first few weeks of the year, it could be that 2016 isn’t the year of capped opportunity and limited growth, but a time to foster mutually beneficial relationships that can consolidate the business landscape, while working to reduce the high level of fragmentation that has become common place over recent years.

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In The NEWS DC Aviation Al-Futtaim to expand its presence at Dubai South DC Aviation Al Futtaim eyes expansion

DC Aviation Al-Futtaim (DCAF) has announced plans to expand operations at Al Maktoum International Airport at Dubai South.

The announcement closely followed an earlier statement from its joint venture partner Al Futtaim, to lease an additional 10,000sqm of land from Dubai South. This new addition to the land will allow the firm to expand the existing VIP lounge and hangar facility, thereby improving their operational 8 | Logistics News ME | February 2016

efficiency considerably.

With this recent addition to the existing hangar capacity, DCAF will be able to meet increasing customer demand, include two additional single aisle aircraft maintenance bays, and offer extra space for workshop and equipment storage. At present, the DCAF hangar is spread over 5,700sqm, large enough to accommodate more than one ACJ or BBJ type aircraft, extensive business jets such as

the Falcon 7X, Gulfstream G650 or the Global Express.

GM of DC Aviation AlFuttaim, Holger Ostheimer, said: “The recent increase in demand for our services as well as Dubai Airport’s decision to transition all corporate and private aviation activities to Al Maktoum International Airport has encouraged Al-Futtaim to committing to signing this lease deal. This agreement will ensure that DCAF will remain the number one service provider for

business and private jet operations in Aviation District at Dubai South.”

DCAF is a joint venture between DC Aviation operator of business jets based in Germany and Dubai-based Al-Futtaim, and is the only integrated business and private aviation operator at AMIA. Its core business operations include: business jet charter, aircraft management, maintenance, FBO and ground handling.

news

Aramex acquires Fastway Limited

SOHAR Port signs deal with Warehousing Solutions LLC

At present, the DCAF hangar is spread over

Hussein Hachem

Aramex is to strengthen its presence in the APAC region, following the acquisition of Fastway Limited.

Established in New Zealand in 1983, Fastway Couriers’ global network includes 63 regional depots and 1,500 courier franchisees across Australia, New Zealand, Ireland, Northern Ireland and South Africa. With more than 250 franchise partners across New Zealand alone, the company transports 16 million parcels globally to 75,000 customers each year.

The deal is aligned with Aramex’s asset light business model, and is Aramex’s second acquisition in the Asia-Pacific region to date and

involves a 100% buyout of the company’s business in New Zealand and Australia for AED293.650m.

Hussein Hachem, CEO of Aramex said: “Acquiring Fastway Couriers is the next logical, strategic move for us.

Having scalable synergies with our own infrastructure and extending our reach across the region, the acquisition now makes us present in New Zealand for the first time and strengthens our existing operations in Australia.”

The Asia-Pacific region was the largest e-commerce market in the world last year, with total B2C e-commerce turnover of $770bn.

CEVA and Etihad Rail sign MoU One of the world’s biggest supply chain management companies, CEVA Logistics has signed a Memorandum of Understanding with Etihad Rail, the developer of the UAE’s rail network.

The MoU was signed by Jerome Lorrain, EVP for Balkans and MEA at CEVA Logistics, and the CEO of Etihad Rail, Faris Saif Al Mazrouei.

Mazrouei said: “This agreement is the first step towards the establishment of a long and strategic partnership between our two companies. We look forward to working closely with CEVA Logistics and play our role in the greater diversification of the UAE economy.”

Lorrain added: “Etihad Rail will provide us with a much more reliable and environment friendly alternative to traditional modes of transport. Moreover, once the GCC rail connection is operational, it will significantly enhance the scope of our business.”

In Numbers

SOHAR Port and Freezone has signed a deal with Warehousing Solutions LLC, a newly established company belonging to Saudi Arabian logistics provider Warehousing Projects and Logistics LLC (WPL).

Warehousing Solutions LLC will develop and manage the new warehouse park at SOHAR Freezone — one of WPL’s first major ventures outside the Kingdom.

The signing marks the beginning of the construction of WPL’s planned 50,000sqm warehouse park in SOHAR Freezone; a further 50,000sqm has been reserved for phase II, taking the total size of the land lease agreement up to 100,000sqm.

Warehousing Solutions will construct ready-built warehouses as well as bespoke warehousing for other SOHAR tenants on-site in the Freezone.

The signing took place at the annual SOHAR business reception, in Muscat. His Excellency Sultan Al Habsi, chairperson of SOHAR Port and Freezone, as well as SOHAR CEOs Andre Toet and Jamal Aziz signed the agreement with WPL chief executive Abdulaziz Mansoor Al Subaie. VIPs and guest from the public and private sectors as well as representatives from key diplomatic missions in Oman attended the ceremony.

5,700sqm large enough to accommodate more than one ACJ or BBJ type aircraft, extensive business jets such as the Falcon 7X, Gulfstream G650 or the Global Express.

With more than 250 franchise partners across New Zealand alone, Fastway Limited transports

16 million 75,000 parcels globally to

customers each year

Logistics News ME | February 2016 | 9

news

With the inclusion of the new ENOC delegates, the MENA region now has

FedEx named Superbrand The world’s largest express transportation company, FedEx Express has been named one of the top UAE brands by the Superbrands organization for the third consecutive year.

Officially taking the title of “business superbrand” the international courier was selectd after backing from a voluntary council of experts and a YouGov survey of over 1,500 business professionals.

DMCA awarded ISO DMCA has been awarded the four highest international awards for quality, information, health and maritime safety management by the international standard setting body, International Organization for Standardization (IOS).

NAVTOR expands to Singapore Norwegian navigation specialist NAVTOR is to expand with a new office in Singapore, driving new business with shipowners and managers such as NEOM, SeaTeam, Waruna Shipping, Samudera Shipping, and Sattech International.

DAFZA partners with LinkedIn Dubai Airport Freezone Authority (DAFZA) has announced an official partnership with LinkedIn to nurture the development of business investments opportunities and “better Human Capital endeavours”. The partnership is aimed at expanding DAFZA’s reach as an employer brand on LinkedIn, and access valuable information available on the professional network. LinkedIn will also allow DAFZA to attract new talents from different industries on a global scale towards the Freezone.

10 | Logistics News ME | February 2016

177

MCIPS qualified individuals

ENOC delegates receive MCIPS accreditation

Twelve delegates from the Emirate National Oil Company (ENOC) have received MCIPS accreditation from the Chartered Institute of Procurement and Supply, an internationally-recognised award which signals procurement proficiency and represents the global standard for a professional working in the procurement and supply profession.

MCIPS was awarded to recipients during a ceremony held in November 2015 and was the result of successful completion of the CIPS Oil and Gas Advanced Practitioner Programme – a targeted programme for the oil and gas sector. The event was attended by the ENOC group procurement and contracts department, Sina Al Khoory, executive director, SSC at ENOC, and Duncan Brock, group director of customer relations, CIPS UK (pictured).

Sam Achampong, GM, CIPS MENA said: “Procurement professionals are currently in an extremely powerful position.

Procuring services and resources at the right time and at the right price, are pivotal to organisational success. This means that qualified procurement professionals equipped with the necessary skill set, are in extremely high demand therefore MCIPS accreditation is invaluable. We are delighted to award ENOC’s delegates with their MCIPS designation.”

The CIPS Advanced Practitioner Programme is an accredited, modular training programme tailored to a specific organisation or industry.

With the inclusion of the new ENOC delegates, the MENA region now has 177 MCIPS qualified individuals.

Panalpina enters Dubai with Ericsson Panalpina Group has brought its logistics manufacturing services (LMS) to Dubai through a partnership with Ericsson Last month, Ericsson officially inaugurated its first telecom equipment hardware and software distribution centre in the Middle East. The Ericsson Supply Centre located in Panalpina’s Dubai South facility is the company’s first distribution center globally that unites hardware assembly and software load under one roof.

The two companies have worked together in the UAE since 2010. “Our partnership has evolved greatly in the past five years. We started off with a spare parts operation and have now moved into manufacturing,” said Peter Triebel, Panalpina CEO for the MEAC region.

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Emerson breaks ground on new Dhahran Techno Valley centre

Emerson Process Management broke ground on the site for its new technology development, customer training, and project support facility in Dhahran Techno Valley in Saudi Arabia on January 11.

The 11,370sqm facility will provide services and support to oil and gas, mining and other process industries across the Kingdom, equipped with resources and capabilities to develop automation solutions, deliver lifecycle services, and train local talent. It will house offices, training facilities, a service and light manufacturing 12 | Logistics News ME | February 2016

workshop, and laboratories focused on control systems, flow metering technologies, and research and development.

The facility is scheduled for completion in May 2017.

“Emerson is recognised for innovation and continues to lead by investing in engineering and technology development,” said Dr. Halim H. Redhwi, CEO of Dhahran Techno Valley.

“The new centre in Dhahran Techno Valley will help shape the next generation of Saudi talent and bring economic returns for the Kingdom, especially

in the petroleum and minerals sector.”

“The Emerson Dhahran Techno Valley facility is a testament to the critical importance of Saudi Arabia to Emerson’s growth in the Middle East and Africa,” said Dave Tredinnick, president of Emerson Process Management MEA. “The new facility and our local Saudi organisation will lead to greater collaboration between Emerson, local universities, and our customers, and complements our manufacturing capabilities in Jubail.”

GES opens Turkish office

Fighting for a share of the estimated $108bn logistics industry in Turkey by 2017, Globe Express Services (GES) recently opened an office in Mersin, , a port on the Mediterranean coast of southern Turkey, in its bid to further strengthen its presence in the country’s logistics market and capitalise on the variety and scale of logistics activities in the city.

Mustapha Kawam, president and CEO, GES, said: “Turkey’s logistics market is consistently showing sustained growth, generating many highly valuable opportunities for GES and other global industry players. The sector is expected to expand further, buoyed by the government’s ongoing economic diversification efforts to stimulate development in various key areas such as logistics.

“At GES, we are formulating strategic plans accordingly to support the local sector and optimise its potentials along the way. Our new office in Mersin, an important economic hub in Turkey, forms part of this strategy. We will remain steadfast in our commitment to deliver outstanding services to our clients as we continue to seek better ways to further improve our offerings,” added Kawam.

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FuturE Logistics Technologies

How disruptive will the “fourth industrial revolution” be and what will it mean for the logistics industry?

Sindhu Hariharan investigates

T

he ‘Future of Jobs’ report released by the World Economic Forum 2016 held in January claims that a “fourth industrial revolution” is underway and will bring sweeping changes to virtually every sector. The report reveals that ‘developments in previously disjointed fields like artificial intelligence, machine learning, robotics, nanotechnology, 3D printing, genetics and biotechnology’ are all building on, and will cause disruption to, business models.

Almost in tandem, the logistics industry has been undergoing series of transformations over the past few years.

Technologies that seemed like science fiction in the past, including virtual reality, driverless vehicles and drones, are potential drivers of the industry’s operations.

With regard to the MENA region, the vision of regional leaders is to develop innovation hubs and inculcate a culture of innovation across states.

Various initiatives have been undertaken, across sectors, to strengthen the region’s position as a leading innovation force globally.

On the occasion of UAE Innovation Week held recently, the global marine terminal operator DP World, released a report titled “A Turning Point: The potential role of ICT innovations in ports and logistics”. The report stated slowdowns in global trade have added fresh impetus for ports and logistics firms to invest in the latest innovations in ICT. “After growing at breakneck speed throughout the noughties, the value of global merchandise trade shrank in the first six months of 2015 by more than 13% year-on-year,” cautions the report, attributing this largely to the current economic situation in China and near stagnant growth in Europe.

DP World’s report, prepared in collaboration with the Economist Intelligence Unit theorises that significant investment is needed to apply 14 | Logistics News ME | February 2016

Tramway maintenance centre depot in Reims, France Image provided by Alstom

digital tools to business and timing is key in taking the plunge into automation.

The report considers government policy to be the primary driver for these innovations and emphasises the new set of skills needed to keep up with an everincreasing tech-savvy world. The study identifies five ICT innovations as being particularly relevant to the logistics industry: robotics and automation;

autonomous vehicles; the Internet of Things and big data; simulation and virtual reality; and cyber-security.

Robotics and automation Automation varies in intensity across ports and logistics players. As reasoned by the report, while the world’s busiest container port, Shanghai, operates on less automation at Rotterdam’s Maasvlakte II

n e w s A na l y s i s

terminal – which opened in April 2015 – has almost no personnel inside its cargohandling section. As the cost of labour increases and the cost of technology decreases, companies are fast-moving to a scenario where investments in automation will work out cost-effective.

The report states that automation makes most sense in ports where there is a competitive need to efficiently handle.

“the rise in megaships has driven the latter need,” it points out.

Commenting on the regional industry’s adoption of high-tech, Muthanna Muckatira, ME business director, Ehrhardt + Partner Solutions says: “There is hardly any serious automation in this region due to the fact that manpower costs are relatively less and they are easily available. However, there are few sites where investment in automation is happening,” he says. He adds that it is essential to educate stakeholders and endusers about the significance of automation techniques to make them consider the investment beneficial from a long-term perspective.

Shashi Shekhar, group chair and founder, SCLG (Supply Chain and Logistics Group) is optimistic about innovation in logistics in the region. “In our recent interaction with many experts from supply chain and logistics domain, they have identified automation as a key theme to be adopted. SCLG’s recent conference also concluded that automation helps the industry but there is an increased need to help customers drive the business case for automation.”

As for robotics, the report identifies growth of e-commerce and changes in consumer preferences as key drivers of adoption. The fulfilment of online orders requires increased responsiveness compared to traditional methods.

“Today many consumers expect sameday delivery and also want to be able to customise the products that they order.

This is placing an onus on warehouses to dramatically increase their speed and productivity,” states DP World’s report.

The use of robotics in intra-logistics is proliferating in developed markets – think Amazon – and is also gradually entering emerging markets. As a result, a number of start-ups and larger technology companies have begun developing autonomous systems to meet these fulfilment requirements.

As per analysts, the biggest barriers to retrofitting automation systems remain perceived impact on employment opportunities and resistance from trade unions at existing ports and logistics companies.

Driverless vehicles The report anticipates that given the ongoing investment in self-driving vehicles, it is likely that logistics firms will

soon be using fully automated trucks and delivery vans, reasoning: “Once the technology has a solid track record and a clear safety record, its attraction may become too compelling to ignore.”

The study is cautiously optimistic about the technology. Referring to analysts’ estimates, it states that humans may need to stay in the driving seat for the foreseeable future, especially for longhaul trucks. The report also considers various governments racing to position themselves as leaders in the sector as a positive sign. For instance, in December 2014, Innovate UK announced that it would invest £10 million in four new testing facilities for driverless cars.

Drones The report counts introduction of small drone copters as parcel carriers – the kind currently being tested by companies such as Amazon and Google – as an important development in the last mile of logistics chains. Just as any technology in its infancy, drone delivery also faces challenges. While commercial use of these carriers is already underway by large players like DHL, Amazon and others, regulatory challenges and inadequate makers or providers of the solution pose a challenge for scalability.

Smaller drones are already being used for security surveillance in some ports, such as Abu Dhabi’s Khalifa Port, and could also have a role in monitoring port operations and detecting problems requiring maintenance in both port equipment and ships.

Internet of Things and Big data The revolutionary and widely spoken advances in IoT and Big Data allow devices to communicate with each other within an existing network infrastructure.

“By 2030, the supply chain industry will the biggest creator of data. For many organisations, the first step is to build meaningful intelligence on existing data while finding ways to capture new data,” explains Shekhar.

DP World’s report expects that IoT will become more prevalent with the increased proliferation of smart devices in logistics operations. However, it also sounds a note of caution. It stresses that a robust communications systems needs to be in place for the successful implementation of IoT in logistics and this becomes particularly important in Logistics News ME | February 2016 | 15

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environments such as ports, where containers and equipment can block signals.

Simulation and Virtual Reality Simulation and Virtual Reality (VR) are two lesser-known but more complicated technologies that are expected to make a difference in logistics operations in the near future. The report expects simulation to become increasingly important in modelling the potential impact of the other ICT innovations discussed, such as automated vehicles, thereby helping operators to determine if and how to incorporate them into operations. It also states that as automation increasingly removes personnel from core operational area, simulation will allow remaining staff members to understand how the automated areas are functioning.

As for VR, the study shows that for the broader logistics sector, VR may have several applications. While at a basic level, a driver whose truck breaks down could launch a VR application that would show them how to fix it, VR can also be used to visualise any planned rearrangements at full scale, explains the report.

Muckatira of Ehrhardt + Partner Solutions’ explains the utility of their product LFS glass adapted from a product innovation from Google that guides the picker in the warehouse with a visual reference to go directly to the bin location and pick the item. “Adoption of this concept and technology is still in its infancy and possible commercial rollout will take some time due the ongoing product development from Google,” he says.

Cyber-security Highlighting a flipside to the entire digital wave in logistics, the report names cybersecurity as a challenge. The potential vulnerability to software bugs and cyberattacks range from small scale attacks by criminals seeking to evade port security through major assaults by terrorists or hostile countries seeking to disrupt trade flows as an act of war, explains the report.

Looking beyond the innovations covered by the study, industry analysts largely agree on the significance of these 16 | Logistics News ME | February 2016

Panama Metropolis. Image provided by Alstom

technologies for the logistics industry. Eft (Eye for Transport) Supply Chain and Logistics Business Intelligence, a research organisation for the supply chain industry, publishes annually its 3PL Contracting Report exploring technological advances entering the industry. A key finding of the 2015 report says that while in 2014, less than 25% of respondents acknowledged areas such as drone delivery, augmented

reality, 3D printing and driverless vehicles as playing any role in their businesses, in 2015 this number jumped to over 40%.

Further, as per Transport Intelligence’s briefings on trends to look out for in 2016, autonomous vehicles, 3D printing, sensor technology and the like, will be key influencers for the industry though not lead to any revolution in the short-term.

Commenting on MENA’s efforts in

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adoption of these transformative tools, Sebastian Stefan, CEO, LoadME says: “Some logistics companies are aligned with the latest technologies but the majority are still using inefficient and outdated methods. Though we [MENA] are a bit behind, the adoption rate of new technologies is fast and governments are also supporting the smart initiatives.”

Shekhar feels that a one-size-fits-all approach will not help the industry. “Our recommendation is that each organisation should evaluate their needs of automation to generate internal efficiency,” he says.

He adds that policy makers in GCC are engaging with the community and implementing ways to regulate and grow all positive aspects of technology.

On the occasion of UAE National Day,

DP World hosted an Innovation Stand that provided a glimpse of the use of hightech in its terminal operations at flagship Jebel Ali Port in Dubai. As per DP World’s official release, the state-of-the-art technology showcased included automated guided vehicles used at Rotterdam World Gateway (RWG); the use of security drones at its ports providing live video coverage of areas not in view of fixed camera networks; remotely controlled quay cranes at Jebel Ali Port, operated by female UAE national crane operators; and also a 3D virtual reality tour of port operations.

DP World also runs the TURN8 programme, a startup accelerator initiative, to encourage future innovation by way of mentoring, business plan advisory and access to seed capital investors.

“I am sure that MENA is ready for technology and the region will also be forced into it in the coming years as all emerging markets mature. Fuel prices in Saudi Arabia have been doubled recently and this will definitely influence the RoI for adopting new technology in logistics companies,” states Stefan.

As postulated in DP World’s detailed take on ICT innovations, at a time when trade flows are down and competition is rising, getting large-scale investments approved for port automation or robotics will be a huge challenge by itself.

Secondly, the regulatory stance taken by governments is also considered a critical factor in determining the pace of rollout of various innovations in core operations.

Further, emerging as a mixed blessing for MENA will be the need for new skill sets.

The report stresses that, in addition to the skills that all employers expect, hard skills will also be needed in fields such as applied mathematics, statistics, data analytics, software engineering, and cyber-security.

Finally, logistics providers must keep in mind that they cannot address management of high-tech tools in isolation.

The report recommends that in case of issues like cyber-security, companies need to work with private sector partners and the government to share information on attacks and on new capabilities.

Logistics News ME | February 2016 | 17

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Connecting the Enterprise

In Q4 2015, Rockwell Automation held its annual Automation Fair in Chicago, USA. Logistics News ME was on hand to discover how The Connected Enterprise can help businesses achieve faster time to market and asset optimisation, while lowering ownership costs and enterprise risks

I

f the experts are to be believed, the world is on the cusp of the fourth industrial revolution. Information Technology (IT) is connecting with Operational Technology (OT) and initiatives are under way around the world to enable smart manufacturing, supported by digital communications and the Internet of Things (IoT).

Integration, digitasation and innovation are all spurring businesses ahead to achieve stronger and wider operations and, ultimately a more robust bottom line. On the back of this, a whole new industry is emerging – one which assists in the navigation of new technologies and helps

18 | Logistics News ME | February 2016

businesses integrate operations, for the benefit of themselves and client operations.

In Q4 2015, Rockwell Automation held its annual Automation Fair on these very issues in Chicago, USA. As the company explains: “There’s no one-size-fits-all solution. Navigating new technologies and understanding their integration implications – such as the need for more secure networks and better data management across enterprises– requires guidance from automation experts and peers who have been there.

“The Automation Perspectives global media event hosted by Rockwell Automation

brought together industry experts and users to talk about today’s most pressing issues in industrial automation. Users shared their progress, challenges, and successes in creating their own connected strategies, and explained how others can learn from their experiences.”

The Enterprise in Operation Among the many resources distributed to delegates at the fair, was a white paper assessing How to move from discussing and theorising a connected enterprise to rationalising and operationalising it.

It was one of the key focuses at the fair.

Technology

Key topics covered at the 2015 Rockwell Automation Fair •

The Connected Enterprise

•

Operational Intelligence

• • • •

Smart Manufacturing

Modern Distributed Control System

System Architecture

Safety and Productivity

Launching a connected enterprise involves several people, decisions and processes and so Rockwell Automation designed a related Connected Enterprise Maturity Model based on five key stages: • Stage 1: Assessment • Stage 2: Secure and Upgraded Network and Controls • Stage 3: Defined and Organised Working Data Capital • Stage 4: Analytics • Stage 5: Collaboration Ideally, each stage should be assessed, designed and implemented with the others in mind. However, while it is important to note that they are not mutually exclusive and that in some ways these stages are dependent upon each other, businesses may initiate the process by entering the phase most appropriate for each organisation and its unique needs.

A Roadmap: The 5 Stages of The Connected Enterprise Execution Model To help its customers make the technology and cultural changes essential to reach The Connected Enterprise goals, Rockwell Automation developed a five-stage process that can help protect operations against emerging IoT threats.

Baseline assessments Without a solid infrastructure you can›t achieve the desired value you’re looking for.

Therefore a comprehensive infrastructure and network assessment will establish to what extent it can be upgraded, or whether it needs replacing.

Secure and upgraded network and controls Applying standard Internet and Ethernet protocols like EtherNet/IP (CIP version) helps

integrate operations data with the rest of the enterprise and future-proofs in relation to the ongoing growth in Internet enabled devices.

Defined and organised working data capital Capturing data is fundamental, but data without context is not an asset. The Connected Enterprise makes the best use of data, transforming it into actionable business information on which better decisions can be based.

Analytics: Operational benefits Data-based analytics can be viewed real-time

with dashboards, and can be monitored contextually as well as against historical performance data. It also can be securely shared and presented organisation-wide using bespoke, secure reports.

Optimise and collaborate The Connected Enterprise unites and shares valuable information not just across people, devices and processes, but also across sites.

Information is even shared across the supply chain, ensuring processes are optimised end to end.

Logistics News ME | February 2016 | 19

Technology

Next generation launch Also during the fair, Rockwell Automation launched its next-generation Integrated Architecture Portfolio, which is designed to enable and support the Connected Enterprise.

The expanded next-generation Integrated Architecture portfolio from Rockwell Automation reduces complexity while helping users meet future capacity and throughput needs as they design systems for a Connected Enterprise.

The portfolio includes a newly released next-generation Allen-Bradley controller, graphic terminal, servo drive and distributed I/O system, as well as the latest release of the Rockwell Software Studio 5000 and FactoryTalk software offerings.

“We’ve invested significantly in the Integrated Architecture portfolio to help our customers prepare their production environments for future growth, and help machine builders simplify machines and get them to market faster,” said Dan DeYoung, market development director, Integrated Architecture, Rockwell Automation. “With this new portfolio and our ongoing collaboration with our PartnerNetwork members, customers have the tools to more easily design, operate and maintain smart, high-performing systems.”

The expanded portfolio also incorporates a number of security features to help manufacturers and industrial operators protect their facilities, assets and intellectual property SECTION 4 Industrial workers are increasingly turning to mobile devices to improve productivity and collaboration. However, interfaces need to be tailored to the specific device that is being used, especially to design, operate and maintain industrial automation systems. To meet this user preference, Rockwell Automation and Microsoft Corp. have announced a mobility co-innovation project designed for industrial environments where a wireless network connection is not always reliable.

The co-innovation brings together leading IP technology from Project Thali, an opensource solution incubated by Microsoft. It also includes JXcore from Nubisa Inc., and complements the expanding mobile foundation toolkit from Rockwell Automation. The toolkit enables Rockwell Automation offerings with a consistent web-based user interface for a specific device; tablet, smartphone

20 | Logistics News ME | February 2016

To watch some of the presentations from the 2015 Automation Fair, visit: tinyurl.com/z6o4tt7 The Automation Fair 2016 takes place in November at Georgia World Congress Center in Atlanta, Georgia USA.

or desktop and now includes a prototype app, dubbed Project Stanton.

The mobility developments support The Connected Enterprise vision: the convergence of operations and information technology that will deliver the next wave of manufacturing productivity. Enhanced by the emergence

of the Industrial IoT and advances in enabling technologies – including mobility, data analytics, and remote monitoring – The Connected Enterprise creates opportunities for benefits in productivity and global competitiveness through greater connectivity and information sharing.

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Logistics News ME profiles the leaders of the maritime industry 22 | Logistics News ME | February 2016

C o v e r St o r y

or the shipping sector, business success in 2015 was dictated by M&A activity, congestion at the world’s oldest ports and the expansion of a new generation of ports.

Performance in 2016 looks set to be decided by the impact of a global economic slowdown, which is likely to bring about prolonged weakness in commodity prices over the next decade. Adding to this, a slowdown in China could also hit shipping activity, but increased demand in Iran could stabilise overall demand and performance of the industry. There is also an urgent need to retrofit port technology and ensure operations are as high-tech as possible in order to attract and retain Gen Y professionals.

Regionally, the industry has enjoyed a level of protection in double digit growth and heavy levels of investment in infrastructure.

Entities such as Abu Dhabi Ports are now moving into a phase of maturation, with their 10 year anniversary of operations and continued positive performance.

Captain Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports, says: “Although many analysts predict that shipping industry will remain volatile in 2016, we will continue to build on the strengths and achievements we had in previous years. The year-on-year dou-

ble digit growth we achieved in all three cargo sectors and in cruise sector in recent years, on the backdrop of a slowdown in the global maritime industry, makes us confident about 2016 also. The UAE’s stable economic condition encourages us to hold this positive outlook, in spite of the new challenges in the global economy.”

But that doesn’t mean success will be achieved complacently. He adds: “We need to work on optimising our operations and providing our customers with added value offerings that will impact their businesses. We have to increase our contribution to the economic diversification and Abu Dhabi and UAE economy has proved to be a resilient economy.”

Competing, both globally and regionally, Abu Dhabi Ports offers more than 100 direct connections to global ports with over 36 shipping lines calling there. Khalifa Port Container Terminal alone can offer a network to 52 international destinations via more than 20 shipping lines and can accommodate the biggest ships sailing the world’s oceans currently.

Acknowledging that business conditions in 2016 could be tough, H.E. Sheikh Ali bin Jassim Al Thani, chairperson of the board, Milaha, adds: “The global economic outlook and oil prices will be the main drivers governing the

Abu Dhabi Ports Performance Highlights In 2015, Abu Dhabi Ports achieved a new annual cargo-volume record, surpassing the previous record set in 2014. Khalifa Port Container Terminal handled 32% more containers and the terminal moved 1,504,293 TEUs, up from 1,137,679 TEUs in 2014.

Roll-on-roll-off (RORO) traffic increased 27% with 134,272 vehicles, up from 106,071 vehicles previous year. General and bulk cargo saw 20% surge to 15,310,847 million freight tonnes (FT) from 12,804,248 million FT in 2014.

The cruise industry witnessed 16% growth with 170,360 cruise passengers visiting the emirate in 2015, up from 146,997 cruisers previous year. Looking ahead, Zayed Port is expanding its status as a regional hub for the cruise industry, as well as general and bulk cargo. The newly opened Abu Dhabi Cruise Terminal, and the upcoming first cruise beach stopover in the Arabian Gulf in Abu Dhabi’s Sir Bani Yas Island are hoped to support this surge in performance looking forward.

shipping industry this year and the slowdown in the Chinese economy will increase the uncertainty of the global maritime shipping industry, which is currently witnessing an oversupply in bulk and container vessels.

“On the other hand, the drop in oil prices has forced major players to cut capital spending in the exploration and production operations which will adversely impact the offshore supply vessel (OSV) industry. The OSV market is already under pressure as a result of an oversupply of vessels which will lead in some cases to significant rate reductions.”

Al Thani’s outlook may be cautious yet, protected by economics and fortunate geographical positioning, the GCC’s ports and maritime operations will continue to benefit from public sector support.

At a recent conference in Abu Dhabi, H.E Dr. Abdullah bin Mohammad Belhaif Al Nuaimi, UAE Minister of Public Works and the chairperson of the Federal Authority for Land and Maritime Transport said: “We promise the sector we will develop our legal and procedural system and build more marine facilities, so that our ports can be the first global destination for ships docking and for the stability of shipping companies, having the UAE flag to be among the most favorite flags in the world.”

Years in operation: 10 At Khalifa Industrial Zone (Kizad), a total of 21 Standard Musataha Agreements (SMAs) signed in 2015 with national and international investors, and three plot extension SMAs with existing investors.

These projects represent over 1,384,017 million square metres of land leased in 2015.

In 2014, the record volumes represented 26% increase in container cargo, and 37% in general and bulk cargo compared with 2013.

2016 Looking ahead to 2016, ADP has a strong positioning to respond to the demands from rising import and export activities in Abu Dhabi by enhancing the capacity of its ports, including those in the Western Region.

Additionally, the rapid growth of trans-shipment at Khalifa Port is set to continue in 2016 as there is huge demand for strategic exports from the region, such as aluminium and polymers. At Khalifa Port, more factories are in the pipeline, which will augment business activities.

Logistics News ME | February 2016 | 23

C o v e r St o r y

Bahri Years in operation: 38 Performance Highlights Holding the distinguished position of first national carrier in the region, Bahri has become one of the biggest shipping conglomerates in the world and occupies a dominant position among its industry peers.

The company commenced operations initially for transporting general cargo and containers. However, during the course of its diversification, the company’s services have been expanded to include transportation of general cargo, crude oil, chemical, liquefied petroleum gas (LPG) and dry bulk.

2016 Bahri’s current fleet strength of 74 vessels includes oil tankers (VLCC’s), chemical tankers, Aframax, general cargo vessels, dry bulkers and additional 10 VLCCs on order which will join the fleet during 2017/2018. The company has also diversified into ship management, freight forwarding, management of its container service yard, gas and offshore maritime services.

DP WORLD Years in operation: Since 1972 Performance Highlights DP World has an impressive, growing portfolio of more than 65 marine terminals across six continents, including new developments underway in India, Africa, Europe and the Middle East.

Container handling is the company’s core business and generates more than three quarters of its revenue. In 2014, DP World handled 60 million TEUs. Around the world DP World handles around 180 container ships and 150,000 TEUs daily.

DP World’s current workforce tops 36,000 employees globally comprising over 90 nationalities and the company constantly invests in terminal infrastructure and facilities. Its flagship Jebel Ali Port in Dubai, the largest in the region, has been consistently voted ‘Best Seaport in the Middle East’ for 20 consecutive years.

Most recently DP World signed a deal at

Gulftainer Years in operation: 40 Performance Highlights Last year, Gulftainer won the Port Operator Award, sponsored by Fichte & Co., at the Lloyd’s List Middle East and Indian Subcontinent Awards 2015 and last month Gulftainer USA, the extension of the UAEbased firm, announced a weekly cargo service between North America, Central America and Europe.

The Blue Stream Service will be mainly carrying perishable goods between regions, and will travel from Florida to French West Indies in three days with a transit time to Europe of 11 days.

The company last year signed a landmark, long-term 35-year concession with the Canaveral Port Authority in central Florida marking Gulftainer’s first venture in the United States of America. The Canaveral Cargo Terminal, which began operations with a TEU cargo capacity of 200,000 TEUs, has ambitious plans to more than triple its peak capacity to 750,000 TEUs. 2016 Gulftainer has been assessing several potential new ventures in line with the company’s commercial strategy and growth, driving its vision of becoming one of the world’s top six container terminal operators within the next 10 years. In 2008, it launched Momentum Logistics its fully integrated logistics provider (3PL), and is currently ranked a Superbrand in its industry.

24 | Logistics News ME | February 2016

Davos with Russian Direct Investment Fund for a JV to develop ports, transportation and logistics infrastructure in Russia.

Last year a similar deal was signed with the Senegalese government in the capital Dakar to build and develop a logistics free zone in the vicinity of the new Blaise Diagne International Airport, close to the 600,000 TEU-capacity DP World – Dakar Terminal, the largest and most modern facility in West Africa, located on the outskirts of Dakar.

2016 With its committed pipeline of developments and expansions, capacity is expected to rise to more than 100 million TEUs by 2020, consistent with market demand.

DP World, along with a number of partners, has also announced plans to invest $1.9 billion in China port terminals until 2020.

Maersk Line Years in operation: 88 Performance Highlights Despite being one of the world’s largest container shipping companies, with 374 offices in 116 countries including several in the Middle East, Maersk Line reported “less than satisfactory” Q4 results in 2015 at 61.4% lower than Q3, 2014.

Revenue for Q3 totalled $6.018m, which is 14.9% lower than Q3 2014. Volumes were 1.1% higher to 2,427,000 FFE and ROIC was 5.2%, down from 13.5% in Q3 2014. The result is below our ROIC target of 8.5-12%.

Throughout 2015, the average freight rate has declined due to weak demand, over-capacity and intense price competition. Maersk Line’s average rate decreased by 19.2% compared to Q3 2014 and 4.3% compared to the last quarter (Q2). In the Asia – Europe trade, rates reached an all-time low and the trade has contracted with 6.5% year-to-date.

However, the company fared well in Q2/2015 with revenues of $6.263 billion and reported profit of $507 million. During this period it moved 2.484 million containers compared to 2.396 million containers for the corresponding Q2/2014 period.

2016 As part of the ambitious target to reduce 60% in per container C02 emissions by 2020 over the 2007 base line, Maersk confirmed a partnership with Borouge in January 2016 to reduce Borouge’s CO2 emissions from its ocean transportation with Maersk Line by 15% from 2016 to 2020.

In addition, Maersk Line is adding 30,000 new containers in its reefer fleet to add to its fruit export operations.

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C o v e r St o r y

Milaha

Sohar

Years in operation: 59 Performance Highlights In the nine months ending September 30, 2015, Milaha delivered a net profit of QAR959 million, a 17% increase compared to the same period in 2014.

The increase in project and infrastructure activity in Qatar positively impacted its maritime and logistics and trading units while robust charter rates for product tankers and gas carriers led to an increase in the profit of the gas and petrochem unit. Furthermore, the net profit of Milaha Offshore grew by 120%, driven largely by the strong performance in its diving services business.

2016 Milaha has undertaken a sizable investment programme over recent years, which will come to fruition over 2016 and 2017. Development of new warehousing facilities in Qatar, as well as deliveries of new vessels, will add to the group’s offerings. However, challenging market conditions mean Milaha will be prudent and selective in accelerating its growth strategy.

Years in operation: 16 Andre Toet, CEO, SOHAR Port

Quick Quote Which geographical markets pose the greatest opportunities for you currently?

“In the immediate future, Qatar’s hosting of the 2022 World Cup and the resulting population growth and infrastructure projects will continue to bring great opportunities for us on our home turf.

We also see long term opportunities for growth in the Indian subcontinent, Southeast Asia, and Africa.”

H.E. Sheikh Ali bin Jassim Al Thani, chairperson of the board, Milaha

Port of salalah Years in operation: 18

Salalah Port

Performance Highlights In Oman, the Port of Salalah is among the top publicly-traded companies, as well as the largest private sector employer in the Sultanate’s southern Governorate of Dhofar. In 2014, the Port of Salalah handled in excess of 3 million TEUs and 3,000 vessel calls bound for 52 destinations.

2016 With future growth pegged to its prime location on the approach to the Gulf, Salalah’s 20 year master plan runs to 2030 and envisions the establishment of the Salalah Hub that includes a railway connection and distribution centre, food reserve and processing centres among warehousing and other logistics facilities, dedicated terminals for cruise tourism and liquid storage along with dedicated facilities that can boost SME entrepreneurship for the community.

It is expected to become a greater hub for regional logistics, especially with the GCC rail in the pipeline. This would position Salalah to become the entry-point for the region, saving time, money and in some cases, CO2 emissions.

26 | Logistics News ME | February 2016

Performance Highlights SOHAR Port and Freezone, managed by Sohar Industrial Port Company (SIPC), is a 50:50 joint venture between the Government of Oman and the Port of Rotterdam. The port and freezone, now fully operational with modern sophisticated facilities and terminals, has current investments exceeding $14billion effectively making it one of the largest port development projects.

With the relocation of all commercial traffic from Muscat to SOHAR in 2014, and the newly expanded Terminal C now fully operational, SOHAR is now equipped to manage 1.5 million TEUs per year. Ultimately, our goal is to secure that all imports and exports from and for Oman go through Omani ports, and adding these new direct services is another important step on that journey.

Andre Toet, CEO, SOHAR Port, says: “We are a young Port and are building world-class infrastructure as we develop. Thanks to 400 years’ operational experience of the Port of Rotterdam, we know what to expect as things scale-up and it’s a big advantage to have that kind of heritage and working knowledge inside our company.”

2016 Oman’s Vision 2020 programme aims to diversify Oman’s economy beyond the oil industry.

The development of SOHAR is a good example of how the nation is strengthening its manufacturing capabilities, and slowly shifting away from being a country that only exports hydrocarbons.

Despite currently low global oil prices, the development of industry in Oman will continue regardless, because the cost of energy resources within the country will always be relatively low, irrespective of global market prices.

SOHAR is a critical link in Oman’s commercial logistics industry and is committed to building a sustainable logistical hub that will help Oman to achieve its Vision 2020 objective of globalising the economy.

C o v e r St o r y

Quick Quote Which geographical markets pose the greatest opportunities for you currently?

“Abu Dhabi’s privileged position midway between the east and west makes it an ideal business hub for international businesses. The UAE is considered a gateway to the world’s most progressive markets, including Africa, India, and China. Many goods flowing between Africa and Asia, and between Europe and Asia pass through the UAE. The nation also boasts as a leading sea-air multimodal transport hub in the world – a cost-effective transport mode that provides considerable savings in transit time and freight cost, compared to pure sea freight or air freight mode.”

Captain Mohamed Juma Al Shamisi, CEO, Abu Dhabi Ports

UASC Years in operation: 40 Performance Highlights The company has grown to become one of the largest container shipping lines in the Middle East region and in the adjacent markets, covering over 240 ports and destinations worldwide.

UASC services include containerised cargo transportation, temperature controlled (reefer) and out of gauge cargo amongst other value added services to a diverse global client-base.

2016 UASC is currently implementing one of the industry’s largest and most technologically advanced new building schemes, with seventeen new vessels on order; six 18,800 TEU and eleven 15,000 TEU containerships. These vessels will be the first ultra large containerships in the industry to be delivered ‘LNG ready’, to enable dual fuel usage that is expected to significantly reduce environmental impact and reduce fuel costs

Eugene Mayne, group CEO and founder of Tristar

Tristar Group Years in operation: 18 Performance Highlights Tristar is a fully integrated Liquid Logistics Solutions provider to the petroleum and chemical industries in the Middle East and globally. Its core expertise lies in handling hydrocarbons, lubricants, chemicals and liquid gases.

The company owns and operates a wide network of dedicated facilities to manage road transport, warehousing, fuel farms, turnkey fuel supply operations, into plane aviation fuel services, and ship owning and chartering.

In 2004, Tristar Energy was set up to enable the company to engage in the ship owning and chartering business and in 2007, Tristar entered Africa to manage one of the largest turnkey fuel supply contracts awarded to any company in the continent by an international non-governmental organisation.

Tristar today counts a host of national and international oil companies and NGOs as its

customers. The company is in more than 15 countries in the Middle East, Africa, Asia, the Pacific and Central America.

UASC CEO Jorn Hinge

2016 In 2016, Tristar will start taking delivery of the six new MR Product Tankers that were ordered from Korea. The vessels will be fuel efficient and eco-friendly.

Tristar will commission its custom-built multi-logistics platform and chemical warehouse which will contain the first silo and bagging facility of its kind inside the Jebel Ali Free Zone.

The company also plans to double its fleet in the next three to five years and expand its presence in Saudi Arabia. Tristar will also look into positioning itself as the leading road fleet operator in the kingdom by playing a key role in promoting road safety.

Logistics News ME | February 2016 | 27

In F o c u s

Emerging Markets: Braced for volatility Published last month, the Agility Emerging Markets Logistics Index has named China as the foremost emerging market globally, with India showing strong growth potential.

Logistics News ME reports the findings

Dubai International Financial Centre (DIFC) is an on-shore financial hub helping business and financial institutions to reach the emerging markets

S

ince the financial crisis of 2008, the world’s trade lines have been redrawn and with the added impact of unprecedented political developments, the world is becoming increasingly difficult to recognize. But that could all be about to change in 2016, with newly released data suggesting an uptick in the growth of emerging markets is just around the corner.

28 | Logistics News ME | February 2016

Agility surveyed 1,200 supply chain logistics executives for its Emerging Markets Logistics Index on their views on the global economic outlook for 2016. Of the sample, 61% of executives are unclear on the direction of the world economy or indicate they expect more turbulence.

However, at the same time, 59.4% feel the IMF was “about right” in forecasting 4.7% growth for emerging markets in 2016.

The Top 10 Five of the top 10 ranked markets moved by at least three positions, while just two – China and Turkey – are in unchanged positions. Comparing the four markets that rose with the four that sank, the difference can largely be attributed to the efforts made to create diversified and modernised economies over the course of the years 2000 – 2010.

In F o c u s

The 2016 index Ranking

Country

2016 Index

2015 Index

Change in Ranking

1

China

7.91

8.09

-

2

UAE

7.00

6.63

up 4

3

India

6.76

6.66

up 2

4

Malaysia

6.66

6.36

up 4

5

Saudi Arabia

6.62

6.76

down 3

6

Brazil

6.40

6.71

down 3

7

Indonesia

6.36

6.70

down 3

8

Mexico

6.17

6.30

up 1

9

Russia

6.16

6.57

down 2

10

Turkey

5.95

6.06

-

The UAE, which rose four positions to rank second overall, is a prime example of this. The Emirates’ ability to understand and play to its strengths has been central to its ability to achieve this ranking.

For many organisations operating in

the UAE – including logistics and transportation service providers as well as manufacturers – a network of 34 free trade zones offers full foreign ownership, no direct business taxation, no exchange controls and no limits on

the repatriation of capital.

What is therefore an already highly attractive business environment is further complemented with a large pool of migrant labour, including both skilled and low-cost workers. In short, the UAE has

Logistics News ME | February 2016 | 29

In F o c u s

Emerging market merchandise trade volumes, six-month average, % change on a year earlier

In Brief • Nearly 1,200 supply chain and logistics executives worldwide shared their views on the 2016 global economic outlook.

• 61% of 1,200 surveyed logistics executives are unclear on the direction of the world economy or indicate they expect more turbulence.

• The UAE ranks as the world’s No. 2 emerging market after China, even though China’s economy is 25 times larger; India’s is five times larger; and Brazil’s is six times larger.

Vertical sectors Which of the following vertical sectors in the Middle East and North Africa do you believe have the greatest potential for future growth in emerging markets?

• Countries in Latin America are losing ground to other emerging markets as a result of recession and political turmoil in Brazil, the region’s biggest economy, and depressed prices for commodity exports.

• Industry executives view oil prices and China’s economy as the leading risks to the global economy in 2016.

Growth The latest set of IMF forecasts predicts that emerging market import

taken significant steps to create the conditions for logistics service providers, and their clients, to succeed.

The role of the US Global economic prospects in 2016 are heavily dependent on the United States, in the view of industry executives. After oil prices and Chinese economic vitality, respondents said the most significant drivers of the global economy will be the strength of the dollar and the health of the US economy.

India For the first time, supply chain industry professionals see India as the emerging 30 | Logistics News ME | February 2016

markets country with “the most potential to grow” as a logistics market over the next five years. India edged out China, which was seen as the market with the most potential in past surveys. India also climbed two spots to third, behind China and the UAE, in the data-driven Agility Emerging Markets Logistics Index. Its rise was propelled by an initial round of economic reforms and a surging economy.

While optimistic, logistics professionals also remain cautious about India. Nearly 42% said India needs more structural reform to sustain its current growth and more than 21% said the country needs more than economic reform if it is to unlock its potential.

and export volume growth in 2016 will be 4.3% and 4.6% respectively, and that both will rise and hover around 5% from 2017-2020.

Essentially, a return to something like the moderate growth figures of 2012-2014. From 1990-2008, though, emerging markets were regularly recording trade volume growth rates in the range of 5-10%, sometimes higher. For the next five years at least, growth rates like that seem to be a long way off.

V i e w p o i nt

All Aboard for the Middle East’s Port Digitization

Ports and logistics companies need to harness IoT technology to enhance collaboration and port Operations, and develop digital talent. Kamel Al Ghossaini writes

N

early thirty years after the Sharjah Container Terminal opened as the Middle East’s first modern port, Gulftainer, like many global port operators, faced significant challenges: how to handle growth, while remaining competitive in light of the rising cost of trade, tight labour markets, and infrastructure and regulatory constraints.

Many GCC cities are expanding or building new ports to meet the increasing throughput from post-Panamax ships, and Gulftainer, like many Middle East port operators, is turning to the Internet of Things (IoT) to drive value in the digital economy. By 2030, there will be at least 50 billion connected things and a value at stake of $14tn.

Using IoT solutions, ports and logistics companies can overcome challenges such as poorly integrated third-party software interfaces, difficult exchanges of data between subsidiary companies, and not enough transparency on supply chain silos. With sensors on ships, containers, trucks, and parking spaces, the entire supply chain – from docking to unloading to parking – can be quicker and more efficient.

At the Sharjah Container Terminal, Gulftainer developed a far-reaching digitisation plan that replaced the legacy ICT infrastructure to maximise its operations and deliver value, without having to physically expand.

On the back-end, Gulftainer deployed innovative solutions across enterprise resource planning, finance and payroll, and business planning and consolidation – providing realtime dashboards to enhance decision-making, employee productivity, costs, and sustainability, while supporting the UAE’s diversified economic growth.

Gulftainer also leveraged best practices from Germany’s Hamburg Port Authority, Europe’s largest port. Hamburg uses realtime connected logistics solutions on the SAP HANA platform to reduce total truck

32 | Logistics News ME | February 2016

ERP reports more promptly. Nakilat has more agility, innovation agenda, and advanced technology to fuel future business strategies.

Currently, Nakilat is doubling the bandwidth on its 67 vessels, providing reliable communications for employees to make video calls with colleagues, business partners, and families, along with automating tasks such as reporting, and providing highly secure data backup systems. Overall, Nakilat has reduced annual costs by 50%.

All Aboard for Digital Talent

time by 5,000 hours per day, enhance throughput and environmental benefits, and prime the port to double capacity by 2025.

Collaboration at Sea Boosts Business With global energy demand set to grow by one-third to 2040, the Qatar Gas Transport Company, Nakilat, is expecting to grow its liquefied natural gas (LNG) operations in the coming decades.

But going into 2015, Nakilat’s senior management realised that its legacy ICT infrastructure was holding back its competitiveness. In response, Nakilat’s long-term digitization strategy has consolidated its data centers and IT departments, while implementing new solutions across the cloud, mobility, and ship management.

For example, employees can access real-time insights on their mobile devices, and the boardroom can access mission-critical financial and

In the Digital Economy, we are facing the rise of advanced technologies and digital-native Millennials entering the workforce. Ports and logistics companies not only need robust ICT infrastructure, but also public-private partnerships to provide a pipeline of skilled local talent to drive digitization. As automation continues, truck drivers and crane operators will be less important than data scientists and Chief Digital Officers.

Nakilat, for example, uses cloud-based talent management for scalable mobile apps for employee services and human resources executives, which have also increased productivity, performance, and collaboration.

At SAP, we’re committed to helping ports and logistics companies to simplify their IT, and free up time, money, and people to focus on innovation. Our Connected Logistics Platform enables collaboration across the ports and logistics ecosystem, boosting efficiency and effectiveness in the hub business of port authorities and operators.

With one research firm showing the Middle East’s logistics market reached $27bn in 2015, Middle East ports and logistics companies need to lay out their innovation agendas by 2017, or risk falling behind competitors.

Khamel Al Ghossaini is Head of Supply Chain at SAP MENA, which has more than 25 years of driving innovation in the ports and logistics industry.

V i e w p o i nt

The Three Keys To Top Talent Management Prakash Menon advises on how to attract, grow and retain the staff with management potential

In my course of work, I meet several CEOs across the region and the globe, and the hot topics of discussion remain: top talent management.

I observe quite a few companies struggling to retain top talent. Good employees, even at very senior levels, just up and leave. However, the problem is not limited to retention alone.

34 | Logistics News ME | February 2016

Companies today are finding it equally difficult to attract top talent and making them grow.

During discussions with CEOs and other Csuite employees of various companies, I realise these people might have got the entire picture wrong. They are focusing on the wrong things, no wonder they are not being able to achieve the desired results.

Most CEOs think they lose top talent because of the money factor. That is not entirely true. While a competitive compensation package is no doubt important, the top talent do not worry about it much. They are already being paid well, and hence, it would be wrong to say money is the top reason top talent leave organisations.

V i e w p o i nt

The second myth that CEOs have is the top talent leave because they feel they are not being promoted enough. It’s not true. The top talent are already at senior positions and are looked after really well. Companies can keep on promoting them, but there comes a point when it hits the glass ceiling, and then there is not much scope for promotion. After all, not everyone can be promoted to CEO. Hence, I can say it confidently that promotion (or the lack of it) is not something that top talent leave organisations for.

What are the reasons top talent quit?

Lack of self-directed learning This is the top third reason urging top talent to quit. Employees work for the same company for two to three years or sometimes more.

They feel stagnated after a while when they realise there is no scope for new learning. They get bored and hence, as the first opportunity presents itself, they jump and grab it. I am not saying push your top talent to do PhD, but throw sufficient and constant challenges towards them. It will help them learn, innovate and come up with new ideas. But, more importantly, it will help them stay back where they are, in your organisation.

Why talented people leave organisations

4 Position

3X

3 grow

6X

1 legacy

10X

2 belong

8X

5 pay

2X

Culture is everything The second top reason pushing employees to leave organisations is that they don’t feel valued any more. They think they are culturally misfit. Well, culture is eight times more valuable than strategy. And, Peter Drucker, the Management Guru, agreed too when he said: “Culture eats strategy for breakfast”. So when your employees do not feel valued anymore and are not happy, they quit.

Leaving a legacy It might be unbelievable for some, however, it’s true. The top most reason the top talent leave organisations is because they want to build something unique and something inconceivable, however, they are not getting the opportunity in their current position. Most employees want to be known as revolutionary innovators such as Steve Jobs. They want to leave a legacy they want to be known for. And if they do not see that happening in the current organisation, they leave.

In a nutshell, though money and promotion are important, the top three reasons why the top talent leave organisations are: a lack of self-directed learning; poor organisational culture; and the unavailability of opportunities to leave a legacy behind.

Prakash Menon is a Partner, Leadership Transitioning with Stanton Chase Dubai and is one of the top 10 Global Executive Search Firms.

Logistics News ME | February 2016 | 35

V i e w p o i nt

Making the Most of the Dubai Hub Stefano Pollotti, MD of GEFCO Dubai explains how in-house operations, aren’t always the most cost effective

T

hanks to its location, its infrastructure and its relative ease of business, it is not exactly shocking that Dubai has been hailed so often as the “crossroads of East and West” one of the “most strategic commercial hubs in the world” and an “essential traditional trade route”. They are phrases which may even be overused, but there is no doubt why Dubai has earned its reputation.

What is perhaps a little more surprising is that despite these massive logistical advantages, there is still a reluctance by many companies to take full advantage of them.

There can often be a lack of understanding in the logistics of importing, exporting and transportation which leads dealers, manufacturers and distributors down the wrong business path. In many cases, the historic view that keeping logistics in-house saves money is simply no longer valid.

GEFCO is one of Europe’s ten largest logistics integrators and we opened our Dubai branch three years ago. We have not only established ourselves as a solid and dependable logistics provider, but we have drawn upon our global expertise and experience to act as a consultant and advisor to others.

I believe there are plenty of opportunities to be more time-effective and cost-efficient.

Dubai has an extremely rich history as a successful trading post, but the phenomenal effects that have come with the city’s rapid rise to a leading world economy have changed the way we conduct business and the way we expand but not necessarily the way we think.

On a cargo that may cross seven land borders and three shipping zones, we have seen companies try to work out which is the cheapest supplier for each leg of that journey. This is where a consultant can step in and explain that there are one-stop-shop solutions which can deliver discounts, economies of scale and eliminate the unnecessary investment in time and money.

36 | Logistics News ME | February 2016

Consultants are not a threat to their logistics set up but we can act as a partner and help them to progress and develop their options. It is a question of mindset as well as business acumen.

Case in point One of GEFCO’s cost saving strategies was with the distributor of the Korean car makers Hyundai and Kia to Jordan and Iraq. Previously, the cars had been exported directly to Jordan from Korea, which looked on paper like the best option. But taking into account the well-developed customs, import and export procedures of Jebel Ali, timings, length of transit and sophisticated infrastructure, we

advised to export through Dubai.

Not only did it save considerable costs, it also avoided any possible contact with the Syrian conflict, shipping the cars to Iraq by sea to Um-Qasr and then by road distribution to the rest of the country.

Logistics, storage, transportation and distribution are extremely competitive businesses, particularly in this part of the world and the way to progress is to adopt new practices and accept new services. We are living and working in an age where companies must constantly reassess their operations and outgoings.

Even though tough competition is always a danger, false economies can be the greatest threat of all.

V i e w p o i nt

Signed, sealed, delivered

E-commerce has been on the rise over the last decade with consumers now able to reach goods from across the world. The penetration of e-commerce across the globe has broadly affected the way supply chains work, and this seems to be the opportune time for logistic providers to take advantage.

Lorraine Bangera writes.

With numerous international and national online retail outlets, the world is becoming smaller than ever before. E-commerce has added a new edge to every retail group, and almost every big brand has decided hop on the bandwagon, adding pressure and demand to global supply chains of disparate agility.

38 | Logistics News ME | February 2016

According to a report by Transport Intelligence, e-commerce is simply a commercial transaction conducted electronically on the Internet. It has not only changed the way consumers buy goods but has also affected how businesses interact with each other.

According to a Jones Lang LaSalle survey, online retail in Europe is expected to

exceed 10% of total sales by 2016. While in India, Technopak Advisors reports that the sector is forecasted to grow to $76bn by 2021.

To sustain this growth, there is an absolute vital need for supply chain reforms across continents. With the demand for online retail increasing, large logistics units are

V i e w p o i nt

on the rise, especially in Scotland; which JLL finds to be the main home for large retail bases in Europe.

In the Middle East, the infiltration of ecommerce has differed nation to nation. In the UAE, according to local paper Gulf News, residents spent a total of AED2.4bn on online purchases in 2015. While according to MasterCard’s Online Shopping Behaviour study in 2015, 83% of UAE residents purchased goods online during the three months prior to the study being conducted and four out of five surveyed said they were satisfied with the process.

CEO of Cosmos Group Gaurav Aidasani told Gulf News, that even though e-commerce would not be able to replace offline retail (in the short term), big retailers must take note of its substantial growth, and the CEO stresses that this is a massive opportunity for service providers.

The e-commerce penetration in The Middle East

The move online The UAE has undoubtedly been topping the charts when it comes to Internet use and online purchases in the Middle East. But is the country, or the region, ready for the massive uprising of online retail?

Consumers today have high expectations when it comes to delivery. Not only do they want goods dropped at their doorstep in topnotch quality but also demand the goods are inexpensive and delivered within a week or in some cases a day.

The attractive prices and the convenience of the whole process has enabled countless consumers to feed in their CVV codes and click “Buy Now”. But has there been similar progress in the back-end?

Cash on delivery options are favoured by the consumer, but last mile logistics have done little to mitigate the barrage of phone calls from drivers who often sound like they’re calling from the other side of the world, while stood outside in extreme weather conditions. And this experience remains in the mind of consumers just as much as the usability of websites and ease of payment, regardless of this final leg of the experience being provided by the retailer or a third party.

Is the GCC’s logistics industry up for the challenge? To be honest, I’m not sure the world is. Financial Times columnist Maija Palmer claims that even in the UK, where online shopping is more mature, the logistics of it is still “somewhat of a mess”. Online retail has emerged from a place you could find second-hand goods to where you can purchase regular groceries. With such a

Egypt

8% Saudi Arabia

Kuwait

25% Lebanon

Source: Ipsos

35%

9%

massive uprising, it is only a matter of time before the infrastructure of the back-end doesn’t match up to the demand of a consumeristic society.

In her column, Palmer states that MetaPack found two-thirds of online shoppers choosing goods with better delivery options.

Delivery, in my opinion, is often undermined by retailers. With a brutal focus on increasing sales, retailers often get blindsided by poor logistics, which in all fairness if managed well could substantially increase the effectiveness of the overall scheme.

In the Middle East, immature logistics and delivery networks have made online re-

UAE

46%

tail harder to trust. Alpen Capital’s Retail Industry Report states that the online retail industry faces challenges with the delivery of products because of under-developed inventory nodes, warehouses and stocking points in the region.

Infrastructure and consumption need to go together to be sustainable. Any kind of unbalance can cause a tumble-down effect, with retailers and logistics solution providers on the losing end of the deal.

It’s fair to say this unseen benefit of the Internet is not really a threat but an opportunity for logistics providers to extend their services and embrace the e-revolution.

Logistics News ME | February 2016 | 39

V i e w p o i nt

The transition to IoT A survey conducted by Infor concluded 69% of manufacturers anticipate the Internet of Things will impact their business in the next three years. Andrew Kinder, VP of industry and solutions, explains the results

T

he transition to the age of the Internet of Things (IoT) is well underway for global manufacturers, according to the findings of a recent survey by Infor.

In fact, 10% of manufacturers claim they already have an established IoT project underway, with 22% either running a pilot or planning a project within the next 12 months. Well over one third at 38%, claim to be investigating its potential.

The research, which polled manufacturers

40 | Logistics News ME | February 2016

across 12 different countries, including North America, UK, Germany, France, Italy, China and India, also reveals that IoT is the single biggest business priority for one in ten manufacturers across the world right now, with 28% putting it in their top three.

The benefits of IoT are well documented, with new revenue opportunities based on the monetisation of information billed as one of the most exciting. However, it seems that at 55% of respondents, the majority of the manufacturers polled as part of the research view

cost savings from greater operational efficiencies as the greatest opportunity associated with the initiative, with a third envisaging competitive advantage through additional revenue from new services.

Specific benefits, according to the research, are likely to come through productivity, which topped the list according to 20%, followed by better insight and decision-making at 15%; greater utilisation of equipment and machinery, also at 15%; new services at 11%; and new revenue streams at 13%.

V i e w p o i nt

IoT: the single biggest business priority

10%

Survey conducted across 12 countries, including

of global manufacturers believe IoT is the single biggest business priority of today

UK

USA

ITALY

CHINA

GERMANY

INDIA

28%

of manufacturers list IoT as a top 3 priority

However, a lack of ownership is impeding adoption with respondents citing a total of nine different functions as the primary drivers of IoT. These span a range of roles from the executive team (31%) and IT (28%), to marketing (5%); manufacturing operations (13%) and facilities (6% ). When asked about challenges to IoT implementation, respondents pointed to a lack of skills, unclear benefits and cost as the primary culprits.

Manufacturers, challenged by the constant need to improve productivity, see the competi-

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tive advantage available to them through exploiting IoT technologies. This research confirms that over half of manufacturers recognise the potential and are either piloting projects or actively investigating use-cases.

We expect more of these pilot projects to evolve into production-ready deployments over the next 18 months - which should send a warning message to the 43% of respondents who have yet to recognise the value.

But with only 10% claiming complete readiness - there is clearly an untapped opportunity

13%

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5% ar

am

28% m

31%

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IT

5 5

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of manufacturers are investigating potential

30

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of manufacturers are running a pilot

50

40

ut

22%

60

50

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of manufacturers claim they already have an established IoT project

Benefits of IoT 60

ex

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France

ahead for companies with the right vision. Our advice would be to look at the device data you are already collecting - most plant equipment is already instrumented - and ask what questions could you answer if only you could collect it, apply analytics and distribute the insight quickly to the right decision maker? Even better, who outside your organisation would want to purchase the information only you can provide? Then have this conversation with your technology provider - the pieces are all available to turn it into a reality.

Logistics News ME | February 2016 | 41

T r an s p o r t

GCC Road Transport: Gearing up for Driverless Trucks

With persistent safety concerns, worsening driver shortage and rising carbon footprints, one study predicts the GCC could benefit more than any other region, from the roll out of automated vehicles.

Sindhu Hariharan examines the factors driving the future of transport

L

ooking at the pace of technological evolution, the year 2016 may well be a tipping point - a year when various technologies go mainstream and when the future becomes present. One such innovation, with the potential to completely transform the commercial road transport (CRT) sector is autonomous vehicles.

According to a recent study by management consultancy Strategy& (formerly Booz & Co), going forward, driverless trucks which have long seemed far-fetched notion will play a key role in road freight transport for the GCC. “Autonomous trucks, driverless vehicles that operate independently, are an emerging technology with significant potential benefits for GCC countries particularly given the region’s ambitious plans to shift to a knowledge-based economy, foster digitization,

42 | Logistics News ME | February 2016

and develop human capital,” reveals the extensive report titled Trucking to the Future.

In the absence of a rail network for trade, most freight movement inside and amongst GCC nations is by road. Strategy&’s study estimates that more than one million trucks are currently in operation across the region and this number is expected to grow at 5-9% each year. One reason for the growth is said to be government fuel subsidies that reduce fuel costs - perhaps the largest expenses of trucking companies - by at least 20%.

Speaking about the CRT sector in MENA, Akin Adamson, Middle East director, TRL (evidence-based transport solutions provider) says: “The biggest challenge facing MENA countries is the fact that the sector is almost totally unregulated. Drivers do need to be trained, but not to a high

standard. Vehicle safety standards are virtually non-existent and un-enforced and load weights are often more than twice those permitted in well-regulated environments.”

Changing Lanes With persistent safety concerns, worsening driver shortage and rising carbon footprints, there are enough reasons for the trucking industry to move to automated systems.

Dr Ulrich Kögler, partner, Strategy& (Dubai) says: “GCC countries will benefit from autonomous trucks more than any other region in the world. The technology can reduce fuel costs, dramatically reduce the number and cost of accidents, reduce expatriate labour and create high value-added technology jobs.”

While acknowledging higher up-front costs

T r an s p o r t

of autonomous vehicles compared to manned vehicles, Strategy&’s study estimates that these expenses will likely be offset by reduced salary costs and increased operating efficiencies. It pegs total lifetime cost savings at 15-20% in the Middle East. The consulting firm believes that based on early estimates, autonomous trucks once in mass production - will be about 2530% more expensive than conventional trucks.

Taking low wages of drivers in the GCC into account, the study anticipates a payback time of roughly four or five years.

Current landscape Manufacturers including Ford, Volvo, Toyota, Audi and Daimler have all announced plans to be a part of the driverless cars wave in the near future. Tech giants like Google and Tesla have also made notable progress. As self-driving cars begin to take shape, commercial driverless vehicles are next in line.

The report quotes instances of driverless trucks that already operate in closed environments. The mining firm Rio Tinto is reportedly using driverless trucks at its iron ore mines in Western Australia, which are remotely controlled from 1,400km away in Perth. Volvo Trucks says it foresees fully autonomous trucks running in controlled environments like ports and quarries as a first step of evolution.

Further, in May 2015 the first autonomous truck, Daimler’s Freightliner Inspiration, was licensed to operate on a public highway in the US state of Nevada. “With the development of autonomous vehicles, Daimler Trucks wants to advance the evolution in goods transport regarding safety and efficiency. Long-distance transport trucks, in particular, are destined for autonomous driving,” says Uta Leitner, product communication, Daimler. She adds that Daimler intends to continue working on improving and expanding autonomous driving technology. Daimler tests autonomous driving in a first step for their main truck markets, Europe and the US. Though there has been tangible progress in developing vehicles navigating with least human intervention, Strategy&’s research estimates that transition to fully autonomous technology will take considerable time. Developers and analysts agree that ‘semi-autonomous’ would be a better and more realistic focus point and someone will have to remain in the driver’s seat for the foreseeable future. Mass production seems likely, after numerous rounds of testing, in the next 10 to 15 years – which is not as far as it seems, for transporters to start planning for their impact.

Benefits of automation The report elaborates on numerous advantages autonomous trucks present over conventional trucks.

Akin Adamson

Middle east director, trl

JérÔme Lorrain

Coo - Ground transport, CEVA

Ulrich Koegler Partner, Strategy&

Firstly, industry estimates suggest that driverless trucks would increase fuel efficiency of cargo trucks by 15-20% through computer-optimised acceleration and braking. This in turn would reduce fuel consumption and associated costs and lead to lower emissions. Autonomous trucks also enable a creative solution for fuel savings: ‘platooning’. “When the lead truck is electronically coupled to following trucks, allowing them to safely follow at shorter distances than normally adopted, it results in greater fuel efficiency for all vehicles involved through improved aerodynamics. Although many years away, this may enable the restrictions around driving hours to be eased if a significant proportion of a journey is conducted within a platoon,” explains Adamson.

The report estimates that when the autonomous truck market in Europe matures, the total cost savings can reach 30-35% over the lifetime of each truck. At the lower current cost levels in MEA, correspondingly smaller savings at 15-20% seem achievable. More studies back this hypothesis. A study undertaken by AXA UK in conjunction with Douglas McNeill- an independent financial analyst and expert in the transport and logistics sector – has found that there would be significant business advantages with the advent of automated logistics vehicles. In an official release, AXA pegs the total savings at £33.6 billion after 10 years from the introduction of such technology.

Beyond the economic advantages, one cannot ignore the significant social benefits that such a technology could present for GCC. The potential to create new kinds of jobs in technology – such as software developers, data analysts and programmers – is exciting. Strategy& expects this to reduce the region’s reliance on expatriate labour and help to shift to a knowledge-based economy.

The most critical benefit perhaps is the aspect of safety. While evaluating safety, the report states that almost 90% of accidents are a result of human error. Further, accidents involving heavy trucks account for at least 10% of road traffic fatalities in the GCC and are said to cost up to $8bn per year in accidents and injuries. These next-generation trucks will help the cause since they have capabilities to anticipate technical problems and also possess self-monitoring features.

Between idea and implementation The foremost hurdle for autonomous vehicles is believed to be the regulatory framework.

“The MENA region can learn from developed markets by creating the right regulatory environment for the development of automated vehicles and gaining governmental support to ensure that anticipated benefits of automated vehicles are achieved across the region,” says

Logistics News ME | February 2016 | 43

T r an s p o r t

Adamson. Manufacturers must work with policymakers to devise holistic strategies for the introduction of such vehicles.

Another grey area that both manufacturers and users need to consider is the issue of liability in the use of autonomous vehicles. Figuring out how insurance will work in case of vehicles navigated without drivers is a challenge. As a result, disruption in the field of vehicle insurance is expected to be profound. However, there seems to be little action from the industry mostly because they feel that the disruption won’t hit until far in the future.

Numerous clarifications are needed in case of assigning responsibility.

Who will be held responsible in case of an accident? Will automation result in reductions in insurance claim frequency and will that reduce policy rates?

Will individuals – or vehicle manufacturers or tech companies behind the navigation systems – be held accountable? Daimler says that the auto company has assembled a multi-divisional steering committee of experts from its various units to investigate these issues, thereby supporting dialogue and public debate regarding the associated legal and ethical questions.

With technology being the single largest driver of these transport systems, cyber security is also significant. “Recently reported events have shown that car and truck manufacturers already need to raise the cyber security standards of today’s vehicles,” points out Kögler.

Hayder Wokil, automation director, Volvo Trucks agrees, adding: “Data and cyber-security will be a huge issue for the next 10 to 20 years. With growing volume and sophistication of cyber-attacks, we have this area under our radar for further development.”

Putting forward fleet operators’ views, Jérôme Lorrain, COO of ground transportation, CEVA Logistics feels that availability of skilled drivers in terms of safety and driving efficiency could prove to be a key challenge for transporters in 2016. Despite a general belief that removing drivers from the equation may solve a host of problems for the industry, a swift implementation of this technology could have a significant impact on the driver labour market.

Adamson disagrees with this popular thought. “For the foreseeable future there will be a need for a trained driver, even in vehicles

44 | Logistics News ME | February 2016

op a legal framework that can accommodate autonomous vehicles. The most complex area in this regard is the allocation of liability. Second - is the need to develop regulations for self-driving vehicles across aspects like vehicle licensing, testing, and operations. Third is the need to build the physical infrastructure and technology. Kögler points out how GCC countries could actively support the development of the technology while simultaneously building an industrial basis for autonomous trucks in the GCC. “This could entail a wide variety of initiatives including direct or indirect R&D and investment grants for research centres and manufacturing plants or joint ventures with leading developers/OEMs.” Lorrain believes that, additionally, on the macro-economic front, customs authorities will also have to validate any bonded movements, which will require understanding between the countries involved.

capable of platooning or operating autonomously. In fact, there is a good argument to pay these drivers more, because they will be operating more complex vehicles,” he says.

“The driver is still the most important person in the cockpit. Automated driving functions support and relieve the strain on drivers by dealing with monotonous stretches and taking care of annoying stop-and-go driving in a traffic jam,” Leitner explains.

Wokil feels it is too early to judge if automated features will affect jobs. “Changes in one area open up new opportunities in other areas.”

Policy framework “Two key areas providing substantial road blocks for rapid deployment of the technology are the need to define a resilient legal and regulatory framework and the impact on employment [of a lower skilled work force],” says Kögler.

The report recommends policy level changes needed for this commercial implementation.

Firstly, it says, policymakers will need to devel-

Accelerating the plans As is said about technology in general, despite challenges the world is likely to achieve as much in over the next 10 years as it has in past decades.

“The 2016 CES event demonstrated that many manufacturers are aggressively pursuing the development of automated and electrically powered vehicles. So it is certainly a case of when and not if these vehicles will be created,” stresses Adamson.

“There could be something to be looked at in new airports which might be built in the future. In my opinion such systems should form part of the overall planning of a large infrastructure or project like that,” emphasises Lorrain.

“For MENA, the real challenge will be deployment and finding appropriate use cases that exploit the benefits automation can bring. Applications in city regions are likely to feature first with trial services operating within five years,” says Adamson.

It is safe to say that MENA will not capture the benefits of these autonomous convoys by waiting for developments in the market. Action from the industry and policymakers today will help create the right conditions for large-scale deployment of this technology in the future.

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Special Report

Iran and the oil industry

It’s a story that has made headlines around the world as oil prices plunged last month.

In the wake of the news, Eduard Gracia, principal, A.T. Kearney shares three predictions for how a newly free to trade Iran could affect the oil industry

The lifting of Iran’s sanctions has been anticipated in the market for a long time. The current climate of a heavily depressed oil prices has created a challenging business environment for oil companies, so there are many questions regarding what effect Iran’s oil supply coming online will have.

Impact of increased supply in an oversupplied market If estimates of Iran increasing its oil production to 800,000 barrels per day in 2016 come to fruition, along with potential growth in capacity of 6% per year until 2020, what will that mean for an already oversupplied market? Potentially, there may not be a major impact on price. In a tight market, we may well see dramatic price shifts, but as we’re currently in an oversupplied one, we might not see any dramatic shifts. In this context, relative to the oil price shift in 2014, the market today has a less-sensitive cost curve (as the most expensive developments are already profitable).

Therefore, an additional source of lower-cost supply will have much less impact on price than in the tight market mid-2014. Another important impact will be to increase the time it takes for oil prices to recover, so expect “lower for even longer” oil price scenarios with new Iranian production in the market.

Increase in foreign investment The past few years have witnessed a wave of new reserve findings in Iran, which is significantly above the Middle East average. However, until now, the country has not been in a position to fully exploit these reserves due to limited access to external upstream technology and expertise. The end of the sanctions will open up a wide range of investment opportunities for IOCs and other foreign investors, particularly if the Iranian government approves the new Integrated Petroleum Contacts (IPC), which operate like joint ventures with a potential duration of up to 20 to 25 years.

Access to outside technology and expertise will significantly increase the chances of heightening production, and is likely to be welcomed.

Effect on oil companies If we look at the effect of ramped up production from Iran on oil companies, coupled with the effect of Iraq’s growing output and the foreseeable increase in Libya’s production, today’s situation of oversupply in the market may remain for yet some time. There are, however, ways to mitigate the impact. From an upstream perspective, companies must leverage opportunities to reduce costs and improve efficiency, particularly with relation to external costs. This can be done effectively through taking advantage of overcapacity currently experienced by oil field service (OFS) providers and engineering, procurement and construction (EPC) providers, as well as materials management with historically low prices of key commodities such as iron ore.

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Q&A

The logistics of entrepreneurship

KRS Logistics was established in 2015 with ambitions to become one of the regional industry’s most successful integrated players. Logistics News ME meets COO Christian Herzog and CEO Shibu George to find out how unprecedented global events will impact on their goals

I

n today’s economic climate the thought of “going it alone” isn’t one that crosses many minds but for Shibu George and Christian Herzog, it became a reality with the establishment of KRS Logistics LLC. Operating out of Dubai for less than a year, the firm is today offering diversified services to a growing client base and has ambitions to become one of the top logistics service providers by 2020 after becoming ISO certified within 44 days of the company’ inception and winning a number of contracts in quick succession.

But while KRS has started strong, globally businesses are struggling to adapt under unprecedented conditions and never before seen dynamics.

“People are saying the market is down and,

48 | Logistics News ME | February 2016

in my opinion, the volume of shipments is there. But when it comes to the revenue part that has been drastically reduced, particularly in the last six to seven months,” observes KRS CEO Shibu George.

“It’s because of the demand and supply, particularly the availability of ship space and what is actually available for the cargo lines. In order to fill the vessels the rates are going down day by day. For example, in China, competition is tight to reach maximum volume. As a knock on effect we are now seeing the industry operating without general rate increases (GRI). There is no peak season; not only in China, but in Europe also,” he continues.

While the volume of cargo and number of shipments remains comparable, George warns

the industry is heading into unchartered waters as it weathers a climate that has operated for months on end without GRI. Adding to the woes, in January of this year the Baltic Dry Index fell to 383 points, its lowest mark. To put that in context; at its high before the 2008 recession, the mark stood at 10,000.

While the decline has been staggered and far from continuous, the outcome remains.

The factors have been plentiful – from a breakdown in the oil and gas industry, to the impact of political and global security issues such as those continuing to play out in the Levant and Yemen.

George continues: “We hope that everything will increase in Q1 and Q2 this year. We already see a trend in the rate ratio so there is a change

Q&A

Baltic Dry Index 10,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000

1,000 800 700 600 500 400 1985 - 1989

1990 - 1994

coming up. In general, the market is quite down. Projects and shipments are there, you just have to sit in front of the right people.”

It’s a scenario George predicts will change little before 2020, and threatens to wipe out the traditional logistics providers.

He continues: “From now until 2020, the scenario is the same, being a traditional logistics service provider you cannot survive in the current market situation; you have to diversify.”

From the current perspective, the diversification cannot be in services alone but must also come in geographical territory in light of how 2015 played out and 2016 began.

COO Christian Herzog, who also serves as the BVL Representative for the UAE and India, elaborates: “Global trends are very unstable.

When I first read about the Saudi/Iran clash it was one of the biggest shocks I could have experienced. The world is becoming increasingly unpredictable and we can only hope for the best, but one negative thing can happen and have a knock on effect on many other things. We now survive in a business environment where there is no peak season, no GRI; you would never have predicted that 10 years ago.”

The road ahead For now, the focus is on a wider reach and penetration of new markets. As the old adage goes: “for every door that closes, another opens.”

1995 - 1999

2000 - 2004

2005 - 2009

“For a new entrepreneurship my advice would be know how to manage your business and staff. You need experience to do that” Reporting “we lost most of the Levant” 2015, in addition to Yemen, George is far from confident about a H1 rebound, but pegs compensation of losses to strong strategy.

“New markets are emerging and will continue to emerge in 2016 and 2017. Far East coun-

2010 - 2014

2015

tries will not grow as in the past, but as far as the UAE is concerned, we are still seeing growth,” he says, his comments supported by the 35% increase exports reported by Dubai Trade in 2015.

Optimistic that by 2016-end, the outlook will be much brighter, Herzog has pinned the operational strategy on wider operations, rather than more focussed.

Recently, KRS Logistics LLC signed a GSA agreement with Swiss based company Global Airlift Solutions Ltd, adding services like air charter, critical care solutions and on board courier to the portfolio of services.

“We are targeting the oil and gas, automotive and industrial sectors and China, South East Asia, Europe and the US, as well as India, will be our geographical focus. We will work with our partners, ensure we have products in place, then expand into the other emirates. We need to see how Iran will operate over coming months – I visit frequently and already see improvements – and we have a strong focus on Africa and dedication to growing the business there,” Herzog shares.

With two contracts signed within the first two weeks of 2016 George and Herzog appear far from phased by current conditions, but have strong advice for industry peers, based on their own experience.

Herzog says: “Logistics is a service industry

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Q&A

Christian Herzog, COO, KRS

“We now survive in a business environment where there is no peak season, no GRI; you would never have predicted that 10 years ago” and we have worked with the top multinational organisations but stepped away to establish KRS. What we are learning is that people take customer loyalty for granted. We have a clear mindset to fulfil customer needs and people know the business but don’t always know how to present it to the customer. There could be a huge improvement in the UAE in this regard; simple things like timekeeping.

“In IT, for example, customer visibility needs to be improved; through simple things like push notifications for vital information, rather than everything going via email. Why is an airline like Emirates so strong? Because they understand their customer’s needs,” he adds.

Partnerships also play a major part, with Herzog’s basic calculation for success revolving around the age old question “who will support me if I’m not with a global name?”

As he says: “Practically, if you work for a company, you have your connections and your clients and when you set up on your own you need to ask that question in order to come to a figure and know your target. To do this in a very short time and make quite a heavy investment, is demanding.”

George adds: “It was exciting to set up the business and being an entrepreneur had never come to mind before. It took only one conversation to know that we wanted to launch the business.

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Shibu George, CEO, KRS

“For a new entrepreneurship my advice would be know how to manage your business and staff. You need experience to do that. We were at the top level of our former companies; we know the feelings of people from entry level to management.”

Riding on the wave of Dubai’s continued success – not to mention surprising market resilience considering how things playout last decade – Herzog advises the authorities to focus next on green logistics, supply chains with less environmental impact and minimising the number of trucks on the roads.

He says: “This seems to be a paradise for entrepreneurs and I am positive the trend will continue. We have to see how current political situations play out, but as a business operator you have to be flexible and available to your customer’s needs.

“On board couriers are now a growing trend and it’s a very popular concept with the big automotive companies and demand is growing, so we now meet that. It’s pointless now to be a specialised logistics company; you cannot only do trucking, or shipping or continue operations on a $10 margin. Those times are dead now.”

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R e ta i l F o c u s

attention to detail

Julien Arnolda, MD of award winning reseller Alpha Tech advises on how to appeal to today’s consumer and why the loyalty scheme could soon be a thing of the past.

Julien Arnolda, MD at Alpha Tech and Darcy Clarkson, senior VP at Jabra, Mobile Division

What are the driving trends in retail distribution currently?

In the recent past, two prominent generations have deeply influenced the retail distribution sector – the baby boomers and the millennials. As the baby-boomers have reached the post-retirement stage, certain trending marketing tactics, such as smartphone solutions and online distribution networks, are simply a poor way to market to this sector, although these are the marketing tactics employed in catering to Gen Y. There is an increase in social media retail distribution, and the pointsfor-purchases system is drawing into a close,

52 | Logistics News ME | February 2016

as this method has reached its prime.

Improvement of order-fulfilment and a rapidly growing need to cater to the individual needs of the customer for a satisfying experience seems to be the latest trend, and it’s a trend that will see a greater rise when retailer competition grows.

How have these trends evolved over the last five years?

If you really think about it, in the last few years, social media shopping has grown exponentially.

Five years ago, when online retail stores had recently discovered Instagram and Facebook as

portals beyond just outreach, the points-for-purchase and customer reward systems was a great market-governing trend. If I walk into a store that will give me a reward for being loyal now, I wouldn’t quite care about it because the reward system is now a burdening investment. There are simply too many retailers who provide this outlet and this form of customer experience is simply too time-consuming and uncertain.

From asking customers to invest in an unforeseen reward, retail distribution networks are aiming to provide quick results –this means instant transfers, instant delivery, complete setups, and going almost entirely paper-less. This

R e ta i l F o c u s

Alpha Tech

American fitness-oriented brand Jawbone are one of Alpha Tech’s clients

Alpha Tech caters to the logistics of American fitness-oriented brand Jawbone and Danish brand Jacob Jensen. Recently, the distributor had the privilege of signing with Energizer for its Hard Case mobile phones line-up for the UAE market.

Other clients include Mio Global, a Canadian performance tracker’s company that caters to niche sports and fitness players and enthusiasts for their wearables range. The firm is looking to expanding into the African market.

hasn’t helped the baby boomer’s segment quite as much as the arguably larger Generation Y section of consumer bases, but with user-friendly online portals, or retail chains that provide excellent customer service to walk-in consumers, the competition is forced to rely more on the order-fulfilment experience than the product consumption experience.

Furthermore, many retail chains and providers have been ousted for not engaging in enough CSR activities, or providing products that fail to meet cruelty-free or vegan-friendly requirements – things that were simply unimportant to retailers in the past. Today, the transparency of social media has forced retailers to keep their products and their customer service record clean, and work on training staff to provide the best possible experience in the hopes to retain consumers.

How do you see these trends developing to 2020?

Retailers today are still quite focused on making their price-points an integral part of their consumer experience. That will all change. By 2020, there will be such a large influx of budding product chains, market segments and retail outlets that consumers will begin to look beyond price, CSR and integrity as added bonuses to purchase, instead these will be seen as prerequisites. The entire market will shift away from the tried and tested paradigm to requiring innovation and sustainability as deciding factors in purchase.

Human error is another deciding factor in customer loyalty, and innovation to eliminate middlemen would be another thing that would become integral to the market’s expectations.

The baby boomers would now have grown to 75 years of age, and user-friendliness of smart solutions would have to increase greatly. Smart

solutions will also become more commonplace, in lieu to the luxury status they currently claim.

In one-to-one retail outlets, customer service efficiency would require heavy training and streamlining, and the research and development industry will see maximum growth.

What is the most significant infrastructure development to enhance your business capabilities in recent times?

I would have to say this particular requisite would depend from sector to sector. For example, the drugstore, healthcare and FMCG retail outlets would need to provide adequate catering to the baby boomer market segment, which would mean increasing the size of the outlet itself while significantly reducing the length of shelving to not be out of reach to the older market.

Carpeting, disability parking, even a separate area for senior citizens and the disabled is essential to the entire consumer experience for that sector. In the sector of wearables and electronics, there is a need for targeted mapping out of products similar to this sector. Like the supermarket layout with aisles and corresponding staff, all electronic stores in the recent times have invested in stacking and shelving according to product type, while keeping the mainfloor mostly to hold cream products and new releases that will draw people in.

Electronic query input devices are a great investment, and it is not uncommon for electronics sector staff to be armed with a tablet to take down the customers’ details and locate products according to target needs. The aim of such infrastructure is to make it easy for persons to navigate through the area for selfservice if needed, or to depend on customerfacing staff for help if required. For the client’s side of things, there is a need to provide logistics and warehousing simultaneously to

keep a steady flow of products from the stock chain to the supply chain.

You recently won a distributor of the year award from your partner Jabra. What advice would you offer businesses to enhance their pitch when competing to become a retail distribution partner?

Having the right product mix for the brand makes a world of a difference when pitching to become a retail distribution partner. As retailers, the onus of brand marketing and sales depends on us, and though people assume the marketing mix begins and ends at the parent company, with no great contribution from the retail partner – this is hardly the truth. Everything from the packaging and labeling, local presence of the brand, the media reviews and the understanding of the brand is something that rests also in the strategy of the retail distribution partner, and we need to bear in mind the needs of the brand and the needs of the region to create the right pitch. The channel partners we offer and tailor-made pitches are key to win the trust of the brand.

Under your contract with Jabra, you provide logistics and warehouse support.

Which other services should retail distribution partners be looking to expand into, in order to meet future needs of their clients?

Technical support and aftersales services to the purchase of our brand partners’ products is an important part of retail distribution management, as is increasing the visibility of the brand and putting it on the regional map.

Merchandising goes hand-in-hand with logistics and warehousing support, and training of brand representatives is another important asset to provide to clients for the holistic retailer experience.

Logistics News ME | February 2016 | 53

Diary Gulfood, Dubai World Trade Centre

The month ahead Supply Chain Middle East Strategy Summit

Habtoor Grand Beach Resort & Spa Hotel, Dubai, United Arab Emirates February 16 – 17

The Supply Chain ME Strategy Summit includes discussions and presentations by supply chain experts and users from across the globe will give an opportunity to unravel supply chain challenges and its prospective role in the domain of entire transport and logistics cycle. info@fleming.events

Gulfood 2016

Dubai World Trade Centre Feb 21 – 23

Gulfood is designed to boost Dubai’s already flexible and transparent food and hospitality industry. The event will be attended by more than 1,000 international specialist Halal food brands and companies and more than 80,000 international food industry professionals.

Visit www.Gulfood.com

Last Mile Fulfillment Asia 2016

Singapore Expo - Hall 1 and MAX Atra March 4 – March 4

This two day conference and exhibition will bring together fulfillment centres, logistics companies, postal agencies and parcel courier companies to meet with eCommerce companies and retailers to discuss and find solutions to address the last mile challenges, forge new partnerships and uncover/maximize business opportunities in Asia. lmfasia@singex.com

Middle East Rail 2016

Dubai International Convention and Exhibition Centre, Trade Centre 2 March 8 – 9

Middle East Rail is the region’s longest running and most successful railways event. For almost a decade we have helped shape the regional rail market through sharing knowledge, educating the market and facilitating influential meetings. enquiry.me@terrapinn.com

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The Cargo Show MENA

Dubai International Convention and Exhibition Centre March 8 – 9

The Cargo Show MENA was launched in 2015 for supply chain and logistics professionals to discover the latest services and innovations to improve efficiency in the movement of cargo across road, rail, sea and air. The show is a unique conference and marketplace where supply chain managers come to understand how they can move their goods more efficiently and meet new partners to help them achieve their goals. sophie.roberts@terrapinn.com

C5’s 3rd Annual forum on Trade Compliance in the Middle East

Dubai Chamber of Commerce and Industry, Dubai March 8 – 9

This event will provide the latest on how to comply with applicable trade and customs regulations and make the best use of duty relief and certification programmes. a.choudhary@c5-online.com

Middle East Pharma Cold Chain Congress

Crowne Plaza Dubai - Sheikh Zayed Road March 14 – 17

The Middle East Pharma Cold Chain Congress provides a regional platform that connects industry stakeholders to share their ideas on issues and challenges the industry faces. The congress will bring to fore solutions and strategies that will ultimately ensure healthy shipments and safe pharmaceuticals throughout the region. info@pharmacoldchainme.com

Transport Solutions Middle East

Dubai International Convention and Exhibition Centre March 13 – 15

Transport Solutions Middle East will become the premier platform for regional industry to witness exhibits. r.mustafa@comexposium-me.com