forging ahead as a significant player in the logistics

Transcription

Worst over: Major reforms are needed in the US and China to revive the global economy
THE
supply chain
and logistics
MENA must comply with
international standards to
attract more trade
Vol I, No 5 | June/July 2009 www.sclgme.org
Gulf
trainer
Forging ahead as a
significant player in the
logistics arena
Swine flu pandemic
threatens supply chain
‘UAE’s absence
is a big setback to
the monetary union’
The official publication of the Supply Chain and Logistics Group
Ducab is jointly owned by the Governments of Dubai and Abu Dhabi (50% each) and has one of the most modern manufacturing units
in the region. It occupies an area of 590,000 square meters of land in Jebel Ali, Dubai and nearly 330,000 square meters in Mussafah,
Abu Dhabi spread over 2 factories. Today, Ducab produces over 90,000 copper tones equivalent of low voltage, medium and high
voltage cables, emerging as the leader and the first choice of prestigious customers in the Middle East. Ducab's product range covers
High Voltage cables up to 132kV, Ducab Powerplus Medium Voltage cables up to 33kV, Low Voltage power cables, Control &
Auxiliary, Wiring and Lead-sheathed cables, Ducab Smokemaster, Low Smoke and Fume cables, and Ducab-FR (Fire Resistance
cables), cable accessories and Ducab Connect (Connectors & Tooling) , as well as copper rod that Ducab manufacture in their own
Copper Rod plant.
Ducab is an ISO 9001:2000 certified company for both its factories. The Abu Dhabi factory was recently awarded an ISO 14001
Environmental Management System certificate and an OHSAS 18001 Occupational Health and Safety certificate by BASEC (British
Approval Services for Cables). The cables comply with and are approved to the full British Standard of the Loss Prevention Certificate
Board (LPCB) and Lloyd's Register, UK. These certifications are the latest in a string of recognitions achieved by the company
including a two time winner of Gulf Excellence Award, two time winner of Dubai Quality Award, Gold category 1998 & 2004.
Ducab was recently honoured with the Mohammed Bin Rashid Business Excellence Award for their achievements in the
manufacturing sector; this was at an award ceremony in April 2009 in the presence of H.H. Sheikh Mohammed bin Rashid Al
Maktoum Vice President and Prime Minister of UAE and Ruler of Dubai.
Ducab has also won other awards such as the Investment Corporation of Dubai (ICD) Chairman’s Award for Outstanding Economic
Value Creation in the Industrial Sector.
Dubai Cable Company Pvt. Ltd. (Ducab), P.O. Box 11529, Dubai, United Arab Emirates, Tel: (971-4) 8082500, Fax: (971-4) 8082511
DUCAB DISTRIBUTORS: Dubai: Beta Industrial - Tel: (04) 7069777, Electromec Company - Tel: (04) 2229352,
Haji Commercial Establishment - Tel: (04) 2670480, Prakash Trading Company - Tel: (04) 2863363, Zubair General Trading
Establishment - Tel: (04) 3362532, Al Shamali & Waris Trdg. Co. - Tel: (04) 2991377, Electric Way LLC - Tel: (04) 3330479,
Thomsun General Trading LLC - Tel: (04) 8854000 Sharjah: Al Jallal Electrical Trading - Tel: (06) 5549593
Abu Dhabi: Marjan (BICC Al Jallaf) - Tel: (02) 6222320, Bahwan Trading Company- Tel: (02) 6414316, Oman: Ducab Oman,
Tel: (968) 24565 177 Qatar: JBK Ducab W.L.L, Tel: (974) 442 1924 Bahrain: BICC MET W.L.L, Tel: (973) 1774 9761
The Image
On track
IT’S about time the Gulf region
made a rail network of its own,
comparable to the world’s other major
regions, such as Europe. Not only
would an efficient railway network
improve passenger and freight
transportation services, it also could
boost regional trade as economies in
the Middle East are diversifying into
the non-oil sectors, such as travel,
tourism and chemicals.
And the Gulf Arab states are on
the right track, with the launch in
September of Dubai’s Red Line metro
railway. Abu Dhabi is also in a frenzy of
developing its transportation services,
owing to its growing economy and
increasing population. UAE’s federal
government, in fact, is planning
a railway network for a smoother
movement of people, goods and services
across the country.
The other Gulf countries are not
without ambitious rail initiatives.
Oman, for instance, is thinking of
extending a planned railway system to
Muscat. This stems from the concept of
a railway system in the Batinah region
which has grown into a wider North
Oman network. Surely, a regional railway
network would run well with the
strengthening of economic integration
in the Gulf.
June/July 2009
The supply chain and logistics link
3
Contents
42
Vol I, No 5 | june/JULY 2009
03 THE IMAGE
On track
06 THE NEWSROOM
• Dear Reader
• Our Cover
07 NOTES & QUOTES
Buy the Book: Good risk
Quotes: On the dynamic transportation
and logistics market in the UAE, positive
economic indicators by the third and
fourth quarters and China worrying
about the safety of its foreign exchange
reserves
08 INSIDE SCLG
• SCLG supports Materials Handling
conference
• Patently SCLG
• Nine SCLG members win 11 SCATA
awards
• SCLG members take part in materialshandling event
• Thakral, Dubac join SCLG
• SCLG leadership
16 NEWS & VIEWS
On Mideast losing $162m in excise tax
on illegal cigs; RTA considering further
plans for Metro lines; UPS’s pact with
India’s AFL; Emirates Airline adding
weekly flights to India; Abu Dhabi’s first
rail system and the new customised air
service by Tyrolean and Clear Sky
24 ROUNDUP
DAFZ sees more companies coming in;
Dubai Customs foils attempt to bring in
opium; flydubai launches flight to Beirut;
Jazeera stops serving some flights out of
Dubai; NEC completes expansion of Khor
Fakkan Port; Fujairah Airport, Europe
Aviation sign aircraft maintenance pact;
Maersk postpones plan for rate hike;
cargo companies engage in illegal arms
transfers to Africa
9 21
26 OVERSEAS
• On CMA CGM development plans; BA’s
first full-year loss; DHL dispatching mail,
books for HarperCollins; K+N handling
of Audi Volkswagen spare parts in South
Korea; APL’s plan to raise freight rates in
Asia-Europe trade and JAL, Mitsui alliance
• China’s exports fall a threat to global
container shipping
• Container shipping lines addressing
transatlantic woes
• DHL Supply Chain is world’s biggest
contract logistics operator
• FedEx’s labour regulations changed
is a big setback to the monetary union’
• Monetary discord
51 OPINION
Applying a systems approach to SCM
52 MENA REGION
• Guarded optimism: MENA must comply
with international standards to attract
more trade
• Under fire
58 FACES & PHASES
• Dubai Chamber launches ‘SME Exporter
of the Quarter’
• DAFZ honoured for environmental
sustainability
• DIC to unveil 2nd phase of open storage yard
• Etihad best in aircraft financing
• DHL opens new Taipei gateway
• GAC promotes Chan
• Festival City is Mideast’s ‘leading tourist
attraction’
• DLA Piper’s environmental initiatives cited
• Dunkin’ Donuts opens 16 new outlets in UAE
30 THE INDUSTRY
In the same boat: Swine flu pandemic
threatens supply chain
34 FUND FOLIO
Worst over: Major reforms are needed
in the US and China to revive the global
economy
38 FOCUS
Health check: The A(H1N1) virus reaches
the shores of Gulf countries
61 CALENDAR
Dubai to host global assembly of shippers’
groups
• SCLG-endorsed events
• Other forthcoming events
42 COVER STORY
Gulf trainer: Forging ahead as a significant
player in the logistics arena
47 THE GULF
62 SIDE VIEW
• Big brother, small brother : ‘UAE’s absence
June/July 2009
Off the rack
5
The Newsroom
The official publication of
the Supply Chain and Logistics Group
Publisher
Dominic De Sousa
Managing Director
& Associate Publisher
Frédéric Paillé
[email protected]
WHEREAS the swine flu story is pegged on the havoc it
could wreak on various industries in the May issue of The
Link, the dreaded illness is again featured on the “Focus”
section of the magazine. In this combined issue, however,
the story is pegged on the WHO declaring it a pandemic
and the measures being taken by governments in the Gulf
to minimise its spread as the A(H1N1) virus reached the
region’s shores.
The threat being posed by the flu pandemic against the
supply-chain and logistics sector and the UAE economy, in
general, is tackled in the “Industry” section. The last thing
that the industry needs is a pandemic, which will surely
restrict the movement of people, goods and services. As it
is, the transport industry has been hit badly by the global
credit crisis while airlines and freight companies have
been suffering from reduced cargo volumes.
Editorial Director
& Associate Publisher
B Surendar
[email protected]
Editor
Jose Franco
[email protected]
Commercial Director
Naz Hassan
[email protected]
The Gulf region wants to emulate EU’s euro
Optimistic views on the UAE economy recovering from
worldwide economic downturn faster than any other
economies are reported in the “Fund Folio” section. The
GCC monetary union and the need for MENA countries
to adhere to international standards in attracting global
trade are discussed in the “Gulf” and “MENA Region”,
respectively.
You may also enjoy the stories in other sections, such
as the ‘SME Exporter of the Year’ award launched by
the Dubai Chamber of Commerce and Industry, and the
environmental award won by the Dubai Airport Free
Zone. The legal firm DLA Piper is also featured in the
“Faces & Phases” section, as it was honoured for its ecofriendly initiatives, such as reducing business travel by its
executives and employees, and using recycled paper.
Design
Rey Delante
[email protected]
Julia Gubanova
[email protected]
Head of Digital Services
Nadeem Hood
[email protected]
Webmaster
Troy Maagma | [email protected]
Database/
Subscriptions Manager
Purwanti Srirejeki
[email protected]
ADVERTISING ENQUIRIES
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[email protected]
Published by
All the best,
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Head Office
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Tel: +971 4 375-6830
Fax: +971 4 434-1906
www.cpi-industry.com
Our cover
Gulftainer is making
waves as it forges
ahead in the world of
logistics
6
June/July 2009
Printed by
Excel Printing Press
Copyright © 2009 CPI Industry
All rights reserved
While the publishers have made
every effort to ensure the accuracy of all
information in this magazine,
they will not be held responsible
for any errors therein.
Notes & Quotes
buy the book
Good risk
IF YOU are trading with foreign
customers, whom you assess in the same
way that you do with domestic ones,
chances are you do not have any personal
knowledge about the risk involved. There
are many factors that can help you find
out who among these potential customers
are at good risk, however. These include
getting information from offshore banks,
other exporters who know your target
customers, employing the services of a
firm looking into the creditworthiness
of potential buyers and checking with
government trade offices, such as the
Dubai Export Development Corporation
(EDC).
These various ways of assessing
foreign customers are discussed by
EDC in its Services export: Effective
pricing of services, which is the fifth
in a series of its “Guide to services
export” primer. The effective pricing of
services is also tackled in this primer
which involves taking into account
2009 what service customers expect to pay
for and a company’s break-even point.
“You can calculate your break-even
point by determining how much you
need to make per service (or per unit of
time), in order to cover both your fixed
(overhead) costs and your variable costs
linked to providing that service,” it says.
This could be more difficult than
expected, however, as entrepreneurs are
always torn between having the lowest
price for a service and charging clients
based on their financial capability. The
best way to deal with the issue is to ask
some friends if how much they charge
for a particular service, make a survey
if how much clients are willing to pay
and calculate the income needed for a
month, among other things. The price has
to include hidden communication and
transportation costs and other factors,
such as foreign exchange fluctuations.
“Like you do in the domestic market,
you may wish to optimise profit by
We will see positive indicators by the
third and fourth quarters. And, for us,
in moving forward, the watchword will
be diversification. – Mohamed Ahmed
bin Abdulaziz Al Shehi, director-general of the
Economic Department
The transportation and logistics market
in the UAE is one of the most dynamic
in the global business scene today. –
Sheik Ahmed bin Saeed Al Maktoum, chairman
of Dubai Airport Free Zone, president of Dubai
Civil Aviation Authority, and chairman and chief
executive of Emirates Airline and Group
Our dealings with governments and
local authorities in the region for
over 30 years have given us a unique
perspective and understanding of how
to achieve the best results in the most
effective way. – Keith Nuttal, commercial
SERVICES EXPORT: EFFECTIVE PRICING OF SERVICES
GUIDE TO SERVICES EXPORT SERIES 5 DUBAI EXPORT DEVELOPMENT CORPORATION Dubai – UAE either increasing your revenues or
reducing your costs,” says the primer
of EDC, which has also published a
number of industry-specific guides and
“answer-books” for exporters and other
entrepreneurs.
The Chinese public is worried about the
safety of its foreign-exchange reserves.
– Yu Yongding, a senior researcher at the
government-backed Chinese Academy of Social
Sciences, to the US, as China held about $768
billion of Treasuries as at March.
So, there is a feeling
of optimism, and I
definitely believe
the worst is over.
However, the economic
growth could take
anywhere between
12 to 18 months from
now, while we could see some clear
indications later this year. – Hamad
Buamim, director-general of the Dubai Chamber
of Commerce and Industry, on the
impact of global credit crisis in
Dubai
manager of the Sharjah-based marine terminal
operator, Gulftainer.
June/July 2009
7
Inside SCLG
SCLG supports Materials
Handling conference
ABOUT 200 exhibitors from
35 countries converged
in Dubai recently for a
materials-handling event, the
industry-specific conferences
of which were held in
association with the Supply
Chain and Logistics Group
(SCLG).
With a 30% growth
year-on-year, the Materials
Handling Middle East
Exhibition & Conference
provided companies and
professionals a platform to
showcase their products and
services, and to discuss new
ideas and best practices in
related sectors.
A non-profit organisation
dedicated to the supplychain and logistics industry,
the SCLG and some of its
member-companies have
been actively supporting the
annual event for the past
three years.
Held at the Dubai
International Convention and
Exhibition Centre, on May
31 to June 2, the event had,
on its fifth year, participants
coming from the logistics,
supply-chain, freight and
cargo, automation and IT
sectors.
“Freight and logistics
have been witnessing
unprecedented growth even
during a difficult economic
climate,” said Mahmut
Gazi Bilikozen, senior show
manager of the Materials
Handling Middle East
exhibition.
The Dubai Airport Free
Zone (DAFZ), for instance,
declared a 48% rise in net
profit for the first quarter of
the year, and 49% growth in
revenue compared with the
same period last year.
Sheikh Ahmed bin Saeed
8
Sheikh Ahmed making a tour of the 2009 Materials Handling exhibition
Al Maktoum, chairman of
DAFZ, said occupancy by
international companies grew
by 58% last year, leading to an
84% rise in net profit and 59%
revenue growth from 2007.
This was due to the steady
growth in passenger and
cargo traffic in 2008, and the
successful opening of Terminal
3 at Dubai International
Airport. The airport handled
37.4 million passengers and
1.8 million tonnes of cargo
last year compared with 34.3
million travellers and 1.7
million tonnes of cargo the
previous year.
DAFZ will continue to
grow, owing to $544.8 million
(Dh2bn) worth of allocated
investment for new facilities,
said Sheikh Ahmed, who is
also president of the Dubai
Civil Aviation Authority and
chairman and chief executive
June/July 2009
of Emirates Airline and Group.
Speakers during the event,
organised by Epoc Messe
Frankfurt, a subsidiary
of Germany-based Messe
Frankfurt, stressed that
Dubai’s growth in 2008 was
favourable to the materialshandling industry.
Sheikh Ahmed said the
exhibition helps advance
the UAE’s leadership in
the related sectors. “The
transportation and logistics
market in the UAE is one
of the most dynamic in the
global business scene today,”
he stressed.
Bilikozen said the
material-handling equipment
is an integral part of
any plant, warehouse or
distribution system. “As a
regional hub, the UAE is set
to play a significant role in
production and consumption
of machinery,” he added.
Earlier, Epoc Messe
Frankfurt said the materialshandling equipment market
would exceed $104 billion
(Dh382bn) in sales by 2010.
In 2008, investments in
the Middle East’s logistics
industry reached $60 billion
(Dh221bn).
Elisabeth Brehl, managing
director of Epoc Messe, said
the growth drivers include
rising per capita incomes,
expanding manufacturing
output and increasing
investments in infrastructure
development.
The growth will be more
profound in the Middle East,
especially the UAE, Saudi
Arabia, Qatar, Iran and Iraq;
and in Asian countries, such
as India and China. The other
outstanding markets are
Russia, Mexico and Turkey.
Patently SCLG
THERE is no denying the importance of the materials-handling
sector in the SCM industry, especially that freight and logistics
have witnessed growth despite the global credit crisis. The
SCLG is happy and grateful to have been part of the Materials
Handling Middle East Exhibition & Conference for three years
now. The event has grown 30% year-on-year, reflecting its
importance on the huge turnout of participants and visitors in
its recent annual event in Dubai.
Sheikh Ahmed bin Saeed Al Maktoum, chairman of the
Dubai Airport Free Zone, put it succinctly when he said that
the annual event has helped the UAE advance its regional
leadership in materials handling and related sectors. This
opinion is shared by the event’s senior show manager,
Mahmut Gazi Bilikozen, who remarked, “As a regional hub,
the UAE is set to play a significant role in production and
consumption of machinery.”
The SCLG is doubly elated, as nine of its member-
companies won 11 of the 16 awards given by SCATA, or the
Supply Chain and Transport Awards. These are Gulf Agency
Company, which won three awards, Maersk Line, Cargolux,
Emirates SkyCargo, TNT Express, Unilever, SP Jain Centre
of Management, Ehrhardt + Partner Solutions and Span
Group. The Gulf Agency bagged three awards. Having these
excellent players in the supply-chain and transportation
sectors means there is great market opportunity in the Gulf
region.
The SCLG takes pride in having helped its members
advance the supply-chain and logistics industry in the
Gulf and the greater Middle East and North Africa region.
Complacency, however, doesn’t rule the group, which strives
always to excel in its field, despite having garnered so
many awards since its inception in 2005. You will be seeing
more of SCLG in future exhibitions, conferences and awardgiving ceremonies.
Nine SCLG members win
11 SCATA awards
NINE members of the Supply
Chain and Logistics Group
(SCLG) bagged 11 of the 16
awards given by the Supply
Chain and Transport Awards
(SCATA) held in Dubai in
June.
These are Gulf Agency
Company, which won
three awards, Maersk Line,
Cargolux, Emirates SkyCargo,
TNT Express, Unilever, SP
Jain Centre of Management,
Ehrhardt + Partner Solutions
and Span Group.
Sultan Ahmed bin
Sulayem, chairman of Dubai
World and its subsidiarycompanies, was honoured
with the Hall of Fame Award
in a ceremony at Madinat
Jumeirah.
Organised by the
magazine publisher ITP
Business, SCATA is on
its third year, and has
established itself as a
major celebration of the
achievements of the logistics
industry in the Middle East.
“The market opportunity
in the Arabian Peninsula,
together with the fierce
competition to succeed in
the lucrative supply-chain
and transportation sector,
means the Middle East is
producing some of the most
impressive players in the
global logistics industry,” said
Walid Akawi, chief executive
officer of the ITP Publishing
Group.
In 2007, the first SCATA
event proved a success,
reflecting the breadth
and experience of ITP’s
transportation magazines.
This year, on June 1, SCATA
included 16 categories
covering the logistics, sea
freight and air cargo sectors.
Here is the complete list of SCATA 2009 winners (continued next page):
Steven Lai, from Rais Hassan Saadi (RHS) Group – Shipping Agent of the Year
Maersk Line – Shipping Line of the Year
June/July 2009
9
Inside SCLG
Gulftainer – Port Authority and Terminal Operator of the Year
Dubai Cargo Village – Cargo Hub of the Year
Drydocks World, Dubai – Shipyard of the Year
TNT Express – Express Logistics Provider of the Year
Cargolux – Cargo Operator of the Year (Cargo airline)
Gulf Agency Company (GAC) – 3PL (third-party logistics) Service
Provider of the Year
Emirates SkyCargo – Cargo Operator of the Year (Commercial airline)
Unilever – FMCG (fast-moving consumer goods) Supply Chain of the
Year
10
June/July 2009
SP Jain Centre of Management – Training and Education Provider of
the Year
Ras Al Khaimah Free Trade Zone – Industrial Area of the Year
Ehrhardt + Partner Solutions – Technology Provider of the Year
GAC – Outstanding Achievement of the Year
Span Group – Materials Handling Provider of the Year
Sultan Ahmed bin Sulayem – Hall of Fame Award
GAC – Corporate Social Responsibility
Sultan Ahmed bin Sulayem – Hall of Fame Award
June/July 2009
11
Inside SCLG
SCLG members take part in
materials-handling event
SOME members of the Supply Chain
and Logistics Group (SCLG) took part
in the recent materials-handling
event held in Dubai, showcasing their
products and services to participants in
and visitors to the annual activity.
The Germany-based Ehrhardt +
Partner Solutions (EPS) and LogCubes, a
newly-created company in Dubai, noted
that topics on warehouse planning and
process optimisation mostly caught the
attention of trade fair visitors.
Godrej & Boyce Manufacturing
Company, on the other hand, showcased
its varied goods, from high-tech
engineering solutions to world-class
consumer products. Based in India, the
company’s delegation to the Materials
Handling Middle East Exhibition &
Conference was headed by its vicepresident and business head for storage
solution, AM Visvanathan.
“Here, at the Materials Handling
Exhibition, we demonstrated what
innovative solutions for warehouse
logistics look like,” said Hermann
Ehrhardt, founder and managing
partner of EPS. “Professional visitors
received inputs on how to reduce
logistics cost, minimise error rates and
increase the picking performance by
implementing a modern WMS.”
Rami Ghandour, a director of
LogCubes, said his company is focusing
to grow in Dubai, Kuwait and Saudi
Arabia. He also stressed the business
potential of the LEVANT countries,
especially Lebanon. Syria and Jordan are
the two other countries uner LEVANT. “While our hub is in Dubai, we plan
to have an active representation in
Saudi Arabia,” he said. “Our philosophy
is through partnerships.”
Ghandour, who recently left Span
Group with a colleague to put up
LogCubes, said the latter wants to be a
one-stop shop for supply-chain solutions
in the Gulf, and conduct training
sessions for supply-chain professionals.
“We are very keen in pushing for
education in this country,” he said. “Our
training programme would focus on the
best practices in running a warehouse.
We also would want to partner with
some institutions in the region.”
LogCubes is currently the new
Three companies join SCLG
THREE companies have joined the Supply Chain and
Logistics Group. These are Ducab, Emcredit and UTi.
number of awards since its
establishment in 1979, the latest
of which is the ‘Mohammed
bin Rashid Al Maktoum Award
for Business Excellence 2008 –
Manufacturing Sector’.
JOINTLY-OWNED by the
governments of Dubai
and Abu Dhabi, Ducab has
one of the most modern
manufacturing facilities in
the Gulf region. Its products
include low-, medium- and
high-voltage cables; fireresistant cables; copper
and auxiliary cables and
accessories.
Ducab has won a
12
EMCREDIT is the UAE’s
first credit bureau, and was
incorporated in January 2006
under the directive of His
Highness Sheikh Mohammed
bin Rashid Al Maktoum, Vice-
June/July 2009
EPS shows visitors how to reduce costs and
increase picking performance
AM Visvanathan
partner of Manhattan Associates, a
US-based provider of software on supply
chains. Manhattan has six major clients
in the Middle East, and negotiations are
under way to get more.
President and Prime Minister
of the UAE and Ruler of Dubai.
It is a fully-owned subsidiary
of Dubai’s Department of
Economic Development, and
operates in line with the Data
Protection Law of the Dubai
International Financial Centre.
Emcredit provides a range
of comprehensive, accurate
and industry-focused credit
information solutions. This
initiative will enable members
to gain greater perspective
into the risk profiles of
their customers, thereby
empowering them in making
informed business decisions.
FOUNDED in 1926, UTi
has become a broad-based,
information-focused
company offering a wide
range of global integrated
logistics to a customer base
that stretches worldwide.
Today, major regional and
international companies
take advantage of UTi’s
enhanced warehousing and
transportation services,
including air, ocean and
ground. The company
also offers manufacturing
support, freight forwarding,
customs brokerage and
contract logistics, among
other services.
UTi employs over 17,000
associates worldwide.
Please visit www.go2uti.
com.
SCLG realigns
leadership efforts
The Supply Chain and Logistics Group (SCLG) has realigned its
leadership efforts, in order to attain its goals better and serve its
members more efficiently.
Working closely with the Dubai Chamber of Commerce and
Industry, the group’s roster of members has been growing, with
new companies, individuals and students coming from various
parts of the world.
A non-profit organisation, SCLG is proud to be able to help
connect Dubai to the world by working towards the further
development of the supply-chain and logistics industry.
SCLG membership
Corporate Membership
Membership with the Supply Chain
and Logistics Group (SCLG) is open
to all organisations. Corporate
members may nominate four to six
members, depending on the category
of membership – basic, privileged or
premier – they opt for. All nominated
members shall be allowed to vote at
the Annual General Meeting (AGM)
and at any Extraordinary General
Meetings. The Board of Directors
(BoD) and Executive Committee (EC)
members shall decide the annual
fees for membership.
Individual Membership
This is open to any individual from
any part of the world. The annual
subscription shall be set from timeto-time as deemed necessary by the
BoD and EC members.
Global thought and
Industry leaders
Shashi Shekhar
Emirates SkyCargo
Mishal Hamed Kanoo
Kanoo Group
Mohammed Sharaf
DP World
Student Membership
Only full-time students can be SCLG
members, but this membership
does not convey voting rights to the
individual. The annual fee shall be
set from time-to-time as deemed
necessary by the BoD and EC
members.
Fadi Ghandour
Aramex
Michael Proffitt
Saadi Al Rais
RHS Logistics
Clifford Cuttelle
David Wild
Sanjay Naik
Emirates Group
Hamdi Osman
FedEx
Jinendra Sancheti
TNT Express
Essa Al Saleh
Agility
June/July 2009
13
Inside SCLG
Why be an SCLG Member
A membership allows access
to educational training,
seminars and networking
evenings at concessional and
rebated rates. It also provides
rebates on subscription
of membership to SCLG’s
international partners. A
membership card will soon be
issued to members allowing
them to receive discount
offers from leading retailers
and service providers.
There is also a certificate
that distinguishes a member
as a professionally focused
individual or enterprise
committed to the cause
of the supply chain and
logistics industry.
For more details, please
visit our website on www.
sclgme.org. If you wish to
volunteer to help us foster
a better supply chain and
logistics community, please
contact Kanchan Vora on
[email protected].
The SCLG Middle East is
a non-profit organisation
working under the umbrella
of the Dubai Chamber of
Commerce and Industry
to promote the cause
of the supply chain and
logistics industry. It brings
opportunities for personal
and professional development
through networking
prospects among likeminded professionals and
corporations on a global basis.
The SCLG was founded
with the help of senior
management professionals
representing a wide spectrum
of industries in the supply
chain. It strives to bring the
best in education, seminars
and interaction through
partnerships and alliances
with a variety of similar
bodies across the globe.
The group’s official
magazine, The Supply Chain
and Logistics Link, addresses
the needs of the supply
chain professionals in the
Middle East. It presents
14
Regional
Development
Committee
Board of
Directors
Tayssir Awada
FedEx
Dr Kanak Madrecha
Dubai World
Roy A Patterson
UTi
Dr Ernst Schmied
East Europe CIS, Russia
Dr Dermot Carey
UK & Ireland
Usha Kaul Saraf
University of Dubai
Ravi Kashyap
Steinweg Sharaf
Geoff Wheatley
SSI Schaefer
(Middle East)
Dr Satish Mapara
GlobeApex Management
Consultants
Madhav Kurup
Hellmann Worldwide
Logistics
Arup Gupta
Sharaf Logistics
Dirk Van Doorn
DHL
Nigel Moore
Logistics Recruitment
Mark Millar
Asia Pacific
Sanjay Babur
Cosmos Insurance
Johnson Soans
Extron Electronics
Jassim Saif
Emirates SkyCargo
Pradeep Melakandy
Pan-Pacific Logistics
Consultative
Committee
Dr Dermot Carey
UK & Ireland
Dave Tootill
Reinhard Wind
USP Logistics
Dr Cedwyn Fernandes
University of
Middlesex
Michael Stockdale
news, views, developments
and information drawn from
industry experts. The first
of its kind in the region,
The Link aspires to be a
benchmark for the industry
community, offering valuable
insights and information to
the target market.
The magazine’s articles
and news features cover
innovative supply chain
practices, emerging
technologies, e-commerce
June/July 2009
and market information from
industry leaders.
SCLG’S Mission
The group aims to provide
an accessible and dynamic
networking environment that
facilitates the achievements
of its members in a
community that encourages
professional development
and diversity in the
logistics and supply chain
management.
SCLG’S Objectives
To promote the cause of the
supply chain and logistics
industry and raise the
standards of all industries on
end-to-end supply chain
To protect the interests of
member organisations and
support government bodies
in the formulation of policy
frameworks for logistics
organisations
To encourage the free
exchange of knowledge
Board of
International
Advisors
Dr Dermot Carey
Ireland
Dr Ernst Schmied
East Europe CIS, Russia
Abre Pienaar
South Africa
Alan Waller
UK
Khalid Bichou
Morocco
Tim Sensenig
USA
Mark Millar
Asia Pacific
Dr. Craig Voortman
South Africa
Paul Lim
Singapore
Tom Freese
USA
Executive
Committee
Members
Soma Sekhar
SCLG President
TrackIT
Melvin Verghese
Transworld Group
John Halpin
Hytech Logistics
Brian Forbes
DHL Express
Mohsen Al Awadhi
Dubai Logistics City
Stephen Cross
ATMS
Sebastian Thomas
Al Futtaim Retail
Hemant Barke
Prudence Insurance
Brokers
Andreas Dur
Xvise Logistics
Naveen Arun
and skills relating to supply
chain and logistics among its
members
To provide members the
opportunity to network
among one another and to
help facilitate an efficient
commercial environment
To undertake studies and
gather information, statistical
data and official documents
relevant to the industry
To establish and maintain
good relations with similar
international organisations
and other professional groups,
and to provide members the
opportunity to network with
like-minded organisations
To conduct training courses,
seminars, conferences and
studies relating to logistics and
supply chain and to establish
a library and research centre
to expand the knowledge base
information on the industry
To promote the cause of
education in supply chain
and logistics among the
UAE nationals, thereby
contributing to build a cadre
of professionals and highlyskilled citizens to take up
current and future challenges
in the industry.
Prof. Donald Tham
Canada
Vineet Agarwal
India
Mahendra Agarwal
Singapore
Dr. Harry Angelopulos
Greece
Gerald Mukyenga
Uganda
Andrew Saliba
Malta
Dominique De
Froberville
Mauritius
June/July 2009
15
News & Views
Aramex to
support
Vodafone
Qatar
ARAMEX has signed an
agreement with Vodafone
Qatar, one the new mobile
telecoms operators in the
Gulf, to provide express and
logistics solutions in Qatar.
“The agreement with
Vodafone Qatar further
expands Aramex’s
growing portfolio of
telecommunications
companies in the region,
and enhances its servicing
capabilities for the sector,”
Aramex said in a statement.
Aramex will provide
Vodafone Qatar a number
of services, among them,
network logistics, retail
distribution, logistics
management and support
for various marketing
initiatives.
An international express
delivery, freight forwarding
and logistics service
provider, Aramex will also
provide Vodafone Qatar
services in express and
freight shipping, inventory
management and provision
of warehouse space for the
storage of handsets, SIM
(subscriber identity module)
cards and marketing manual.
There are value-added
services involved in the
contract, such as the
provision of a break-bulk
facility equipped with
steel shelves at Vodafone’s
main station, closed-circuit
television (CCTV) system and
smoke detectors.
16
The next three years will be marked with the development of flagship projects within RAK FTZ
Mideast loses $162m in
excise tax on illegal cigs
REGIONAL governments in the
Middle East lose about $162.2
million per annum in excise
tax due to illegal supplies
of tobacco while legitimate
cigarette manufacturers incur
losses of $102 million due to
this illicit trade.
About 23.6 billion cigarette
sticks, or 16.3% of all cigarettes
smoked in the region last
year, were supplied illegally,
putting at risk the brands
and distribution network of
tobacco companies, said the
British American Tobacco
Middle East (BATME).
This illegal trade results
in $5 billion worth of profits
lost every year by tobacco
companies worldwide, and
$20 billion in government
taxes. This brought to over
330 billion illegal cigarette
sticks smoked in 2008, or six
per cent of the total world
consumption.
A part of the British
American Tobacco Group, the
world’s second-largest publicly
listed tobacco group by market
share, BATME stressed in a
June/July 2009
recent conference in Beirut the
importance of addressing the
illegal trade in tobacco products.
“This is a very important
issue, and it goes beyond just
a loss of revenue for tobacco
companies and governments,”
said Omar Bseiso, general
manager of British American
Tobacco Levant and Yemen,
during the two-day conference.
Quoting the Interpol
and the US Department of
Justice, Bseiso added: “When
consumers smoke smuggled
or counterfeit cigarettes, they
may be unwittingly helping
fund international organised
crime and terrorists, who are
closely linked with the illicit
trade in tobacco.”
He said the tobacco
group supports regulators,
governments and international
organisations in working
against this illegal trade.
“We would like to see all
our markets free of it,” he
stressed. The World Customs
Organisation (WCO), World
Trade Organisation and World
Health Organisation (WHO) are
all moving in this direction.
BATME said illicitly supplied
cigarettes may include genuine
cigarettes sold on the black
market. This is usually driven
where there are high taxes
on tobacco products and
lower prices in neighbouring
countries. “Weak criminal
penalties, poor border controls,
low arrest rates and corruption
in some countries add to the
problem,” it added.
It also stressed that
counterfeit cigarettes, mostly
coming from China, Paraguay,
the Middle East and Eastern
Europe, may contain harmful
ingredients as they do not
comply with the regulatory
standards on tar, nicotine and
carbon monoxide levels.
It said that addressing the
issue needs the co-operation
between governments, the
industry and international
groups, such as WCO and
WHO. The group has signed a
memorandum of understanding
with authorities in the region
on the sharing of information
on this illegal trade.
RTA considering further plans
for Metro lines
THE DUBAI Roads and Transport
Authority (RTA) will spend
about $681 million (Dh2.5bn)
on various projects this year,
and may have more plans for
the Dubai Metro lines as it is
re-evaluating the areas to be
served by the metro system.
Mattar Al Tayer, RTA’s board
chairman and executivedirector, told a television
show that the credit crisis
has not lessened the number
of cars using the roads. The
RTA, therefore, will continue
investing in roads and
transport projects.
The number of registered
cars in Dubai has shot up to 1.1
million from 350,000 in 2005.
Engr Abdul Redah Abu Al
Hassan, director of planning and
development at RTA’s Rail Agency,
said Dubai Metro’s Purple Line
will be launched soon.
The rail will run on Al
Khail Road and connect the
Dubai International Airport
with Maktoum International
Airport, which is under
construction. The Red Line will
open on September 9 while
the Green Line is set to start
operating by March 2010.
“We have completed its
design and are ready for
tendering, but will start
construction only after
completing fresh studies
regarding the development,” he
told reporters during a recent
regional conference on railway.
With an initial budget of
$4.2 billion (Dh15.5bn), RTA
is currently constructing the
74.6-kilometre (km) Dubai
Metro project. RTA’s rail transit
master-plan includes 320km
of metro lines and 270km of
tram lines until 2020.
Al Hassan said Dubai
would have an integrated mass
transport system by 2020. This
also includes 450km of water
transport to serve the coastal and
offshore development projects,
and a network of 3,000 buses.
IATA calls for carbon-neutral
growth in aviation sector
THE INTERNATIONAL Air
Transport Association (IATA)
has called on governments to
help reduce carbon emissions
in the aviation sector in
accordance with Kyoto 2,
a global system seeking to
stabilise the greenhouse
gas concentrations in the
atmosphere.
“Air transport is a global
industry with a good track
record and ambitious
targets for environmental
performance,” said Giovanni
Bisignani, director-general and
chief executive officer of IATA.
“But to achieve them, we need
governments to take a global
approach.”
In a message to the
recent World Business
Summit on Climate Change,
in Copenhagen, Bisignani
talked of the need for a
global accounting of aviation’s
emissions as defined by the
sectoral approach in Kyoto 2.
This move, which should
be done by governments
through the International Civil
Aviation Organisation (ICAO),
would open access for airlines
to regulate carbon markets,
thereby maintaining a level
playing field for all the airlines.
This would also replace
overlapping national and
regional schemes in reducing
carbon emissions.
Supported by three industry
targets, the global approach
consists of a 25% improvement
in fuel efficiency by 2020 from
2005; a 10% use of alternative
fuels by 2017 and a 50%
reduction in carbon emissions
by 2050.
“We are already working
to set an important fourth
target: a date for carbonneutral growth beyond which
our emissions will not grow
even as demand increases,”
Bisignani said.
He added that aviation’s
emissions will fall by eight per
cent this year, about six per
cent of which is because of the
drop in demand brought about
by the recession while two per
cent is related to IATA’s fourpillar strategy.
This involves the 70%
improvement in fuel efficiency
over the past 40 years, 23% of
which happened in the last
decade due to better aircraft
and engines; best practices
being imposed in co-operation
with governments worldwide;
shortened routes and the
carbon-offset programmes by
some airlines.
“By working together with a
co-ordinated global approach,
we can make aviation the first
global industry to achieve
carbon-neutral growth, which
can be a model for the others
to follow,” Bisignani said.
He stressed that the
“most exciting” development
is the work being done on
sustainable next-generation
biofuels, which could reduce
carbon footprint by up to 80%.
“Three years ago,” he added,
“nobody thought biofuels
could be applied to aviation.”
June/July 2009
Emirates
chips in
$16bn to UAE
economy
UAE’s widely-known brand,
Emirates Airline and Group,
contributed $16 billion to the
country’s economy, or nearly
a fourth of Dubai’s gross
domestic product.
Emirates Airline alone
managed to rake in $405.8
million (Dh1.49bn) in profit
in 2008, despite high oil
prices and the global credit
crisis. Last year’s net income
dropped by 72% from $1.4
billion in 2007.
Sheikh Ahmed bin Saeed
Al Maktoum, president of
Dubai Civil Aviation Authority,
stressed that no one could
have predicted the recession
that has been affecting
economies worldwide.
“Emirates has worked hard
to cope with this downturn by
maintaining our agility and
responsiveness in a volatile
economic environment,”
added Sheikh Ahmed, who
is also chairman and chief
executive of Emirates Airline
and Group.
He said that Emirates
Group will see “satisfactory
growth” in the coming year,
and development plans
remain unchanged. He also
stressed the sustained quality
of excellent services and the
retention of the staff, despite
the credit crisis.
“We will continue to
forge ahead to build the
airline, Dnata and the many
subsidiary-companies that are
part of the Emirates Group,”
he said. “Emirates has a
massive growth plan, which,
if revised, could impact its
future growth.”
17
News & Views
Emirates to
add flights
to India
WANTING to support India’s plan
to attract millions of travellers,
Emirates Airline will add 22
weekly flights to the world’s
second-most populous nation.
This will bring to 185 from
163 the number of Emirates
Airline’s weekly flights to India’s
10 gateways during the summer
and winter periods, the airline
said in a statement.
The airline, meanwhile,
launched its third and largest
lounge in Germany at the
Düsseldorf International Airport.
The 700-square-metre facility is
part of the airline’s programme
to offer pre-departure comfort
at key airports worldwide, and
follows similar travel sanctuaries
in Frankfurt and Munich.
“These lounges are an
integral part of the Emirates’
experience, putting passengers
in the best possible frame of
mind for their journeys,” said
Mohammad H Mattar, the
airline’s divisional senior vicepresident for airport services.
The Indian routes facing
high demand from travellers
include Ahmedabad, Chennai,
Kolkata, Kozhikode and
Thiruvananthapuram. India
plans to attract 100 million
tourists by 2010.
“When traditional European
markets dried up, India was
quick to refocus its trade and
marketing efforts in targeting
regions not severely affected by
the economic downturn…” said
Majid Al Mualla, the company’s
vice-president of commercial
operations for West Asia and
Indian Ocean.
These regions include the
Middle East, Eastern Europe, Africa
and parts of Southeast Asia.
With a global network
spanning over 100 cities in at least
60 countries, Emirates Airline can
connect India well to the world.
18
Emirates Glass installed the EmiCool Plus NN 51 clear glass in Dubai’s Emirates Tower Hotel
Emirates Glass secures 20% in
EFG’s annual glass production
EMIRATES Glass, together
with two sister companies,
has secured a 20% stake,
amounting to $5.4 million
(Dh20m) per annum, in the
total glass production of
Emirates Float Glass (EFG).
This means that Emirates
Glass, a subsidiary of Glass
LLC, and Lumiglass Industries
and Saudi American Glass
Company will buy a total of
100,000 square metres of
glass every year from another
sister company, EFG.
Emirates Glasss, a leading
processor of architectural flat
glass in the Middle East, and
two other buyers will coat
Rashid, Mashaal and Yazbeck
June/July 2009
and temper the raw clear
glass from EFG according
to the requirements
from clients in various
construction projects.
“We are very glad to
support our sister-companies
by providing them with
float glass produced with
superb craftsmanship and
cutting-edge equipment,”
said Ghassan Mashaal, vicepresident of EFG.
Faisal Rashid, general
manager of Glass LLC,
which is owned by Dubai
Investments, said this
collaboration was triggered
by a growing demand for
glass from construction
projects. “This partnership
with our subsidiaries further
cements our position as a
substantial player in the local
market,” he added.
The general manager
of Emirates Glass, Ziad
Yazbeck, said the annual
order shall be increased
after the installation of a
new coater in his company
by September. He said the
facility would have a total
capacity of 3.7 million
square metres of flat glass,
and feature a purchase
requirement of $12.3 million
(Dh45m).
UPS inks pact with
India’s AFL on FSLs
UPS has teamed up with AFL
to expand its field stocking
location (FSL) network in
India, aiming to boost global
post-sales service options at
a time when Asia’s contract
logistics market is set to
overtake that of North
America.
“UPS is expanding its
post-sales solutions in the
Asia-Pacific region to fulfil
these market needs,” said
Brad Mitchell, president of
UPS Logistics & Distribution.
The courier firm will
put up over 130 FSLs
across India through an
agency agreement with
AFL, a leading logistics and
domestic transportation
service providers in that
country.
UPS said AFL will use
the former’s post-sales
technology to manage the
forward stocking inventory
of customers in multiple
locations. This solution
also provides value-added
services, such as inventory
planning.
An expanded network
of FSLs will support sameday, next flight out and
next-business-day delivery
of critical service parts.
Basically, FSLs provide
support to companies that
must respond quickly to
customer service needs.
“Despite the current
economic conditions, Asia
continues to be a global
manufacturing hub, and a
market research indicates
‘Dubai is
not overretailed’
that Asia’s contract logistics
market could overtake North
America’s in the next five
years,” Mitchell said.
He added that the
partnership with AFL makes
UPS well-positioned to serve
both local businesses and
multinational corporations.
“It gives our global customers
improved access to one of the
world’s largest economies,” he
stressed.
UPS has the biggest FSL
network in the world with
more than 700 FSLs in 120
countries. Fully integrated
with the company’s global
transportation network, these
FSLs help customers locate
the needed products and
services nearest to them.
Cyrus Guzder, chairman and managing director of AFL, the South District MD of UPS Asia-Pacific Region, Craig Foster, and
Juzar Mustan, chief executive officer of AFL Logistics
June/July 2009
STRESSING that Dubai is not
“over-retailed”, an official of
the Dubai Shopping Festival
(DSF) said the retail sector
is expecting to have good
revenues from the ongoing
Dubai Summer Surprises (DSS),
a city-wide sales promotion.
“Dubai is not over-retailed as
it is made out to be,” said Laila
Suhail, chief executive officer
of the DSF Office. “Yes, the
city’s gross leasable area is the
highest in the region, but this is
the dynamic nature of Dubai.”
Suhail described Dubai
as the world’s fourth-most
dominant retail city, offering
value-added promotions on
international brands through
shopping extravaganzas, such
as DSF and DSS.
“It must be noted that we
achieved this in a short period
of time, unlike other seasoned
retail destinations that have
been retailing for decades,”
Suhail said. “And we are
pooling our efforts to ensure
that the efforts put out this
summer will be unmatched by
any other retail destination.”
This year’s DSS, which
began on June 11 following the
registration of retailers from
May 17, will be the longest
shopping promotion ever
organised in the Middle East.
For four months, retail outlets
are expected to offer discounts
of up to 80% on various items.
This year’s DSS is the largest
shopping promotion in the
Middle East
19
News & Views
Abu Dhabi’s
1st rail
system up
in Sept
ABU Dhabi will begin operating
the first phase of its metro rail
project by September 2015, said
Dr Abdul Qader Al Shahbani,
project manager of Surface
Transport Master Plan at the
emirate’s Department of Transport.
This involves 42.5 kilometres
(km) of track on the ground,
4.91km of elevated track, 16.2km
on cut and over tunnel and
19.26km in the bored tunnels, he
said in the recent ‘MENA [Middle
East and North Africa] Rail 2009’
conference in Dubai.
The Abu Dhabi Metro project
is part of the city’s master
transport plan 2030, which
also involves 580km of High
Speed Railway Lines, a 350-km
light-rail tram (LRT) system and
130km of metro system.
The LRT system will serve
the areas within Abu Dhabi
City while the metro system
will link the airport with the
central business district and the
areas close to the metro will be
served by trams.
Al Shahbani said the study
for the metro project will start
in August while that of the LRT
system will follow in November.
Besides serving Abu Dhabi’s
growing population, the railway
will also provide vital links
to Dubai, Al Ain, the Western
Region and Saudi Arabia.
Abu Dhabi’s population of
900,000 is expected to increase
to 3.2 million by 2030. The
daily personal trips on roads
are 1.2 million, and will rise to
5.4 million by 2030. About 7.9
million tourists are also expected
to visit the emirate by the same
year from the current 1.8 million.
“The existing road network...
“ Al Shabani said, “will not be
able to cope with the transport
needs of the increasing number
of population without the help
of a rail network…”
20
An artist’s view of a service area being considered for KBSP
GOP considers car park, service
area for Bahrain’s KBSP
THE GENERAL Organisation
of Sea Ports (GOP) is
considering hosting a
multi-storey car park
and a service area in the
vicinity of Khalifa bin
Salman Port (KBSP) that
could provide customs-free
storage, warehousing and
commercial facilities.
This develops following
the successful launch of
KBSP in Manama which
needs, along with the
Bahrain Logistics Zone, a
strategic component, such as
a service area catering to the
supply-chain and logistics
companies.
“It will ensure that the
tenants and the companies
June/July 2009
operating at the port and
logistics zone will have
access to the best possible
facilities to support their
business activities,” said
Hassan Ali Al Majed,
director-general of GOP.
GOP will announce soon
the auction procedure for
potential investors to bid
for a 25-year concession
agreement under the buildoperate-transfer, or BOT,
scheme. The completed
design for both the multistorey car park and the
planned service area will
be provided to interested
developers.
“The new service area will
yet be another milestone in
our continuous commitment
to develop the Khalifa bin
Salman Port community,” Al
Majed said.
In a statement, GOP said
the service centre, to be
located behind the customs
gate, will house 6,500 square
metres of office space
and general warehousing
facilities. With a space for
4,000 vehicles, the car park
will house the imported cars
before their re-distribution
across Bahrain.
The whole area will
have a number of other
important amenities, such
as a petrol station, banking
facilities, food outlets and a
convenience store.
Govt targets high-growth sectors
THE UAE government
will push for economic
diversification to expand
its revenue by investing in
sectors that promise high
Mohamed Ahmed bin Abdulaziz
Al Shehi
returns, as the country is
seen to recover from the
credit crisis towards the end
of the year.
“We will see positive
indicators by the third
and fourth quarters,” said
Mohamed Ahmed bin
Abdulaziz Al Shehi, directorgeneral of the Economic
Department. “And, for
us, in moving forward,
the watchword will be
diversification.”
Speaking on behalf of
Sultan Saeed Al Mansouri,
UAE Minister of Economy,
Al Shehi added: “We will
concentrate on expanding
our revenue streams through
focused investments and
[by] developing high-growth
sectors.”
At the recent ‘MegaTrends’
conference in Abu Dhabi, Al
Shehi said the UAE economy
has begun to recover from
the global financial turmoil,
while another UAE official
described the tourism
industry as a key driver of
economic diversification.
Organised by Aim Events,
the conference identified
trends and insights on the
different sectors in the UAE
through various interactive
sessions addressing the
future of regional and global
economies.
Nobel Laureate Paul
Krugman, who is also a
professor of Economics
at Princeton University,
pointed out that the world
economy has been stabilised
and is now recovering. A
situation similar to the Great
Depression 80 years ago will,
therefore, not happen in the
present world.
“The velocity of growth
and change comes from an
organisation or society’s
ability to innovate,” said
Ross Dawson, chief executive
officer of international
consulting firm Advanced
Human Technologies.
The panellists in a forum
addressing the financial
landscape in the Gulf region
stressed that Abu Dhabi’s
strong fundamentals and
sound economic plans have
made it well-equipped to
deal with the credit crisis
compared with the other
cities in the US and the UK.
Participants in the ‘MegaTrends’ conference
June/July 2009
21
News & Views
Lift & Shift
ships 8
modules
for ADGAS
Lift & Shift India has
successfully completed the
shipment of eight process
system modules involving
a project for the Das Island
facilities of Abu Dhabi Gas
Liquefaction (ADGAS).
One of India’s leading
specialists in heavy-lift and
over-dimensional projects
cargo, Lift & Shift did the
shipment in behalf of Technip,
an engineering company
headquartered in Paris.
Grenald Alves, general
manager of Lift & Shift, said the
modules were shipped in two
batches from India to the Abu
Dhabi Terminals, also known as
Mina Zayed, from December to
May 16.
Early last year, ADGAS
awarded Technip a turnkey
contract worth $610 million
for gas compression plants
and associated facilities for
Das Island. The project had to
be configured in large-scale
process system modules
and interconnecting racks,
which were manufactured and
assembled at construction yards
before their transportation to
Das Island.
ADGAS’s plant facilities on
Das Island include compressor
and booster stations, fuel gas
treatment and gas dehydration
units. These will treat 211
million cubic feet per day of
associated gases produced by
offshore fields in Abu Dhabi.
Modules shipment for ADGAS
22
Tyrolean, Clear Sky create new
customised air service
A NEW executive air service
will soon be available from
Dubai to other parts of the
Gulf and the wider Middle
East region, following a joint
venture agreement between
Tyrolean Jet Services (TJS)
and Clear Sky.
Called Clearsky-Tyrolean
Jet Services (CST), the new
company will have its first
customised air service in
Beirut, and has plans of
opening a representative
office in Dubai, one of the
world’s fastest-growing
aviation hubs.
CST will offer services
through its own fleet and
third-party aircraft and
management services
during the first phase of
its operation while the
second phase involves
aircraft maintenance and a
service centre at an airport,
also known as a fixed-base
operator.
The new company’s first
aircraft – 14-seater Executive
Dornier 328JET, operated
by TJS – will be based in
Beirut from June. Headed by
Munzer Awaida, an aviationindustry veteran, CST will
quickly expand its fleet and
set up operations across the
Middle East.
Munzer Awaida
June/July 2009
Martin Lener
Martin Lener, chief
executive officer of
Austria-based TJS, stressed
the excellent network
and local knowledge of
MerchantBridge, as well
as its good experience in
developing new ventures in
the Middle East and Europe.
The Gulf Arab states will
have 700 aircraft servicing
the sector y 2011 from the
current 600, 50% of which
are in Saudi Arabia, followed
by 37% in the UAE and the
rest are spread over Kuwait,
Qatar, Bahrain and Oman.
Operators in the Middle
East, which has a tremendous
growth potential for
chartered air services, will
have an overall turnover of
$1.2 billion by 2010 from the
current $500-800 million.
“The Middle East executive
aircraft market is still in its
infancy if compared with
the developed markets,” said
Basil Al Rahim, founder
and president of Gulf-based
MerchantBridge International
Holdings, owner of Clear Sky.
The sector is seen to
grow significantly across the
Middle East and North Africa,
with $210 billion worth of
expansion projects in various
airports. About $100 billion
of these projects are in the
UAE, particularly Dubai.
Liquid Terminal and
Tank
Integrity
Abu Dhabi unveils mass transport
plan
Achieving cost effective
maintenance and operational
strategies in bulk liquid storage
facilities
Doha, Qatar
Abu Dhabi skyline: The emirate offers good opportunity for cargo business
Abu Dhabi’s April
cargo movement
jumps 5pc
CARGO movement at the
Abu Dhabi International
Airport climbed five
per cent in April while
passenger traffic jumped
12% compared with the
same month last year, as
aircraft movement was up
five per cent.
The growth in passenger
traffic was attributed mainly
to the various conferences
and exhibitions held in Abu
Dhabi, as well as the arrival
of Sudan’s Sun Air and the
start of daily flights to
Melbourne in Australia by
Etihad Airways.
Mohammed Al Bulooki
“We keep attracting new
airlines to the airport which
is testament to the quality
of services and facilities
we provide, as well as the
increasing interest in Abu
Dhabi as a global business
and tourism destination,”
said Mohammed Al Bulooki,
vice-president of Airline
Marketing and Aeronautical
Revenue at the Abu Dhabi
Airports Company (ADAC).
London remained as
Abu Dhabi’s busiest route,
followed by Bangkok and
Doha while the emirate
saw strong growth in the
Indian Subcontinent through
competitive pricing and high
volume workforce traffic.
In a statement, ADAC
said traffic to and from
India jumped 29.2% in April,
followed by the UK with
15.1% and Pakistan at 13.9%.
It also enjoyed strong growth
in Australia, which became
ADAC’s ninth largest market.
Al Bulooki said the third
terminal has increased the
airport’s capacity, so “we can
keep up with the demand
and open our doors to more
airlines wishing to establish
routes to Abu Dhabi in the
future”.
4th & 5th October 2009
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• Applying proper disaster recovery and emergency response
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For more information and registration, please contact
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conferences
June/July 2009
23
News & Views
Roundup
Dubai, its second hub, citing
the emirate’s “regulatory
restrictions”. Its non-stop
flights from the UAE to Delhi,
Mumbai, Sana’a and Salalah
now go via the airline’s homebase in Kuwait. Its services
to the southern Indian city
of Kochi and the Sudanese
capital of Khartoum were also
terminated.
The UAE has changed its
regulation on directional
“fifth freedom”, which grants
flying rights to an airline to
carry traffic between a second
and a third country. Budget
airlines are becoming more
popular among travellers, with
Jazeera and Sharjah-based
Air Arabia adding new routes
and expanding fleets. Dubai
has launched its own budget
carrier, flydubai.
Dubai Customs personnel are trained in the latest inspection techniques
MORE companies are seen
to relocate to free zones in
the coming years, prompting
the Dubai Airport Free Zone
(DAFZ) to consider investing
$354 million (Dh1.3bn) to
double its capacity with six
new buildings and a hotel.
DAFZ posted a 49% rise in net
income in the first quarter of
the year compared with the
same period in 2008. Total net
profit last year amounted to
$47.7 million (Dh175m).
This means that foreign
direct investment to the
emirate is doing well, said
Mohammad Ahmad Al
Zarouni, director-general of
DAFZ. He told a local paper
that growth in the second
quarter would slow down
because of the summer season.
DUBAI Customs has foiled
an attempt to bring 11.4
kilogrammes of opium into the
UAE, and referred the seized
consignment to the AntiNarcotics Department of Dubai
Police. Inspectors at the Cargo
24
Village of Dubai International
Airport found eight pieces of
opium in two cartons filled
with fabric rolls and curtain
accessories coming from an
Asian country.
“Such an incident proves
once again the vigilance and
preparedness of customs
inspectors,” said Mohammed
Matter Al Mari, executive
director of Cargo Operations
Division at Dubai Customs,
“who have been trained on the
latest inspection techniques
through intensive training
courses.”
DUBAI’S General Civil
Aviation Authority has given
flydubai, the emirate’s first
budget airline, the go-signal
to launch its first flight to
Beirut. The regulatory body
approved flydubai’s manuals,
instructions and procedures,
as well as the functions of its
flight attendants, maintenance
personnel, pilots and
management staff.
Operating at Terminal 2
June/July 2009
of the Dubai International
Airport, flydubai has
announced three other
destinations in the Middle East
and North Africa, including
Amman, Damascus and
Alexandria. It will serve 16
destinations in the Indian
Subcontinent and the Gulf by
the end of the year.
JAZEERA Airways has
stopped serving from June
some of its international
destinations directly out of
LUFTHANSA has launched
a low-fare programme for
40 destinations worldwide,
including from Dubai and
Abu Dhabi to Europe. This
develops as the German airline
expanded its mobile boarding
pass service to a number of
destinations, following its
successful introduction on the
Frankfurt-Vancouver route.
A round-trip flight from the
UAE to a European city can be
booked starting from $324.07
(Dh1,190). Lufthansa also said
Lufthansa offers low fares from UAE to Europe
Astana is Etihad’s second destination in Kazakhstan
that more passengers are taking
advantage of fast, flexible and
convenient check-in service
by having their boarding pass
sent to an internet-enabled
cell phone in the form of a
2D barcode. About 85,000
passengers use this innovative
service every month.
MASTER developer Nakheel
would merge with the realestate arm of Dubai Multi
Commodities Centre (DMCC),
with an aim of reassuring
investors of growth despite
the current market conditions.
Analysts say that 2009 is all
about consolidation.
Nakheel has become
famous for its Dubai
waterfront projects, such as The
Palm Jumeirah and The Palm
Jebel Ali. DMCC is the emirate’s
commodities hub, especially
in gold, precious metals and
diamonds.
ETIHAD AIRWAYS launched its
maiden flight to Astana on
May 7, making that capital
its second destination in
Kazakhstan after Almaty.
Astana is now served once a
week from Abu Dhabi by the
airline using Airbus A319.
Launched in December, the
number of flights to Almaty,
Kazakhstan’s largest city, was
reduced to three times a
week from four times a week,
following the new service to
Astana.
A former Soviet republic,
Kazakhstan has benefited from
major foreign investments
since its independence in
October 1990. It is among the
world’s top 20 oil producers,
and it expects to be among
the world’s top oil exporters
over the next decade, with a
daily production capacity of
3.5 million barrels of oil. It also
plans to pump up to 45 billion
cubic metres of natural gas a
year by 2015.
ABU Dhabi-based Navayuga
Engineering Company (NEC)
has completed the Khor
Fakkan Port Expansion Project
for Berth 6 which involved
the installation of board pile
foundation. The piles are
extended to depths of up to
25 metres in deep sea. NEC
General Manager Anthony
A David said the company
will hit its growth target this
year, owing to on-schedule
completion of projects.
also plans to start flights to
Abu Dhabi and two other
destinations in the Gulf region.
It has been expanding its route
network since 2007, when it
acquired Air Deccan.
THE FUJAIRAH Airport and
Europe Aviation have signed an
agreement on a new aircraft
maintenance facility which
will start soon and run for 18
months. This will be the ninth
base for Europe Aviation, which
has six main centres in France
servicing 60 airline carriers.
The $13.6-million (Dh50m)
facility will cater to four aircraft
at a time, but will increase its
capacity after the initial stage.
Dr Khalid Al Mazroui, director
of Fujairah Airport, said there
are plans to market the airport
as a stop-over and maintenance
centre for the small business jet
market.
GLOBAL container shipping
line Maersk announced a brief
postponement of its planned
general rate increase in North
America to the Mediterranean
and North Africa trade. The
delay from June 15 to July 1
had been made to coincide
moves to increase rate with
a change in the bunker
adjustment factor (BAF) charge,
also set for July 1. BAF is the
floating part of sea freight
charges representing additions
due to oil prices.
“By combining the rate
increase and the BAF into a
single event, we simplify tariff
and contract maintenance,
reducing complexity for our
customers,” Maersk said.
Maersk’s Danish parent group,
AP Moeller-Maersk, meanwhile,
revealed the imminent
departure of its chief financial
officer, Soren Thorup Sorensen,
for health reasons.
WARED Logistics, a regional
logistics service provider based
in Saudi Arabia, has secured
“significant” contracts for its
operations in Syria run by
Wared Transport. “As a result
of this new business, Wared
Logistics has dramatically
increased the size and
capabilities of this operation,”
it said in a statement.
Wared’s new major
customers in Syria include
Premco, a manufacturer of precast concrete and steel beams,
the Bahra Steel Company and
the United Arab Aluminium
Company. Wared Logistics
is a joint venture between
Zahid Group Holding and
Construction Products Holding
Company.
KINGFISHER Airlines was set to
start flying from the Indian
technology hub of Bangalore
to Dubai from June 25, citing
improving market conditions.
“The conditions have improved
now,” said Vinay Nambiar, the
airline’s area manager for the
UAE, Qatar and Oman.
The four-year-old airline
June/July 2009
THE SAME air cargo companies
that engage in illegal arms
transfers to African conflict
zones are also contracted
to deliver humanitarian aid
and support peacekeeping
operations in the areas. This
according to a report released
in May by a Swedish research
institute.
The Stockholm International
Peace Research Institute (SIPRI)
said that major UN agencies,
the European Union and NATO
member-states have also used
the services of 90% of air
cargo firms identified in arms
trafficking-related reports.
This means that besides being
involved in humanitarian aid,
these companies have also
transported “conflict-sensitive
goods”, such as cocaine,
diamonds, coltan and other
precious minerals.
25
News & Views
Overseas
DHL to dispatch mail, books for HarperCollins
26
management control, all with a
single point of contact.”
June/July 2009
To North America,
Latin America
Westport
Singapore
Brisbane
17
10
7
14
12
Singapore
9
15
5
11
13
16
9
6
13
11
Westport
11
17
7
13
15
Fremantle
Melbourne
Sydney
Adelaide
Brisbane
Fremantle
Melbourne
Sydney
Transit Times
Adelaide
Fremantle
Adelaide
Sydney
Melbourne
FRE
SIN
Singapore
0
1
Tu We
ADL
Fremantle
0
Tu
MEL
Adelaide
1
0
Tu We
SYD
Melbourne
0
Tu
BRB
Sydney
Transit Day
Day of Week
FRE
Brisbane
Loop 1
WP7
Fremantle
SIN
Westport
Port Rotation
Singapore
10 11
Fr Sa
12 13
Su Mo
14 15
Tu We
17
Fr
20 21
Mo Tu
26 0
Su Tu
12 13
Su Mo
14 15
Tu We
17
Fr
20 21
Mo Tu
26 0
Su Tu
Loop 2
APL-226
7
Tu
Arrives
Transit Day
Day of Week
Departs
CMA CGM, the French global
container shipping line,
announced two development
plans for June – a new service
to and from north Europe and
a hike in rates to and from
Asia – in connection with its
Mediterranean region trades.
Called French Europe
Med Express, the new fixedday service will link Greece
and Turkey. It will deploy
five vessels of 2,100 20-foot
equivalent units (TEUs) to
establish direct connections
between north Europe and the
main ports in the Aegean and
Marmara Seas. The company
also planned to start raising
from June its rates in AsiaMediterranean, from $200 per
TEU. Another hike of $200 per
TEU followed in July.
To North Asia
To West Asia,
Europe
Brisbane
DHL has secured new contracts
in the UK with HarperCollins,
one of the world’s foremost
English-language publishers.
DHL would look after air and
sea freight to HarperCollins’
sister-companies and
associates in Australia, New
Zealand, Canada and India.
DHL Global Mail would also
manage the daily international
mail from HarperCollins’
facilities in London and
Glasgow.
Part of German global
group Deutsche Post DHL,
DHL would dispatch about
two million of mail and books
a year under the contract.
“Some of the major factors
contributing to the win,”
DHL said, “were DHL’s ability
to offer a complete endto-end solution, enhanced
communication infrastructure
and a clear and streamlined
APL, a unit of Singapore-based
US firms CryoPort Systems
Neptune Orient Lines, has
Incorporated and FedEx
announced plans to raise
Express have signed an
freight rates in the Asiaagreement for an “innovative
Europe trade, following an
and breakthrough” frozen
earlier initiative announced
shipping solutions for the
in February. It said that from
life-science industry. The
June, a pre-container rise of
system called CryoPort Express
$100 would be placed on scrap
Shipper allows products to
commodities, such as paper, for remain frozen at temperatures
the eastbound Europe to Asia
below -50 Centigrade for up to
leg. An increase of $300 per
10 days. This is unlike dry ice
20-foot equivalent unit would
shipping, which often requires
be imposed for all freight to
re-icing during transit.
the Mediterranean and North
“By using CryoPort Express,
Europe from June 15 and July
customers also will eliminate
1, respectively.
greenhouse gas emissions
“Despite the relative
and landfill disposal issues
success of initiatives we
associated with traditional dry
implemented earlier this
ice methods,” said CryoPort and
year, rates in the Asia-Europe
FedEx Express, a subsidiary of
trade are not even close
FedEx Corporation. CryoPort
to sustainable levels,” said
commercialises technologyDetlev Kerber, APL’s vicedriven shipping products
APL Intra-Asia
president
for Asia-Europe
for the biotechnology and
Trade.
“We
will
be
doing
biopharmaceutical cold chain.
AAX–Asia Australia Express
THE APL ADVANTAGE
everything
possible
to
ensure
TOLL, a provider of integrated
• Reliable dedicated service to and from Singapore and Westport to Australia
sailings that connect to APL linehaul and other feeder services in Singapore
the •• Weekly
latest
rises
are
upheld.”
logistics based in Australia,
Offers reefer services to meet the needs of customers
has agreed with China
For sailing schedules, shipment booking, and tracing, visit www.apl.com.
APL to raise rates in Asia-Europe trade
aaxsvc.pdf ©APL 27-Jun-07
Merchants Group to acquire
the remaining 49% of shares
in ST-Anda Logistics. Based
in Shenzhen, ST-Anda has
warehouses and depots in over
30 cities across China, and a
distribution network reaching
1,500 cities. In May, Toll agreed
to acquire an equity stake
in BIC Logistics, an Indian
company.
“The Toll Group has for some
time considered our Chinese
logistics operations to be of
strategic significance to Toll’s
international business,” said
Paul Little, managing director of
Toll. “We now have operations
in over 50 countries globally,
and China is a critical element
in our growth strategy.”
EUROPE’S third-largest carrier,
British Airways (BA), reported
last month a first full-year
loss since 2002, saying it lost
$611.3 million compared with
a net income of $1.2 billion
a year earlier. The deficit
was wider than the $508.4
million predicted by analysts,
based on the median from
eight forecasts gathered by
Bloomberg. BA and other global
carriers, such as Air FranceKLM Group, are dropping rates
and cutting flights to deal with
the lack in demand for travel
due to the credit crisis.
Meanwhile, BA is having
merger talks with Iberia Lineas
Aereas de España. The aim is to
create an airline with two fleets
and a dual listing in London
and Madrid. BA is also seeking
anti-trust immunity, as it
proposed an alliance with AMR
Corporation’s American Airlines.
SWISS global forwarder Kuehne
+ Nagel (K+N) said it will handle
Audi Volkswagen spare parts
for the aftermarket in South
Korea for three years. This
includes receiving, picking and
packing, handling of dangerous
goods, shipping and national
distribution to the carmaker’s
dealers across the country.
K+N committed to
In Shenzhen, China
construct a brand-new state-ofthe-art logistics centre northwest of Seoul which will be
fully operational by September.
The centre will provide 4,500
square metres of dedicated
warehouse space for 22,000
stock-keeping units of Audi
Volkswagen, and this may
be expanded to 2,000 square
metres more.
EIMSKIP, an Icelandic shipping,
logistics and supply-chain
management group, has
announced an agreement
to sell 65% of its shares to
Finnish shipping company,
Containerships. “This
agreement is provisional due
to an approval from the board
of directors and release of
pledges,” Eimskip said.
The sale was part of the
financial restructuring of
the Icelandic group. After
the sale, Containerships and
Eimskip will continue their
co-operation in Denmark and
Finland. Eimskip acquired
Containerships in October
2006.
JAPAN Airlines (JAL) Group
and Mitsui & Company have
announced an alliance that
June/July 2009
would allow the former to
offer its air cargo transport
services while the latter would
provide logistics solution
services on sea freight
transport. They are set to start
sales activities from July.
“The companies hope that
through the partnership,
they can both transcend the
frameworks of a logistics
division in a general trading
firm and of an airline,” they
said in a statement, “and
integrate their respective
features and functions to offer
support to the business of
their customers.”
27
News & Views
DHL Supply
Chain is
world’s
biggest
DHL Supply Chain is once again
the largest contract logistics
operator on a regional and
global bases, according to the
latest annual rankings issued by
Transport Intelligence (Ti).
Re-branded recently from
DHL Exel Supply Chain, DHL
Supply Chain posted total
revenue of $16.9 billion, way
ahead of CEVA, which ranks
second, and the Swiss firm
Kuehne + Nagel.
Ti said the rankings of the
top three firms remain the same
from last year’s. It added that
in Europe, as on the global
basis, DHL Supply Chain is the
dominant force.
UK-based Wincanton, on
the other hand, is stronger
in Europe than it is globally.
CEVA has four major UK and
Italian businesses and smaller
operations across Europe.
John Manners-Bell, chief
executive of Ti, said most
contract logistics companies
are focusing on internal growth
opportunities, since volumes
and margins are decreasing
worldwide.
“I believe this will continue
to be the case in 2009, despite
the general perception that
‘distressed’ targets may soon
be coming onto the market,” he
added. “However, as the market
picks up in 2010, there is likely
to be a surge of mergers and
acquisitions activity.”
The world’s biggest contract
logistics operator
28
Maersk’s container business may suffer for the rest of the year
China’s exports fall a threat to
global container shipping
THE 25% fall in China’s
exports recently has
called into question the
present structure of the
global container shipping
sector, whose major players
announced huge losses
for the first quarter of the
year.
Maersk, Hapag-Lloyd,
Neptune Orient Lines and
Evergreen Marine said
they lost so much revenue
between January and March,
according to UK-based
Transport Intelligence (Ti).
The Danish conglomerate
AP Moller-Maersk, owner
of Maersk, may incur more
losses for the rest of the year.
The container business of
Maersk lost $424 million in
earnings before interest and
tax, with revenue dropping
to about 40% and volumes
falling 14%.
A provider of intelligence
on the global transport
industry, Ti said total exports
in China dropped by 22.6%
in April from a year earlier
June/July 2009
while imports fell by 23%
for the same period. It added
that the drop in volumes
may get worse if China’s
exports decline further
against those with other
industrialised countries.
The US and the UK, for
instance, are rebalancing
their trade while South
Korea is showing signs of
stabilising its exports. This
will create a change in the
trading pattern worldwide,
and that of the container
shipping sector.
“The problem is the
container shipping sector is
oriented to making money
from the China trade,” said
Ti on an online article. “That
is where the shortages of
capacity were in the recent
past, not on export lanes
from Europe, North America
or, indeed, from other areas
of east Asia.”
Eivind Kolding, chief
executive officer of Maersk,
said the line had cut again
its container rates on
eastbound transpacific routes
by about 10%.
Ti said the collapse in
demand and increased
capacity in the market
resulted in losses among the
container shipping lines.
FedEx’s lab
THE DECISION of the US
House of Representatives
to change the regulatory
status of FedEx’s labour
regulations could
prove expensive for the
US-based global express
and freight firm.
Its rival UPS, for
instance, negotiated a
large pay deal last year
with the Teamsters Union
over $1 billion in pension
and provisions alone,
said UK-based Transport
Intelligence (Ti).
“FedEx may have to
Abu Dhabi unveils
mass transport
Container
shipping
linesplan
addressing transatlantic woes
MAJOR container shipping lines are
taking new co-operation moves to ride
out the global financial crisis, the latest
of which is the plan to address the
declining volumes in the transatlantic.
Some members of Grand Alliance, a
multinational global container shipping
group, are planning to work with
Hamburg Süd on the Atlantic Express
Service (ATX).
“The co-operation will allow Grand
Alliance to continue offering [its]
customers the competitive and highquality service they are used to,” the
group said.
The ATX service is currently operated
by Grand Alliance members HapagLloyd, Nippon Yusen Kaisha (NYK) and
MISC Berhad’s Puteri Firus: The shipping line is pulling out of Grand Alliance from 2010
Orient Overseas Container Line. They
are the ones planning the co-operation
on ATX.
The group said the port rotation
would remain the same – that
is, Rotterdam-Hamburg-Le HavreSouthampton-New York-NorfolkCharleston-Rotterdam. Hamburg Süd
will initially provide chartering slots,
the group added, and “may provide a
vessel to the service at a later stage”.
Grand Alliance member MISC Berhad,
meanwhile, said it will pull out of
the group from 2010, citing “portfolio
restructuring”. It will stop participating
from the European and Mediterranean
trade lanes covered by a memorandum
of understanding forged in 2007.
“The withdrawal of MISC’s Liner
Division from the Asia-Europe trade
is part of a portfolio restructuring
to reposition the business on a
firmer footing that will drive future
expansion,” the company said.
Its Liner Division will then focus to
become one of the leading intra-Asia
liner operators. One of the core services
would be the Middle East-India Subcontinent trade.
our regulations changed
face a similar bill in the
near future,” said Ti, a
provider of intelligence on
the global transport industry,
stressing that UPS has long
recognised trade unions
representing its staff.
In May, the US House of
Representatives applied the
National Labor Relations Act
to FedEx employees who
are not directly concerned
with flying or maintaining
aircraft.
The management of
FedEx staff is regulated
under the Railway Labor
Act, although the US-based
global express and freight
firm is regulated by the US
Federal Aviation Authority
because it is an airline.
“That makes union
organisation much more
difficult than under the
alternative National Labor
Relations Act, which covers
most other freight transport
businesses,” Ti said.
FedEx called the decision
a “legislative bailout” which
would diminish competition
for UPS if it becomes a law.
“UPS’s bailout bill is
targeted only at hurting
FedEx Express and our
airline-based delivery
network,” FedEx said in a
statement. “But those who
rely on next-day commerce
for medicines, replacement
parts, critical inventory and
other essential goods would
pay the price.”
The president of
Teamsters Union, Jim Hoffa,
looked at it in a different
light, saying, “The House of
Representatives has done the
right thing in closing this
unfair loophole that benefits
June/July 2009
only FedEx. Because of this
unfair advantage, FedEx
Express workers have been
deprived their right to form
unions like workers at other
package delivery companies.”
It may be noted that
FedEx has been involved in
a series of legal cases with
some of its drivers, whom
FedEx said are self-employed
contractors. The drivers
claim they are employees,
and are entitled to better
terms and conditions of
employment.
29
30
June/July 2009
The Industry
{ L0gistics }
In the
same boat
Swine flu pandemic threatens
supply chain
I
T’S not only the supply-chain and logistics sector that
is facing serious threats from the A(H1N1) virus, more
commonly known as swine flu, but, more particularly,
the UAE’s export-driven economy. The transport
industry has been reeling from the effects of a global
economic downturn, with huge decreases in cargo volumes
consisting of manufactured and traded goods, as well as in
passenger traffic. Airlines, freight companies and truckers
feel the pinch of reduced freight volumes – and the last
thing they need is a pandemic, which will further restrict
travel and the movement of goods and people.
CHALLENGING TIMES
“The economic downturn is of unprecedented dimensions
because all global economies are in deep recession, and we
do not know when the downturn will bottom out,” said Ivan
Misetic, chairman of the Association of European Airlines,
during a recent meeting of industry bigwigs in Brussels.
“What we do know is that it has severe repercussions on
all airline business models. Passenger volumes are in steep
decline and the air freight market has suffered what can only
be described as collapse.”
Figures released by the International Air Transport
Association (IATA) reveal that April international air cargo was
down 21.7% compared with the previous year levels, the fifth
consecutive month that volume was down by more than 20%
year-on-year. Airline analysts expressed cautious optimism
that “the sideways progression might indicate that the worst of
the economic downturn was over”. Though business confidence
was improving, experts believe that air freight volumes would
likely continue to “bounce along the bottom”.
Carriers worldwide experienced double-digit declines
in April, IATA figures show. Worst hit were Latin
< In Dubai: The emirate’s economy will have
structural shift in the next few years
The Industry
Truckers are in the same boat as their airborne cousins
American carriers at a decline
of -24.2%. European, North
American, Asia-Pacific and African
carriers had similar poor performance
of -23.3%, -22.4%, -22.3% and -18.8%,
respectively. On the other hand, Middle
Eastern carriers exhibited the strongest
performance with a decline of only
-11.1%. “Freight remains at shockingly
low levels,” lamented IATA DirectorGeneral and Chief Executive Officer
Giovanni Bisignani. “The worst may be
over. However, we have not yet seen any
signs that recovery is imminent.”
Truckers are also in the same boat as
their airborne cousins. YRC Worldwide,
one of the world’s largest logistics
companies which accounts for almost a
quarter of the US’s “less than truckload”
freight market, is on the brink of
bankruptcy. At the rate it is using up its
cash, financial analysts foresee that the
company might run out of cash by the
third quarter of the year.
YRC managed to convince its creditors
to ease up on certain loan conditions,
such as an EBITDA (earnings before
32
interest, taxes, depreciation and
amortisation) of at least $45 million
by the second quarter. Its chairman,
president and CEO, Bill Zolars, hopes
that, with consistent improvement in
the firm’s operational trends and with
continued loyalty of their customers,
YRC can buy enough time to get
through these tough financial times.
To cushion its precarious finances,
YRC applied for a $1 billion bailout
by the US government of its pension
obligations. If Washington can throw
June/July 2009
a billion-dollar lifeline to auto and
banking industries, it should also
extend the same support to the
transport sector. So goes the YRC
reasoning, but industry and government
officials doubt if the Obama
administration will see it that way.
Analysts postulate that most road
freight companies worldwide “are using
up working capital at a fast rate due to
the unprecedented drop in volumes”.
Most estimates place the decrease
between 20% and 30%, but observers
concede that some companies suffer
even bigger setbacks.
ON STABLE SUPPLY CHAIN
Given this bleak predicament that
logistics companies find themselves in,
how will a swine flu pandemic impact
on the struggling industry? How will it
affect the UAE?
Dubai’s economy will undergo a
structural shift in the next few years
towards sustainable long-term sectors,
such as transportation, healthcare,
education, tourism and financial
services, said Dr Omar Bin Sulaiman,
governor of the Dubai International
Financial Centre (DIFC).“Despite these
shifts, trade will remain a significant
contributor to the emirate’s GDP,
especially given the substantial
investment in Dubai’s transport and
logistics infrastructure, and the more
than 200 destinations served by its
seaports and airports,” he added.
Dubai Airport Free Zone, for instance,
will expand to almost double its
leaseable area to attract at least 1,000
more companies and billions more in
foreign direct investments, in addition
to the present occupants comprising
of more than 1,500 companies and
10,000 employees with their substantial
spending capacities. Moreover, based on
a recent study by the Dubai Chamber of
Commerce and Industry, total exports of
A woman sneezing: Swine flu threatens the
UAE’s export-driven economy
its members to 25 destinations reached
almost $12 billion for the first four
months of 2009, with GCC being the
largest market.
Sharjah, which is fast becoming
another trading hub for the country,
posted imports worth almost $11
billion in 2008, representing a 51.3%
increase from 2007 figures, according
to the Sharjah Economic Development
Department.
Further, a DIFC economic note reports
that intra-Middle East trade represents
19.3% of all trade in the Gulf region.
Middle East trade shifts increasingly
towards Asia, with manufactured
imports from Asia growing to 33.9%
of total world imports in the region in
2007 from 29.3% in 2000.
TRANSPORT DISRUPTIONS
If a pandemic disrupts the production
and transport of goods, it will create
gargantuan challenges (to say the least)
to UAE and the region as a whole. A
glimpse at recent transport disruptions
might be informative.
The Saudi border crisis easily comes
to mind. Some transport operators and
traders experienced up to 50% drop in
the volume of their business because
of the glitch. Tennison Abraham, sales
manager of Royal Truck Transport,
complained that the firm’s trucks used
to make 300 trips a month, but the
border delay limited them to only 150
trips. Drivers used to make five trips
a month but they were constrained to
make only two trips, thereby losing over
half of their potential earnings.
The estimated 8,000 vehicles,
24-kilometre-long queue which got
stranded at the Al Ghuwaifat bordercrossing cost UAE trucking companies
up to $36.6 million a month, according
to transport analysts.
Towards the end of November 2007,
in Italy, transport unions went on strike
to protest the city council’s decision
to cut transport spending and to issue
500 new taxi franchises. Drivers blocked
the streets in central Rome, affecting
the services of most train, air, sea ferry
and buses. Millions of Italians failed to
report for work.
As though the November strike was
just a warm-up, the truckers again went
on strike in December, this time against
rising fuel prices. The Franco-Italian
border and other major motorways were
A pandemic may disrupt the production and
transport of goods
barricaded by 2,000 trucks and lorries.
The strikers stopped cars and freight
deliveries from getting through.
After three days of the strike, the
economy was brought to a stand-still.
Automaker Fiat had to close down
five of its factories because there were
no more spare parts to use. It had to
send home 22,000 employees because
there was nothing for them to do at
the plant. Petrol supply was disrupted,
and some fuel stations in the country
ran dry. Garbage was left uncollected,
panic-buying ensued and food shortage
loomed. Fortunately, reason prevailed and
the strike was lifted after the third day.
The UAE, like other countries in the
Gulf region, relies on trade to boost its
economy. Its reliance on a stable and
secure supply chain and logistics can
never be over-emphasised. Reliance on
imports to feed its people places the
UAE and other Gulf states in a difficult
situation, if there is a disruption in
the supply-chain and logistics sector.
As Economic Minister Sultan Saeed
Al Mansouri said, “UAE imports 85%
of foodstuff, and 60% out of the total
imports come from 10 countries which
pose a big risk in case any problems
arise in these countries which may
affect production”.
June/July 2009
33
Fund Folio
Tourists visiting the Forbidden City: China is ‘worried about the safety of its foreign-exchange reserves’
{ Financial system }
Worst over
Major reforms are needed in the US and
China to revive the global economy
T
HE WORST of credit crisis
is no longer upon the UAE,
as some business leaders
believe, although economic
analysts insist on the various
challenges that the regional banking
system will have to overcome. Lesser
mortals are trying to decipher the
differing views on the impact of the
global economic downturn in the Gulf
Arab states, as western bureaucrats
say the world is in dire need of major
economic reforms to be instituted by
the US and China.
“So, there is a feeling of optimism,
and I definitely believe the worst is
over,” said Hamad Buamim, directorgeneral of the Dubai Chamber of
Commerce and Industry. “However, the
economic growth could take anywhere
between 12 to 18 months from
now, while we could see some clear
indications later this year.” He said the
liquidity injected by the government
has started to bear fruit, as developers
began paying contractors – a move that
could revive the whole construction
supply chain.
He added that the government is
working on laws that would reduce
trading procedures, and lower the costs
of licensing and business registration
in Dubai. Plans for the implementation
of value-added tax system are off the
government’s agenda; it is working
instead on a set of rules that would
make Dubai more investor-friendly.
He noted that Dubai had just set up
the Competitive Council to realise this
programme.
SERIOUS CHALLENGES
Emmanuel Volland, senior director for
financial services at the credit ratings
agency Standard & Poor’s, said regional
banks are facing serious challenges,
including deteriorating asset quality
and bad loans. “Our view is that
Fund Folio
Hamad Buamim
asset quality deterioration will
continue,” he said, as quoted by
Gulf News. “There’s always a time-lag
effect between the slowdown in the
economy and the appearance of the nonperforming loans. So, for the next few
quarters, we will continue to see some
negative news in the corporate sector.”
Gulf banks may have noted their
position of relative strength when the
economy was slowing, confident that
they are well-capitalised. Many of these
banks have suffered from overexposure
to weakening sectors of the economy,
however, as well as due to the drop
in liquidity. Some of them also have
exposure to investment companies
in Kuwait. These factors resulted in
negative rating from the credit ratings
agencies since the last quarter of 2008.
The economic downturn has forced
banks to strengthen their budgets
for collections and procedures, as the
potential for loan defaults looms. There
is also a need to establish credit bureaux,
which would allow banks to look into
the credit history of potential customers.
A consumer banker said it’s about time
discreet collections and recovery divisions
of banks be given importance.
“Collections have to be at the top of
the organisational chart,” said Sanjoy
Sen, head of consumer banking for the
Middle East at Citibank. “Collection is
a science – with different tools and
techniques to collect money,” he added
on the sidelines of the recent Cards
Middle East conference in Dubai. “The
whole thing about collections is you
have to be early in the game.”
Presently, only the central bank
provides data on credit history
in the UAE, and on loans of over
$136,128.10 (Dh500,000). In 2006,
Dubai’s Department of Economic
Development created Emcredit, a
credit information company that helps
financial institutions make decisions on
lending, in order to reduce the number
of unpaid loans. In March, the UAE’s
An oil drilling tower: The oil-exporting region of the Gulf will be fine as long as ‘oil prices remain above $40 a barrel’
36
June/July 2009
The White House: Washington wishes for a
deficit of three per cent of GDP
Banks in the Gulf are facing deteriorating asset quality and bad loans
Federal National Council approved a
draft law proposing the creation of a
federal credit information office.
“As and when you build a credit
bureau, it takes on the role of
moderating the level of exposure,”
Sen said. In the last few years, the
availability of easy credit resulted
in high debt to income ratios, or the
levels of income per month which are
channelled towards debt repayments.
The presently tight credit market,
coupled with job losses and salary
freezes, are resulting in unpaid loans.
POSITIVE SIGNS
There have been some improvements,
though, especially in terms of liquidity
in the financial sector. The UAE Central
Bank is prepared to ease monetary
policy further for the good of the
economy. “There is no pressure on
inflation, so it makes sense to keep
expansionary monetary policy,” said
the central bank’s governor, Sultan bin
Nasser Al Suwaidi, as quoted by Reuters.
In January, the central bank lowered
its key interest rate by 50 basis points
to one per cent, shadowing moves by
other central banks worldwide in an
attempt to remedy the damage inflicted
by the credit crisis. Regional central
banks injected fresh liquidity into the
financial systems, and have slashed
interest rates and reduced bank reserve
requirements.
And while the UAE economy may
shrink this year, Al Suwaidi is confident
that it will grow by 2010 as the global
economy recovers gradually. The central
bank is also planning to conduct
a survey of banks operating in the
country on a proposal to amend interest
rates and fees on personal loans and
commissions against services offered
to the clients. The government will also
survey inactive bank accounts, and look
into a suggestion to amend the rules
on pending loans and interest and
investment allocations.
The world’s biggest oil-exporting
region, the Gulf has been hit by the
slump in oil prices to about $50 per
barrel from a record $147 a barrel in
July last year. As long as the oil prices
remain above $40 a barrel, Buamim
said, the Gulf Arab states will be all
right. “I don’t think that there is any
reason to worry,” he added. “The Gulf
economies will do well under any
conditions, as long as the oil demand
remains stable.”
GLOBAL ECONOMY
A smooth transition into a stable
global economy, meanwhile, will need
significant changes in economic policy
and financial regulation worldwide,
especially in the US and China. “How
successful we are in Washington and
Beijing will be critically important to
the economic fortunes of the rest of
the world,” said US Treasury Secretary
Timothy Geithner in an address at
Peking University.
He told the biggest holder of US debt,
China, that the world’s biggest economy
wants to shrink its budget gap as
soon as it recovers from the financial
crisis. Washington aims for a deficit of
about three per cent of gross domestic
product from a projected 12.9% this
year, Geithner said. The US deficit is
seen to reach a record $1.75 trillion
by September from the previous fiscal
year’s $455 billion shortfall, said its
Congressional Budget Office.
“The Chinese public is worried about
the safety of its foreign-exchange
reserves,” said Yu Yongding, a senior
researcher at the government-backed
Chinese Academy of Social Sciences,
in an article filed by the wire agencies.
China held about $768 billion of
Treasuries as at March.
“We are going to have to bring our
fiscal deficit down to a level that is
sustainable over the medium term,”
Geithner assured the world’s thirdbiggest economy. “This will mean
bringing the imbalance between our
fiscal resources and our expenditures
down to the point…,” he said, “where the
overall level of public debt to GDP is
definitely on a downward path.”
Apart from the US markets, the
Far East and Asia will drive future
demand. “Once the US economy begins
to recover, it will drive worldwide
demand,” Buamim said, “and then we
could expect a gradual recovery across
the world.”
June/July 2009
37
Focus
{ Flu epidemic }
Health
check
The A(H1N1) virus reaches
the shores of Gulf countries
T
HE WORLD Health Organisation (WHO) declared swine
flu a pandemic. Students from the Middle East and North
Africa (MENA) who are studying abroad face health checkups and quarantine upon their return. Stringent measures
are carried out at various ports of entry across the MENA
region, in preparation for the upcoming Hajj and Umrah season.
These are the stuff that prompted and gave the go-signal to
pharmaceutical companies to speed up the manufacture of vaccines
against swine flu, medically known as A(H1N1) virus, which mutated
from pigs and transmitted to some humans. The number of infected
people rose to over 58,000 in 100 countries and territories, with 282
deaths, when WHO declared swine flu a deadly disease.
From North America to Europe and the Far East, swine flu
has everybody’s spine a-tingle, as there is no cure available yet
and while governments issue travel advisories against affected
countries. This, despite tests showing that GlaxoSmithKline’s flu
drug Relenza and Roche’s Tamiflu appear effective to the strains.
The tests were conducted by the US Centers for Disease Control and
Prevention (CDC), which has several departments concerned with
occupational safety and health.
PILGRIMAGE
Millions of pilgrims are expected to descend to the holy cities of
Makkah and Madinah to perform the Muslim ritual of Hajj. As
such, various steps are taken to prevent the further spread of swine
flu, which has likewise affected countries in the Gulf Co-operation
Council (GCC) and those in the wider MENA region.
The Abu Dhabi Airports Company (ADAC), for instance, set up
mobile health clinics at the Abu Dhabi International Airport for the
immediate treatment of people suspected of carrying the disease.
ADAC, which operates and manages the airport in Abu Dhabi,
also supervised the deployment of high-tech thermal imaging
cameras and mobile detecting devices at the airport and at the Al
Bateen Executive Airport, also in Abu Dhabi, and Al Ain
International Airport.
< In Amman: Jordan is one of the Gulf countries affected by swine flu
June/July 2009
39
Focus
WHO declares swine flu a pandemic
The UAE took proactive
measures against the global pandemic
by, among other things, sending medical
teams to the MENA embassies in some
countries severely hit by the flu, such
as the US, the UK and Australia. Also,
foreign-based students returning to
the UAE are asked to notify authorities
should they exhibit swine-flu
symptoms, such as shortness of breath,
chest pain and persistent vomiting. The
UAE provided its embassies emergency
telephone numbers and e-mail
addresses for the students to contact
Some of the swine flu symptoms are shortness of breath, chest pain and persistent vomiting
40
June/July 2009
while abroad.
Circulars have also been disseminated
by the UAE embassies in the US and
Canada, warning Emirati students that
the following cities have been affected
by swine flu: Ohio, California, New
York, Kansas and Texas. Among the
warnings include the need to remain
indoors in their respective dormitories
or residences, and to avoid travelling to
flu-affected areas.
The number of Gulf students
studying abroad had increased
recently, said Dr Hanif Hassan, the
UAE Minister of Health. UAE Education
Minister Humaid Al Qutami stressed
that students suspected of carrying
the H1N1 virus would be subject to
quarantine. “We will contact their
families and let them know all
the details about these preventive
procedures,” Hassan said.
Currently, there are about 600
Emirati students studying abroad
under the supervision of the Ministry
of Higher Education. There are about
1,200 other students on scholarships
sponsored by the UAE government,
A(H1N1) flu fact file
Commonly known as swine flu, the
H1N1 is a virus that mutated from pigs
and transmitted to some humans.
Affected areas having high number
of cases: Mexico City, California,
Arizona, Texas, the Philippines, South
Korea, Hong Kong, China, Canada,
New Zealand, Australia, Egypt, Israel,
Kuwait, Spain, France, Thailand, Cuba,
India and Taiwan.
Cure: No vaccine effective yet,
but tests have proven that
GlaxoSmithKline’s flu treatment
Relenza and Roche’s Tamiflu appear
effective to the strains.
Transmission: Occurs from person to
person through coughing or sneezing
by the infected person. It also occurs
when someone touches objects
(doorknobs, handles, etc) infected
with the virus, and then touches his
mouth or nose.
The White House: Washington is planning a summit on the preparations for swine flu
Signs and symptoms
• Difficulty in breathing or shortness
of breath
• Pain or pressure in the chest or
abdomen
• Sudden dizziness
• Confusion
• Severe or persistent vomiting
• Fever with a rash (among children)
• Bluish skin colour (among children)
semi-government authorities, banks,
rulers’ courts and private companies.
ALLAYING FEARS
As another counter-measure to the
virulent disease, experts from the
United Nations and CDC were invited
recently to tour the entry points for
Hajj and Umrah pilgrims. The field trip
was part of a four-day workshop held
in Jeddah, as a point to allay fears of a
wide-scale transmission of the disease
during the Hajj and Umrah, which
is considered a ‘minor pilgrimage’.
These experts would review the steps
being taken by Saudi Arabia against
the pandemic, and offer suggestions,
recommendations and modifications
where necessary.
A painting depicting a departure for a holy journey
Also in place are plans for various
conferences and initiatives, to be
held across the Arab countries. Saudi
Arabia’s Ministry of Health is also
gearing up to present a comprehensive
precautionary plan to prevent the
possible outbreak of flu among the
pilgrims. This plan will be presented to
the Royal Court for final approval.
The GCC, meanwhile, will start
implementing a joint plan to deal with
the H1N1 virus, said Dr Ziyad Ahmad
Mumaish, director of the Gulf Centre
for Combating Epidemic. This includes
increased monitoring of all entry
points leading to the Gulf states, an
ample supply of Tamiflu and renewed
calls for vaccination against seasonal
flu. “This plan will be implemented in
co-operation with the health and nonhealth sectors in the member-states,”
Mumaish said.
Saudi Arabia’s top cleric, Grand
Mufti Sheikh Abdul Aziz Al Asheik
has declared a Fatwah (religious edict)
banning the travel of Muslims to
countries affected by the swine flu. In
Egypt, Health Minister Hatem Al Gabali
warned that tens of thousands of
Egyptians who will join the Hajj risked
being quarantined upon their return.
The number of cases in the Arab world
has been growing in a moderate rate. So
far, there have been no reported deaths
in the region. Affected countries include
Jordan, Qatar, Yemen, Oman, the UAE
and Bahrain, which reported the most
number of cases with 15 persons.
June/July 2009
41
Cover Story
{ Port management }
Gulf
trainer
Forging ahead as a
significant player in the
logistics arena
I
T has been making waves not only in the
international container terminals and
stevedoring sector, but also in overseas port
management and freight logistics projects.
Having been into port management for 30 years,
Gulftainer has now become a more complete logistics
company, making the UAE firm a new but promising
kid on the block when it comes to providing a holistic
service in maritime management and logistics
requirements.
Gulftainer is, indeed, stepping into a wider field
armed with good knowledge and understanding of the
culture and business operations in the Middle East and
North Africa (MENA). “Our dealings with governments
and local authorities in the region for over 30 years
have given us a unique perspective and understanding
of how to achieve the best results in the most effective
way,” says Keith Nuttall, commercial manager of the
Sharjah-based marine terminal operator.
Established in 1976, Gulftainer started out by
operating and managing the ports of Khor Fakkan
and Sharjah, and of Shuweikh, in Kuwait, since 2003.
Complementing this is an active shipping agency
that undertakes local ship- and cargo-agency works
in the pursuit of international port management
opportunities.
EXPANSION AND DEVELOPMENT
Currently, Gulftainer is involved in international
projects in Kuwait, Pakistan and the Comoros,
with new ventures in other countries soon to be
announced. While most of the company’s investments
have been focused on smaller general cargo and
container ports in the emerging markets, Gulftainer
has also consolidated its overseas activities, primarily
in Kuwait. It has helped the Kuwait Port Authority
(KPA) – primarily at Shuwaikh – cope with the huge
increase in cargo volumes and ship calls.
On the island-nation of Comoros, where
< SCT handles containers in behalf of over 30 shipping lines
June/July 2009
43
Cover Story
Keith Nuttal
a port management contract
has been implemented, traffic
volumes have responded positively to
the modernisation programme, and
new management initiatives were
introduced. Nuttal says Gulftainer is in
“Pakistan, where we are involved in a
logistics and haulage joint venture, and
Turkey, where a new logistics venture
was set in mid-2008. Initiatives in Iraq
are in progressed during 2009”.
The partnership between Gulftainer
and Hyderabad-based Lanco Infratech,
meanwhile, has led to $1 billion worth
of projects under study in the Eastern
Mediterranean, Middle East and India.
Also, Gulftainer has a third-party
logistics (3PL) subsidiary launched in
late-2008. Momentum Logistics was
created through the consolidation of
Gulftainer’s existing business sectors
– transportation, container repair and
Sharjah Inland Container Depot – and
the formation of new business sectors,
such as freight forwarding, logistics cities
and contract logistics. Momentum offers
a single location for 3PL and supplychain management for international
companies looking to outsource their
logistics requirements, Nuttal says.
TWO PORTS, ONE MISSION
With the operation of two ports in
the in the UAE – Sharjah Container
Terminal (SCT) and Khorfakkan
Container Terminal (KCT) – the
company is fast-becoming a leader
in international ports and terminal
44
management sector. It is seen that
leadership will further grow as
Gulftainer takes advantage of its
overseas opportunities.
SCT was the first purpose-built and
fully-equipped modern container
terminal in the Middle East. This port
lies adjacent to Sharjah’s industrial area,
which accommodates over 45% of the
UAE’s non-oil manufacturing capacity.
The existing Sharjah facility consists of
586 metres of quay, three berths with
11.5-metre draft and a terminal area
of 150,000 square metres. It boasts a
storage facility for over 8,000 20-foot
equivalent units and 9,300 square
metres of dedicated transit shed and
storage area for less than container load,
or LCL, cargo.
SCT handles containers on behalf of
over 30 shipping lines, including all the
world’s top 20 companies. Among these
are Global Container Lines, United Arab
Shipping Company (UASC), Ethiopian
Shipping Line, American President Lines
(APL), Mediterranean Shipping Company
(MSC) and Maersk Line.
The only natural deepwater harbour
on the east coast (Indian Ocean) of
the UAE, KCT is an ideal transhipment
hub port with numerous feeder-ship
connections to ports in the Gulf, Iran,
India, Pakistan, Asia and East Africa.
Its 350,000-square-metre terminal,
with 1,460 metres of quay and five
berths with 16-metre draft, makes it
one of the world’s leading container
transhipment ports. The Khor Fakkan
port is widely recognised as one of the
most productive container terminals in
the world. KCT is strategically located
on Sharjah’s east coast, outside the
sensitive Straits of Hormuz, close to the
main east-west shipping routes, and
with only three hours from the UAE
emirates of Dubai, Sharjah and Abu
Dhabi. In recent years, KCT has been
increasingly recognised not only for its
ideal location, but also for its efficiency
and productivity.
GROWTH AND DEMAND
Despite the global credit crisis,
Gulftainer has seen significant growth
over the past few years. Volumes at
its UAE terminals – KCT and SCT –
grew 15% to over 2.5 million TEU in
2008 from a year earlier, or more than
double the 1999 figure of just over one
million TEU. In addition, the company
has continued to expand its global
connections with its latest upgrade, the
CMA CGM’s MEX (Mediterranean-Asia)
service. Through this service, Gulftainer
now offers traders in the Gulf the
fastest, most direct route to Japan
through weekly calls at KCT.
In terms of expansion, Gulftainer
has poured $500 million worth of
investments involving port handling
equipment, terminal trailers and
gantries into its two ports, KCT and SCT.
The former underwent its expansion
in 2006, with 400 metres of new quay
length and super post-Panamax (SPP)
cranes, while the latter has recently
KCT is the only natural deep-water harbour on the Indian Ocean (East) coast of the UAE
June/July 2009
Container throughput statistics
3,000,000
2,501,829
2,157,899
2,003,620
2,012,840
2,173,867
teu’s
2,000,000
1,000,000
2005
2006
2007
2008
Photo courtesy: www.choppershoot.com
0
2004
Gulftanier Company Website
Marked upswing in the level of operations at
KCT and SCT ports
begun its expansion programme.
KCT’s first expansion was
supplemented with a 16.5-metre draft
alongside and more stacking area, and
the second phase is under way. This
involves another 400 metres of quay,
two gantries (already in place) and four
more state-of-the-art SPP gantries, to be
delivered by the end of the year. SCT is
having dredging and new berth works
to allow greater scope for its increasing
cargo volumes. Plans for 2009 include
the increase draft to 12.5 metres from
11.5 metres, add a further berth and
increase storage and stacking area by
30,000 square metres.
COPING WITH THE CRISIS
Despite the global recession hitting
the shipping industry at a vicious turn,
Gulftainer is confident that Sharjah’s
ports will continue to develop, in
anticipation of the projected recovery
volume growth. When said growth occurs,
Sharjah’s ports will be among of only
three ports in the whole MENA region
that will have the ability to handle the
largest container ships in the world.
The fact also remains that KCT
is ideally placed, geographically, to
save shipping lines time and money,
especially since the terminal’s speedy
performance ensures that large,
expensive container ships would
not spend much time berthing and
working. Right now, this fast efficient
turnover is exactly what shipping lines
are looking for to cut down on costs.
Moreover, the addition of two new
gantry cranes in Khor Fakkan will help
to improve KCT’s already impressive
The Sharjah Inland Container Depot
performance.
When asked about the growing
demand for commercial and military
vessels in the MENA region while there
is significant downturn in the global
shipping industry, Nuttal has this to
say: “The year 2009 is going to be a very
tough year for the ports and shipping
industries. There has been a definite
shift toward a preference for larger
vessels in order to consolidate shipments
and cut costs in the wake of the
financial decline. Only those ports and
shipping lines with a strong financial
base and the stamina to outrun this
global recession will be successful.”
He cites several factors in Gulftainer’s
resilience and success, despite the
pinch of the global economic crisis.
One key thing is the wise decision of
His Highness Sheikh Dr Sultan Bin
Mohammad Al Qasimi, Member of the
Supreme Council and Ruler of Sharjah,
to expand KCT and SCT. This expansion,
in turn, has left the ports well-equipped
to handle substantial amounts of traffic.
Sharjah’s ports were the least affected
in the region with regard to congestion,
and shipping lines did not impose a
congestion surcharge on Sharjah’s ports
as they did on the other UAE ports.
Nuttal says the global financial
crisis has definitely caused a shift in
the standard operating basis for most
players in the transport and logistics
industry. “Having said that, every
market is unique and will have its
own challenges, be they economic or
political, and an extensive research
is necessary before the ramifications
can be fully understood and worked
around,” he adds. “Our strategies take
into account the general climate of the
areas in which we operate, so that we
are never caught unawares.”
So far, Gulftainer has been seeing
great progress with its ventures abroad,
particularly in Turkey and the Comoros,
where it continues to achieve excellent
results. The company is currently
evaluating continued ventures in
Pakistan due to the political and financial
turbulence that has plagued that Muslim
country over the last two years.
“As the gateway between East and
West, we enjoy a particularly strong
position in the international ports and
logistics scene and, in addition to our
fortunate geographical situation, we
are steadily increasing our operational
capacity,” Nuttal says, “in order to
accommodate the growing need for
ports capable of handling larger vessels.”
Gulftainer’s strategic practices,
combined with the company’s proven
superior productivity track-record and
a reputation for excellent, efficient
and economical service, have placed
the company securely in a position of
authority within its field.
June/July 2009
45
The Gulf
{ Single currency }
Big
brother,
small
brother
‘UAE’s absence is a
big setback to the
monetary union’
I
T opted out of the planned monetary union
among Gulf Arab states, despite being the most
qualified to host the future regional central bank,
as its closest rival insisted that it be the host.
This latest irritant between the UAE and Saudi
Arabia has prompted some analysts to note of Riyadh’s
tendency to lord over smaller member-states. While the
two countries are both powerhouses in the six-member
Gulf Co-operation Council (GCC), there is no denying
that Saudi Arabia holds the biggest influence in the
bloc’s economic and political matters, owing perhaps to
its being the largest economy in the Gulf.
“UAE had the strongest case to host the bloc’s central
bank,” stressed Emilie Rutledge, author of “Monetary
union in the Gulf: Prospects for a single currency in
the Arabian Peninsula”. “With its high standards of
regulatory quality, excellent banking infrastructure and
a critical mass of banking institutions and expertise,
the UAE has justifiably earned its international
reputation as the Gulf’s financial centre.”
Rutledge, also an assistant professor of Economics
at the UAE University, interprets the UAE decision as
a clear illustration of “a deep concern at the
heart of all monetary unions – that of ceding
sovereignty over economic and monetary policy”.
< In Abu Dhabi: The Gulf’s planned monetary union hits
snags as the UAE drops out of it
June/July 2009
47
The Gulf
European Union’s euro: The GCC plans an EU-style monetary union
She views Riyadh’s insistence
of hosting the central bank, on
the other hand, as its “desire to exert
control” over the decision-making bodies
of the MU. She also said that Saudi
Arabia “might attempt to steer future
joint economic and monetary policy to
suit its own domestic economy”.
The pulling out of Abu Dhabi from
the MU is seemed linked to the decision
to place the GCC Monetary Council, a
precursor to the bloc’s central bank,
in Riyadh, said the chief regional
economist at Moody’s Investors Service.
Tristan Cooper stressed that the
ramifications of this irritant remain
to be seen, although he said that these
would not be good for the bilateral
relations between the UAE and Saudi
Arabia.
and other essential supplies. The
truckers, which normally took minutes
to cross the border, had waited for
longer hours, even days, without much
food and water. Their trucks lined up
bumper-to-bumper, stretching out up to
30 kilometres.
Riyadh had also demanded that Saudi
traders who bought commodities from
the UAE be levied customs duties at the
UAE-Saudi checkpoints. Under the GCC
customs agreement, customs duties
should be paid where the commodities
are exported – in this case, the UAE.
These goods are then re-exported to
other GCC states.
“One cannot help but suspect that
there might be another explanation for
the Saudi behaviour at Al Ghuwaifat
– something that has nothing to do
with logistical or procedural processes,”
said Gulf News in its June 11 editorial.
“In fact, it has everything to do with
the UAE’s withdrawal from the GCC’s
proposed monetary union. And it is
a direct reflection of the big brother
mentality that everyone has to bow to.
We have always been supportive of GCC
integration.”
The same editorial suggested it was
about time the UAE re-evaluated the
“merits of its membership” in the GCC,
saying that the economic and political
bloc was being turned “into a tool to
harm the interests of smaller states”.
Saudi Arabia’s actuations at the
border sent alarm bells clanging in the
UAE, although the border crisis was
resolved in a meeting between UAE and
Saudi customs officials in Riyadh. A
technical committee was formed with
representatives from both sides to craft
the mechanism to restore the smooth
flow of goods in the border, while
addressing Saudi Arabia’s security and
customs concerns.
LOCATION, LOCATION, LOCATION!
Though the central bank location
appeared to be the straw that broke
the camel’s back, UAE Central Bank
Governor Sultan Bin Nasser Al
BLOCKED BORDER
Riyadh had since implemented stricter
security measures and new customs
regulations at the Saudi Arabia-UAE
border. Trucks from the UAE entering
Saudi Arabia underwent stringent
identity checks, fingerprinting and cargo
inspection. It did not help that Saudi
customs officials worked only 16 hours
a day while the UAE counters operated
round-the-clock.
Thousands of long-distance truck
drivers were stranded at the Al
Ghuwaifat border, prompting the Red
Crescent Authority to give them water
48
The Awakening Tower, Muscat: Oman opted out of the planned GCC monetary union in 2006
June/July 2009
The Gulf
Monetary discord
S
OME economists see little economic impact on UAE’s
decision to stay out of the GCC monetary union. They
cite the miniscule percentage of the country’s trade
involving GCC members, its reinvestment and diversification
programme, and its oil revenue savings as the primary
reasons that the UAE economy will continue to prosper,
despite its exclusion from the monetary union.
National Bank of Abu Dhabi Chief Economist Giyas Gokkent
downplayed the impact of the UAE’s non-exclusion, considering
that less than 10% of the country’s trade activity involves
GCC countries. The country accounts for one-third of the
GCC members’ domestic product. He cautioned, though, that
government should accelerate its economic diversification away
from oil and real estate, sectors which bore the brunt of the
global economic downturn. He pointed out that more than 70%
of projects in the country are related to real estate.
UAE has been reinvesting in infrastructure-building,
education, health and economic diversification, said
Mohammad Ahmad bin Abdul Aziz, director-general of the
Ministry of Economy. He cited tourism and renewable power
generation as major directions of the country’s economic
diversification. Moreover, Bin Abdul Aziz expressed confidence
that the UAE will continue to be the main recipient of foreign
direct investment in the region.
“Numbers show where the investment is going – it’s coming
to the UAE. The year before last we had 60% of FDI in the
UAE, last year it was about 50%,” he said, adding it has “all the
ingredients that will make foreign direct investment attractive.”
To accommodate more foreign investments, the Dubai
Airport Free Zone (DAFZ) is currently expanding to almost
double its current capacity of leaseable area. Presently home
to more than 1,500 companies and 10,000 employees with
billions worth of foreign investment, it will add a hotel and
six buildings, which translate to another 320,000 square
metres of leaseable area.
Mohammed Al Zarouni, director-general of DAFZ, believes
that the expansion will bring in more than 1,000 companies
with billions more of foreign investment. Even with the global
economic slowdown, Al Zarouni is confident that Dubai will
still attract investors. He stressed that Dubai has been a hub
Sheikha Lubna with Engr Saed Al Awadi, chief executive officer of
Dubai’s Export Development Corporation
for import, export and services, owing to its strategic location
between the East and West, and its excellent infrastructure
and investor-friendly regulations. “These qualities make Dubai
still attractive and competitive during the global economic
slowdown,” he said.
Mohammad Jaber, vice-president of Morgan Stanley, said
the UAE’s oil revenue savings for the past five years places
the country in a position “to increase public spending
without going into debt or struggling to manage massive
budget deficits, as is the case with some developed western
economies”. These savings allowed the UAE to implement
“pro-active, preventive and confidence-building measures to
cushion the economy”.
Minister of Foreign Trade Sheikha Lubna Al Qasimi
credited these measures for boosting the confidence of local
and foreign investors in the economy. “Positive preliminary
indicators show that the UAE market has overcome the
impact of the global financial meltdown,” she said.
Mohammad Al Shehi, Under-Secretary of the economy
ministry, said the “recovery has already started, and we are
going to see positive indication by the third quarter and
fourth quarter”. Noting that oil prices are on the rebound, the
right financial and economic infrastructures are in place, and
investor confidence remains strong, he stressed: “Things are
going in the right direction.”
The Dubai Creek at sunset:
‘Dubai will still attract investors’
June/July 2009
49
The Gulf
A jet of water in Jeddah at dusk: Saudi Arabia insists to host the future Gulf central bank
Suwaidi explained that it was
not the sole issue. He stated
that the UAE had some reservations on
fundamental matters, such as the role of
the GCC Monetary Council, timetable for
the smooth transition to the common
currency, “absence of a unified inflation
index and the condition of covering
currency reserve from imports”.
UAE officials decried that the move
to host the central bank in Riyadh was
more political than practical. Al Suwaidi
pointed out that 50% of international
money transfers in the Gulf region take
place in UAE, and that the country hosts
branches of major banks from around
the world.
“We still stand by our decision of
withdrawing from the monetary union,”
said UAE Minister of State for Foreign
Affairs Dr Anwar Mohammed Gargash,
after a meeting among GCC foreign
ministers in Riyadh. “The UAE has made
its stance public and clear... This is a
joint action... and it is normal to have
divergent views in a joint action.”
Gargash reportedly wished the other
member-states in the monetary union
good luck, and impressed upon them
that the UAE had taken a sovereign
decision that still holds. The UAE
reiterated, however, that it “will always
work for the best interests of the GCC
citizens, and play its role as a founding
member of the GCC to achieve the
50
council’s mission and targets”.
Accounting for over 23% of the GCC’s
gross domestic product, the UAE is the
second-largest economy in the Gulf.
Experts agree that its robust economy
will not be stymied by its refusal to
join the union, but they believe that its
absence is a big setback to the union.
“I cannot imagine a monetary union to
succeed and carry a meaningful weight
without the presence of one of its key
members – being the UAE,” said Ali
Afshar, senior vice-president and head
of institutional and investment banking
at Al Hilal Bank, in Abu Dhabi.
Saudi Arabia, Bahrain, Kuwait and
Qatar forged ahead with the signing
of the common currency agreement in
Riyadh on June 7, without the UAE and
Oman, which pulled out in 2006. The
accord will lead to the establishment of
the GCC Monetary Council, and pave the
way for the setting up of the regional
central bank in Riyadh. Minting of the
common currency, originally scheduled
for 2010, was moved to allow memberstates to iron out monetary and other
policy differences.
‘LANDMARK ACCORD’
Saudi economist Ihsan Bu-hulaiga
hailed the move as a “landmark accord”,
but stressed that “it is highly desirable”
that the UAE and Oman should also join
their fellow GCC states. John Sfakianakis,
June/July 2009
chief economist at the Saudi British
Bank, also hoped that the two countries
would eventually realise that “the
benefits of joining far outweigh the
costs of opting out”.
No definite name for the common
currency has been floated since the
MU concept came about in 2001. As
an initial step towards this vision,
however, the GCC members agreed to
peg their currencies to the US dollar in
2003. Things seemed to have gone well
according to plan – until 2006, when
Oman announced it could not join the
MU. Kuwait also depegged its currency
from the dollar in 2007 and moved
to a currency basket, citing imported
inflation from the weak US currency,
among other reasons.
“The GCC Monetary Council will
manage the transition toward monetary
union, which is targeted to be
operational in 2013,” said Abdulaziz Al
Uwaisheg, the GCC spokesman.
Comprising the world’s fifth-largest
economy, the GCC bloc foresees that
trade relations among its members will
flourish, and their joint financial muscle
will expand if they are successful in
having a common currency similar to
European Union’s euro. When the GCC
was formed in 1981, its secretariat
set up office in Riyadh. No GCC
establishment or authority is located in
the UAE.
Opinion
Applying a systems
approach to SCM
Patrick Daly
IN BUSINESS, what people
commonly refer to as “supply
chains” are seldom, in practice,
sequential chains, nor are they
solely concerned with the supply
of materials or products. In fact,
what people are really referring
to in these instances more often
resemble complex networks of
entities, people, processes and
relationships interconnected by
flows of information, materials
and finance.
Often, the scope of these
supply chains goes from
the extraction of primary
raw materials all the way
through the various stages of
manufacturing, distribution
and use or service, to the final
disposal or recycling – literally,
from cradle to grave – or, indeed,
from cradle to grave to rebirth!
This is a complex, messy
thing in which it is difficult
some reductionist analytical
intervention make some
changes to this component’s
function or operation.
The systems approach
provides a useful conceptual
model that can help us
understand this complexity,
and provide some guidance on
how to affect the behaviour of
the overall system of interest
in ways that we find helpful or
useful for a particular purpose.
The essence of systems
thinking is that it is a holistic
and subjective approach that
views wholes rather than
parts from particular points
of view. It provides us with a
toolbox of concepts and ideas
that can help us make sense
of complexity, and it matches
well with the evolving reality
of what supply chains or
product systems are becoming
The essence of systems thinking
is that it is a holistic and
subjective approach that views
wholes rather than parts from
particular points of view
to predict or anticipate
what effect or result would
be obtained by acting on
or making a change to a
particular element within it.
Should we focus on a
particular component, such as
a distribution centre within
the supply chain, we may
experience unintended or
unforeseen consequences,
positive or negative, at a
different time and location in
the supply chain as a result.
This may also hold true
if, for example, we will let
in modern economies.
There are several advantages
to taking this approach
over the more traditional
reductionist approach to
studying supply chain
management, or SCM:
Avoiding Unintended
Consequences. Applying a
systems approach is more
likely to help avoid the
unintended consequences of
certain actions than if a more
reductionist approach is taken.
For example, in the financial
services supply chain over the
last year and a half or so, we
have seen a catastrophic
systemic failure when the less
well-off people in the US were
provided access to mortgage
finance. What seemed to be a
good and noble idea had led to
the derailing of the global
financial system by way of a
complex interaction of events,
with grave unintended
negative consequences.
System Optimisation over
Component Optimisation. A
systems approach can provide
the understanding that an
overall system can be
optimised while, at the same, a
particular component within it
may be sub-optimised. In a
recent project at a consumer
electronics plant, for example,
a warehouse operation was
reconfigured in terms of its
physical layout, material
location strategy and ways of
working. The objective of the
change was to improve
material flow and service to
the production lines, and
reduce the quantities of
inventory on the shop floor.
Viewing both the warehouse
and production as part of one
system allows us to take the view
that the overall system could
be optimised and improved
even though more man-hours
were needed to be employed in
warehouse activities.
Tackling Complexity and
Identifying Points of Leverage
for Maximum Systemic Impact.
In a recent project, the
challenge was to increase the
throughput capability of a
warehouse unit that was
providing production-line side
supply as well as supplier
receipt, customer shipment
and storage services to a
June/July 2009
production facility. Observation
and analysis indicated that a
range of changes to the
structure and operation of a
facility could lead to
significant increases in the
throughput capacity of its
warehouse. However, had we
made those changes without
further consideration, it was
more likely that the
anticipated improvements
would not have materialised.
Adopting a systems approach
will lead us to include, within
our considerations, both the
communications dynamic
within and among the people
working in the warehouse,
and between them and the
planning department at the
production plant who scheduled
with suppliers and customers
the deliveries and shipments
into and out of the warehouse.
These are the two key points
of leverage that make all the
difference, even before the
structural changes to the
warehouse are carried out.
The author is managing director of
Alba Logistics, in Dublin, Ireland.
51
MENA Region
A traffic circle in Cairo: Amnesty International noted cases of violence against migrants in Egypt
{ Economy }
Guarded optimism
MENA must comply with international
standards to attract more trade
A
S ECONOMIES in the Middle
East diversified into the
non-oil sectors like travel,
tourism and chemicals,
regional trade shifted away
from the US and increasingly towards
Asia during the period between 2000
and 2007. Within the region, trade
registered a 28% growth over the same
period, owing to increased demand in
agricultural products, which almost
doubled in volume. Fuel and mining
products posted about 500% growth
while manufactured goods increased
52
almost 400%. Intra-Middle East trade,
according to an economic note from
the Dubai International Finance Center
(DIFC), now represents 19.3% of total
trade in the region.
Travel and tourism were cited as
the region’s “best performing trade
sector”, which is expected to play a
more important role as major airport
infrastructures in the UAE and Qatar
come on stream. Hydrocarbons led
exports from the Gulf Co-operation
Council (GCC), with chemicals
representing the second-largest revenue
June/July 2009
earner. Pharmaceuticals, aluminium,
iron and steel were among other GCC
leading exports.
In 2000, intra-Middle East trade
comprised only 15.1% of total external
trade, but it increased to 19.3% in 2007.
However, compared to other regions, the
Middle East’s intra-regional trade level still
substantially trails behind Asia’s 54.7%
and the European Union’s 71.2%. The lack
of an integrated transport infrastructure,
burdensome customs procedures, nontariff barriers to trade and lack of
product diversification were identified
www.visionhotel.net
P.O.Box 52662 Tourist Club Area, Old Mazda Road Abu Dhabi, UAE Tel: +971 2 699 2 666 Fax: +971 2 699 2 555 Email: [email protected]
MENA Region
Tokyo Bay at sunset: Japan will chip in 32% to Asia’s $120-billion emergency liquidity fund
as the main barriers to regional
Middle East trade.
deeper integration among GCC countries
must include increased harmonisation
of economic, financial, cultural,
environment and foreign policies.
ECONOMIC INTEGRATION
Underscoring the need for GCC to
strengthen regional trade and make
its presence felt in the global trade
map, DIFC Chief Economist Dr Nasser
Saidi the GCC and the whole Middle
East should pursue “deeper regional
integration and more structured trade
policies”. He added, “The current global
economic crisis should encourage us
to take bold steps towards greater
economic and financial integration.”
The tearing down of trade barriers,
and more investments and increased
movement of people and goods will
lead to a broader integration of the Arab
economies. This “economic renaissance”,
as Saidi put it, would create a market
of more than 300 million people. Such
an integrated economy of more than
300 million would benefit producers
and consumers. Aathira Prasad, main
author of the DIFC economic note, said a
54
EMERGING, FRONTIER MARKETS
DIFC pointed out that manufactured
imports from Asia grew to 33.9% of
total world exports to the region in
2007 from 29.3% in 2000, edging out
the European Union, whose share of
imports declined to only 31.5% from
39.2% for the same period. Considering
the shift towards Asia, DIFC urged
Gulf economies to initiate free-trade
agreements with emerging Asian
markets, such as China and India.
Mark Mobius, an expert on emerging
markets and executive chairman
of Templeton Asset Management,
supported the move. “Asia is the largest
emerging market region in the world,”
he said in a Gulf News article. “Asian
countries are also growing relatively
fast. They include countries like China
and India with very large populations
June/July 2009
whose per capita income is growing,
and capital markets in those countries
are undergoing rapid development.”
He noted that a relatively high
economic growth and ongoing political
and economic reforms, coupled with
rising per capita incomes and attractive
valuations, have been improving the
region’s business and investment
environment. He emphasized that rising
per capita incomes in these countries
will generate increased demand for
consumer products and services,
creating great investment opportunities
in the consumer area.
While acknowledging the
attractiveness of Eastern European
markets and the resilience of some
Latin American countries amidst the
global economic downturn, Mobius
expressed interests in the Middle East
countries as the emerging markets
of the future. “[W]e believe the
potential for economic growth and
development remains considerable,
especially if the current trend toward
the implementation of political and
economic reforms remains on course,”
said. “The fact that prices in Middle East
stock markets have come down after
somewhat of a bubble means that there
are opportunities to pick up cheap
stocks with good prospects.”
He particularly mentioned the open
economies of Dubai, Kuwait, Oman
and Qatar. Saudi Arabia, he said, poses
difficulties for investors because of
its “current restrictions”. When asked
on which sector he will invest in the
region, Mobius replied, “[T]he emphasis
would be on the financial sector and the
property sector. Both sectors have come
down in price, and for those with sound
balance sheets there are opportunities.”
HUMANITARIAN STANDARDS
Even as the Middle East and North
Africa (MENA) region posits itself to
attract more foreign trade with the
rest of the world, it must prove itself
compliant with international standards,
such as in respect for human rights,
to gain ready acceptance in the wider
community of nations.
Latest report from Amnesty
International (AI) which documented
the state of human rights in 2008
within the region has noted some areas
which need improvement and more
liberalisation. AI reported allegations of
torture and ill-treatment of prisoners,
US dollars: Mideast trade shifted away from
the US towards Asia
International coins: Global co-operation is a must during a recession
discrimination against women and
crackdown on press freedom in Bahrain,
Jordan, Kuwait and Lebanon. Similar
observations plus violence against
migrants and asylum seekers were
noted in Egypt. Moreover, migrant
workers continued to face abuse
and exploitation in those countries,
according to AI.
Political killings persist in Lebanon,
where more than 17,000 people were
victims of enforced disappearances. Iran
reportedly used a heavy hand against
civil society and human rights activists
and openly discriminated against
women and cultural minorities.
A substantial reduction in violence
was noted by AI in Iraq, but gross
human rights abuses continued to be
committed by both factions, resulting
to the death of thousands of noncombatants, including children. The
conflict has displaced more than four
million Iraqis.
Members of Oman’s Aal Tawayya
and Aal Khalifayn tribes as well as
women were victims of discrimination.
Harassment of the press was also
reported. In Qatar, members of the Al
Murra tribe are still deprived of their
nationality after a failed coup in 1996,
foreign workers are abused and women
endure discrimination and violence.
AI said that freedom of expression,
religion, association and assembly
remain tightly restricted in Saudi
Arabia. Thousands continue to be
detained without trial, flogging is
widely-used and more than 100 people
have been executed in the Kingdom’s
extensive and allegedly discriminatory
use of the death penalty.
The UAE, said AI, rejected the
recommendation for a moratorium on
the use of the death penalty and the
corporal punishment. It also denied
the request for a legislation which will
provide more rights to the workers and
prohibit gender discrimination.
Israel and the occupied Palestinian
territories witnessed violence which has
claimed thousands of lives, occupation
of territories which displaced thousands
more and a blockade which virtually
imprisoned Gaza’s 1.5 million
inhabitants. According to AI, about
June/July 2009
55
MENA Region
A night scene in Seoul: South Korea will provide 16% of Asia’s emergency liquidity fund
8,000 Palestinians remain in
Israeli prisons, mostly after unfair
military trials.
Meanwhile, tensions remain high
between the Al Fatah and Hamas
factions. Security forces and militias of
both parties are accused of arbitrary
detention, torture and ill-treatment of
hundreds of the rival faction’s members
and sympathisers.
56
GLOBAL ACTION VS RECESSION
In essence, most of the observations
of the AI report reflect the divergence
in cultures among members of the
global village. Gradually, stakeholders
will learn to appreciate and respect
each other’s culture and, thus, pave the
way for greater economic co-operation.
Global co-operation is a must in these
times when the economy has fallen
June/July 2009
into a severe recession which calls for
forceful concerted action to get back on
the road to recovery.
The International Monetary Fund
(IMF), in its latest World Economic
Outlook, predicted that “the global
economy would likely contract 1.3%
this year in the deepest” recession
after World War II. “Growth is set to
re-emerge to around 1.9% next year,
a pace more sluggish than average
recoveries because of lingering strains
in the financial sector,” it added.
A few months ago, the IMF had
projected global growth of 0.5%, but
later warned it would fall into deeply
negative territory, the Washington-based
institution said. It is apprehensive
that “financial markets will take
longer than previously expected to
stabilise... depend[ing] on efforts by
governments to nurse the financial
sector back to health by cleaning banks’
balance sheets and on additional fiscal
and monetary policies in advanced
economies”. Vigorous public support
for policy actions are necessary, stated
the IMF. It called for sustained, if not
increased, stimulus measures for 2010,
and for further easing of interest
rates, if practicable, in major advanced
economies.
In Asia, 13 nations rushed to finalise
details of an emergency $120 billion
liquidity fund to counter the global
economic crisis. China and Japan will
contribute 32% each to the regional
fund. South Korea will provide 16%
while the balance will be provided by
the 10-member Association of South
East Asian Nations (ASEAN). This bloc
includes Brunei, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, the Philippines,
Singapore, Thailand and Vietnam.
UAE Central Bank Governor Sultan
Nasser Al Suwaidi likewise assured that
Middle East governments are ready to
provide more financial support to help
their economies weather the financial
crisis. “Governments stand ready to
provide additional support as needed to
shield the financial sector and domestic
activity from further deterioration,” he
said. Among the measures which were
already implemented so far are the
slashing of interest rates of regional
central banks, reduction of bank reserve
requirements and the provision of
emergency cash to help their banks
cope with the global crisis.
Under fire
T
WO French transport
conglomerates find themselves
under fire from the Palestine
National Authority and its allies for
their continued involvement with
the controversial Jerusalem Light Rail
project, which aims to connect occupied
Jerusalem with Jewish colonies in the
West Bank.
Veolia and Alstom are part of the
City Pass consortium, which won the
project in 2002. Alstom will construct
and maintain the infrastructure and
produce the carriages and signal
systems while Veolia, with its five per
cent share in the consortium, will
operate the system for 30 years.
Adri Nieuwhof, a human rights
advocate, said the rail project will
solidify Israel’s hold on the occupied
territory, and is part of that country’s
“master-plan for occupied Jerusalem
which includes the confiscation of
privately-owned Palestinian land”.
Palestine officials insist that the
project is against international law, and
the contract violates French law and the
Geneva Conventions. In 2005, Palestine
President Mahmoud Abbas asked the
then-French President Jacques Chirac to
intervene, but the French government’s
stand was that it does not involve itself
with projects of private companies.
The editor of Le Monde Diplomatique,
Alan Gresh, did not believe the French
line, claiming that the Jerusalem Light
Rail contract was signed in the office of
the then-French Ambassador to Israel
Gerald Araud. Interestingly, one of these
companies, Alstom, was investigated by
French prosecutors in 2008 for alleged
bribery in securing foreign contracts,
but no charges were made.
In 2006, the Arab League passed
a ministerial decision urging Arab
states and international organisations
to stop the Jerusalem Rail project and
desist from involving in its execution.
Palestine relied on this declaration in
asking Arab states to use their clout to
in pressuring France to act against the
two companies, but to no avail.
The Palestinian foreign
ministry even wrote Saudi
Arabia to intervene, but
the Riyadh reply was noncommittal. Since then, Saudi
awarded two lucrative contracts
to Alstom, one of the companies
involved in the project. One was
the $2.6 billion contract for a
power plant and, the other, is
the recent $1.8 billion contract
for the Haramain Expressway
linking Makkah and Madinah.
Palestine advocacy group
Association France-Palestine
Solidarite, with the Palestine
Liberation Office in Paris,
initiated legal action against
Veolia and Alstom in a French
court in 2007. Though the
lawsuit remains unresolved, the
Palestinians hope that it will
set a precedent that will make
firms think twice before they
get involved in projects in the
occupied territories.
The Global Boycott,
Divestment and Sanctions
Alstom’s El Mourouj TGS Project (tramway), in Tunis
(BDS) for Palestine Movement
A BDS campaign poster
launched the ‘Derail Veolia and Alstom’
campaign to strike the two companies
where it hurts most – the pocket.
Omar Barghoutti, the group’s founding
member, stated that their campaign
“played a key role in denying Veolia
major contracts totalling about $7
billion in Sweden, Britain and France”.
In a recent article in an Israeli daily,
Veolia reportedly is contemplating the
sale of its five per cent stake in the
City Pass consortium. Its spokesperson
neither confirmed nor denied the
report.
With Veolia now in the sidelines,
Alstom stands out as the sole target of
the Palestinian advocates. BDS has been
intensifying its campaign to convince
European and Arab companies not to
invest nor award contracts to Alstom.
Further, Palestine foreign ministry
officials are lobbying with Saudi Arabia
to rescind the $1.8 billion Haramain
Express contract awarded to Alstom.
Definitely, it will not sit well with Arab
public opinion that the company tasked
to build the link between their most
holy cities is a company which works
hand-in-glove with Israel.
June/July 2009
57
Faces & Phases
Festival City
is ‘leading
tourist
attraction’
DUBAI Festival City, a mixed-use
development, was adjudged the
‘Middle East’s Leading Tourist
Attraction’ at the World Travel
Awards held in Dubai recently.
This brings to four the
number of awards won so far
this year by the Al Futtaim
Group Real Estate development.
“This has been a great year for
us,” said Tom Miles, director of
Shopping Centres at Al Futtaim
Real Estate, owner of Festival
City
In May, Festival City was
voted ‘Retail Destination of the
Year’ by the Middle East Awards
while it won the 2009 Silver
Maxi Award for Marketing in
Hollywood. It also clinched the
‘Best Innovation’ award given
by the Dubai Shopping Festival
earlier this year.
“This recognition
encourages us to keep
performing even beyond our
best levels while continuing
to provide our tenants and
guests unmatched memorable
experiences,” Miles said.
The World Travel Awards
celebrates the achievements in
all sectors of the global travel
industry. The candidates are
taken from the previous year’s
voting cast by travel agents in
over 190 countries.
DFC is Al Futtaim’s mixed-use
development
58
Rettab and Sharokh Khazaei, executive-director of Mohsen Line
Dubai Chamber launches ‘SME
Exporter of the Quarter’
DUBAI Chamber of Commerce
& Industry has launched
an initiative recognising
the export performance of
its members classified as
small- and medium-sized
enterprises (SMEs).
Dubbed ‘SME Exporter
of the Quarter’, the first
recognition was given to
Mohsen Line General Trading
in early May for achieving a
record export volume for the
last quarter of last year.
“Visionary management,
leadership, transparency
and equity are some of
the attributes exhibited by
Mohsen Line…“ said Dr Belaid
Rettab, director of Economic
Research & Sustainable
Business Development Sector
at Dubai Chamber.
These are the characteristics
June/July 2009
of SMEs which Dubai
Chamber wants to promote,
he stressed. He also said that
the new initiative “underlines”
the contribution of SMEs in
making Dubai the world’s
third-largest re-export centre.
Dubai Chamber,
meanwhile, placed second
from the previous 13th
rank in the evaluation of
employee satisfaction at
the Dubai Government
Excellence Programme 2008.
It scored 752 points out
of 1,000 in the ‘Employee
Satisfaction’ category, and
811 points in the ‘Customer
Satisfaction’.
The programme is aimed to
upgrade the performance of
the public sector, and keep it
abreast with the developments
in the administrative and
technical fields.
Rettab said all Dubai
Chamber members in good
standing, employing not
more than 100 people and
having an annual turnover
of less than $27.2 million
(Dh100m) are eligible to be
nominated for the award.
The candidates are
gauged by their quantitative
re-exporting activities in the
previous quarter documented
by Dubai Chamber as well
as on qualitative company
criteria.
“By showcasing the
achievements of one of our
export members, we hope to
inspire other SMEs,” Rettab
said, “and highlight the
characteristics that can lead
to success in the Dubai SME
re-export sector.”
DAFZ honoured for
environmental sustainability
THE DUBAI Airport Free
Zone (DAFZ) was given
the ‘Best Environmental
Initiative’ award in property
management during a
ceremony organised by the
Arab Institute for Urban
Development, in Saudi Arabia.
“This is one of the most
important awards that
encourage us to promote
and apply the concepts of
environmental sustainability
in the property, facility and
services management,” said
Engr Adel Ghafan, executive
director of the Engineering
Section at DAFZ.
DAFZ was honoured for
“ensuring the preservation of
environmental sustainability”,
the organiser said during the
Kingdom Expansion Congress
2009, which was attended by
about 350 industry leaders, in
Riyadh.
The institute said that
Arabtec Construction, builder
of the world’s tallest building
Burj Dubai, clinched the
‘Best Construction Firm’
award while the Dubai Metro
DHL opens
new Taipei
gateway
Ghafan receiving an award for DAFZ from Turki
was adjudged the largest
project in the Middle East.
Saudi Arabia’s Bin Laden
Group won the ‘Best
Developer of Infrastructure’
award while Dallat Albaraka
was named the ‘Best
Company in the Private
Sector’ award and Qatar
Science Oasis bagged
the award in the ‘Best
Achievement’ category.
Ibrahim Turki, the
institute’s executive-director,
said the winners were
chosen from nominees in the
infrastructure development
and academic sectors across
the Middle East.
“The main objective of
celebrating the excellent
performance of private and
public enterprises,” he said, “is
to promote a climate of success
in economic activities and
higher levels of performance…”
GAC promotes Chan
GAC Shipping has appointed
Clarence Chan as senior
marketing manager of
shipping services for China,
a move which further
strengthens its marketing
team in the mainland, Taiwan,
Hong Kong and Macau.
His immediate focus
is to maintain customer
relationships and consolidate
new business for the
company. Based in Hong
Kong, Chan spearheads GAC’s
marketing activity in China’s
shipping industry.
“Clarence’s appointment
not only recognises his
years of local service to GAC,
but also highlights GAC
Shipping’s commitment to
expand its sales and account
management resources in
China,” said the company’s
group sales director, Neil
Godfrey.
Chan joined GAC in 1984
as marketing manager for
the Greater China region,
representing the company’s
over 300 offices worldwide.
“Clarence is working
closely with our new
colleague, Jessie, and retains
overall responsibility for
the effective promotion of
GAC’s global ship agency
and related services to
DHL has opened its new
Taipei Gateway in Taiwan, at
the Farglory Free Trade Zone
of Taoyuan International
Airport, with an investment of
$6.2 million.
Having many industryleading features, the new
gateway would triple its
shipment handling capacity
to 11,000 pieces per hour
from 3,600. These include 13
X-ray machines, 10 telescopic
conveyors and a monitoring
system for flight information.
“Further, the number of
truck docks will be increased
to 10, and shipments can
be uploaded to operational
vehicles automatically,” DHL
said. It added that Customs
and Aviation Police offices are
housed within the facility –
which is a first for the express
industry in Taiwan.
The facility’s total footprint
was equivalent to 46 tennis
courts, or four times that of
the previous facility, said the
global express and logistics
service provider.
It is also Taiwan’s only
gateway that houses a
24-hour drop-off centre, where
customers receive assistance
from a dedicated team. “As
a result,” DHL added, “the
drop-off cut-off time can
be extended for up to two
hours for shipments that are
delivered directly to the DHL
Taipei gateway.”
Clarence Chan
the shipping and trading
communities in this
important regional market,”
Godfrey said.
He was referring to Jessie
Gong, who was appointed
marketing manager for the
Greater China region earlier
this year.
June/July 2009
Taiwan gives DHL room for
expansion
59
Faces & Phases
DLA Piper’s
environmental
initiatives
cited
LEGAL firm DLA Piper won
the ‘Sustainable Initiative’
award for its commitment
to sustainable environment
through various measures,
such as reduced business
travel and using recycled
paper.
“We are committed to
reduce our environmental
impact and conduct our
business in a responsible
manner,” said Elaine Kelly,
the firm’s regional facilities
manager in Dubai.
The firm also has
programmes designed to
offset carbon emission,
purchase items made from
sustainable materials and
recycle plastic, paper, glass
and cartridges.
Given by the Facilities
Management Middle East
Awards, the latest win follows
a week-long campaign in May
to reduce energy output in all
regional offices of DLA Piper.
Organised by ITP Business
Publishing, the ceremony
gathered over 200 facilities
management professionals
across the Middle East,
including developers, service
providers, contractors and
building owners.
Elaine Kelly accepts the
‘Sustainable Initiative’ award
for DLA Piper
60
Dunkin’ Donuts opens
16 new outlets in UAE
THE NUMBER of Dunkin’
Donuts outlets in the UAE will
increase to 60 over the next
two months, following the
opening of 16 new branches at
a cost of $2.2 million (Dh8m).
“Despite difficult times, we
haven’t felt any significant
change between our takeaway
or dine-in figures in our
outlets,” said the company’s
general manager, David
Rodgers.
The coffee and baked goods
chain recently opened its
53rd outlet in the country
at the Al Manar Mall, in Ras
Al Khaimah. The outlet is its
third in that emirate, Dunkin’
Donuts said in a statement.
June/July 2009
“Wherever you go in
the UAE, the GCC [Gulf
Co-operation Council] or any
part of the world, you will
see that we outnumber our
competitors 10-to-1 in the
number of outlets,” Rodgers
said.
He added that Dunkin’
Donuts has an investment
outlay of $2.7 million in the
Middle East and North Africa
over the next three years.
The statement said that
Ras Al Khaimah is witnessing
economic growth and a
growing population comprising
of the locals, expatriates and
tourist arrivals.
As at end of fiscal year 2006,
David Rodgers
Dunkin’ Donuts had 7,000
outlets worldwide, generating
sales of $4.7 billion.
Calendar
SCLGEndorsed
Events
Solar Economics Forum
September 9-10
Washington, USA
Fourth Southern Asia Ports,
Logistics and Shipping
September 24-25
ITC Hotel Park Sheraton & Towers
Chennai, India
Liquid Terminal and Tank
Integrity
October 4-5
Doha, Qatar
SCM Logistics World
October 13-16
Singapore
International Freight Week
October 18-20
Abu Dhabi, UAE
Fifth Thai Ports and Shipping
October 29-30
Imperial Queen’s Park Hotel
Bangkok, Thailand
Air Freight Middle East
November 1-3
Airport Expo
Dubai, UAE
This year’s GSF will focus on freight transportation requirements
Supply Chain Cost Control
Dubai to host global assembly
of shippers’ groups
Fifth Trans Middle East
AN ASSOCIATION of
international shippers’
groups from 50 countries
will hold a global conference
in Dubai this November
focusing on the freight
transportation needs of
manufacturers, retailers and
wholesalers.
The annual assembly
of the Global Shippers’
Forum (GSF) will be held
in conjunction with the
International Week of
Transport and Logistics, or
SITL Dubai, at the Dubai
International Convention
and Exhibition Centre on
November 3-4.
“Together, these two events
are an unrivalled platform
for industry officials from
the logistics and related
sectors to meet, network,
discuss and exchange ideas
on the issues and trends that
affect their business,” said
Frederic Theux, president of
Reed.
He stressed that GSF and
SITL Dubai will bring the
‘who’s who’ of the shipping
and logistics industry from
across the world. He also
said that Reed Exhibitions
Middle East is the organiser
of GSF’s event in Dubai.
Dick van den Broek
Humphreij, chairman of the
European Shippers’ Council
(ESC), said a concerted effort
by concerned parties is
needed to promote efficiency,
productivity and cost-savings
in the logistics and supplychain industry.
He described Dubai as a
“trail-blazing city” for the
shipping industry that will
provide a “cornerstone” for
November 8-9
Dubai, UAE
November 24-25
Gulf International Convention and
Exhibition Centre
Bahrain
Gulf Traffic
future growth.
Confirmed speakers during
the two-day forum include
Filip Beckers, transport
procurement manager of
Masterfoods; Lothar Muller,
project manager, Cargo 2000;
Dirk van den Bosch, chief
commercial officer, DP World;
Peter Knopf, chief executive
officer of SAT Albatros and
Ramiro Diaz, of Elizabeth
Arden, among others.
ESC, together with the
Japan Shippers’ Council and
the US National Industrial
Transportation League,
originally comprised GSF
under the name Tripartite
Shippers’ Group. The group
was joined more recently
by the Asian Shippers’
Council and the Canadian
International Transport
Association.
June/July 2009
December 6-8
Dubai International Convention &
Exhibition Centre
Dubai, UAE
Other
forthcoming
events
Fourth Intermodal Asia
January 28-29, 2010
Hilton Sydney
Australia
Fourth Indian Ocean Ports and
Logistics
March 25-26, 2010
Hilton Mauritius Resort and Spa
Mauritius
Eighth ASEAN Ports and
Shipping
June 3-4, 2010
Windsor Plaza Hotel
Ho Chi Minh City, Vietnam
Fifth Southern Asia Ports,
Logistics and Shipping
September 16-17, 2010
The Leela Kempinski Hotel Mumbai
India
Eighth Intermodal Africa
October 28-29, 2010
Capetown International Convention
Centre
South Africa
61
Side View
The Giordano outlet at Dubai Mall
Off the rack
Giordano’s Ishwar Chugani
on the basics of retailing
DURING tough times, successful
brands should go back to their roots
and do what they are best at. “Many
brands have a long history of success
and experience but, at the same time,
in their quest for new business, they
over-expand or do other things away
from their real strengths,” says Ishwar
Chugani. “This is where the focus on
what the brand stands for diminishes.”
The affable executive-director of
Giordano Fashions in the Middle East
becomes animated when he begins
talking about the art of retailing. Quoting
from the father of Taoism, Lao-Tzu,
Chugani cherishes the idea that people
get to respect someone who is happy
just being himself, and does not compete
or compare. The competitive world of
apparel retailing, however, becomes the
leitmotif of his next discourse.
“The world of apparel retailing is
incredibly competitive, with customers
becoming more and more disillusioned
with the various lines, styles and brands
available,” he says. “To be successful,
the retail offering should be relevant,
functional and affordable. Customers
don’t buy from a company; they buy
regularly from someone they can trust,
someone knowledgeable, someone who
62
Chugani
delivers what is promised.”
Something which his company is
known for, says Dubai-based Chugani,
stressing it’s the Giordano signature to
focus on one’s everyday essentials when
it comes to apparel. The company, for
instance, created linen and soft-cotton
clothing to help customers deal with the
searing heat this summer. Besides having
June/July 2009
designs in pastels, Giordano also has a
collection of solid, striped and checked
linen shirts in white, corn and aqua,
among other ready-to-wear clothing.
With 204 stores in the Gulf region
and India, 43 of which are in the UAE,
Giordano already surpassed its earlier
goal of having 200 stores in the Gulf
Arab states and the world’s second-most
populous nation by 2010. It has 2,000
stores worldwide. “We will continue to
grow,” Chugani says, as Giordano Middle
East plans to invest $20 million for new
stores over the next three years. There
will be 250 Giordano outlets in the Gulf
and India by 2012.
Born to Indian parents living in the
Philippines, Chugani was educated in
Management at Manila’s elite De La Salle
University. In 1979, he joined the ETA
Ascon Star Group, which later on forged
a joint venture with Hong Kong-based
Giordano International to put up Giordano
Middle East. A UAE-based conglomerate
with interests in construction and real
estate, trading, shipping and retail, among
other industries, ETA Star first hired
Chugani to launch Sinbad’s Wonderland at
Al Ghurair.
While pioneering the region’s
amusement industry in Dubai, a
provincial town that transformed into
a highly-commercialised city, Chugani
was indulging himself in his favourite
sport and pastime – playing darts. He
started winning darting competitions,
and became the champion of the UAE in
1984 and the Abu Dhabi Open in 1990.
Having got a good training in darting
way back in Manila, all that Chugani
had to do was looked back to the time
when he honed his ‘bull’s-eye’ skills
with showbiz personalities who were
also regulars in the pub he used to
frequent. To this day, Chugani still has
his favourite dart board he had used in
the Philippines.
And just like his way with darting,
Chugani says retailers may just have to
look back in their past experiences to
be able to know what actions to take
during difficult times. “This makes
us review our business operation,” he
stresses. Trimming production costs
and cutting wastage, reducing inventory
and streamlining operations are the
three basic things that a retailer
should do, especially amidst the global
financial downturn. “In other words,” he
says, “go back to the basics.”

forging ahead as a significant player in the logistics

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