GLOBAL SUPPLY CHAIN APRIL 2020 ISSUE by GLOBAL SUPPLY CHAIN

April 2020 Issue 69

ENHANCING THE BUSINESS OF LOGISTICS

SPOTLIGHT:

SULTANATE OF OMAN

HM Sultan Haitham Bin Tariq Al Said Architect and Initiator, Oman Vision 2040

RSGT: NC Terminal New port operations begin

Airline Stimulus

IATA asks for financial sops

Autoterminal-Khalifa Port Prepping for auto-logistics hub

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                                                                         ’                                

     

Pandemic Paranoia SIGNATURE MEDIA FZ LLE P. O. Box 49784, Dubai, UAE Tel: 04 3795678 Email: info@signaturemediame.com Exclusive Sales Agent Signature Media LLC P.O. Box 49784, Dubai, UAE Publisher: Jason Verhoven jason@signaturemediame.com Editor: Malcolm Dias malcolm@signaturemediame.com Art Director: Johnson Machado johnson@signaturemediame.com Production Manager: Roy Varghese roy@signaturemediame.com

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Contributor’s opinions do not necessarily reflect those of the publisher or editor and while every precaution has been taken to ensure that the information contained in this handbook is accurate and timely, no liability is accepted by them for errors or omissions, however caused. Articles and information contained in this publication are the copyright of Signature Media FZ LLE & SIGNATURE MEDIA LLC and cannot be reproduced in any form without written permission.

Now that the World Health Organization (WHO) has officially characterized the CoronaVirus (Covid-19) outbreak as a pandemic, the nations of the world are urged to continue to implement a containment strategy while accelerating their efforts to control the disease. The disease is omnipresent and the fallout has indeed been ubiquitous. The pandemic has consumed the globe in its wake and its impact, from a health standpoint as also economic, industrial, social, behavioural, cultural and even in the way we now live our daily lives, has indeed been overwhelming and overpowering. Like in almost every industry, this virulent disease has taken a heavy toll on the logistics and supply chain sector too. With the entire world almost at a standstill, trade has virtually ground to a halt. The silver lining though for the industry is that vitally needed pharmaceutical products, medical and hospital apparatus and other Personal Protection Equipment (PPE) are urgently required to be air-freighted to countries and regions where it is most wanted. Despite the ongoing moratorium and embargo on flights, it is hoped that essential cargo flights and freight takeoff will be allowed to operate and keep the supply chains streamlined and operational. Moving on, this month’s edition contains a focus-feature on the Sultanate of Oman, the second largest country on the Arabian Peninsula which uniquely borders three seas—the Arabian Sea, the Gulf of Oman and the Arabian Gulf. With this strategic geographical location on the Eastern seaboard of the Arabian Peninsula and developing infrastructure, Oman has the potential of becoming the region’s logistics hub! A change of guard and a peaceful seamless transition of leadership in January this year will also ensure the continuity to further develop this historical and culturally-rich country. The New Ruler, HM Sultan Haitham Bin Tariq Al Said, is deeply committed to continuing his nation on the growth and development trajectory. Elsewhere, a piece of good news featured in this issue is the inauguration, on 1 April 2020, of Saudi Arabia’s new North Container Terminal at the Jeddah Islamic Port’s Red Sea Gate Terminal (RSGT), the Kingdom’s busiest and largest port. We have also marshaled a panel of international experts for their take and perspectives on some important logistics and supply chain-related issues that affect us all in these times. It is our hope that their expertise and experience will shine a light on these subjects.

Happy reading! Malcolm Dias

Editor malcolm@signaturemediame.com

APRIL 2020 3

April 2020 Issue 69 September 2019 Issue 62

ENHANCING THE BUSINESS OF LOGISTICS

Oman Onus

Our focus feature puts the spotlight on the Sultanate and its onward march with a new Sultan at the helm.

06 NEWS 27 Oman Assessment

In an exclusive interview, Billy FitzHerbert, Regional Editor, Middle East Oxford Business Group, provides us his take on the current status quo in Oman. 30 Blockchain Boost SITA and ULD care on how Blockchain can be harnessed to save US$ 400mn annually for the industry. 31 Red Sea Gate Terminal RSGT’s North Container Terminal now fully operational. 32 Future

for GCC’s Petrochemicals Supply Chains

John Richardson, Senior Consultant, Asia, ICIS, ponders on GCC petrochemicals deliveries in the light of the ongoing pandemic. 36 Pharmaceutical

Cold Chain in pandemic shadow

Eelco Dijkstra, Managing Partner, Europhia Consulting, mulls on medicine and PPE supplies as CoronaVirus cases surge. 4 APRIL 2020

40 IATA

48 Pandemic

With the air transport industry in freefall, IATA advocates financial sops for airlines.

Maritime Attorney Joy Thattil analyzes the results of the CoronaVirus for global shipping to date.

clamours for State Stimulus

41 Airbus One of the leading aircraft manufacturers has demonstrated versatility by producing 3D printed visors. 42 Etihad Rail UAE’s rail operator launches the construction works of Package B of Stage Two of the network. 43 Maersk’s

ICD in South India

The shipping colossus has opened an Inland Container Depot in Madurai, South India. 44 SAP’s

Supply Chain Solutions

Supply Chain and remote work solutions from SAP help maintain business continuity according to the software mega company. 46 Industry

effects on International Shipping

52 Autoterminal

Khalifa Port

The new Auto Terminal at Khalifa Port bodes well for the maritime, automobile and logistics sectors in the UAE. 54 DAFZA Report Card The Dubai Airport Free Zone Operator has fared well in the last fiscal year. 56 Global

Supply Chains post pandemic

Prof. Stuart Milligan, University of South Wales-Dubai contemplates on the industry post pandemic. 59 Technology

in Kingdom

Surge

Big Data and AI are hitting Saudi Arabia big time.

-4.0 Manufacturing Interface 60 Gartner Guide for CIOs

Gartner’s Amel Gardner dwells on the Impact of Industry 4.0 in Manufacturing

Gartner’s Sandy Chen on what CIOs need to do in a looming pandemic crisis.

You wouldn’t accept complex booking in a restaurant. So why do it in shipping? Introducing Maersk Spot – our simplified booking tool to improve the efficiency and predictability in your supply chain. With Maersk Spot, you get Loading guarantee

Fixed price

Compensation if in a rare case rolled

Capt. Maktoum Al Houqani and Nadia Abdul Aziz with ADMA and NAFL officials.

NAFL partners with ADMA to advance logistics education in the UAE n In line with the UAE’s 2030 vision to foster a knowledge-based economy, the Abu Dhabi Maritime Academy (ADMA) has signed a Memorandum of Understanding (MoU) with the National Association of Freight and Logistics (NAFL) to further the logistics education and training standards offered in the UAE. Both organisations will work closely together to create and introduce new professional development programmes in the field of freight and logistics, while also offering globally recognised degrees, such as the International Federation of Freight Forwarders Associations (FIATA) Diploma. The agreement was recently signed at the ADMA offices by Captain Maktoum Al Houqani, Managing Director, Abu Dhabi Maritime Academy and Nadia Abdul Aziz, President, NAFL and Vice President, FIATA. “Reinforcing our long-standing role as an enabler for the Middle East’s maritime and trade industry, our newly minted agreement with NAFL has expanded our capacity to develop the future leaders of the world’s logistics market,” remarked Al Houqani . “Combining NAFL’s expertise on global best practices and our stateof-the-art training facilities will not only provide talented youth 6 April 2020

with the opportunity to develop a skill set that is future ready but at the same time elevate the quality of freight and logistics services offered within the UAE,” he added. “We are very excited to be joining forces with ADMA to accelerate the development of the future generation of logistics professionals. Combining our subject matter expertise along with the academy’s well-established education management processes will result in an enriched learning experience for the benefit of students, who will be better equipped to contribute and drive future progress for global logistics standard,”affirmed Nadia Abdul Aziz. In addition to offering the International FIATA Diploma and courses in freight and logistics, the two parties will collaborate on formulating awareness programmes that will highlight the benefits of the market for prospective students in search for a rewarding career within an evolving and critical industry. Under the terms of the agreement, ADMA will focus its efforts on marketing and delivering the new programmes, while NAFL is expected to develop and provide the specialised trainers to head up the courses and issue the related certifications and diplomas upon completion.

Representatives from Jafza and Deli Foods Peru

Peruvian company becomes the first to join JAFZA’s LATAM Incubation Centre n DP World, UAE Region has announced that Deli

Foods Peru has joined the Latin American (LATAM) Incubation Centre at JAFZA One, the flagship commercial complex located at the heart of Jebel Ali Free Zone (JAFZA). The agreement was signed at Gulfood 2020, and marks Deli Foods as the first Latin American company to join the incubation centre, a leading initiative for international SME investors wanting to set up business in JAFZA and explore regional markets. DP World operates fully integrated maritime and logistics services in Peru, a container terminal at the Port of Callao, catering to customers across the entire supply chain. “Our strategy of enabling smarter global trade in Peru is an optimum illustration of what we do at our flagship facilities in Dubai,” commented Mohammed Al Muallem, CEO and Managing Director, DP World, UAE Region and CEO, JAFZA. The LATAM Incubation Centre, strategically located in Jafza One, offers the most advanced, cutting edge business facilities that enable companies to collaborate and achieve returns on their investments with fewer tax and other logistical hurdles. “The signing of this strategic deal is another milestone within our long- standing relationship with DP World, UAE Region,” remarked Alvaro Silva Santisteban, Director - Trade, Tourism & Investment Office of Peru in the UAE. “Being part of the Latin American (LATAM) Incubation Centre will give Deli Foods a leading competitive edge in the regional markets,” affirmed Bruno Quesada Carrasco, General Manager, Deli Foods Group.

Saudi Arabia’s Arabian Auto Agency presents the IVECO trucks range n The IVECO distributor in Saudi Arabia, Arabian Auto Agency (AAA) recently welcomed more than 200 guests that included customers, government representatives, local authorities and business leaders to a well-attended open house event held at its premises in Riyadh. The full IVECO line-up was showcased with a display that included two Trakker 6x4 Rigid Chassis mounted with a local body tipper, a Trakker 6x4 Tractor heavy truck, a Performer 4x2 Tractor head, two Eurocargo trucks, two Daily vans and three Daily lightduty trucks. “As Saudi’s leading equipment and commercial vehicle distributor group, we are best positioned to deliver on our customers’ ambitions,” commented Mike Fritz, Senior Vice President, ZMS Group, AAA’s holding company. “We supply world-leading brands, backed by world-class service. AAA and IVECO will become one of the major truck suppliers in the Saudi market,” remarked Maan

AAA’s IVECO showroom in Riyadh, Saudi Arabia. Gharaibeh, General Manager, AAA. “Durability also means a strong focus on after sales service, and this is one of the main pillars for IVECO and AAA in this market. In partnership with AAA, our ambition is to meet the needs of our customers in Saudi Arabia with IVECO’s full

range,” concluded Marco Torta, IVECO Saudi Arabia Area Manager. AAA is one of the kingdom’s leading distributors, and prides itself on its longstanding partnership with a global brand such as IVECO. The dealer hopes to host similar events later in Dammam and Jeddah.

DP World announces profit of US$ 1.326bn in 2019 n On a reported basis, revenue grew 36.1%, delivering profit of

$1,328 million, up 4.6%. The revenue for the period was US$7,686 million. Revenue growth of 36.1% was driven by acquisitions including P&O Ferries (UK), Topaz Energy & Marine (UAE) and the two terminals in Chile (Puerto Central and Puerto Lirquen) as well as the full year impact from Continental Warehousing Corporation (India), Cosmos Agencia Maritima (Peru) and Unifeeder (Denmark), and the consolidation of Australia region. In 2019, gross global capacity was at 91.8mn TEU. Consolidated capacity was at 54.2mn TEU. Cash from operating activities was $2,462 million. Capital expenditure guidance for 2020 is up to US$ 1.4bn with investments planned in UAE, Prince Rupert (Canada), London Gateway (United Kingdom), Jeddah (Saudi Arabia), Callao (Peru), Sokhna (Egypt) and Berbera (Somaliland). Posorja, the only deep-water port in Ecuador with capacity of 750K TEU opened on time and on budget. Furthermore, the 30year concession renewal at Jeddah Islamic Port, largest port and hub that connects East-West cargo in the Kingdom of Saudi Arabia bodes well for the company’s future. The company also sounded a note of cautions and that global trade outlook remains uncertain due to supply chain disruption caused by Covid-19 outbreak.

DP World Jebel Ali “We continue to focus on maintaining our disciplined approach to investment to deliver integrated supply chain solutions to cargo owners. Looking ahead into 2020, we will focus on integrating our recent acquisitions and managing costs to protect profitability,” the company said in a press statement. “This performance has been delivered in an uncertain trade environment, once again highlighting the resilience of our portfolio,” commented Sultan Ahmed Bin Sulayem, DP World Group Chairman and CEO. APRIL 2020 7

Tristar Group’s JV signs contract with Linde-Sigas n Tristar Group has announced that its joint venture United Stars in the Kingdom of Saudi Arabia (KSA) has signed a five-year contract with Linde-Sigas, a majority owned subsidiary of Linde in the Kingdom and a leading manufacturer of gases for industrial and medical purposes. Tristar’s mandate will be to transport these products to Linde-Sigas´ diverse portfolio of clients throughout the Kingdom from five centrally located depots in Dammam, Jeddah, Riyadh, Jubail, and Yanbu. The initial contract is for five years with the option to extend on completion for an additional two years. “Linde-Sigas is one of Tristar’s long-standing partners in other Gulf markets, so we are particularly pleased that we can provide them with a comprehensive end-to-end logistic solution for KSA,” remarked Eugene Mayne, Group CEO of Tristar. The contract was signed by Linde-Sigas´ General Manager, Mehdi Benzaari, and United Stars’ KSA Country Manager, Aous Ali, at a signing ceremony that took place at United Stars’ headquarters in Modon, Dammam second industrial area in the Eastern province.

The KSA Management team of Tristar (United Stars) and Linde-Sigas.

Siemens signs ten-year lease agreement with District 2020 n Dubai’s District 2020 has announced that

one of its key anchor tenants, Siemens, will grow its presence within its innovation ecosystem and future-proof community which is set to evolve from Expo 2020 Dubai – following the signing of a 10-year lease agreement for two buildings. The recently signed agreement will see the German company establish its Dubai operations at District 2020 from mid-2021, after the close of Expo 2020 Dubai. The lease agreement outlines the establishment of different divisions of Siemens’ business group at District 2020, including the soon to be spun off Siemens Energy. The announcement follows Siemens’ 2017 commitment to establish a global headquarters for its airports, cargo, and port logistics business in District 2020. The circa 11,000sqm office space will be among the most technologically advanced in the UAE and will serve as a base in Dubai for Siemens and the newly independent Siemens Energy. Approximately 1,000 Siemens employees are expected to work from the two buildings following Expo 2020 Dubai’s transition into District 2020.

8 April 2020

An aerial view of the proposed District 2020 in Dubai. The signing ceremony was attended by key representatives from Expo 2020 and Siemens, including HE Reem Al Hashimy, Director General, Expo 2020 Dubai; Marjan Faraidooni, Chief Pavilions and Exhibitions Officer, Expo 2020 Dubai; Dr. Roland Busch, Deputy CEO, CTO, and Member of the Managing Board of Siemens AG; and Michael Bueker, CFO, Siemens LLC & Siemens Middle East. “The partnership supports our vision to curate an ecosystem that enables

cross-industry collaboration between global businesses, ultimately driving their respective industries forward,” said Faraidooni on this occasion. “Our new offices will be some of the most technologically advanced in the UAE, and our decision to call District 2020 home underscores our commitment to investing in the future of Dubai and the region beyond 2020,” remarked Dietmar Siersdorfer, CEO, Siemens UAE and Middle East.

Etihad Cargo to tweak its freighter network to adjust to passenger suspension

Strata has deployed two of the latest generation MTorres ATL machines to support its Airbus A350-900

An Etihad Cargo freighter on the tarmac.

n Following the directive issued by the National Emergency Crisis and Disaster Management Authority and the General Civil Aviation Authority (GCAA) of the UAE to temporarily suspend all passenger services to and from the UAE, Etihad Cargo will continue to play a vital role in connecting key cargo markets and ensuring the UAE’s import and export needs are adequately covered in line with current demand. To complement its fleet of Boeing 777 freighters, Etihad Cargo is introducing a fleet of Boeing 787-10 aircraft as passenger freighters to operate 34 weekly flights, serving 10 markets initially. Each aircraft will provide capacity for 12 Lower deck pallets and four containers, carrying up to 45 tons of payload. The passenger freighter network will introduce capacity into India, Thailand, Singapore, Philippines, Indonesia, South Korea and other places where borders remain open for cargo. On top of that, the current freighter schedule will be enhanced by additional flights into Riyadh, London, Hong Kong and Shanghai. By utilising the Boeing 787 in addition to its freighter fleet, Etihad Cargo will ensure the continuity of vital imports into the UAE including fruits, vegetables, meat, medical supplies, mail and e-commerce. “As the national carrier to the UAE, Etihad is working closely with the UAE government to ensure the country is well served and the needs of the people residing in the UAE are unaffected, while continuing to play our role as a facilitator of global trade between the East and the West,” remarked Abdulla Mohamed Shadid, Managing Director, Cargo and Logistics, Etihad Aviation Group.

Strata implements automated manufacturing for Airbus A350-900 n Strata Manufacturing (Strata), the advanced

composite aero structures manufacturing facility whollyowned by Mubadala Investment Company PJSC, has deployed two of the latest generation MTorres Automatic Tape Laying (ATL) machines to support its Airbus A350900 manufacturing capabilities. The Al Ain based manufacturer has gained First Part Qualification and First Article Inspection design and quality verifications for the use of the computercontrolled robotic ATL machines that will automate Strata’s production of the Inboard Flap components. “The deployment of breakthrough technologies brings enhanced efficiencies and increased productivity that will drive the company’s long-term competitiveness in a rapidly evolving and increasingly competitive industry,” remarked Ismail Ali Abdulla, CEO of Strata. The two ATL machines lay unidirectional materials onto a flat bed, which is then transferred to a mould tool for further processing. Through this new technology, Strata will drastically reduce processing times in comparison to a standard hand layup process. With the support of its industry partners, Strata is likewise incubating other advanced technologies such as additive manufacturing, robotic assembly of aircraft structures, advanced inspection techniques through thermography, and optimisation of processing and machining of composite parts. Based at Nibras Al Ain Aerospace Park, Strata supports the development of a leading aerospace hub in Abu Dhabi.

APRIL 2020 9

First commercial bulk liquid storage terminal to be built in Abu Dhabi n Abu Dhabi Ports has signed a strategic agreement with Saudi Arabia based Arabian Chemical Terminals (ACT) that will see the development of the emirate’s first greenfield commercial bulk liquid storage terminal at its flagship, deepwater Khalifa Port. Further diversifying Abu Dhabi Ports’ portfolio with enhanced capabilities in the handling of liquid bulk products and gases, the project will benefit existing customers and attract new customers in the region seeking liquid bulk storage. The agreement for the bulk liquid terminal, which will be developed on a 50,000sqm land plot adjacent to a 16 metre deep-water quay access, with option for an additional 150,000qm of land, was signed by Captain Mohamed Juma Al Shamisi, Group CEO, Abu Dhabi Ports and Rakan Alireza, Managing Director, Arabian Chemical Terminals and Deputy Managing Director, Reza Investment Company. As per the agreement, the project is set to be completed in two phases with the first stage slated for commissioning in the second half of 2022 entailing the deployment of 44 storage tanks sized 1250 and 3000 tonnes each. The terminal’s second phase will commence following expansion of the surrounding area and will consist of a number of larger industrial storage tanks and spheres.

Capt. Mohamed Juma Al Shamisi (L) and Rakan Alireza at the deal signing ceremony. “Working closely with ACT, we are pleased to now offer a comprehensive suite of integrated logistics solutions that are powered by the most advanced technologies available in the market,” remarked Captain Al Shamisi. “The new liquid terminal will not only prosper as a result of its strategic location, but will be further bolstered by Khalifa Port’s multi-modal connectivity with access to the sea and UAE’s extensive road and future GCC railway network,” commented Alireza.

Turkish Cargo adds Quito to its cargo flight network n Turkish Cargo, the fastest growing global air cargo

carrier, continues to expand its flight network. The air cargo brand has just added Quito (UIO), the capital city of Ecuador, to the destinations with direct cargo flights. The new addition to the flight network of the Turkish Cargo is not only an important cultural and financial center but also possesses a significant export and import potential. Being one of the most notable flower producers of the world, Quito hosts developed textile, metal and agricultural industries, and its most significant exports include coffee, sugar, cacao, rise, bananas and palm oil. The first one of the Quito flights, to be operated for two days a week by the Boeing 777F freighters of Turkish Cargo, is planned to be operated on the Istanbul – New York – Quito – Curaçao - Maastricht (ISL-JFK-UIO-CURMST) line. Reaching 127 countries with to its extensive flight network, which includes 89 direct cargo flight destinations and more than 300 destinations, Turkish Cargo is the preferred brand in the air cargo industry as it achieves a sustainable growth with its infrastructure, operational capabilities, fleet, specialized crew and teams.

10 April 2020

A Turkısh Cargo B777F freighter.

dnata expands partnership with the Hertz Corporation n dnata has expanded its car rental portfolio by adding the quality services of Dollar Rent a Car and Thrifty Car Rental to its offering. Both brands are part of The Hertz Corporation, one of the global leading car rental companies, which dnata has been serving as a General Sales Agent (GSA) for more than eight years. dnata now promotes and sells the products and services of Hertz, Dollar and Thrifty, to cater for the different needs of corporate and individual customers in the UAE, Oman, Bahrain and Saudi Arabia. “This strategic move allows us to offer a broader range of services to our customers, while driving sales and awareness of our partners’ quality products,” remarked Alan William, Vice President, dnata Air & dnata Representations (land). “The Middle East outbound market continues to present great opportunities for Hertz, so we are pleased to extend our partnership with dnata by introducing Dollar and Thrifty in the GSA’s portfolio,” commented Richard Bowden, Vice President Inbound Sales, Hertz International. dnata was appointed Hertz’s GSA for the UAE in 2011. With the addition of Dollar and Thrifty to its portfolio, dnata now offers a broader range of options to partners and customers looking additional options.

dnata expands partnership with the Hertz Corporation.

GP Global launches bunkering operations in Jebel Ali Port

GP Global Jebel Ali Port Opening.

n GP Global has announced the expansion of the group’s bunkering portfolio with the launch of its new bunkering operation in the port of Jebel Ali. Jebel Ali Port, operated by DP World, contributes over 26 percent to Dubai’s GDP and along with Jebel Ali Free Zone (JAFZA) provides AED 151bn (US$ 41.1bn) or 10.7 percent to the UAE’s national GDP making it a key player in the development of the UAE economy. GP Global’s new bunkering operation includes two wholly owned barges, each with a capacity of 4,800 MT of fuel oil and 1,000 MT of gas oil, which will deliver MAROPOL and ISO-compliant distillate marine, including high quality marine gasoil (MGO) grades. Subsequently, GP Global will continue to champion the bunkering

industry’s needs for ISO-compliant low sulphur grades, working closely with its customers and partners on cleaner energy solutions. The new Jebel Ali bunkering operation of GP Global complements its operations in the UAE at the Port of Fujairah, where it had set a group milestone by completing its first delivery of IMO compliant fuel oil, three months ahead of the January 2020 deadline. “With this, we now offer a global network that can meet the requirements of marine fuel supply as per IMO guidelines,” asserted Anil Keswani, Head of Bunkering, East of Suez, GP Global. The strategic location of Jebel Ali Port will catalyse GP Global’s bunkering business, given the effortless connectivity that the port offers in linking South Asia, North America and the Middle East. APRIL 2020 11

AlMajdouie, new exclusive Peugeot dealer in Saudi Arabia

n Groupe PSA, the French automotive manufacturer of Peugeot, Citroen, DS and Opel brands has announced AlMajdouie as the new Peugeot dealer in Saudi Arabia. The announcement was made recently at a press conference following the inauguration of the Peugeot Khobar showroom in the presence of regional media and distinguished guests. The first AlMajdouie-Peugeot Showroom, located in Khobar, spans 2,200sqm in total and with the capacity to display nine cars on the showroom floor. With the Khobar showroom up and running, AlMajdouie plans to expand Peugeot’s presence in the Kingdom by opening two more showrooms in Riyadh and Jeddah by June 2020. Mediumterm plans for the brand include opening showrooms and service centres in eight cities across the Kingdom by 2024. “We are confident in AlMajdouie’s knowledge and established reputation in the Saudi market; their network of 13 dealerships and 40 service centres is a testament to their ability to maintain customers and offer top-notch aftersales services that match Peugeot’s own high-end offering,” affirmed Samir Cherfan, Executive Vice President-Middle East and Africa Region, Groupe PSA. “Following a record year for the brand across the GCC, with a 72 percent increase in sales, now is the perfect time for Peugeot 12 April 2020

to re-establish its presence in the Kingdom,”asserted Rakesh Nair, Managing Director, Groupe PSA-GCC “We are proud to be trusted as Peugeot’s exclusive dealer in the Kingdom and we foresee great growth for the brand locally. Since the brand’s comeback in the region in 2017, it has introduced several new models in a variety of segments and has become a force to be reckoned with in the high-end mainstream segment,”commented Yousef Ali Almajdouie, President, AlMajdouie Group. The Peugeot 508 had its Saudi launch alongside the announcement of the new partnership. The premium sedan is powered by a 1.6 litre inline 4-cylinder PureTech engine and is mated to a 6-speed automatic transmission with manual and sports mode. The combination delivers 165 Hp at 6,000 RPM and 240 Nm of torque at as low as 1400 RPM. Founded in 1965 by Shaikh Ali Ibrahim Almajdouie, Peugeot’s new authorised exclusive dealer in Saudi Arabia employs 5,000 people in the automotive division alone which is one part of the Group’s vast portfolio. Operating in other auto motive-support activitiés including financing, leasing, and logistics, further cements AlMajdouie Group’s commitment and ability to enhance the Peugeot brand name in the Kingdom of Saudi Arabia.

Arab and India Spices FZC invests US$41mn in HFZA as part of its expansion plan n The Hamriyah Free Zone Authority, HFZA, has recently

announced that Arab & India Spices, a global leader in the pulses and spice industry, will build 12 silos at Sharjah Food Park with a total operating capacity of 52,000 metric tons of pulses at a time. The 12 grain storage warehouses will be constructed over a total area of 300,000sqft in the food park, a regional hub for the Middle East and North Africa’s multi-billion dollar food industry, dedicated to food import, export, storage, manufacture and packaging. This will be the Middle East and North Africa’s first of its kind facility with such a huge organized storage capacity. It would cover the UAE’s consumption needs of beans and lentils for a period of six months. The Arab India Spices’ joining of companies investing in the Food Park is concrete evidence of the growing attractiveness and importance of the Hamriyah Free Zone, being a springboard for expansion activities in the regional markets. This will reinforce Sharjah’s position as a leading destination for foreign direct investment. The project was announced during a ceremony held at HFZA’s premises in the presence of Sheikh Khaled Bin Abdullah Bin Sultan Al Qasimi, Chairman of HFZA; Saud Salim Al Mazrouei, Director of HFZA and Harish Kumarlal Tahiliani, Proprietor, Arab India Spices, in the presence of several senior officials. Al Mazrouei stressed the joining of Arab India Spices to the group of companies investing in the food park is a step in the right direction and will support Sharjah’s food industry in addition to enhancing its contribution to the Emirate’s diversification strategy. “The project’s launch is promising, once inaugurated, it will shoot up our investments in the UAE from US$ 95mn to US$ 136mn, a growth of 43%,” Tahiliani said, adding that if more silos and warehouses are built, they will be used to store rice, wheat and grains. He highlighted that the GCC markets account for about 60% of the company’s operations and activities and that the UAE is the first market targeted by the company followed by Kingdom of Saudi Arabia.

Emirates SkyCargo deploys capacity to supply essentials against coronavirus backdrop n Emirates SkyCargo has stepped up its commitment to facilitate the flow of essential goods across markets including the UAE, the carrier said in a press statement. Working in a scenario where global air cargo capacity has been severely constrained due to restrictions on passenger flights, Emirates SkyCargo continues to ensure that goods such as food and medical supplies are transported to destinations where they are needed the most, the statement continued. Emirates SkyCargo has deployed a range of measures, including additional freighter flights, and using connecting road feeder services to help transport essential cargo such as pharmaceuticals, medical supplies and equipment, perishables, and other raw materials to the UAE and other global destinations. Between mid-January and mid-March 2020, Emirates SkyCargo transported more than 225,000 tonnes of cargo in total out of which 55,000 tonnes were food items including fruits, vegetables, meat and seafood, and more than 13,000 tonnes were pharmaceutical cargo. “By operating our freighter fleet at full capacity across six continents with a combination of scheduled and ad-hoc operations, we are making sure that we can maintain the flow of goods such as medical and pharmaceutical supplies, equipment and food items across the world,” remarked Nabil Sultan, Divisional Senior Vice President, Emirates SkyCargo

During the eight week period between mid-January and midMarch, Emirates’ freighter aircraft transported more than 50,000 tonnes of cargo including medical and food supplies. During one charter operation, Emirates SkyCargo transported close to half a million units of hand sanitisers in a single Boeing 777 freighter aircraft.

P&O Maritime Logistics appoints new Chief Executive Officer n For the past three years, Helweg has been responsible for

P&O Maritime Logistics’ global operations. He will report to Mike Bhaskaran, DP World’s Chief Operating Officer, Logistics and Technology. Earlier, Helweg spent over 15 years in marine service solutions working for Svitzer, an AP Moller-Maersk Company in regional CFO and CEO roles across the Americas, Europe, the Middle East and Asia. P&O Maritime Logistics was created last year following DP World’s acquisition of Topaz Energy and Marine and its integration with P&O Maritime. The combination of the companies brings greater financial strength, allowing increased investment both in the fleet and in technology and innovation. Offering a distinctive value proposition to customers, POML focuses on three strategic segments – Offshore, Port Services and Logistics – delivering world-class capabilities across industries, with safety and the environment at the forefront, the company said in a press statement. “P&O Maritime Logistics will continue to innovate to offer our customers a wide portfolio of services,” said Sultan Ahmed Bin Sulayem, Chairman and CEO of DP World. “We will leverage our strengths, and our organization’s core capabilities and maritime legacy to change this industry and deliver maximum value to our stakeholders,” commented Helweg. APRIL 2020 13

Etihad Airways to move to Beijing’s new Daxing International Airport

Turkish Cargo maintains the air bridge amid coronavirus pandemic n As the global repercussions of the unprecedented the largest single-structure Airways (Etihad) will transfer all airport terminal and integrated its flights to and from Abu Dhabi transportation hub, projected and Beijing, and its flights to and to reach a network of 28 cities in China, home to 202 million from Beijing to Nagoya, Japan, people, by high speed train to the new advanced Beijing within three hours. Daxing International Airport The terminal’s major rail (PKX). transportation links include “We are proud to announce high-speed rail, inter-city, and that Etihad Airways will be one subway connections, providing of the first airlines in the region Etihad’s customers with greater to move to Beijing’s iconic air-rail connectivity across Daxing International Airport,” China, enabling a reduction in affirmed Robin Kamark, CCO, the carbon footprint of domestic Etihad Aviation Group. connecting travel through the The daily flights will capital. continue to be operated by the The airport is a pioneer in the technologically advanced Boeing use of double-deck departure 787 Dreamliner, featuring the and arrival platforms and is airline’s innovative, awardequipped with technologically winning cabin designs and advanced services such as facialproducts, complemented recognition equipment and by its acclaimed service and baggage-tracking systems. hospitality. The environmentallyFlights include Food and focused facility features several Beverage Managers in Business and a Flying Nanny in Economy sustainability initiatives including carbon reduction to provide specialised care for policies, solar paneling, and families with young children. systems collecting rainwater for The new Zaha Hadidre-cycling and re-use. designed aviation hub, is

n Effective 1 June 2020, Etihad

14 April 2020

situation caused by COVID-19 outbreak continues, Turkish Cargo, the global brand with the world’s sixth largest cargo capacity, has started to operate cargo flights with Turkish Airlines’ passenger aircraft. This is in addition to its flights with 25 high capacity freighters in order to prevent any mishaps in the supply chain and carry the medical cargo that are of vital importance, the carrier maintained. Flying the first of the recent cargo flights operated with a passenger aircraft with a B777 type on IstanbulKiev route, Turkish Cargo has operated cargo flights to Bucharest (OTP), Amsterdam (AMS), London (LHR), Paris (CDG), Amman (AMM), Beirut (BEY), and Dubai (DWC/DXB), thus adding 5,000 tonnes of additional capacity. During these challenging times, Turkish Cargo continues its mission to act as a bridge that transports the much-needed medicines and medical equipment to Turkey from across the world and from Turkey to the countries that needed them. With that in mind the global cargo carrier transported the rapid test kits that can give results in 15 minutes to Turkey from China. Turkish Cargo has already added 14.500 tonnes of extra capacity from and to Turkey with additional 167 cargo flights. By adjusting to the rapidly changing situation and maintaining its commitment to provide additional capacity, the global cargo carrier has contributed to the continuation of the supply chain in these challenging times.

Dubai Customs dealt with 20.44m items of luggage at Terminal 3 n Statistics released by Dubai Customs showed that Dubai Customs’ Passenger Operations Department has dealt with 20.44 million passengers’ items of luggage on board 88,000 flights arriving into Terminal 3, Dubai International Airport in 2019. They also completed 34,200 customs transactions and made 1301 seizures (1198 criminal seizures and 103 customs seizures). During his tour of terminal 3, Dubai International Airport, Director General of Dubai Customs Ahmed Mahboob Musabih said he was very happy Dubai Customs is part of the success and distinction Dubai International Airport reached. It is the first airport worldwide to have automated customs procedures and this has noticeably facilitated passenger traffic during peak seasons such as Hajj and holiday seasons. “Dubai is a global tourism and trade hub, and for this we, at Dubai Customs, make sure to be close to the passengers and listen to their suggestions and expectations,”

remarked Musabih. During the tour, Director General of Dubai Customs made a skype call with an inspection officer at Emirate Airlines building and talked with him about the procedures and services delivered at the building. Director General of Dubai Customs was accompanied by Mohammed Al

Ghafari, Acting Executive Director, Human Resources, Finance and Administration Division; Ibrahim Al Kamali, Director, Passenger Operations Department; Shuaib Al Suwaidi, Director, Customs Intelligence Department; Khalil Saqer Bin Gharib, Director, Corporate Communication Department; and Khalifa Malik Bin Shahin, Director,Terminal 3.

Meesan Logistics opens new chemicals logistics centre outside Mumbai n Meesan Logistics has recently opened a brand new chemical warehouse in Bhiwandi-Mumbai, India. With a total footprint of 47,000sqft (approx. 4,500sqm), the advanced logistics centre features an advanced infrastructure including a clear height of 12 meters, six dock doors and 5,600 pallet positions. In 2018, Meesan Logistics was acquired by RSA Global, a UAE-headquartered digital freight forwarding and solutions company. Equipped with the latest technology, fire hydrant and sprinkler systems, high-quality roof insulation as well as drainage systems and LED lightning, amongst others, the facility meets strict security, safety and environmental standards enabling secure, efficient and seamless storage and loading of chemical and petrochemical goods. The new facility brings the total warehouse footprint across India to 50,000sqm and 50,200 pallet positions complementing the company’s growth strategy in India. Meesan Logistics offers integrated warehousing and transportation services in currently eleven cities across India to customers from various industries including chemicals, automotive, consumer goods, oil & gas and retail. Meesan Logistics is an Indian based logistics and transportation provider founded in 2012. The company has

developed into an integrated supply chain solutions company with own facilities in nine cities across India and a warehouse footprint of 50,000 m² and 50,200 pallet positions. Over 200 logistics specialists serve the company’s customers from diverse industries such as chemical, automotive, consumer goods, oil & gas and retail.

APRIL 2020 15

Jaguar Land Rover to build new distribution centre in JAFZA n Jaguar Land Rover will begin construction of a new Parts Distribution Centre during the first quarter of 2020 to serve its discerning customers across the Middle East and North Africa. It is scheduled to be operational during the first quarter of 2021. This demand is driven by an increase in the number of cars joining the region’s roads. The new distribution centre will be located at Dubai’s Jebel Ali Free Zone Authority (JAFZA). Jaguar Land Rover has operated a regional aftermarket Parts Distribution Centre in Jebel Ali, Dubai, since 2014, serving nine MENA markets with genuine components, but needed to expand its operations. The development will provide 19,000sqm of storage capacity, with the option to expand to 30,000sqm in the future. The added space will allow Jaguar Land Rover to hold and distribute approximately 32,000 part numbers, including branded merchandise from the luxury marque. Responsible for all inbound, warehousing, scheduling, and distribution tasks, the new facility will streamline the flow of parts to retail partners across the region, enhancing customer service. “This is a key element of our regional expansion plans as we recognise the importance of offering first-class aftersales service, an essential ingredient of which is rapid parts supply,” said Bruce

Robertson, Managing Director Jaguar Land Rover MENA. “The entire range of Jaguar Land Rover parts and accessories is available through our distributors in nine regional markets, and supplying them all is a big operation,” remarked Paul Lane, Customer Service Director, Jaguar Land Rover MENA.

Etihad Cargo launches constant tracking mobile app n Etihad Cargo has expanded its digital portfolio by

launching the first version of its mobile application, offering customers the ability to gain real time access to information on-the-go. Building on the success of Etihad Cargo’s iCargo platform and etihadcargo.com, the optimised mobile app boasts an array of in-built features to enhance customer experience. In addition to real-time tracking, the app also boasts a feature for opt-in push notifications, providing customers with instant alerts to any-timeanywhere updates on shipment milestones, including ‘received; ‘departed’; ‘arrived’; ‘notification for delivery’; and ‘delivered’. “The app provides our customers with access to information at their fingertips whether at the office or on the go, when and where they need it most,” commented Rory Fidler, Head of Technology and Innovation, Etihad Cargo. Available to download from both Apple’s App Store and the Google Play store, the Etihad Cargo app also features flights status, routes search, links to a portfolio of specialised product services, latest news, and Etihad Cargo contact information including global office locations and key personnel. Future versions of the app will include instant mobile eBookings with an anticipated launch in 2021.

16 April 2020

ACWA Power signs milestone agreements with Uzbekistan n Saudi Arabia’s ACWA Power announces the signing of three new strategic agreements, potentially worth up to US$ 2.5bn, with The Ministry of Energy of Uzbekistan to amplify power generation and develop technical expertise. The agreements include a 25-year Power Purchase Agreement (PPA) and Investment Agreement – with a total investment value of US$1.2 billion - for the development, construction and operation of a 1500 MW Combined Cycle Gas-Turbine (CCGT) power plant. The deal also stipulates an Implementation Agreement worth US$550 million-US$1.1 billion for the building of wind power plants with a capacity of 5001000 MW. The project will be located in Shirin City in the Sirdarya region and will be developed as a ‘Build, Own, Operate, Transfer’ (BOT) model. ACWA Power will take the lead in constructing, engineering, operating and maintaining the plant. An implementation agreement worth US$550 million-US$1.1 billion has also been signed with the Ministry of Energy

to utilise Uzbekistan’s natural renewable energy sources. The agreement envisages the development, financing, construction, operation and maintenance of a 500-1000 MW wind farm. “We have chosen ACWA Power to be the government’s partner in upscaling Uzbekistan’s energy generation capacity

because of their exceptional track record in delivering results,”said Abdulla Aripov, Prime Minister of Uzbekistan. “The market in this part of the world is thriving with economic activity that will stimulate private sector investment and participation in the energy sector,”remarked Mohammad Abunayyan, Chairman, ACWA Power.

Solutions for a healthy world Tranzone operates a state-of-the-art 3PL warehouse in Jebel Ali Free Zone. We have partnerships with the leading pharmaceutical, medical device and animal health companies around the world.

Healthcare Logistic Services: Air Freight Sea Freight Land Transportation Value Added Services Warehousing & Distribution Return logistics Documentation Tranzone FZCO (Member of Banaja Holdings)

Jebel Ali Free Zone (South) Plot No: S20129 P.O Box : 262955, Dubai, United Arab Emirates, Tel : +971 4 811 0000

Web: www.tranzone.ae APRIL 2020 17

Intertek awards Al Tayer Motors multiple ISO certifications n Intertek, the Total Quality Assurance provider to industries worldwide, has awarded Al Tayer Motors, one of the premier automotive dealerships in the UAE, with multiple certifications for International Organization for Standardization (ISO) management systems. The certifications recognise that Al Tayer Motors facilities in Dubai and the Northern Emirates conform to the latest global standards for environmental, occupational health and safety, business continuity and energy management systems. The certifications were granted following a four-month-long audit and certification process by Intertek experts. This achievement demonstrates that Al Tayer Motors showrooms, service centres and workshops operate as per global best practices to provide a safe, environmentally friendly, and secure setting for customers as well as employees. Al Tayer Motors embarked on many internal initiatives to help achieve these certifications which included employee training, accident prevention measures, water and energy saving initiatives, site inspections and compliance.

Intertek awards Al Tayer Motors multiple ISO certifications. The awards were presented during a special ceremony at Al Tayer Motors, to Ashok Khanna, CEO at Al Tayer Motors, by Ian Galloway, Executive Vice President of Middle East, Africa and Global Trade and Matthew Skinner, Regional Managing Director, Intertek. “These accreditations also demonstrate

that our core values of integrity, quality and reliability are at the heart of everything we do,”commented Khanna. “Receiving the certifications for ISO 14001, ISO 45001, ISO 50001, and ISO 22301 is an impressive achievement, and I would like to congratulate the entire team for this accomplishment,”remarked Skinner.

UPS Board makes top-tier appointments n The UPS Board of Directors has announced it has named

Carol Tomé as UPS Chief Executive Officer, effective June 1. David Abney, the current Chairman and Chief Executive Officer, will remain in his role until June 1, when he will become Executive Chairman of the Board. He will retire from the UPS Board on September 30. In order to ensure a smooth transition and successful peak season, Abney will remain as a special consultant through the end of 2020 and then retire after 46 years of UPS service. On September 30, Abney will assume the role of Non-Executive Chairman. “Carol is one of the most respected and talented leaders in Corporate America and has a proven track record of driving growth at a global organization, maximizing shareholder value, developing talent and successfully executing against strategic priorities,” said William Johnson, UPS Lead Independent Director. “This is the right time for me to pass the baton. I am extremely pleased for Carol and know she is the best choice to lead the company. She understands UPS’s culture and values, is a strategic leader and possesses a customer-first mindset,”

18 April 2020

remarked Abney in a press statement. Carol Tomé becomes the 12th chief executive officer in the 113-year history of UPS. She has been a member of the UPS Board of Directors since 2003 and serves as Chairperson of the Audit Committee.

8 June 2020 DUBAI SOUTH, Dubai, United Arab Emirates

www.logisym.org Government of Dubai

Logistics Gateway Dubai BEYOND 2020 Learn: How Dubai will shape up to retain its regional logistics and distribution gateway role beyond 2020. Topics discussed by industry leading speakers n Logistics infrastructure developments n Multi-modal freight hub Dubai n Regional E-commerce retailing n Robotics and automation n Big Data in logistics Europhia Consulting is the regional partner of Logisym Dubai. Connecting leading logistics and supply chain solutions to the UAE. www.europhia.com

Jason Verhoven M: +971 50 6543876 E: jason@signaturemediame.com

Oman Country Report

Oman to boost investments in transport and logistics sectors The Sultanate’s strategic location on the Arabian Peninsula gives it the advantage of becoming a logistics hub for the region These have been both tumultuous and hopeful times for the Sultanate of Oman. The new Sultan HM Haitham Bin Tariq Al Said was sworn in to succeed the late HM Sultan Qaboos Bin Said Al Said in January of this year. According to the World Bank Group’s October 2019 Economic Update on Oman, growth is expected to accelerate to 3.7% in 2020 driven largely by the rise in natural gas output as production from new fields comes on stream. Inflation is expected to increase to almost 2% in 2020, and to further accelerate to nearly 4% in 2021. The Oxford Business Group’s (OBG) latest Investment & Economic Report on Oman is the basis and foundation of this study on the Sultanate. Global Supply Chain is thankful and appreciative of OBG’s gracious gesture in making the data and input available to us — Editor. 20 APRIL 2020

Oman Country Report

man, the second largest GCC country by geographical area, benefits from a strategic location on the south-eastern coast of the Arabian Peninsula, particularly for the movement of goods and people by sea and air. As a result, transport and logistics has been identified in Vision 2040 – the Government’s national strategy – as one of five key areas in the Sultanate’s efforts to diversify away from its dependence on hydrocarbons. Transport infrastructure is also critical to the success of other sectors and economic efficiency as a whole, and is therefore a major source of public funding. With an upgraded airport terminal (Seeb International) opening in Muscat in 2018

and new multi-lane highways crossing the country, Oman has invested heavily in the sector in recent years. Meanwhile, the Sultanate has also developed its ports, adding a number of new facilities to rival competitors in the region. These investments are likely to reap economic benefits for years to come, as well as support other priority sectors such as manufacturing, tourism and mining.

Oversight The main government body responsible for the management of the sector is the Ministry of Transport (MoT). In early 2015 the Ministry, which was then known as the Ministry of Transport and Communications, established the Oman Logistics Centre

(OLC), which was tasked with overseeing the segment’s development. This led to the creation of the Oman Global Logistics Group in 2016, which was re-launched in 2017 under the name Asyad. Asyad is responsible for maintaining ports, free zones and maritime services in Sohar, Duqm and Salalah, alongside a number of global operators. The organisation also manages the freight segment, which comprises Oman Rail Company, Oman Shipping Company and Oman Drydock Company, the latter of which is among the largest and most technologically advanced repair yards in the MENA region. In addition, Asyad is tasked with the oversight of several major state-funded services in Oman, including public transport APRIL 2020 21

Oman Country Report

and maritime training. Another key national organisation in the transport sector is Oman Aviation Group (OAG), which was established in 2018 to bring all public investments in the aviation segment under the purview of one authority.

The KPIs for 2020

Aviation Group

Reducing average import clearance time for sea cargo from 7 days to 1.5 days

The group includes Oman Air, Oman Airports and Oman Aviation Services. Oman Air is the national carrier, which flies to more than 50 destinations worldwide. Oman Aviation Services provides ground handling, cargo management, catering, dutyfree retail, hospitality and hotel services across nine locations. Meanwhile, Oman Airports is in charge of overseeing Muscat International Airport (MCT in Seeb), as well as the country’s three regional airports located in Duqm, Salalah and Sohar. Under OAG, Oman Airports also manages Muscat Airport City, a mixed-use development located adjacent to the airport.

Sector Strategies The MoT and OLC are tasked with implementing the sector’s long-term development plan, the Sultanate of Oman Logistics Strategy 2040. The strategy, which 22 APRIL 2020

Increasing the number of logistics jobs from 67,469 to 100,000 Raising OM2bn ($5.2m) in investment

Increasing capacity at ports from 3.1m TEUs to 7m TEUs.

as a priority sector in the government’s ninth five-year plan for 2016-20. The strategy outlined Oman’s short-term plans for economic diversification, which are being enacted through the National Programme for Enhancing Economic Diversification, known as Tanfeedh. Tanfeedh, which was launched in September 2016, is responsible for identifying the resources needed for diversification, as well as setting timeframes and key performance indicators (KPIs).

KPIs identified was developed in consultation with a team of 65 specialists from a range of sectors, was published in February 2015. Its main targets, to be met by 2040, include achieving a top-10 position in the World Bank’s Logistics Performance Index, creating 300,000 jobs in logistics services and reaching a GDP contribution of OR14bn (US$ 36.4bn), which would make the sector the country’s second-largest economic contributor after hydrocarbons. The strategy has already seen results, and in 2018 the transport, storage and communications sector contributed OM1.7bn (US$ 4.4bn) to the Sultanate’s GDP, an increase of 14% since 2014. Transport and logistics was also selected

The following KPIs were assigned for 2020—increasing the number of logistics jobs from 67,469 to 100,000; raising OM2bn ($5.2m) in investment, which the sector is close to achieving; reducing average import clearance time for sea cargo from 7 days to 1.5 days; and increasing capacity at ports from 3.1m twenty-foot equivalent units (TEUs) to 7m TEUs. In order to meet these goals 14 initiatives were outlined across a range of areas, including one-stop clearance procedures, bonded warehousing facilities and improved land connections with neighbouring countries.“Tanfeedh has worked well to diversify the economy,” affirmed Michael Jorgensen, CEO, Oman

Oman Country Report

in the region. Oman has also traditionally Oman’s strategic location and 2092-km Oil export markets, 2018 (m barrels) maintained good relations with other coastline has provided the Sultanate with countries in the GCC, as well as with Iran, a long-standing maritime history and which gives the Sultanate an additional a natural advantage for trade. Oman is China advantage in building trade links. situated near international shipping routes Oil export markets, 2018 (m barrels) The country is similarly well placed and benefits from being closer to the India to compete in the air transport market, world’s sea traffic than other major ports

Shipping Company. Real GDP growth, 2013-22F (%) “Specifically within the transport and 6 logistics sector, the initiative is pushing for the upgrade of shipping fleets to increase 5 non-oil operations, such as the transport of Real GDP growth, 2013-22F (%) containers and dry cargo,” he continued 4 6 Comparative Advantage

Japan China 35

Real GDP growth, 2013-22F (%)

Oil export markets, 2018 (m barrels) South Korea

India

Thailand

Japan China

SouthOthers Korea

India

24 6 13 5 02 4 13

19F

20F

21F

22F

1 3 Source: IMF

Thailand

Japan

100

200

300

100

200

300

Source: CBO

South Others Korea 0 2 13

19F

20F

21F

22F

1 Source: IMF

Thailand

Source: CBO

Others 0 13

Construction & building GDP*, 2013-18 15 16 17 18 19F 20F

21F

22F

No. of 20 international40passenger arrivals, 2014-18 (m) 100 200

2500 IMF Source:

8 Source: CBO

2250

2000

Construction & building GDP*, 2013-18

1750 2500 1500 2250 1250 2000 1000 1750 2500 750 1500 2250 500 1250 2000 250 1000 1750 0 750 2013 1500 500 Source: 1250 NCSI, MoCI 250 1000 0 750 2013 500 Source: NCSI, MoCI

Construction & building GDP*, 2013-18

2014 OR m

2015

2016

2017

Contribution to total GDP (%)

2015

2016

2017

Contribution to total GDP (%)

7 10 6 9 5 8 4 7 10 3 6 29 5 18 4 07 3 2018 6 2 *Current prices 5 1 4 0 3 2018 2

*Current prices

250 0

Manufacturing output2015 by segment*, 2013 2014 2016 2013-18 2017 (OR m) 2018

Source: 3500 NCSI, MoCI

300

OR m

Contribution to total GDP (%)

250 300

Source:NCSI

200 150 3500 100 250 300 50 200 150 0 100 250 50 200 0 100

*Current prices

2014

2015

2013

2014

2015

Chemicals & chemical products

2016

2017

2018

Refined petroleum products

2016

2017

2014

2015

2016

2017

2018

2014

2015

2016

2017

2018

Oman2014in brief 2015

2016

2017

2018

1 3 0 2

Source:NCSI

The year 2020 marks the 50th anniversary of the establishment of the Sultanate of Oman, making it the longest continually independent Arab country in modern history. While still largely dependent on oil and gas revenue, a strong commitment to diversification – beginning in earnest in 2014 – has seen Oman’s non-oil sector record an average real GDP growth rate of 7% since the turn of the century. The country’s strategic position near established global trade routes and a history of political neutrality is opening up opportunities for Oman in transport, trade, tourism and manufacturing. Moreover, officials are working to welcome greater foreign investment while focusing on the needs of a talented, young population.

Source:NCSI

Other

APRIL 2020 23

2018

Refined petroleum products

No. of international passenger arrivals, 2014-18 (m)

Source:NCSI 4

Manufacturing output by segment*, 2013-18 (OR m)

2013

6 3 8 5 2 7 4 1 6 3 0 5 2

*Current prices

Chemicals & chemical products

7 4

*Current prices *Current prices

No. of international passenger arrivals, 2014-18 (m)

8 5

Manufacturing output by segment*, 2013-18 (OR m)

150 3500

300

Other

Oman Country Report

given that it is located along multiple international air routes. Furthermore, Oman is located at the centre of international cable networks, with several major landings of submarine cables passing through the Sultanate. It benefits from data connections between Asia, Europe and North America. This gives Oman a competitive advantage in the communications segment, which is integral to supporting transport and logistics. Furthermore, the Sultanate is investing heavily in road and rail infrastructure, which is expected to increase efficiency in other priority sectors such as mining, manufacturing, tourism and agriculture.

Ports & Free Zones Oman’s extensive coastline, natural harbours and maritime expertise have made ports and shipping a key part of the sector’s continued development. The Sultanate has three main ports in operation – Sohar, Salalah and Duqm. “The shipping industry is set for rapid growth as Oman increases its connectivity with the rest of the GCC,” asserted Wasam Al Najjar, General Manager, Corporate Planning, Oman Shipping, “Dry bulk is particularly poised for 24 APRIL 2020

expansion as mining continues to increase. Around 30m tonnes of dry bulk commodities are exported annually and 14m tonnes are imported. There are also opportunities to develop the transportation of liquefied natural gas and oil products through the Port of Duqm,” he added.

The port largely serves four industries: metals, logistics, petrochemicals and food. In 2018 more than 3434 vessels passed through Sohar, and the port handles 1m tonnes of cargo each week. The 45-sq-km free zone was established in 2002 and is located adjacent to Sohar Port. The zone houses 26 companies, including automotives traders, metal manufacturers and logistics firms. There are also a number of small and medium-sized enterprises (SMEs) operating from the zone across a growing range of industries, including power and water, petrochemicals, plastics, metals, fertilisers, minerals, food, vehicles and general cargo handling.

Sohar

Salalah

Sohar Port and Freezone, situated in the north of Oman close to its border with the UAE, is a 300-sq-km deep water port capable of unloading large container ships. The port has general bulk and liquid bulk storage facilities, and offers a wide range of services including bunkering, marine supply, tug and towing, crew change, pilotage, ship supplies, fresh water deliveries, cargo handling and ship-to-ship transfer.

Salalah is a leading trans-shipment port, handling more than 5m TEUs per year. The port has facilities to process liquid bulk and mineral bulk, six container berths and an 18-metre draught. There is an adjacent free zone, managed by the Salalah Free Zone Company, which has attracted more than $5.1bn in industrial investment as of November 2019 across a range of sectors, including petrochemicals,

Oman’s first low-cost airline, SalamAir, has a goal to carry 3 million passengers in 2020.

Oman Country Report

materials processing, manufacturing, pharmaceuticals, logistics and distribution. According to local media, an estimated 210,000 new jobs will be created in the free zone between 2019 and 2022.

Duqm The Port of Duqm is located near the centre of Oman’s south-east coast. With a 2.1-km quay, a large basin and a maximum draught of 19 metres, the port is able to berth the world’s largest ships. Duqm has facilities to process containers, liquid bulk, dry bulk and various other types of cargo. The port is linked to a 2000-sq-km special economic zone (SEZ), which was established in 2011 and is the largest SEZ in the Middle East. “Duqm is a unique greenfield project offering opportunities for many activities and industries,” observed Reggy Vermeulen, CEO of the Port of Duqm.“Complementing its potential, logistics value chains are already established here, and we are seeing industries operating very efficiently while creating opportunities for the local labour force and SMEs,” he continued.

Duqm SEZ The SEZ is divided into eight main areas: the port, a dry dock, an oil refinery, a regional airport, an industrial complex, a residential and commercial area, a tourism area and a logistics services area. Around 1000 ha of land is dedicated to logistics at the Port of Duqm, of which 65 ha has been developed and 100 ha is under construction. The logistics zone benefits from its proximity to the commercial pier, which has helped attract investors to the area. In May 2019 the Duqm SEZ Authority signed six agreements to upgrade infrastructure at the port, including the construction of new internal roads and a 14-km dual carriageway, and the levelling of 5.5 ha of land in the logistics zone. The SEZ offers a range of benefits for companies looking to establish themselves in Oman, such as: 100% foreign ownership on a freehold basis; tax exemptions for up to 30 years; no restrictions on expatriate employment; assistance with Customs procedures; and residence permits for employees. The port’s location also provides an additional incentive for companies. “As the largest port development in Oman, Duqm could save one or two

shipping days compared to Jebel Ali Port in Dubai and it also has links into Saudi Arabia,” Manish Jangir, finance manager at local logistics firm Majan Shipping.“With strong potential for containers, oil, refined products and petrochemicals, it is likely that the Port of Duqm will continue to see high cargo volumes,” he added.

Khazaen Located 60 km north of Muscat, Khazaen Economic City is a major logistics centre currently under development. The 51.6-sqkm area will contain an inland dry port, logistics facilities, warehousing, free zones with tax benefits, and commercial and residential areas. Khazaen is located within easy reach of Sohar Port and MCT, and has road links to the rest of the region, making it strategically positioned to become one of Oman’s busiest logistics hubs. In September 2019 a $24m contract for the first phase of the project was awarded to Oman’s largest construction firm, Galfar Engineering and Contracting. According to local media, the project is scheduled to take around 12 months, although as of November 2019 there had been no update on whether construction had begun.

Airports There are four passenger airports in Oman, located in Muscat, Duqm, Salalah and Sohar. In March 2018 a new terminal building was opened at MCT, increasing the airport’s total capacity to around 20m passengers per year. The 580,000-sq-metre site has replaced the existing 44-year-old terminal as the centre for international flights. The older building has the potential to be used by low-cost airlines or for other purposes; however, this has yet to be finalised. The new terminal will cater to a growing number of passengers as Oman Air continues to expand. Meanwhile, the total number of passengers passing through MCT has grown as a result of the new building. In the first quarter of 2019 the number of international flights increased by 2.1% year-on-year (y-o-y), from 25,789 to 26,334. International passengers totalled 3.7m in the first three months of 2019, up 9.4% y-o-y from 2018.

According to the most recent full-year figures available from the Public Authority for Civil Aviation, total passenger traffic at MCT increased by 9% between 2017 and 2018, from 14.1m to reach approximately 15.4m. When it comes to shipping, the amount of cargo transported through MCT has also risen sharply in recent years, from 160,000 tonnes in 2016 to 203,000 tonnes in 2017 and 215,000 tonnes in 2018.

OAG Vision Air cargo is a major part of OAG’s vision for future expansion, and its National Air Cargo Strategy aims to raise the amount of goods transported per year to 780,000 tonnes by 2030. With this target in mind, cargo-handling facilities were upgraded at MCT and Salalah International Airport in 2018. MCT now has the capacity to process 350,000 tonnes of cargo per year. “OAG is looking to develop beyond a cargo terminal, adding facilities such as warehouses and supporting infrastructure, and improving polices and regulations,” noted S T Tan, CEO, Oman Air SATS Cargo. “We need to capitalise on our location and Oman’s political neutrality to complement the regional cargo offerings in Doha and Dubai,” he said. Salalah International Airport is the Sultanate’s second-largest airport. A 65,638-sq-metre terminal building opened in November 2015, helping the airport to expand its passenger traffic by 78.4%, from 841,000 in 2014 to 1.5m in 2017. In 2018 the airport saw 1.4m passengers and 979 tonnes of freight. Sohar Airport, which has operated domestic flights since 2014, became Oman’s third-largest international airport in 2017 following the launch of flights to Qatar and the UAE. A new terminal has been under construction since 2015, and will be able to handle 250,000 passengers and 50,000 tonnes of air freight annually when it is completed.

Updates First opened in 2014, Duqm Airport has seen a consistent rise in passenger traffic in line with the development of the nearby port and free zone. A new 8660-sq-metre terminal began operations in September 2018, with an annual capacity of 500,000 passengers and the potential to expand to APRIL 2020 25

Oman Country Report

2m passengers. Total traffic grew by 27% y-o-y in the first eight months of 2019, from 28,939 to 36,766. A new airport is planned at Ras Al Hadd, near the city of Sur, which has been earmarked for development as an ecotourism destination. The road network, utilities, runway and apron have already been completed, but the final phase of construction is on hold until the region’s tourism facilities develop fully. At full capacity, the terminal is expected to be able to serve approximately 500,000 passengers per year. A potential new airport in Musandam has also entered the early stages of development. The area already has a small airport located in Khasab, the capital of the governorate, from which Oman Air operates nine domestic flights per week. In July 2019 the Public Authority for Civil Aviation announced that the project had entered the second phase, which involves estimating the cost of the development and preparing a general outline of the airport.

Airlines Oman Air is majority owned by the government and operated 55 flights to 27 countries from its primary hub in Muscat as of the end of 2019, including eight flights to European destinations, 11 to India and four to South-east Asia. In 2018 a number of new routes opened to Istanbul, Casablanca and Moscow, and in 2019 the carrier launched direct flights from Muscat to Athens and Alexandria. The airline is therefore on track to achieve its target of 60 destinations by 2022. Oman’s first low-cost airline, SalamAir, originally launched in 2017 and offered flights to 23 destinations in 2019. The carrier reached 1m passengers for the year in October 2018, and is expected to see a total of 1.3m passengers in 2019. The airline has the goal to carry 3m passengers in 2020. In November 2019 Mohamed Ahmed, CEO, SalamAir, told regional media that the airline expects to make a profit in 2020 and is looking to issue an initial public offering in the years ahead.

Roads Oman has invested heavily in its road infrastructure over recent years. The first six phases of the 11-stage Batinah Expressway, a 256-km eightlane motorway connecting 26 APRIL 2020

Muscat to Sohar and the country’s border with the UAE, were opened in December 2018, and work has since started on the remaining sections of the line. As such, in January 2019 the MoT awarded UAE-based construction company Ghantoot a $211m contract to build two linking roads and associated facilities as part of the seventh phase of the project. The development is expected to cost approximately $2.6m. Meanwhile, the $1.3bn Al Sharqiyah Expressway, a 365-km road linking Bidbid to Sur, is nearing completion. According to local media in May 2019, the tunnels were 80% complete and electrical work was in progress, as was fire hazard control. Although the road was scheduled to open in mid-2019, Ahmed Al Futaisi, the Minister of Transport, issued a statement saying the road between Bidbid and Al Kamil would begin operations by the end of 2019. The new road will improve journey times from Muscat to the south-east coast, facilitating a popular tourist route. Major projects awaiting construction include a new road to Saudi Arabia via the Empty Quarter desert. The current 1638-km route from Oman to Saudi Arabia passes through the UAE, requiring two border crossings and often taking up to 18 hours. The new route covers 680 km and will significantly reduce journey times. This will help improve trade between the two countries and other GCC nations, namely by reducing the cost of transporting goods between Oman and Saudi Arabia. This is a significant development given that 2mn tonnes of cargo is transported between the two countries every year.

Rail Oman has long been planning the development of a 2135-km national rail network linking mining areas, oil and gas developments and major ports to increase their export. Although the railway is expected to mainly be used for the transportation of freight, it would also be designed to be able to accommodate passengers. The project was initially planned to be part of the greater GCC rail network, but it has since been scaled down to a US$ 11bn development project with a longer timeline. The section of the route that remains a priority is a mineral railway in Al Wusta, which will transport materials from the

south-west of the country to processing facilities in Duqm, to then be transported overseas from the port. Furthermore, the route will assist with the transportation of equipment from Duqm to oilfields in the centre of the country, as well as the shipping of general consumer products from Duqm to south-west Oman.

Public Transport Public transport in Oman is largely managed by Mwasalat, a governmentowned company. The bus network forms the backbone of the Sultanate’s urban transport system; Mwasalat operates bus services in Muscat, Salalah and Sohar, as well as inter-city services to Dubai. The number of buses in operation has increased considerably in the past decade, from 50 in 2008 to 250 in 2018, with plans to expand the network to 500 buses by 2040 as part of the MoT’s bus masterplan. However, obtaining funding is a challenge for the public transport segment, as the government has reduced its share of the budget allocated to these services in recent years. As a result, the number of buses operated by Mwasalat still stood at 250 in 2019.

Outlook The sector has seen major investment in recent years, which has helped to expand infrastructure and support the long-term growth of transport and logistics services. This is likely to continue as the sector remains a leading national priority and a central part of Oman’s overall economic diversification strategy. Therefore, provided there are no unforeseen constraints on the government budget, the outlook is largely positive. Nevertheless, if public funding is limited, the Sultanate’s ongoing transition towards privatisation should help to successfully accelerate growth throughout the years to come. n (Global Supply Chain acknowledges the Oxford Business Group-OBG as the source of all published information and assessment. To this end we thank Billy FitzHerbert, Regional Editor, Middle East Oxford Business Group and Marc-André de Blois, Director of PR and Video Content, Oxford Business Group for this input)

Exclusive Interview: OBG

Sultanate of Oman on the growth trajectory

Main Picture: Duqm Port, Oman Inset: HM Sultan Haitham Bin Tariq Al Said of Oman

lobal Supply Chain engaged exclusively with Billy FitzHerbert, Regional Editor, Middle East Oxford Business Group, on what the immediate future holds for economic progress ad development in the Sultanate of Oman. Global Supply Chain (GSC): The New Sultan of Oman, HM Haitham Bin Tariq Al Said, recently took over in January this year following the demise of his predecessor HM Sultan Qaboos Bin Said. What implications does his accession have for the Oman economy? Billy FitzHerbert (BFH): While the passing away of HM Sultan Qaboos

Bin Said initially precipitated significant uncertainty about the succession and concerns about the continuation of stable leadership in the Sultanate, the transition has been incredibly smooth. This has ensured Oman maintains one of its key advantages as a destination for investment, namely its reputation for stability and good leadership. As a businessman himself, the new Sultan Haitham Bin Tariq is widely regarded by the business community as someone who will bring necessary economic reforms, while maintaining a steady diplomatic course. As a leading architect behind the Sultanateâ&#x20AC;&#x2122;s long-term diversification plan,

Vision 2040, his accession signals a renewed commitment to the plan. In his first speech to the nation, HM Haitham Bin Tariq pointed to the importance of SMEs (Small & Medium Enterprises) and took some measures to ensure greater access to credit. Bringing in foreign investment is another key goal for the new Sultan, in line with the legal reforms on FDI (Foreign Direct Investment) and PPPs (Public-Private Partnerships) that were established in 2019. GSC: On the whole how is the Sultanate of Omanâ&#x20AC;&#x2122;s economy faring at the present time and how is the country countering to the onset of the novel coronavirus APRIL 2020 27

Exclusive Interview: OBG

COVID-19 since the beginning of the year 2020 had on the economy? BFH: The Sultanate took rapid and farreaching measures in response to Covid-19. As an example, as one of the first countries to prevent cruise ships from entering the country, Oman suffered a significant economic blow – just months earlier, the cruise industry was highlighted as one of the most promising segments of the tourism industry. The hope is that swift responses like this, which entail short-term pain, will in the long run ensure that Oman is one of the best protected in the region. While it will be some time before the more long lasting impacts of Covid-19 on the local, and indeed global economy can be properly measured, it is clear that the impact on the Sultanate’s economy will not be insignificant.

As of mid-March, tourist visas had been suspended and tourists were urged to return home. This includes regional tourism from the GCC, which initially observers had hoped would be spared. Domestic tourism is unlikely to see any benefits as the country has rapidly moved to shut down tourist sites, including beaches and parks, and towards the end of March there were indications that all hotels might be made to close. Despite these measures however the sector remains one of the Sultanate’s more promising ones in the long-term, and there is hope that the segment will witness a surge of activity once the all-clear has been sounded and holidays and business trips are re-scheduled. Another, related industry to have witnessed a direct impact is the retail industry with industry. Malls have been

China the biggest importer of Oman’s energy exports, accounting for between 80-85% of total oil exports. The country will have to contend with as the full extent of the pandemic’s economic fallout becomes clear.

Billy FitzHerbert Regional Editor, Middle East, Oxford Business Group

28 APRIL 2020

Billy has been working for Oxford Business Group’s Middle East desk since 2014. In that time he has been involved in over 30 reports focused on the region, undertaking numerous analyst assignments in the field in addition to working on the management and production side of the projects. In his current role, Billy oversees OBG’s research and editorial output in the Middle East and regularly travels to regional capitals to conduct interviews and meet key stakeholders. His personal research interests include the rise of tech implementation in the region’s key sectors, and more broadly the reorientation of Gulf economies away from oil in the medium to long-term. Originally from Ireland, Billy holds an MA in History and French from the University of Edinburgh. Shortly following his graduation he moved to Istanbul, Turkey, to work in economic research, before joining OBG a year later. He still lives in Istanbul.

closed with the exception of grocery stores, and restaurants, cafes and bars are only allowed to provide take-away and delivery options. Certain segments of luxury retail have a big exposure to the tourism sector and are among those most vulnerable to economic shocks threatened by covid-19. However one segment that has witnessed an uptick in activity is E-commerce and delivery business with the big player Talabat (food delivery) and smaller players like Akeed Delivery seeing a boost to their turnover. As e-commerce was quite underdeveloped in the Sultanate, this black swan event may well provide the boost that will help it take off more broadly in Oman and across the region. The key thing will be whether the still somewhat nascent segment can absorb the anticipated increase in demand in the weeks and months ahead. Finally the industry, construction, transport and logistics sectors are all likely to feel a direct squeeze as a result of the pandemic chiefly in terms of disruptions to global supply chains. Given that these sectors rely heavily on Chinese imports, the expectation is that delays - which were already being witnessed prior to the pandemic -will intensify and persist. GSC: Covid-19 has impacted the global economy. In the scale of things, how much of a fall-out has the pandemic had on Oman had vis-a-vis say the GCC and the wider Middle East? BFH: At this stage it is really too soon to tell. However given Oman has taken such swift and decisive measures to mitigate the spread of the virus, and its impact on the local economy one is optimistic that the more adverse effects of Covid-19 – both health and economic - can be headed off. The reaction of the Omani population meanwhile has been calm and measured, with little of the panic buying or excessive stockpiling witnessed in other countries including the UK. This being said there are some significant broader economic concerns that need to be taken into account. The Sultanate is very exposed to any fluctuation in Chinese energy demand for example, with China the biggest importer of Oman’s energy exports, accounting for between 80-85% of total oil exports and this is something the country’s new leadership will have to contend with as the full extent of the pandemic’s economic fallout becomes clear. n

Blockchain

Tracking of ULDs through blockchain to save industry US$ 400mn annually

ITA and trade association ULD Care hope to bring new efficiency to the air cargo industry by exploring the use of blockchain to digitally track and record change of custody of airline cargo containers or Unit Load Devices (ULDs) across their journey, it was revealed in a joint press release. By eliminating inefficiency, embedding always-on tracking of ULDs and abandoning redundant paper systems, the use of blockchain is expected to save the industry US$400mn a year in improved efficiency, fewer losses and prevention of damage. The proposed platform also offers a wide range of authentication and trust-based benefits, reducing the risk of tampering, cybercrime, trade-based money laundering, fraud, and illicit trade.

High trade value “Air cargo represents only 1% of all global trade in terms of volume but accounts for 35% of the total trade value and the inefficiency is significant. A container traveling from Shanghai to Long Beach could take up to 30 days to finish its journey, but the true travel time on sea or road is only around 15 days, with the remaining time spent on back-office and paperwork. The use of blockchain could revolutionize that process,”affirmed Bob Rogers, Vice President and Treasurer, ULD Care. Currently, more than 800 million ULDs 30 APRIL 2020

Shipment oversight

Through accurate tracking and secure data sharing, shipping times could be cut in half are in use by airlines yet the system used to track these ULDs has only been partial digitalized and relies on incomplete data sharing and record keeping. The proposed blockchain system improves efficiency by making use of all data points across the air cargo journey and provides a platform that aggregates and processes the ULD data in a trusted and secure way. The PoC (proof of concept) will extend and upgrade the current ULD interlining platform to include non-airline third parties such as ground handlers via open APIs (Application Programming Interfaces ) and a new modern interface. The results will transform the industry by lifting the veil on a myriad of previously unknown factors like damage reports. Knowing the location of all ULD’s (and therefore cargo) at all times means companies can accurately track where loss or damage occurs and recover the costs without dispute.

For any given shipment there can be up to 12 custodian companies monitoring and tracking the cargo, with many relying on paper documents making the process cumbersome and undermined by trust and transparency issues. Blockchain presents a near-perfect solution to address these industry pain points with huge time and cost-saving potential. “We are looking at blockchain very closely and we’re excited to test the potential of the technology to transform the air cargo industry. Beyond cargo and across the air transport industry we see huge potential for blockchain to address common challenges. The biggest obstacles standing in the way of a seamless passenger journey and truly efficient air travel, are the siloed processes across the many stakeholders, including airlines, airports, ground handlers and control authorities. They act as significant speed bumps at every step of the way,”concluded Matthys Serfontein, President of Air Travel Solutions, SITA. This project forms part of SITA’s Global Blockchain Alliance which is leading exploration into blockchain’s potential for the air transport industry. SITA’s role, as the air transport community’s IT provider, is to provide governance for the global alliance, support the working groups, deliver all required blockchain technology components and ensure proper alignment and validation with regulators and international standardization bodies. n

Red Sea Gate Terminal

Saudi Arabia’s expanded and equipped RSGT Jeddah Port Facility commences operations US$ 1.7bn allocated for further project development and renovation

he Red Sea Gate Terminal (RSGT) has significantly expanded its operational capabilities and capacity at Jeddah Islamic Port on Saudi Arabia’s western Red Sea coast. Wednesday, 1 April 2020, marked the official commencement of RSGT’s take-over of operations in the northern section of Jeddah Islamic Port (previously known as North Container Terminal (NCT). It may be recalled that a new long-term, 30-year concession agreement for the existing north port facility was successfully reached at the end of last year between RSGT and the Saudi Arabian Ports Authority, (Mawani). The deal calls for US$ 1.7bn of investment in infrastructure, equipment and technology by 2050, with annual container throughput capacity growing to 8 million TEUs. “As we begin operations at the northern part of Jeddah Islamic Port, we are very proud to commemorate this tremendous milestone of the RSGT growth strategy, demonstrating our ongoing and longstanding commitment to expansion, modernization, and world-class terminal services,” stated Jens O. Floe, CEO, RSGT.

An aerial view of the newly opened RSGT Jeddah Port Facility at the North Container Terminal. Arabia, the Ministry of Transportation and Mawani for their foresight and trust in our ability to continue to bring excellence to the trade,” asserted Floe.

RSGT – a maritime powerhouse

RSGT empowered By 2023, the expanded RSGT, covering an area of 1.5 million sqm, will have increased annual container throughput capacity to 5.2 million TEUs. Already able to accommodate Ultra-Large Container Ships (ULCS) of 20,000 TEU class and above, at the end of the first three-year phase of investment, RSGT will be empowered with 24 Super Post-Panamax quay cranes, 67 Rubber-Tyred Gantry Cranes (RTGs), and will offer 4,900 Reefer plugs. “This carefully planned program of growth and investment will firmly establish RSGT as the largest logistics gateway, and the busiest container terminal, in Saudi Arabia, and on the Red Sea,” affirmed Floe. Red Sea Gate Terminal has already signed an Islamic financing and funding agreement

Jens O. Floe, CEO, RSGT. for the project with two of the top Kingdom’s banking institutions—Banque Saudi Fransi and Al Rajhi Bank. “We are looking forward to executing this outstanding project and thank the Government of the Kingdom of Saudi

Red Sea Gateway Terminal (RSGT) is an international terminal operator representing a strong and effective partnership between the Saudi Industrial Services group SISCO and the Malaysian Mining Company (MMC). Their combined assets, handling capacity and experience place the terminal operations among the ten largest container terminal operators globally, with a combined annual handling capacity of 20 million TEU, and equity-weighted throughput of over 10 million TEUs. The largest terminal operator on the Red Sea, RSGT is committed to regional and global infrastructure and facility investment to better serve the growing requirements of domestic cargo and container services, as well as assuming a larger role in the global logistics chain through targeted international expansion. n APRIL 2020 31

Petrochemicals supply chains under price and demand duress The coronavirus pandemic implies that global growth across most if not all petrochemicals will be negative in 2020 over 2019. No meaningful recovery in markets seems likely until the end of 2020 at the earliest, opines John Richardson, Senior Consultant, Asia, ICIS, in this contribution. This is of course challenging news for the Gulf Cooperation Council (GCC) petrochemicals producers and suppliers. In this rather volatile situation it is impossible to assess the gravity or implication of the current situation but we can at least attempt to assess the impact on demand from China for GCC polyethylene (PE) imports, notes Richardson in the commentary below — Editor.

irst, it is important that we paint the overall picture of the challenges represented by coronavirus in order to support the petrochemicals planning process in the current context. Previous assumptions on GCC operating rates and exports to all regions, as well as demand growth within the GCC itself, must be re-forecasted – and then likely reforecasted again and again as events move rapidly forward. The great news is that China may have got on top of its crisis thanks to a huge and highly co-ordinated government effort. A recovery in economic activity outside the most-affected province, Hubei, appears to be gathering pace as factory and office workers return to their jobs.

Secondary wave? There is one major caveat here, though, which is whether there will be a secondary wave of infections when China fully gets back to work. Nobody really knows because there are so still so many uncertainties about this disease. Even with significant Chinese economic stimulus that’s likely to occur once everyone is fully back to work, lost demand is lost 32 APRIL 2020

demand. The Lunar New Year was a major consumption season so think of all the bus, train and car journeys, and all the buying of gifts etc. which didn’t take place during that period that cannot be replaced later in the year. It will also take a good while for supply chains to come back to normal even in the best of possible outcomes. Chinese ports are clogged-up with goods that were made before the outbreak that still need to be shipped and internal logistics have yet to fully recovery.

The impact on Chinese PE imports from the GCC My original expectation was that Chinese PE demand would grow from 33.9m tons in 2019 to 36.1m tons in 2020, a 6.6% increase over last year when analyse the exact numbers. However, so far in Q2, demand growth versus the base case appears to have been down by 8% based on discussions with market players. Add to this a guesstimate of the prolonged impact of the Chinese economy of the crisis, assuming that the number of new infections has now peaked, and I

estimate that annual demand may end up being y 11.4% below my original base case, at just 31.9m tons. This would represent a decline of 5.6% versus last year. There is an upside to this outlook. Demand could bounce back more strongly than I assume. And it hasn’t been all doom and gloom across all end-use applications.

Quarantine requirements For instance, because of quarantine restrictions there has been a significant rise in high-density PE (HDPE) injectiongrade and linear-low density (LLDPE) and low-density PE film-grade demand

GCC Petrochemicals Exports

China PE Imports from the GCC

KUWAIT

QATAR

UAE

3654148.067

1405291.296

1582591.055

1491027.761

676994.6252

762291.4774

722084.297

317929.5423

358106.2595

Scenario B: 2020 forecasts of imports after the virus outbreak

4116155.076

Scenario A: 2020 forecasts of imports before the virus outbreak

3875191.984

2019 actual PE imports

336401.212

for packaging food delivered to peopleâ&#x20AC;&#x2122;s homes. Stretch LLDPE film demand has also benefited from stricter hygiene requirements which require more film to be used to wrap finished goods. Now letâ&#x20AC;&#x2122;s stick with this perhaps extreme downside scenario in order to map what this might mean for Chinese PE imports from the GCC countries. How this was estimated was to work out the percentage split between Chinese local production and imports in 2019 for each of the grades and use this to forecast imports for each of the three grades of PE in 2020 on the basis of demand at 36.1m tons (situation A) and then demand at 31.9m tons (situation B).

KSA

APRIL 2020 33

GCC Petrochemicals Exports

Dual scenarios I then assumed that the GCC countries would achieve the same percentage market shares in the China market as they did in 2019, in order to estimate how much China would import from the region’s countries under scenarios A and B. The end-results you can see in the below table, where I compare these two outcomes with actual imports in 2019. For example: Total PE imports from Saudi Arabia imports in 2020 is likely to reach 4.1m tons in 2020 under Scenario A from 3.9m tons in 2019. Under Scenario B, they fall to 3.7m tons. Imports from the United Arab Emirates were at 1.5m tons in 2019. In Scenario A they climb to 1.6m tons, but in Scenario B they fall to 1.4m tons. For instance, to what extent might the US win more market share in China in 2020 at the expense of the GCC? The US could gain more market share following a Chinese government decision in February to allow importers to apply for 25% additional tariffs that were imposed on US HDPE and LLDPE as part of the trade war. The outlook for Chinese demand will also become clearer as China returns to work and as the global implications of the coronavirus crisis become clearer. Also, I may be wrong to assume that local production as a proportion of demand stays the same in 2020 as in 2019. This assumption is based on substantial delays in domestic capacity start-ups in 2020 resulting from coronavirus. 34 APRIL 2020

Total PE imports from Saudi Arabia imports in 2020 is likely to reach 4.1m tons in 2020 Before the outbreak, we were expecting local HDPE production to rise by 15% over last year. LLDPE was forecast to be 7% higher with LDPE production edging up by just 1%.

Major global logistics reductions So, now that the virus has gone global, we need to study the disruptions that have taken place in China and game plan how they might play out across the world. Whereas economic stimulus will work in China once most people are back to work, provided there are no secondary outbreaks, it won’t work in the West because travel restrictions, factory, school closures and lockdowns that have only just begun. You cannot stimulate economic activity that isn’t taking place. In May 2003, the Q2 company results came out and the results were grim. Even though by then SARS was being brought under control, the negative effect on stock market sentiment – and so economic activity – was big. We can expect the same in May this year when the Q2 results come out, but on a bigger scale because this is a bigger scare than SARS.

There will be several waves of disappointing financial results if this crisis isn’t over until the end of the year, whereas in the case of SARS it was only one wave of bad results.

China demand vital Statistics from the ICIS Supply & Demand Database indicate the much bigger role that China today plays in the global economy today compared with 2003. Back then, China accounted for 22% of global consumption of the 28 major polymers. Our expectation is that in 2020 this will have risen to no less than 43%. Another major problem will relate to logistics. Think of what’s happened because of events just in China. Containers are stranded in the wrong locations and there is a lack of backhaul cargoes. Now consider these disruptions on a global scale. There could be a major impact on the trade flows of petrochemical feedstocks, petrochemical products and customers’ products all the way down to finished goods. Petrochemicals markets may become much more regional. An inevitable global recession could also morph into a financial crisis because of the big build-up in debt since the 2008-2009 Global Financial Crisis. The Financial Times reports that, according to the Institute of International Finance, the ratio of global debt to gross domestic product reached an alltime high of more than 322% in Q3-2019, with total debt reaching close to US$ 253tn.

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Pharma Supply Chain

Covid-19:Key risks to the global Foreword: In this special independent contribution, author Eelco Dijkstra, Managing Partner, Europhia Consulting, and an industry expert, reviews the clear and current supply chain risks for pharmaceutical and medical products in realtion to the COVID-19 crises currently overwhelming the globe. The observations, from a global supply chain persepective, are based on the authorâ&#x20AC;&#x2122;s input and concerns from many professionals and peers within the industry working in different parts of the supply chain. The writer advocates more cohesive, coordination and quicker action at the highest leadership levels between government and industry that in the present crises situation is sorely needed urgently to streamline and harmonise the flow of much-needed medical supplies and personal protective equipment (PPE) regionally and internationally â&#x20AC;&#x201D; Editor. 36 APRIL 2020

Pharmaceutical Supply Chain Introduction Only ten weeks ago, the emergence of the novel coronavirus COVID-19 seemed remoteâ&#x20AC;&#x201D;its occurrence in far away Wuhan in central China apparently posed no threats at all. Then suddenly, and viciously, the virus started popping up in various other parts of the world. At the time of publication of this report, with more than 396,000 cases and more than 17,000 deaths globally, the World Health Organisation (WHO) announced that we now have a global pandemic on our hands that is ravaging across the world. An increasing number of countries across Asia, Europe, the Middle East and the US are sliding into lockdown mode. Exhibitions, conferences, sports events and social gatherings have been banned. Schools and places of worship are closed. People are being told to stay at home and streets across Europe in Italy, France and Spain are being policed. No one saw this coming. What started as a strange virus with a funny name has turned into everyoneâ&#x20AC;&#x2122;s worst nightmare.

Panic purchases People all around the world have started panic buying food from their local supermarkets leaving shelves empty. People are locked up in their homes. Companies around the world have started to halt manufacturing lines similar to what has already been happening earlier across China. Whole industries are coming to a halt. Flights are being cancelled and airlines and hotels have started laying-off staff. Other industries are doing the sameâ&#x20AC;&#x201D;starting to lay off temporary staff and flexi workers. The global financial markets are in melt down and have lost over 35% of their value not seen since the financial crisis of 2008. This has started to look like the script from a Hollywood horror film scenario with only one major difference. This is real and we are only 10 weeks into this! APRIL 2020 37

Pharma Supply Chain

The role of Government Thus far, governments are still slow to respond. They are not using the lessons learnt in China and copying these lessons quickly enough. Lockdown only started this week across some countries, yet the virus has already affected whole areas and countries. While China managed to lock down most of the Wuhan region quickly within four weeks, some major countries such as parts of Europe and the US still allow free movement between and within the country. What is needed is for government not only to think about how to provide some economic relief across the whole economy but to focus their financial efforts on three key sectors.

Three key industries are vital — manufacturing, auto and airlines A number of companies have started to slow down or stop completely their manufacturing activities. In China this has already been going on for some weeks which implies products such as electronics, mobile phones, fashion and textile exports are coming to a halt. Of course, China is the global factory for so many products and all these product supplies are affected 38 APRIL 2020

as inventory levels across the world are starting to run low. This week a number of key carmakers announced a full production stop such as the French PSA Group (Peugeot Citroen, Opel+) and the German Volkswagen. Others such as Renault, Ford and Fiat have announced similar closures of key factories. Soon there will be no new cars to buy from the showroom. This is just an example of a whole sector grinding to a halt.

Closure of airspaces Another one is the airline sector, as countries close their borders and people stop traveling, all airlines are winding down their operations. Major airlines operating flights between the US and Europe have started to fully cancel all flights in an attempt to reduce the financial impact on their business. Soon there will be no transAtlantic flights a situation unheard of since World War II. However, most people don’t realise that most air cargo moves around the world onboard passenger jets. Airlines are making the right decisions from their own financial business perspective, but from a macro socio-economic perspective this will start affecting supply of goods across the world. There are three key industries which run the highest risk of impacting all of us

the most very soon if governments and big business don’t step up. These sectors are utilities such as water and energy, food and food processing, pharmaceuticals and medical care.

Energy, food and medical supplies sectors The energy sector is well organised, and governments traditionally have a direct role to play in this sector as they own most of the assets and/or have a vested financial revenue interest in ensuring energy gets to consumers as part of their tax system. The energy sector looks probably okay for now. However, in the food industry we are already starting to see many people stockpile food to build up buffers in their homes in case events turn for the worse. Most of us have never experienced this before in our lifetime. Although retail chains and governments are calling on people not to panic, the panic is there and for good reason. People realise that supply of certain foods will soon slow down especially in countries heavily dependent on imported foods. The pharmaceutical and medical supply sector is the third sector which although on everyone’s radar screen in terms of the medical and hospital care needs, is at great risk of breaking down soon unless governments step in fast.

Pharma Supply Chain

The Pharmaceutical supply chain will run dry During normal times the pharmaceutical and medical supply sector typically has about six months of inventory on hand in its supply chain. There are various factors why pharmaceutical products from the pharmaceutical industry will soon be in short supply. The production of medicines typically has a very long and global supply chain from raw material production to API (active pharmaceutical ingredient) to semifinished product, compounding or filling to packaging. Many pharmaceutical products touch a number of countries before the finished product is actually available in the hospital or across the counter in your drug store around the corner. In the pharmaceutical industry, much of the global transportation between these manufacturing steps goes via international airfreight. This is grinding to a halt.

Supply conundrum Right now, there are various ‘supply’ related factors slowing down the whole pharmaceutical supply chain. Firstly, manufacturing itself is slowing down as companies are trying to protect their staff. Secondly, government pressure on certain companies has started to slow the export of certain medicines and medical consumable items as governments step in to secure supply for their own domestic needs first. Thirdly, the transportation of product itself is under severe pressure as airlines stop flying. Medical consumables is typically moving around the world via sea-freight is also under severe pressure due to several additional factors and overland transportation on trucks is also being complicated as countries have started to block their borders.

Demand-supply balance On the ‘demand’ side we have seen in the pharmaceutical and consumables a similar development compared to the food industry, namely stocking up of product. This is currently going on throughout the whole global medical market. Governments and hospitals are trying to increase their ‘safety stocks’ from the

traditional 3-4 months to 12 months of many medical items as demand for a number of products related to the virus surges. Governments and hospitals around the world have been caught ‘off-guard’. They are not known as fast movers and typically behave reactively to events. It seems that the ‘middle-men’ are profiteering and making the situation only worse. Price levels of many products have shot up and whilst some hospitals and clinics have secured additional stock others have clearly not been so lucky and are scrambling to find additional stock from anywhere.

Shortages All of the above factors together are putting severe pressure on the whole supply chain system within the pharmaceutical sector. As a result, we could soon face severe shortages of medical supplies as the whole global supply chain for these products slow down. Inventory levels will wind down whilst medical needs for certain products such as medical gowns, surgical masks, sterilisation equipment but also for certain pharmaceutical products will go further up as the corona virus gathers further pace.

What now needs to happen fast COVID-19 needs to be treated like an enemy during war time. Not only is securing strategic stock of certain products right now vital but even more so is ongoing continuity of supply. Governments needs to step up and work more together to secure continued supply and they need to do so fast. This is a fine balancing act as they weigh domestic political and social pressures against the need to work together internationally to ensure global pharmaceutical supply chains keep working effectively.

Government regulations Governments need to regulate collectively. They need to ensure price levels are fixed through temporary law based on existing contracts from before the onset of the Coronavirus. This will also ensure the middlemen and traders cannot take further advantage of the situation and play off governments, hospitals and clinics against each other in the supply of vital products.

Currently, the global transport sector in airfreight, trucking and sea freight are all reducing capacity and they struggle financially to keep their heads above the water. This is completely the wrong direction to take and will lead to the ‘doomsday’ scenario we need to try to avoid where product supply can no longer be guaranteed as whole supply chains break down. Therefore, governments, pharmaceutical manufacturers and large logistics companies collectively need to ensure continuity of vital airfreight and logistics routes between countries. This can only be done short term through regulations to keep key transportation companies ‘operating’ to ensure continued supply of ‘strategic’ medical products. One option is for governments to extend financing securities to key transport players who currently are cutting down costs to offset massive financial loss in revenue and stock market value. In the most extreme scenario, some airlines and some transportation players may need to be temporarily nationalised to ensure short term business continuity. This will cost money for sure but will cost governments far less than if they leave this problem lingering on for too much longer.

The good news The good news will come if governments and big business act fast and work together. Securing vital supply chains will ensure there are enough products to support the hospital and medical care sector dealing with the virus with the products they need to keep the entire hospital care system going in each country. By regulating and financially supporting key pharmaceutical manufacturing, transportation and logistics players governments can play a vital role in ensuring ongoing supply of product reaches hospitals and patients around the world. This will create a balancing factor badly needed in an industry looking for leadership and direction. n (Europhia Consulting is an international management consulting company specialised in the logistics and supply chain industry in the life-sciences sector. The opinions are based on the author’s own experience and understanding of the dynamics within the sector.) APRIL 2020 39

Airlines Stimulus

IATA request urgent emergency support for airlines Required relief package estimated at US$ 200bn

he International Air Transport Association (IATA) is appealing to governments in Africa and the Middle East, as part of a worldwide campaign, to provide emergency support to airlines as they fight for survival due to the evaporation of air travel demand as a result of the COVID-19 crisis. “Governments must be aware that the public health emergency has now become a catastrophe for economies and for aviation. Many routes have been suspended in Africa and Middle East and airlines have seen demand fall by as much as 60% on remaining ones. Millions of jobs are at stake,”said Alexandre de Juniac, IATA’s Director General and CEO in a recent press statement. Extensive cost cutting measures are being implemented by the region’s carriers to mitigate the financial impact of COVID-19. However, due to flight bans as well as international and regional travel restrictions, airlines’ revenues are plummeting— outstripping the scope of even the most drastic cost containment measures. With average cash reserves of approximately two months in the region, airlines are facing a liquidity and existential crisis. Support measures are urgently

40 APRIL 2020

Alexandre de Juniac, Director General and CEO, IATA. needed. On a global basis, IATA estimates that emergency aid of up to US$ 200bn is required. IATA is proposing a number of options for governments to consider, the communiqué continued. These include: • Direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19;

• Loans, loan guarantees and support for the corporate bond market by governments or central banks. The corporate bond market is a vital source of finance, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies. • Tax relief: Rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other Government-imposed levies. “The much needed stimulus will enable global supply chains to continue functioning and provide the connectivity that tourism and trade will depend on if they are to contribute to rapid postpandemic economic growth,“ remarked Muhammad Al Bakri, IATA Regional Vice President Africa, Middle East. Africa’s air transport industry’s economic contribution is estimated at US$ 55.8bn supporting 6.2mn jobs and contributing 2.6% to GDP. In the Middle East air transport’s economic contribution is estimated at US$ 130 billion supporting 2.4mn jobs and contributing 4.4% to the GDP. n

Airbus Innovation

Airbus to produce 3D-printed hospital visors in fight against Covid-19 Company announces measures to bolster liquidity in response to pandemic

he majority of Airbus sites in Spain have joined forces to produce 3D-printed visor frames, providing healthcare personnel with individual protection equipment in the fight against Covid-19. More than twenty 3D-printers are working day and night. Hundreds of visors have already been produced and dispatched to hospitals close to the Airbus facilities in Spain. Airbus leverages a patented design to manufacture the visor frames, using PLA plastics. “One of the reasons I love my job is the capability we have for advanced design and quick manufacture. Overnight, we have gone from making aerospace concepts to medical equipment,”remarked Alvaro Jara, Head of Airbus Protospace, in Getafe, Madrid.

Despite the pause of the majority of production at Airbus’ sites in Spain following the Royal Decree of 29 March, Airbus employees are allowed on site to continue with this essential activity. In addition, Airbus in Germany also joined the project. The Airbus Protospace Germany and the Airbus Composite Technology Centre (CTC) in Stade, together with the 3D-printing network named ‘Mobility goes Additive’, are now supporting this project in Spain, also coordinating the collection and transport of visors to the Madrid region.

Liquidity boost Meanwhile, Airbus announced measures to bolster its liquidity and balance sheet in response to the COVID-19 pandemic as it

continues to assess the ongoing situation and the impact on its business, customers, suppliers and the industry as a whole. “Our first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus. We are committed to securing the liquidity of the Company at all times through a prudent balance sheet policy. I am convinced that Airbus and the broader aerospace sector will overcome this critical period,”affirmed Guillaume Faury, CEO, Airbus. Reflecting the Company’s prudent balance sheet policy and to ensure financial flexibility, Airbus’ management has received approval from the Board of Directors to secure a new credit facility amounting to € 15 billion in addition to the existing € 3 billion revolving credit facility. n APRIL 2020 41

Etihad Rail

HE Sheikh Theyab Bin Mohamed Bin Zayed holds a virtual meeting wuth Etihad Rail officials.

Etihad Rail confirms the award of AED 846m contract for O&M facility at Al Faya

UAE’s rail operator launches the construction works of Package B of Stage Two of the network, including a sleeper factory at Saih Sheib, during a virtual site visit

he Etihad Rail Board of Directors recently held a remote meeting chaired by HE Sheikh Theyab Bin Mohamed Bin Zayed Al Nahyan, Member of the Executive Council, Chairman of Abu Dhabi Crown Prince’s Court and Chairman of Etihad Rail. Following the digital meet, the Board confirmed the award of a contract worth AED 846mn (US$ 231mn) for the construction of the central Operation and Maintenance (O&M) facility at Al Faya, Abu Dhabi. During the meeting, Sheikh Theyab Bin Mohammed also carried out a virtual visit of the construction site in Saih Sheib region, and launched the civil works on Package B of Stage Two of the UAE’s national railway network project, which is developed and operated by Etihad Rail. Package B extends over 216 km and includes the construction of a second concrete railway sleeper factory and rail routes to Khalifa Industrial Zone Abu Dhabi (KIZAD), Khalifa Port, and the Industrial City of Abu Dhabi (ICAD). In addition, the Etihad Rail Chairman discussed a mechanism to ensure operational continuity of the company’s fleet in Stage One, which daily transports

42 APRIL 2020

granulated sulphur from sources at Shah and Habshan to Ruwais, according to approved plans as part of the company’s commitment to provide reliable, safe, and fast services.

Review of strategic plans Sheikh Theyab also reviewed the performance report on the execution of Etihad Rail’s strategic plans and the company’s operations to date, in addition to its future programmes and initiatives and the latest developments of Stage Two of the national rail network, which runs from Ghuweifat on the UAE’s border with Saudi Arabia to Fujairah and Khorfakkan on the east coast. Sheikh Theyab stressed the importance of continuing to implement the strategic plans, future visions, and operational work of the UAE’s national railway network project to continue the implementation of strategic projects as per the approved plans, in order to sustain national achievements. The Etihad Rail Chairman also highlighted the necessity to execute precautionary and preventive measures to ensure business continuity while supporting the efficient dealing with changes, thereby maintaining

performance and productivity throughout the various sectors of the company. Etihad Rail board members confirmed that the O&M facility in Al Faya contract, valued at AED 864m (US$ 231mn), had been awarded to a joint venture led by VINCI Construction France, in line with the company’s future strategy to provide a railway network that supports and strengthens the long-term growth of the national economy.

Largest facility on the network The facility will be the largest and the most important facility on the network; it will be responsible for warehousing, installations, operations, and the maintenance of locomotives and wagons. The facility will also include an administrative building to control the operations of the whole network. Etihad Rail has now awarded all civil works and construction contracts for Stage Two of the national railway network. The company has also launched construction on Package A of Stage Two, signed a contract for the construction of a series of Freight Facilities centres, and awarded a contract for the supply of locomotives to expand the company’s fleet to 45. n

Maersk

Maersk opens new Inland Container Depot in South India The new Madurai facility will reduce transportation times and lower costs

Steve M. Felder, MD, Maersk South Asia.

ith the opening of its new Inland Container Depot (ICD) in Madurai, Maersk, the global integrator of container logistics aims to get closer to customers in the hinterland of Tamil Nadu, one of India’s southern states. Spread over a total area of about 70 acres, the ICD is one of the largest in the country and will serve as a major cargo acceptance hub for South India. Equipped with a warehouse to support faster cargo clearance, Maersk believes this

latest ICD will help reduce overall logistics costs by up to 30%, while also providing while providing operational transparency and other operational benefits to customers. Until recently, importers shipped cargo to Tuticorin Port on India’s eastern Bay of Bengal coast,, where it was cleared by Customs, de-stuffed and kept at a warehouse. In line with customer requirements, the cargo was then generally moved by truck from Tuticorin to its final delivery point in and around Madurai. Exporters had to pick up empty containers from Tuticorin and bring them all the way to their factories. With ICD Madurai as a new acceptance point, Maersk will help move the cargo directly to Madurai, speed up the clearance process and manage de-stuffing and storage

at the ICD warehouse. The new ICD also provides customers with a choice of taking the container and delivering it back at the final delivery point, or to return containers to Madurai. “Our operations at ICD Madurai are aimed at reducing logistics costs for our customers by cutting the cargo transport journey by up to 150 km. We are also tapping into the hinterland’s potential by opening up new trade possibilities and enabling ease of doing business for the trading community in the region,”affirmed Steve Felder, Managing Director, Maersk South Asia. Customers are expected to benefit from faster clearance of their cargo in Madurai as compared to Tuticorin. They will also have the advantage of same day clearance and gate-in at the terminal. n APRIL 2020 43

Ingenious Innovations

Managing lockdowns with customized Real-Time Business Innovations Supply Chain, health pre-screening, and remote work solutions from SAP maintain business continuity

n the wake of the on-going pandemic, Middle Eastern organizations are being called on by industry experts to adopt realtime solutions to re-design core business processes to secure employees’ and citizens’ welfare and subsequently maintain business continuity. Safety and well-being are top priorities as the world manages the deepening effects of the coronavirus. All organizations face unprecedented challenges as the impact on the global economy continues. Frontline industries of healthcare, pharmaceuticals, research, and public security need to access real-time information, address citizen sentiment, and accelerate reaction time. Retail, banking, education, insurance, and entertainment need to enable digital channels. Wholesale distribution, retail, consumer, and oil and gas need to provide supply chain flexibility, ensure last mile delivery, and secure sources of supply and finance.

44 APRIL 2020

Sergio Maccotta, SVP, SAP Middle East South. The urgent need to evaluate business viability is now more important than ever for both industries directly hit and equally for companies experiencing demand spikes.

Supply chain solutions “To weather the impacts of the current COVID-19 coronavirus crisis, SAP enlists in leveraging real-time tech solutions to

interweave potentially disrupted supply chains, foster safe travel, accelerate coronavirus pre-screening, and facilitate remote working,”remarked Sergio Maccotta, Senior Vice President, SAP Middle East South. It is during such times that we, as contributors to our community, must strive to come closer together in battling this outbreak. With this in mind, SAP Qualtrics has launched two new free solutions: the COVID-19 Pre-Screen and Routing, a guided pre-screening questionnaire and information portal, and the Remote Work Pulse, which provides a live barometer for organizations to understand how employees are working from home. Similarly, and to support the organizations which embrace our citizens, SAP has opened access to SAP Ariba Discovery for real-time procurement between buyers and sellers to maintain the supply chain, and to TripIt Pro from Concur to manage safe and easy travel itineraries in the face of changing travel itineraries. n

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Industry 4.0-Manufacturing Juxtaposition

Managing the Impact of Industry 4.0 in Manufacturing The definition of the term Industry 4.0, attributable to Deloitte, encompasses a promise of a new industrial revolution—one that marries advanced manufacturing techniques with the Internet of Things to create manufacturing systems that are not only interconnected, but communicate, analyze, and use information to drive further intelligent action back in the physical world. Amel Gardner, Regional Vice President–Middle East, Africa & India, Epicor Software Corp., analyzes the broad implications of Industry 4.0 in the Manufacturing sector and outlines a six-step plan for success — Editor

or Middle East manufacturers, or any business in general, the success of digital transformation isn’t just about investing in the right technology. As with any large-scale project—from a change in working location to a company merger—the impact on the people involved needs to be a key consideration when putting a strategy and implementation plan in place. However, in a bid to keep up with the latest technology trends, regional manufacturers could be shooting themselves in the foot by not addressing the change management and cultural aspects from the outset. In fact, recent research has found that only a quarter (26 percent—the research was conducted by Savanta on behalf of Epicor in 2019) of businesses consider change management strategies to be an important part of the move towards Industry 4.0 and the connected enterprise. This suggests that a large proportion of manufacturers are not putting steps in place to manage the impact of such a change on corporate culture, which could affect the ultimate success of any digital transformation project.

46 APRIL 2020

Six steps to success

they can get the best out of it.

Despite pressure on Middle East businesses and individuals to remain at the cutting edge, no one wants to be an early adopter and get it wrong. A recent report from Deloitte into Industry 4.0 readiness found that even in today’s technology-driven world, senior executives are not as prepared as they think they are to reap rewards from digital transformation: ‘’Faced with an ever-increasing array of new technologies, leaders acknowledged they have too many options from which to choose and, in some cases; they lack the strategic vision to help guide their efforts. Organizational influences also challenge leaders as they seek to navigate Industry 4.0. Many leaders reported their companies don’t follow clearly defined decision-making processes, and organizational silos limit their ability to develop and share knowledge to determine effective strategies’. To make Industry 4.0 a success, no matter how big or small the change, manufacturers need to put key measures in place to manage the transition. This includes undertaking the necessary groundwork to ensure that whatever technology businesses invest in,

Step one – Be realistic Despite digital transformation being very much an industry buzzword, local manufacturers don’t need to take everything on at once. Assess what needs to be automated and why. If something is working and the process efficient, it might not need changing just yet. The key to getting it right is to prioritise adoption rather than change for changes sake. A phased approach will be beneficial for everyone in the long term.

Step two – Get stakeholders on board Following an assessment of priorities, manufacturers need to map and plan out what needs to happen next—from procurement to implementation and beyond. This ensures that all stakeholders from every department affected are clear about what is happening, why and when. Only then can everyone involved be prepared and plan for the roll-out.

Industry 4.0-Manufacturing Juxtaposition

Step three – Keep talking Communication at every stage is essential— particularly before implementation. Users need to feel they are part of the process and can raise any concerns or questions before a new way of working is thrust upon them. Taking time to address any potential issues at the start of a project will ensure users are bought into the process, understand what is expected of them and avoid any pitfalls further down the line.

Step four – Factor in ongoing training and support For efficiencies and productivity to be realised, users need to have a good understanding of how the technology impacts their working practices. This can only be done through comprehensive training and ongoing support. While this could be an overwhelming prospect, breaking it down into bite-sized, digestible sessions will be invaluable rather than overloading people with too much information from the outset. It is also worth considering that everyone learns in different ways, so whilst an online

not well thought through or fit for purpose.

26% of businesses consider change management strategies to be an important part of the move towards Industry 4.0 demo or training manual might be right for one person, someone else might prefer more visual tools like a video or a step-by-step animated guide, for example.

Step five – Take your time The choice of new technologies can be overwhelming and daunting for even a seasoned professional. Never lose sight of why you are investing in technology and keep your business objectives in mind— what your competitor is doing might not be the right approach for you. Jumping on the bandwagon or adopting new technology too quickly could be detrimental in the long-term, if the process is

Step six – Undertake regular reviews While following steps one to five will ensure the business has the best chance of successfully adopting new technology, it will all be in vain if you miss out step six. The hard work doesn’t stop when you reach golive—in fact, that is only just the start of the digital transformation process. For a project to be a true success, any technology investment needs to be reviewed and assessed regularly. Is it being used to its full potential? Are there any gaps in training? What more could the business get from it? What is the data showing? Can it be analysed to improve future business growth? Only by following these six steps will the Middle East manufacturing industry bring the whole business along for the digital transformation ride and ensure that Industry 4.0 is a success. Having a clear change management and implementation strategy will enable businesses to realise the full value of technology, whilst guaranteeing strong ROI (return on investment) and user acceptance. n APRIL 2020 47

Commentary â&#x20AC;&#x201C; Fallout of the Pandemic on Global Shipping

Cornona Virus: Outbreak and impact on the Global Shipping sector In his maiden contribution to Global Supply Chain, Adv. Joy Thattil, Managing Partner, Callidus Legal and leading maritime lawyer, examines the knockon effects of the ravaging CoronaVirus (Covid-19) on the international shipping industry. Adv. Joy Thattil focuses on key geographical regions on the legal implications and aspects related to berthing, discharge and loading of container ships as also medical measures to combat the virus at ports â&#x20AC;&#x201D; Editor.

Symptoms FEVER COUGH

DIFFICULTY BREATHING MUSCLE PAIN TIREDNESS 48 APRIL 2020

Prevention

Commentary – Fallout of the Pandemic on Global Shipping

oronaViruses are a group of viruses that cause diseases in mammals and birds. The name CoronaVirus is derived from the Latin corona, meaning ‘crown’ or ‘halo’, which refers to the characteristic appearance of the virus particles (virions). They have a fringe reminiscent of a crown or of a solar corona. In humans, CoronaViruses cause respiratory tract infections that are typically mild, such as the common cold, though rarer forms such as SARS, MERS, and COVID-19 can be lethal. The ongoing novel CoronaVirus outbreak has rapidly spread from its origin in Wuhan City, a commercial hub and capital of Hubei Province in Central China and has now been detected in other countries in Asia as well as in Australia, Europe, North America and Northern Africa—in virtually every continent except Antarctica.

Avoid contact with sick people FVirus impact on Decline in shipping Container Shipping: frequency / cancellations Shipping companies that carry goods from China to the rest of the world say they are reducing the number of seaborne vessels, as measures to stop the spread of the CoronaVirus crimp demand for their services and threaten to disrupt global supply chains. About 80% of world goods trade by volume is carried by sea and China is home to seven of the world’s 10 busiest container ports, according to the United Nations Conference on Trade and Development. Nearby Singapore and South Korea (Busan) each have a mega port too. Everything from cars and machinery to apparel and other consumer staples are shipped in containers, and disruption to the industry could reverberate far beyond China as the country seeks to contain the CoronaVirus outbreak by keeping factories shut and workers at home.

The CoronaVirus outbreak has led to a Wash your hands decline in the number of ships calling on Chinese ports including Shanghai and with soap and water

Yangshan in January 2020, as factories across the country remain closed or operating at low capacity. The number of port calls at Shanghai and Yangshang declined by 17% in January 2020, compared to the same period in the previous year. Carriers have blanked 21 sailings on the US-Asia Pacific trade route with the primary reason being weak demand in China. The cancellations are in addition to 66 cancellations that took place during the Chinese Lunar New Year resulting in 199,000 TEUs (twenty tonne equivalent) units of reduced capacity. On the Asia-Europe trade route, a total of 61 cancelled sailings have been announced, representing a 151,000 TEU capacity reduction. The biggest impact of the cancellations is expected to be on Maersk due to its wide exposure to container shipping and port terminals. The company’s operations in China represent 30% of its annual shipping volume. Hapag Lloyd is another company that is expected to witness a weak first quarter as its operations in China account for 25% of group revenue.

If you develop cough, use a medical face mask

Transmission

VIA RESPIRATORY DROPLETS Prolonged crises

2–14

The longer the health crisis lasts, the harder it will be to move goods around the world. The CoronaVirus outbreak has killed more than 43,300 people and infected at least 875,000 (and rapidly counting at the time of publication of this report on 1 April 2020) — mainly in China, where close to 100 million people are living in cities on lockdown. Still more vessels are idling in ‘floating quarantined zones’, as countries such as Australia refuse to allow ships that have called at Chinese ports to enter their own until the crew has been declared virus-free. Giant shipping companies such as Maersk, MSC (Mediterranean Shipping Company), Hapag-Lloyd and CMA-CGM have said that they have reduced the number of vessels on routes connecting China and Hong Kong with India, Canada, the United States and West Africa. BIMCO* members, which include 1,900 shipowners, operators, managers, brokers and agents, report limited or no demand from Chinese buyers of seaborne commodities, such as coal, crude oil and iron ore and other minerals. The lack of activity is reflected in oil prices, which have crashed into a bear market.

days

estimated incubation period

CoronaVirus impact on regional Ports: China: According to local sources, no Chinese seaports have officially announced a lockdown, except for the inland river port of Wuhan, though domestic traffic seems to be operating there. Ports have implemented strict prevention and control measures, such as declarations of crews’ health condition prior to ships’ entry, monitoring of crewmembers’ body temperature, gangway checks of people attending from ashore, restrictions on crew change, restricting shore leaves, requirement for crew to wear masks, and Personal Protective Equipment (PPE). Few container depots in Shanghai, which is the busiest port in the world according to United Nations Conference on Trade and APRIL 2020 49

VIA RESPIRATOR

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Commentary – Fallout of the Pandemic on Global Shipping

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Development, are closed until 10 February. Vessels with crew from Wuhan or the Hubei province are restricted to berth at the Putian (Fujian Province) and Quanzhou ports. At the Ningbo port, such vessels will be placed under isolation for 14 days before berthing. Substitution of crew at the Shanghai, Xiamen, Ningbo, Tianjin, Dalian, Qingdao and Guangzhou ports has been prohibited. Wearing facial masks and temperature checks everyday has been initiated as a preventive action for CoronaVirus.

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The US Coast Guard issued a notice on 02 February 2020 stating that any passenger vessels or vessels carrying passengers, which have been to China or embarked passengers in China in the last 14 days, will be denied entry into the US. Any passengers who exceed the 14 day period and are symptom-free will be allowed entry into the US. Non-passenger vessels are allowed to operate in the US with restrictions if they have been to China or embarked passengers in China within the last 14 days under the condition that there are no sick crewmembers. Any vessels with sick crew members are required to notify the nearest Coast Guard Captain of the Port.

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Singapore:

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The Maritime and Port Authority of Singapore (MPA) has implemented temperature screening at all sea checkpoints, including ferry and cruise terminals. Visitors having a travel history in Hubei or possessing PRC (People’s Republic of China) passports issued in Hubei, will not be allowed to enter or transit through Singapore.

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Australia: Australia initiated additional border screening and isolation measures on 01 February. Any vessels that have left China or transited through the country after 01 February and less than 14 days prior to the date will be required to meet CoronaVirus requirements set by the government. 50 APRIL 2020

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TIREDNESS Japan:

Diamond Princess Cruise ship owned and operated by Princess Cruises was quarantined off the coast of Yokohama after a suspected case of CoronaVirus infection was reported on 03 February. A total of 705 confirmed cases have been reported on the ship, which has 2,666 guests (a majority from Japan) and 1,045 crew on board. The Japanese health authorities commenced the disembarking process on 19 February for those passengers who did not display any symptoms of the disease since the beginning of the quarantine period and tested negative for the virus.

the following guidelines (not exhaustive): • Cooperate fully with the port health authorities and make an honest disclosure of the crew health on-board. • Practice good hygiene. Some of the good practices mentioned by the WHO are: • Wash hands frequently and avoid touching eyes, nose and mouth. • Practice respiratory hygiene (cover coughs and sneezes with flexed elbow or tissue, discard tissue immediately into a closed bin and wash hands). • Maintain social distancing. Keep at least one metre (three feet) distance between yourself and other people, particularly those who are coughing, sneezing and have a fever. • If you have a cough and fever, use a surgical mask, avoid close contact with others and seek medical help early. • Practise food safety, such as by cooking the food items thoroughly.

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Preventive measures on board: It is very important to raise the awareness amongst crew members so that they are aware of the risks, how the virus can be spread, and precautions to be taken. The IMO (the London headquartered International Maritime Organization) has provided some advice for seafarers and shipping. Many Flag States have also highlighted the importance of ensuring seafarers are properly informed, such as the Directorate General of Shipping in India. In general, ships’ crews are recommended to adhere to

Preventive measures in Ports: Timely safety measures and preventive actions by various ports and shipping organisations are expected to limit the impact of the outbreak. The International Chamber of Shipping (ICS) stated that by implementing certain preventive measures for CoronaVirus, ports

GNIHTAER

Commentary – Fallout of the Pandemic on Global Shipping

Prevention Avoid contact with sick people

Wash your hands with soap and water

If you develop cough, use a medical face mask

and global shipping can continue to operate and avoid the closure of any port. The ICS recommenced exit screening at all ports in the affected areas to isolate passengers displaying symptoms of the disease and curb its spread to other Countries. All major ports across the world have adopted a 14-day quarantine period for vessels arriving from or transiting through China. Vessels arriving from China are required to report regarding the health of the crew members and passengers prior to berthing. As mentioned above all the Countries across the world have taken various steps to prevent the spread of CoronaVirus within their Territory.

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Loss of lives and business emanating from the CoronaVirus:

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• Maersk cautions of lower earnings from CoronaVirus Impact as it has taken a toll on the shipping volumes and freight rates and various factories remained closed for a whole week. • Two passengers from the cruise ship quarantined in Japan have died after contracting the new CoronaVirus, the first deaths among the more than 600 people on board who have been infected.

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• Carriers, faced with the possibility of shrinking revenue and increased losses, have opted to cut their rates with the Shanghai Containerised Freight Index on the Shanghai Shipping Exchange showing significant declines.

Conclusion: The damage caused by CoronaVirus in all sectors has been huge and its effect has not left the Maritime industry as well. Most of the ships have restricted their entries to many countries due to the fear of being infected and causing more damage to people. We ought to follow the national and international Governments advice and follow WHO’s guidelines in order to safeguard and protect every individual. All we can do at this stage is too hope and pray that such Global Pandemic chaos does not see the light of the day in the future. (*BIMCO, founded under the title of ‘The Baltic and White Sea Conference in Copenhagen, Denmark in 1905, is the largest of the international shipping associations representing shipowners; its membership controls around 65 percent of the world’s tonnage and it has members in more than 120 countries, including managers, brokers and agents). n

Joy Thattil is the Managing Partner, Callidus Legal. After completing his schooling in Cochin, Kerala, India, Thattil did his graduation in Law from the Government Law College, Ernakulam. Thereafter, he enrolled as an Advocate on the rolls of the Bar Council of Kerala in the year 1996. He has been a notary public appointed by the government of India since 2007. The firm led by Joy Thattil commenced operations under the name M/s Joy Thattil & Co. The law firm later merged with M/s. Callidus in 2009 and extended its services to Mumbai, Delhi, Kolkata and Chennai. The firm has overseas branches in Dubai and Singapore. Joy Thattil attended the University of Southampton, U.K to do his specialization in International Maritime Law. As a Maritime Lawyer, Thattil had the opportunity to conduct several cases throughout India and abroad relating to Maritime issues representing clients ranging from owners of vessels to individuals raising claims against shipping companies. He was appointed as the Special Public Prosecutor in 2016 for the Thekkady Boat Tragedy in India. Thattil is the present Secretary General of the Indian Institute of Maritime Law.

APRIL 2020 51

port khalifa auto terminal

Autoterminal Khalifa Port launches advanced Technical Centre Centre to offer pre-delivery inspections, accessory fitting, smart repairs, and other vehicle conversions

utoterminal Khalifa Port, a joint venture between Abu Dhabi Ports and Autoterminal Barcelona, the operator of the advanced RoRo terminal at Khalifa Port, has unveiled an all-new technical centre aimed at diversifying the portfolio of services on offer to customers. As the first facility of its kind in the region, the centre provides a wide range of value-added services for customers within the Middle East’s automotive market. From pre-delivery inspection to accessory fitting, automotive importers stand to benefit from reduced labour and transportation costs, as vehicles can be prepared for showroom display or the receiving consignee without needing to visit a third-party facility. “Since its founding in 2018, Autoterminal Khalifa Port has quickly established itself as one of the leading choices for automotive distribution moving to and from the Gulf. The new Technical Centre is a culmination of our continuous drive for improvement and opens new opportunities for our customers to benefit from,” remarked Saif Al Mazrouei,

52 APRIL 2020

Head of Ports Cluster, Abu Dhabi Ports. “Using our centre, clients will be able to conduct any necessary modification prior to final delivery streamlining their respective operations and achieving improved cost-savings. We are delighted to be the first in the region to offer this added benefit directly within our terminal,” commented Pierre Algeo, CEO, Autoterminal Khalifa Port. In addition to offering car washing, predelivery inspection and polishing on site, the facility will have the capability to conduct smart repairs, as well as accessorise and convert vehicles. The site will also provide a refuelling service in the near future, which will ensure vehicles are fuelled before their departure from Khalifa Port. The processing of vehicles through Autoterminal Khalifa Port, including the technical centre, is carried out via the Carsys app, a superior automotive terminal management platform. Developed in-house, the app allows users to scan and log vehicles passing through the facility. In addition to ensuring accurate

reporting and guaranteeing the traceability of all operations carried out on the vehicles, the Carsys app also allows its users to track the movement of their cars in real-time. “Through our close collaboration with Abu Dhabi Ports, we are delivering advanced new opportunities and benefits for our customers, while at the same time pushing the industry standard to new heights,” observed Xavier Vázquez, CEO, Autoterminal Barcelona. The new technical centre is the latest addition to Autoterminal Khalifa Port and expands the already extensive capabilities of the platform, which is considered the ideal Ro-Ro terminal in the GCC. Featuring pollution free storage for up to 15,000 vehicles in a sand free area, provides technical services within its bonded area and land transportation from Khalifa Port to Abu Dhabi, Dubai and all other Emirates. Autoterminal Khalifa Port offers multimodal solutions for automotive customers looking to either import vehicles to the UAE or distribute from the Middle East to East Africa and Western India. n

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Dubai Airport Free Zone Authority (DAFZA)

DAFZA’s contribution to Dubai’s foreign trade tops US$ 44.65bn The value reflects a 12.6% growth in the total value of the foreign trade of the Emirate

ubai Airport Freezone Authority (DAFZA) played a key role in boosting Dubai’s economic growth, with a 12% contribution to the Emirate’s foreign trade in 2019, compared to 11.2% in 2018, out of a total trade value of AED 1.37trillion (US$ 377bn) recorded last year. This came as a direct result of the incentives and business facilitation services provided by DAFZA that have enhanced the attractiveness of the free zone to foreign investors. DAFZA’s foreign trade exceeded AED164bn in 2019, compared to AED146bn (US$ 44.65bn) in 2018, with a 12.6% growth. In terms of goods, machinery and electrical and electronics equipment ranked first with 55% of the total foreign trade in 2019, with a value of AED 37.4bn (US$ 10.18bn) for imports and AED 53bn (US$ 14.43bn) for exports and re-exports. This was an increase of 14.3% or AED 11.3bn (US$ 3.08bn) in DAFZA’s total trade. This was followed by precious stones and metals with 38% of the total import value at AED 29.6bn (US$ 8.06bn) and AED 32bn (US$ 8.71bn) in terms of exports and re-exports. DAFZA witnessed an impressive growth in operations of its hosted multinational companies, cementing its position as an attractive destination for companies, looking to benefit from DAFZA’s portfolio comprising a mix of services, incentives and business facilities. In 2019, DAFZA’s total revenues of multinational companies increased by 36.6% compared to the same period in 2018. The total space occupied by multinational companies increased by more than 135%.

54 APRIL 2020

Dubai Airport Free Zone Authority (DAFZA)

Global connectivity HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman, DAFZA, highlighted that DAFZA’s foreign trade boost was a result of DAFZA’s leading position as a hub for international companies and investors, connecting key commercial hubs worldwide. “DAFZA succeeded due to its welldesigned plans that ensure ease of business and better-controlled operations that match the requirements of various business sectors,” asserted Dr. Mohammed Al Zarooni, Director General, DAFZA.

Expansion for international companies In 2019, a number of international companies opened their regional headquarters in DAFZA or expanded their facilities to serve customers across the region. This includes Airbus expanding its business with the opening of its first Africa and Middle East Cabin Electronics Service Centre. TNA, a leading global supplier of integrated food processing and packaging solutions, has opened its new regional headquarters in DAFZA. The new facility

In 2019, DAFZA’s total space occupied by multinational companies increased by more than 135%. will allow TNA MENA to offer a range of after-market services to customers in the region, including enhanced technical support, a new training and demo centre and easier access to spare parts. Michelin, the world major in tyre design, manufacturing and distribution, has also opened its regional headquarters in the free zone to manage its operations in Africa, India and the Middle East.

DAFZA expansion As part of its expansion plans to provide additional leasing space and facilities to the increasing number of companies, DAFZA developed a new building compound which is due to open in the first half of the year. The new buildings will have a leasing

space of 21,580 square meters, of which DAFZA leased almost half of before the expected opening. DAFZA is currently working on developing a new multi-story car park, which is expected to open next year.

International delegations In 2019, DAFZA received several international delegations looking to know more about the unique investment environment it offers. DAFZA recently received an official delegation from the Bank of China to discuss prospects of future collaboration. The Chinese delegation was briefed on key, DAFZA-led strategic projects and initiatives, and the free zone’s experience over the last two decades in attracting, increasing, and sustaining foreign direct investment. DAFZA also welcomed a delegation from the Enterprise Europe Network (EEN) as part of the networks’ mission. The delegation comprised of representatives from 32 European companies on a multisector mission with a focus on EXPO 2020 Dubai. The delegation was briefed on market information from the UAE and the region, best ways to start a business and the incentives offered by DAFZA in this regard. n APRIL 2020 55

Post Pandemic: Supply Chain landscape

What will supply chains look

f you were to ask Chief Procurement Officers and Supply Chain Directors what the biggest risk to their organisations was twelve months ago, what would they have said? A recent survey indicates that the top risks identified by organisations are: Fires or explosions; natural disasters such as earthquakes and wildfires; cyber threats; transportation disruptions; government interventions; and demographic shifts. The COVID-19 crisis is more severe and widespread than any other supply chain disruption in recent history. Due to the vital role that the Middle East plays in global

56 APRIL 2020

trade, connecting China with the rest of the world, supply chain disruptions have hit the region hard and have significant consequences for the rest of the world. These disruptions are being felt within every mode of transport in the GCC. In air freight, IATA noted a 1.4% drop in Middle Eastern cargo volume in January 2020 against the same period last year, with a deeper decline forecast in coming months.

E-commerce on the upswing In shipping, container ships are unable to dock at many ports due to COVID-19, and

where they can dock, the crew are often not permitted to leave the vessel. In road freight, social distancing measures are causing a sharp rise in e-commerce, resulting in a shortage of distribution capacity. For example, Bulkwhiz, a grocery e-commerce start-up in Dubai has seen a 100% increase in orders since February 2020 and are currently urgently recruiting additional delivery drivers to cope with increased demand. Supply chain disruptions are commonplace; supply chain professionals are highly adept at expertly dealing with issues relating to continuity of supply

Post Pandemic: Supply Chain landscape

like after COVID-19? In this opinion piece Stuart Milligan, Course Leader, MSc International Logistics and Supply Chain Management, University of South Wales-Dubai, contemplates the fastchanging dynamics of the logistics and supply chain landscape and what the scenario may look like when COVID-19 is behind us — Editor.

or fluctuations in demand without the customer ever realising there was a problem. So, what is so different about COVID-19? Simply stated, the current pandemic is so disruptive to supply chains that it has interrupted two of the ‘principal flows’ that supply chains require to work efficiently, namely, the movement of goods and the exchange of information. COVID-19 has highlighted the fragility of many global supply chains, so how can organisations manage supply chain risks and what might future supply chains look like as a result of COVID-19?

Risk management Effective risk management should start with supply chain design. This is concerned with important strategic decisions such as facility location planning—which customers will be served from each distribution centre or factory, and which suppliers would be engaged, and more. Typically, complex quantitative analysis is employed to calculate optimal supply chain structures based upon assumptions and constraints relating to demand, supply and transportation capacities. Ideally, at this stage, organisations

consider risks such as demand and leadtime uncertainty, and plans are put in place to minimise these disruptions. Practices such as vendor managed inventory, collaborative planning, forecasting and replenishment (CPFR) are common risk management techniques. There are, of course, limitations with this perspective. Firstly, many organisations do not have the benefit of being able to design their supply chain in such a way. Their current infrastructure is the result of organic growth, legacy systems, and mergers and acquisitions, meaning that their supply chain design is sub-optimal. APRIL 2020 57

Post Pandemic: Supply Chain landscape

Stuart Milligan Course Leader, MSc International Logistics and Supply Chain Management University of South Wales-Dubai

across the globe as society prepares itself with the challenge of social distancing and self-isolation.

Impact on healthcare and retail

Stuart Milligan joined the University of South Wales in 2016 and is the Academic Manager for Procurement, Logistics and Supply Chain Management. He is also the Course Leader for the MSc International Logistics and Supply Chain Management in the UK, and for the course at the Dubai Campus, which was introduced in September 2019. Alongside teaching, Stuart is studying for a PhD. His research is based on the impact of adopting an omni-channel strategy, and his research interests include supply chain strategy, sustainable operations and the impact technology has upon the supply chain.

Secondly, such measures are effective for day-to-day disruptions such as a single supplier experiencing a supply issue or a short-term fluctuation in demand, they do not equip organisations for a global crisis such as we are experiencing now.

The nature of supply chain disruptions Supply chain disruptions are often categorised in two ways, the ripple effect (downstream) and the bullwhip effect (upstream). The ripple effect is where disruption in the upper tiers of the supply chain ripple downstream resulting in a downscaling of demand fulfilment in the supply chain, i.e. out-of-stocks ripple downstream ultimately to the customer. To first explore this in relation to COVID-19, it is well documented that COVID-19 originated in China. China is responsible for 28.4% of all global manufacturing (Statista, 2020).

China spotlight The infographic below details how each manufacturing sector in China was affected by COVID-19 in January and February this year. These are then shipped to a final place of assembly, ready to be distributed across the global marketplace. Global supply chains are complex, often with component parts being produced in many different countries to strategically balance capacity, 58 APRIL 2020

quality and cost. As an example, Apple works with suppliers in 43 different countries to make the iPhone, these components are then shipped to central assembly factories, predominantly in China, to be distributed across the world. The 31.8% reduction in motor vehicle manufacture in China, experienced in January and February therefore didnâ&#x20AC;&#x2122;t result in motor vehicle not being manufactured per se, what it did result in, was an acute shortage of critical components that are used in the final assembly of motor vehicles. As the virus spreads around the world, continuity of supply will become a bigger challenge, especially as other global manufacturing hubs such as the US (16.6% global manufacturing), Japan (7.2% global manufacturing) and Germany (5.8% global manufacturing) close their borders and their factories.

The Bullwhip effect The bullwhip effect is where operational dynamics oscillate upstream, resulting in ordering oscillations. Simply put, as organisations experience shifts in demand, upstream suppliers alter their inventory holdings in attempts to meet potential new demands. These inventory shifts tend to get bigger as the demand signal travels up the supply chain, ultimately leading to the severe over/ under stocking of lines. COVID-19 has been strongly associated with panic buying

This is a major issue for organisations and is felt most acutely by healthcare and retail supply chains. In the healthcare sector, the industry is desperately trying to understand the likely demand on resources as a result of infection, with demand for critical items such as face masks and respirators significantly outstripping supply. From a retail perspective, social distancing is creating a surge in demand which is not only difficult to replenish, it is also difficult to forecast. The increase in demand for grocery products is so widespread that consumers often cannot find the products they want and are therefore choosing substitute products, inflating the demand forecast for these products and understating the demand forecast for the desired products. Conversely in retail, there is an excess of non-food stock which would normally be in demand. For example, Noon.com are offering a 47% discount on the iPhone XS and 30%-45% discount across fashion lines in attempts to shift excess inventory. The COVID-19 crisis has forced consumers to adopt different demand patterns resulting in unplanned overstocks and stock-outs.

What does the future hold? Whilst some organisations may fall casualty to the current crisis, the more resilient supply chains will survive. History tells us that some supply chains will recover faster than others; after the Japanese tsunami in 2011, the automotive industry was severely impacted. Nissan in particular was less affected than its competitors. This is because Nissan had invested significantly in risk mitigation policies. Disaster recovery had become part of its culture; they had been conducting disaster drills for years to improve their ability to deal with disruption. In response to the current crisis, organisations should become more collaborative, integrating both vertically with their supply chains, and horizontally with industry partners. Risk management and recovery is far more effective when it is approached collectively as an industry, rather than a single entity. n

Saudi Data and Artificial Intelligence Authority

Data and AI to add more than US$ 10 bn to Saudi Arabia’s economy Saudi Data & Artificial Intelligence Authority is driving the country’s transformation into a leading data-driven economy

he Saudi Data and Artificial Intelligence Authority (SDAIA) recently celebrated the launch of its brand identity in the Kingdom’s capital Riyadh under the theme, ‘Data is the Oil of the 21st Century’. Attended by ministers and top government officials, the celebration marks SDAIA’s readiness to establish the Kingdom among the world’s leading economies in the adoption of artificial intelligence (AI), which is expected to contribute an estimated US$ 135bn to its GDP by 2030, corresponding to 12.4% of the national GDP. The strategic importance of SDAIA’s mandate is reflected in Saudi leadership’s recognition of its role in establishing the Kingdom as a global leader among global data-driven economies. The value of the country’s data and AI economy is currently estimated at US$ 4 to 5 billion, with an opportunity to generate additional government revenues and savings of over US$ 10bn by harnessing data insights to help guide government decisions. Since the launch of the Saudi Vision 2030 program in 2016, Saudi Arabia has made significant progress in unlocking the value of data as a national asset, with close to 70% of 96 strategic goals under Vision 2030 closely related to data and AI. The establishment of Saudi Data & Artificial Intelligence Authority (SDAIA), an entity mandated with driving the national data and AI agenda for transforming the country into a leading data-driven economy, was a major step in that direction. “SDAIA has been tasked with defining the national data and AI strategy, and delivering on our nation’s vision for the future by optimizing our national resources, improving efficiencies and enabling the creation of diversified economic sectors,”commented Dr. Abdullah Bin Sharaf Al-Ghamdi, President, SDAIA.

Dr. Abdullah Bin Sharaf Al-Ghamdi, President, SDAIA, at the Authority’s brand launch event.

SDAIA has been tasked with

Establishing a national data bank, that has already consolidated more than 80 government datasets, corresponding to 30% of government digital assets Implementing the G-Cloud, with the aim to build one of the largest clouds in the region by merging 83 datacenters owned by over 40 government bodies Utilizing AI-analyzed data to detect opportunities that could generate more than USD 10 billion in government savings and additional revenues, and developing an ambitious and innovative data and AI strategy for the Kingdom.

Speaking at the SDAIA brand launch celebration held yesterday under the

theme of ‘Data is the new oil’, in Riyadh, Dr. Al-Ghamdi added,“Data is the single most important driver of our growth and reform in the 21st century, and we have a clear vision and roadmap for transforming Saudi Arabia into a leading AI and datadriven economy. SDAIA is at the forefront of this transformation and is primed for national data and AI agenda definition, implementation and awareness.” SDAIA’s vision is to establish the Kingdom as a global leader among the league of data-driven economies. The establishment of SDAIA is a testament to Kingdom’s commitment towards this vision – SDAIA, as a world-class data and AI governance body, is bringing global innovations to diversify the national economy, and developing local human capital. n APRIL 2020 59

CIOs fighting CoronaVirus

immediate actions for CIOs to prepare for CoronaVirus disruptions CIOs must have large-scale business plans and preparations in place to combat the pandemic, says a senior Gartner official

ith the spread of the CoronaVirus (Covid-19), CIOs should focus on three short-term actions to increase their organizations’ resilience against disruptions and prepare for rebound and growth, according to Gartner. “With such a dynamic situation like Covid-19, it has the potential to be as disruptive, or more, to an organization’s continuity of operations as a cyber intrusion or natural disaster,” commented Sandy Chen, Senior Research Director, Gartner. “When traditional channels and operations are impacted by the outbreak, the value of digital channels, products and operations becomes immediately obvious. This is a wake-up call to organizations that focus on daily operational needs at the expense of investing in digital business and long-term resilience,” she continued. Gartner recommends that CIOs focus on three short-term actions to provide support to customers and employees and ensure continuity of operations.

Source digital collaboration tools with security controls and network support Various quarantine measures and travel restrictions undertaken by organizations, cities and countries have caused uncertainties and disruptions as business operations are either suspended or run in limited capacity. In organizations where remote working capabilities have not yet been established, CIOs need to work out interim solutions in the short term, including identifying use case requirements such as instant messaging for general communication, file sharing / meeting solutions, and access to enterprise applications such as enterprise resource planning (ERP) and customer relationship 60 APRIL 2020

engagement still plays a big role. Workplace collaboration, video conferencing and live-streaming solutions can serve various customer engagement and selling scenarios. Organizations should also enable customers to use self-service via online, mobile, social, kiosk and interactive voice response (IVR) channels. “The value of digital channels becomes obvious as market demand shrinks and as people rely more on online platforms for daily supplies. Organizations can leverage digital channels, such as online marketplaces and social platforms, to compensate for some of the demand loss,” noted Ms. Shen. “They can set up official pages/accounts and integrate commerce capabilities to enable online selling. They should also quickly adapt products to make them suited for selling through digital channels.” Sandy Shen, Senior Research Director, Gartner. management (CRM), while reviewing all security arrangements to ensure secure access to applications and data. Organizations also need to deal with staffing shortages to maintain basic operations. CIOs can work with business leaders to conduct workforce planning to assess risks and address staffing gaps, such as identifying mission-critical service areas. CIOs can see how digital technologies such as AI can be used to automate tasks, for example, candidate screening and customer service.

Engage customers and partners through digital channels and maintain sales activities Many organizations already engage customers over digital platform, such as branded sites and apps, online marketplaces and social media. But offline face-to-face

Establish a single source of truth for employees Confusing data from unverified sources, or the sheer lack of data, can lead to illinformed decisions being made, escalating employee anxiety and making organizations underprepared for returning to normal operations. Such anxiety can be somewhat relieved if organizations can leverage data to support better decision making and communicate progress more efficiently to employees. “Organizations can offer curated content, drawn from internal and external sources, to provide actionable guidance to employees. These sources include local governments, healthcare authorities and international organizations, such as the World Health Organization (WHO). HR and corporate communications leaders may be involved to vet the content and interpret the company’s policies,” concluded Ms. Shen. n

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