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Logistics News

2016 – Expert Insight On The Year Ahead

After a year dominated by oil prices, sanctions, global security issues and natural disasters, 2016 is tipped to be a year of change and positivity. Logistics News ME hears the outlook for the year ahead, from the industry’s key sectors and top personalities 

Eng Mahmood Al Bastaki

Eng Mahmood Al Bastaki

The Trade Perspective

Eng Mahmood Al Bastaki, board member and CEO, Dubai Trade

What was the single most significant event to impact on trade in 2015?

From our perspective UAE non-oil trade has been resilient reaching AED 534.1 billion in the first half of 2015 compared to AED 521.8 billion in H1 2014, achieving a growth of 2%.

Despite this heartening scenario for UAE, global trade is possibly poised to record its slowest growth rate since 2009 due to multiple macro scenarios that have come together but possibly dominated by the continued slowdown in Chinese exports and regionally by the fall of the crude oil prices.

Is this impact likely to continue in 2016?

With regard to the UAE non-oil trade outlook, we have reasons to be optimistic about 2016. The continued government support for mega-projects such as Dubai South, Dubai Design District and Expo2020 will add impetus to the local economy. Across the border, the expected opening of Iran’s economy to mainstream trade will provide a huge boost to various industry sectors in the UAE. The UAE leadership is also committed to cement a firm footprint in the “new Silk road” and the current visit of H.H. Sheikh Mohammed Bin Zayed Al Nahyan to China comes at a time when China has become UAE’s largest trading partner. These factors will ensure that UAE continues its growth trajectory for non-oil foreign trade in 2016 also.

2015 was a huge year for Dubai and Dubai Trade – with exports and FDI increasing, a huge leap in MICE business and record visitors to DWTC – what have been the primary factors driving this?

According to Mr. Helal Al Marri, director general of Dubai’s Department of Tourism and Commerce Marketing: “Business tourism generates leisure tourism.” The rise of exports from Dubai and UAE reflects the increase in tourist numbers to Dubai. The UAE offers political stability for foreign investors and coupled with the excellent business and tourism infrastructure has established itself as a global hub for MICE business.

Automation and trade are said to be key to driving the future of Dubai’s non-oil trade: how will these be further developed in 2016?

All related stakeholders to the non-oil trade sector are committed to the Innovation agenda of the Dubai Smart City initiative. Under this strategy, entities such as DP World, Dubai Customs, EZ World and Dubai Trade along with the Government departments will continue to deliver innovative services to complement the hard infrastructure development. In Q4 of this year DP World’s Terminal 3 has started operations, and in 2016 this new terminal will reach its full operational capacity. Dubai Customs has plans for greater cooperation with the Federal Customs Authority and the wider GCC customs bodies for standardisation of customs laws and to promote automation for border clearance activities. EZ World has already provisioned all of its administrative services on Smart Devices and will be releasing their next generation app in 2016.

Dubai Trade will continue its journey to deliver value to the trading community by investing in its core technology and Contact Centre platforms. We are conceptualising a few pioneering solutions for our stakeholders that will change the way cargo logistics is being managed currently.

Dubai was named as the world’s fifth fastest growing city economy in 2015. What is Dubai Trade’s role in this achievement and how will this be sustained and enhanced in 2016?

Dubai Trade is a part of the Dubai Smart City vision by enabling the Smart Economy and Smart Mobility pillars through our various initiatives. Our role is to facilitate seamless trade across the borders and into the commercial capital of the country, Dubai. In order to achieve this vision, we work in close coordination with the Dubai government entities to complement the investment in the hard infrastructure by developing tight integration with all stakeholders, both private and public, to ensure free movement of goods, associated information and also the flow of money.

What is next for Dubai’s logistics infrastructure development?

Dubai Trade continues to set the benchmark for trade facilitation in the region. We will be launching a crowd-sourcing innovation program with our industry partners to better align our investment programs with the need of the industry.

Do you have a message for logistics industry companies for next year?

We welcome the logistics companies to foster closer ties with Dubai Trade and collaborate on improving the standard of services to the trading community both locally and regionally. We want them to use Dubai Trade as their launch innovative solutions that will strengthen Dubai’s position as the leading trade and logistics hub of the world.

The Service Provider Perspective

Bachi Spiga, VP of operations, DHL Express MENA

How did your business perform in 2015?

Overall very well considering a number of disruptions and challenges in the region. We invested significantly in the past couple of years and we have seen this impact our business very positively. New flights into Lebanon, Egypt, Tangiers, Jordan, Abu Dhabi in addition to upgrading our ground facilities in Saudi, UAE, Cairo, Algeria have provided impetus for continued growth. Also Imports and re-exports have continued to grow so overall it has been positive

What was the most impactful event of 2015 on your business?

We have had a number of countries that have suffered disruption and unrest in MENA which meant we had to adapt to these challenges providing continuity in service safely and securely. Also the oil price has impacted some aspects of the region and the short term outlook on some sectors, which meant we had to react to find alternative growth

What new plans do you have in place for 2016?

We plan to launch a few new flights in the region, new flight for Algeria, increased frequency to Lebanon as well as reviewing our movements and schedules to Jeddah in mid-2016. We are also looking at improving our connectivity from Asia. We plan to strengthen our footprint with some agreements in a variety of airports around the region, Tangiers, Doha, DWC, AUH, MCT which will see us prepare for our future plans and commitment to growth.

What are your top three predictions for 2016?

• Continued demand and growth for Imports and redistribution despite price of oil
• Middle East will continue to see growth and development in its infrastructure
• There will be less volatility and civil unrest in 2016 and more stability in the region especially North Africa.

 

The Shipping Perspective: Middle East and GCC Trends

Abdulrahman Essa Al-Mannai, president and CEO, Milaha

Abdulrahman Essa Al-Mannai, president and CEO, Milaha

Abdulrahman Essa Al-Mannai, president and CEO, Milaha

Macro-Economic Uncertainty: Uncertainty in macro-economic conditions is primarily due to the large correlation factor between regional economics and the hydrocarbon sector, which has suffered a huge drop in prices. This, in turn, has impacted the market spending which is imperative for economic diversification.

Investments: Major investment projects, especially in infrastructure, will continue as planned. For instance, infrastructure development, including rail and road network, sea port and airport expansion, and construction of water and power projects in the UAE, Saudi Arabia and Qatar are proceeding.

Vertical Integration: Additionally, investments will continue to be directed towards vertical integration in the hydrocarbon sector where there is a push for production of refined rather than base products for exports. Besides fetching a premium for the GCC economy, this will more effectively enable them to compete with their US and European counterparts because of their lower ton-miles in trade lanes to Asia.

Food Security: Middle Eastern countries have made significant investments in food security supported by robust strategic planning. This has led to the conceptualisation and development of strategic food reserves backed by robust food supply chains to withstand disruptions and endemic conditions in case they fall upon the region.

Retail Landscape: A growing young population, strong GDP growth, and rising purchasing power have all boosted investor and consumer confidence, luring more retail players into the region. The growing number of malls and hypermarkets has transformed the shopping pattern of the consumers. In addition, it has altered the distribution pattern of products from warehouse to shelf, providing challenges and opportunities compared to distribution in the single-location stores. At the same time, standalone large and mega stores are proliferating with high levels of urbanisation.

Digitisation of Commerce: The influx of e-commerce and established brands moving to web stores has enabled consumption of goods and services online. This has created the demand for enhanced value added solutions from logistics partners in terms of scheduling, inventory, quality control, and returns logistics. Many startups have gone a few steps ahead in supporting such businesses through channel analytics which enables cost control measures, targeted marketing, and even IT support.

 

Marcus Meissner, managing partner, MEA, Camelot

Marcus Meissner, managing partner, MEA, Camelot

The Consultant’s Perspective

Marcus Meissner, managing partner, MEA, Camelot

What was the single most significant event to impact on trade in 2015?

The world and especially the logistics industry are exposed to high volatility and dynamics on the market every year. Many events as the sudden and deep drop of the oil price, the regional conflicts and the potential opening up of Iran can be mentioned for 2015. However, there is one event in particular which has in my opinion the most significant impact on trade: the expansion of the Suez Canal. The construction was initially scheduled to take five years, reduced then to three and took at the end only one year to be finalised. This is remarkable!

Is this impact likely to continue in 2016?

No, the shipping lines are slashing sailings on their routes and bundle shipping volumes, which means that the Suez Canal extension can only create more business if the world economy is growing significantly. In other words: the extension came at the wrong time. We believe that on land the GCC rail will be the major game changer for the next years. In particular the rail logistics hubs – which are being established at Yanbu and Dammam in Saudi Arabia – will play a major role in the near future.

2015 was a huge year for Dubai and Dubai Trade – with exports and FDI increasing, a huge leap in MICE business and record visitors to DWTC – what have been the primary factors driving this?
Dubai and the overall UAE are profiting from the fact that Saudi Arabia did not develop in the same speed as UAE. Dubai is clearly the main logistics hub for passengers and freight. It will continue its strong position as the potential opening up of Iran will have a very positive impact on trade. However, due to the upcoming rail infrastructure the linkage will increase with Oman and especially Saudi Arabia. Furthermore, if Saudi Arabia will develop Free Zones, or at least Special Economic Zones, than a major shift is possible within the next 10 years

Automation and trade are said to be key to driving the future of Dubai’s non-oil trade: how will these be further developed in 2016?
Automation is only one topic, more important is the trading and cross border supply chain. As we still do not have the GCC union in place in the day-to-day business, the automation alone will not help to shorten the end-to-end supply chain. However, as automation in Dubai trade points (sea ports, air ports) is continuously improving, it will further secure Dubai’s position as one of the top hubs in the world with regards to trading and logistics infrastructure and processes

What is next for Dubai’s logistics infrastructure development?
Dubai South with its integration to other airports and ports is the key development which we see to be very successful in the future, including rail connectivity.

Do you have a message for logistics industry companies for next year?

Get prepared for the main game changer, rail, as well as Iran and Saudi Arabia becoming major players in logistics.

 

The Trade Show Perspective

Jasmeet Bakshi Singh MHME

Jasmeet Bakshi Singh MHME

Jasmeet Bakshi Singh, show director, Materials Handling Middle East

How did the 2015 show perform compared to previous years?
Materials Handling Middle East (MHME) 2015 was a great success and attracted 4,386 trade visitors from 55 countries, a 30% increase over the previous edition of the show in 2013.

What do you believe were the factors driving this?

Thanks to relatively rapid economic growth coupled with huge investments in commercial and logistics infrastructure, the region is currently seeing a surge in demand for quality materials handling and logistics services. This has created considerable interest among global materials handling brands in doing business with the rapidly-expanding regional markets. The other factor has been the ability of the exhibition to accurately reflect global trends onto the regional market and represent regional aspirations and requirements on a global scale. We continue to work closely with our exhibiting partners in order to ascertain and anticipate regional needs, while at the same time ensuring that every edition of the exhibition is more representative in terms of scope and coverage. The show also showcases an unmatched range of products, services and comprehensive materials handling solutions that are tailored to the needs of the region.

Were there any particular themes or trends in the 2015 exhibition which were new? Why were these included?

The 2015 edition was far more representative and wider in scope than ever before in its 14-year history. The show witnessed the debut of 30 UAE-based companies and more than 30 exhibitors who were making their initial showing in the region. Brand new at the exhibition was the Forklift Operator of the Year competition, which featured 77 contestants from across the UAE pitting their skills against each other for the title of the country’s most skilled, safest, and efficient forklift operator. The competition was designed to promote operational safety across all theatres, given that the region is witnessing a huge boom in the warehousing and logistics industries.

What do you believe will be the key factors driving development of the maritime sector in 2017?

Even as the region continues to gain importance as a major shipping hub as the oil and gas exports continues to supply major economies around the world, the countries of the GCC are also becoming key import and trans-shipment centres, thanks to flourishing commercial cities such as Dubai, Abu Dhabi and Doha as well as ports in Saudi Arabia. Continued large-scale investment in ports, commercial, logistical and transport facilities will ensure that demand for materials handling services and machinery remains high, making the exhibition a must-attend event for leading suppliers and service providers worldwide.

 

 

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