Afghanistan, a nation ravaged by decades of war, is being fed – literally – through the efforts of the United Nations

If your business is based out of the Middle East, you can be spoiled for choices on which airline to use for your business travel and cargo needs. There are new airline companies, terminals, warehouses and airports springing up all across the region.

You can choose an airline to fly your people and goods to almost any part of the world.

Well almost any. Not Afghanistan. That’s where United Nations Humanitarian Air Services (UNHAS), sometimes referred to as WFP-Aviation, comes in. Operating out of Terminal Two of Dubai International Airport, it provides the vital Dubai – Kabul link for diplomats, aid agencies and the media. It operates flights to Islamabad and two loops within Afghanistan. The northern loop runs from Kabul to Mazar-e-Shariff, Kunduz, Faizabad and back to Kabul; and the southern loop connects Kabul to Kandahar, Herat and Bamiyan. Both flights leave Kabul in the morning and are back in the evening.

If it hadn’t been for these destinations, Afghanistan would have been cast off from the rest of the world.

There is no rail transport in the landlocked country and the road infrastructure can be rated on a scale of bad, worse and non existent. If you add the security element, air transport seems to be the only way to keep this rugged country connected. One of the by products of constant conflict for the last 40 years has been the creation of air strips in almost all major towns in the country.

Loic Lataste, Chief Air Transport Officer, UNHAS

Frenchman Loic Lataste from Bordeaux is the Chief Air Transport Officer of UNHAS in Afghanistan. He works under the WFP Country Director, Stefano Porretti, and has been in the position for the last six years. Prior to this position, Lastaste was with the French Army for 10 years.

The UNHAS comes under the World Food Programme (WFP), because the WFP has the United Nations’ greatest logistics capabilities. In 2002, the UNHAS mission inherited air operations from the United Nations Office for the Coordination of Humanitarian Affairs (UNOCHA). Its mandate is to provide a safe, efficient, reliable, cost-effective air support to the humanitarian community in Afghanistan.

Samir Sajit, Regional Air Safety Officer, is responsible for making sure that all planes, staff and systems are up-to-date. From his office in Sharjah, he also conducts safety courses for field staff from Afghanistan, Kenya, Sudan and Congo. Commercial carriers Emirates and Etihad play a vital role by sponsoring these programmes. UNHAS is the only air service in Afghanistan whose domestic flights are approved by the UN Safety and Security Department and are considered compliant with international flight standards.

Although there are other private operators providing air transport to and within Afghanistan, there are no other carriers that meet international safety standards, keep to a schedule and fly to airports like Faizabad in the North and Kandahar in the South. Hence, for most flyers, UNHAS is the only option. Several planes (owned by a local Afghan businessmen and registered as scheduled airlines) are parked at Kabul Airport and sitting idle, because no one will fly them.

To buy a ticket or transport goods on an UN flight you need to be listed as an official humanitarian, diplomat or media organisation. Until mid-2003, the fares were fixed and subsidised. “We can’t keep flying if we are losing money, just like any other airline,” says Lataste. “But what makes us different is that we rely on donations to keep going, we don’t have any traditional financing operations like commercials airlines do. We don’t own anything.”

Porretti’s response is more direct, “Just tell them we are stopping, then the donations start coming in again.” And he is not kidding – as recent as June 2008, the IRIN news agency reported that the UNHAS may have to abandon its operations in Afghanistan due to a shortfall of US$2.5 million.

Since mid-2005, UNHAS has operated on a full cost recovery basis. The Dubai-Kabul flight costs US$400 one way. It is more expensive (and has no in-flight entertainment) compared to Safi Airways who fly the route from Dubai Terminal One; but Safi fails to meet the safety standards required by all international organisations for carrying their people and goods.

Air transport is the only option for Afghanistan’s difficult terrain

Overcoming challenges

Intensifying conflict-related violence and deteriorating security in different parts of Afghanistan have increasingly impeded humanitarian and development access. Increased insurgency and criminal attacks have, meanwhile, restricted missions by road to almost half the landlocked country for most aid workers, including UN agencies.

UN employees are only allowed to travel to provincial capitals in the south, west, central and southeast by air and UNHAS is the only security-cleared airline with flights between Kabul and Jalalabad, Kandahar, Herat, Kuduz, Mazar, Faizabad and Bamiyan.

Kennedy Ooro, Air Transport Officer, UNHAS Kabul Airport, keeps a track of all aircraft movements across Afghanistan. UNHAS operates the UN terminal at the Kabul Airport. Complete with its own immigration, customs and check-in counters.

Tickets can be bought from the UNHAS offices in Kabul, Islamabad and Dubai though its accredited agency. Previously the UNHAS office was within the WFP office, but they had to move out due to lack of space. The new office is lacking a bank, so those wishing to make a booking in Kabul need to make payments separately at a bank outside as the UNHAS will not directly accept payment. In addition, the UNHAS also runs a ‘pouch’ service for NGOs and other international organisations on a complementary basis.

The domestic northern and southern loops are serviced by Canada-based Regional 1 Airlines. They operate the Bombardier Dash 8 200 series (formerly the de Havilland Canada Dash 8, sometimes abbreviated as DHC-8). According to Susan Smart, Director of Inflight at Regional 1 Airlines, their company has grown from two aircrafts to five in the last year alone because of UNHAS related work in Afghanistan and the Congo. And both Sajit and Lataste say that the Dash 8 is ‘the’ ideal aircraft for humanitarian work. These planes can land and take off on short runways and can be configured for cargo and passengers depending on the load. Landing and taking off from the Faizabad runway is a good example of this aircraft’s capabilities as the entire runway is made of metallic sheets. According to Sajit, Canadian planes and pilots have an advantage in Afghanistan because they have experience in the same terrain.

Samir Sajit and Kennedy Ooro

The Dubai-based Eastern Skyets provides UNHAS with the vital Dubai-Kabul link. They operate a McDonnell Douglas DC-9 (initially known as the Douglas DC-9). Naturelink, a South Africa based charterer operates an Embraer 120 Brasilia on the Kabul-Jalalabad- Islamabad route. Lataste changes schedules to bring in traffic from overseas in the morning and then leave in the early evenings (all airports in Afghanistan only operate during daylight), this increases the number of people on the route as a large number of people want to fly in and fly out within a day.

So far, the UNHAS operations in Afghanistan has carried 371,000 passengers, 8.1 million kilogrammes of cargo, burned 32 million tonnes of fuel by flying for 27,000 hours covering a distance of 11.5 million kilometres. Over 700 agencies use this service to fly to eight domestic and two international destinations. But the best figure that stands out is zero – notifying the number or accidents or incidents.

In 2008, UNHAS had an annual budget of US$19.5 million. Of this, 42 per cent was spent on the aircraft contract, 40 per cent on fuel, 10 per cent on staff and the remaining eight other expenses. Operations on its own generated an income of US$16.3 million and received a donation from UN’s CERF (Central Emergency Response Fund) of US$340,000 and the Government of Finland chipped in US$179,000. There is still a shortfall of US$2.7 million. But Lataste is confident that governments will chip in more to keep their services going.

UNHAS has also had to deal with the steep rise in aviation turbine fuel (ATF) prices which increased by up to 150 per cent this year. Even though prices have started to come down internationally, in Afghanistan ATF prices still remains high (UNHAS provides all its planes with fuel). The fuel supply in Afghanistan is controlled by a single company and they have not reduced prices. Lataste intends to add pressure on the supplier to reduce the prices. As fuel is transported across the country on road, security and infrastructure problems jack up its cost. In fact the pilots check the fuel before each refuel to make sure that they have not been adulterated.

War Risk Insurance and its rising premium is another major factor in the cost of services and lack of good operators.

It is also difficult to find operators willing to come to Afghanistan. Security for the staff and planes is a major issue for the air charter companies. The UNHAS cannot pick just anyone to fly for them, it needs operators who fit its high standards. “Our standards are not easy, they are something you only gain by maintaining a standard of aircraft, staff and procedures for a period of time,” says Sajit. The final decision of chartering aircrafts is taken at their headquarters in Rome.

The heavily fortified UNHAS head office in Kabul

No stranger to danger

According to the WFP’s latest country report, security has progressively worsened in much of the country throughout the year. Commercial trucks transporting WFP food were increasingly targeted, especially along the southern ring road from Kandahar to Herat, through the restive provinces of Kandahar, Helmand and Farah. Incidents also occurred in the south eastern provinces of Paktika, Paktia and Ghazni, in the central Wardak province and in Nuristan in the east.

For the three days this reporter was present for breakfast with Porretti and the conversations mostly centred on security and hijacking on WFP trucks and envoys. In most cases the trucks were stolen and food items left on the road. Recently transport contractors have preferred to travel without escort of the Afghan police as they are less likely to be attacked when not in the presence of police. The attackers seem more interested in the armoury of the envoy than the biscuits carried by WFP trucks.

More than 30 attacks against commercial vehicles or convoys carrying WFP food were reported in the 12 month period, compared to just five in all of 2006. In all, 870 tonnes of food, valued at US$730,000 was lost. Worse, in at least four of the incidents, vehicle crew members and Afghan police escorts were either killed or wounded. It remains unclear whether many of the attacks were conducted for political reasons, pure criminality or a combination of the two.

Hunger pains

According to the WFP annual report, despite poor road conditions, extreme seasonal weather and heightened insecurity, in 2007, the WFP brought into the country over 200,000 tonnes of food for distribution in all provinces. The majority was received through the southern corridor – via Peshawar and Quetta in Pakistan (75 per cent) – where WFP operates large transhipment bases exclusively for food destined for Afghanistan.

Significant tonnage also entered from Uzbekistan (15 per cent) and Iran (10 per cent). As the 2007 cereals harvest was much better than the previous year, 4,000 tonnes of Afghan wheat was also purchased in Herat province, while a further 400 tonnes were received at Mazar-e-Shariff as a balance from a purchase made in 2006. Overall, WFP dispatched 220,000 tonnes of food from its main warehouse complexes in Kabul, Kandahar, Herat, Mazar-e-Shariff, Faizabad and Jalalabad to its implementing partners for distribution to beneficiaries.

Out of the total food dispatched, 23 per cent was delivered by the WFP fleet, with the rest by commercial transporters. Increasing challenges were faced throughout the year due to

deteriorating security in much of the country. More than 850 tonnes of WFP food was looted between January and December while being transported. Most of the looting incidents took place in the southwest, especially Kandahar, Helmand and Farah provinces. The direct consequences of the risks faced by transporters were a shortage in available trucks to operate in some areas, and transport rates that ranged as much as 50 per cent higher than the previous year.

As in past years, prior to the onset of winter and the consequent loss of access to many areas of higher elevation, WFP began the positioning of 23,000 tonnes of food in 18 provinces. By the year end, 95 per cent of the target had been reached, aided by the later arrival of heavy snow compared to the year before.

Though it operates its own fleet of 135 trucks, WFP mainly uses unmarked commercial vehicles to transport the majority of its food throughout the country. Unfortunately, 2007 saw a marked deterioration in security that often halted food movements and threatened the vehicles and even the lives of drivers and crew.

WFP lost over 850 tonnes of food in more than 30 separate attacks, mainly on the commercial transporters operating in the south. The attacks have frightened the drivers, limiting the availability of willing transporters and pushing the already high cost of transportation even higher.

Other factors hindering transport and logistics activities are seasonal road blockages due to snow, floods and extensive landslides and the largely neglected road infrastructure owing to decades of war. Afghanistan is one of WFP’s largest operations in the world with more than 6.7 million beneficiaries being reached in 2007.

NOTE: The 2007 annual report is the latest report from Afghanistan, the 2008 report will only be out in 2009.

Outlook on Afghanistan

According to the Afghanistan Investment Support Agency (AISA) Afghanistan’s large and growing market for basic logistics and transportation services presents a ground-floor opportunity for new providers. This opportunity is open to domestic and foreign firms of all sizes and origins. While investment in the sector is increasing, the field is virgin territory for many services. The timing is right to cultivate customers and establish a “first mover” advantage. Early investors in the sector report modest start-up costs and relatively low overheads, and even smaller operators are moving large volumes of freight.

It is estimated that 60 per cent of overland transportation comes to or from Pakistan, 30 per cent to or from Iran, and a combined 10 per cent through borders with the Central Asian republics. To the north, in Turkmenistan, Uzbekistan and Tajikistan, goods and commodities flow on main transit routes south through Afghanistan to the ports of Bandar-e-Abbas and Chabahar in Iran, and Gwadar and Karachi in Pakistan. A planned bridge will link Afghanistan and Tajikistan over the Amu Darya (Oxus) River, which carries barge traffic along the borders with Turkmenistan, Uzbekistan and Tajikistan. Within Afghanistan, the main “Ring Road” is connecting Kabul to Kandahar in the South, Herat in the East, and Mazar-e Shariff in the North, hence linking the country’s key commercial centres, while other roads are extending to the border crossings with Iran, Pakistan and other neighbouring countries.

Today Afghanistan is ideally situated to again function as a strategic gateway, serving landlocked countries to the north and the Iranian and Pakistani seaports to the south. Afghanistan is potentially the shortest route to the open sea for the Central Asian republics and Russian industrial centres of western Siberia. For Pakistan, Afghanistan offers a primary route for trade with Central Asia. In fact, Afghanistan shares borders with six neighbours – Iran, Turkmenistan, Uzbekistan, Tajikistan, China and Pakistan – and is considered a “land bridge” connecting proximate country markets, as well as potentially large trading partners, such as Iran and India. Afghanistan offers a point of access to an extended regional market of more than 2 billion people, linking the Middle East to Southern, Central and Southeast Asia.

Commercial transport is a high-growth sector in Afghanistan. Among the commercial markets as well as the donor community, demand for transport services is expected to remain strong in the medium and long term. Afghanistan has immediate, almost unlimited demand for both industrial materials and consumer products. Transport volumes for commercial goods, which are almost double that of donor material are expected to rise as Afghanistan’s commercial infrastructure continues to improve. Finally, improving infrastructure and security is resulting in increased transhipment of goods through Afghanistan.

An important demand in the logistics sector is the provision of cold transportation and storage facilities such as cold rooms and refrigerated trucks and containers. Some 20 to 40 per cent of post-harvest horticulture products are wasted because of poor packaging. In cold storage transportation, there are currently less than 50 refrigerated trucks available around the country.

Sultan Ahmed Bin Sulayem, Chairman, Dubai World

“A good leader is one who can connect a bird’s-eye view with a worm’s-eye view of the world.” That’s how N.R. Narayana Murthy, Chief Mentor, Infosys, describes leadership. Having spent 12 hours with His Excellency Sultan Ahmed Bin Sulayem, Chairman of Dubai World and its subsidiary companies at sea level in the Algerian port of Djen Djen and at 45,000 feet aboard this private jet, I am qualified to say he is someone with a very good view of the world from any altitude or angle.

Dubai World insiders say that the group operates as ‘state within a state’. With over 100 subsidiaries in diverse fields such as logistics, tourism, various kinds of real estate projects and offerings, private equity, ecommerce, media, energy and natural resources, it is not hard to understand why the ‘state within a state’ tag sticks. “We are a very diverse group but whatever we get into we have to be the best,” Bin Sulayem says while multitasking with his Macbook Air.

Surely there asks to be a favourite amongst the 100 of companies he heads? “Logistics is close to my heart,” he says. “It’s what we started with and what I spend a lot of time engaged in.”

A graduate from Temple University in Philadelphia, Bin Sulayem was recently awarded an honorary doctorate from the Middlesex University in recognition of his “dedication to excellence and commitment to the economic development of the UAE and the Arab World, and his inspiring community leadership”.

The key factor in Dubai World’s success according to Bin Sulayem is its knowledge capital. “We have consultants but we try our best to gain as much in-depth knowledge ourselves before we get into anything.” And when he says “in-depth” he means it literally too! “Before we started work on the Palm, I took my core team of designers and engineers diving at the site to get a better understanding,” he recalls.

Bin Sulayem likes to fit horse riding into his hectic schedule. In fact, he arrived in Algeria straight from Malaysia where he competed as part of the UAE endurance team. The team claimed the only medal that was missing from their list of achievements – the team gold in a World Endurance Championship. Bin Sulayem finished third in the individual tally. He is also a bronze medalist at the Doha Asian Games.

Not bad considering that he took up riding only eight years ago. A sound example that when he says Dubai World “has to be the best in everything it does”, he means it from all angles.

Three ways you can hang on to your most valued resource.

Many organisations tell their employees how important they are. Why did I stress on tell? Because it seems to be the only thing they do.

In our environment, with rising inflation resulting in a higher cost of living – hanging on to your most valued resource can be challenging, as Robin Lyndhurst and Darryl Judd tell us in this issue.

Here are three principles I gathered on how to value and be valued by your most important resource.

• RESPECT Treat your employees, peers and superiors with respect, from the lowest janitor to the CEO of the company. In Kathryn Semcow’s feature Better than the Boys, for example, you will see how women in the supply chain take notice when they are treated with respect. Basic humaneness pays, acknowledge that your employees are human beings first and your employees only next.
• TRUST It’s not a good idea to monitor every aspect and moment of their
  working day. The realisation that you trust them to do their jobs effectively without supervision will drive them to justify that faith. As Dan DeSoto with Kuehne + Nagel shares with us, managing relationships is key to the industry.
• ALLOW MISTAKES It happens. Allow your employees room to make mistakes and you’ll find that they do a perfect job. Running a tight ship will only make them nervous and lead to a lot of errors. Experience is the best teacher but also the costliest one. Accepting that mistakes happen also requires having a good lawyer. Check out Jasamin Fichte’s guest column on page 60 for advice on liability. If all this sounds too preachy for one issue, please bear in mind, none of these will work if you are paying people peanuts. Find out if you’re making enough in our salary survey. In keeping with our people theme, I’m sure most of our regular readers will be delighted to know that this is the last time you will see me. From next issue on Kathryn Semcow will be sharing her thoughts on the editorial for LOG.Middle East.

Until next time,

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com

Three ways it can

Sceptics would argue the concept of being carbon neutral is a myth. An additional cost. A phase. A new buzzword. A marketing ploy. It’s time to wake up. Global warming is a reality. It affects each and every one of us and if we don’t act responsibly, there won’t be any winners – we all lose.

It’s true, turning your organisation carbon neutral calls for change in the way you run your business. Changes that will cost you money. At times, you might wonder if it’s all worth it? Here are three ways your business can benefit from taking the step:

• EFFICIENCY By aligning your business on carbon zero fundamentals, you will be able to bring in greater efficiency and resource reduction. Cutting energy use over time, for example, leads to cutting costs. This could provide a fundamental advantage in your operations and products. Just look at Masdar City. No doubt developers will have to put up millions of dollars for the solar panels required to power the entire development, but in twenty years, it will be the cheapest city to run in the world. And check out Michelle Mills’ story on the SkySails cargo ship. Who would think something as simple as a kite could save gallons of fuel and millions of dollars?
• MARKETING You can use your organisational changes and innovations in green products and services to offer customers a competitive advantage. If two 3PLs are offering two warehouses of exactly the same price, yet one follows green building standards, why wouldn’t a customer choose the more environmentally friendly option? In fact, the 3PL with the green warehouse, because it has reduced energy costs, could, in time, offer lower prices than its conventional counterpart. How are you going to differentiate your offerings from the competition?
• IMAGE If you care about nothing else, you can at least maintain or improve your image by going green. As awareness of the issue grows, customers will prefer to do business with a company which is environmentally responsible.

I sometimes roll my eyes at media hype over corporate social responsibility, knowing full well the CEO’s concerns for the rainforests of Brazil, or the melting ice caps, are nothing more than words provided by a well- paid public relations officer. But at the end of the day, does it matter if that company cares? All that matters is the end result – a cleaner, greener future for us all.

So jump on the green bandwagon. Maintaining status quo may be the easy path to take, but turning carbon neutrality into your advantage is the responsible way to go. As I mentioned earlier, we are all in this together.

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com

Three factors that will shape the cool chain industry

This issue of LOG.Middle East focuses on what’s cool in the logistics industry, from trends, such as RFID and FFASs, to Sohar Port, the hottest new shipping hub. We also bring you some pretty cool industry players such as David Christmas, Regional Managing Director, Middle East, DHL Exel, and Albert Tan, Logistics Professor with the University of Wollongong Dubai.

And what is a ‘cool’ issue without a feature on the cool chain? Unfortunately,
the title ‘cool chain’ does not make it inherently cool. Until recently, the transportation and logistics arrangements for perishable products in the Middle East have been far less sophisticated than other regions, as demonstrated by broken cool chains, representing a significant cost to the industry and threats to customers’ health.

So what can be done to change all of this?

• FOLLOW THE RULES Building a globally compliant temperature-controlled transportation process is vital. This framework will have to cover the best practices that support the cool chain industry’s regulatory compliance requirements relative to temperature control product transportation and distribution. Having the entire chain onboard under a single compliance framework will limit the number of breaks and give clients greater confidence.

I suggest we base these rules on Hazard Analysis Critical Control Point (HACCP), conceived in the 1960s when the US National Aeronautics and Space Administration (NASA) asked Pillsbury to design and manufacture the first foods for space flights. Since then, HACCP has been recognised internationally as a logical tool for adapting traditional inspection methods to a modern, science based, food safety system. Galadari, which supplies the UAE with Baskin Robbins, is HACCP compliant, and I hope other Middle East companies will follow suit.

• FLY SAFELY Anyone who ships perishables by air also needs to take a look at the IATA Perishable Goods Manual. The International Air Transport Association (IATA) has instituted specific guidelines on how airlines handle temperature-sensitive healthcare products. Not only will it provide you with the most efficient practices for your shipping of perishable cargo throughout the entire supply chain, but it will also answer all your questions regarding urgent time-and temperature-sensitive shipping.
• PACKAGING TECHNOLOGY Finally, packaging has always and will play an ever-increasing role in the cool chain process. With technological improvements in the packaging industry, it could act as a safety net in case there are breaks and delays in the chain. How soon the industry will induct these new technologies will be interesting to watch.

How can you profit from these factors? Simple. Be cool.

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com

Three challenges to watch out for in 2008

The year 2007 is one that will be very special to all of us here at LOG.Middle East. It marked the start of our operations in the region and, judging from the response of our readers, we are already making a mark for ourselves in the logistics industry.

In this special issue, we look at the year that was and the challenges the industry will face in 2008. Three things that will test the industry this year are:

• SECURITY No freight forwarder or supply chain manager can afford to ignore security. The United States HN1 law requires 100 per cent scanning of maritime containers before they are loaded onto vessels heading for the US. The US has defined a five-year period for this implementation, but we have to start preparing now. Will Europe follow the US example? What will this mean for the industry? One thing is certain: new security requirements will bring with them a lot of work, in terms of screening and data provision. We will see a slew of new entities aimed at helping companies meet these standards. Expect an industry of security providers for logistics companies to grow.
• INFLATION Prices are only going to go up. In this issue of LOG.Middle East, industry players such as Dr. Edward Roderick with Agility have identified inflation as one of their biggest concerns. The price of fuel, in particular, is a complaint echoed by Ingo Roessler of Royal Jordanian Cargo, Sujit Subramanian of Lufthansa Cargo and Prakash Nair of Emirates SkyCargo. In fact, Nair speculates that we’ll soon be talking of oil reaching US$150 a barrel.
• FREE TRADE No doubt, free trade is good for our business. But the GCC common market, if it becomes a reality, will bring with it a string of new requirements for logistics providers. We will see freight forwarders scrambling to change their routes if Saudi Arabia opens its border. And we will see the whole industry scrambling to understand new prices, new labels and new rules.

With the announcement of the Gulf Common Market comes uncertainty. Is this market a mere political statement or could it become a reality? Is the US$ peg going to stay?

A lot of questions. I know. What’s the best way to stay ahead at uncertain times such as these? Stay informed. As we move into the New Year, I can assure you that our team at LOG.Middle East will continue to bring you up-to date and highly researched articles, with clarity and transparency.

Happy New Year!

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com

Three suggestions for governments

In the first issue of LOG.Middle East, my editorial touched upon the three trends that will shape the future of the logistics industry in our region. I was told by one of our first readers that one of these trends, deregulation, was a landmine issue.

“Can you image a government giving up authority?” he said. And before I could think and respond, he added, “That’s what governments are for – regulate, control and tax!”

So, in between the multiple deadlines for this issue of the magazine, our website launch and the FIATA World Congress dailies, I managed to steal some time to day dream – “What would I do if I were in government? What if I were President of the Republic of Logisticsland?”

Other than the first obvious step of visa-on-arrival for all Indians, I narrowed my ideas down to three.

• PROMOTE FDI Sure, most governments talk about promoting foreign direct investment, but how many really mean it? Far more important than attractive advertising aimed at luring foreign money are the policy and regulatory changes that actually draw it in. These policies should include a liberal economic environment, full foreign ownership and adherence to global quality standards. History, after all, has taught us that liberalisation and the removal of market entry barriers lead to substantial economic growth, particularly in the logistics industry.
• OPTIMISATION Red tape kills business. Areas of government services such as licensing, regulatory oversight, competitive regulation and customs services need to partner with industry. Particular care should be taken to foster entrepreneurs, as they are usually bureaucracy’s first victims.
• PROMOTE LOGISTICS CHAMPIONS Every country needs national heroes, why should the Republic of Logisticsland be any different? Very often, smaller sized local enterprises do not own the means to establish sophisticated logistics processes and service offerings. Larger industry players, on the other hand, focus predominately on their core business, often neglecting the innovation potential of logistics processes. Governments can use the savings made by optimisation to educate, nurture and support the growth aspirations of smaller local industry players. This generates competition and forces the industry to be more efficient and innovative.

Now all I need to do is get elected.

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com

Three trends that will shape our future

It’s easy to assume the world’s eyes are on our region. Media around the world – be it online, print, radio or television – have used nothing but superlatives to describe the rapid economic progress witnessed here. The logistics industry, as well, is no stranger to this phenomenon, having enjoyed its fair share of the global media limelight.

With a tax-free environment, abundance of space and a third of the world’s population living within a three-hour flight radius, this region has evolved as a natural hub for trade between the East and the West.

But these factors are only the foundation. The best, as they say, is yet to come. Over the next five years, three trends – deregulation, competition and technology – are going to revolutionise our industry.

• DEREGULATION The biggest debate of the season seems to be over a GCC wide single currency. Today, the complex web of tariffs and formalities not only add to the cost of goods, but also hinder the development of over-land transportation routes. In the logistics industry, a GCC-wide single customs tariff would fuel the movement of goods throughout the region. Such a deregulation move could connect Oman with Turkey and beyond.
• COMPETITION Great opportunities often create fierce competition. Almost all of the world’s major logistics players are in this region. Local businesses, such as Mohebi, Aramex and UAE government-backed Empost are investing heavily to expand their portfolios. This trend is set to continue. Prices will remain competitive and new players will have to come in with even larger investments.
• TECHNOLOGY Everyone knows technology is important, but very few understand how important. New knowledge is enhancing the industry’s ability to offer customers rationalisation, quality assurance and better service. Logistics is increasingly becoming a tech business. It is no longer enough to have the largest warehouses or fastest ships. Having the right technology can make or break a business.

Continuing infrastructure development and diversification into non-oil products and services have positioned the Middle East as one of the world’s key trade hubs. At LOG.Middle East, we consider ourselves extremely fortunate, to not only document this community, but to be a part of it.

Our journey starts here.

Jacob Joseph
Executive Editor
jacob.joseph@dvvmedia.com