Are you feeling paranoid these days? I am. I was in the Taj, Oberoi in Mumbai only a month before it was attacked, and my boss was there when the gunmen entered the main doors. Thankfully, he made it out, but we here at DVV were all left a little shaky.

Just when we thought the shakiness left by September 11 was over, the threat of terrorism is making headlines again. Having an incident occur so close to home leaves me wondering if this threat is here to stay.

And turbulence in the economy won’t help. The tighter money becomes, the more people move to the margins, and look for violent methods to take out their frustrations. While not all desperation leads to mass terror attacks, it can still increase crime and security threats, such as money laundering, smuggling, theft and hijacking. If the Somali pirates were economically satisfied, after all, they would probably lose the need to take over ships.

Maybe these threats are just media hype. Maybe they are perceived risks, rather than real risks. The risks we worry about, however, can be far more dangerous to our industry than actual risks. Perceived risks mean more rules (C-TPAT anyone?) and security checks, which mean more bottlenecks. And let’s not even talk about the rise in insurance costs.

We will all be affected by these concerns. An example: A major shipping firm in Dubai sent an empty vessel from Karachi to Mumbai just before the terrorist attacks occurred. While the ship had no suspicious cargo, to outsiders it appeared as if it had transported the assailants into India. The Indian and American navies showed up to investigate, and only recently was the company able to clear its name.

Governments around the world are likely on alert for suspicious activity. While I am not accusing you of anything, I recommend that you make yourself aware of the security rules of any country you deal with, and follow them accordingly. The last thing you need is authorities knocking on your door. After all, should anything go wrong, we will be the first industry to take the blame. Not that I want you to be paranoid.

Happy New Year

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

It’s difficult to tell just how hard the financial crisis has hit the industry in the Middle East. We live in a culture of denial, after all, where corporations are eager to boast profit and quick to hide loss. No one seems to want to talk about their problems publicly. Soon, however, they may have a tough time hiding their tears.

Signs of logistics pain are already showing up in other parts of the world. DHL has announced that it will close all 18 of its hubs in the United States, cutting its workforce down from 13,000 to 3,000. This follows an announcement in the summer that they would outsource many of their services to UPS. The other guy, FedEx has been reporting losses since June.

On the airline side, carriers are hurting. Many airlines, including Etihad Airways, have started leasing aircraft instead of buying them, according to leasing firm BOC Aviation. Singapore Airlines is reporting its largest drop in profits since the Asian financial crisis. Even Emirates is admitting it has failed to rake in the cash it usually does.

The storm is also passing over the sea. The Baltic Dry Index is, well, dry. In recent months, the cost of shipping a container from Asia to Europe dropped by more than 75 per cent. Research firm Drewry Shipping Consultants Ltd. has told the press it expects a five per cent decline in container volumes from Asia to the US in 2009, after years of double-digit growth.

If the heart of this crisis is the United States, then perhaps that is where the solution lies. Many Americans seem hopeful their new president, Barack Obama, can perform open heart surgery on the economy, suturing the wounds caused by President Bush. If one man can do so much damage, surely another man can offer just as much repair.

In the meantime, we have to remember that this, too, shall pass. The economy is a mood. It moves up and down in waves, which seem to balance out over time. We’ve been riding high for long enough and now it’s time to settle down. Let’s use this shortage of cash to eliminate efficiencies, keeping only what we really need. Let’s use this drop in demand to develop our businesses so that they can super compete. And most importantly, let’s use this slowdown to finally work normal working hours. There’s no denying we all deserve a bit of a break.

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

How will this affect our industry? Are we going to be okay? On the one hand, we can say that lower fuel prices will give us an advantage. Transport operators can reduce their prices, 3PLs can earn a bit more profit and customers can stop complaining.

On the other hand, if market conditions continue, those customers might cease to
exist. Logistics providers could slowly watch clients drop like flies, or at least reduce their demand for services. If global demand slows, so too will global trade.

My non-expert opinion is ‘Ouch!’

We tend to be a fairly optimistic magazine,presenting plans for the region’s airports, ports, logistics villages and warehouses as if they are sure to come true. In this issue, for example, we take a look at airports on the rise in Ras Al Khaimah, Dubai, Abu Dhabi, Doha and Kuwait. We also share regional ambitions for railways, which come with high price tags. I wonder if this optimism is still warranted. Will the money supply and trade demand still exist for these projects over the next few years?

If the logistics sector does slow down, however, it will not face the doom of other industries such as banking and real estate. We are a bare bones industry, driven out of necessity and practicality rather than ego and glamour. Ambitious plans for new islands and soaring towers may move aside for things we really need, like warehouses and roads.

But some experts say our region will be relatively okay. The Gulf region is fairly insulated against bank closures, homes losses and unemployment. Hopefully, life will continue as usual and we can all forget the world around us is crumbling apart.

Even if our world does crumble apart, you can still count on LOG.Middle East holding the LOG.LEO Awards at the Westin at the end of this month! Check out the candidate profiles in this issue and visit log.ae to vote for your favourite Young Achiever, Innovator and Supply Chain Manager of the Year.
See you there!

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

Which got me thinking, how do banks move money to and from ATMs without getting robbed? According to one insider from a reputable cash in transit (CIT) company, the UAE has very few, if no, incidents in this area. Africa and South America, on the other hand, have the highest heist statistics in the world, and even the UK experiences hundreds of cases a year.

Still, the threat is here thanks to lax policies on CIT. While banks in most other countries have cash processing centres dedicated solely to CIT, UAE banks make the armoured car crewman stand in line like any other customer. Does this seem like an easy target? “There needs to be more discretion,” says the insider.

Another money problem – my rent cheque bounced this month. I think I was about 800 dirhams short. I don’t know what happened. I bought nothing out of the ordinary. The only explanation is that the standard bundle of goods I buy every month, from bottled water to shampoo and conditioner, simply costs more. Time to start scaling back. I’m on a budget.

And something tells me I’m not the only one out there worrying about money. Rising prices are forcing everyone in the industry to scale back, to re-examine their budgets.

What to do? The traditional solution for inflation is for governments to increase interest rates, thus encouraging people with money to invest rather than spend, ultimately reducing the supply of money in the economy.

No problem, except for the fact that most GCC currencies are pegged to the US dollar. The US Federal Reserve has been slashing interest rates for the past year, requiring the GCC powers that be to follow.

Insha’allah, this new GCC common currency will step away from the dollar. The greenback’s day is done, and it is time for the region to take hold of its own financial power.

The only problem is, when this happens, I’ll have no excuse for money problems.

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

Now I wonder how many degrees would separate us if we factored in goods. This thought struck me as I stood on the quay wall of Port Zayed in Abu Dhabi, watching a vacuum move grain from a bulk carrier from Canada to the Grand Mills for Flour & Feed silos. I looked at a pile of wheat that had fallen on the concrete and wondered if it had come from my Uncle Trev’s farm.

And I couldn’t help but reflect upon the importance of our industry. It is supply chain managers and logistics professionals, after all, who minimise distances, shorten the supply chain and expand our networks. They are the ones placing me only one degree from family on the other side of the globe. They are the ones shrinking the world.

With trillions of projects underway, the GCC construction industry appears to be growing, but developers may have to shrink their plans down to scale thanks to supply shortages. Contractors are finding it more and more difficult to secure basic materials such as steel, and many projects are up to months behind. When procurers finally do secure supplies, they end up paying phenomenal prices. Steel prices in Abu Dhabi, for example, surged 91 per cent in the first half of this year.

I’ve heard a lot of people complaining about this issue, but have seen few innovative solutions, besides short-term fixes such as securing contracts with suppliers and government removal of tariffs. The only long-term answer, however, is for GCC countries to start producing more construction supplies themselves. This means more factories for cement, glass, marble, tiles, drywall, rebar, even steel.

And now I’m about to eat my words. Literally seconds ago, our reporter placed a news story on my desk. It appears that cement companies in the UAE have plenty of factories planned for the next few years. Next he’ll probably give me a piece on new factories for glass, marble, tiles, drywall, rebar and steel. The good old law of supply and demand seems to be solving the problem. I guess my idea isn’t so innovative after all.

Ramadan Mubarak!

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

If bringing together an IT issue is tough, I imagine deciding what and how much IT to integrate into your business is even tougher. Breaking through the marketing hype and deciding what you really need, after all, can be difficult. Of course a GPS provider will tell you that you need GPS, an RFID vendor is going to push his tags and a software developer will insist that her product is the ‘streamlined’, ‘tailor-made’, ‘one-stop-shop’ solution for you. We at LOG.Middle East heard many such statements this month.

In fact, we were relieved to come across the honest remarks of one logistics provider who described RFID as just another way for consultants to make money. Sadly, however, he asked for the quote to be removed, so we went ahead and removed his article.

But let’s not bash RFID too much. The costly technology will prove useful for inventory you cannot afford to lose. Damas jewellery, for example, is using it to keep tabs on its stock and American passports apparently have RFID tags hidden neatly away in their covers.

Soon, you and I may have our own personal RFID chips, which we use as portable health insurance, ATM and credit cards. Don’t even bother shoplifting with one of these in your arm.

By the way, did you notice that the cost of fuel is rising? At this point you can sit and cry over your invoices, or you can use these hard times to proactively change the way you do business. This means investing in fuel efficient technologies and carefully planning your routes. If oil prices are ever to drop, the changes you make now could lead to major profits in the future.

Perhaps one of your strategies to offset rising costs is switching from air or road freight to sea freight. But do you ever really think about what happens out on the open ocean? In this issue, Casey McFann provides us with a guide to maritime shipping and a First Officer helps Munawar Shariff uncover the mysteries of life at sea.

China, to most of us, remains a mystery. We all know the country is growing faster than even the Middle East. But how do we get a piece of this growth? Anyone who can find a way to fill up the empty containers heading from this region to China is in for big bucks. Containers moving from China to the Middle East, after all, are already packed full. I wonder if China has any need for sand. For this, we’re going to need some marketing hype.

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

The region seems to be health crazy these days. The UAE government has announced mandatory health insurance for all residents, Bahrain has said it is planning the same, and Saudi Arabia will soon require all pilgrims visiting its holy cities to be insured. And suddenly, thanks to a new government study, we have realised we’re not getting enough vitamin D.

More health awareness and healthcare insurance, means more prescriptions, which means more medicine. Someone is going to have to move all of these pills. Providers like Kuehne + Nagel are eager to tap into the pharmaceutical market, and Saudi-based Banaja International is spending big bucks to develop Pharma World, a 3PL designed specifically for drugs.

While outsourcing is presented as a less-expensive option, Gulf Pharmaceuticals (Julphar) based in Ras Al Khaimah has chosen to take care of its shipments to regional distribution centres by itself. The lucrative company has not yet decided, however, if it should outsource the transport from these distribution centres to the 2,000 pharmacies it is planning to develop in the coming year. Any 3PL who can earn their trust and grab this business could be in for some major cash.

And, in a twist of fate, we have a doctor on our cover. Mohammed Al Zarouni, who has his PhD in Economics, is better described as a doctor of free zones than a medical doctor; but he has, however, nursed Dubai Airport Free Zone in to one of the region’s healthiest. Hopefully, he can use his expertise to make Dubai Silicon Oasis a new hub for designing and manufacturing integrated circuits. But we will have to wait and see if this project will take Dubai into the next generation of technology, or if it will disappear into the sand like the now obsolete Saadiyat Free Trade Zone, once planned for Abu Dhabi’s Saadiyat Island.

While Al Zarouni is against turning all of Dubai into a free zone, many expats may soon be wishing it were. I sense that the inevitable disease of taxation is on the way. Signs and symptoms are already showing, for example, the Salik toll on Dubai’s roads. A presenter from Dubai Customs at the recent event co-hosted by the SCLG even hinted that personal income tax will be implemented next year.

If the virus of taxation is to spread, I predict a wave of skilled workers heading home. Losing a percentage of income coupled with rising prices will make the cost of living in the Gulf outweigh the benefits. Could you and I be amongst these evacuees?

One thing that will cost you nothing, but provide you with hours of entertainment and useful information is our new website www.log.ae. Check it out, and post a comment.

Trust me, it’s good for your health.

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

Between running to interviews, servicing my car and buying furniture, I spent a lot of time this month trying to find my way in Al Quoz and fearing of my life. Would one of those big trucks drive over me? Is that warehouse going to explode? Am I going to die from lung cancer from breathing in this noxious air?

Similar to how Sajith Sarathchandran, CEO of Bin Yousef Cargo Express, describes the Qatar freight forwarding industry, this region has it’s share of highly professionalised companies, but also a great number of organisations which will cut costs at any expense – unqualified workers, inadequate facilities, environmental terrorism.

But, as Sarathchandran says, and the likes of Bill Hill with GAC have reverberated in past issues the market is consolidating. Only those who are certified , standardised and professionalised will survive.

And for those companies who are struggling to do so, LOG.Middle East is here to help. In this issue Scott Sykes and Vicki Wrona, in separate articles, offer advice on managing risks, Casey McFann takes a look  at ISO 28000 certification, as well as fire safety, and Amira El-Gawly explores the world of access control.

If you need a little push to up your ante, you can always move to Dubai Industrial City.

The development tailored to factories, which will feature plenty of warehouses and logsitics providers, is setting it’s standards high, grouping relevant certifications such as the ISOs and OHSAS 18001 under one label it calls the Dubai Quality Mark. In fact, CEO Rashed Al Ansari says DIC has already rejected around 35 per cent of applioants due to thier failure to meet this mark.

If you’re worried about the costs of implementing security, health, safety and environment standards – get over it. As Al Ansari explains, the price of losing your warehouse to fire started by your neighbour is far more than the price of preventing such fires.

Next time any area of the city goes up in flames, I hope I’m living in a container. Rod Dyck with Penguin Container Trading and Repairing Services LLC (PCTRS) says he can outfit a shipping can to be 100 per cent fire proof, sucking out any air to kill the flames (I think you’d have to step out of the container first). Check out our cover story and I think you’ll be quite amazed.

Speaking of PCTRS, they are one of many companies moving to DIC. In the meantime, you can find them in Al Quoz. Please don’t call me for directions, however – I will only get you lost.

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

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

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