The region’s biggest cargo fleet is here to stay, Jassim Al Bastaki tells Kathryn Semcow

You could say all-cargo carrier Midex Airlines entered the market at one of the worst times in aviation history. When it launched its first flight from the Al Ain Airport in June 2008, fuel prices were high as ever and airlines around the world were wondering if they could survive.

But Jassim Al Bastaki, Director General, hardly looks bothered. “Once you give a commitment to the market that you are flying to, you have to fly,” he says. “You have to take a risk. You have to pay from your own pocket in the beginning.”

And he is hardly bothered by the current global cash shortage either. “Our aircrafts are 100 per cent owned by the company,” he says. “We don’t have the cost of leasing. The other airlines in the UAE lease their aircraft, so their overhead is too high. This will push them to go out of the market, or at least to reduce their fleets.”

The company he is referring to is Midex International Group, said to be the world’s fifth largest integrator. It is the agent for clients such as La Poste, Royal Mail, Swiss Post, ABX in Belgium and Chronopost; and turns over approximately US$5.44 billion a year. “The idea is to build an airline to help and support the express courier business,” says Al Bastaki.

Midex set up its airline in the UAE with the government of Abu Dhabi’s blessing and encouragement to make use of Al Ain Airport. “So many people ask, ‘Why did you choose Al Ain?’,” says Al Bastaki. “Al Ain Airport is not in an economic city, but from a technical and operational point of view, it is one of the most recommended airports.”

He also likes the airport’s proximity to Dubai. “If I will use Sharjah Airport, for example, I will need four to five hours just to reach the airport and take my cargo. But Al Ain is a maximum of two hours driving by truck.”

“There is no traffic right now in Al Ain, so as a carrier, I think that is a positive,” he adds. “Plus, Al Ain is very close to Oman, only one hour from Sohar Port on the Indian Ocean.”

 Jassim Al Bastaki, Director General, Midex

Al Ain’s dry weather is also a bonus. “There is no fog during winter seasons, so there is no way your aircraft will be delayed,” he says.

Midex currently has six Airbus A300B4-203Fs and one Boeing B747- 200F based in Al Ain. It also has seven 747s based at its hub in Orly, which it operates on dry lease. “Today, Midex Airlines has one of the biggest fleets in the region,” says Al Bastaki.

He says the company is considering moving two of its Orly planes to Al Ain. “Internationally, other regions aren’t doing so well, but the Middle East is still booming.”

And he seems to think this will continue. “We are negotiating now to buy another 747-400,” he says.

Al Bastaki says Midex now has scheduled flights to Bombay, Madras, Dhaka, Colombo, Beirut, Damascus, Hann and, of course, Orly. It trucks cargo from Orly to the rest of Europe, and relies on agreements with North American carriers to move it across the Atlantic. Since June, it has operated150 scheduled flights and moved around 11,000 tonnes of cargo to Europe. Al Bastaki says the company also has plans to start chartering soon.

Although faced with a dramatic economy, Al Bastaki says dropping any of these routes is nowhere in his plans. “Once you bridge this period, you will be there in the market, because you have shown the big cargo companies that you are committed, that you have your big aircraft flying on time,” he says. “Once you think you need to drop services a bit, or stop services a bit, you will lose your client. You need to keep going on, moving forward.”

Nabel Mohammed Saleh, Director of Roads, Roads and Traffic Agency (RTA) gives
Munawar Shariff a clear picture of how the RTA is handling the issue of constructing
new roads, reducing traffic and building the infrastructure for Dubai’s future growth

Munawar Shariff: By how much are you expanding your roads? What is the capacity of vehicles you are targeting to absorb on all the new road constructions?

Nabeel Mohammed Saleh: To provide traffic congestion relief, we have transformed many grade interchanges into grade separations and interchanges greatly increasing road capacity effectively and minimising delays. Most of these are the biggest and most unique ones in the world. The number of bridges constructed in Dubai have doubled during the last two years.

Highway capacity is defined to be the maximum number of vehicles passing over a given section of a lane or a road during a given period of time. It is normally given in units of vehicles or passenger cars per hour.

RTA is keen to increase the capacity of the Dubai road network to accommodate the huge increase in traffic volumes. Road capacity can be increased through widening and adding new lanes to the existing network and through increasing the operating speed by solving different intersection and bottleneck problems.

We continuously measure the level of service over each link in the Dubai road network and try to reserve an acceptable level of service over the links according to the international standard (Highway Capacity Manual 2000).

Through these procedures we can and are achieving our targets of relieving traffic congestions, minimising delay time and providing safe and smooth transport for all.

Which are the new areas/developments in Dubai that are being linked and will be linked in the near future with these new roads?

Currently Dubai’s economic development is sky rocketing, and through development of major new road projects, we are trying to keep up with Dubai’s growth and also help accelerate its growth through our initiatives.

Construction of new roads is happening all over Dubai, however, areas where new roads are being developed include: the area around the Arabian canal, the area around Mohamed Bin Rashid Park, the Dubai World Central, the Dubai Land area, the Business Bay and the Dubai Lagoons project.

Nabel Mohammed Saleh, Director of Roads, Roads and Traffic Agency (RTA )

What are the factors you consider when planning the infrastructure of such a fast developing city like Dubai?

Factors to be considered during the planning stage of infrastructure construction are: identifying the target design year based on which design will be carried out, identification of the nature of development around the infrastructure, identification of the land use of the development, anticipating the trip generation rates and the trips generated from the assigned development, perform a trip distribution process, perform traffic assignment and modal split task, perform the soil investigation analysis process and the infrastructure design steps.

By going through the above-mentioned steps, we can predict the number of anticipated users and hence be able to start planning the relevant infrastructure.

Typically, what is the time frame involved from the planning stage of the development of a new road complex to link a new part of town?

There are a number of stages. They are:

1) Strategic Planning Stage: The idea of constructing a new road has to be seen from the strategic planning point of view to predict the impact of the new road on the network.

2) Feasibility Study Stage: Before proceeding with any project, a feasibility study has to be performed on the project to provide an overall view about the benefit cost ratio to see whether the project is feasible or not.

3) Geometric Design Stage: At this stage, the idea of building a road is transformed into engineering drawings and material quantities and specifications of the project. This stage may involve the following steps: preliminary study which involves a traffic study and analysis about the volume of traffic expected on the road, the preliminary design which involves preparation of the preliminary project drawings and lastly the final design which is the preparation of the final project drawing.

4) Tendering Stage: The determination of the lowest bidder of the contract who will do the construction works of the project.

5) Road Construction Stage: The construction and supervision of the project to ensure that the project has been constructed according to the specifications and standards.

The time frame of these stages varies according to the importance and the size of the project.

How does this time frame differ from that of expansions of existing roads?

Developing/expanding an existing road may not take that long comparatively as some of the above-mentioned stages will not be present.

What are the challenges you face in planning and executing the construction of your road networks?

Our biggest challenges during the planning stage are predicting the traffic volumes that will be expected to use the road, anticipating trips generated due to the development of the area around the project, simulating the anticipated traffic movement over different interchanges to simulate the actual movement, overcoming different design restrictions to design a road that complies with the international standards within limited conditions and avoiding major expropriations of the existing plots needed for widening roads and constructing major interchanges.

The challenges we face while construction are: developing a traffic detour plan to divert traffic into alternative routes to avoid delaying road users during the construction stage; overcoming construction problems, choosing the most promising and optimum method statement for infrastructure construction and tallying the planned project schedule with the actual schedule to achieve the milestone project dates.

Which roads are being planned for the near future?

We are planning an extension of the Nad Al Hamar Road, parallel roads up to Jebel Ali -Lihbab Road, the Dubai Academic City Road, the Al Qoudra Road, the Bawady Boulevard, the Meydan Road and the Business Bay Road.

How is this planning of a new road network connected to the overall vision of Dubai’s expansion?

The idea of developing a new road is born from the overall vision of the proposed expansion of Dubai. The construction of a new road contributes significantly to the development of the area around the new road. So, the proposed planning is studied well first. The proposed new roads network will be studied accordingly to be complying with the nature and the size of expansion and development.

Moving on to traffic congestion, how do you plan to lessen the load of cars on Dubai roads?

In order to overcome congestion problems in Dubai, we have developed comprehensive execution plans. They are

1) Developing Dubai’s roads network, through: a) widening and developing the existing road network, b) extending and constructing new roads in different locations, c) ensure network connectivity, d) develop and upgrade different interchanges.

2) Develop public transportation modes, through: a) developing the metro project which can be considered to be the first rail transport project in the GCC. It will contribute significantly in solving traffic congestions, b) developing the modern bus transport and reserving a dedicated lane for buses, c) encouraging people to use different public transportation modes, d) developing modern and air conditioned bus shelters in different Dubai locations, e) extending the metro lines to cover origins and destinations of different trips.

3) Develop strategic operational Polices such as a) encourage car pooling, b) implementing toll roads system (SALIK), c) restricting issuance of new driving licenses, d) implementing some policies towards reducing car ownership percentages.

Mix one part contract logistics and one part freight management and what do you get? One of the world’s largest networks with presence scattered around the world.

Gianfranco Sgro, President, CEVA Southern Europe, Middle East and Africa and Shamsudeen Ahmed, Regional Director, CEVA

What’s in a name these days? It is very easy to lose track of company titles amidst the infinite consolidation happening in the market. First we had TNT, until private equity group Apollo Management purchased its logistics division in 2006, renaming it CEVA. Then, in mid-2007, CEVA merged with EGL Global Logistics and integrated it under the CEVA brand.

This merger, according to Gianfranco Sgro, President, CEVA Southern Europe, Middle East and Africa, brought together two entirely different companies. “TNT was a European-centric company, while EGL was more a US-based company,” he explains. TNT, as well, focused primarily on freight management services such as air, ocean, and ground-based transportation and services such as customs brokerage, local pick-up and delivery service, materials management and trade facilitation; while EGL specialised in contract logistics.

Each company’s breadth differed by region. “In North America, the predominant culture was freight, due to TNT’s presence,” says Sgro. “In North Europe and South Europe, I would say contract logistics was dominant. In Asia Pacific, I would say it was a merger of equals.”

The balance of the companies in East Asia made the region the perfect place to begin.

“We started in Asia Pacific as a test for us, and after six months we witnessed positive results, including a higher growth rate,” says Sgro. “Irrespective of normal organic growth, merging the two companies brought us an additional 20 per cent growth, on top of forecasted growth. All of these figures brought us to the conclusion of merging in all the regions.”

And merging in the Middle East, he says, was no big deal. “The legacy we had in this region was almost entirely from Eagle. TNT was not present here.” In fact, TNT’s presence stopped at the Turkish border.

EGL, according to Regional Director, Shamsudeen Ahmed, had been offering purely contract logistics in the region. “We were in Saudi for the past 30 years,” he recalls. “We were here predominantly looking after the freight management business, mostly in the oil and gas industry. We also had operations in Oman for the past 25 years.”

CEVA ’s Dubai headquarters

This legacy can only stand to benefit from TNT, says Sgro. “The great power of having the two companies together is that we are leveraging both parts of the business,” he explains. “The freight management of TNT will be leveraged through the existing network, also we are bringing all the know-how, IT solutions and capabilities, and people from contract logistics in order to boost growth.”

The greatest challenge, he insists, is merging two corporate cultures. “The point is to understand that contract logistics and freight are two different aspects of the business. There can be merging at a certain level, and not at other levels.”

“We used to discuss these in terms of left brain and right brain,” he explains. “Contract logistics is more engineering, more technical, more prudent. Freight is more emotional. The big error of this merger would be to try and have one of these as a dominant culture.

‘The big opportunity for us, which is 100 per cent achieved, is to respect these cultures, and to try and leverage them as much as possible. This is the first step, and then taking care of other things like IT is easy.”

Going local

Sgro insists one of CEVA’s next steps is to expand in the region in a big way. “We are commiting the company to a three billion dirham investment over a short to medium period, or five to 10 years,” says Sgro. “Today in the Emirates we have a 20,000 sq metre presence. In 2010, we will have 310,000 sq metres, of which 60 per cent is already fully committed.”

“It’s so difficult to get space here that people tend to think 99.9 per cent of the work is done when they get space. We don’t believe that and are investing in other aspects such as people, who we are bringing from Europe and Asia in order to support the growth that we expect. We are bringing in people on a permanent basis.”

He says the second aspect of development is IT. “We will have our state of the art IT system which we use all over the world.”

And the third is specialisation. “Then we will focus our strategy on specific sectors – not only oil and gas, in which we are already strong, but other sectors such as automotives, industrial parts, electronics, fashion, telecommunications and consumer goods,” he says. “These are sectors we already play a leadership role in, in most of the world, and we would like to reach that role very soon here. We know that we have to fight with some other guys, but we will succeed.”

Cargo 2000 is taking the air cargo industry a step above

Lothar Moehle, Regional Director EMEA, Cargo 2000

Lothar Moehle is a patient man. The Regional Director EMEA for Cargo 2000 seems to know that soon enough most airlines and forwarders will join his organisation, replacing airway bills with electronic data and sending regular freight status updates. “It’s just a matter of old IT systems, and to replace those can be quite an investment,” says Moehle. “Many companies simply have other priorities.”

Taking air cargo to the next level is his priority. “Cargo 2000 is the organisation founded by industry members to improve the quality of the air freight industry, to improve customer service and to implement standards across the world, streamlining operations and processes,” he explains. “At the same time, Cargo 2000 has implemented a system to control the process so there are no black holes.”

This process, he says, includes planning the shipment from origin to destination, with constant clarification to ensure the movement is going according to plan. “The route plan is part of the service commitment given by the forwarder to the customer. That is also the basis for the measurement later on to see if the service commitment has been kept or not.”

“Customers have criticised the industry for years,” he adds. “Now we are at the stage where we can improve customer service.”

Members can also move on to greater data exchange. While Phase 1 offers only airport to airport notification, Phase 2 covers the shipment from door to door. The third and final phase manages shipment planning and tracking at individual piece level and document tracking. “This will help us better implement security requirements,” says Moehle.

Of course, the ultimate goal for the industry is E-freight, an initiative started by IATA, the parent organisation of Cargo 2000. “E-freight is going beyond the basic exchange of information and tackling the issue of commercial invoices, certificates of origin, packing lists and other certificates,” says Moehle. “Moving to e-freight will take working with the industry and, in particular, with governments and customs to be able to eliminate those documents.”

Join the team

Cargo 2000 has around 70 members, which include airlines, freight forwarders, ground handlers, trucking companies, airports and IT providers. Regional players include airlines such as Egyptair, Saudi Arabian Airlines and Etihad; as well as most of the larger logistics providers such as Agility, DHL, GAC, Panalpina and Schenker. Emirates Group software provider Mercator is also a member.

Like any other industry, the transportation business has more than its fair share of stresses. No two days are the same and challenges are plenty (driver shortages, spiralling fuel costs to name a few). Companies either sink or swim.

Khalid Abdullah Al Hawai, Managing Director, Mashaweer Transport

The transportation business is not perfect, it can never be. It is one business that can never be without problems,” says Khalid Abdullah Al Hawai, Managing Director, Mashaweer Transport.

Having said that, Al Hawai has a very positive outlook. “Our trucks are always on the roads, which means unending situations of maintenance, violations, heavy fines. But the more the challenges in your way, the higher is the level of satisfaction when you are able to overcome those challenges successfully,” he adds.

Driver shortages Speaking of his biggest challenge – driver shortages he says, “Since the beginning of this year the transfer of GCC heavy duty licences to that of UAE heavy duty licenses was stopped. Which means all those GCC heavy duty drivers were unqualified when they came to the UAE for jobs.”

This caused a mass exodus of drivers to greener pastures. And for those who stuck around, it meant costly training that could not be funded without a pay cheque. And for the lucky few who were UAE-qualified it meant high salaries as demand surpassed supply.

Ten months into the year, Al Hawai has managed to sort that problem out by recruiting a number of GCC-qualified drivers (they have fewer tests than those who are not) and getting them enrolled into driving institutes. “Each month I get around four to five licensed drivers. So steadily our driver situation is improving,” says Al Hawai. Although he admits, salaries being demanded are still very high.

“Because of salaries, drivers are not willing to stick around because they know they will get fatter salaries else-where,” continues Al Hawai. “At Mashaweer, we offer them a good working environment and three-year contracts so we can atleast recover the investment we made in getting them trained.”

Al Hawai says forward thinking goes a long way in keeping any venture afloat. He now has 10 drivers on standby and a satisfying rotating stock to cover for emergencies.

“These days we face a very big problem in the form of heavy fines for any violation on the road. A fine which would earlier cost AED500 now costs AED3,000,” says Al Hawai. Which means drivers lose their entire month’s salary paying for the fine. “That depresses them a lot,” he adds. “So, they just go to the GCC countries where fines are low and rules are not so strict and traffic is also not such a big issue.”

“We try and mentor them,” Al Hawai says, “and support them wherever possible. Such as when they are not able to complete their daily quota of trips due to road blocks, traffic or even delays from the client’s side. We allow them to make up for lost time the next day.”

“We have a very systematic way of working, solutions have to be found to the problems as no problem is without a solution. All our departments are working to their best efficiencies and so we’re very much above all the challenges that we come across daily.”

But he agrees that having friends in high places helps. “It gives us an edge over the competition,” Al Hawai elaborates, “Having and keeping good relations is a cultural thing. This country does not have a dishonest system of functioning, but having influence helps.” Which in simple words translates to quicker dates for driver tests.

Border issues When asked about the competition, Al Hawai says, “Business is good. In the last seven to eight years, we have experienced annual growths of 25 to 30 per cent. Volumes have increased in a big way. There’s room for all of us, the competition only makes us better at our job. We have a strong reputation in the market, we are committed to our clients.”

And for the sake of their clients Mashaweer is starting services to Saudi Arabia soon. “If we want we can start operations to Saudi Arabia today, but economically it’s a difficult decision,” he says.

Saudi Arabia is notorious for the delays at its borders clearing customs and Al Hawai opines that they can make much more money continuing as they are with operations across the UAE and Oman. “If we calculate the number of trucks going to Saudi Arabia and see how many trips they manage to make there, the numbers aren’t forthcoming.” And the rapid depreciation of the vehicles doing such long distances will only add to costs. “But some of our regular clients are insisting as it’s easier for them to handle one forwarder. So we are going to start soon.” Saudi Arabian rules and regulations make the requirement for Arabic-speaking drivers essential.

Is insurance another major cost when dealing with cross-border transport? Al Hawai doesn’t think so. “For the cargo we carry, we have haulers’ insurance which is covered all over the emirates and Oman. So it’s nothing special. In case of an accident we can claim up to AED200,000 each time. Usually the cargo is not worth that much, but when it is we have special coverage for it. Totally, all our vehicles are covered under a million dirham policy with unlimited coverage. Other than that, all our vehicles have third party insurance and on the Omani border vehicle insurance is bought for AED600 for a period of six months. We hardly have any accidents happening with our vehicles, though.”

Delays Speaking about delays, Al Hawai says, “The traffic situation we are finally managing to overcome. It used to be a nightmare, especially sticking to timeliness with our trucks. But with all the new roads and expansions of existing ones, congestions have reduced considerably.”

Currently 80 per cent of Mashaweer’s business is movement of containers from Jebel Ali port (they move approximately 500 containers daily) and 20 per cent is loose cargo (tiles, pvc pipes etc).

Out of their 140 Mercedes trucks, most are leased out on a fixed monthly basis, where Mashaweer receives a lump sum from the client which covers all their operation costs.

Fuel costs, too, are adjusted accordingly with clients. “Of course, our transportation costs were not increased in accordance with the high diesel costs which were changing daily in the last six months,” continues Al Hawai. Customers accepted the marginal increases in their rates, and the rest were absorbed considerably by Mashaweer. “We have to keep our relations,” he says.

So what about the bottom line? Al Hawai says Mashaweer continues to meet its goals. “We have transactions per day, and values haven’t gone below the rate of our interests, the rate of transportation is a standard rate which has never gone below our target,” he says.

Seasoned player “When we started off in the early 1990s, we had only one vehicle. We steadily added to it making a fleet of 140 trucks and about 400 multi utility trailers today,” says Al Hawai. But with all the inflation, a second hand truck which costed Mashaweer AED50,000 about 10 years ago, costs them AED200,000 today. “A new Mercedes truck from Al Gargash will cost me half a million,” he says.

Having a new truck is not what one needs in the business. “Right now our trucks are 1995, 1998 models, they’re all road worthy vehicles and don’t require much maintaining,” he says. But that’s because Mashaweer has invested heavily over the years towards a mechanical and electrical division and its own garage and even several mobile workshops which are three to seven tonne pick ups completely geared to handle any kind of breakdowns.

“We’ve even invested in GPS and GPRS on about 70 of our vehicles,” says Al Hawai proudly. One of the main reasons for this was client satisfaction, so as to provide complete visibility to the client in the trucks leased out to them as well as reducing operation costs of tracking vehicles for the clients on Mashaweer’s side.

Ras Al Khaimah Airport is expanding its cargo facilities. But can CEO Michelle Solimon fill it with freight?

CEO Michelle Solimon on the Ras Al Khaimah tarmac

Walk around Ras Al Khaimah Airport with CEO Michelle Solimon and it becomes clear she is different from all the others working there. She is six feet tall, blonde and from a small town in Montana, USA. The male employees who flock to greet her are shorter, darkened from the tarmac sun and
almost always Arab. They are happy to see her and you can tell they want her to feel welcome. But all the Arab hospitality in the world cannot prevent Solimon from standing out.

And perhaps that is just why the powers that be in Ras Al Khaimah have hired her -to make their airport stand out. Solimon began her career as an officer in the US Airforce where she earned her MBA; and, after being stationed in the South Australian town of Woomera, moved on to work for Sydney Airport Corporation. While in Sydney, she moved from IT to systems development to business development to Freight Manager. And, since arriving in Ras Al Khaimah in 2007, she is now applying this experience to transform the sleepy airport into a hub suitable for the emirate’s ambitious plans.

“The airport has been here for 30 years, but it has only been in the last two years that the board and the emirate have been concentrating on bringing up its profile and really putting in those investments,” says Solimon. “People who have maybe looked at Ras Al Khaimah in the past or only know a little bit about it haven’t seen what is happening now.”

The government of Ras Al Khaimah certainly has a lot happening. Capitalising on its location and a booming region, its development plan includes becoming a major financial, real estate, industry and transportation centre. On the logistics side, the government is pumping billions of dollar into ports, roads and, of course, the airport.

Solimon is overseeing a 20-year master plan for Ras Al Khaimah, which includes a new arrivals terminal, general aviation area and cargo bays.

On the passenger side, the new 3,000 sq metres for arrivals will be able to handle two arrivals per hour. When this is ready in the next few weeks, the current 2,600 sq metre arrivals and departures terminal will then take care of only departures. This capacity will help cater to home-based carrier Ras Al Khaimah Airways, which is looking to increase its business.

“RAK Airways is obviously the biggest business here at the moment,” says Solimon. “They’re doing Calicut, India, daily and every other day they go to either Dhaka or Chittagong. They’re operating with one Boeing 757-200 at the moment, but they have expansion plans over time.”

On the cargo side, they are building a new 1,855 sq metre cargo terminal, nearly tripling the existing space dedicated to freight. This terminal will have a 1,380 sq metre manoeuvering and staging area linked to Ras Al Khaimah’s arterial road network. “The new terminal features state-of-the-art handling equipment, comprehensive air cargo security, loading docks, electronic weighing equipment and a professional management and operations team,” boasts the promotional power point Solimon’s team presents to potential clients.

While the airport currently handles only around 15,000 tonnes of cargo per annum, Solimon insists that is about to change. “This new facility will have the capacity to handle somewhere between 300,000 and 350,000 tonnes per annum, which is roughly about the same as Sydney Airport,” she says.

But they cannot rely on Ras Al Khaimah Airways for this throughput. “RAK Airways is really focusing on their passenger services,” says Solimon. “They don’t have any plans to buy wide-bodied aircraft or anything like that.”

So, while they currently have playerssuch as Bin Majid, DHL, E-Freight, Sky Gate, Ukranian Cargo Airways and Volga Dnepr as clients, Solimon’s team is out courting cargo operators to come set up shop.

“There’s a lot of opportunity now to build custom freight facilities, and on the other side we are looking at developing additional freight facilities ourselves, just to generate business,” she says.

“The opportunity for any cargo company to come in and build their own facilities is there now,” she adds. “Our own facilities should be finished by the end of 2009, early 2010.”

“The opportunity for any cargo company to come in and build their own facilities is there now,” she adds. “Our own facilities should be finished by the end of 2009, early 2010.”

This argument, however, is unlikely to convince any other big UAE airlines to bring over their cargo. “The thing about these airlines is they support their home base,” says Solimon. “Emirates is about Dubai and Etihad is about Abu Dhabi.”

But she insists that’s not a problem. “This actually creates opportunity for us, because the other customers at those airports are the ones that we would be targeting to come to Ras Al Khaimah. There’s a lot of opportunity for airlines to come in right now and they can have really special personalised customer service from RAK Airport.”

“I think we are finding a niche in the market,” she continues. “A lot of the bigger airports place a heavy emphasis on their home-based carriers, while I think that we have the opportunity to service those customers who do not have a home base and make them feel like this is their home base.”

Why would a cargo carrier come to Ras Al Khaimah? “Because it is very uncongested,” says Solimon. “Because they can have opportunities here for very reasonable prices. They can invest in their own facilities and we are just so well-linked to the rest of the emirates. Doing business in Ras Al Khaimah is very, very easy. The government is very pro-business and pro-development.”

But they still have to convince potential clients. “The challenges are gaining exposure for Ras Al Khaimah, making sure people know what we have; doing additional expansion to make people comfortable that we have the capacity to handle them long term; and the third thing is investment in our facilities,” she says.

Solimon will have to wait and see if international carriers are buying her arguments. “The airlines are currently making their networking decisions on where they are flying to,” she explains. “The decisions have already been made for Northern Winter 2008, so we’re really working on getting them for Northern Summer 2009, which gets announced in April.”

You, too, can bring in the big bucks. Just ask Farook Al Zeer, Managing Director for Schenker in the UAE

Farook Al Zeer, Managing Director, Schenker for Dubai and Abu Dhabi

Walk into the Mirdiff villa office of Farook Al Zeer, Managing Director for Schenker in Dubai and Abu Dhabi, and you will quickly understand you are not dealing with an average freight forwarder. The artwork on the walls looks pricey, the suit is certainly designer and the personality is definitely debonair. After a few minutes of conversation, this first impression will make sense, however, because you will understand that you are not dealing with merely a freight forwarder, but rather an investor.

“During the time I was with Kuehne + Nagel, I was building up my investments,” says the Jordanian who started his career with K + N as a clerk and later returned to be Managing Director for its UAE office. “It was a win win situation.”

During this time, in 2001, Al Zeer and a local partner invested in a local franchise of the massive freight forwarder BAX Global.

“BAX was always a big company, especially in the United States, and they had certain valuable products. This is why we invested in the name. We owned the company 100 per cent.”

And BAX in the UAE took off. “BAX had an excellent start,” says Al Zeer. “We started with three people, and in two to three years we were close to 40 people, with nice operations, a nice office and good staff.”

While he will not reveal numbers, you can see the dollar, or dirham, signs in his eyes.

“BAX was a very successful project. We made profits in the first year. It was very good. Even we were surprised. We were prepared to invest and inject money for three years. In our studies, we thought that in the first year you need to build and expand, in the second year you need to stabilise the company and have branches outside, and the third year you make money.”

He likely saw even more dollar signs five years later in 2006 when Deutsche Bahn, owners of Schenker, bought out BAX. While Schenker already had an agent in Dubai, it chose to go with the BAX office instead. “In BAX we were Making history also a franchise, so Schenker had to make a decision between us and its own agents,” says Al Zeer. “The decision came to our own benefit.”

This may have to do with the fact that Al Zeer was already in Shenker’s good books. “Fortunately, I have known Schenker for quite some time,” he says. “In fact, we worked together in Abu Dhabi, because Salem Freight was their agent for several years. That made their decision even easier.”

In 2006, the two companies set up a joint venture in the UAE, and as of September 1 this year, the company was officially established as Schenker LLC. “It was the official announcement that Schenker has started its own operations,” says Al Zeer.

Unlike most mergers, this consolidation came without lay-offs in the Dubai office. “Fortunately, we employed more people in Dubai,” says Al Zeer. “When Schenker took over, BAX was a relatively small company, but the potential was huge. We moved from 40 people to almost 140 people in less than two years.”

Al Zeer seems confident that the venture has made his company stronger than ever. “Schenker brought many more opportunities to sell in the local market,” he says. “The good thing about them is that they have many products. They have a strong sea-air service, they are strong in fairs and exhibitions, they have a projects department, as well as aero parts and marine parts divisions.”

He says one of Shenker’s hottest products is sea-air freight, in which goods move by ship from Asia to Dubai and are transferred by plane to Europe and the United States. The company has two regular charters a week on Emirates’ Boeing 747, as well as many other ad-hoc charters.

“We make use of our Schenker capabilities,” says Al Zeer. “We use the flights from Dubai to Hann, Germany, and in Germany, they use the flight from Hann to Toledo, USA. It’s a good combination between Dubai, Hann, Toledo and return. This gives us a great opportunity. We, as Schenker, have our own space. We control the space, and we have the cargo for it.”

His office can now benefit from BAX’s strength in the United States and Schenker’s team in Europe. “You need a strong network behind you,” says Al Zeer. “How good you are locally is important, but you need those international contacts.”

He insists his team has the perfect combination of global reach and local knowledge. “We know the local market,” he says. “We’ve been here for so long. We know the customers. We have our reputation behind us. People know us.”

“A lot of multi-national companies make terrible mistakes when they move to different places in the world. They think they know the market, and then they make a mess. They make a mess with their people. They make a mess with their operations. They make a mess with their costs.”

Al Zeer seems to feel strongly that he has invested properly: “First of all, our investments are not, ‘I put money in a company and it has to give me returns in one or two years.’” he explains. “That’s not the right way to do things. I have a commitment to a multinational partner and I have a commitment to the local market. To build a company, you should have enough money to inject whenever needed.”

So is logistics a good industry to invest in? “It’s not about being a good industry or bad industry,” answers Al Zeer. “You have to have people specialised in the industry. If someone comes from outside the industry to invest, he might make mistakes and lose a lot of money. You need people who are specialised in every business. If you are specialised, definitely the Dubai market is excellent for business.”

CAREER PATH

In 1981, Farook Al Zeer started his career with Kuehne + Nagel in Amman, Jordan, working as a clerk. Within six months he had moved to Aqaba to work as second man in operations. “It was a big job,” he recalls.

In 1982, Al Zeer moved to Dubai and spent most of the decade working for a local freight forwarding company. In 1989, he started the Air Express International office in Dubai. Today, the company is known as DHL/Danzas.

In 1993, he opened both Al Naboodah Cargo Centre in Dubai and Salem Freight International in Abu Dhabi. “I wanted to start something of my own,” he explains.

Al Zeer later became Managing Director for Kuehne + Nagel’s UAE branch, and it was during this time that he and a local partner invested in the BAX franchise.

In 2005, he left Kuehne + Nagel, and in 2006 BAX and Schenker signed a local joint venture.

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Money seems to be literally floating on the seas, and at the end of the day it’s all about how much profit you make. In today’s information age, communication between owners and brokers continues around the clock, and remains the catalyst for optimising profit. As cargo bookings, weather conditions and ETA’s are variable and everchanging, the shipping industry has become far more data driven and analyst dependant. Indeed, ship brokering has evolved massively from what it used to be

Matthew Patton (Left), Chairman of Triton Lines, Alexander Hamalton (Right), a broker for Barry Rogliano Salles (BR S) Middle East

Sit down with any shipbroker and he’ll be quick to tell you, the market is changing. No longer are brokers perceived merely as middlemen facilitating ship acquisition for their clients. Rather, with daily variables such as rising fuel costs, hourly market fluctuations, futures contracts and other speculation- driven interests, their roles have become industry specific and far more real time data-driven.

“In the old days, shipbrokers were just like middlemen, ‘Get me a ship at the cheapest price,’” says Alexander Hamalton, a broker for Barry Rogliano Salles (BRS) Middle East in Dubai. “Now it’s getting a bit more like banking where there is a lot of market research. People are interested in your views on forward freight, historical freight, how the market is going to move, etc. So you have more of an analyst role.”

Hamalton says he spends most of his time interpreting market conditions and relaying information to clients as well as shipowners. With a specific focus on oil tanker acquisition, Hamalton feels that specialising in a respective industry allows brokers to stay abreast with their ever-changing markets.

“In shipping, anything can go wrong,” says Hamalton, “hurricanes, break downs and other instabilities affect the entire market. Brokers today must always cover their clients’ interests in that respect.”

“At BRS we have a designated person only watching ships’ activity. That has become an important part of the job,” he continues. “We’re trying to prevent problems before they occur.”

From a shipowner’s perspective, the rapid flow of information has proved invaluable. According to Matthew Patton, Chairman of Triton Lines, the advent of the Internet has directly impacted the global shipping market.

“The Internet has had a significant effect on the industry since it’s made the world much more ‘flat’ as they say. Cargo owners and shippers are able to quickly advertise, communicate and book cargos because the information can be sent to hundreds if not thousands of potential clients in an instant.

This type of communication was impossible beforehand and it allows market prices to correct themselves much more quickly as cargos are fixed at a much faster rate,” says Patton.

As the Middle East region continues to escape the slump that has plagued the global ship charter market since the beginning of the year, BRS and other industry analysts do not see a change in this trend anytime soon. One contributing factor is the flexible nature of the market in the region, compared to a more structured and defined European model.

“The Middle East is more of a traders market, whereas in Europe it would be considered a systems market,” says Hamalton, comparing regional differences within brokering. “For instance, in Europe a company has a refinery which produces ‘x’ amount each month, and most of the time the product is sold in a yearly or bi-yearly contract. You just have to get the stuff moving. Here, it is far more speculative trading. A refinery pumps out a product that doesn’t necessarily have a designated destination at production, but inevitably they will still have to move the product.”

Indeed, trade lanes such as Intra-Asia and Middle East as well as Asia to South America and southern Africa routes are continuing to soak up capacity for almost all tonnage sizes.

Most brokers and industry experts agree that within the GCC there is still huge capacity and demand for commodities is growing. This has helped to keep the region’s container market afloat despite the global slump. Globally, hire rates for all ship sizes are retreating with carriers able to negotiate sizeable discounts as owners opt for lower rates rather than having their vessels unemployed.

“The one thing I think all ship-owners and brokers agree about is that the Middle East has changed drastically in the last five years, and no one expects the demand for raw materials to slow down anytime soon,” says Patton.

Carriers also are deferring charters until the last possible moment because they expect rates to fall even further during the current seasonal slack ahead of the pre-Christmas peak shipping season that gets under way towards the end of summer. However, rates of shipping containers within and out of the Middle East region have increased by an average of 60 per cent since last year due to increasing capacity and fuel prices.

“What most people want to talk about is how shipping rates have changed in the last few years,” adds Patton. “Overall, rates have definitely surged in the past five years or so years. Most of this rate increase has been attributed to what some call the Chindia effect. This is really just China and India’s demands for raw materials as those developing countries continue to grow. China has definitely had a greater impact than any other nation in the last five years, but that doesn’t mean the other developing countries aren’t contributing to this growth.

With rates already starting to correct themselves, we’ll probably see some ship yard orders cancelled and scrapping will increase.”

Indeed, reports of cancelled charters and shipyard orders have been depressing market sentiment in recent weeks. Germany’s NSB, the world’s largest container ship charter owner with a fleet of 87 ships totaling 360,000 TEUs, this month cancelled a US$620 million contract for eight 4,250 TEU vessels reportedly because it could not persuade banks to finance ships that didn’t have charter contracts. Earlier, Evergreen Line pulled out of a long term charter for eight 12,400 TEU ships from Greek owner Niki Shipping.

“When rates go up the way they have, it’s typical to see a large number of new ships ordered by shipping companies worldwide,” says Patton. “I think the past five years have been no exception. In theory the rates should correct themselves as new vessels come online to meet this increased demand, however what typically
happens is an overcorrection of the market – thus begins the cycle. If an overcorrection occurs then we’ll see rates drop significantly forcing shipowners to lay up vessels and others to send their older ships to scrap. This of course will take vessels out of the market and allow the prices to stabilise.

Then eventually there will not be enough ships to meet demand and the cycle will start all over again. The game has always been the same, we just need to learn how to play it right,” he says.

With a flood of large ships of up to 12,000 TEUs about to be delivered from Asian shipyards over the next three years, charter owners globally are bracing for rates to sink even lower. However, brokers rule out a repeat of the 2001 bear market when charter owners considered a coordinated lay-up of idled ships, largely because cargo demand and ship supply are more closely aligned now, than seven years ago.

“We have a bullish outlook on the market,” says Patton. “Since many of the vessels which are currently on order are for the most part delayed in their delivery, the market hasn’t been flooded with as many ships as expected. In actuality it will take some time before many of these ships reach the market and as a result it should dampen the effect it has on rates by some degree. Another element to the stability of the market is the fact that many other nations are developing at a rapid rate and this will require further resources. Locally we’ve seen the UAE completely transform in the last five to 10 years. We’ve seen China and India grow by leaps and bounds but we believe there are other nations that are nowhere near their full potential.”

Clarkson, the London shipbroker, has forecasted world container trade to grow by 8.7 per cent this year, down from an earlier estimate of 9.7 per cent, while ship capacity should grow by 13.2 per cent. That gap will be narrowed substantially by several factors including port congestion and slow steaming. Clarkson expects trade will grow 9.6 per cent in 2009 while the world fleet will expand by 12.9 per cent. While the cargo growth on the major trade routes is slowing, Asia to Europe shipments are expected to increase 10 per cent this year compared with 20 per cent in 2007.

So the question remains, with current market conditions are long-term structured contracts more appealing or short-term flexible deals? “I believe it’s a simple commercial decision at this moment,” says Patton. “The only reason you would sign a short term contract is because you felt rates may increase and you want to be able to capitalise on that increase. If, however, you can still make a good profit at today’s rates, then we believe it’s better to sign the vessels to long term contracts of 12 months or more. Trust me when I say this, if you sign a short term contract because you think rates will go up and you turn out to be wrong – you’ll be kicking yourself for the losses you’ve incurred. When it comes to greed I’ve always believed that it’s better to be a pig instead of a hog. Pigs get fed every day, but hogs end up going to the slaughter house.”

THE RISE AND FALL

Today, the average daily charter rate for a 3,500 TEU gearless Panamax ship has fallen to US$27,000 from US$31,000 in May and US$33,000 in March, according to Clarkson, the London shipbroker.

A 2,750 TEU vessel is earning US$22,000 a day, down US$8,000 since March, and the benchmark 1,700 TEU geared ship is pocketing US$16,000 a day compared with US$18,500 six months ago. Current rates have retreated to their 2006 average and are well below earlier years – a 3,500 TEU vessel for example, earned an average of nearly US$38,500 in 2005.

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Casey McFann sits down with Dirk Montgomery, Director – Offshore Sales, MENA, National Oilwell Varco, to find out how drilling rigs come together

In the world of oil, drilling rigs are the essential tool of extraction. But what do we actually know about them? Dirk “The Driller” Montgomery explains the workings of today’s drilling rigs.

Dirk Montgomery, Director – Offshore Sales, MENA, National Oilwell Varco

Casey McFann: How does a drilling rig work?

Dirk Montgomery: In simple terms, the rig has five main components. They are the power system, mud system, rig structure, pressure control system and drill floor equipment. The power system supplies electrical power to the mud pumps, draw works, top drive, rotary table, shale shakers, mud agitators, blow out preventer controls and any other component on the rig that might require electrical power.

The rig is powered by generators that produce AC power. This power is then distributed to the various tools that require the power to operate in either a DC or an AC format. The mud pumps pump the mud from the mud tanks to the top drive, which is attached at the top to the travelling block and at the bottom to the drill pipe. The top drive rotates the drill pipe at a determined torque and rotations per minute (rpm) to cause the drill bit to penetrate the earth and form the well bore.

Has rig technology improved within the last few years?

Absolutely! Rigs have moved from being mainly powered by DC to being powered by AC. This typically gives the equipment more torque, power and longer lifetime of the motors as well as requires less maintenance on the motors. In addition, computerised tools driven by PLC’s (Programmable Logic Controllers) are being utilised on the rigs. Automation has been added to the pipe handling process via the use of iron roughnecks and automated pipe handling and pipe racking systems. This provides a safer work environment and requires fewer personnel on the drill floor, as there is less manual work being performed.

Add to this the new computerised drilling controls and control stations, and you have a safer, cleaner work environment for the rig personnel. The offshore marketplace has really embraced this type of technology and as is normally the case, the land marketplace is slowly but surely embracing it, as well.

What parts of the rig tend to go bad and need to be replaced most often?

This is subjective to the amount and type of preventative maintenance that is performed on the rig by the drill crew. A number of pieces of equipment require daily routine maintenance in order to keep operating efficiently. If this maintenance is not performed properly and/or routinely, any of this equipment will break down. Typically, the equipment with the most moving parts requires the most maintenance.

Where does the majority of rig equipment come from?

The majority of the rig equipment used to be manufactured in the United States. However, over the past 20 years many countries have begun manufacturing this equipment. National Oilwell Varco now has manufacturing facilities located in Mexico, Canada, Norway, Holland, United Arab Emirates, China and India, although the majority of our manufacturing is performed in the United States. Equipment is also being manufactured in Russia, Romania, Poland, Italy, Singapore and many other places that I can’t recall at this time. Suffice to say that the manufacture of rig equipment is a global effort.

Do rig operators need specialised training?

Yes. In addition to the “standard” training of learning how to operate a drilling rig, today’s rig crews require even more training in order to be able to operate and maintain the computerised equipment. Ironically, as the rig crews get younger, the computerisation training is required less due to their familiarity with computer games and equipment. In order to try to minimise this problem, National Oilwell Varco (NOV) has constructed and opened our first university in Houston, Texas, to train existing drilling crews on new equipment, new drilling personnel and new NOV field service personnel.

Is there a labour shortage or surplus regarding qualified personnel?

There is absolutely a shortage in today’s marketplace and this is expected to continue for some time. There are numerous new jack-up, semi-submersible and drillships being built at various shipyards around the world. Couple this with the large amount of land rigs being built and you have a serious labour shortage that has everyone in the oilfield scrambling to try and find personnel for their various requirements. It is not only the drilling companies that are seeing this shortage, but also the service companies.

VOCABULARY LESSON

Did you know it’s called a ‘drilling rig’, not an ‘oil rig’? Here are a few other terms you need to know:

DERRICK

The rig structure is commonly referred to as the derrick on offshore rigs and the mast on land rigs and then the substructure. The derrick or mast houses the top drive that is used in most of today’s modern rigs to provide drilling torque and rotations per minute (rpm) to the drill string as it rotates the drill bit in the well bore. In older rigs, this function is provided by the kelly and the rotary table, but it is much less efficient than the top drive. The substructure is the “base” of the rig and houses the rotary table, draw works, drill pipe tongs, driller’s control cabin (or station) mud manifold and numerous control panels.

DRAW WORKS

The draw works is essentially a hoisting device and operates like a block and tackle in conjunction with the crown block of the derrick and the travelling block that is suspended from the derrick with wire rope. The top drive is typically attached to the travelling block and the draw works will lower the travelling block/top drive as the drill pipe turns in the well bore, or it will hoist the travelling block/top drive in the event that a new connection needs to be made, or if the drill pipe needs to be removed from the well bore in order to change out the drill bit.

MUD PUMPS

The mud pumps provide pressurised mud to the top drive that then travels down through the drill pipe, out the drill bit through “jets” and then back up the hole and returns to the mud pits after being cleaned by the shale shakers. From the mud pits, the mud then re-circulates back down the well again via the mud pumps and returns back to the mud pits. The mud is used to cool the bit, clean debris from the well and to help offset any gas that might try to escape from the well bore. Depending on the formation that is being drilled in and the amount of gas that might be expected to be encountered, the mud will be “weighted up” by adding particulate matter to it.

BLOW OUT PREVENTER

The blow out preventer is located underneath the substructure and is used to close off the well bore to keep it from blowing out should gas under pressure be encountered. This is also where the weighted mud is typically utilised to help prevent the blow out. The choke and kill system, which is also a part of the pressure control system, is used to slowly bleed off or stabilise the well bore pressure so that a blow out does not occur. During this same procedure, the mud pumps are pumping the weighted mud into the well at a pre-determined rate to keep the gas pressure stabilised. This process is known as “pumping bottoms up” and is a somewhat delicate process. If it is not performed properly, a blow out could occur which could cause major damage to the rig and/or the well bore.

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If one word could describe Agility’s global expansion, it would be ‘aggressive’

Bassem Chbaklo, Deputy Chief Executive Officer, Middle East and Africa, Agility

Mention the name Agility to anyone working in the logistics or freight forwarding business in the Middle East and his or her expression will likely turn to that of half fear, half respect. In the past few years, Agility has developed into one of the top logistics providers in the world, finding itself with over 20,000 employees in more than 100 countries. Its three divisions – Global Integrated Logistics (GIL), Defense & Government Services (DGS) and Investments – bring in almost US$6 billion in revenue each year.

“Agility is an aggressive culture,” says Bassem Chbaklo, Deputy Chief Executive Officer, Middle East and Africa. “In life you have the entrepreneurs who like to start their own companies, and then you have the corporate people who sit in the office wearing suits and are happy to receive their paycheque every month. What I like about Agility is that it combines both of these cultures. It feels like your own company, but you are backed up by a huge six billion dollar corporation with a brand name, systems and technology.”

Chbaklo describes Agility as a “corporate entrepreneur”.

“A lot of our deals are driven by people on the ground, not necessarily the Chairman,” he says.

These deals include a US$23.2 million project to move materials for the Al-Khafji Joint Operation (KJO) Hospital in Al-Khafji, a Saudi city on the border between Saudi Arabia and Kuwait; beating out 11 other bidders for a Kuwaiti Dinar (KWD)5.5 million (almost US$21 million) tender from the Kuwait National Petroleum Corporation (KNPC); forming Agility Kurdistan, a joint partnership with Kurdistan Capital Investment to build warehouses and develop real estate in Northern Iraq; and a mega-contract to distribute assets and equipment from US military bases in Iraq, Kuwait, Jordan and Turkey to locations throughout Iraq.

The company has come a long way from its beginnings in 1979 as the Kuwaiti government-owned Public Warehousing Company (PWC), which rented out warehouses. In 1997, the Chairman Tarek Sultan made the company private.

“Back then, there was no such thing as a 3PL or a huge transport business in Kuwait,” says Chbaklo. “Such companies simply did not exist. People rented their own warehouses or did their own transport.”

Still, Sultan built a 20,000 sq metre warehouse, 12 metres high, with the latest warehouse management technology. “When people saw this happening, they said, ‘Are you crazy? Why do you want to build a 12 metre warehouse in Kuwait?’ The warehouse sat empty for three months and then slowly started filling up.”

Agility’s biggest break, however, came with the US invasion of Iraq. “In 2003, when the US military wanted to set up a warehouse for operations in Iraq, the only option it had was PWC,” continues Chbaklo. He says what the US army was looking for was a full logistics platform to support its operations in Iraq which included warehousing, clearing, shipping and transport, as well as a warehouse in Kuwait.

“Chance favours a prepared mind,” he says, quoting Louis Pasteur. And this quote should perhaps be Agility’s motto.

“We essentially focus on emerging markets,” says Chbaklo. “We are one of the top 10 logistics players in the world and there are players who are much bigger than us, but if you look at emerging markets in the Middle East, we are the largest in terms of assets and people.”

“People are reluctant to invest in the Middle East, Africa and CIS countries,” he adds. “This is where our advantage comes along.”

He says this strategy helped Agility win contracts such as Kraft in Bahrain and Procter & Gamble in Egypt. “We put in the warehouses, we put in the people, we put in the solutions, and the supply followed. We were ready.”

Agility, according to Chbaklo, usually enters a market by outsourcing fleets.

Chbaklo describes Agility as a “corporate entrepreneur”

“This strategy is faster, it’s quicker. It is very difficult to find the trucks and get them registered in a brand new market. As you start executing more projects, you start replacing the trucks with your own. And as you grow, you get more trucks through outsourcing and then you buy more of your own.”

In most countries, “with the exception of Dubai in the UAE”, Agility likes to form partnerships to leverage local knowledge and expertise. “In certain cases we go in and buy a company and in other cases we go in with a joint venture,” says Chbaklo.

He says he especially has his eye on Africa. The company recently signed an agreement to acquire the Kenyan logistics company, Starfreight Logistics Limited, based in Nairobi, and also has a presence in Libya, Egypt and Algeria. Chbaklo also hints that Agility will announce its move into a few more African countries by the end of the year.

“The biggest challenge we face is finding the right people to go to these countries,” says Chbaklo.

Agility is also feeling the crunch of staff shortages throughout the Middle East, as it continues to expand in its home region. It is building a 60,000 sq metre warehouse in Dubai’s Jebel Ali Free Zone, to be ready by the Second Quarter of 2009. It will also have a new 20,000 sq metre facility in Qatar, 40,000 sq metres in Egypt, 15,000 sq metres in Bahrain and 40,000 sq metres each in Riyadh, Jeddah and Amman.

While many logistics companies in the region tend to avoid Iraq, Agility has kept a strong presence, moving more than 100,000 truckloads into the war-torn country. In fact Chbaklo has just returned from a business trip there. “I was in Iraq yesterday,” he says. “We just started operations in Kurdistan this year, leasing trucks from another company. We will start purchasing our own trucks and hopefully by the time those are up and running we will have another contract there.”

Agility is also developing a one million sq metre warehouse, not far from Erbil Airport in Kurdistan.

“Iraq is something very dear to my heart,” says Chbaklo. “It is a two way thing – Iraq is a difficult market, it is a war zone involving life and death. People working for us have lost their lives. But I see us as part of the solution for Iraq. You need Iraqis to have jobs, to have goods on the shelves for them to buy. This is what we do. We are part of bringing life back to normal. I see this as very exciting.”

Chbaklo says Agility will not ignore the safer markets of the west. But, financially, developed countries may not be safer. “In Europe and US it is very easy to set up a business. In a few days you can have a license, a company and an office. If you want to service a client it is easy to find trucks on the market, you can outsource them. But because it is easy, it is also very competitive,” he explains.

“When you look at a place like Qatar, however, it is extremely challenging to set up an office, let alone find people, hire them, set them up and get the licenses you need. This process can take months. But because this is extremely difficult, an advantage comes in. When you own the warehouses and the trucks yourself and you go to clients and say ‘I can guarantee you that delivery will be there tomorrow morning,’ you cannot lose.”

WHAT’S IN A NAME?

Agility held the name Public Warehousing Corporation (PWC) until 2005 when it purchased British-based chemical transport company Agility, taking over not only its services, but also its name.

CASHING IN

Agility earned over US$6.2 billion in 2007, increasing top line growth by 26 per cent. Acquisitions included Leader Group, a freight forwarding and shipping agency services group based in Alexandria, Egypt; WTS Houston Inc.: a global logistics company WTS of Houston and its sister company, World Transportation Services, Inc., (Global Express Line); as well as Guangzhou Runtong International Transportation Company Limited (GRITCL), a South China company primarily focused on ocean freight forwarding services in Guangdong. It also won six new major contracts, including the Qatar – Pearl GTL project, with Transcar Projects Ltd. to cover the global shipping contract for two phases of the Pearl Gas to Liquids (GTL) in Ras Laffan, Qatar; discount store Sultan Centre’s logistics services in Oman and serving the US Air Force Base Service Operations in Kyrgyzstan through a one-year base period and four one-year options, with potential value of the contract being up to US$25.7 million.

This year is bringing in the bucks as well, although shares are not as strong as 2007. Agility’s financial results for the second quarter ended June 30, 2008 included earnings per share of Kuwaiti Fils 33.80 (US$1.30), compared to 36.85 Fils (US$1.40) per share in 2007. During this quarter Agility announced the acquisition of 71 per cent stake in the Denmark based forwarder CF GeoLogistics, increasing its total interest in the company to 100 per cent. It also completed the acquisitions of Kenya-based forwarder Star freight Logistics, as well as French forwarding company Medgroup which expanded its presence in France and helped them foray into Algeria.

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