The demand for antiquities is phenomenal. And whenever there is phenomenal demand for a product, it is usually matched by supply. This is where the supply chain of smuggling antiquities gets kicked off – in the want of the consumer.

Dubai Customs recently held a press conference announcing a major interception of antiquities which were being smuggled in a secret compartment of a wooden ship. The compartment in which the treasures were found on the ship was built to look like a part of the ship’s structure. When Dubai Customs’ officers asked the captain to open the hollow area, he said that if he did so his ship would sink.

“Our officers are trained in all aspects of judging people through their expressions, reactions and body language, and the crew’s body language gave them away,” says Ahmed Butti Ahmed, Director General, Dubai Customs.

Acting on their hunch, the officers found more than a 100 items dating back between 1,000 and 5,000 years hidden away in that secret compartment. Ahmed wouldn’t say where the ship’s port of origin was or where it was headed. He also wouldn’t give out the nationalities of the captain and crew and to which country the antiquities belonged.

Illegal supply chain

Although Ahmed did not acknowledge the origin of the antiquities, many invitees were sure the antiquities were from the ransacked Iraqi museum. Since the beginning of the 2003 American- led invasion, much of the Iraqi culture and history has been systematically looted.

Prior to the war, people who did not have anything to eat used to dig artifacts from the ground and sell whatever they found for food; but ever since the looting of the Iraqi museum, the illegal antiquities trade from the region has exploded, leading many countries to levy heavy restrictions on its activities, thus sending it underground.

Coming back to the supply chain of this business, many say its starts from the time something valuable is dug up or looted, after this the artifact is driven to Jordan or further north to Syria. After reaching either Jordan or Syria, it is sent to one of three cities – Beirut, Dubai or Geneva, in order to create ‘documents’ for the artifact and for it to surface in the market. From this point it is sold to private collectors or established auction houses until it gets a new home.

This illegal trade is even rumoured to have an underground tariff system, with the Hezbollah (from Lebanon) apparently taxing the artifact when it passes through the country.

Improving standards

This is not the first time such a large cache of antiquities have been intercepted in the country. Sharjah, too, has in the recent past captured many ships passing through its port carrying this illegal cultural cargo. Dr. Sabbah Jasem, Head of the Sharjah Directorate of Antiquities, says, “We need to have a federal antiquities law that prevents the buying and selling of historical artefacts all over the country, as Sharjah is currently the only emirate that has one.”

Supply chain globalisation is the natural outcome of today’s expanding consumer markets as companies struggle to meet the dynamic needs of growing markets and new consumer segments. Despite the risks caused by economic and political uncertainties, global supply chains are the wave of the future. Companies that make key decisions early – about entering new markets, balancing risks and opportunities and managing costs and complexity – are more apt to remain leaders in their industries.

Economic and political developments continue to pose challenges for global supply chains. With the value of the U.S. dollar at its lowest in a decade, there is more demand for cheaper U.S. imports, particularly in growing economies such as China, India, the Middle East and Russia. At the same time, a shift to more protectionist trade policies by the United States could spur retaliatory actions from foreign countries, while U.S. corporations become attractive investment buyout targets for sovereign wealth funds from countries such as China, Saudi Arabia and the United Arab Emirates. This trend may be accelerated further with the current financial sector crisis in the United States. Although the resolution path is unclear, one thing is apparent – economies are more interconnected than ever before and any policy shift will have an impact on the flow of investment and ultimately on the way companies conduct business around the world.

Meeting demands

Between 2003 and 2007, six nations entered the ranks of the world’s top 10 destinations for retail investment (see figure 1). The order among the top four nations – India, Russia, China and Vietnam – was shuffled somewhat as India moved from fifth to first; Russia from first to second; China stayed in third and Vietnam moved from ninth to fourth.

Pushed upward by rising living standards and burgeoning populations, more than 75 per cent of the world’s citizens are “medium-low income” consumers. With purchasing power parity of up to US$10,000, they constitute the majority in Eastern Europe, the Middle East and Central Asia.

Making products affordable for this market requires a low-margin, high-volume strategy and the efficient use of relatively modest amounts of working capital.

One approach companies employ to attract these customers is to reduce packaging size and thus reduce the price per unit. For example, in India, Hindustan Unilever sells five billion pieces of penny candy a year, earning revenues of US$50 million.

Yet another strategy is to recognise and serve the unique needs of a large, untapped and growing sub segment of an existing market. We can use the Muslim market to illustrate this point. By 2020, Muslims will account for 30 per cent of the world’s population, compared to 20 per cent today and 12 per cent of global consumption, up from eight per cent today. Muslim consumers are not just in Muslim countries but are spread across the world, with more than half in Asia. Even the U.S. Muslim market, small by comparison, represents US$107 billion in spending power. Sharia and Halal compliance is important to Muslim consumers, yet only a small amount of this US$560 billion market is being addressed by major multinational companies.

SUCCESS

A successful supply chain globalisation strategy depends on the following:

Identifying real opportunities

It is not enough to understand the global landscape, companies must also have a plan in place for recognising whether to enter a new market and how to capture emerging opportunities. For example, Carrefour Group operates 15,000 stores in 30 countries in Europe, Latin America and Asia, using four formats: hypermarkets, supermarkets, hard discount and convenience stores. Carrefour was early to recognise the potential of the “Greenfield” Chinese market. It entered China in 1995 and by 2006, its 112 Chinese hypermarkets and 275 discount stores reported annual sales of approximately US$4.5 billion. Today it is the only foreign retailer among China’s top 10. In contrast, Tesco, a competing international grocer, was slow to enter China’s developing market. Entering in 2004, Tesco’s sales in 56 hypermarkets were approximately US$1.1 billion by 2006.

Balancing risks and rewards

Doing business in global markets requires balancing risks and costs against potential benefits. Managing global price and supply risks with hedges are not limited to certain industries or spending categories. For example, the metals industry has used hedging tactics for over a century to address price volatility, a practice now being adopted by consumer packaged goods companies.

Maintaining flexibility

As mentioned earlier, every segment of the supply chain must be flexible enough to shift quickly to identify and capture new opportunities. And every potential opportunity must be measured against a matrix of quantitative and qualitative factors – from local tax and regulatory costs to labour force availability to freight costs to the economic and political risks within the market’s national boundaries. Although supply chain principles can be pretty basic, execution strategies are not – they often involve navigating through the complexities of the global supply chain in areas of sourcing, manufacturing and delivering across geographies. In developing markets, logistics has to be up and running quickly, while in developed markets companies are more focused on optimising an existing network.

Costs and complexity

Cost visibility is imperative for companies operating across borders. They must be aware of what drives supply chain costs within each function and then tailor the overall supply chain strategy to achieve success in each market. When all costs are visible across the global supply chain, the company is in a better position to accurately assess and evaluate the impact of possible trade-offs.

The region’s rail plans are best described as immense

These days, the GCC’s rail sector is receiving global attention. And for good reason. The plans are ambitiously immense, as well as being a lucrative incentive for private investment. It is no wonder then, that updates on the ongoing projects are being received with open ears.

These days, the GCC’s rail sector is receiving global attention. And for good reason. The plans are ambitiously immense, as well as being a lucrative incentive for private investment. It is no wonder then, that updates on the ongoing projects are being received with open ears.

From Saudi to Sharjah, rail initiatives are materialising almost daily, seeking to lessen the congested roads as well as facilitate borderless trade. Some plans are local, like light rail and automated metro systems, to regional, which include an international GCC line, similar to Europe’s Eurorail. Once completed, this GCC line will provide a direct link between ports on the Arabian Sea and the Gulf.

Regarding the GCC line, there are issues still to be worked out however, as countries have not reached consensus on the cost structure of the project. “If each state built its share of the rail network, it would be a very feasible project,” says Abdullah Alkatheeri, Director of the land transport department at the National Transport Authority. “I think it’s a political project and I think it is something we have to work on to tie the economics.”

“Final recommendations for the GCC line should be expected within the next six months,” says Dr. Ramiz Al Assar, a senior transport analyst at the World Bank, who has been advising the GCC secretariat on establishing rail links.

Saudi Arabia and the UAE have continued to drive the region in terms of rail progress. Aside from the GCC project, each is exercising its own initiatives. Saudi’s desire to diversify its economy away from oil remains a crucial role in the Kingdom’s upcoming North-South line. With an abundance of natural resources in the mining sector, specifically phosphate and bauxite, the North-South line is forecasted to handle 10 million tonnes of mineral deposits annually. By October 2010, Saudi expects to have the mineral line operational, with an initial 780 wagons set to go. Through time, additional traffic will include petrochemical and agricultural products, and eventually make way for passenger travel.

When complete, the North-South line will span a distance of 2,380 kilometres, consist of 107 bridges and 2,679 culverts. To say the line’s construction is a large assignment, would be an understatement. In terms of earthworks, the project is unprecedented. Official figures have calculated that 497 million cubic metres of sand must be removed to make way for it. Consider that when the pyramids of Egypt were constructed, some 2.6 million cubic metres of sand was relocated. The Great Wall of China required 322 million cubic metres of soil removed. These were enormous projects, that took centuries to complete. Factor in Saudi Arabia’s unforgiving climate, and the timely supply of goods in such desolate regions, and the size and expediency of the project remains unparalleled.

In the UAE, Dubai and Abu Dhabi continue to implement their own individual light rail systems, as well as a cohesive trans-Emirate network. The requirement for a rail link in the UAE remains motivated by the need to move freight faster and cheaper, and in time, passenger services will lessen the congestion on the Emirates’ roads.

Dubai’s rail and master plan will tie together all future light and railway networks with existing projects, such as the metro and Al Sufouh tram system, each designed to take the strain off the city’s congested roads. It will also integrate these with the proposed national railway network traversing the UAE. The first phase of the UAE’s rail network will have a double track railway built from Ruwais in Abu Dhabi and stretching to Fujairah. Eventually, there would be about 900 kilometres of track running from the Saudi border to the northern UAE coast.

Some of Abu Dhabi’s current plans indicate a metro with stations on Abu Dhabi island, connecting to Musaffah industrial zone, the planned cities of Capital City and Masdar, Abu Dhabi International Airport, as well as various islands under development, including Yas Island, the future home of the Formula One Grand Prix. “This is not final, but basically the numbers that we have indicate that we need a metro network in Abu Dhabi,” says Abdelgader Elshabani of the Abu Dhabi Department of Transport. “In the future, it will be important to link Abu Dhabi to Dubai. We need to have this connection to Dubai through a regional rail system and as a matter of fact we have begun reserving space for that.”

Abu Dhabi’s network of tram lines is scheduled to open in 2015, while the metro is planned for 2020 and regional rail may be completed between 2020 and 2030. So while the Emirate is still a while away from completion of such projects, at least officials have acknowledged the need for such transport and are actively seeking solutions. Time will tell.

As the weather starts to cool and UAE motorists start to dream up enjoyable daytrip itineraries, spare a thought for the thousands of truck drivers who, come winter or summer, drive through the heat for hours on end, are restricted in when and where they can drive, and have little in the way of amenities and services to help them off the roads.

But if proposals for truck stops by oil major Emirates National Oil Company (ENOC) are given the green light, then at least that last point will be consigned to the scrap heap.

The spacious, trucker-focused facility would have everything on one convenient site with designated sections for specialist oil, water, truck wash and repair facilities, as well as a convenience store with first level accommodation, garbage skips, weighing stations for trucks and power generating points. A stand for taxis and buses would also be available to shuttle drivers to and from the city.

ENOC has earmarked five locations in various Emirates, including one in the heart of Dubai Industrial City, but hasn’t received approval yet, or consequently started construction.

“It’s something that’s really been ignored,” says Zaid Alqufaidi, Chief Operating Off icer, ENOC, which operates 170 stores across the UAE. “Drivers come from Jordan, Syria, Turkey and Lebanon – where do they go? They end up sleeping in the trucks. If a driver wants to go to the washroom, he has to go behind the truck which is really uncivilised – or they end up cooking under the truck. I’ve heard of a lot of bizarre accidents where people have been sleeping and someone has backed up into them. Since the whole country is developing, we should be part of the development.”

The weight monitoring facility would be a useful service, especially as by 2013, the UAE will have 49 bridges crossing water, so operators will need to know their loads and be aware of any restrictions. The convenience store would be modified to serve drivers’ specific tastes – “these guys don’t eat Burger King”.

Emergency services would also be on site. “Whenever we have an accident today, the ambulances are finding it hard as they get stuck in traffic – so having them on the highway may help them get to the scene quicker.”

Power points would enable leads to be connected to trailers so chilled units can be kept running in a more environmentally friendly manner. “A lot of people bring in fresh dairy and meats – and they end up running the trucks just to keep the products cool.”

The current sticking point is the investment. ENOC hopes to get the RTA on board and other government partners to help get the project off the ground. He said once the truck stops are up, you can create a mandate and law around them. “If you see someone park on the side of the road, the authorities can impose heavy fines or confiscate the truck,” he says.

“This really has nothing to do with our business – unless we end up charging them, and if they can park on the side for free, why would they want to pay?,” he added. “It’s a good service but if it doesn’t justify it economically, it will be hard to sell to the board. The government can help by giving us the land, but we still need help for the rest. Putting everyone together on one table will take time. Then there’s the issue of who will manage it. But it’s not impossible.”

For fleet managers, nothing is more important than keeping vehicles running and productive. Maintaining vehicles, including repair, upkeep and downtime, can have a huge impact on a fleet’s bottom line. A proactive, preventive maintenance programme can help fleet managers keep vehicle repair costs and downtime to a minimum

Many fleets simply take a reactive approach to vehicle maintenance because they do not have access to the right tools. In a widely distributed fleet, that could mean costly repairs, not to mention vehicle downtime. Fleet managers need to be able to monitor and collect data on the “health” of their vehicles to fix problems early and reduce costs.

Scheduled maintenance Even simple maintenance like regular oil changes can help reduce engine wear and make the vehicle run cooler and last longer.

Setting preventative maintenance schedules requires knowing the type of vehicle, the usage (mileage, hours, operating environment), OEM warranty, recall status and regulatory requirements. In addition, it is beneficial to know the types of diagnostic problems that typically occur with different vehicle types.

Vehicle performance Information on individual vehicle performance on the road is vital to reduce maintenance costs. For example, when trucks are travelling in high heat and steep grades; monitoring the temperature of the engine, the air intake temperature and oil pressure can help fleet managers gauge engine performance. Having access to statistics on vehicle diagnostics over time is also important to determine if a vehicle is performing optimally.

Fuel economy Improving vehicle performance through preventative maintenance can improve fuel economy. Monitoring unauthorised vehicle use, excessive speeding, mileage and idling can also greatly reduce fuel usage. Repairing a vehicle that is out of tune can improve its gas mileage by an average of four per cent. Furthermore, fixing a serious maintenance problem, such as a faulty oxygen sensor, can improve your mileage by as much as 40 per cent.

From the whitepaper “Optimising Fleet Maintenance with Wireless Vehicle Management” by Networkcar.

On her initial journey from China to Europe, hauling 45,000 tonnes of Christmas goods, the Emma Maersk was worthy of much attention. Often hailed by other ships that passed, the vessel’s master, Henrik Solmer remembers it vividly. “They said, ‘Hey, we heard about you and it is nice to see you coming. You are beautiful and it is a good speed that you are doing.”

Costing US$145 million to construct, the massive Emma Maersk stretches the length of four football fields and is wider than the Panama Canal. She maintains speeds up to 25 knots, while her capacity is estimated to be nearly 14,000 TEU, far and away the largest in the industry. According to calculation from IMO the ship can carry between 13,500 and 15,800 TEUs, which is 4,000 containers more than the previous leader in this class – Xin Shanghai. However, the company lists official capacity at a little over 11,000, as Maersk Line has a long history of under-reporting these figures for all its vessels. In the world of Maersk, underreporting only reinforces your reputation.

Responsible for more container traffic in the seas than anyone, Maersk is expanding the economies of scale in shipping, a key driver of trade globalisation. Ultimately, larger ships should lower shipping costs and prove more efficient in terms of emissions and manpower. Consider that as large as the Emma Maersk is, she only needs a crew of 13 to operate.

According to the Financial Times, “it often now costs more to ship a container by road 100 kilometres from a port to its final destination than it does to move the container by sea from China to Europe.”

Figure that with the Emma Maersk, it costs only US$10 to transport a bicycle from Asia to Europe, a washing machine is US$18, a T-shirt US$0.22 and a pair of jeans US$0.73.

Emma is powered by the world’s largest diesel engine, a 2,300 ton behemoth belting out roughly 109,000 horsepower. At five stories tall and 30 metres long, the turbocharged two-stroke Wartsila-Sulzer diesel engine looks like a modern day industrial plant – the crankshaft alone weighs 300 tons. At her most efficient, she consumes 1,660 gallons of diesel an hour and is capable of propelling the 170,000 tonne Emma Maersk to a brisk 25 knots.

The Aioi Works of Japan’s Diesel United takes the credit for producing Emma’s thrust, and is quick to remind everyone how green-friendly their mammoth motor is. One innovative feature is recycling the exhaust back into the engine for reuse. The benefits of this include increasing efficiency by as much as 12 per cent, while also reducing engine emissions.

Maersk Line too is quick to reaffirm Emma as “one of the most environmentally friendly container vessels built.” Another one of her environmentally friendly features is the special silicone-based paint used to paint the hull below the waterline. Rather than biocides which may leak into the ocean, this specialised paint is used to keep barnacles off the hull, while also reducing drag. Maersk credits the silicon paint to saving an average of 1,200 tons of fuel per year.

Currently, Emma Maersk’s destinations, including Gothenburg, Bremerhaven, Rotterdam, Algeciras and Singapore, will mean the GCC must wait on Emma’s sister ships to be completed. Assuredly, with all of the goods moving between China and the GCC, the region will have its own Maersk super container carrier in due course. However, for the time being, when it comes to the global shipment of goods, Emma Maersk remains in a league of her own.

EMMA’S STATISTICS

Cargo Capacity

• Maximum load: 11,000 20 ft containers, enough to fill a 44 mile long train.
• 1,000 refrigerated containers can be accommodated and provided with power.
• A patent leashing system is used to secure containers.
• Although only 13 crew are needed to operate this vessel, there is accommodation for 30 people

Length: 397 metres
Beam: 56 metres
Depth: 30 metres
Engine: 14 cylinder diesel producing 80,000 kw
Speed: 25.5 knots

Against all odds In 2006, while under construction in the Odense Steel Shipyard in Denmark, a large fire broke out in Emma’s accommodation and bridge. Though heavily damaged, the ship was still able to be completed on time.

When a company has a fleet of more than 50 to 100 trucks, the assets need to be protected. Investing in a fleet is a big expenditure. It could cost anywhere from AED750,000 to AED5 million (US$204,000 to almost US$1.4 million) and the expenses do not end there. In fact, they begin from there. Annual replacements of parts such as tyres could cost a minimum of AED20,000 (US$5,435). With other costs to be considered, a turnover ratio becomes difficult to achieve.

With a fleet management software in place, a proprietor can ensure his investment is going in the right direction and his assets are being looked after. The software manages a variety of parametres such as safety of drivers, road safety, vehicle tracking, fuel and maintenance costs. The status of each vehicle can be controlled which increases their life span and generates more profit. Planning can be to the mark as drivers are able to avoid traffic delays and enhance the value of their trips.

“All the companies we have worked with have experienced very quick return on investments. In less than six months they are able to generate profits,” says Rani Ghazzawi, General Manager, FMSi, Abu Dhabi.

FMSi provides Fleet Management and Vehicle Tracking (AVL) solutions, based on GPS/GPRS/SMS/Satellite Communication/offline and semi online technologies. Set up in 2003, the company has a number of oil and gas companies as their main clients – ADCO, ADNOC, Shell, EPPCO, NDC (National Drilling Company), Drake and Skull, and Halliburton among others.

Since most of their clients belong to the heavy industrial sector, FMSi’s Fleet Management software solutions are suitable for all kinds of vehicles from heavy industrial trucks, oil tankers to forklifts and bulldozers. So, even if a vehicle is being rented out to a client, it can be supervised from the comforts of the office. This gives the proprietor an upper hand on the handling of his asset. Today with the rapid changes in all sectors, adapting to improvements in technology is the only thing to give one company an edge over another.

“Besides the regular advantages, a fleet management software solution can help you negotiate a better premium with insurance companies. As they know you have invested heavily in the care of your fleet,” says Ghazzawi.

One of the most important facts of a fleet management solution is the prevention of accidents. With the daily havoc on Dubai roads, this is a major concern. The software generates a number of detailed reports that inform the office of the driver’s behaviour on the roads directly leading to the prevention of minor and major accidents. Typical reports show the detail of each trip with the driver’s name, vehicle description, trip start/depart/arrive/end time and location, street names and times, drive time, idling time, parking time, maximum speed, average speed, distance and odometre reading.

Activity reports display trip and event information for a driver or vehicle graphically in the form of a timeline. It can display up to 24 hours (a full day) of information and can be zoomed in to display various time periods down to an hour.

Another more specific Driving Errors Report shows, on trip-by-trip, daily, monthly or summary basis parametres such as over speeding, over revving, harsh braking and excessive idling. The accident analysis shows engine speed (RPM) in one second intervals and value of other inputs.

A collection of these reports provides ample information to the company of drivers’ behaviour and areas of concern.

“One of our clients, National Drilling Company (NDC) has started a monthly rewards programme for their drivers. Based on these reports, the best 10 drivers are nominated for an award and the worst 10 are warned with official letters. It’s an example of creating initiative, competitiveness amongst them to be the best,” says Ghazzawi.

Since FMSi’s set up in Abu Dhabi five years ago, the industry, in Ghazzawi’s words, “has seen a huge metamorphosis. Previously there was no market for our solutions in the oil and gas industry, but today this industry has a very severe safety policy and our solutions have made a lot of people’s life easy.”

Just as the market has changed year after year, Ghazzawi says so have companies’ philosophies. Previously, they were reluctant to invest in technology as they thought it to be redundant. But as the economy has progressed coupled with the government’s initiatives, attitudes have changed. “They’ve had to change with all the competition out there,” says Ghazzawi. “Today, when a sales person contacts a company with his solution, 90 per cent of all clients are aware and are interested. The UAE is the leading market in the entire GCC and Arab world. It’s the most technologically advanced country.”

But even though the market is aware, the work doesn’t end there. Ghazzawi feels the main challenge lies in client education. Once the software solution has been installed, the client needs to be aware of all the reports that can be generated as well as the way the software should be used and tracked. Education also needs to take place on an ongoing basis as clients need to be educated about newer versions.

The education of drivers is also imperative. Their attitudes need work. Ghazzawi feels companies need to spend time on the drivers’ psychological state in order to have an impactful solution to all their problems.

Nobody expected fuel prices to rise in such a mercurial manner. One coping mechanism adopted by transport providers with big and small fleets in Europe – the diesel accord – has failed miserably. Gravely affected are the smaller transporters who are stuck between the diesel supplier and their customers. As diesel becomes increasingly expensive, not every costumer is willing to pay the full price for it. The diesel accord works a little bit better for larger companies.

But even the large companies are complaining. Transporters are increasingly forced to pay extra costs in advance for the customer. When the diesel accord was introduced, it seemed like a great solution. Road transporters agreed on a diesel accord with their customers, with a guarantee that they would take care of the worst fluctuations in fuel prices themselves. On prefixed times monthly or quarterly, the fluctuation of the diesel price per litre was reassessed. This amount was added separately to the basic price for transporting cargo. This system was much needed at the time. But since, the price of diesel has increased strongly between 1999 and 2000, from €.55 (US$.82) to almost €.80 (US$1.19) at the beginning of 2001. After that, a few relatively quiet years followed, but during 2003 fuel prices started to hike up again. In the second quarter of this year, the average price had risen to €1.10.

That quarterly average shows exactly where the problem lies – the diesel accord can no longer keep up with rapid price increases. Transporters who had agreed on a new accord every quarter with their commissioners, are now being forced to pay two months of cost increases in advance. Although, it is possible the advances will be recovered, the interest lost will not.

The cost of diesel contributes to a major part of a transport company’s cost. Every increase in the price of diesel makes the fuel cut go up not to mention other regular costs which are also rising. It is a misconception that larger transporters can handle the increasing costs of diesel better having paid for them much in advance. But if the price of diesel keeps on rising, and it looks like it will, an annual profit can be completely wiped away. In the Netherlands, it is widely assumed that a quarter of the companies with one to 10 vehicles will not make it to the end of the year.

Option ´Hedging’, financial protection against major diesel price fluctuations, can be an option for some transporters. For the smallest companies this is not always an option, considering that these entrepreneurs even know of the sort of financial instruments that are available. Eventually the consumer will experience the consequences of the price rise on his bank account, as expensive fuel is a source of inflation.

First published in DVV Media’s Nieuwsblad
Transport and translated by Devi Boerema

Tom Nauwelaerts, Head of Logistics, Al Futtaim

Al Futtaim has a massive transport fleet which it uses for several purposes, from delivering furniture for IKEA to full truck loads of vehicles that run across Arabia, to project cargo with all the range of container loads and oversized heavy haulage car transport vehicles… the complete range. And managing such a gigantic fleet is no mean feat.

Having recently joined the company, Tom Nauwelaerts, Head of Al Futtaim Logistics, is in the thick of organising his fleet so as to have a semblance of order in the coming months. “A fleet of this size is challenging to manage on its own,” he explains. “Couple that with the speed of Al Futtaim’s growth. All of it rolled into one is a nightmare.”

Nauwelaerts faces numerous challenges. With the variety of vehicles, harmonisation
and management of equipment becomes a big deal as tractors, trailers and other vehicles need different parts and equipments for maintenance.

“Al Futtaim has a variety of businesses and they need different types of vehicles to service their clients,” says Nauwelaerts. “Today, the market rates are such that I have to ensure all vehicles are on the roads with maximum load and doing the most optimum run, that they have left the warehouse calculating the time they need to reach their destination so that no one has to spend any time idle on the roads.”

The challenge is to keep heavy vehicles running all the time they are allowed to run. Trips have to be planned like clockwork so if a road block starts just after noon, trucks should be at the right location with their cargo loaded by the time road blocks are removed. Time management is crucial. Nauwelaerts plans to use regular trucks with appropriate loads to run round the clock and the heavier vehicles to run at the specified times.

Nauwelaerts’ biggest cause of concern is the lack of an appropriate fleet management solution. “With the current volume of business, Microsoft Excel sheets cannot be our transport selecting tool of choice. Although there are smaller solutions running in different parts they are under performing, what we need is a solution that can harmonise all our corporate applications. Since we’ve already got SAP running in other parts of our business, it’s probably what we’re going to choose for our transport management, too.”

Uday Kiran, DGM, Home Centre

Home Centre From one store in 1995 to nine Home Centres across the UAE and 60 worldwide, the brand has expanded. “In the last four years, we have experienced massive growth,” says Uday Kiran, DGM, Home Centre. “The retail market has grown around 30 to 40 per cent each year and because of that we’ve had to expand out fleet to keep up. Today we have more than 120 vehicles.”

Satyaprakash Singh, Senior Manager Logistics, Home Centre, elaborates, “We have a jumbo-sized fleet covering all the emirates, from Abu Dhabi to Fujairah with approximately 360 deliveries per day. We cover around 500 to 600 kilometres.”

Singh and Kiran insist fleet expansion only happens as per the requirements of the business and a growth in the retail market.

On top of the 120 delivery vehicles, Home Centre also has separate 1.5 tonne pick ups for urgent deliveries. “We’re completely customer dependant, as they are our number one priority,” says Kiran. So, although normal deliveries are promised within three days, Home Centre says it sticks to a schedule of 24 hours from purchase, or later if required by the customer. “We not only have 1.5 tonne pick ups but we have them in varying sizes in order to fulfil requests or otherwise,” adds Kiran.

In order to maintain efficiency, Home Centre maintains feeder warehouses in different parts of the country. Each feeder warehouse has a few permanently- stationed delivery trucks to service nearby areas. “A feeder warehouse is basically a transaction point,” says Singh.

“It is a part of the warehouse and covers areas close to it. We have three feeders currently, one each in Sharjah, Abu Dhabi and Al Ain.”

Home Centre is currently using a fleet management solution from Atlas which is proving to be highly advantageous. Firstly, GPS helps them locate customer locations, saving time, fuel and gaining customer satisfaction as the vehicle reaches the correct spot in the minimum amount of time. “Our fleet management solution has proved to be a bridge between our employees and our customers,” says Kiran. “Safety of our employees is of utmost importance, with this solution we can track them, warn them of accidents and our Customer Care Centre can SMS them of road blocks ahead.”

The solution has helped manage another very important factor for Home Centre – fuel. “Drivers no longer have to go around in circles looking for houses, so we save fuel,” says Singh. “Also, through the GPS we’ve been able to cut down on overtime costs which we were incurring heavily earlier. Even a five per cent reduction in cost in these inflationary times is a good deal.”

Where do I hand in the Bahrain Logistics Zone tender?” an American businessman hurriedly asks the security guard in the lobby of the General Organisation of Sea Ports (GOP) in Bahrain. He is rushing to meet the deadline for applications to lease land at the one sq kilometre plot of land dedicated to re-export and value-added logistics at the new Khalifa bin Salman Port.

And he has reason to be a bit nervous. Over 60 local applicants and several international ones will find out this month if they made the cut. “We are getting a huge response and companies are expressing interest,” says GOP Assistant Director General Hamad Fakhro. “Our land is quite small, so we have to be selective.”

Despite oversubscription, the GOP was kind enough to extend the deadline by a week to ensure that the “the best of the best” 3PLs and freight forwarders handed in their applications. In fact, Fakhro says the zone will accept only around 20 local companies, as it is targeting “all the big players.”

The biggest player of them all, Danzas, the freight forwarding arm of Deutsche Post, is already on board, having signed an Memorandum of Understanding (MoU) to lease serviced warehouse space in BLZ.

Hamad Fakhro, Assistant Director General, General Organisation of Sea Ports, Bahrain

BLZ will offer 20-year leases on plot sizes from 2,000 sq metres as well as warehouses at BD 5.000 to BD 12.000 (US$13.40 to US$32) per sq metre per month.

“The majority of the infrastructure is ready,” says Fakhro. “The land, as well as the services, will be fully ready by the fourth quarter of this year.”

The BLZ will also supply office and commercial space. It takes care of licensing, registration and visa processing, and, of course, offers a customs-bonded zone.

Fakhro says the BLZ may even provide temporary workers if needed. “A company might be handling most of the Formula One logistics which requires equipment or labour for a short period of time,” he explains.

It sits adjacent to a mixed use real estate park, Bahrain Investment Wharf, which will feature labour accommodation, as well as a hotel and Bahrain International Investment Park, a zone dedicated to light manufacturing. “We support each other,” says Fakhro.

The reclaimed land BLZ sits upon is only a 10-minute drive from the Bahrain International Airport, and 45 minutes to Saudi Arabia via King Fahad Causeway. When the new 38.63 kilometres Bahrain-Qatar Causeway is ready, it will also be close to Doha.

And we cannot forget that BLZ sits on Bahrain’s soon to be busiest port. “Now this area looks like a ghost town, but by the end of the fourth quarter, the Mina Salman will be closing and Khalifa Bin Salman will be operating, so you will see a lot of traffic,” says Fakhro.

Much of the BLZ’s business focus will be not on Bahrain, but on the countries surrounding it.

“Right now Bahrain needs a capacity of 240,000 TEUs per year for itself,” says Mauricio Zuazua with A.T. Kearney, the consultancy helping develop the project. “The capacity of the new port is going to be 2.5 million TEUs per year. The strategy of BLZ is placing a lot of emphasis on transhipment, especially for the Northern Gulf countries. Even with the growth that Bahrain is expecting, there is significant capacity for shipments to other countries.”

Sheikh Daij bin Salman Al-Khalifa, Chairman of the General Organisation of Sea Ports, Bahrain for Bahrain Logistics Zone and Enver Moretti, President and CEO EMA Region, DHL Global Forwarding on behalf of Danzas AEI Intercontinental Bahrain sign MoU

This project, he says, is part of Bahrain’s master plan to become a major logistics hub in the region. “Bahrain was a trade centre many years ago, but it lost its lustre. The BLZ is part of a strategic effort to bring Bahrain back to its old glory.”

Bahrain currently ranks 36 on the World Banks Global Logistics Index compared to the UAE’s rank of 20, but still sits higher than other GCC countries. “We are working hard to move Bahrain up the ranking,” says Fakhro.

“There is still a lot of room for improvement,” he admits, explaining that port operator APM Terminals is working closely with Bahrain Customs to improve efficiency. They are moving towards an e-customs system, which will eventually link to BLZ, according to Fakhro. He says customs has processed over BD25 million (US$67 million) in the last few months. “The system is running at 99.6 per cent so far. There is only a .4 per cent error.”

But is Bahrain too late to catch up in its development? “It’s never too late,” says Fakhro. “It’s actually the right time.”