Dubai Ports Authority (DPA) is ranked as the eighth top container port worldwide. After it acquired P&O it also acquired the right to manage around 51 container ports across the world in over 24 countries.

R N Bhaskar, Consulting editor LOG.india

It is today one of the largest port operators in the world. In India, it manages eight terminals, notably at JNPT (near Mumbai), Cochin, Vishakhapatnam, Vallarpadam and Mundra. And it is at Mundra that a very unusual wind is threatening to become a squall, if not a hurricane.

When Mundra set up its port terminals the management of the same was given to P&O, which was later taken up by Dubai Ports World (DPW).

Under DP World management, Mundra has seen its business grow. The cargo it has handled has swelled from 11.7 million (m) tonnes during 2005-06 to 19.8m tonnes during 2006-07.

Over these years it has handled a total of 56.9 million tonnes of cargo (40.3 million tonnes of bulk cargo, 3.7 million tones of crude oil cargo and 1,079,000 twenty-foot equivalent units (TEUs).

To further expand capacities and become the largest port in India, Mundra is now building additional terminals, and the port management team wants to manage the new terminals itself.

But that does not appear to have gone down well with DP World which wants to manage the new Mundra terminals as well. In the absence of any positive response from the managers of the port, DP World has now decided to file a case in Indian courts against the Mundra Port management, insisting that nobody can have the right to manage the new terminals at the port without first giving DP World the right of first refusal.

The Adanis of Mundra obviously want to ensure that nothing goes wrong with their expansion plans at the port, and are reported to be in active discussions to paper over any differences that may exist between people at DPA and the management at Mundra.

Obviously, with a public issue just round the corner, the Mundra management would be loath to see such differences being aired in public forums. Astute as Adani is known to be, it is unlikely that this difference will be allowed to blow into a full-fledged storm.

Uncertain Winds The Adani story with the Mundra port has taught port watchers one lesson – While the Union government conveniently designates all Union government-owned and managed ports as major ports, and those managed by the state governments as minor ports, the definitions could soon become a joke. Mundra – classified as a minor port because it is promoted by the state government – is likely to become bigger than any of the major ports. Similarly at least three other minor ports, with aggressive private managements backing them, are beginning to show interesting signs of activity.

Damra, on the Orissa coast on India’s eastern shore, is one of them, being built jointly by the Tatas and L&T. It is a deepwater port, and a bit of dredging could make it as deep as Mundra. And though decent rail and road linkages to this port are missing, the Tatas are not complaining as they want to use it primarily as a captive port, much in the manner as the Mukesh Ambani group manages and owns the Jamnagar jetties, and the Ruias of Essar own and manage the captive jetties at Hazira, both in Gujarat. Captive ports can be a very profitable proposition, as they allow the promoters to develop their own logistics for export and import of goods.

Moreover, two other “minor” ports that are coming up on the country’s eastern coast hold a lot of promise. One of them is Nagapattinam, being promoted by Marg Constructions. The second port is the Krishnapatnam Port promoted by the Natco Pharma Group. Both of them promise to become “major” ports in a few years’ time.

Evidently, the minor ports are out to prove that they are better than the major ones. And unless the Union government changes its policy framework and allows for private enterprise and faster expansion approvals with linkages, the major ports could lose a lot of business. More alarmingly, this could adversely affect the fortunes of their host cities as well – especially Mumbai, Chennai and Calcutta.

R N Bhaskar Consulting editor LOG.india

Strong demand for faster delivery of goods by shippers worldwide is creating numerous challenges for the air cargo industry, in particular the air charter business. Overall, air cargo is expected to grow steadily and strong for the next decade. This increase significantly outpaces any other modes of transportation. Yet air cargo continues to be challenging and ever-evolving.

Sujit Subramanian, Regional Manager, Middle East & India Lufthansa Cargo Charter Agency

The near future will see a transition in the air cargo industry. Air carriers, charter operators and forwarders alike will realize the benefit of their collective strength. We are already witnessing the formulations of such partnerships, which means that combined services for shippers and consignees will become unmatched.

The Middle East and Indian sub-continent offer tremendous opportunities in the air charter business. They comprise the fastest growing region for cargo this year, recording double-digit growth. This expansion, coupled with dynamic support from regional governments, is a positive indicator for the air charter business. It gives Lufthansa Cargo Charter an opportunity to position itself as a preferred air charter service provider to meet excess capacity and specific air transportation demands from customers in the region.

Airfreight flows from USA and Europe into Iraq and Afghanistan are facing high demand. Commodities range from relief items to medical supplies to telecommunications equipment to perishables. Our parent company Lufthansa Cargo brings these shipments into Dubai or Sharjah and we arrange charter flights from the UAE into into the war-torn regions. We offer customers shipping to Iraq and Afghanistan unique benefits like single airway bills and single source billing, as well as on-line shipment tracking. Being part of an airline, the access we offer to Lufthansa Cargo’s as well as Swiss WorldCargo’s worldwide capabilities is something no other charter brokers can provide!

We see various commodities like electronics, perishables, equipment and garments as key products to the region, as we have transported a large quantity of these goods over the past few years. Traditionally, trade flows between Asia and Europe and the United States have been strong, but the past few years have also seen an increase in trade flows between Asia and the Middle East. This expansion can help the Gulf countries gain access to the fast developing and emerging Asian markets.

The Middle East, no doubt, has geographic advantage. With proximity to the exporting Indian subcontinent and importing European and African markets, the area is a multi-modal logistics hub. It is, therefore, no surprise that the region has evolved to be one of the most efficient sea-air hubs in the world, bringing with it ample opportunities for air charter services.

We often face challenging cargo situations in this region. Recently, for example, a large automobile manufacturer in India entrusted us to organise two B747 charter flights from China into India. These flights were so time critical that any delay meant our customer’s production unit would come to a halt and millions of dollars would be lost. Our entire charter team was on its toes to ensure that the components arrived as planned and the customer could breathe easy and meeting the requirements of his production team.

The aviation market in India is maturing with an increasing number of cargo aircraft operators. The environment seems upbeat with optimism. We foresee demand for charter flights in this market. And our regional office in the UAE is ready to serve the needs of its large customer base in the Indian sub-continent as well.

As we say, “Uplift – no limit in time and space.”

Sujit Subramanian, Regional Manager, Middle East & India Lufthansa Cargo Charter Agency Aircharter.

Michael Stockdale loves fast cars and rides a Harley. But he says he is one of the good guys.

Michael Stockdale, General manager, Al Futtaim Logistics

In his spare, almost Spartan, Al-Futtaim Logistics office in the Jebel Ali Free Zone, Michael Stockdale comes across as a regular bloke from Sydney – the type who says “G’day, mate!” to strangers.

“Around here, I’m just one of the good guys,” he qualifies. “Al Futtaim Logistics has the best people in the logistics industry – not just here in the region but possibly in the world.”

Stockdale has reason to be proud. Since he took on the challenge of growing the 3PL business of Al-Futtaim Group in the UAE in 2003 he has expanded Al-Futtaim Logistics by six-fold. And this year the company is expected to yield more than 55% growth.

In the upcoming Second Middle East Logistics Awards the company has nominations in more categories than any other entity, including Best Innovator of the Year, Best Importer, and Best Logistics Provider – 3PL. If this was the Oscars, Al-Futtaim Logistics would be Lord of the Rings.

And Michael Stockdale would be Peter Jackson. The supply-chain expert himself is a nominee in the Logistics Personality of the Year Award – Land Transport Industry category.

“Being nominated for the MELA 2007 is good news for both Al-Futtaim Logistics and me,” he says. “But the better news is that the quality of the competition is extremely high. This is good for clients in particular and the region’s economy in general.” Two years ago, when asked about the future of the logistics industry in the region, Stockdale predicted that the growing demand of quality logistics will eliminate the “bad guys” from the market, a trend he says he is seeing happen.

“The current players are trying to outdo each other, not just in terms of size and business volume, but more in the provision of services of consistently high quality.”

“What we constantly try to do is not be like the competition,” he smiles. “The motto of the Company is ‘Grow by being the Best in Service, Quality and Efficiency’.”

Stockdale insists on hiring only the best. “We would rather leave a position vacant than fill it up with someone who is not perfectly suited for the job.”

“The logistics industry is my life,” he admits. Apart from being General Manager of Al-Futtaim Logistics, he is also a member of the Australian Institute of Management, the Logistics Association of Australia, and the Consultative Committee of the Supply Chain and Logistics Group, UAE.

And what is he when he is not being a “logistics person”? “I don’t really know,” he muses. He looks genuinely confused by the question. “I’ve been doing this for so long – and loving it – that I can’t really see what else I would be.”

And then his eyes light up. “I love to ride my Harley. The roads in the UAE are great, and when the weather is good the sound and the power of the machine let you forget everything. And the CART and AUSCAR races in Surfer’s Paradise in Queensland drive me wild …”

Michael Stockdale may not be such a “good guy” after all.

Mike Ortega interviewed Michael Stockdale at his office in the Jebel Ali Freezone

Gautam Adani is on a mission to make Mundra India’s intermodal focal point, providing shippers with an enviable choice of deep-sea, rail and air links. But will his connectivity charge succeed in a nation renowned for its fair share of congestion and infrastructural challenges? And will DP World let Adani expand on his own?

Gautam Adani looks strangely composed for someone who oversees a diverse business empire with a combined group turnover of $44 billion. The 46-year-old appears charming and warm, belying the tremendous clout he wields in Gujarat. He marshals facts on his fingertips, and can justify or debunk a plan better than any management guru. But he also has the stuff that visionaries are made of – hard facts, cold execution and the ability to inspire people and countries.

Adani’s goal is simple – to make Mundra the country’s premier intermodal centre, one that unifies deep-sea, rail and air links against the backdrop of the alluring Mundra Port Special Economic Zone (MPSEZ). The air cargo operation is expected to take off within the next year. Mundra Port is blessed with a deep water draft ranging from 15 to 32 metres – and its deepest part is no more than 1 kilometre from the shore – enabling it to handle large size vessels carrying bulk, container and crude oil cargo.

Mundra’s North Indian location is also extremely appealing to Arabian Gulf-sailing operators. Muncra is at least 180 km closer to the Arabian Gulf than any other port in the country.

Between October 1, 1998 and March 31, 2007 Mundra Port handled approximately 56.9 metric tonnes (mt) of cargo, comprising approximately 40.3 mt of bulk cargo, 3.7 mt of crude oil cargo and 1,079,000 twenty-foot equivalent units (TEUs) (approximately 12.9 mt) of containers. Total cargo volume at Mundra Port increased 68.7% from 11.7 mt during 2005-06 to 19.8 mt during 2006-07. The port management now has ambitious plans to increase its capacity to 50 mt by 2010. “This project will test our credibility as infrastructure developers,” says Adani. “We have now to look after the environment, take into account the interest of the local people and the development of the region, and that means focusing on connectivity. And, equally important, we have to generate wealth for all the parties concerned – our society, our country and our shareholders.” Adani’s expansion plans have major implications for trade flows, particularly existing ports such as Mumbai, which currently hoovers up much of North India’s traffic. Companies located in the adjacent Mundra Port Special Economic Zone (MPSEZ) enjoy customs and income tax exemptions and reduced costs for infrastructure, utilities, raw materials and other resources.

Eventually, Mundra will have 14 jetties all forming a semicircle for better management and synergies

Sandeep Mehta, CEO of MPSEZ, is confident its location will make it the gateway for all states to the North and North West of India. “What is more interesting is that the market is growing rapidly – 30% year on year – and with the WTO provisions taking effect, more goods will flow in and out of India. Already the latent demand for port terminals is twice the country’s operations. What is needed is to clear the bottlenecks.”

He says he foresees more of Mumbai and Pune’s car traffic taking a new turn to Mundra.

“[Drivers] will have little option as JNPT is already congested. And we are already experimenting with stacker rakes especially designed for moving cars. We can accommodate large ships and also offer them the best rail road and even air linkages which no other port in India can.” Mehta has equally high hopes for the air cargo division. “I would like it to be what the Fedex hub is in Memphis.”

How it started The Adani group has its beginnings in the Kutchi community which is one of the most important trading communities in India.

This community – although often believed to be made up of only Hindus – encompasses almost every religion with roots in the Kutch region in the state of Gujarat. Adani’s rise to economic power in the region, like most self-made entrepreneurs, is striking considering his lack of formal education. And rather than settling down taking charge of a part of his father’s wholesale textile trading business Adani opted to chalk out his own career. He tried his hand at diamond trading for a couple of years, and then opted out.

After working with his elder brother at his plastic packaging unit, Adani decided to go in for trading of polymers. That proved to be the spark to the flame, as he grew his business into one of the country’s largest export-import houses
under the Adani Exports banner. “I still continue my trading activities mostly through Adani Exports [now renamed Adani Enterprises], which is now looked after my brother Rajesh Adani. To my mind, most entrepreneurs have begun their careers as traders. We began building assets for business only in 1992.” Adani‘s trading background and personal interest in gemstones led him to purchase a substantial interest in coal mines and gemstone units in Indonesia. But destiny took a turn in 1991 when managers from Cargill, the international food, agricultural and risk management corporation, approached Adani with a proposal to source salt from the largest salt pans of India which lay in the Kutch region. To facilitate easy evacuation of the salt, Cargill’s officers suggested Adanani join them in building a port at Mundra. Both parties agreed for a 50:50 joint venture, hammered out in the presence of Chimanbhai Patel, the then chief minister of Gujarat. But events took an unexpected turn when the Union government decided that ports could be built with 100% foreign ownership.

Cargill’s managers decided to rework the ownership ratios and suggested that it should be 89% in favour of Cargill and 11percent in favour of Adanis. Adani backed out of the deal, preventing Cargill from preceding with its Mundra plans. After an abortive attempt to get an equity stake in Kandla Port, Cargill lost interest in Indian ports. But Adani had found a new business opportunity. Thus, when in 1995 the state government came up with its port policy aimed at promoting the development of ports in Gujarat, the Adanis decided to take up Mundra. What began as a joint venture with the state government eventually became a port wholly owned by the Adanis.

Mundra currently handles around 60% of India’s coal imports which are used by the Gujarat electricity board

Today, the Adani Group has interests in numerous industries including commodity trading, coal mining, power trading, power generation, real estate development, agro processing, logistics, shipping and port operations. To make the port succeed, Adani insisted it had excellent rail links. And before the government could come up with a policy, he went ahead and installed 65 km of privately constructed and owned railway lines connecting Mundra to the national rail network junction at Adipur. Adani acquired locomotives and built rakes and began conducting tests to ensure that the trains could carry double decker loads of containers. Then, when the government policy was announced, he was fully prepared, and the first to move in.

The Adani group is also developing a second railway corridor which should be ready in two years.

Lastly, and most importantly, Adani has managed to escape all the restrictions on land acquisition by a whisker. Instead of waiting for the government to step in and acquire the same for him, he went ahead and kept on acquiring land. Today he has almost 15,665 acres – although some claim the area could be as large as as 30,000 acres. Adani sees air cargo operations as the next piece in the intermodal jigsaw. “We are expanding and extending the runway to accommodate bigger planes,“ he says, “and within five years we will make it an international airport for passengers as well.” The Adani family plans to increase it 1.9km airstrip used for private jets to 2.5 km, so that larger aircraft can land at Mundra.

“The plan is to be in control of every aspect of logistics,“ says Adani. “To make this possible, we will build ports, airports, warehouses to help promote companies that need to make use of our air, rail, sea and road facilities, and do everything to make this possible. Japan and Korea have succeeded because of logistics. Their industries are 25 km away from ports. Why can’t we do the same as well?”

Storage strengths Thanks to temperature-controlled silos constructed on site, much of the grain imported by the Food Corporation of India is stored at Mundra. Mundra is the largest oil storage capacity of any port in the country with pipelines running right to the refineries. Hindustan Petroleum has storage capacities of 306,000 tonnes which it pumps to Bhatinda, and Indian Oil has storage capacities of 720,000 tonnes which go to its refinery at Panipat. Edible oil manufacturer Adani Wilmar, part of the Adani group and located near the Mundra Port, is also a major beneficiary because its location near the Mundra Port allows it not only to pipe its imported product directly to its refining unit, but also to dispatch it to its other centres across the country.The port has helped Wilmar become the country’s second largest edible oil player.

Mundra also has storage facilities for coal. It currently handles around 60% of India’s coal imports, used by the Gujarat State Electricity Board, Rajasthan State Electricity Board and Maharashtra State Electricity Board. Not surprisingly, Mundra has one of the finest facilities in the form of coal reclaimers, conveyor belts and stackers capable of handling 100,000 tonnes of coal per day. And a Rs. 20 billion ($500m) terminal for coal and other cargo will only enhance these facilities. The new project has been brought on by the Tata Group’s plan to set up a 4,000 MW ultra mega power plant (UMPP) at the site, and the Adanis’ plans for a 2,640 MW plant at Mundra. These ventures are expected to increase coal imports through Mundra by around 25m tonnes a year.

Mundra’s deepwater capabilities will enable MPSEZ to handle next-generation vessels and up to 30,000 tonne VLCCs

Stackers-cum-reclaimers with 100,000 tonne-per-hour handling capacity will support coal jetties so that the coal can be stacked and reclaimed far more effectively. MPSEZ also plans to install an in-motion wagon loading system for faster and more accurate loading. With the help of this system the port says it will be able to handle about five to seven coal rakes a day. The proposed facility will likely increase output and enhance the speed of handling with proper stockpile capacity monitoring. The project is also touted as environmentally-friendly.

Capacity benefits Captain Unmesh M. Abhyankar, master mariner and vice president, marine services, MPSEZ, says Mundra’s deepwater capabilities will enable MPSEZ to handle next-generation vessels and up to 30,000 tonne very large crude containers (VLCCs). “This will do away with the need to have large vessels berth at Colombo or Dubai,” he says, “leaving the arduous job of trans-shipment to be done by smaller carriers.”

MPSEZ has over eight tugboats (some larger than those available at Mumbai’s ports) and modern material handling systems. It has the largest conveyor belt system for moving coal and grain over long distances, making movement and storage far easier than at any other Indian port.

MPSEZ now has approximately 15,665 acres of land. Its portfolio includes approximately 4,000 metres of undeveloped waterfront land which can be used for expanding its own port operations. Its approval as a developer of the SEZ at Mundra and the surrounding areas makes it the first port-based multi-product SEZ in the country. Eventually Mundra will have 14 jetties forming a semicircle.

The port also has large fertiliser and raw material godowns with bagging systems, 21 closed godowns covering an area of 1,490,000 sq m and 5,200,000 sq m of open storage space, and huge tank farms with storage capacity of 278,000 KL with additional capacity that can be added anytime in the near future. Another key selling point of Mundra Port is its ability to handle cargo throughout the year in all weather conditions (India’s monsoon season is often characterized by severe weather involving heavy rains, strong gusts, and lashing waves), thus resulting in minimal costs, delays and damages that often impact other more exposed ports.

The port is located in the Gulf of Kutch, in the southern part of the Kutch peninsula. The Kutch is the largest district in Gujarat, having an area of 45,652 sq m constituting 23% of the state. It is bound by the sea to its south and west and by the Ranns (salt marshlands) in the east and north. Kutch has 951 villages with a population of about 1.5m. Situated on the western coast of India, Mundra Port offers access to the the Asian, European, American, and South American and African markets.

While it has the potential to become a transit point for international traffic by being a new gateway to the west, Mundra is also strategically located to service the northern and western hinterland of India, which contribute nearly 70% of India’s containerised international trade.

Local support One major advantage MPSEZ enjoys is being located in Gujarat where governments have always shown excellent commercial judgment and promoted projects that spur economic growth and employment. Gujarat also has better administration than and lacks the labour activism of other states. The present state government has been far more aggressive in its drive towards investment mobilization and towards ensuring that Gujarat remains foremost among all the states in India. Not surprisingly, on August 14, 2007, when the country’s central bank released its report of how states had attracted investments, Gujarat emerged as the leading investment destination in India, trouncing even Maharashtra which held the top spot for decades.

Gautam Adani, Chairman, Adani Group

Rail links Mundra Port is connected by rail, road and pipeline to the transportation network of India, particularly the inland regions of western and northern India, including Delhi.

The Adanis have already built 65 km of privately developed rail network, capable of taking double- decker container rakes. Mundra thus becomes the only private port to offer rail linkage to the national railway grid. Mundra links up to Adipur. It can handle upto 22 rakes a day, or one train an hour. Trials are also underway to design rakes that can carry cars in a triple-decker mode. This will make both the transport linkages and the port of Mundra much more attractive to automobile manufacturers.

Alongside these tracks, private (toll) highways are proposed for construction. This will give Mundra Port excellent road connectivity to two major national highways (NH 8 and NH 15) at Adipur. This would allow connectivity of the markets in North and West India to Mundra’s cold storage and temperature controlled storage facilities. Excellent security and ease of movement until the trains or vehicles reach the national network ensures minimum downtime and tremendous comfort and security. This is of enormous significance because delays and pilferage are the two problems that afflict any Indian importer or exporter.

New facilities In order to make Mundra an even more attractive destination,
two five-star hotels are slated to go up near the port, one likely managed by Marriott Hotels. A 12-hole golf course is also being planned near the airport. At the same time, two new townships are also being planned.

The first comprising some 3,000 dwellings is likely to be fully occupied by the end of this year.

The TATAs are constructing the second township around their mega power plant at Mundra. Moreover, a new 100-bed hospital by the Sterling group is under construction (in addition to the one by Apollo which already exists). The Adanis have also invested in an intensive care unit on wheels – the first in Saurashtra.

New opportunities Adani has been looking at this line of business partly because he has investments in at least three ports (Mundra, Dahej and Dholera) and because he sees this activity as a natural extension of the ship-breaking activities it is familiar with (The Adanis also recently acquired a large ship breaking yard in Virginia, USA where decommissioned warships are sent for being dismantled and converted to scrap. They import this scrap into India through the Mundra Port to feed the steel industry.)

It may be recalled, that one of the largest ship breaking businesses in India used to be at the Gujarat port of Alang, but which is now on the decline, partly because of increasing labour costs and partly because of the inevitable climb to higher value – added business opportunities. Much of this business is likely to be Adani Shipyard incorporated in July 2005.

Adani is also eyeing other sectors, including bunkering, piped gas, information technology, township development and textiles.

Group synergies Most of the investments made by MPSEZ are likely to create new business opportunities, not only for the port and SEZ company, but also for other companies within the group. In fact, the synergies between the group companies and MPSEZ are so many, that it is difficult to pinpoint which company depends on whom for its success. Moreover, together they have accelerated the pace at which markets operate, not only within the state, but also in India. Today MPSEZ is keen to make strategic investments in key group companies to better exploit their synergies.

Adani Logistics Ltd (ALL) is a company in which MPSEZ already holds a 49% equity stake, but now wants to enhance it to 50%. It proposes to commence container train operations. ALL has obtained a licence from the Indian Railways to operate container trains on Category-I routes – that is from JNPT/Mumbai Port to locations in and around Delhi and to other locations that can be reached from Delhi.

Mundra port is connected by rail, road and pipeline to the transportation network of India, particularly the inland regions of western and northern India including Delhi

The Adanis, along with Kandla Port, Pipapav Port and the Gujarat government own a 50% equity stake in the Kutch Railway Corporation Ltd (the remaining is held by Indian Railways) for conversion of narrow gauge railway lines to broad gauge. Two conversion projects have already been taken up – one from the Dahej port to Baroda and the other from Dahej to Bharuch. ALL plans to acquire 20 rakes initially for which it has already placed orders for importing 3,600 wheel sets. Once the wheels are received, they will be sent to wagon fabrication companies in India for fabrication of the rakes.

Adani Energy is engaged in the business of production, supply, transportation and distribution of all forms of conventional and non-conventional energy. It has an equity capital of Rs.900m ($22.5m) and earned in income of Rs.790m ($19.75m) during the year ended March 2006. It has ambitious plans to generate 2,640 MW of power by setting up four units of 330 MW and two units of 660 MW. The first of these units is expected to commence operation within a year’s time, and the entire power plant should be on stream by 2012. The boiler-turbine- generator (BTG) units are being sourced from China and, interestingly, the cost per MW of installed capacity is not likely to be more than Rs.35m (a little less than $1m). Given the easy access to coal, the tax benefits the power plant will enjoy and the lowest cost of transmission and distribution, all the units at Mundra and the SEZ – including the township and other commercial establishments located in and around the port – could get uninterrupted power supply at some of the best rates that any power distribution system could offer in the country.

The Adanis have also set up another power generation company under the name Dahej Power Private Limited, whose plans in this sector are yet to be announced.

MPSEZ is also taking up a 50% equity stake in Inland Conware Private Ltd (ICPL) which will be constructing and developing Inland Container Depots (ICDs as logistics hubs for providing synergy with the container terminals at the port and the proposed container train operations. These ICDs will have a rail side area which will be non-bonded by the customs department, a bonded area housing warehouses and open stuffing and de-stuffing areas, and a non-bonded area which has warehouses for providing value-added services. The first ICDs are expected to come up in Delhi, Ludhiana and Kishangarh (Rajasthan) followed by similar facilities in Ahmedabad, Mumbai, Kolkata, Chennai, Bangalore, Coimbatore and Nagpur. Transportation and logistics facilities for both import export and domestic cargo are likely to be offered through ICPL.

Adani Enterprises, formerly known as Adani exports, is the only other company in the group to approach the capital markets in November 1994 to raise Rs.1,892.85m ($47.32m). It is primarily engaged in the business of trading in and the import and export of goods but has made its intention of getting into other areas sucha as mining activities, power plants and real estate acquisitions. As of March 2007, its equity capital stood at Rs.246.5m ($6.16m) and Reserves at Rs.10.2 billion ($254.88 million Its income during that year was Rs.101.5 billion ($2.5 billion) and profit after tax at Rs.1.6 billion ($40.22m).

Adani Wilmar was set up in 1998 to take advantage of the government’s decision to ensure that more edible oil was available in packaged containers instead of being sold loose in the marketplace. “When we began, our edible oil plant, located at seed fields, used to have a capacity of 50-100 tonnes-per day (tpd),” explains Adani. “Now that we are port based and often use the coastal shipping route, we could increase its capacity to 2,000-3,000 tpd.”

That, and the government’s decision to relax import duties on edible oil made the Adanis sense an opportunity and they set up a 600 tpd plant for solvent extraction and packaging. Since more than 50% of India’s edible oil consumption is met through imports, and because North India consumes more than 65% of this edible oil, Mundra enjoys a tremendous competitive advantage. Today, the port has a totally automated process for evacuating edible oil, and sending it through pipes to Wilmar’s plant. The unit has its own PET bottling unit as well.

The company’s oil, sold under the Fortune brand, has already grabbed a quarter of the country’s market for packaged edible oil, and has become the second largest player in India. In addition to the one at Mundra, the company has four units across the country.

Legal framework Gujarat maritime board (GMB) entered into a 30-year concession agreement with MPSEZ, granting it the right to develop, operate and maintain Mundra Port. MPSEZ has also entered into a separate lease and possession agreement with the GMB, whereby, it has been granted the right to use approximately 3,404 acres of land as its port and the right to use the foreshore land and waterfront. It also has a sub-concession agreement with Mundra international container terminal (MICT).

Through this agreement, MICT has the right to operate and maintain the container terminal and the freight station and collect charges from users for providing container handling services at both entities. MPSEZ receives from MICT a monthly terminal royalty equal to 10% of the gross revenue received by MICT.

For fiscal 2006, income from container cargo, including royalties and the income from related marine services, was Rs.529m ($13.23m), or 13.8% of MPSEZ’s income from operations, and for fiscal 2007, container income was Rs. 715m or $17.88m (12.3%). MPSEZ has also entered into strategic long-term contractual arrangements with Indian Railways relating to the railway links and cargo services to and from Mundra Port.

Similarly, it has entered into a long-term relationship with Indian Oil Corporation for the handling of crude oil cargo. MPSEZ earns income through payments for services, royalties provided to them, a percentage of the revenues generated and the lease rent payable. The revenue from such arrangements was Rs.863.9m or $21.6m (22.5% of income from operations) in fiscal 2006 and Rs.1,447.3m or $36.18m (25%) in fiscal 2007.

Adani vs. DP World MICT was acquired by P&O Ports (Mundra) in 2003, which furnished an undertaking to the GMB that it would continue to maintain a minimum 51% shareholding in MICT until at least 2010. Dubai Ports World (DP World) subsequently acquired P&O Ports in February 2006.

DP World is ranked as the eighth top container port worldwide. After it acquired P&O it also acquired the right to manage around 51 container ports across the world in over 24 countries.

It is today one of the largest port operators in the world. In India, it manages eight terminals, notably at JNPT (near Mumbai), Cochin, Vishakhapatnam, Vallarpadam and Mundra.

And it is at Mundra that a very unusual wind appears to be threatening to become a squall, if not a hurricane. When Mundra set up its port terminals, the management of the same was given to P&O, and that management was later taken up by Dubai Ports World (DPW) which later became DP World. Under DP World management, Mundra has seen its business grow. The cargo it has handled has swelled from 11.7m tonnes during 2005-06 to 19.8m tonnes during 2006-07.

Over these years it has handled a total of 56.9m tonnes of cargo (40.3m tonnes of bulk cargo, 3.7m tonnes of crude oil cargo and 1,079,000 TEUs (approximately 12.9m tonnes).

To further expand capacities and become the largest port in India, Mundra is now building additional terminals, and the port management team wants to manage the new terminals itself. But that does not appear to have gone down well with DP World, which wants to manage the new Mundra terminals as well. In the absence of any positive response from the managers of the port, DP World has now decided to file a case in Indian courts against the Mundra Port management, insisting that nobody can have the right to manage the new terminals at the port without first giving DP World the right of first refusal.

The Adanis of Mundra obviously want to ensure that nothing goes wrong with their expansion plans at the port, and are reported to be in active discussions to paper over any differences that may exist between people at DP World and the management at Mundra.

Obviously, with a public issue around the corner, the Mundra management would be loath to see such differences being aired in public forums. Astute as Adani is known to be, however, it is unlikely that this difference will be allowed to blow into a full-fledged storm.

Middle East governments must take advantage of their unique geographic location to become a trade hub for the future.

Today, the Middle East region is in the middle of exciting global, regional and local developments in terms of transport and logistics. With the explosive growth of global and regional trade, and especially the trade between Europe and Asia and within the broader region, the Middle East faces unprecedented opportunities to capitalise on the unique strength of its favourable geographic location.

“The Middle East region’s excellent geographic location and very good accessibility by air, land, and sea have brought it to the top of the agenda for global logistics as the strong growth of global trade requires efficient transport and logistics structures,” says Fadi Majdalani of Booz Allen Hamilton.

“Hence, from a global perspective, the region has a set of three unique opportunities.”

First, the region can benefit from the strong volume growth on the trade lane between Europe and Asia.

Second, and more importantly, the Middle East will benefit from the volume growth on the Europe-Asia trade lane as shippers use larger vessels and apply more advanced logistic concepts. The hub-and-spoke approach, an alternative method to transport, becomes more favourable as volumes and vessel sizes increase. In this layout, the volume from one origination point is loaded onto a vessel irrespective of its destination and then transported to a central node, ie the “hub”.

If volumes and vessel sizes achieve a certain threshold size, a hub-and-spoke approach is the ideal logistics concept to achieve cost-effective transportation.

Finally, the third driver of the Middle East as a growth area for global logistics along the Europe Asia trade lane is the need for multi-modal hubs.

For most goods, a complete airfreight transport is still much too expensive to be viable. Hence, a new transportation concept that we call “acceleration in motion” becomes more important. “Acceleration in motion” offers a conversion from sea transport to air transport. The shipper can start with cost-effective sea freight transport and, if need arises due to better sales or unexpected additional demand, the shipper can manage almost in real-time how fast additional supplies will be brought to market. In sum, this process allows the shipper to achieve better trade-offs on speed to market, stock availability and transportation costs.

The Middle East is a natural location to do the sea to air transport conversion,
for three reasons:

The region is already the natural hub for refueling stopovers for the air freight industry; The location is easily accessible by sea and is increasingly becoming a hub for the sea freight industry; and “Acceleration in motion”, if done in the Middle East, achieves attractive reductions in transportation time-approximately five to seven days—while still conserving the cost-effective sea transport rates for half of the total transport.

In fact, Dubai has already made significant infrastructure investments in the integration of its airport and sea port in Dubai.

Four macroeconomic elements make a strong and efficient transport and logistics sector a strategic must:

• Enhancing economic activity. Strong and efficient transport and logistics service offerings are essential to provide efficient access to markets for domestic trade and manufacturing and enhance economic activity. At the same time, the availability of efficient transport and logistics services is increasingly a key decision criteria for foreign direct investment, in addition to competitive factor costs and availability of skilled resources.
• Enhancing industry competitiveness. Opening markets and abolishing import custom duties increasingly expose domestic industries to global competition. For the Middle East, these realities have ramifications on two levels: First, the effective removal of import barriers, as promoted by the World Trade Organization, exposes local and domestic markets to global competition; thus, Middle Eastern manufacturers face increasing competition in their home markets. Second, Middle Eastern manufactures face stronger competition in their international export markets as global logistics and supply chain services become more sophisticated on a global scale.
• Growth of the industry sector. The transport and logistics sector itself provides an attractive opportunity to enhance economic activity. The Middle East’s opportunities globally and in its own broader geographic region, described earlier, make a strong transport and logistics sector crucial for the Middle East in particular.
• Generation of sustainable job opportunities. Finally, besides providing a key building block for growing economic activity in manufacturing and other sectors and hence providing a basis for increasing employment levels, the growing transport and logistics itself will provide the substantial potential for employment growth that Middle East countries are eagerly looking for. As in other emerging markets, an additional supporting factor of the industry’s employment potential is the Middle East’s competitive labour cost, which reduces pressure for automation and workforce efficiency.

Each of these four macroeconomic elements provides rationale enough on its own for the Middle East to position the development of the transport and logistics sector very high on the government agenda. They are even more compelling in combination.

Dubai Logistics City is about to become a major force in global logistics, capitalising on the city’s insatiable growth, east-meets-west location and proximity to two billion consumers

Michael Proffitt, CEO, Dubai Logistics City

The seismic ripples of the GCC’s meteoric economic growth continue to be felt far and wide and its rapidly expanding logistics sector has been at the epicentre of all the activity. Now the ripples are set to become even larger, as Dubai Logistics City (DLC) prepares to start operations, serving as a powerful magnet for global and regional trade.

DLC is the joint brainchild of His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE, and Ruler of Dubai and HH Sheikh Ahmed bin Saeed Al Maktoum, President, Department of Civil Aviation, Government of Dubai and Chairman of the Emirates Group.

It is the first phase of many that make up the Dubai World Central International Airport (JXB) – a 140-square kilometre (sq km), $33 billion, multi-modal development comprising of a range of industrial clusters. When all phases are completed in 2017 and projected to house over 900,000 people when all phases are eventually completed in 2017.

Dubai World Central is unique because it is believed to be the first airport ever with cargo as its primary focus. Its first scheduled flight is likely to be a cargo carrier towards the end of 2008.

Work has begun on the first $75 million Air Cargo Terminal, which will be finished next year. It will be close to both the DLC Forwarding Area and the main runway and will stand directly on the aircraft parking aprons for quick access.

The 25-sq km DLC is set to become the Middle East’s unparalleled air-sea-road logistics hub – a key aspect of its design is the dedicated road link with Jebel Ali, now the world’s eighth largest port. It will provide access to a market of two billion people, encompassing the Indian Subcontinent, Middle East and Africa (MENA) and CIS countries, who live within three hours flying time of the GCC.

Artist impression of how the completed DLC will look like.

DLC will be instrumental in driving regional trade, which is predicted to top $1,225 trillion, and is conveniently placed to benefit from the boom in China, whose air cargo market is growing at 15% a year.

At full operating capacity, DLC will handle 12m tonnes of cargo annually through 16 dedicated air cargo terminals. It is estimated that approximately 65-70% of that freight will be transiting the UAE for re-export.

The scale is unprecedented. Dubai World Central will be larger than both London Heathrow and Chicago O’Hare combined. Its runways and parking aprons will accommodate the new Airbus A380-800Fs. Four of a possible six runways have been approved, with space between them to allow simultaneous take-offs and landings, and it is anticipated they will all be certified CAT III, allowing all weather operations and automatic aircraft landing.

Michael Proffitt, chief executive officer of DLC, says an operation of this size is essential, given that the region’s air traffic is growing at 15% per year.

“We are addressing the future needs of Dubai,” he says. “Dubai Cargo Village is quite congested, and the existing airport has two runways with a finite capacity. You look at Emirates’ orders and the growth, there are issues because you can’t expand the existing airport. At some stage, the main airport will flip from Dubai International to Dubai World Central, but there’s no timeframe. It’s not a competition, it’s a collaboration.”

Flexible options DLC, which offers 11m sq m of space, will be a one-stop-shop for all logistical requirements.

With Phase I grading at DLC completed, contracted logistics partners have begun constructing their own facilities. Suppliers will be able to keep pre-set levels of inventory in stock at DLC’s storage facilities and save them precious time when needed for distribution.

Left: Recent photograph of the work in progress, Right:Werner Kleymann, Regional Manager of Kuehne + Nagel Middle East and Michael Proffitt laying the cornerstone of Kuehne + Nagel new facility in DLC

Most of the businesses opting to set up their base there can either focus on warehousing and distribution or cargo handling.

Companies have the option of either sharing DLC’s own warehousing facilities, ideal for small to medium-sized operations, or larger companies can choose to build their own from scratch. Kuehne + Nagel (K&N) has opted for the latter, and is in the process of constructing a 50,000-sq m warehouse, which will principally target the pharmaceutical sector.

“At this strategic hub,” says Werner Kleymann, K&N’s Regional Manager Middle East, “adding to our established global facilities – we will be able to provide our customers with sophisticated, integrated logistics solutions across the Middle East, as well as Sub-Asia and Africa, thereby enhancing our already strong market position in the region.”

Danzas AEI LLC, part of the DHL Global Forwarding group, has also signed a contract for a 30,000-sq m facility in DLC’s Forwarding Area with a further possible option for an additional 15,000 sq m. They have also secured an extra plot of over 150,000 sq m in the specialised Contract Logistics Area.

The company, with 17 years experience in Dubai, sees the new facilities complementing its existing freight exchange and warehousing business situated in other Free Zones.

“We have come to a stage,” says Enver Morreti, CEO/President EMA DHL Global Forwarding, “where we say Danzas in Dubai is where the world meets because it is here where everything comes in from all over the world and we serve it to a vast geographical outreach – Africa, South Asia and the GCC – and the footprint keeps expanding as the emirate continues to be identified as a major hub.”

Logistics operators can take advantage of a wide range of services including proprietary facilities management

DLC will offer its own specialised aviation area with air cargo terminals situated directly on the aircraft aprons

This brings the total area at DLC reserved by the DHL Group – which also owns Deutsche Post World Net, DHL Express, DHL Exel Supply Chain, and DHL Global Forwarding – to over 300,000 sq m. DHL will be looking to increase its current daily cargo movement levels of 200 metric tonnes and DLC will play a major part in those expansionist ambitions.

Aramex, the GCC’s freight express and logistics specialist, has also secured a 140,000-sq m plot with a possible extension of another 100,000 sq m.

“Innovation is in Aramex’s DNA, so it was easy for us to take the initiative on a project of such immense significance,” says CEO and President Fadi Ghanour. “We took a strategic decision almost 22 years ago to make Dubai the hub of our global operations. We are, therefore, well positioned to capitalise on our presence in DLC, which has an important role to play in Aramex’s logistics service offerings, especially our third-party logistics.”

Panalpina World Transport is availing themselves of 30,000 sq m in the Free Zone’s Forwarding Area, and has plans for its own purpose-built 2,600-sq m office complex, plus a high-tech 10,000-sq m storage facility.

The new warehouse will function as a transit base and include air-conditioned and temperature controlled spaces. The firm is keen to take advantage of the project’s pivotal location which places all major markets in the Middle East within 24 hours driving distance, as well as the region’s major sea ports, which are accessible within two days.

Additional benefits DLC will offer extra value added services, such as some limited assembly operations and a smattering of smaller scale manufacturing facilities. And these services come in a Free Zone and single customs bonded environment.

René Wernli, Panalpina Area Managing Director along with Michael Proffitt at the ground breaking ceremony of Panalpina’s new facility

Alongside the locational benefits, companies operating within the Free Zone enjoy 100% foreign ownership and the freedom to repatriate profits outside of the UAE.

Logistics operators can take advantage of a wide range of services, including proprietary facilities management, office facilities for start-ups and property management services ranging from design of infrastructure to “turnkey” DLC facilities.

A shuttle link is proposed between DLC and Dubai International Airport, ensuring smooth, customs bonded connectivity around the clock, and Dubai Customs Authority will soon be offering a new E-Customs service enabling operators to rapidly handle and clear all imports and exports.

DLC will offer its own specialised aviation area with air cargo terminals situated directly on the aircraft aprons, providing air cargo handling operators with direct access.

Shippers and operators will benefit from close links to Jebel Ali port, which now hosts more than 120 leading lines, as well as the neighbouring Jebel Ali Free Zone Authority (JAFZA), whose packed site now houses more than 1,100 companies. The port is on course to handle 11 million twenty-foot equivalent units (TEUs) this year, and in the process of expanding its capacity to 15m TEUs to keep up with demand.

Containers can be transferred from the port’s terminal to the airport’s cargo terminal without customs clearance or incurring any related delays, another major attribute.

Right: DLC’s passenger terminal taking shape, Left: airport tower

Sheikh Ahmed bin Saeed Al Maktoum, President, Department of Civil Aviation, Government of Dubai and Chairman of the Emirates Group, says geography makes this vision possible with huge land availability in a prime location.

“The long-term benefits of Dubai World Central to the UAE, GCC and the wider region are phenomenal and will place this emirate firmly in a “pole position” for regional logistics, tourism and commerce,” he says. “Dubai World Central will not only cater to economic growth, but will be a strong catalyst for our next wave of development as a truly global commercial, trade and logistics hub.”

By the time Dubai World Central International Airport is fully operational, Dubai Logistics City will be an integral and essential cog in the economic machinery that is powering growth in both the tiny emirate and the wider Middle East.

Michael Proffitt the man in charge left Deutsche Post/Danzas and his role as Executive Director for Europe, along with his board membership of Mail International after eight successful years, to take the helm of DLC.

Originally from the UK, the 58-year-old industry stalwart holds an MBA awarded by Cranfield University and is a Fellow of The Chartered Institute of Logistics and Transport.

The role as CEO of DLC is the pinnacle of a career that has also seen Proffitt employed at a senior level in some of the world’s most distinguished and successful logistics operators, including XPL GmbH and McGregor Cory (now owned by Excel Plc).

Proffitt says he is extremely confident that DLC will live up to its expectations and remains remarkably sanguine about the rate at which the project will develop. His approach, he maintains, will be a measured one.

“While it’s a visionary project, it’s also an evolutionary one. We have the capacity for six runways but we will build them at the pace we need to build them. We’re not rushing out to build the biggest airport in the world.”

Mohebi Logistics, as an entity, may be less than a month old, but the Mohebi family has been in the UAE logistics industry since 1931.

Iain Gordon, General Manager, Mohebi Logistics

In September 2007, Mohebi Investments, an affiliate of the renowned UAE-based Zainal Mohebi Group, announced the launch of Mohebi Logistics, an Dhirams (Dh) 1 billion investment aimed at creating one of the region’s biggest supply chain companies. As part of this ambitious initiative, Mohebi Logistics will establish an Dh 200 million (m) state-of-the-art regional logistics hub spread over an area of over 51,000 square metres (sq m) in the Jebel Ali Free Zone.

This multi-temperature investment facility will be operational by January 2008. General Manger Iain Gordon has extensive experience in the international logistics arena, perhaps beginning in childhood when his father, an independent lorry driver, took him along while making deliveries.

In his professional career spanning over two decades, Gordon has established strategic partnerships in the logistics and supply chain sectors across various markets. His current responsibilities include management and development of Mohebi Logistics, mounting new growth strategies and overseeing the strategic direction and implementation of various initiatives.

Has the Mohebi Group always been in the logistics business?

The Mohebi Group had been engaged in logistics probably even before the term, in its current context, was invented. The Mohebi family started doing business 76 years ago. The UAE as we know it is just 36 years old.

Logistics? Seven decades ago?

The core business of the Group has always been retail and wholesale. Understandably, the way retail was conducted may have been different back then, but the basic logistics principles have been the same – goods were produced, goods had to be stored and then transferred to places where they are to be sold. In all instances, the key is getting what is required to the right place at the right time.

What makes Mohebi Logistics different from other players in the logistics industry?

Obviously, we have the history and heritage of doing business in this part of the world that few, or none, of our competitors can match. We have long-term relationships with more than 70 world-class brands involving more than 7,000 stock-keeping units (SKUs). This provides us with the solid foundation to look at the business from the point of view of our clients. We have always understood, for instance, that our clients require more than the traditional concept of just being given warehouse space and transportation. We provide solutions that allow our clients to concentrate on their business while we take care of all their logistics needs. This involves a partnership approach and the development of tailor-made solutions based on our recommendations as experts in the field.

The Mohebi Group may have been around for a very long time, but Mohebi Logistics is a new entity. Why did it take long to establish a dedicated logistics arm?

The Mohebi Group couldn’t have survived as long if it had been hasty in making crucial decisions. The concept of Mohebi Logistics was thoroughly developed based on our analysis of the market and its requirements. Once we determined that all elements are in place – that we were ready and that Dubai was ready as well – we moved fast.

Other companies may look at establishing businesses based purely on what they may stand to earn. We look at our trade as a way of making it easy for more people to come to Dubai to do business. We want to be instrumental in opening new options apart from traditional ones.

Artist‘s impression of Mohebi‘s Dh 200 million logistics hub

The unprecedented growth that the UAE, particularly Dubai, is experiencing now has brought additional challenges to your business. I’m talking about traffic jams, congestion and the like. For a business that relies on transporting goods from point A to point B, how are you equipped to face this challenge?

This relates to my earlier point of getting all elements in place. The Jebel Ali facility obviously plays a crucial role as the center of our logistics operations. The traffic issue is addressed by the establishment of satellite locations in the other Emirates from where we can conduct multiple executions.

We will make full use of technology in conducting the business. Technology will not just make our operations more efficient. More importantly, it will give our clients full visibility and transparency – essential but sometimes overlooked elements of the relationship between a business and its logistics solutions provider. We already have, and will continue to acquire, the latest technological tools that will grant us and our clients access to real-time information on the status of their goods, be it in transit or storage.

What do you think will drive Mohebi Logistics to be a leading player in the industry, not just in the UAE, but also globally?

Our Chairman, Dr. Zainal Mohebi has always given credit to the support extended to the Group by the rulers of Dubai and the UAE. Our CEO, Mohammed Mohebi, has stated clearly that our vision is one of building successful, long-lasting relationships based on integrity, commitment and responsibility. These, together with the expertise and commitment of our people and our management, drive us to succeed.

Equally important, our biggest reward is to see that we can contribute to the improvement of the margins and the growth of the business of our clients. That is a true demonstration of our value as a business partner.

FedEx may be flying high in the region and have a wealth of new aircraft in the pipeline, but Hamdi Osman, Senior Vice President of FedEx Middle East, Indian Subcontinent and Africa, is keeping his eyes firmly fixed on the ground

Hamdi Osman, Senior Vice President of FedEx Middle East, Indian Subcontinental and Africa

FedEx’s regional head Hamdi Osman may always have one eye on the sky, but his head is nowhere near the clouds. The straight-talking Senior Vice President is gearing up for the day when goods will travel from Dubai to Europe by road.

“The next war in the airfreight business will be on the ground,” he says with a confidence that belies the contradiction.

“Once you get the bottle-necks in Saudi cleared, then there’s nothing stopping you going through Jordan, Syria, Turkey, Germany and all the way up to the UK. If you can truck it from Dubai to Germany, you will probably be able to get it faster than through the Suez and Mediterranean – at half the cost.”

This summer, FedEx started putting that plan into action by expanding its operations within the Global Logistical Services bonded area at Bahrain International Airport.

FedEx added five additional trucking routes and made improvements to the facility, including a drop-off point for the FedEx World Service Centre. These changes provide easier access to customers needing to quickly deposit their shipments.

“The expansion signals the importance of Bahrain as major trucking gateway for FedEx to neighbouring countries,” says Osman.

“The extension is a direct result of the trust customers place in us, and the additional demand for the fast and reliable services we provide across Bahrain and the rest of the GCC.”

Paris CDG remains the main hub for FedEx’s Europe, Middle East and Africa (EMEA) division, with sub-hubs in Stansted, Dubai and Mumbai. It connects with Subic Bay and China eastbound and the global hub in Memphis westbound.

This arrangement has served FedEx well, although, with the Middle East and India booming, Osman is always looking to boost efficiency.

“A couple of years ago, there was demand on direct point-to-point between Asia and Europe and we used Almaty as an exchange hub – it saved us 25 minutes rather than coming into Dubai,” he says. “But Dubai will always be the main hub between east and west and this is because of the trade and its position between Asia and Africa. Dubai has become a gateway to India too – I say it’s now the ‘Hong Kong of China’.”

Dubai’s ongoing success is down to two reasons in Osman’s eyes – it is a major re-export hub, attracting goods irrespective of where they are manufactured, and it is also a magnet for sea-air movements, which can cut days, if not weeks, off delivery times.

The most recent boom has been further fuelled by the meteoric growth in the region’s construction business, affecting not only Dubai but also Bahrain, Qatar and Saudi Arabia.

“A lot of investment is coming back and this is one of the major driving forces in growth in the region,” he says. “If you look at the four integrators, everyone is in double-digit growth. We’re all benefiting. The key that differentiates us from the rest is we use our own flights, planes we land from CDG and on to Asia. No one else can do it on that magnitude. We have expanded into Iraq and Afghanistan and now, if you look at the map, Iraq, Qatar, Saudi – these are the emerging markets. You’d have never seen that kind of movement five years ago.”

Osman reels off facts and trends from a recent IMF report with the same ease one of the company’s 275,000 staff would scan a parcel: Saudi, the GCC’s largest consumer market, is up 60 points; Egypt is number one in growth year-on-year and cutting down the number of days it takes to establish business; Morocco is talking about zero rates clearance with the EU, and Tunisia will likely follow. Jordan is also doing well after signing a free trade agreement with the US.

But the GCC, for all its boom, has plenty of challenges at a macro level, principally with regards to common currencies, dollar pegging and variable tariffs.

“I’d probably be more of a champion of common tariff rather than common currency,” says Osman. “The tariff is really what makes or breaks our business these days. The UAE came up with the 4% rate on all products, and now 5%, which makes it much easier for our businesses – some companies still have 17,000 different tariff codes which makes it difficult.”

Increased competition is also being felt on the ground and in the air, with Empost recently muscling on in the integrators’ territory. “The market is large enough to have many new players, the only question I’d ask is ‘what is Empost really after when they grow up?’”

More pertinently, now that Empost has joined the integrators’ scene, Osman wants the 10% levy that express operators pay scrapped.

“We are the only industry besides tourism that has to pay [the levy],” says Osman, who started FedEx corporate life as a truck washer in 1978. “The reason why we paid the charge was because we were taking business away from the post. If the UAE has open skies and wants to be a central hub, then these are issues that have to be addressed. It’s the biggest concern of express operators.” From Dubai, FedEx operates six frequencies to Europe, with flights to Paris complemented by a subcontinental loop which encompasses Dubai-Delhi-Mumbai- Dubai.

Indian westbound trade is currently growing very fast and Dubai effectively serves as the West Asian hub. Singapore serves Asia proper, as India is yet to establish a major hub. Centrally located Nagpur has been mooted, but its infrastructure will take years to develop. Hyderabad is another possibility, but it is further south.

Another hot topic is the upcoming Dubai World Central. While clearly a fan of the project – “you have the combination of air, sea and ground in one unit. It’s not made for 2010 or 2015, but 2050” – Osman has yet to put pen to paper with any major investments. “We have marked our place but I won’t make a decision to build or not to build until the million dollar questions are solved – how are we going to connect, and how long is it going to take me between the two airports? If all the cargo is here, and all my business and customers are here, will that make sense? It might be easier for me to go to Sharjah. We all love Dubai, but it’s something that’s got to be looked at.”

FedEx is about to start receiving the first of a staggering 95 B757s, with deliveries starting from March/April next year. It has also signed an order with Boeing for 15 B777Fs last year.

The fuel-efficient B757 model offers greater payloads than previously offered by Boeing and Airbus, thereby providing better operational efficiencies. “I think the medium-sized aircraft will really help tremendously our hub and spoke network. We’re seeing more inbound demand from Asia to the Middle East, the outbound business hasn’t been there yet. But it’s going to come, especially with China announcing big investment with Africa.”

The fastest growing area of Africa is the central belt between Nigeria and Kenya, notes Osman, and he commends the Chinese for making commitments on the continent now. “I think they will yield the fruit of their labours there within three of four years and see more two-way traffic. Africa will be the next frontier after the Middle East.”

BUYING AND EXPANDING FedEx Corp has had a busy year on the acquisition front, snapping up the express business of the DTW Group, its joint venture partner in China, its global service participant PAFEX in India and Flying Cargo Hungary. It is also busy re-branding its recently acquired UK domestic express company, ANC, and all 2,000 vehicles and 3,000 uniforms will sport the FedEx logo by next autumn.

In March, FedEx expanded its International Priority Freight Service to an additional 39 countries within its EMEA region. With access to over 110 countries and territories this expansion increases express freight coverage to more than 90% of the world’s GDP. Customs clearance is included in the transport rate, and shipments are backed by a FedEx Money-Back Guarantee.

This priority service is supported by leading-edge technology, which allows customers to increase efficiency in supply chain management, and provide complete transparency into the movement of goods.

The FedEx Powerpad wireless technology is also being rolled out across the UK, Belgium, Spain, Germany, Italy and France, as part of a global plan to deploy 50,000 devices to FedEx Express couriers in more than 60 countries this year. The trendy pad enhances customer service by providing near-instant wireless access to the FedEx network. It enables couriers to send and receive instant information when away from their delivery vans.

FedEx has invested more than $200 million globally in the last five years in new wireless technologies and service implementation. The company continues to develop and use solutions that improve reliability and productivity, and make shipping information readily available to employees and customers worldwide.

The company pioneered the use of wireless technology for shipping more than 25 years ago when it created its own private radio network, one of the world’s largest. FedEx was the first to offer real-time package-tracking and drop-off location information via most types of PDAs and wireless phones. And with Osman at the helm, FedEx is likely to continue to pioneer.

Christa Soltau has a formidable track record opening airports. And now she’s relishing the hot seat at Dubai World Central

Christa Soltau, Managing Director, Dubai World Central International Airport

Christa Soltau can’t stop smiling and who can blame her? We’re sitting in the sumptuous fifth floor office of Dubai World Central International Airport, overlooking the stunning Emirates Golf Club and ever-changing “New Dubai”.

And the view inside isn’t bad either. The large open plan office, which resembles a small exhibition hall, contains a soothing water feature near the entrance, a mock design of the airport’s 92-metre air traffic control tower, as well as three huge model impressions of the 140-square kilometre (sq km) facility that is rapidly taking shape in Jebel Ali.

Soltau came on board as senior manager of airport ground operations in April, after admittingly “falling in love” with the project two-and-a-half years ago. Now she arguably has the biggest job in UAE aviation, managing director of the new DNATA/Dubai

World Central joint venture that will oversee the airport’s operations.

“I opened Munich and Athens airports and this is my third,” she says. “This project is outstanding, I really feel honoured. I’m used to working in a difficult field but so far it’s been very smooth and well organised.”

Arriving fresh from Dusseldorf Airport, where she was general manager of the Air Cargo Centre, Soltau has more than 20 years of industry experience, mainly in operations, but she confesses that her heart is in cargo, because it is “more lively”.

That message is immediately apparent when you look at how much space has been assigned to cargo at Dubai World Central. In fact, the first plane to touch down will be a freighter, most probably in the fourth quarter of next year.

“Most airports concentrate on the passenger and forget about the real business, which is cargo. The main focus of Dubai World Central is cargo and it’s the first of its kind,” she says.

The airport has a new concept which is designed to integrate handling, air cargo operations, and Dubai Logistics City, all of which is linked up by a bonded road to Jebel Ali port. “We will have a dedicated runway for cargo, close to the cargo terminal, probably by about 2015.”

Shipments will be broken down at a 38,000 square metre cargo terminal, which is close to the runway and adjacent to Dubai Logistics City (DLC) and will be capable of handling up to 600,000 tonnes annually.

“Once this first cargo warehouse has reached its limits we have space for six more warehouses totaling a capacity of four million mtonnes. In addition to this Emirates and Integrators have a capacity of eight million (m) tonnes for their own facilities which give us a total capacity of 12m tonnes.”

Dubai Logistic City is located right next to the cargo warehouses and is the location for forwarders and logistic companies.

While declining to elaborate on how many freight companies are signed up at DLC, she says she believes the facility is growing faster than expected. “There’s a lot of interest and people are prepared to sign the contracts. We’re starting our focus with DLC and the Office Park so companies can settle down there. If, at a later stage, they want to move to Commercial City, they are free to do so.”

Dubai Logistics City offers tenants not only offices but also shared warehouses, or they can build their own facilities, while the whole airport serves as a free zone umbrella, giving companies 100% ownership.

“Customers can choose their own requirements and how they want to set themselves up,” she says. “Reservations have been good, but at this size of the project of course it’s not fully occupied yet.”

Soltau believes one of the key cargo selling points is not only the integrated transfers but also the assembling options open to shippers. A dedicated road link with Dubai International Airport is under discussion.

“If a customer has a component from China and another from Indonesia, they can bring it in by air, assemble it here and send it on, or it can come in by sea and out by air. Dubai has low labour costs so if you want to assemble goods, you don’t have to bring it to Europe because it gets too expensive. There are so many cargo airlines that fly here so you have choice with schedules.”

The final main passenger terminal, planned at the very centre, will handle up to 120 million passengers, while outlying areas are assigned to Commercial and Residential Cities, which will house up to one million people, Dubai Exhibition World, Aviation City and even a golf resort.

And building has already started. “The instrument landing system has been installed,” says Soltau. “If you go out to the construction site now, you can feel it’s becoming an airport. We are ready for the next decade.”

All of this should mean that the skies above Dubai World Central will soon be busy with traffic. Soltau has no immediate concerns about the environmental pressures, saying new-generation aircraft are quieter than your average turbo prop.

“The discussion of airport pollution is nothing compared with what happens elsewhere. Cars are bigger polluters than aircraft.”

Over the past three years, the Middle East and North Africa (MENA) region has experienced an unprecedented rail boom. Rapid population growth and increasing road-traffic congestion have encouraged governments to take a serious look at light and mass transportation, leading to over $30 billion worth of investment in the industry.

In the last 12 months alone, construction on the Dubai Light Rail project, also known as the Dubai Metro, has gathered pace. Tenders for the Saudi Landbridge project have also been issued and awards have been made on the Kingdom’s multi-billion-dollar minerals railway.

An increasing number of ambitious public transport projects are being developed and launched in MENA. In the coming months and years, a combination of metro, rail and bus systems, along with enhanced road networks, will become a reality. With rapid population growth in countries throughout the region, development is set to continue for many years.

A railway system linking the United Arab Emirates, Oman, Qatar and Bahrain could be in place within three years, said Mohammed bin Ubeid Al Mazroie, the GCC Assistant Secretary-General for Economic Affairs, during a lecture at the Information Affairs Office of the Deputy Prime Minister in Abu Dhabi recently.

Explaining the GCC railway project, Al Mazroie said, “The project is aimed to achieve coordination, interconnection and integration among the GCC member states in all fields. This will enhance their unity and strengthen relations and cooperation among their peoples.”

UAE The UAE Road and Transport Authority has devised an ambitious plan to increase the uplift share of mass transit in the number of trips to 30%.

This includes the implementation of the Dubai Metro project at a base cost in excess of Dh 15.8 billion. Abu Dhabi’s master development plan includes an inter-city train network and metro lines. The plan, aimed to develop the emirate up to 2030, will see an expansion of the transport network to accommodate the expected growth of Abu Dhabi’s population to three million (m) by that year.

“Intensive work is needed,” says His Highness Sheikh Khalifa bin Zayed Al Nayan, President of the UAE, “to develop the UAE to the level of the most advanced nations.”

The UAE is finalising a 350-kilometre (km) national railway network plan to ease road congestion, according to Sultan bin Saeed Al Mansouri, Minister of Government Sector Development. The track will link Abu Dhabi to the east coast and will eventually connect to the proposed GCC-wide railway network. The minister says the UAE government wants to reduce the number of container trucks that ply between the emirates and ease the trucking congestion by creating a railway system for both passengers and cargo.

Saudi Arabia This November, Saudi Arabia will receive proposals from four consortia for the construction of its long awaited railway project. Abdulaziz Al Huqail, President of the Saudi Railways Organisation (SRO), says the project includes construction of a 950-km railway from Jeddah to link with the existing Dammam-Riyadh railway, a new 115-km line from Dammam to Jubail, as well as numerous projects to upgrade Saudi’s existing rail network.

The project is expected to add significant value to the national economy, and will serve all GCC states. Saudi Arabia’s Ministry of Finance has also awarded a $765m contract to a group comprising Mitsui & Co. Ltd, Barclay Mowlem Ltd. and Al Rashid to provide civil and track work services for a 508-mile stretch of the new North South Railway line.

GCC Rail System The six-member Gulf Cooperation Council (GCC) is studying the possibility of constructing a rail network that will link its member countries. The rail network, estimated to cost $6 billion (SR22.5 billion), will later be expanded to cover other Arab states.

An initial study, presented at the recent GCC summit held in Manama, proposes construction of two lines. The first will be 1,970-km long, stretching from Kuwait to Saudi Arabia, Bahrain and through a bridge to Qatar, and from Doha to the UAE and then to Muscat. The second line, 1,984-km long, will start from Kuwait and pass through Saudi Arabia and the UAE, ending in Oman. Connecting points will be in Bahrain and Qatar.

The rail track will run along Eastern Coast of the Arabian Peninsula, linking the six GCC member states from Kuwait to Muscat, running through the industrial ports and areas in the Arabian Gulf.

The network will also connect the holy cities of Makkah and Madinah in Saudi Arabia to all GCC nations, facilitating those who visit the cities for holy pilgrimage.

The study, conducted by the Al Khaleej Financial Study Center in Kuwait, outlines the overall benefits of the project and suggests that the railroad could be connected to seaports in some countries. Extensions could be made into inner parts of the GCC countries by their governments or the private sector. The initial study also has details on cost and positive effects in regard to economic and political impact and points out that the railroad will eliminate delay at border checkpoints.

The key advantage of the network is that it will link the Arabian Gulf with the Mediterranean Sea for passenger and cargo movement. Officials and experts agree the railroad will no doubt boost the region’s economy. The railway will also be a milestone in the history of Gulf unity.

FINANCING OF THE PROJECT The GCC railway has a wide range of financial options, including private sector investment through setting up of stock companies and government funding. The council is expected to name a reputable and experienced consultant soon to conduct a more elaborate and detailed study of the project. This study will deal with the size of the project, its complications and the required extent of cooperation of the countries involved. The cost implications, according to Mohammed bin Ubeid Al Mazroie, the GCC Assistant Secretary-General for Economic Affairs, will be the same for all the nations involved.

Initial estimates are that the project will cost between $5.5-6 billion and will take up to four years to complete.

The railroad project is not anticipated to negatively affect other means of transportation, particularly aviation, because population and cargo movement among the GCC countries is growing rapidly. The region has continuously registered the highest growth in the world, resulting in passengers having to wait up to two days for air bookings during seasonal rushes.

Saudi Arabia has offered to carry out a feasibility study of the GCC railway project, as the project would help the flow of people and goods within the GCC. The study, which will include bidding proposals, is expected to be completed in six months.