Brian Shepherd, Senior Vice President, Al Tayer Logistics

Gucci handbag. Check. Pucci jacket. Check. Jimmy Choo shoes. Check.

No, this is not an article about the day in the life of a fashionista but about Brian Shepherd, Senior Vice President, Al Tayer Logistics LLC. Part of this group, after all, is Harvey Nichols, one of the world’s most stylish stores. Sheperd happens to be the behind-the-scenes-guy who makes the life of a fashion obsessed diva complete.

Sheperd is a logistics industry veteran of 40 years, so he knows exactly where he’s coming from and where he’s going. “The basics of logistics are the same in any industry,” he says. “It’s all about how you deal with different products, whether it’s coffee or clothes, you have to know how to manage inventory, move stock in the best possible way and handle costs.”

But the logistics of luxury fashion must still be different. Shepherd agrees. He says, “Fashion is treated very differently than other businesses, because we’re talking about high value luxury products which are very fast moving.” Other lifestyle brands like GAP, Banana Republic, have four seasons – Spring, Summer, Fall and Holiday. So essentially, warehouses are stocked up with merchandise for one particular season which are pushed out into the store in two phases, for example, Summer Phase One and Two. Summer One is the biggest push from a marketing perspective. Next follows Phase Two which lasts till almost the last bit of summer.

And unlike luxury brands, stocks of any particular season of lifestyle retail brands are purchased approximately six months in advance. Stock for Holiday 2009 (approximately from October 2008 to January 2009), for example, is purchased in January or February of 2008. This gives the team a large gap and ample opportunity to organise themselves and start bringing the first part of the product to the stores around September or October 2008. The launch and marketing happens by November and the range lasts right through December and January 2009.

Luxury designer fashion is changing all the time. This sets it apart in treatment and handling. Fashion savvy consumers want to find a new collection each time they go to a store, so they can be the first to be seen wearing a new piece of clothing. Buyers at Harvey Nichols buy selected styles in small quantities from suppliers selected by the buyers for the store. Harvey Nichols has a large number (close to 400) of suppliers. Bigger, more established brands like Bottega Veneta and Gucci may require larger orders since a number of these brands are exclusive franchise partners with Al Tayer Insignia and therefore buying is consolidated at a company level.

Buyers travel to brand headquarters a few times each year to select a range of products suitable for the region. These brands can be relied upon to provide a running range of styles to the buyers who have a certain value at their disposal and are very specific about their purchasing requirements. Buyers also continuously visit high fashion clothing fairs where they meet with new suppliers whose designs are of potential appeal to the Middle Eastern customer. Buyers are also regularly on the lookout for new suppliers from a variety of sources. This makes for a variety of stock in the store.

Accessories such as handbags are purchased in even smaller quantities. “We only purchase a limited number of different styles in handbags as that is the kind of business we do and also, here in the Middle East, we do not carry stock of fashion brands,” comments Shepherd.

Throughout the season, Harvey Nichols introduces new products so as to be up to date with the trends in the other fashion capitals of the world. This cross stocking gives UAE consumers the opportunity to own the latest designs from around the world. Almost everything is air freighted so as to ensure that fashion lines in the Middle East are usually launched at the same time as the rest of the world. The cost of air freighting is still very low compared to the value of the products coming in. Within a week from the time the stock arrives, it is processed through the warehouse and arrives at the shop floor.

And what happens to stock that does not get sold? “We have two major sales before and during DSF (Dubai Shopping Festival) and around DSS (Dubai Summer Surprises),” replies Shepherd. “To satisfy customer demand we have the option to move stock around from one store to another depending on demand. Whatever else is still left is sent to the outlet mall.”

Store in Style

The warehouse that stocks Harvey Nichols’ merchandise is in the Al Quoz Industrial area and is just one of the warehouses operated by Al Tayer Logistics. It is not exclusive to Harvey Nichols and services all the companies luxury brands. Purchased in 2005, it was converted into a distribution facility by the Al Tayer Logistics project team. All Al Tayer warehouses are temperature controlled.

As soon as stock arrives, it is unpacked, put on hangers, priced, security tagged and sent to the store. The store conducts further value added services such as steaming, but because the stock is moved so quickly it’s hardly subjected to any creasing. “Everything is treated with great care,” says Shepherd. “We ensure that all merchandise reaches our stores in perfect condition.”

Shipments arrive in Dubai by air from over 500 suppliers located in countries mainly in Asia, Europe and the Americas. The 52 staff members segregate shipments by store, scan them into the WMS system and place them in pallet storage by reach trucks, using hand held RF (Radio frequency) scanners. Within three to five days, the pricing is complete and the stock is withdrawn from storage and transferred to a processing area where the individual merchandise is priced and security tagged and made store ready. Merchandise is then scanned out of the warehouse and transported directly to stores within the average seven day window.

Fashionably challenged

We do face certain challenges in the region,” says Shepherd, explaining that the Middle East customs authorities require a country of origin statement for every item coming in. “As a number of the origin countries do not require this statement,” adds Shepherd, “some suppliers may face a challenge giving us a country of origin statement. This is an issue that can affect our overall efficiency. Although, this is not that much of a problem in Dubai.”

Another issue is organising the international supply chain. Shepherd says that some countries do not have regular flights coming into Dubai, hence they have to fly their merchandise through other centres, consolidating it in central, easily accessible ports, for example. Because the quantities purchased are generally small, however, bringing the supply chain together can be a challenge. “Dubai as a major international airline destination is not that much of a problem because now almost all major airlines come here, but some markets in the region can pose a difficulty at times and offer more of a challenge for our stock, as it may take longer to reach the stores,” he says.

Al Tayer is mulling expansion across various Middle East markets. Moving into Saudi Arabia could prove to be even more challenging as the kingdom’s customs procedures are traditionally stricter than other Middle Eastern countries. Efficiency is also a problem area there. “They’re not as efficient in Saudi Arabia as we are in Dubai for clearing shipments,” says Shepherd. “Our air shipments arriving in Dubai get cleared within a day of arriving. We’re also a known and accredited Platinum customer of Dubai Customs, which gives us the validation of having excellent, certified products.”

The portfolio

Al Tayer’s attire section is divided into two categories: Al Tayer Trends, which are the mass market brands like Gap, Banana Republic, Mamas and Papas, At Home, Texture and Galler Chocolates. The second category is Insignia. Labels that fall under Insignia are Gucci, Giorgio Armani, Emilio Pucci, Jean Paul Gaultier, Sergio Rossi among others. As if being the biggest high value fashion brand retailer in the UAE was not enough, expansion is being considered all over the region.

If anyone knows air cargo, it is Daniel Fernandez, Secretary General of the International Air Cargo Association. And, although he remains positive, he seems to know tough times are ahead.

“If you’re looking for leading indicators of economic activity in the future, air cargo is a pretty good indicator,” he explained during an interview at the International Air Cargo Forum and Exposition in Kuala Lumpur last month. “Obviously things are a little slow right now, because the world economy has slowed down because of the credit crunch. Companies are pulling back because consumers are pulling back, and then air cargo starts to go down.”

Daniel Fernandez, Secretary General, International Air Cargo Association

Perhaps many in the industry could already see it coming. While regional carriers boasted 12.1 per cent growth, international freight traffic dropped by 0.8 per cent in June, the first decline the industry has seen since May 2005, according to Giovanni Bisignani, IATA Director General and CEO. “The airline sector is in trouble,” he warned at the time. “Losses this year could reach US$6.1 billion, more than wiping out the US$5.6 billion that airlines made in 2007. Falling demand and rising costs are re-shaping the industry.”

In the Middle East, many who are not yet feeling a drop in demand, seem certain that they will. “The impact will come by January or February,” says Mohy Shenashen with Egyptair Cargo. “We’re just expecting it, because we can feel it in Europe. Demand is going down.”

Des Vertannes, Executive Vice President Cargo, Etihad, was keeping positive at the IACA World Air Cargo Forum in Kuala Lumpur. “For Etihad, I am pleased to say that because we have so many projects in Abu Dhabi, the UAE and GCC and because we are part of everything on the Abu Dhabi 2030 Plan, we haven’t got time to show any compassion,” he said in an interview. “We’re too busy coping with what is going on in our world. At the moment, we look as if we are immune to what is going on in the rest of the world.”

Other carriers also aren’t so concerned. “Royal Jordanian is a small niche player, so we are not going to big volume markets like China,” says Ingo Roessler, Vice President Cargo, Royal Jordanian Airlines. “The biggest drops are in those places. Also, to and from the USA we have a small capacity on our passenger services. I would reckon that we will be able to fill that come hell or high water, because there is sustainable demand throughout the year to and from Jordan.”

Oil prices

Emirates is insisting its worst is over. The Dubai-based airline announced an 88 per cent drop in net profit to US$77 million for the six months of its current financial year ending last September 30 from US$643 million during the first half of 2007, but blamed the losses on high oil prices. “Crude oil prices averaged US$122 per barrel for the first six months of the financial year, up from an average of US$67 for the same period last year, whilst the differential between crude and aviation fuel was also up from an average of US$16 per barrel,” the company said in a statement.

The sudden drop in oil prices should solve the industry’s problems, right? Not necessarily. Airlines who hedged over the past year are still paying for the prices they hedged at, and cannot afford to bring their prices down as quickly as oil prices fell. An airline which leveraged fuel at US$100 when it was trading at US$140 in the summer, was screwed in October as oil prices fell to the US$50 range this month. “Some airlines have hedged at very high prices,” says Roessler. “The actual oil price is down and everyone keeps looking at the news saying, ‘You have to reduce the prices!’ But we’re still paying for the hedged prices. Thankfully RJ only hedged in a moderate way. But we still hedged and so did everyone else.”

“If you look at some of the major American carriers, we are talking about losses due to hedging in the area of half a billion dollars,” he continues. “This means that the airlines are not able to pass on more benefits to the market.”

The future

“The oil price is falling, but what we save in fuel, we lose in revenue,” IATA’s Bisignani told the crowd at the Annual General Meeting of the Arab Air Carriers Association (AACO) in Tunis. “This industry will lose US$5.2 billion this year.”

“Even the Middle East is not immune,” he added. “The region’s carriers posted 18.1 per cent traffic growth in 2007. This year, August growth plummeted to 4.3 per cent. Profits of Middle East carriers will fall from US$300 million in 2007 to US$200 million this year. Only a handful of carriers will be profitable, while the majority bleed red ink. The region’s fleet is set to double to 1,300 aircraft over the next decade as we enter a period of global economic uncertainty. The challenge of matching capacity to demand will be difficult.”

He also issued a harsh warning to country’s wishing to privatise their airports, for example Jordan, Saudi Arabia and Egypt who have given concessions to run their airports to management consortiums. “Just look at what happened in Quito. The concessionaire ignored ICAO principles and raised rates by 128 per cent to pre-finance airport construction. You don’t want this type of monopoly abuse here. As you privatise, strong independent regulations to enforce ICAO principles and delivering cost-efficiency are a must.”

Bisignani called for MENA governments to offer greater commercial freedoms for air transport. “Airlines need to operate like any other business – with a level playing fieldand the freedom to access markets and global capital,” he said. “In MENA, we have seen pockets of progress, including open skies agreements and domestic liberalisation. Now the region’s governments must think bigger and act faster.”

Yet Bisignani’s speech left room for hope. “The industry crisis highlights the need for change,” added Bisignani. “MENA has some great advantages – strong oil economies, top notch infrastructure and fuel-efficient fleets. The crisis is a turning point. We must deliver significant change with efficiency and commercial freedoms. If we can do that, I am confident that we can weather this perfect storm and emerge as a stronger and more profitable industry.”

Others seem hopeful for the long run as well. Boeing, in its World Air Cargo Forecast 2008/2009 has said that world air cargo growth will expand at a 5.8 per cent annual rate over the next two decades, with worldwide air freight traffic tripling through 2027.

“Our research tells us that long-term economic growth, freighter fleet renewal and moderating jet fuel prices will stimulate air cargo traffic growth,” said Randy Tinseth, Vice President of Marketing at Boeing Commercial Airplanes. “These positive prospects will prevail despite the industry’s concerns about our current economic challenges. World GDP is projected to average just higher than three per cent during the next 20 years.”

Fernandez agreed. “Things are slow now, but there is a difference between a structural change and what we would call a cyclical change,” he explained. “In other words, there are things that fundamentally change the industry, like 9/11, where from that point on we had to take on the additional burden of security. Fundamentally, that changed the industry; whereas economic downturns are cyclical. This is not an industry in retreat.”

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.

David Christmas is Regional MD, Middle East, DHL Exel Supply Chain

This has been an exciting, invigorating, successful, albeit sometimes challenging year for most players in the Middle East logistics industry.

Growth has continued at a pace, and most companies have witnessed a double digit increase in volumes; whether through organic growth with present customers or new growth as more and more companies requiring logistics services enter the region.

This growth has meant that the ‘war for talent’ has increased, and the movement of managers has been at times quite fluid, particularly between the larger players; as they try to attract and retain the very best in the business. A welcome (though still too small), growing interest in the industry has been evidenced from local communities – helped by an increased number of educational courses, graduate schemes and inhouse training programmes.

The infrastructure in the region continues to creak at certain ‘touch points’, with road and port congestions increasingly becoming a thorn in day to day operations, as too is the availability of vehicles. However, it is clear to see that most countries are working very hard to address this and many initiatives are well underway to alleviate the issues.

The oil price fluctuations have clearly played a role in the movement of prices (both up and down) and have added some complexity into the decision making process, on how and when to move materials and goods. I believe the majority of companies have tried to minimise the impact of these price movements on their customers, but clearly there have been some associated effects.

The green agenda, has definitely been on the rise; globally, regionally and I am pleased to say broadly within the industry – which by its very nature is a large contributor to the regional carbon footprint. Discussion and moves towards carbon neutral warehouses and reduced emissions from vehicles (on road, sea and in the air), can only be viewed as positive.

Interestingly, the link to cost reduction is adding its own commercial impetus for change.

Pleasingly, the profile of health and safety has also increased, with a number of companies working hard to improve standards and awareness. A number of the more enlightened customers I know have already tied health and safety performance to financial return and penalise or reward their logistics supply accordingly – the oil and gas industry certainly seems to be leading the way on this.

One very clear trend is with the larger multi-national customers. They now expect the same standards, processes, behaviours and performance throughout the globe. If they have proven a successful warehouse management system (WMS) in say Dallas, Texas, they expect the same system and the same smooth implementation in Dubai. If they have global positioning systems (GPS) on the vehicles that are operated for them in Rotterdam, via a control tower platform, they expect the same for their fleets in Riyadh. They also expect to see the same high calibre of people, health and safety standards, processes and employment policies.

Technology continues to play an increasingly critical factor offering complete visibility for customers and affording accuracy, flexibility and a speed of goods movement that helps support significant cost efficiencies. And although not all the players investing in large new builds have gone the ‘automation’ route, consideration is certainly being given more seriously, particularly with the increases in labour rates and supervisory salaries.

Partnership is perhaps also being taken more seriously between customer and supplier. For years there has been ‘lip service’ to a move from transactional relations to partnership and strategic sourcing. However, more and more case studies from across the region and from within the industry are proving that the value created here can far outstrip that of the more traditional approach.

There is no doubt that more and more customers are asking logistics companies to deliver ‘value’ rather than just minimum cost. This, I believe, is in part due to increased maturity and understanding of what an improved supply chain can really deliver for a business – end to end, and also in part due to the drive to maximise market share as the regional economies continue to grow.

Competition has increased as well as the demand for both excellence and value. Whether it’s for a retailer, manufacturer, oil field supplies company, or public sector works project, the pressure has always been on doing it better, faster and more efficiently. This has been good for the industry; and it means we have to remain focused on delivering the very best service for our customers and adding tangible benefit to their top and bottom lines.

Within many of the global industry companies, the Middle East has been held up as one of the ‘shining lights of opportunity’, where ‘anything is possible’, and their associated interest and commitment has continued to grow – many investing considerably in increased footprints.

As the success of these more established industry players is witnessed by others, it has encouraged a number of new entrants into the regional market. Time will tell how successful they will be, but certainly they are doing their part to raise the profile of the industry, and to increase the competitive element in the region.

The tremendous investments in infrastructure, particularly with the advent of Dubai World Central including Al Maktoum Airport, Dubai Logistics City, Dubai Industrial City and the opportunity afforded by Jafza, (the only free zone in the world to be situated between an airport and seaport), offers infinite further possibilities for suppliers and customers alike.

It’s true that the fallout from the global credit crunch has yet to become clear, in terms of its full impact on the region. What is certain, is that 2009 will be a harder year for consumers and businesses. This is likely to have a knock-on effect for the logistics industry, but the upside is that it will further increase focus and innovation.

The year has been a successful one for the industry as a whole, and the rate of innovation and developing maturity is truly impressive. However, there are still many areas for internal improvement, external value creation and indeed further growth.

With the prevalence of a struggling world economy, 2009 should perhaps be greeted cautiously by some, but for those willing to lead the logistics agenda and focus on their customer needs (both short and long term); another exciting and rewarding year lies ahead.

The Hub

With the opening of Danzas’s massive logistics facility in Dubai, companies can use the centralised location to reach out to clients all over the world, reports Casey McFann

With the global freight market set to reach US$1.4 trillion by 2020, and the Gulf imports and exports reaching US$320 billion at the end of 2007, Danzas’s new facility will be an essential addition to the expanding GCC market.

The 80,000 sq metre facility, at the equivalent of 11 football pitches, the largest of its kind in the Middle East, is said to offer the perfect platform for companies to profitably leverage their supply chains using the new hub as a global gateway.

The facility, with a built up area of 54,000 sq metres, is fully air-conditioned and includes 6,700 sq metres of office space and an 8,000 sq metre temperature- controlled life sciences distribution centre. The building was constructed using 3,000 metric tonnes of steel and 12,050 cubic metres of concrete and is equipped with world-class security infrastructure that will be certified under the Technology Asset Protection Association (TAPA) guidelines.

The company says using advanced, scalable technology platforms and strategic warehouse management solutions, combined with an environmentally friendly green data centre, will ensure customers accuracy, flexibility and a speed of goods movement that should support significant cost efficiencies.

“The Gulf is ideally positioned, with access not just to Europe, Africa and Asia, but also to the fast developing Indian subcontinent and its huge manufacturing output. Our global experience of aligning logistics services with trade lanes will be further enhanced by the future benefits of operating from the only free zone in the world to be located between an airport and a seaport,” explained Hermann Ude, CEO, DHL Global Forwarding, Freight.

Organising events, congresses, conferences entails having everything in the right place at the right time. In order to execute successful events, Middle East based organisers are juggling with a variety of logistical challenges.

Imagine the logistics involved in the grandiose opening of the Atlantis hotel last month. The organisers of that event must be very pleased with themselves, though, since everything went according to plan.

For things to run like clock work, planning is key. Vishal D’Souza, Director – Operations, MCI Middle East says, “When a client approaches us for a congress, we have what we call at MCI a Product Organigram. This is a programme showing the client the different levels/components of services within a project. It’s just like setting up a new business.”

Vishal D’Souza, Director – Operations, MCI Middle East

MCI’s modus operandi in creating successful congresses such as FIATA is getting an idea of what the client has been used to in the past. D’Souza says, “We need to understand what they’ve done in the past, how have they operated or who they were working with and what was the structure being used previously to see if they are comfortable with the existing structure or if we need to create something new for them. Our focus here is if it is a new client, we do not want to do things too differently than what he/she is used to in order for the client to have the comfort level with us.”

MCI’s key focus is doing business as a professional congress organiser (PCO) although events also are very much part of the family as congresses have a number of social events and parties all linked into them. Clients usually contact MCI a year or six months in advance. MCI then sits with them to learn the way the client wants the congress to be executed presenting them with a breakdown of costs depending on the number of delegates expected to attend.

Activities typically executed by MCI when it commits to creating a congress include: sending invitations to delegates, organising registration of delegates with the appropriate number of MCI staff, pre-event communication, hotel procurement and management, onsite logistics, VIP and speaker management, sponsorship issues, the actual exhibition, creative production, transportation, social events and technical tours.

Challenges All of these components require a large percentage of logistical back up. Having extensive international and local experience, the challenges MCI faces are related to contracting of hotels/venues. “There are a lot of congresses that are keen to come to this region but there are no congress centres,” says D’Souza. The Dubai International Convention Centre (revamped in 2003 for the IMF) is the only dedicated exhibition centre in Dubai. “If you look at their calendar of events, there is no chance of getting availability for the next four to five years,” he continues.

But there’s hope. “There is a new convention centre coming up at the Jebel Ali airport, the Dubai airport free zone is planning something, so there is a lot of scope for conferences yet to come,” says D’Souza.

Challenges are many in the area of contracting. “Clients are not used to having to come to this part of the world and booking about 300 rooms in a hotel one year in advance and having to pay a 50 per cent deposit of the total cost to book their rooms because this doesn’t happen in Europe. The inventory of hotels in Europe is so large that hotels benefit when you make a large group booking as for that period of time they don’t have to worry about selling rooms because they are usually not running on full occupancy.”

Procurement is a way out of this. By acquiring long term contracts with hotels, transportation companies, F&B, catering and supplies reduces costs as well as establishes a two way benefit scheme.

The glamour quotient The Talent Brokers have been around for 30 years in Dubai. Having organised a number of concerts in Dubai and other regions, they know organising events like the back of their hands. Padma Coram, Managing Director, The Talent Brokers, says, “Organising events such as the ones we do is all about trial and error. I don’t think any textbook can give you the answer for it. Managing logistics is something you have to experience your self and be consciously doing what we do. You need to be passionate and know your territory very well. It doesn’t matter if you’re the biggest promoter in London, you come to Dubai and everything is different. People are different, the location is different, permissions and procedures are different. Also, just because an event works in India it might not work here, you really need to know your land, you need to know the pulse, the heart of the project.”

From left: Padma Coram, Managing Director, The Talent Brokers with Luciano Pavarotti and HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai and in the other picture with husband Richard Coram and Indian actress Kareena Kapoor

The biggest event organised by The Talent Brokers logistics wise was the Power Boat Race concert featuring Amr Diab way back in 1988. Being a free concert, Coram says they had about 60,000 people who attended that concert. “It was huge, probably a majority of the UAE population at the time came for it!”

Having concerts for 80,000 to 90,000 plus audiences in Dubai is simply not possible she says. A large concert with such capacities can happen in India but never here. “Last year, we had about 15,000 to 17,000 people who came to watch Elton John live in Abu Dhabi.”

Coram’s team is well-versed with organising such large open air concerts because having the hard earned experience helps in quick organisation. “It’s like working on a ready template but with different subjects each time,” she says, “we’ve done it so often.” So although she doesn’t have a permanent team, she has what she calls a permanent part-time team of companies to whom she contracts these tasks.

“It’s like setting up a city for a day and then taking it apart. We need to construct the entire stage area with the green room, VIP Lounge, refreshments are (sometimes artistes come with 200 people of their own and organising the logistics for their needs such as transportation, entourage, their own private jets and cargo planes has to be arranged), seating area, toilets. I often describe my job as that of a construction worker or toilet maker as we even have to make the drainage for the toilets,” she chuckles.

Challenges “In this country, my biggest challenge is a lack of a venue, lack of infrastructure, lack of a common location, traffic. Everything to do with an event that takes us all the time to manage such as facilities, generators, electricity that we don’t have because there is no permanent location. It’s my biggest challenge because we spend 90 per cent of our time constructing these facilities for a concert when we have to concentrate on other things such as the show itself. And, trust me, that is an enormous amount of work on its own. We seem to be concentrating on creating infrastructure and facilities of the country which we needn’t have to be doing,” she says. She likens her job to building an entire theatre to show one movie for one night and then taking it apart.

“After an event is over, we get blamed for the facilities or lack of them such as parking which wasn’t suitable or the traffic getting in and out of the venue. We aren’t responsible for that and shouldn’t be the ones to be blamed,” she says. “Unless there’s a venue, event logistics in the region will continue to be a nightmare. The venue cannot be built by a private company it has to be arranged for by the government. The way I see it, organising logistics for a country is about thinking of the future, it’s not about satisfying the needs of the present but anticipating the needs of the nation 70 to 80 years from now. It’s about respecting the people who reside in a country and envisioning their needs in advance, that is my take on planning logistics of a country.”

From its wide use on toll ways, to its extensive use in libraries to track, borrow and return books, to tracking products, improving visibility and also reducing inventory in the fashion industry, RFID is the technology of today and the future.

At the recent Arab-RFID 2008 conference, delegates from a variety of industries converged to share information about how RFID was being used in their respective fields to yield significant benefit and enhance overall effectiveness.

Daniel W Engels, Chief Technology Officer, Authenticrypt says, “RFID is going to enable a revolution in the medical industry in how we are going to take care of people.”

A shortage of nursing staff is commonplace in all hospitals. With RFID, nurses will be able to do their jobs more efficiently and have more time to care for patients. Since RFID enables greater asset management and efficiency, it makes it easier to find IV pumps, beds, determine correct patients, freeing up time for a nurse. This leads to better management, better monitoring of drugs being given to patients reducing patient errors, pharmaceutical errors, medical errors which happen in hospitals and in some cases can have lethal/life altering effects on patients.

Mistakes happen directly due to human error. Human error occurs if nurses are over worked and if there are no strict and regular checks as sometimes errors can also be caused through the system. “RFID can automate and take the human completely out of the loop,” adds Engels.

Another example where RFID can be of great use and benefit is in the case of implants. Implants such as pacemakers and their batteries need to be replaced in a timely manner. Stents are implanted in arteries to expand and push it open. They are medicated in order to reduce the inflammation caused by the blockage. One of the biggest causes of re-blockage of arteries typically within six to 12 months is scar tissue which starts forming on the ends of the stents causing another heart attack. The only way to know what is happening inside the artery is to put a catheter and check. Being a long procedure many doctors do not usually go through with it so effectively another heart attack could prove the re-blockage! If a RFID pressure sensor is put on the stent, a reader will be able to detect a change and would be able to point to doctors to check on the patient’s heart.

Tyres

As diverse as tyres are from the medical field, RFID is being used to identify tyres for transport fleet managers making fleet management easier.

RFID being a hard chip seems to be out of place in flexible and bendable tyres, not according to Patrick F King, Global Electronics Strategist, Michelin. He says, “B2B industries like transportation companies with a number of trucks, airlines and construction vehicle companies have a potential business benefit. I don’t know if passenger tyres will ever have RFID because of the cost factor involved.”

Michelin is cautiously moving forward to a place where RFID in tyres will be widespread and they are mitigating a risk by wilfully releasing the research they are conducting on the use of RFID in tyres in order to establish a tyre standard for the future. “So, if our plan is effective and if RFID does end up in tyres (which for trucks, airlines and other industries get re-treaded) it will be of immense value for an organisation.

King believes that where there is a real value in assets and if there is a chain of custody involved, RFID is necessary. “Our approach is different, we believe it’s going to happen, we believe in standards, in having harmonisation. It has to be a disciplined process and has to have benefits.”

From left: Patrick F King, Global Economic Strategist, Michelin and Daniel W Engels, Chief Technology Officer, Authenticrypt

Robotic future?

So what about the future of this technology? “An organisation led by the government of Korea has what it calls the Internet of Things. Also known as ubiquitous RFID, what actually happens is if you have a certain number of tagged items and with the way in which the technology is moving forward, the items can actually interact with themselves,” says King.

In simple words, if you have say a number of tagged cutlery and if you send a piece of information through a reader, which is captured by one of the tagged items say a napkin, it could actually inform you that it was sitting next to a plate! And so they would have some interaction.

Another vision sees devices actually looking at their location, proximity and other details and reporting as a community. With the more distinct part also dealing with sensors with which devices can not only communicate to you about what’s going on but also give each other commands!

Here’s to the future.

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

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

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

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

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

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

Kathryn Semcow
Editor
kathryn.semcow@dvvmedia.com

Ingo Roessler,
Vice President Cargo, Royal Jordanian

The best
We have not increased in volumes a lot, but we have been able to find more attractive business, and have done a lot more charters. If you compare this year with 2006, for example, we are at almost ten times the volume. The 310 freighter has become particularly popular. Obviously, the more expensive fuel gets, the less competitive were the Ilyushins or Antonovs that are able to fly loads in the 35 to 40 tonne range.

The year we made a lot of changes. The second phase of our complete warehouse remodelling is being completed now. We doubled the amount of pallet storage, and can now store more than 7,000 pallets in a semi-automated environment with bar codes. We put in new doors, we put in fencing, we put in access control, we put in a lot of new equipment to store and move the pallets. On January 1, we will move over to our new IT solution, Cargospot from Champ Cargosystems. We are also working on an improved interface to Jordan Customs. Eventually we will have the ability to offer on-line booking for the clients, via our new website.

The worst
The worst thing to happen was the spike and sudden drop in fuel prices. Yes we did some hedging to mitigate, but I don’t think any mathematic model actually reflected such a development. It has been a difficult situation for everyone. If the price had stayed at US$150, we would not have seen many freight operators continue to operate the aircraft.

Bill Hill,
Group Vice-President, Logistics Services, GAC

The best
The wide-ranging investigations into the global freight forwarding and air cargo industry by anti-trust agencies in several countries, including the United States and European Union, which started back in early 2006 has put the spotlight on possible anti-competition practices engaged by selected industry players. The probes have led to heavy penalties for errant companies which have violated anti-restrictive business laws with price fixing of cargo rates, fuel and other surcharges – the events culminated in one of the largest antitrust settlements in history in June this year. The resounding message sent by the governments is that they will not tolerate any malpractices. This is a big step forward for the global logistics industry towards the cleaning up and eradication of unfair and restrictive business practices. This action not only helps level the playing field for all industry players, especially those who practice ‘good corporate ethics’, but more importantly, benefits our customers through greater transparency and competitive pricing.

The worst
With the onset of the global financial meltdown, all businesses including the transport and logistics market are now entering a period of uncertainty as the effects of the crisis, start to be felt. In the interconnected world which we operate in, all industries and markets will be affected to varying degrees.

Konstadina Kottoros,
Legal Consultant, Fichte & Co Legal Consultancy

The best
Pre credit crunch and in the not so distant past, the UAE industry was booming at an exciting rate with an expected sustainability for at least the next five years. Import of project cargo was on a roll to facilitate the construction boom, the number of tonnage entering the region doubled in capacity, further attracting investors worldwide in real estate and shipping. Given the booming year for shipping and in the region, our firm has dealt with a high number of shipbuilding and sale and purchase contracts and ships finance transactions related to the new build vessels expected for delivery in the next years, with further popularity over the purchase of second hand vessels as well while shipowners speculated the market. There has been in fact a high demand for tonnage to accommodate this significance in commodity trading, while at the same time airports and sea ports throughout the UAE equally embraced the burgeon and put forth plans for expansion.

The worst
We have experienced a healthy 2008 throughout up until the recent crash in the economy which has slowly but surely leered its head in our parts of the world. How and to what extent this financial crisis will affect private practices in the region remains to be seen.

André N. Verdier,
Senior Vice President Supply Chain, Itsalat International Company

The best
The realisation that the supply chain is actually the value chain and it has a place at the corporate top.

The worst Rising oil prices and terrorism in Pakistan.

Duncan Alexander,
Vice President, Mercator

The best
The best thing to happen in 2008 was SkyChain. It will transform cargo operations and improve it for everybody. It’s a fundamental change in the way we do business. It will be much more affective and profitable.

The worst
The worst was the global economy and prices. Logistics are a barometre of world trade, so people in the industry could see the problems coming very early. That has been the worst thing for everybody. Margins are now wafer-thin. Normally, our region just lies through crises but this is a different wind of change that might be a real problem.

Des Vertannes,
Executive Vice President Cargo, Etihad Airways

The best
The best thing to happen in the air cargo logistics industry was having to compete with an understanding that ocean freight has become more competitive in terms of timelines. It’s not just about faster ships. It’s the fact that they can accelerate their process on the ground while air cargo still has to fight with greater security requirements before it can get its freight in the air. Of course, the cost variation precipitated by fuel prices has meant that a lot of the air cargo commodities have been converted to sea. That’s going to make people working in the air cargo supply chain think of ways to make up for the differences. I think this is a good thing, because if you’re challenged you tend to stretch yourself that much further. As your competitors start to close the gap, you want to try and widen that gap. It causes you to be far more innovative.

The worst
The credit crunch and the impact is has had on consumer confidence, the economies of the world. Consumers are feeling the pinch and putting their hands in their pockets and not spending. This means that less goods are going to be purchased, shipped and moved.

 Viktor Fuchs,
Managing Director, Pro Service GmbH

The best
In the first half it was a pretty good year. Our VIP cargo business for Arab tourists lasted until August/September, so there was not much I could complain about.

The worst
The worst thing to happen in 2008 was the start of a global economic crisis. Nobody really knows where it is going to take us. Germany, as you know, depends on three main commodities for business: cars, machinery and chemistry. All three of them were badly affected by this situation, so fingers are crossed for a lucky development. Logistics companies are directly connected to such developments: Every order missing in the industry is a transport missing in our books. My hopes go to the new US President elect, a more steady political situation in the world’s biggest economy might stabilise other economies as well, or at least help the situation.

Satya Prakash Singh,
Senior Manager, Warehouse / Logistics, Landmark Group

The best
Infrastructure development in the UAE, for example roads, logistics cities, rail and free zones has supported the supply chain and logistics industry in 2008.

The worst
Differences in diesel prices in two emirates of the same country (Dubai and Abu Dhabi) put logistics companies under pressure to look into their bottom line.

Alexander Borg,
Regional Director & Co-ordinator, The Chartered Institute of Logistics and Transport

The best
The logistics industry in Dubai is contributing to nine per cent of the emirate’s total GDP. The Government of Dubai has recognised this important factor and sector and this year has issued a Directive to the Department of Economy to start working on a strategy to increase this sector up by 13 to 15 per cent. Also, with the increase of this year’s budget, about 30 per cent was budgeted for education in which logistics education plays an important role. All this shows that this sector is giving positive results and it is growing at a rapid pace as Dubai continues to distinguish itself as a logistics hub.

The worst
Cost of fuel made international shipping and transport difficult. Companies had to revise their costs of operations to remain competitive. The worst is when you have already forecasted and planned your operations and in the middle you have to revise your costs. This impacts the bottom line and could lead to less investment from the private sector.

Gerhard Mattrisch,
Daimler AG, Research and Development Society and Technology Research Group

The best
The best thing to happen in 2008 was related to vehicle technology, especially hybrids. From my point of view, the majority of commercial vehicle manufacturers made a considerable step in the direction of sustainability. Sure, the looming market crisis might form some kind of a retarding moment in this development, but in the long run the movement will gain momentum, ending up in those advanced drive technologies as electric and fuel cells. This way, the sustainability footprint of the whole transport sector should become much more “dainty”.

The worst
The worst thing to happen in 2008 was related to fuel prices. What happened in the first half of 2008 was almost a catastrophe for the logistics business, and, as we can see now, was completely inadequate. In other words – the financial and energy markets have been in the position to grab (or steal) hundreds of billions of dollars from private consumers and energy-consuming industries, including transport and logistics. This money has gone, and insofar cannot be used for modernisation, upgrading and investments.

Dirk S. van Doorn,
Business & Product Development Manager,DHL Express

The best
The best thing to happen this year was the excellent boom in the supply chain industry across the Gulf. Investments are at an all time high and there is a massive demand for services from the various industry and sectors across the Middle East. The foundations have been laid by the supply chain industry as a whole for a competitive industry to operate out of the Gulf and the UAE. The industry is well positioned to be in the top three when it comes to the management of supply chains globally.

The worst
The worst was the continued hike in the fuel price. The industry as a whole in the Middle East and specifically in the GCC countries is facing spiraling costs. From trucking costs, to aircraft costs, to the cost of construction of warehousing and distribution centres – all have taken a toll on the profits of the supply chain industry. However there is a silver lining and that is if the industry as a whole in the UAE and Middle East can manage its costs in times like this, it should be in a strong position to achieve a competitive position in the global supply chain and make reasonable returns.

Kamel El-Ghossaini,
Senior Manager – Supply Chain Solutions, SPAN Group

The best
As the leading provider of supply chain solutions in the ME region, SPAN has experienced during the past year, a significant increase in the number of customers who have adopted its best-of-breed technology and automation solutions. This reflects that companies are finally realising the value of technology in minimising labour cost and improving service levels. Furthermore, the emergence of new players in the supply chain management solutions market has helped prospects distinguish SPAN’s unique solutions and service offerings in a more objective way.

The worst
The recent global economic crisis has had a negative effect on the supply chain and logistics industries. This crisis will hold down customers’ expenditures which will bring about a challenging year to come for all players in the logistics industry.

Prakash Rao,
DGM Logistics, Landmark Group

The best
The supply chain is being increasingly recognised as a competitive factor across companies. Supply chain professionals are entering into the boards of various companies and educational institutes are placing special emphasis on supply chain and developing specialised courses for the same. There has also been substantial investment in logistics infrastructure across the world with a view to the future requirement.

The worst
The increase in crude prices adversely affected the end consumer in terms of inflationary pressures. All links in the supply chain from manufacturing to transport were adversely affected in terms of price escalations. The reduction in export benefits offered to Chinese suppliers has also pushed up the manufacturing cost index. Locally in the GCC, it was a very challenging year with double digit inflation and a shortage of road freight and warehousing capacity. The Ramadan season in 2008 was also adversely affected due to the Jebel Ali Port congestion with delays in upper gulf shipments. This created increased pressure on the already constrained road freight capacity in the Gulf.

Nimesh Parekh,
Director, Calipar Trading

The best The value and importance of different services (eg. 3PL, 4PL, areas related to supply chain and logistics) became very prominent to all companies (multinational or domestic) as other costs were increasing globally. The requirement of higher standards of service has increased where the companies are willing to invest more time and effort, which in turn means higher investment.

The worst The development of different logistics parks, export oriented units, special economic zones and logistic cities in different countries has been very slow and caught up in different political stages with respect to each country. There are many sanctions and development plans which were launched two years ago but the entire process has been slow. Further, the fluctuations globally have been skewed with respect to the costs of the services to be provided which has led to windfall gains and losses.

Flemming Ravnsborg Andersen
Director, East Arabia Cluster, Maersk Logistics

The best
Mirsal II by Dubai Customs and the e-token system of JAFZA – only through automation of the processes around entry and exit of the port can we continue to support the growth in volumes.

The worst
The closure of Port Rashid causing major constraints on in-land moves and leading to the ongoing congestion of Jebel Ali port. Delaying this closure by one or two years would have enabled Jebel Ali to have completed its Terminal 2 and the hinterland infrastructure (partly DP World/partly RTA).

Auriel Newman,
Executive Manager, South African Airways Cargo

The best
The best thing we ever did was go back into Kinshasa. This year, we made a phenomenal run in terms of developing that market.

The worst
We went through a really rough patch with our long haul freighter when the volumes subsided. The worst thing that could have happened to us was losing capacity. We lost an MD 11 on May 1, but with the subsequent economic conditions it might have been the best thing that ever happened to us. We managed to recover fairly quickly and now it has opened up a whole lot of other opportunities.

Joseph Ghazal,
Senior Vice President, Prologis

The best
The better understanding of logistics and supply chain have led companies to raise the bar of their requirements or to outsource to a specialist in order to optimise their operations. As a result, the region as a whole is on its way to catch up with practices from Europe and North America in order to be able to face the continued growth and challenges of the supply chain industry. Outsourcing operations or real estate is no longer a “taboo” as companies are focusing on their core business and using their capital to grow it. Also, sustainable development is finally directed towards the industrial projects. Being a leader in sustainable development in our field, we are delighted to see that more customers are sensitive to this issue, which will certainly differentiate the players in this market.

The worst
The proliferation of logistics parks, or hubs, across the region can leave one puzzled somehow. Of course, not all the locations are 100 per cent suitable from a supply chain perspective, therefore each developer and the end user should be very diligent in his assessment to ensure the success of the operations.

Sandeep R Prabhu,
Sr. Manager Supply Chain Management and Operations, Philips Consumer Lifestyle

The best
Being recognised as the heart of the business organisation and not as a back office.

The worst
There is not enough transparency on what is happening and will happen in the supply chain.

Fervez P. Puthiyapurayil,
Operations Manager, Imation

The best
Overall the government has been very proactive in ensuring and planning ahead in terms of dedicated areas or zones for facilitating warehousing and distribution services. One has been the operational start up of Dubai Industrial City, additional space being let into the market and emphasis on dedicated zones for specific product and food groups. The planned roll out of Dubai Logistics City this and next year will also decongest the Jebel Ali Free Zone area. But importantly the government continues it’s positive approach to ensuring more options for the growth of the industry.

The worst
The phasing out of services and closure of Port Rashid. For the last one and a half months Jebel Ali Port has been congested which is hampering container traffic inbound and outbound. A direct result of this has also been the surcharge by shipping lines in terms of cost and delays in meeting customer commitments. I feel this shut down should have been planned when Jebel Ali was close to being ready to take on the extra load.

Nathan Vellasamy,
Regional Manger, Air Capacity Sales Asia Pacific, DHL Express

The best
The best thing that happened was that we saw positive growth in the beginning of the year, which was carried over from 2007.

The worst
Due to the financial crisis which started in the US, the Asian economies are badly affected. The goods and services transportation is a key factor to see the GDP growth of any country. We did see in July, August and September a gradual reduction in transportation. I do think this is cyclical, and will probably last about a year.

IN DEPTH

Dr. Rajiv Aserkar, Professor and Vickram Srivastava, Student,
SP Jain Centre of Management, Dubai

The best
The best thing to have happened to the industry in 2008 is the launch of the new 53-foot containers by APL Logistics. Though the first container was delivered in November 2007, the real impact of the launch could only be gauged in 2008. The new containers are poised to change the way containers are moved around the world. In the first phase, the containers have been launched in the South China-Los Angeles service route of APL. The 53-foot containers have long been in use in the USA for intermodal transportation, but have not been deemed strong enough for rigorous sea transit. The newly designed containers are reinforced and have been specifically designed for this purpose. After extensive pilot runs, APL, is set to revolutionise the supply chain. The bigger boxes have 60 per cent more capacity than the standard 40 foot containers. The extra space allows shippers to consolidate more cargo into fewer containers. The growing business in Middle East with Dubai turning out to be a major hub, will soon see the new containers being shipped to Europe and Western markets through the Suez Canal. This will have major impacts on the industry. First of all, shippers can gain better cube economics using the bigger containers. Also a lot of cost can be eliminated in trans-loading expenses. Secondly, the new containers can hold more cargo. Two 53-foot containers can hold contents of three 40-footers. This will result in fewer containers to handle, fewer moves, better consolidation and collaboration across the supply chain. Finally, the environment will benefit. Using the 53-foot containers would result in more being shipped every container resulting in less trucks required, less moves resulting in lesser exhaust emissions and pollution.

The worst thing to have happened to the industry in 2008 was the sky rocketing fuel prices. Fuel prices shot up from around US$100 per barrel touching the almost US$145 mark in just around four months in 2008. This rising fuel price forced a lot of strategy change by companies to cope. Rising fuel prices meant companies could afford fewer moves of goods. With fewer moves of goods to avoid stock out, companies had to over stock. This led to an increased level of inventories lying in the warehouses and to match these increased level of inventories companies had to invest more. Hence a full vicious circle of cost cutting led to a new cost being incurred. The sub-prime crisis in USA didn’t help much to this cause. The depreciating US dollar value added to the woes of supply chain managers, who had a tough time managing the finances attached to their respective supply chains as the biggest consumer in the world went into a recession period. The economic slowdown of the US economy coupled with the rising fuel cost resulted in a double impact to the supply chain all around the globe. Logistics and transportation costs became the point of contention with companies. With the rising fuel cost, additional costs were passed on to the end user. This resulted in inflation and a rising cost of goods in the market. With oil and logistics costs higher than the past few years, we’ll see more efforts in trying to keep these costs down. Many companies will ‘slow down’ their supply chains by using less expensive and slower transport modes. This will of course mean that inventories will increase – especially in-transit and at justin- time sites. Shippers and carriers will tend to exit non-profitable service lanes and will continue to cut costs to stay afloat as with low volumes and reduced margins their cash flow will be crunched anyways.

AND FINALLY

Brian Shepherd,
Senior Vice President, Al Tayer Logistics

The best
All doom and gloom. It is very difficult to think of anything if you take the full year into perspective. Over the last two months, I would believe that the positive adjustment in the price of oil and steel/materials for building new facilities has helped to reduce costs in the short term. How long will it last?

The worst
The worst things to happen in 2008 included oil prices, Middle East port congestion,  and costs and building costs which have all seriously affected the cost of logistics and fuelled inflation.

They’ve struck again. And again. And again. In fact, in a period of two weeks last month the brazen pirates off the coast of Somalia tallied nine hijacked ships alone. They can now claim their largest take, in capturing the Saudi supertanker Sirius Star some 450 miles off the coast of Mombasa. The vessel owned by Saudi oil giant Aramco was heading for the US via the Cape of Good Hope at the southern tip of Africa, instead of heading through the Gulf of Aden and the Suez Canal.

“The world has never seen anything like this. The Somali pirates have hit the jackpot,” says Andrew Mwangura, coordinator of the East African Seafarers’ Association.

“The supertanker was fully loaded, so it was probably low in the water and not that difficult to board,” said Mwangura, adding that the pirates probably used a ladder or hooked a rope to the side.

Consider that this year, Somali pirates have attacked 90 ships, more than double the number in 2007, according to the International Maritime Bureau, and are still holding 16 ships and more than 250 sailors.

“We can confirm the ship is anchoring off the Somali coast at Haradheere,” said Lieutenant Nathan Christensen, a spokesman for the US Fifth Fleet.

Prince Saud al-Faisal, Saudi Arabia’s Foreign Minister called the hijacking of the Sirius Star an outrageous act and promised to back an EU-led initiative to step up security in shipping lanes off Africa’s east coast.

“This outrageous act by the pirates, I think, will only reinforce the resolve of the countries of the Red Sea and internationally to fight piracy,” he told reporters in Athens.

In a move likened to feeding alligators, Russia recently conceded to demands and paid a ransom of US$1 million for the return of a captured ship. The question at this point is – What else can be done?

The hijacking occurred despite an international naval response, including from the NATO alliance and European Union, to protect one of the world’s busiest shipping areas.

US, French and Russian warships are also off the Somali coast.

Consequently, the pirates have driven up insurance costs, forced some ships to go round South Africa instead of through the Suez Canal and secured millions of dollars in ransoms.

Based on the recent escalation in piracy, one might conclude that such actions to date have proved ineffective. With the exception of India’s navy claiming to have sunk a mother ship last month, it appears that governments’ resistance to piracy has been minimal and insufficient.

My question is this: Don’t these affected countries have militarised special forces, such as the US’s Navy Seals or UK’s Special Air Service? Where are these units when pernicious pirates strike? Operations could be launched in the dead of night and one assumes they are trained in such matters already.

Are these primitive pirates so advanced that their defenses are impenetrable? Or, is it the risk of life that could be lost, should such actions prove unsuccessful? The world is waiting to see what the appropriate response will be.

Alright ladies and gentlemen, class is now in session. Today, the University of Dubai is offering the internationally recognised Chartered Institute of Purchasing & Supply (CIPS) qualifications to those seeking to enhance their industry credentials. Though attendance will remain optional, anyone and everyone within the procurement and purchasing-supply industries are highly recommended to not only attend, but to use this class as a catalyst to create more value for themselves and their respective companies.

Why? Because as a profession, purchasing and supply is increasingly being seen as a strategic business discipline, involving a growing number of highly specialised roles. The supply chain is becoming ever more complex, presenting those in the profession with many new challenges, from changing market structures ushered in by globalisation and the growing economic strength of developing countries, to technology, global events and trends towards ethical and fair trading.

As the job market is becoming increasingly competitive, internationally recognised standards are becoming the norm. Quite simply, those who may have experience, but no standardised qualifications, are being left behind. The programme has proved popular amongst supply chain professionals throughout the Middle East, as the course structure is flexible and tailored to allow students to maintain their day jobs.

Offering an International Certificate qualification as well as an International Advanced Certificate, the University of Dubai wants industry insiders to progressively step up their game. The International Certificate qualification is awarded to students who have knowledge of the main concepts and principles associated with the area of study. Upon completion, they will be able to identify and describe the main concepts and principles, present and/or interpret qualitative and quantitative data, and communicate clearly in written English, using diagrams and charts as required. Sounds straight forward enough.

Currently, there are no entry requirements to commence studying for the International Certificate in Purchasing and Supply. However, you must complete the International Certificate programme before starting the International Advanced Certificate. For Advanced Certificate acquisition, you must successfully suggest solutions to a range of problems, analyse data and make reasoned judgements, as well as develop lines of argument. This is the foundational understanding for those who wish to ascend the corporate ladder within their respective business.

As topics introduced at the Certificate level are developed in the Advanced Certificate, the awards are progressive. Each award has five compulsory units. With each unit designed for a minimum of 15 hours direct tuition, it is expected that students undertake an additional minimum of 15 hours self study per unit. This equates to approximately 150 to 200 hours of study for each certificate, including a minimum of 75 hours of direct tuition.

At a cost of AED11,500 (US$3,126) per year, the University of Dubai’s CIPS programme is not for the faint of heart. However, those interested in attaining such qualifications should make their employers aware of their intent, and request possible financial assistance. One would assume companies would be more that willing to invest in their employees, as it proves to be a win-win scenario for all parties.