TOC Container Supply Chain Middle East Opens

Held at the Dubai World Trade Centre, TOC Container Supply Chain opened, attracting delegates from across the Middle East beyond, including cargo owners, logistics services providers, shipping lines and maritime ports and terminals.

The renowned conference & exhibition, part of the global TOC family maritime supply chain events, is being held under the Patronage of His Excellency Dr. Rashid Ahmed Bin Fahad, UAE Minister of Environment and Water, who officially opened the accompanying Trade Exhibition.

They heard many instances of just how the Middle East region is now firmly established as a major trading block with extensive economic linkages across the globe.

The Keynote presentation was given by Mr Mohammed Al Muallem, Senior Vice President & Managing Director DP World, UAE Region.

After welcoming delegates to TOC CSC Middle East, Mr Al Muallem noted that maritime transport is crucial for the world economy, given that almost 90% of goods traded today across borders are carried by ships and pass through marine terminals.

He went on to say that GDP of the countries of the Gulf Co-operation Council is predicted to reach $1.5 trillion in 2013 according to Qatar National Bank researches. Coupled with a GCC population growth rate expected to be 3.2% in 2013 (faster than the world average) the GCC states are still contributing to the efforts towards global economic recovery.

In addition, most Gulf countries are moving to break their economic dependence on oil – a path already successfully taken by Dubai. Significant spending on infrastructure and social initiatives, such as housing, implies significant potential demand for traded goods, which in turn puts a demand on world-class logistical services.

“All this is good news for the ports and shipping industry in the long run as we apply the dynamics of integrating the supply chain,” Mr Al Muallem commented.

Container flows

The first plenary conference session of the day examined Middle East Container Trade Flows & Macro Economic Outlook.

Eng. Mahmood Al Bastaki, CEO of Dubai Trade, explained that while economic growth in the Middle East was still very positive, he recognised that the region still has a number of challenges to confront in facilitating trade. However, Dubai Trade, in partnership with government institutions, is making significant progress.

For instance, in the area of trade finance Dubai Trade is working with financial institutions to automate the Letter of Credit process, and partnering with Dubai Exports to facilitate trade finance for exporters. New e-services, such as Online Cargo Booking & Shipping Instructions are being developed. At the port of Jebel Ali gate automation has improved truck turnaround in the terminal, while ‘e-token’ &’e-payment’ services have eliminated queues at counter.

“There is constant pressure on the industry to further increase efficiency and reduce costs,” he said. “However, we can’t do it alone, there are weak links,so we need to work together to eliminate these.”

Mohammed Esa, CEO – Dubai, Senior Vice President UAE, Oman & Bahrain, Agility, outlined the scale of the changes in global trading patters impacting the Middle East. Between 2000 and 2010, exportsbetween emerging markets as a percentageof total exports increased substantially, while of the $15 trillion in world trade, nearly a third is conducted between emerging markets. In fact, in 2009, China overtook the US as the Middle East’s largest trading partner. These all represent changes of great magnitude, not simply for the Middle East, but for the world as a whole and as such require strategic, long term thinking in order to ensure the necessary investments and processes are in place.

In order to take advantage of the growth potential of emerging markets, companies must rethink every aspect of operations, including product portfolios, research & development, marketing, supply chain management, and talent development.

Michel Deleuran, Executive Vice President – Maritime, MILAHA (formerly Qatar Navigation), noted that the GCC countries are expected to grow faster than the world average of 4%, supported by strong fundamentals that are unlikely to change in the near term.

There is no doubt, he said, that massive investment in infrastructure projects is taking place across the region. However, opportunities remain for regional co-ordination and positioning, as each country is relatively small, but together, the region provides significant scale potential.

Shailesh Garg, Director, of maritime analysts Drewry, gave a detailed presentation on the statistics behind the growth of the Middle East as a major trading area. He even commented that the Far East-Middle East/South Asia trade route has the potential to overtake transpacific trade volumes by 2020 if it is able to maintain an annual average growth rate of around 10%, while transpacific grows at annual average rate of 2.3% over the same period.

The UAE has maintained its dominance in the Middle East container market registering a compound annual growth rate (CAGR) of 12.3% between 2001 and 2011. Saudi Arabia also registered an annual average growth of around 13% over the same period. Interestingly, Iranian ports have witnessed very strong growth over the last 10 years, registering a CAGR of around 18% between 2001 and 2011.

Supply Chain Planning

After lunch, discussion moved on to focus on Supply Chain Planning &Fulfilment: the Logistics Dimension. Vasco Amoroso, Head of Group Supply Chain, Mattex Group, said supply chain managers are facing one of the most challenging periods of the last 5 to 10 years, where the market is unstable and causing severe constraints in terms of supply chain/services.

He pointed to a number of particular challenges in managing the supply chain in the Middle East region. Among these are: variances and increases in freight cost; and some heavily congested Middle Eastern ports. Space availability on vessels is also a concern as is the availability of empty containers during peak season.

Mr Amoroso added that in times of uncertainty companies to analyse the risk element in their supply chains and questioned how many actually perform this task properly. He pointed to recent events, such as the threat to the Strait of Hormuz and threatened ports strikes in the US and Europe, as examples of how it is necessary to plan for contingencies in routing cargoes.

Crucially he called for improved communication between supply chain actors, such that if a shipment is likely to be delayed it is essential the customer knows the precise situation as early as possible.

Mustafa Sener, SVP Seafreight (Middle East, Turkey & Central Asia Region), Kuehne + Nagel, noted that forwarders have steadily gained market share from shipping lines in terms of dealing with shippers.

He believed that this was the fruit of increasing sales representation by the forwarders and logistics service providers. They also had a greater focus on local customer service, combined with multi carrier programmes, and customer-friendly IT solutions with enhanced visibility.

Of course, shipping lines have had a very tough few years recently, and Lars Oestergaard Nielsen, Managing Director – UAE, Oman, Qatar & Iran, Maersk Line, outlined exactly how the current financial situation of the carriers cannot continue. “The liner shipping industry is generating unacceptable margins, the industry is not self-sustaining and we are destroying shareholder value,” he stated baldly.

“A serious over-capacity situation exists and the outlook is grim, we need supply/demand stability for the industry to be profitable in the long-term. In addition, we need to adjust capacity investments to customer demand.”

Dirk Van Den Bosch, Chief Commercial Officer, DP World UAE Region, recommended that all supply chain partners help each other to achieve better forecasting. In the current economic climate, it is very important to know what is coming in terms of volumes and frequencies. Better forecasting would help everyone optimise resource management.

Peter Ford, Chief Executive Officer, Port of Salalah, discussed the role of ports in ‘agile supply chains’. Noting that supply chains today often make it difficult to take advantage of rapid changes in demand, he put forward a model of the agile supply chain and showed how the modern port functions as the critical interface in this chain.

Port developments

The final conference session focused on Middle East Ports &Logistics Infrastructure: New Projects, Developments &Investments. Jay New, Commercial Director, Gulftainer, outlined a number of the investment undertaken by the Sharjah-based terminal operator.

Edwin Lammers, Executive Commercial Manager, Sohar Industrial Port Company, explained how Sohar is developing as a significant port, and finally, Martin Mannion, Global Head of Maritime, URS Scott Wilson talked about Kuwait’ plans for the new port of Mubarak Al Kabeer.

TOC CSC Middle East continues until Wednesday 3 October.

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TOC Worldwide, October 2, 2012