Logistics : A fast moving sector in the region

Logistics : A fast moving sector in the region

The recent fire on board the ultra large container vessel, Maersk Honam, in the Arabian Sea sent a few shockwaves around the boardrooms of the rapidly expanding logistics businesses in the gulf region.

Losing 7,500 40ft containers will have disrupted an industry that has started to fill gaps created by the fall in the creation of new gas and oil projects. However, it is not just the risk of fires on ships used for the importing and re-exporting of goods, consideration as to how to equip warehouses where they store so many different varieties of goods require specialist fire protection demands the collaboration of fire strategists and engineers, passive fire protection specialists and leading edge fire suppression technology.

Fires in logistics premises and warehouses, big and small, are a common occurrence globally in the MENA region and as Colonel Khalid Bin Kanoon said, in 2014 when acting general director of Sharjah Civil Defence, in some cases they have been started by owners hoping an insurance claim would balance out the debts caused by failing businesses. However, the sheer scale of some recently announced logistics developments in the MENA region along with the companies and huge assets behind them would suggest that particular issue will not be involved.

But the new business potential for the fire protection and safety companies will be vast since one report has suggested the region’s logistics industry will have an annual turnover of US$ 3 trillion by 2020.

Contributing to that will be an agreement signed between Abu Dhabi ports and Autoterminal, a member of the Noatum Maritime Group, to create a joint venture company called Autoterminal Khalifa Port. For the past 25 years, Autoterminal has dominated the distribution of cars to Mediterranean countries and in 2017 it handled the movement of more than 1.2 million vehicles.

The new terminal to be created in Khalifa Port will eventually occupy 300,000 m2 of land and be serviced by 550 metres of dedicated quay space where ship transporters can download their cars.

Meanwhile Binzagr Company, a leading distributor in Saudi Arabia, is aiming to bolster its customer services by setting up a new logistics centre in the Industrial Valley at King Abdullah Economic City.

Binzagre has purchased 163,453 m2 of land for the new facility which it says will enhance the speed flexibility of movement and transportation around the Kingdom of its consumer products which range from food and drink, personal beauty and care, home care and automotive tyres.

Fahd Al Rasheed, the company’s managing director said: “The Industrial Valley’s strategic location with its unrivalled transportation facilities and the city’s connection to the national road network, linking KAEC to local and overseas markets, will enhance opportunities for commercial growth and provide job opportunities for citizens.”

Qatar’s leading logistics provider GWC is also looking to increase its warehousing capabilities and trade volumes and has recently signed a 22-year deal with Al Asmakh Real Estate Development to manage and expand their 517,375 m2 business park.

Mohammad Daoud, GWC Senior Manager of Corporate Communications commented “With the support of world-class Hamad Port, Qatar is fast emerging as a major re-export hub. The country’s logistics sector is going to benefit hugely from
this opportunity.”

Elsewhere in Qatar, The New Port Project (NPP) Steering Committee and AlJaber Engineering (JEC) recently signed a contract for designing and constructing food security facilities and warehouses at Hamad Port at a cost of QR 1.6 billion.

The buildings will be developed and constructed on an area of approximately 53 hectares and include the processing, manufacturing and refining of rice, raw sugar and edible oils which will be available for local, regional and global use.

The project also includes bulk storage silos with associated infrastructure and conveying equipment, in addition to essential buildings fully equipped for the project associated operations of handling, processing, packaging, reloading and transport.

However all of these countries have some way to go before they catch up with Dubai which in a survey of the logistics industry in 50 emerging markets ranked only behind China and India.

And the growth looks set to continue as Dubai Wholesale City has announced that Jaleel Holdings, the UAE’s largest fast-moving consumer goods (FMCG) wholesaler, will construct a cash and carry facility with an investment value of AED100 million.

Spanning an area of 300,000 ft2, the premises will include a fully integrated, direct sale warehouse accommodating more than 250 employees, as well as a flagship store, storage and cooling facilities and accommodation in the DWSC labour villages.

Abdulla Belhoul, CEO of Dubai Wholesale City, Saud Abu Al-Shawareb, said: “We remain committed to accelerating the development of the trade and manufacturing sectors in Dubai and the wider UAE, and helping our business partners build and grow their businesses.

“We welcome Jaleel Holdings to Dubai Wholesale City. We are confident that their new facility will benefit from DWSC’s strategic location and superior infrastructure to enhance their position in the market and contribute to their growth story.”

According to the GCC Food Industry Report 2017 from investment bank Alpen Capital, the food industry remains one of the highest growing sectors in the UAE with food consumption projected to grow by 4.4 percent to reach 10.1 million metric tonnes by 2021.

Among the other big projects in the MENA Region the Global express service provider DHL Express is investing US$177million in new facilities located in Saudi Arabia, UAE and Egypt. The German logistics operation is focusing on emerging markets in the MENA region, according to a company statement. The new investments include three new facilities in Saudi Arabia, a new office in Cairo, and an operations facility in Dubai.

And after paying US$ 580 million to acquire the Dubai based online retailer Souq Amazon has said it has plans, which have yet to be published, to build ‘a regional logistics powerhouse’.

That is yet another sign of how the MENA countries are now harnessing their geographical location between the Far East and Africa and Europe to create a new industrial giant.

Register for Intersec Dubai 2024