Link issue#7 may -june2005 - SCLG

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Dear Readers, 

here am I? Am I in France?" Do you remember this old 

“Wfamiliar line? Of course you do, it’s King Lear! 

Getting “lost” is not the case today. Everything is visible! 

Vehicles can be traced in real time – location, speed, number of 

authorized and unauthorized stops and fuel level. And yes, even 

the toothbrush that you just bought, the blade you shave with, 

the bag that you check-in at the airport and the patient from a 

cardiac surgeon’s clinic – they are all "visible". That is the name 

of the game, VISIBILITY. In the supply chain and logistics sector, 

visibility is very important – inventory, material handling, 

logistics. 

The radio frequency identification (RFID) is the "in" thing in 

the market, gradually taking over the reins from the old 

barcode. 

The U.S. government is preparing for a full implementation of 

the e-passport, a RFID enabled passport format. Hong Kong 

airport bags are tagged with RFID microchips. Gillette blades are 

RFID monitored and so does products delivered to Wal Mart. In 

the Middle East, RFID is trying to make headway, as featured in 

our previous edition. 

Yes, RFID is your TRACKER. As a business solution, it is a 

welcome sign. But consumers - the general public, seems to be 

looking at the whole tracking issue as an intrusion to privacy. 

Many believe that too much visibility intrudes one’s inherent 

right to privacy. It may be taken as an efficient inventory and 

tracking measure for business, but some argue that it goes 

beyond the limit. The US government has conducted a Privacy 

Impact Assessment (PIA) on its several RFID enabled programs 

like e-passport and US-VISIT programs, and mostly, the decibel 

of privacy intrusion tone rings the loudest. Whether or not one’s 

privacy will influence the global trend towards the use of RFID 

is a topic wide open for discussion. What remains to be seen may 

not be emitted via low frequency signals but on a debate of 

issues that would lead to understanding the benefit RFID brings. 

We would like to hear from you ! 

We welcome your comments and views on this issue of The LINK Magazine. Your 

opinion is valuable to help us serve you better. 

Keep us updated on the activities in your organisation. Send all the exciting 

news about your company to: 

The Editor, 

magazineeditor@sclgme.org 

Supply Chain & Logistics Group | www.sclgme.org

Contents 

6 SCLG-Round Up 

SCLG supports 3rd Materials Handling Exhibition 

11 RETAIL 

Future shop 

14 SUPPLY CHAIN 

Electronic vendor enablement 

18 WAREHOUSING 

The Span between modern and old warehouses 

21 LOGISTICS 

The future of quality logistics 

23 MARKET WATCH 

Freight Xchange: Enter Here, Send Anywhere! 

26 HUMAN RESOURCES 

Emiritisation: Moving towards better 

28 TRANSPORTATION 

Al Futtaim launches m-Trak 

31 MATERIAL HANDLING 

Ship Matters: delivering ships across continents 

32 CONSTRUCTION 

Green buildings 

33 CASE STUDY 

DHL’s logistics triumph: A world record 

34 LEGAL 

Picking the right franchise partner 

36 GATEWAYS 

Singapore’s Changi Airport to undergo "facelift" 

39 BANKING & FINANCE 

Banking on data 

40 INSURANCE 

Guide to cargo Insurance 

42 INFORMATION TECHNOLOGY 

RFID: Making sense of sensor-based technology 

44 ACADEMIA 

Logistics, what’s in for you! 


6 

Supply Chain & Logistics Group - A Round Up 

SCLG supports Materials Handling Exhibition 

In its quest to further support the efforts towards 

enhancement of materials handling and logistics, the 

Supply Chain and Logistics Group (SCLG) actively 

participated in the just concluded 3rd Materials Handling & 

Logistics Exhibition. "We want to actively support efforts 

towards harnessing the materials handling and logistics in 

the region", Shashi Shekhar, Founding President, SCLG said. 

The SCLG maintained a stand throughout the exhibition, 

linking with industry executives and professionals. At least 

5,247 visitors saw the latest in materials handling and 

logistics: state of the art racks and shelves, small and giant 

fork lifts, robotics wrapping equipment, modern conveyor 

systems, space saving and "highly intelligent" storage 

systems, enhanced data readers and warehouse systems 

solutions. "I noticed quality visitors, mostly representing 

all sectors of the industry. It is a healthy sign, it feels good 

to note that those in the supply chain and logistics are 

eager to know about the latest in materials handling", 

Shekhar added. 

The visitors came from almost every section of the 

supply chain and logistics industry. More than half came 

from the freight and cargo industry: freight and logistics 

companies, ports and airports. A further 19% were 

consumer or business goods retailers, wholesalers and 

agents looking for supply chain solutions. Building 

contractors and material supply companies seeking 

equipment made up a further 12% of the audience while 

manufacturers’ regional offices represented 9% of the 

show visitors. 

Organized by Epoc Messe Frankfurt, the 3rd Material 

Handling and Logistics Exhibition attracted 30% more 

exhibitors compared to last year. "It’s getting bigger and 

better", Shekhar commented who, along with several SCLG 

leaders, toured the Dubai World Trade Center Halls, venue 

of the exhibition. Aside from Middle East/UAE exhibitors, 

the event drew industry players from UK, Holland, Italy, 

USA, Germany, France and Sweden. The presence of major 

material handling and logistics companies, SPAN, 

Caterpillar, Siemens, Al Futtaim, Airlink, Schenker, FAMCO, 

Arcoma, Bin Brook Motors, Dahbashi Engineering and 

Germany’s ITC Logistics added excitement to the fever 

pitch frenzy of what was dubbed by Shekhar as the 

"dawning of a more exciting exhibition that focuses on the 

future not only of the industry but of the equipments and 

solutions". 

Among the huge crowd drawers were the giant fork lift, 

warehouse solutions and the latest in robotics plastic 

packaging. As a regional logistics hub, Dubai plays a 

pivotal role in the "enhancing industry solutions and 

equipments".

Supply Chain & Logistics Group - A Round Up 

7 

Global Supply Chain 

Conference 2006 

slated in Dubai 

The Council of Supply Chain Management 

Professionals (CSCMP), Dubai Roundtable headed by its 

Founding President, Shashi Shekhar played host to a 

delegation of Supply Chain Management Professionals 

based in Illinois, U.S.A. to finalise the plan of holding 

the Global Supply Chain Conference 2006 in Dubai. 

In a meeting held recently, Shashi Shekhar, together 

with key members of the Supply Chain Management 

Professionals (CSCMP), Dubai Roundtable, Clifford 

Cutelle, Dr. Madrecha, Sanjay Naik and Saikumar met 

Thomas L. Freese, CSCMP Executive Committee 

member and Education Strategies Chair, Abre Pienaar, 

CSCMP Global Supply Chain Conference 2006 cochairman 

and Kathleen L. Hedland, CSCMP Director of 

Education & Roundtable Services. 

"We are very excited in hosting the Global Supply 

Chain and Logistics Conference in Dubai under the 

banner of the Supply Chain and Logistics Group (SCLG) 

& the Council of Supply Chain Management 

Professionals (CSCMP), Dubai Roundtable", Shashi 

Shekhar said. Although no definite schedule was set, 

Clifford Cuttele said that "it will most likely happen in 

the first quarter of 2006". 

The conference objective, as outlined by Pienaar, "is 

to organize a world class forum and open the 

floodgates of what is happening and would likely to 

happen in the supply chain industry and profession". He 

emphasized that the global supply chain landscape is 

"changing dramatically" and the global forum can be a 

way of sharing experiences and adding professional 

inputs. 

The Council of Supply Chain Management 

Professionals "is the preeminent association for 

individuals involved in supply chain management". As 

an organization, it "provides educational, career 

development and networking an opportunity to it’s 

over 10,000 members and to the entire profession". 

Founded in January 1963, CSCMP was originally called 

the National Council of Physical Distribution 

Management (NCPDM). It was organized by educators, 

consultants and managers who envisioned the 

integration of transportation, warehousing and 

inventory as the future of the discipline. In 1985, the 

association’s focus broadened, paving the way for the 

changing of the name to become Council of Logistics 

Management (CLM). CSCMP got its baptism in 2004 

after the former CLM executive committee decided to 

change its name to adjust to the call of the time. Asked 

to describe what CSCMP means today, Freese said: "It is 

a group of industry professionals that strives to 

enhance the profession of supply chain management". 

Shashi Shekhar, Founding President, SCLG and Clifford 

Cutelle, Board of Advisor, SCLG with Mohammed Sharaf, 

Managing Director, Dubai International after the latter 

joined the SCLG as one of its Board of Advisors. Sharaf 

will bring to SCLG BoA his expertise and experience in 

the logistics industry. 

New Corporate Members 

Consolidated Shipping Group 

Headquartered in Dubai, UAE, CSS is one of the leading 

integrated freight forwarding solutions provider. The Group 

consists of Consolidated Shipping Services LLC, Dubai & Abu 

Dhabi; Consolidated Shipping Logistics Centres, Jebel Ali; 

CSS Homeward Bound – International Packing & Removals, 

Dubai; Consolidated Shipping Line, Bahrain, Kuwait & 

Pakistan and CSS India (Pvt.) Limited. 

CSS is ranked among the top NVOs in the UAE with an 

enviable Global Network Partners. The company has 

adapted itself to the latest trends in the industry to offer 

efficient and most feasible solutions to the clients' freight 

forwarding requirements. With state-of-the-art CFS & 

Supply Chain facilities in the Jebel Ali Free Zone, the 

Group’s major activities involve NVO exports/imports, air 

exports/imports, sea-air transport, project freight, 

warehousing, distribution, container freight station (CFS), 

multimode operations, customs clearance and local & 

International removals. 

CSS is an ISO-9001 certified company and is a member of 

FIATA (International Federation of Freight Forwarders 

Association) and NAFL (National Association of Freight 

Logistics). 

New Individual Members 

NEW MEMBERS 

We take great pleasure in welcoming our new members 

and together hope to attain new heights of excellence. 

SCLG Executive Committee 

Patrick Higgins – Gulf Food Trade LLC. 

Steven Sked – Charles Kendall Freight Ltd. 

Subin George – Charles Kendall Freight Ltd. 


8 

About SCLG 

SUPPLY CHAIN & LOGISTICS GROUP 

BOARD OF ADVISORS 

Shashi Shekhar 

Emirates SkyCargo 

Mishal Hamed Kanoo 

Kanoo Group 

Mohammed Sharaf 

Dubai International 

David Wild 

DHL 

Hamdi Osman 

FedEx 

Clifford Cuttelle 

Gulf Adhesive Labels 

Supply Chain & Logistics Group (SCLG) of the Middle East is a nonprofit 

organisation, working under the umbrella of Dubai Chamber of 

Commerce& Industry to promote the cause of supply chain and 

logistics industry. This group brings an opportunity for personal and 

professional developments by offering networking prospects among 

like-minded professionals and corporations on a global basis. 

The SCLG was founded with the help of senior management 

professionals representing a wide spectrum of industries on Supply 

Chain. This group shall strive to bring the best of education, seminars 

and interaction through partnership/ alliances with a variety of similar 

bodies across the globe. 

The Link is the official magazine of the SCLG addressing the needs 

of the Logistics and Supply Chain Professionals/Management in the 

region. It presents news, views, developments and information to its 

readers drawn from the industry experts. The magazine aspires to 

serve as a benchmark guide to the industry, the first of its kind in the 

region. 

The articles offer valuable insight and information for today's Supply 

Chain executives. These articles and news features cover innovative 

supply chain practices, emerging technologies, e-commerce, market 

information from industry leaders and reports on break-through 

innovative practices. The Supply Chain and Logistics industry is still in 

the development stage in the region, but activities of SCLG will help 

build renewed professionalism in the industry. 

CONSULTATIVE COMMITTEE 

Jan Bak 

Dubai Ports Authority 

Pradeep Melakandy 

FMCG Logistics 

C. Rajmohan 

Free Ports Shipping 

Sanjay Naik 

Emirates Group 

Johnson Soans 

Panasonic Gulf FZE 

Dr. Satish Mapara 

Danautic Shipping 

EXECUTIVE COMMITEE 

Mike Lee 

Vice President Membership 

PWC Logistics 

Christopher Cahill 

Vice President Marketing 

Eagle Global Logistics 

Rob Turner 

President 

Nestle Middle East 

Ravi Kashyap 

Vice President Membership 

Steinwg Sharaf 

Roy A. Patterson 

Vice President Task Forces 

Panalpina 

Graham Burne 

Vice President Education 

Kraft Foods 

Alnoor Nagji 

Vice President Events 

Great Circle Lines 

Dirk Van Doorn 

Member at Large 

DHL 

Dr. Madrecha 

Vice President Financial Affairs 

Kanoo Group 

Madhav Kurup 

Vice President Events 

Trident Freight 

Hussien Hachem 


Aramex 

Arup Gupta 

Vice President Admn. & General Secretary 

Orient Shipping 

Sanjay Babur 

Vice President Marketing 

Cosmos Insurance 

John Tansey 


UPS 


About SCLG 9 

MISSION OF SCLG 

To provide an accessible, dynamic and 

professional networking environment that 

facilitates the achievement of 

professional, educational and personal 

goals, by members of SCLG community in 

an atmosphere that encourages 

professional development, diversity and 

innovation in Logistics and Supply Chain 

Management. 

OBJECTIVES OF SCLG 

• To promote the cause of Logistics and 

Supply Chain industry and raise the 

overall standards of all industries on end 

to end supply chain 

• To protect the interest of member 

organisations and support government 

bodies in formulation of policy framework 

for logistics organisations 

• To encourage the free exchange of 

knowledge and skills relating to supply 

chain and logistics within the members of 

the organisation 

• To provide all members an opportunity 

to network among each other and help 

facilitate an overall efficient commercial 

environment 

• Undertake studies, compute and 

maintain information, statistical data and 

official documents relating to various 

aspects of supply chain and logistics 

industry for the benefit of all 

• To establish and maintain contact with 

similar organisations internationally and 

provide all members an opportunity to 

network with like-minded organisations/ 

members across the globe 

• To conduct training courses, seminars, 

SCLG MEMBERSHIP 

conferences and studies relating logistics 

and supply chain; also establish a library 

and research centre relating this industry 

to expand the knowledge base 

• To establish good relations with other 

professional groups or societies that are 

existing or to be established locally or globally 

• To promote the cause of education in 

Supply Chain and Logistics among 

nationals of UAE and thereby contribute 

to build a cadre of professional and extra 

competent nationals to take up current 

and future challenges of Logistics/ Supply 

Chain industries. 

SCLG Endorsed Events Calendar 

2 nd Warehousing Logistics and Distribution Forum 

17 – 21 September 2005, Venue - Movenpick Hotel - Dubai 

3 rd ASEAN Ports and Shipping 2005 

21 and 22 September 2005, Venue - Surabaya – Indonesia 

2 nd Annual Chemical Logistics & SCM Middle East 2005 

26 and 28 September 2005, Venue – Shangri-La Hotel, Dubai 

3 rd Thai Ports & Shipping 2005 

24 and 25 November 2005, Venue - Bangkok 

4 th Intermodal Africa 2006 

2 and 3 Feb 2006, Venue - Namibia 

3 rd Trans Pan Pacific 2006 

27 and 28 April 2006, Venue - Dalian, China 

For details log on to: www.sclgme.org 

CORPORATE MEMBERSHIP 

Membership is open to all organisations. 

Corporate members shall/may nominate 4 

representatives. All nominated members 

shall be allowed to vote at the Annual 

General Meeting (AGM), and at any 

Extraordinary General Meetings. Board of 

Advisors and Executive Committee 

members shall decide the annual fees for 

membership. 

INDIVIDUAL MEMBERSHIP 

Open to any individual from any part of 

the world. The annual subscription shall 

be set from time to time as deemed 

necessary by the Board of Advisors and 

Executive Committee members. 

STUDENT MEMBERSHIP 

Open to students, full-time education 

only. Student membership shall not 

convey any voting rights to the individual. 

The annual subscription shall be set from 

time to time as deemed necessary by the 

Board of Advisors/ Executive committee 

members. 

MORE REASONS - WHY BELONG TO SCLG? 

Access to Educational Training and 

Seminars at concessional rates 

A Membership Certificate - to 

distinguish you/ your company as 

professionally focused enterprise 

committed to the cause of Supply Chain 

and Logistics 

• Access to networking evening(s) at 

rebated rates 

• Access to 'member only' section of 

SCLG coming soon 

• Rebates on Subscription of Membership 

to international partnering body of 

SCLG 

• Membership Card (discount offers 

being discussed at leading retailers 

/service providers) and many more to 

come............ 

Visit our website (www.sclgme.org) for 

more details. Wish to volunteer on various 

Sub Committee to support us in managing 

and fostering Supply Chain & Logistics 

Community? Contact - Kanchan Vora at 

admin@sclgme.org 


10full page ad 2

Retail 11 

Future Shop 

- combining IT advancement with customer satisfaction 

The Supermarket in the year 2015: long rows of shelves are a 

thing of the past, the goods are displayed with the aid of virtual 

images, sounds and aromas – shopping is an "experience". You 

simply press a button to select the required items and presto! 

You pick them up – already packed – at the checkout counter. 

Long queues at the checkout are a distant memory: Point of 

Sales (PoS) processes are all automated. 

Is this all just a pipedream? Far from it – the future of retailing 

is well underway and perhaps headed for a store near you – 

thanks to the emerging state-of-the-art technology. 

The METRO Group has launched the METRO Group Future 

Store initiative together with business partners from the retail, 

consumer goods and information technology industries. This 

internationally unique project will change the retailing 

landscape and its labour structures profoundly. The aim of all 

parties is fixed - to test and develop new technologies in actual 

retail settings that can be implemented on an international 

scale.. 

The first pilot project, Metro’s first Future Store opened in an 

Extra supermarket in Rheinberg, last April. The state-of-the-art 

technologies used in this store support new forms of customer 

contact that ensures better and faster level of service – easy 

and convenient shopping. 

Instead of the conventional products displayed on racks, 

customers use information terminals and advertising displays to 

find out about the goods available on stock. And yes, you don’t 

need to take the queue for your fruits to be weighted and 

priced; the Intelligent Scales can recognize fruits and vegetables 

automatically. Kiss goodbye the time you spend wandering 

around the store looking for your favorite perfume – just a push 

of a button, and you can find out from the Personal Shopping 

Assistant (PSA), a small computer attached to the shopping 

trolley, where a specific item is to be found on the shelves. The 

computers can also be used to scan products in order to obtain 

information about the goods or to find out the total cost of the 

items purchased. The total price of the products scanned is 

then transmitted to the checkout system via radio signals. 

Indeed, it is a total convenience of your shopping time! 

RFID at the core 

The key technology used in Extra Future Store is the more 

sophisticated radio frequency identification (RFID). The 

conventional barcodes, while to some extent outmoded, still 

comes in handy in some respect. This system makes it possible 

to read special labels attached to products and packages via low 

frequency radio signals. In conjunction with the Extra Future 

Store’s merchandise management system, RFID enables much 

more product information – such as the sell by date or the exact 

location of the individual articles, where it is stored using 

conventional barcodes. The advantages of this in terms of 

warehousing, quality assurance and merchandise management 

are significant. Many processes can be monitored or controlled 

electronically. For example, RFID provides personnel at the 

Extra Future Store with an early indication that stocks or shelves 

soon need to be replenished. They can then order the items as 

required and restock the shelves in good time. Stockless 


12 

Retail 

Customer pays with personal 

shopping assistant 

Entrance gate Information terminal Customer at the exit gate 

displays works the same except that products are stored not in 

the shelves but in the warehouses inside the store. 

THE TECHNOLOGIES 

The Loyalty Card. Loyalty cards are being implemented 

worldwide and are the key to the PSA. Few retailers are 

providing customized coupons based on collected purchase 

data. Even fewer are providing offerings tailored to a specific 

customer. The Future Store is the only store providing 

customized offers at the "point of decision" in the grocery aisles. 

Promotions are developed by the loyalty information that has 

been accumulated and updated in real-time, and customers can 

check their card data at an information terminal or from any 

web browser. 

The Personal Shopping Assistant. The loyal customer has 

access to a free PSA attached to the shopping cart. The shopping 

experience begins by swiping your loyalty card on this small, 

portable computer. A personalized shopping list, special offers, 

and "suggested items" are in full view prompted by previous 

shopping visits. Pricing, discounts, and a running cost total is 

always visible. 

Pay As You Walk with the PSA. Since items are "scanned" as 

they are placed in the shopping cart, the checkout process has 

been tremendously simplified. When the customer reaches the 

checkout counter, pressing one button on the PSA initiates the 

process. None of the items need to be removed from the cart 

and a receipt is printed automatically. 

Digital Signage. Wirelessly connected digital signage is 

prevalent throughout the Future Store. The manufacturer can 

provide differentiating content at the "point of decision". Fullmotion 

video or a simple slide can provide detailed information 

used to persuade the customer’s product choice, to include 

special offers available. 

Information Kiosks. Whether product information is available 

via PSA or an in-store kiosk, the greatest improvement is not 

just the technology —it is the actual buying information. 

Providing details about the manufacturing process, the 

ingredients, and the selling price is incredible information 

available to every loyal customer. And yes, even useful cooking 

tips and food nutritional values! 

Electronic Price Labels. Wireless price labels are available 

for every product on every shelf at the Future Store and provide 

endless benefits such as elimination of price discrepancies and 

incorrect labels, receipt of pricing information directly from 

the POs system, which is continually updated by merchandise 

management, up-to-date price labeling, individual or 

simultaneous price changes for a single item or all 40,000 

items, synonymous and automatically updated label 

information, SKU and checkout information. Changing every 

price and monitoring products for the entire store never 

takes longer than two hours. Day-part pricing can be used to 

highlight a "promotional pricing" for an hour instead of an entire 

day or days. Flashing displays are used to draw attention to 

special offers while Planogram information is also available 

via the label providing stacking heights, order quantities, 

and shelf quantities to the staff. 

Smart Shelves. RFID readers are built into the shelves and 

recognize the RFID label attached to each product. The shelf 

detects when a product has been removed or incorrectly 

placed and automatically notifies out-of-stock situations. All 

item movements are tracked and provide real-time 

information to the back-office applications. Expiration dates, 

out-of stocks, and minimum reorder quantities are continuously 

monitored - eliminating frowns from the face of the 

shoppers when they found out that there favorite shampoo is 

out of stock!

Retail 13 

Smart Scale 

…and what is in store for you? 

Consumer Benefits 

Acceleration 

The main benefit on the consumer side will be the 

acceleration of the shopping process. Time is of the 

essence, right? Consumers can quickly see what they 

need to know about a product. They can pick a product 

off the shelf and take it to a nearby information kiosk 

which, via touch screen, gives information about the 

product and how to use it. If the product rests on a 

smart shelf, removing the product from the shelf will 

automatically kick off a video telling the consumer 

about the product. 

Mobility 

Customer mobility is important. In the future, 

customers - who write their shopping lists while at 

home, in the office, or in the car - can create a lists on 

their handheld devices and communicate with the store 

on the way there. So can you imagine yourself sending 

SMS if not e-mail message to the store and finding your 

message zipped in PSA while pushing your shopping cart? 

Personalisation 

Retail in the future will be more personalized, so 

customers will get the offerings specific to their needs. 

Stores and customers can communicate more directly 

with handheld computer devices. Individualisation will 

be a major building block in the Future Store vision. 

Efficiency 

Efficient shopping means ease, convenience, and a 

quick checkout process that does not involve standing in 

a queue. A more efficient shopping procedure means 

shorter time in the store, ergo, time can be spent 

somewhere – work, friends or with family! 

Virtual technologies 

Internet and virtual technologies can help consumers 

prepare for shopping in advance of actually visiting the 

store. In Metro’s vision for the future, consumers may 

use their "smart refrigerators" - which "know" which 

items on their shelves are in low supply - to directly and 

automatically communicate with the shop via the 

Internet. 

Benefits to Metro 

Metro has decreased mis-orders and lost inventory due 

to accurate visibility from the distribution centre to the 

retail store, thanks to tagging pallets and cases made 

possible by RFIDs. Real time tracking of retail store 

inventory helps Metro order new inventory on demand, 

reducing out of stocks POs. POs checkout locations are 

monitored and, as need arise, staffs are added during 

peak hours to avoid bottlenecks and deliver the best of 

shopping experience. 


14 Supply Chain 

Electronic Vendor Enablement 

Making e-Business Viable for the SMB 

INTRODUCTION 

Vendor enablement, or the process by which buying 

organisations work with their Vendors to exchange 

business documents electronically, is a proven e- 

business initiative and is one of the first steps towards 

collaborative commerce. Well-structured Vendor 

enablement programmes yield dramatic reductions in 

transaction costs, fewer errors per transaction, and 

shorter cycle times for document processing within 

the extended supply chain. 

Vendor enablement is an initiative driven by the 

buying organisation, and from the buyer’s perspective, 

the issues center on the general application of the 

80/20 rule. For most buyers, around 80 percent of the 

value attributable to received goods and services will 

typically derive from 20 percent of the Vendor base. 

That 20 percent of the Vendor base is often considered 

strategic to the buying organisation, and therefore, 

the buying organisation works to ensure that these 

Vendors are capable of electronically transacting 

business documents. 

The remaining 80 percent of Vendors account for 

only 20 percent of imputed value. As such, the cost of 

managing these accounts is in inverse ratio to the 

value they provide. Given that the cost of processing 

two Purchase Orders with the same number of line 

items is similar, regardless of the Purchase Order 

value, processing costs for the buying company are 

disproportionately higher for its smaller purchases. In 

other words, while buyers will readily integrate the 80 

percent of transactions by value, it is frequently the 

remaining 80 percent by number that are not only the 

most costly to process, but are also the most 

challenging to integrate. Thus, successfully 

electronically enabling this large group of Vendors 

delivers the buying organisation extraordinary value 

that meets current boardroom requirements to 

leverage IT investments as part of broader initiatives 

aimed at reducing the cost of doing business across the 

whole supply chain. 

Petroleum Development Oman has an ongoing 

Vendor Enablement programme which started with the 

connection via the OTN/EOS digital document 

exchange (DDE) of some 2500 vendors (trading locally, 

regionally and internationally). With this connectivity 

PDO have driven down the internal cost of processing 

its documents, are driving the external cost of 

exchanging documents and are starting to derive value 

from doing business electronically. The value in the 

business comes from having the visibility across the 

whole supply chain and is the first steps towards a 

collaborative commerce environment. 

BENEFITS TODAY 

Running the business in a cost efficient manner is 

always a boardroom priority. To date, most cost 

reduction projects have focused on the direct cost of 

doing business – acquiring goods and services at the 

lowest price commensurate with meeting quality 

objectives. But this only addresses part of the cost of 

doing business. Large organisations (such as PDO) have 

long understood that the indirect cost of doing 

business and in particular, processing paperwork, 

handling inquiries and dealing with errors, is a 

significant cost. Electronic Vendor enablement 

programmes offer companies the chance to 


Supply Chain 15 

significantly impact the bottom line by 

addressing the indirect cost issue. This can be 

achieved with a modest financial investment, 

producing the following major benefits: 

• Elimination of parallel processes 

• Maximizing value 

• Reduced cycle times 

• Improved Vendor relationships 

VENDOR ENABLEMENT CHALLENGES 

The Buying Organisation’s Perspective 

Despite recognising the advantages of 

electronic trade, companies do not often 

achieve complete success in their attempts to 

reduce costs through Electronic Vendor 

enablement. The following represent common 

causes of failure: 

• Too many Vendors to enable 

• Fear of imposing too great a cost on 

vendors 

• Lack of knowledge about the 

Vendor community 

• Lack of internal commitment and 

communication 

• No time, money or expertise to 

initiate and manage programme 

• Lack of external commitment and 

communication 

The Vendor’s Perspective 

From the Vendors’ perspective, different 

issues emerge. Companies launching 

Electronic Vendor enablement initiatives most 

often hear these protests from their smaller 

trading partners. 

• Overwhelming complexity 

• Lack of money and technical resources 

• No visibility of return 

SUMMARY 

Although enabling a Vendor community does 

not come without its share of challenges, 

buying organisations have many practical 

methods of facilitating the process. Advances 

in technology, lessons learned through 

internal history, and outside vendors 

seasoned with experience can all help to ease 

what was once a burdensome, if not 

overwhelming, task. Finally, given the current 

economic environment, there has not been a 

better time to elevate Electronic Vendor 

enablement into a top e-commerce initiative 

than now! 

About Author: 

Dr. Graham R Smith. 

FIAP. MBCS. MCIPS. 

Supply Chain SAP Asset Manager. 

Petroleum Development Oman. 

Graham has spent the last thirty 

three years in Supply Chain 

Management environment 

primarily in the Oil and Gas 

exploration and Production 

industry. He has worked for 

many of the Oil & Gas majors in 

his career; this includes Mobil, 

ESSO, ARCO, QP and Aramco 

and is currently with Shell 

International in Petroleum 

evelopment Oman in Muscat, 

Oman.

16 Supply Chain 

SQF 2000 Recipient: 

Hunter Foods 

made locally, sold globally 

It pays to be first - in so many ways! And no one knows 

this better than Hunter Foods Limited FZCO. As a matter 

of fact, they have perfected the art of being the FIRST! 

Try to consider the following: the 

Chairman and Managing Director 

was a member of the first batch of 

graduates from the prestigious Birla 

Institute of Technology -Pilani, 

Hunter Foods was the first factory 

to start operations inside the Jebel 

Ali Free Zone, first to manufacture 

potato chips in canister in the 

Bharat Narayan 

Middle East and the first snack food 

Chairman and Managing Director 

Hunter Foods Limited FZCO factory in Europe, Africa and the 

Middle East to be given the SQF 

2000 by SGS International Certification Services Pty. Ltd. 

Bharat Narayan, Chairman and Managing Director, 

Hunter Foods Limited FZCO narrated why he founded the 

company in 1986: the idea was simple, the fresher the 

food the better its taste. An engineer by profession, 

Narayan noticed that "much of the food available in Dubai 

in those days was imported" and it occurred to him that 

snack foods that had been freshly manufactured locally 

would appeal strongly to consumers because it was an 

innovative idea back then. Thus, three reputed snack food 

brands were born – Safari, Hunter and the international 

flagship brand, Shikar. 

SQF 2000 

SQF stands for Safe Quality Food. The SQF program is a 

fully integrated food safety and quality management 

protocol designed specifically for the food sector with 

application at all links in the food supply chain. For a 

company to be a recipient of SQF certification it should 

provide and pass an independent external validation that 

a product, process or service complies with international, 

regulatory and other specified standards. Based on 

a universally accepted CODEX Alimentarius HACCP 

Guidelines, SQF Codes offer the food sector a 

standard set of guidelines to manage food safety and 

quality simultaneously. Designed to support industry 

or company branded products, achieving SQF 

certification is an external verification of a 

supplier’s commitment to producing safe, quality 

food for target consumers. 

rigorous and flexible while simultaneously complementing 

government efforts and industry initiatives. It also avoids 

duplication and confusion associated with the current 

range of industry sector programs. The biggest 

significance of an SQF certification is that "it builds 

confidence and trust between retailers and suppliers and 

provides an enabling tool for producers and manufacturers 

to demonstrate due diligence and compliance with 

regulatory and product traceability requirements. Safety 

and quality are embedded not only in the production 

process of Hunter Foods but likewise in every employee in 

the company. "Every employee ensures that nothing, 

absolutely nothing goes out of the factory that is not up to 

our standard of quality as if is the backbone of our 

company", Narayan pointed out. SQF is recognized by the 

Global Food Safety Initiative as conforming to the highest 

international standards and utilize protocols recognized 

by the International Accreditation Forum. 

LINKING ARMS 

In the business world, survival and growth are keys to 

success. And intense competition as well as rising 

production cost have had a dampening effect on these key 

success factors. In order to remain competitive, UAE 

based manufacturers linked arms, to cooperate under the 

banner of Dubai Chamber of Commerce and Industry 

(DCCI). "The DCCI has a food and drink committee, under 

which we operate as a subcommittee – a legal body for 

snacks where we regularly discuss product, specification 

and shelf life. We form joint opinions which are conveyed 

to the Dubai Municipality. In return, the municipality takes 

note of these recommendations for proper disposition and 

action", the engineer turned entrepreneur proudly 

outlines. With robust internal systems and international 

recognition coming, Hunter Foods is packaging itself "not 

to be the biggest but the best" – made in Dubai. 

SQF SIFNIFICANCE 

The SQF program has been adopted and 

implemented by over 4,000 companies operating in 

Asia-Pacific, the Middle East, United States, Europe 

and South America. The program itself is very

Warehousing 17 

6 Steps to 

Rack and Roll 

your warehouse 

Now you have considered building a modern warehouse. The 

lay-out, cost and planning is done. But wait, how about your 

racking system? Have you considered the kind of racking 

system to use? Experts believe that a racking system can 

make or break your warehouse or distribution center. True, 

for a not-so-well-considered racking system design can 

greatly affect material handling within the warehouse. 

Stocking and picking time is greatly affected. Efficient 

racking means speedy rolling of products from the 

warehouse to the clients. Below are six easy points that 

will help you start racking and rolling. Are you ready? 

STORAGE DENSITY AND SELECTIVITY. Analyze closely onhand 

storage volumes by SKU and never overlook putaway 

storage zones. Knowing your product and your client mean 

understanding storage design – to adopt deep-lane storage 

such as double-deep, drive-in, drive-thru, pallet flow and 

push-back racks. Choosing the right approach means 

dramatic increase in cube utilization within the 

warehouse. Take note that if you must have access to 

specific pallets at all times, deep-lane storage is not for 

you. In a space crunch, you may be forced to "bury" pallets. 

If this practice is limited to the slowest moving SKUs, 

additional labour is required to access these loads may be 

acceptable. 

PICKING AND INVENTORY PROFILE. Understanding the 

nature of your business means knowing the kind of orders 

you take daily. Consider and understand your requirements 

before selecting a deep-lane storage alternative. If you 

require pure FIFO (First in, First out) method, try 

considering pallet flow racks. You can use other deep-lane 

storage alternatives in a FIFO system under right 

circumstances. Always consider your primary picking 

environment – by pallet, cases or pieces. Carefully evaluate 

your choices, because buried loads might significantly 

increase your material handling labor cost. Picking from bulk 

to replenish a forward pick zone means a lot when it comes 

to racking configuration. 

EQUIPMENT ACCESS. The design of racking system used in 

a warehouse greatly affects the kind of material handling 

equipments to be used. Forklift selection is critical, more 

so if you are using specialized storage such as drive-in, 

drive-thru or double-deep racks. Always add a minimum of 

6 to 12 inches to the right angle stacking aisle requirement 

provided by equipment manufacturers. In so doing, it will 

help reduce damage to both product and racks and create 

a safer workplace. Inconsistent pallet type can also pose a 

problem so that it is necessary to "synchronize" rack design 

to that of material handling equipments. 

WEIGHT AND HEIGHT. As a general rule, don’t try guessing 

game when it comes to weight and height of pallet load. 

Always weigh them. You might stock all those pallets in a 

rack that can’t hold so much weight. Courting disaster is 

disaster in itself! If you can avoid it, a system of weighing 

pallets is perfect while checking the height will help you 

undo all the inconveniences. It might be higher than what 

you thought it will be. 

SEISMIC ZONE. An ounce of prevention is more than a 

pound of salt. Always check all federal, state and local 

building codes. A tall rack built on a high risk earthquake 

zone is very risky. A shaky wall or warehouse built below 

sea level might prove to be a wrong move if you are living 

in a tsunami prone area. It pays to be cautious! 

WAREHOUSE ENVIRONMENT. As much as possible, the use 

of natural lighting is ideal. Reducing power cost is a must. 

Also worth considering are the wash-down requirements, 

related federal or government laws and regulations when it 

comes to handling special products that requires special 

warehouse needs. 


18 Warehousing 

SPAN between 

modern and old 

The warehouses 

Expand. Consolidate. Upgrade. Integrate. All the 

things that keep the board room of SPAN busy. After 

all, "it is where we excel technically", Tarek Saoud, 

SPAN Supply Network Solutions Director said. He 

described the company as "the brain that provides 

supply chain solutions". Backed-up by professional 

services teams, SPAN provides total Warehousing 

Solutions, Office Solutions and Supply Network 

Solutions (IT). "The intent is to provide our 

customers with a turn key solution for their entire 

supply chain requirements" added Saoud. Choosing 

Dubai as its headquarters, it holds regional offices 

in Qatar and Lebanon with active partners in the 

US, France, Italy, and Germany. "We provide 

consulting and application integration services 

including planning, procurement, logistics, fleet 

management, inventory management and 

warehousing", Saoud pointed out. 

WAREHOUSE SOLUTIONS 

Warehouses today are more than just four walls, 

shelves, roof and a tall, wide door. It is more than 

just rough floors with dark corners and corridors. 

Modern warehouses go beyond being a place to 

stock and store merchandise and products but 

rather, for effective inventory control, monitoring, 

safety and above all, cost effective both for 

maximum manpower output and space. "All our 

warehouse solutions are customized as required by 

our individual clients", Ghassan Daniel, Regional 

Manager, Warehouse Solutions pointed out. He 

observed that "today, warehouses are built as per 

specific client demand" a departure from the 

previous warehousing practice where structures are 

constructed with little or no consideration as to its 

relevance and the nature of the business. "We take 

a lot of effort in reaching out by way of information 

to our clients – what an effective warehouse is and 

its effect on cost", Saoud stressed. 

SNS UNIVERSITY 

"We consider inputs to our clients an important 

aspect", Saoud added, reason enough why SNS 

University was "established". Not a school in a strict 

sense of the word where students come to classes 

on a routine basis and teachers give inputs and 

observations. SNS University is a focused forum 

where prospective clients are given inputs on 

modern warehouse solutions where integrated 

systems are essential. "Not just about racks and 

structures but a warehouse that optimizes 

resources and use of space", Daniel articulated. 

From the point of view of our clients, we want to 

"reduce there expenses and not increase the price", 

Saoud categorically said. An innovative approach, 

SNS University aims to "produce not graduates but

Warehousing 

19 

quality and state of the art warehouses and 

operations" for SPAN clients. 

BOOMI Integration Platform 

In every implementation of supply chain 

solutions, the problem is always in the integration 

of the systems (EAI) as well as the communication 

with the external trading partners (B2B). "Boomi is 

the solution", Kamel El-Ghossaini, SNS Business 

Development Manager, said. The Boomi Integration 

Platform adds a lot of value to the Warehouse 

Management system (WMS) implementations. A preconfigured 

integration system, Boomi can "handle 

most communications standards and software 

applications found within the supply chain 

management", commented El-Ghossaini. Boomi 

Integration Platform greatly reduces the cost and 

complexity of internal systems and trading partner 

integration by empowering its users to design, test 

and deploy integration processes without any 

programming. "The process of integration that 

normally takes weeks and months to finish now can 

be ready for ‘go live’ in a matter of hours or days", 

he added. 

Designed to suit the current demand for a fast 

paced integration process, the Boomi solution is 

deployable on a point basis, eliminating the 

technical complexities and higher costs associated 

with traditional implementations. Boomi along 

with the Operations Control Center (OCC) provide 

visibility across the entire operation by integrating 

the different supply chain solutions to a central 

dashboard. The OCC provides managers with real 

time access to valuable data that is already 

analyzed, compared against targets, and presented 

in a graphical and user-friendly manner (KPIs). The 

OCC also highlights situations that are critical and 

require attention. That way, monitoring is done in 

an integrated manner. Tarek Saoud commented, 

"Boomi is a natural partner for us because their 

software meets the demanding integration 

requirements of supply chain management (SCM), 

and in particular, the requirements of third party 

logistics (3PL) providers, one of our primary 

focuses". He also noted, "We’ve already worked 

closely with Boomi on several integration projects 

and are pleased to be solidifying our relationship. 

Our customers will benefit greatly from our 

combined integration knowledge and experience". 

SPAN has an outstanding reputation for customer 

service and a well established customer base. As in 

the medical world, the SPAN solutions are the 

scalpel and SPAN is the specialist. They prescribe 

the proper medication or recommend total surgical 

operation. 


Logistics 

21 

Al Futtaim Exel: 

the future of Quality Logistics 

Michael Stockdale 

General Manager, Al Futtiam-Exel 

Survival of the fittest elimination of 

the unfit. You got it right. Charles 

Darwin’s’ "Law of the Jungle". For 

Michael Stockdale, Al Futtaim Exel 

General Manager, the growing 

demand for quality logistics will 

eliminate the ‘bad guys’ from the 

industry today. 

Coming out from the merger of two 

"giants" - local logistics provider Al 

Futtaim of the Al Futtaim Group and 

Exel, a global leader with wide 

logistics distribution reach, Al 

Futtaim Exel is positioning itself not 

only as a market leader in the field of 

logistics but a company with a heart 

that cares for the consumers and has 

an eye for quality. "Quality will 

eliminate the bad guys from the 

market", Stockdale emphatically said. 

Aside from profit, he explained, Al 

Futtaim Exel is guided by its "No 

Compromise for Quality" mission 

statement. 

On hindsight, quality may seem to 

be a foreign language as far as 

logistics is concerned. After all, the 

business is about moving the product 

on time, from the production plants 

to the consumers. "Quality is what 

sets apart a good logistics service 

provider from a bluffing, pseudologistics 

", Stockdale said, hammering 

on the issue of quality as paramount 

in the changing global logistics 

landscape. Logistics play a very 

important role not only in the supply 

chain but in the day to day lives of the 

people. An irresponsible, profit-onlycentered 

logistics provider will create 

a lot of problem to people and to the 

public in general. 

THE LOGISTICS PICTURE 

Growth, as far as cargo is 

concerned, is unprecedented in Dubai. 

For the past 20 years, the cargo 

industry in Dubai is growing at a steady 

pace of 6 -7% each year. In Free Zone 

Logistics Center alone, at least 

400,000 tonnes of cargo is handled 

every year since it become operational 

in 2000. Dubai International Airport 

saw cargo growth between 13 – 15% 

per year while Dubai Cargo Village saw 

7.5% increase of cargo handled for the 

month of March as compared to last 

year’s. Dubai Ports Authority is 

expecting 50 million TEUs by either 

2020 or 2030. Without mentioning the 

huge cargo coming and going out of 

Jebel Ali Free Zone, clearly, it is a 

sunny day for the logistics Sector. 

The pull of supply and demand in the 

logistics sector pave the way for 

innovations and new strategy 

formulation. That is the positive side. 

The negative part however, adds 

Stockdale, with the space created as a 

result of the influx of huge cargoes 

that needs logistical support, some 

logistics companies drop costs – and 

services. "Cost benefit with Al Futtaim 

Exel is competitive but for quality, we 

provide the best", the towering 

Stockdale punctuated. 

STRENGTH OF MERGER 

Al Futtaim, one of the pillars of 

local UAE business, has grown into 

a 60 company conglomerate. With 

businesses spanning from automobile to 

real estate, from spare parts to retail 

outlets, Al Futtaim is both a client and 

an investor. Exel, whose presence spans 

135 countries as a result of bolt-on 

acquisitions and joint ventures, is a 

respected world leader in logistics. The 

merger of both companies, Al Futtaim 

Logistics and Exel, is viewed as a smart 

move to position the new company in 

the MENA Region. 

FUTURE OF LOGISTICS 

It’s about size, reach and 

organization. That is how Stockdale 

see the future of logistics in the face 

of the global market development. 

"Global logistics solution will be about 

mergers and acquisitions. Size drives 

and efficiency is the leverage. It is the 

economy of scale", he confidently 

said, looking at a huge world map 

dotted with marking pins in his 

ceiling-to-floor-window office. As for 

the logistics clients, Stockdale saw a 

trend of rationalize service providers: 

at least one to three service providers 

per client for a more focused costing 

and monitoring. And as they always 

say in Al Futtaim Exel, THE WHOLE IS 

GREATER THAN THE SUM OF THE PART! 

Whatever it means to them, they 

believe in only one thing: if we cannot 

be the best, we shouldn’t do it! 


22 

Market Watch 

DHL opens $ 3.5m Jebel Ali express logistics hub 

DHL UAE stepped up its 

express logistics and road 

freight capability with 

the opening of US $3.5 million 

state-of-the-art express 

logistics centre in Jebel Ali 

Free Zone. The new 6,000 

square metre facility will 

manage and process throughput 

arriving in Jebel Ali by road, air 

or sea for rapid distribution by 

road or air. A fast evolving part of this market is coming from road haulage, with 

more international players now focusing on the segment. DHL expects to double 

its number of routes out of Jebel Ali within two years. 

"Over the past 12 months we have managed a 214% increase in weight handled 

through the Jebel Ali Free Zone. Customer demand continues to rocket and our 

new facility will provide us with the additional capacity necessary to offer even 

more customers full express logistics solutions," said David Wild, General 

Manager, DHL UAE. 

Opening the new facility, Sultan Bin Sulayem, Executive Chairman, Dubai Ports, 

Customs & Free Zone Corporation (PCFC), said: “DHL has recognised JAFZ’s 

potential not only in boosting its own business but in providing value-added and 

cost-efficient services to its region-wide customer base.” 

Kuwait’s PWC wins 

$ 14b supply chain deal 

Kuwait’s Public Warehousing Co. 

(PWC) won a supply and logistics deal 

from U.S. and Allied Armed Forces in 

the Middle East worth $14 billion on a 

5 year spread. The deal has a 

minimum value of $1.4 billion during 

the initial 18-month period. Under 

the agreement, PWC will supply and 

provide logistics services to the U.S. 

led allied forces in Kuwait, Iraq, 

Jordan and Turkey. 

Aramex expands 

network to Bahrain's 

Financial Harbour 

Aramex has signed an agreement 

with Bahrain Financial Harbour (BFH) 

to serve the express and logistics 

needs of 350 financial and insurance 

institutions operating in the US $1.3 

billion BFH development. The 

agreement is part of Aramex’s major 

expansion plans in the Kingdom, which 

includes four new branches in addition 

to upgrading its office in the 

Diplomatic Area, a central location for 

all businesses, embassies, banks and 

investment companies. 

“We are pleased to announce our 

new office in the Bahrain Financial 

Harbour, which is a significant 

milestone for Aramex Bahrain, set to 

become the center of financial 

excellence in the Middle East,” said 

Samer Marei, country manager, 

Aramex Bahrain. 

As a global transport solution, 

Aramex network spans to 35 countries 

with 200 offices and 3,500 employees. 

Breakthrough: ‘SkyBox’ for secure air cargo 

Transguard, a division of Emirates 

Group Security, has developed 

"SkyBox" - a new breakthrough product 

to secure the transportation of 

valuable air cargo, in partnership with 

German manufacturing firm bwh- 

Spezialkoffer. 

SkyBox combines technology and 

clever physical design to secure 

shipments and prevent air cargo crime 

- in particular the pilferage of 

valuable shipments like electronic 

items, computer peripherals and 

mobile telephones, which have been 

the growing targets of thefts due 

to their relatively high market 

value and small size. 

Designed to meet the 

specifications of the Euro cargo 

pallet, the SkyBox is made of High 

Density Polyethylene (HDP) and has 

adjustable dimensions which could 

measure a minimum of 70cm x 80cm x 

130cm, up to a maximum of 130cm x 

100cm x 130cm. It has an advanced 

locking system designed to prevent 

lock-picks and its durable material 

withstands the harshest handling and 

environmental 

conditions while 

providing secure packing for cargo. 

The SkyBox is already being used on 

some of the routes served by Emirates 

Airline, and has received strong 

interest from other air cargo service 

providers and operators. 


Market Watch 23 

Local Port authorities 

support Ship & Port 

Arabia 2005 

Leading port authorities of the 

UAE and the Middle East region have 

announced their strong support to 

the forthcoming Ship & Port Arabia 

2005 slated between September 3 - 

5, an international show focused on 

opportunities and trends in the 

global maritime industry. 

The event is designed as a mega 

showcase for ship building, 

shipyards, ports, logistics, 

engineering and next-generation 

marine technologies. Ship&Ports 

Arabia 2005 is being supported by 

Dubai Ports Authority, Ras Al 

Khaimah Port, Abu Dhabi Port 

Authority, Sharjah Port Authority, 

Saqr Port Authority, Al Jasira Port 

Authority, Saudi Ports Authority and 

other leading ports from the region 

and outside of it. 

Umm al Qaiwain to build 

Warehouses City 

Tameer (UAE's Al-Khaleej 

Development Co. B.S.C) will invest 

close to US$ 70 million to establish a 

warehousing project in the emirate 

of Umm al-Qaiwain. The Warehouses 

City project will be constructed on 

an area of 116,250 sq. m. and will 

comprise a total of 450 buildings and 

warehouses. Once finished, the 

Warehouse City will complement the 

Ahmed Bin Rashid Free Zone. Umm 

al Qaiwain is located about 50 km 

north-east of Dubai. 

Siemens to construct 

fully automated high-bay 

warehouse 

Siemens Logistics and Assembly 

Systems (L&A) have received an 

order from Almarai Co. Ltd., with 

headquarters in Riyadh, Saudi 

Arabia, to construct a pallet 

warehouse with a controlled 

temperature of 15 degrees Celsius. 

As general contractor, L&A will be 

responsible for delivery, installation 

and start-up. The fully automated 

and integrated high-bay warehouse 

is expected to enhance Almarai Co. 

Ltd. operations. 

Best Value for Money 

Freight Xchange: Enter Here, Send Anywhere! 

Information, or the lack of it, makes or break business. 

The wealth of information is equated to a pool of resources 

that can be used to enhance business – or service. And in 

the advent of the vibrant movement in the information 

highway coupled by experience, Freight Xchange was born. 

David Cleary, Director of Sales, Freight Xchange said: 

Freight Xchange is a worldwide online freight service with 

a fresh approach. It is a FREE service for those who wish to 

post their freight details online for leading freight/logistics 

providers to view and ultimately quote for the business. 

A revolutionary idea, Cleary added that ‘whether the shipment is a small parcel 

all the way through a full aircraft or ship charter, Freight Xchange brings the service 

providers together with the end users". Asked why Freight Xchange, Cleary, a former 

UPS European Air Cargo Sales Manager said: “Our aim is to host a wealth of 

information which shall grow by the day, to facilitate a one stop shop gateway for 

products and services in relation to the freight/logistics industry”. Freight Xchange, 

a first of its kind, is an internet supported venture, can be accessed at 

www.LNNnews.com. 

THE One picks GAC Logistics 

UAE-based home fashion 

retailer, THE One Total Home 

Experience, has chosen GAC as its 

Fourth-Party Logistics Provider 

(4PL) as it opens its first European 

store in Sweden, following 

successful expansion across the 

Middle East. 

The long term contract will see 

GAC provide logistics operation 

covering 2,000 square metres, complete with inbound clearance, full 

transportation to THE One’s boutique store in Stockholm, as well as home 

deliveries to their customers. GAC will be the brain centre for THE One’s supply 

chain, developing a logistics expansion strategy to support further store openings 

in Sweden and possibly other parts of Europe. 

Industrial City: New Dubai Address Rising 

Watch out, another “city” is rising within 

Dubai. Located inside the 560 million square 

feet of prime land, a dedicated industrial zone 

for manufacturing will be home for Dubai 

Industrial City. Aside from manufacturing 

plants, an international engineering academy 

established in partnership with one of the 

leading globally-branded schools, a dedicated 

logistics zone, commercial developments, 

residential communities and retail 

developments with high rise towers, 

boardwalks, piers and promenades will 

complete the “new city” landscape. The just completed master plan showed an 

artistically designed winding canal that will break the cacophony of activity in the 

soon to be the busiest area in Dubai. 


24 

Market Watch 

AXA Gulf is born 

The largest International Insurer in 

the Middle East is born! Recently, 

AXA Insurance B.S.C. and Norwich 

Union Middle East tied the knot‚ in 

Bahrain. The new entity will operate 

under the AXA brand name and be in 

joint venture with the Yusuf bin 

Ahmed Kanoo Group of companies, a 

leading private business 

conglomerate in the GCC. 

Abdulla Kanoo, Chairman of the 

Yusuf Bin Ahmed Kanoo Group of 

companies said 'we are looking 

forward to an enduring partnership 

and are fully confident for the future 

with development of business 

opportunities in the GCC particularly 

Saudi Arabia'. 

Andrea Rossi, AXA's COO for the 

Middle East & Mediterranean Region 

said 'We are delighted at the 

outcome of our discussions which are 

to the satisfaction of all 

shareholders. We now have a solid 

platform to grow our business in the 

region and focus our strategies to 

make AXA Gulf the foremost 

international insurer, offering the 

most comprehensive range of 

products and services to our 

customers'. 

Carrefour hits a 

billion in the region, 

to open 5 more stores 

MAF Hypermarkets, a Carrefour 

franchisee, plans to open five more 

hypermarkets by the end of 2005 and 

a further four by the end of 2006. 

The move followed after a reported 

US$ 1B turn over in 2004 by all 

Carrefour stores in the region. MAF 

Hypermarkets, owned by Majid Al 

Futtaim Holding (75%) and Francebased 

Carrefour (25%), now runs 13 

outlets in the region. 

Dubai to launch consumer price index 

Dubai will launch an internationally comparable 

Consumer Price Index (CPI) that would serve as a basis 

for determining the purchasing power of dirham and 

the inflation rate. 

Announcing this, H.E. Abdul Rahman G. Al Mutaiwee, 

Director-General, Dubai Chamber of Commerce & 

Industry (DCCI), said the index - to be dubbed as DCCI- 

CPI - would be released on a quarterly basis to allow 

international benchmarking. 

According to him, the DCCI, which has undertaken the 

task of producing a globally comparable consumer price 

index for the emirate, is also willing to contribute to the establishment of such 

CPIs in other emirates. 

Iraq, Libya, Morocco & Sri Lanka 

join TNT's 'Express Import' network 

TNT Express has added 20 

countries - including Iraq, Libya, 

Morocco and Sri Lanka - to its 

'Express Import' service, which 

allow customers to arrange 

collections from an overseas 

client and pay for delivery in 

their own currency or send 

shipments overseas and the 

recipients pay for the transaction 

in their local currency. 

'With all the GCC countries already being well established in the Express Import 

network, this expansion gives our regionwide clientele access to a greater 

geographic spread for this convenience product, which removes any difficulties 

arising from exchange rate conversions or fluctuations,' said Mark Pell, TNT's 

Managing Director, Gulf and Saudi Arabia. 

LCCD touch AED1 billion Q1, 2005 collection 

A 14 percentile increase for 

the first quarter of 2005 

representing value and weight 

of goods transacted through the 

Land Transport Custom Center 

in Dubai reaches AED 1 billion 

collection. The report came out 

after the Statistics Department 

of the Ports, Customs and Free 

Zone Corporation (PCFC) made 

an analysis on LCCD recently. 

The increase in goods transacted through the Land Transport Custom Center, was 

achieved despite a 16.8 per cent decrease in the number of trucks that operated 

through the Center this year. In the first quarter of last year, 7818 trucks operated, 

but only 6504 trucks operated in the same time period in 2005. This decrease is a 

result of new specifications introduced, with regard to size and type of trucks used. 

The total number of completed transactions also decreased from 22,561 in the first 

quarter of 2004 to 17,440 in the first quarter of this year. These transactions 

included, issuing of shipping permits, inspection reports and insurance related 

transactions.

Market Watch 25 

Trident appointed Korean 

Trade Center logistics partner 

To focus on the small to 

medium size Korean 

companies exporting into 

the region and give them 

competitive edge in pricing, 

Trident Freight inks an 

agreement with the Korean 

Trade Center (KOTRA). The 

international freight 

forwarding arm of Rais Hassan Saadi Group, Trident Freight "will provide logistics 

facilities which will include collection and destination freight management 

arrangements and storage and handling services to Korean companies using Dubai as 

their hub", Madhav Kurup Trident Freight general manager outlined the role of his 

company. With the arrangement in place, Korean companies whose exports amont to 

less than a container load (LCL) will be able to consolidate their volumes with other 

companies to reduce their shipping costs. Trident Freight will utilize the RHS Group 

third party logistics facilities in Jebel Ali Free Zone and Dubai Airport Freezone to 

provide storage, handling and other value added services for KOTRA. 

Fast Express to join logistics industry 

It’s not only FAST, it is likewise 

an ESPRESS logistics company. 

Fast Express, the express and 

logistics company from the 

Emirates National Group (ENG), 

announced the launch of its 

operations with an AED seven 

million initial investment from 

ENG. "The region's economy is 

booming and there is a growing 

need for express and logistics 

solutions across several sectors of industry. The industry in the UAE is expanding at 

a rate of 30 per cent annually and is currently valued at AED 13.8 billion. It is 

therefore an opportune time for ENG to enter this sector,' said Mr. Ahmed Abood Al 

Boasy, Group General Manager, Emirates National Group, the parent company of Fast 

Express. ENG is one of the leading transportation services providers in the UAE with 

a fleet of over 7,000 vehicles and owns Fast Rent a Car, Fast Limo and Emirates Taxi, 

among other leading brands. 

TIACA to offer "special" scholarship 

Take a Masters Degree or PhD in Air Logistics and you will soar to greater studies 

for free. The International Air Cargo Association (TIACA) is offering students seeking 

further specialized studies a chance to win a scholarship package worth up to 

US$25,000. The awards are available to university students worldwide in three 

specific categories: PhD scholarships, this $25,000 scholarship will be awarded to a 

PhD candidate in logistics, aviation management, transportation, international 

business, law or related field with a focus on air commerce; Masters Scholarships, 

this $5,000 scholarship will be awarded to a student intending to enroll or already 

enrolled in a Master Degree Program and Graduate Research Paper Competition with 

a cash award of $1,000 to the winner. A one of its kind program, TIACA aims to 

support students taking further studies to focus on air commerce. 

Proffitt to take the reins 

of Dubai Logistics City 

HH Sheikh Ahmed, 

President, Department 

of Civil Aviation, 

Dubai has appointed 

Michael Proffitt as 

CEO to head Dubai. 

Logistics City (DLC) 

and the Jebel Ali 

Airport City Free 

Zone. 

A logistics industry veteran, Proffitt 

joins DLC after eight years at Deutsche 

Post/Danzas where he rose to be 

Executive Director for Europe and Board 

Member of Mail International. 

Suez Canal registers 

$282 million receipts 

A growing and active trade 

movement in East Asia, particularly in 

India and China coupled by the rise in 

fuel prices makes Suez Canal the ideal 

and shortest route to the West. The 

result, a significant increase in toll fees 

that hit the record high of $282 million 

dollars as of May 2005. About 1,466 

ships loading 53.8 million tons passed 

through the canal in May, compared to 

1,400 ships loading 51 million tons 

crossed the canal a year earlier. About 

53,575 ships have passed through the 

canal in 30 years with 11.2 billion tons 

in loads. Revenues from Suez Canal are 

Egypt's major foreign currency earners 

along with revenues from tourism and 

oil exports, in addition to remittances 

from Egyptians abroad. 

Number of millionaires 

in the UAE on the rise 

The number of millionaires 

in the UAE has gone up to 

52,800 in 2004 from 47,000 

in 2003 and 45,000 in 

2002, a rise of 12.3 

percent, according to 

the 2005 World Wealth 

Report by Merrill 

Lynch. The reports 

indicates that at 

least one per cent 

of the population in 

the UAE belongs to the 

millionaire category.

26 

Human Resource 

EMIRITISATION: 

Moving towards better 

Marwan Al Sawaleh 

Asst.Director General 

& Director of the ESDC 

Tanmia 

Subsidized housing program 

and scholarship for the 

children of UAE citizens. 

What more can one ask for? 

The missing link, well-paying 

job? Guaranteed! Thanks to 

the vision of H.H. Sheikh 

Zayed Bin Sulta Al Nahyan, 

the late President of the UAE 

and Sheikh Maktoum bin 

Rashid Al Maktoum, UAE Vice 

President and Prime Minister, 

and Ruler of Dubai, a focused 

program for job placement is born. 

The country is pushing ahead with Emiratisation. Recent 

resolutions issued by the UAE authorities mandate that 

trading companies with 50 employees and above should 

have 2% of their employees as Emaratis (UAE nationals), 

while for Insurance Sector it is 5% and for the Banking 

Sector it continues to remain 4%. 

The word "Emiratisation" leads one to believe that simply 

means replacement of expatriate employees by Emaratis. 

But such a narrow connotation undermines the Vision of the 

‘Leadership’ in regard to Emiratisation. The Emiratisation 

Vision aims at rectifying the demographic imbalance of 

local and expats in the local work force - a process that is 

being done judiciously. 

TANMIA: A Focused Body 

The Emiratisation push has become more intense since 

the establishment of TANMIA, a Federal Government 

Independent Authority, whose main objective is to create 

job opportunities for the UAE National workforce, reduce 

the unemployment ratio, enhance the skills and 

productivity of the national workforce and recommend 

relevant policies to the UAE Federal Government. 

"Tanmia has accelerated the process of Emiratisation and 

is marching on the path of success," says Marwan Al 

Sawaleh, Assistant Director General and Director of the 

Employment and Skills Development Center, Tanmia. 

Records show that so far Tanmia has succeeded in finding 

employment to more than 3,500 jobseekers. In 2004, 1,550 

jobseekers were employed and another 450 jobseekers 

were employed in the first quarter of 2005. 

MAHARAT INITIATIVE: Bridging the Gap 

Today's jobseekers demand a different kind of mindset. 

Obtaining a degree is often not enough to land a suitable 

job. According to a recent report, the private sector 

employed only 2 per cent of the nationals, while 52.1 per 

cent of the total jobs in the country were available with 

the private sector. The report attributed this trend mostly 

to the poor record of nationals matching their 

qualifications to the demands of the job market in the 

country. On the other hand the private sector too is blamed 

by the report for relying heavily on the expatriate 

workforce. 

Tanmia’s Maharat programme seeks to enhance 

competencies and skills of UAE national jobseekers in 

diverse fields to match the jobs available in the 

market.Under the Maharat innitiative, Tanmia works with 

private and government employers to enroll potential 

candidates in a partner-training institute for customised 

training which is constantly reviewed and customised to 

meet the labour market's requirements. In 2004. around 

1300 jobseekers were trained in partnership with 

specialised training institutions under this programme.. 

Sawaleh explains :"Our research and information center 

‘looks into the market’ to know which sector can a UAE 

national, given his skill and educational background, be 


Human Resource 

27 

employed and become productive and competitive. It is the 

‘information that we gather’ that finally determines what 

training program we should initiate, after which, where to 

look for employers to hire UAE nationals." He stressed, " The 

quota on banking, insurance and trading for mandatory 

hiring of UAE nationals is a product of research." 

Tanmia, focused like a laser beam, is pouring all its 

resources in fulfilling its mandate. With its four priority 

pillars in place, the best may yet to fall in its right place. 

But while everything may not come like rain, at least, all 

roads lead to better life. A home, a responsive government 

and hopefully, a stable, well paying job! Can anyone ask for 

more? 

GCC LABOUR MARKET REFORM 

BAHRAIN 

Recently developed a new National Employment Strategy 

that includes providing fiscal subsidies for training nationals 

in the private sector and financial aid for the unemployed. 

Introduced measures to improve general education 

standards, and vocational and technical training programs, 

and increased employment quota of Bahrainis in small and 

medium-sized companies while abolishing the "free visa" 

system to expatriate labor force. 

KUWAIT 

Established Manpower and Government Restructuring 

Program (MGRP) in July 2001 to implement the labor law, 

provide unemployment benefits to unemployed Kuwaiti 

nationals, and provide training and facilitate employment of 

Kuwaiti nationals in the private sector. Approved, in 

September 2002, quotas for the proportion of Kuwaitis that 

private companies must employ; companies that fail to meet 

this target would be subject to a fine and sanctions such as 

exclusion from bidding for government contracts. 

OMAN 

Introduced measures to improve vocational and technical 

training programs, and set a uniform minimum wage for 

Omanis at RO 100 (plus RO 20 as transportation allowance) 

instead of the previous two-tiered (skilled/unskilled) 

minimum wage. The authorities are also modernizing the 

educational system at all levels. A new ministry of manpower 

was created in 2002 and a new labor law adopted in May 

2003. 

QATAR 

Formally ended the policy of automatic employment for 

Qatari graduates. Now assists job seekers by maintaining 

information on job openings and by counseling and training. 

Established a department in the ministry of civil service with 

responsibility for this function. 

SAUDI ARABIA 

Created the Human Resources Development Fund (HRDF)—with 

financial participation of the private sector—to provide 

training of Saudi labor force in skills required by the private 

sector, and development of a database for matching and 

placement of Saudi workers in the private sector. 

UNITED ARAB EMIRATES 

Established the National Human Resource Development and 

Employment Authority to help improve skills of U.A.E 

nationals looking for jobs; and established a national labor 

market database to facilitate nationals' job searches. 


28 

Transportation 

Boeing to offer 777 freighter version 

Al Futtaim Technologies 

launches web-based 

tracking system 

Boeing has provided new details about its plans to 

possibly develop a freighter version of the 777, which would 

be based on the new 777-200LR, the world’s longest-range 

jetliner. 

The 101-tonne freighter, expected to be ready by 2009, 

would have a range of about 5,200 miles, said Rob Faye, 

Regional Director of Product Marketing for Boeing 

Commercial Airplanes. It would burn about 18 percent less 

fuel than other freighters in use today, such as older 747s, 

he said. 

It would offer a cargo density of 9.9 lb. per cu. ft., 

almost identical to the 747-400F’s density of 9.8 lb. per cu. 

ft. A side cargo door would measure 120 inches high and 

141 inches wide. 

Jumbo container ship 

docks at Jebel Ali Port 

One of the world's largest container ship ‘MSC Rachele’ 

docked recently in Dubai's Jebel Ali port. The ship which 

arrived from Belgium’s Antwerp port was on its way to 

Singapore. 

Reported to be third longest ship worldwide, the 335 

meter long vessel ‘MSC Rachele’ has a capacity of 8238 

twenty-foot equivalent units (TEUs). In fact, should the 

ship stand upright on its stern, it would easily tower over 

the Burj Al Arab (321 metres). 

The high quality infrastructure facilities and equipment 

at Jebel Ali Port ensured the smooth and efficient handling 

of the mega container vessel. 

Al Futtaim Technologies, an Al Futtaim Group business 

unit, has announced the introduction of m-Trak, a webbased 

tracking system with the ability to track fleet of 

vehicles and produce online alerts to fleet managers. 

m-Track by MobiApps, a leading provider of real-time 

fleet management solutions for small to large 

transportation and logistics companies, allows managers to 

log in from any PC to access real-time information on a 

specific vehicle or group of vehicles. 

Based on Global Positioning System (GPS) and GSM 

technology, the system generates critical information 

through GPS/GSM/GPRS, such as speeding, unauthorized 

stoppages and emergency SOS alerts. Fleet managers can 

log in from any PC to the secure m-Trak web application 

and access real- time reports, analyze data and replay 

vehicle routes for efficient fleet management, even in 

harsh vehicle environments. 

"m-Trak combines internet technology, GPS and wireless 

terrestrial networks such as GSM/GPRS into an affordable 

fleet tracking and monitoring system, which will 

revolutionise the ability of fleet owners to track and 

manage their fleets," said. Vishesh Bhatia, Group Director 

(Electronics), Al Futtaim Group. "We are delighted to be 

launching m-Trak in the GCC. The system will enhance 

operations through mapping and reports generated in a 

unique way," he added. 

Apart from ease of use, convenience and superior value 

in terms of improved efficiency, m-Trak can be integrated 

with other transportation and logistics applications. 

Oman Shipping Company 

inks $240m shipping deal 

Oman Shipping Company has signed a US$240 million 

(RO92.4 million) agreement with a number of international 

institutions to finance the building of 145,000 cu mt. 

capacity LNG gas carriers 'Salalah' and 'Ibra'. 

Once complete, the two gas carriers would be rented to 

Qalhat LNG company. Salalah is expected to enter the 

service in December this year, while Ibra will be ready by 

middle of 2006. 


Transportation 29 

Boeing projects $2.1 

trillion market for new 

commercial airplanes 

Emirates SkyCargo 

inducts first A310 Freighter 

Boeing sees a $2.1 trillion market for new commercial 

airplanes during the next 20 years. Market demands will 

more than double the world's commercial airplane fleet by 

2024 and accommodate a forecasted 4.8% annual increase 

in passenger traffic growth, according to just released 

Boeing’s 2005 Current Market Outlook report 

The report projects a need for approximately 25,700 new 

commercial airplanes (passenger and freighter) during the 

next 20 years, more than 80% of which will be in the singleaisle 

and mid-size twin-aisle categories. In terms of 

delivery dollars, the largest market is projected to be the 

Asia-Pacific region, with 36% of the $2.1 trillion total. 

Emirates SkyCargo has taken delivery of the first of its 

three Airbus A310-300Fs from EADS EFW, at the latter's 

facility in Dresden, Germany. 

The wide-bodied A310-300F, with the Emirates SkyCargo 

logo emblazoned on its body, has a gross payload of 39 

tonnes. Equipped with state-of-the-art technology, the 

aircraft offers excellent performance capabilities. The 

aircraft also has Auxiliary Centre Tanks to increase its 

range, enabling one-stop operations from Dubai to the U.S. 

and countries in the South Pacific. 

The two A310-300Fs on order will enter Emirates' fleet by 

the end of the year. 

Etihad Crystal Cargo 

beefs up feeder service 

Bahrain receives world’s 

second largest cargo plane 

The world's second largest cargo aircraft the Antonov 124 

(AN124) landed at the Bahrain International Airport from 

Houston (U.S) to deliver urgent oilfield equipment - a 

drilling rig derrick for the Saudi drilling contractor Pool 

Arabia Limited. 

Carring the combined cargo weight of around 92,000 kg, 

the charter of this heavy weight transport aircraft was 

arranged by Panalpina. 

Etihad Crystal Cargo has enhanced its feeder services in 

the Middle East with the introduction of new roller-bed 

trucks.. 

Manufactured in Germany, the roller-bed trucks, 

provided and operated in cooperation with Micco Logistics 

on scheduled services linking Abu Dhabi to Sharjah, Dubai 

and Jebel Ali, will provide an improved trucking 

infrastructure to and from Abu Dhabi international airport. 

The trucks have been fitted with the global positioning 

system to make cargo tracking easier and more efficient. 

In 2004, the first full year of operation, Etihad Crystal 

Cargo moved almost 20,000 tonnes of cargo. The cargo 

volume target for 2005 is more than 100,000 tonnes. 


Material Handling 31 

Ship Matters 

- delivering ships across continents 

Take material handling out from the supply chain and you 

will see economies fall, trade and commerce on a standstill 

and countries grouping for something to hold on to. Material 

handling - efficient material handling, is the key factor that 

perfects the link between the producer to the customer. A 

gleaming Lexus is nothing but a piece of metal if not sold 

and delivered to clients. Modern PC’s will end up gathering 

dust instead of data in warehouses if it is not delivered. 

Companies today have perfected ways of timely delivery 

of products. With the use of modern and state of the art 

equipments coupled with innovative ideas, delivery is made 

easy and fast! But how about if you are to deliver a ship! Of 

course you cannot just pack a tug boat or an oil tanker in a 

crate and ask DANZAS or Empost to deliver the same across 

a distance of 20,000 nautical miles. It needs an expert in 

the field, for it must sail on its own keel not packed and 

lifted like "ordinary" cargoes. 

Founded in 1906, Redwise, a global ship delivery and 

crewing company, knows exactly what it is to deliver a sea 

going vessel from the builders to the clients. After all, ship 

delivery is not just a matter of crewing the vessel and 

sailing off. It requires an interesting mix of seamanship and 

creativity. Creativity for example, is often required to 

achieve optimum cost-efficiency in technical and 

operational management, and in providing multi-skilled 

crews ready to deal with any seaworthy vessel. "The most 

important challenge is that you must deliver in the 

destination port as per contract", says Evert van Tellingen, 

Redwise Managing Director. Failure to deliver cost a fortune 

- as one tug boat much more a tanker costs millions of 

dollars, and money is always the twin of mishandling 

and failed delivery. 

CHALLENGES 

Since its founding, they only failed twice! Tellingen 

however is quick to point out that that "in both cases, 

it happened because of machinery and boilers 

failures", not human factor. In both cases, planning 

and pre-arranged contingency measures comes in 

handy. Decisive actions were taken. Towage 

arranged, until the vessel reaches its final 

destination. "The marine world is 

a small one, words does travel 

fast and a mishap goes around 

longer than stories about all the 

other vessels delivered", he 

added. 

"Route planning is the 

most 

essential part", Tellingen said. Possible bunker ports and 

ports of refuge are identified, readily accessed when 

emergency situation comes. "Prepare for the most likely 

mishaps like bad weather en route to final destination. 

Make sure that the vessel is water tight and secured, even 

if the monsoon season is over", he pointed out with 

authority. In 1999, Redwise delivered Tug "Whale Cay" from 

Yokohama, Japan to Freeport in the Bahamas. Tellingen 

narrated that "delivery route was originally planned to take 

Hawaii/Panama sea lane". However, "atrocious weather 

conditions in North Pacific forced us to re-route the vessel 

via Guam/Singapore area towards Suez Canal". The result, 

they traveled longer distance than expected, picking 

around 16,829 miles before reaching its final destination. 

On the same year, a fast ferry, "Carmen Ernestina" was 

delivered from Fremantle, Australia to Curacao, Antilles via 

Suez Canal. Designed with jet-propulsion, the ferry goggles 

fuel, forcing Redwise delivery crew to call in so many 

bunker ports along the way – Mauritius, Djibouti, Malta, 

Ceuta and Cape Verde. After reaching its final destination, 

"Carmen Ernestina" consumed 350 tons of fuel for the 

circuitous 13,750 mile journey. 

THE BUSINESS 

On an average, Redwise crew travel more than 100,000 

nautical miles per year, delivering ships of all sizes and 

make from almost all corners of the world. With an in-house 

maritime recruitment and crew management, Redwise is 

able to staff itself with competent sailors. Tellingen pointed 

out that knowing the capabilities of each sailor and 

screening them better is as important as fitting the vessels 

for the long journey. "Knowing the personnel is a must!" he 

said. 

RISKS 

Two most common risks – damage (vessel) and delay 

(arrival) carry heavy toll for the ship delivery business. In 

some instances, delivery delay will cost US $200K per 

day. Tellingen also identified "stowaways are a problem 

but piracy is even worse, let alone kidnapping". 

And as the old saying goes, no matter what, the 

show must go on. And so they sail to high seas, 

from one corner of the world to the other, 

delivering one of the most important 

cargos that links both ends of the 

supply chain. 


32 

Construction 

Green Buildings: 

Energy efficient, healthy and sustainable structures 

On June 9, 2005, some parts of Dubai were paralyzed by 

a sudden blackout that stopped people in their tracks. From 

Bur Dubai to Gold Souq to Jebel Ali, computers crashed, air 

conditioners shut off and thousands of homes and 

businesses were plunged into darkness. Thousands of 

workers hurriedly left their offices, descending long flights 

of stairs because elevators had stopped working. The 

economic cost: estimated at millions of dirhams. 

While capacity was not the culprit, the blackout, handled 

efficiently and set right in record time by the authorities, 

has spurred discussions within the real estate industry 

about energy strategies. That sharpened focus has, in turn, 

intensified interest in the concepts and strategies 

associated with "green buildings." 

Green building: Optimising nature 

Green buildings are structures that are designed, built, 

renovated, operated, or reused in an ecological and 

resource-efficient manner. For example, a green building 

might reduce electric consumption through the 

incorporation of energy-efficient appliances and fixtures, 

such as high-performance windows. Faucet aerators, waterconserving 

toilets and low-maintenance landscaping are 

strategies commonly implemented to conserve water. 

Proponents of green buildings argue that the approach 

has many benefits. "Making buildings more energy-efficient 

could have a significant impact on energy savings," notes 

Mario Seneviratne, Director of Green Technologies, an 

Engineering and Project Management consultancy firm 

which promote ‘Green Buildings’ concept in the Middle 

East. "The combination of green design techniques and 

clever technology, in the case of a large office, for 

example, can not only reduce energy consumption and 

environmental impact, but also reduce running costs, 

create a more pleasant working environment, improve 

employees’ health and productivity, reduce pollution and 

legal liability, and boost property values and rental 

returns," Mario adds. 

can be incorporated with minimal or zero increased upfront 

costs and they can yield enormous savings. A building 

that is properly situated can reduce energy requirements by 

relying on the sun to satisfy some of the heating 

requirements, on shading to cool the building and on 

natural light to reduce the need for artificial light. Also, the 

energy-saving techniques need not all be as exotic as 

installing coated glass, computer-controlled blinds or 

photovoltaic cells. Builders are now insulating buildings 

more effectively, in some cases using materials such as 

recycled paper and fabrics, including old, shredded jeans. 

Sitting in his Dubai Airport Free Zone located office, 

Mario noticed that DAFZA buildings adopt many green 

buildings themes. "The optimal use of natural daylight and 

controlled air-conditioning system in the building, for 

example, as well as reducing energy costs, also seems to 

make workers more productive," 

According to Mario, in Dubai’s other landmark buildings 

that can be considered having green themes include the 

Sheikh Rashid Residential building at Maktoum Street, Al 

Maha Resort which uses solar power to pump water, Madinat 

Jumeirah Hotel which maximises cooling green spaces and 

natural lighting, Hyatt Regency Hotel which uses high 

efficiency and environment friendly chilled water plant, 

etc. 

Mario is quick to note that the need to inform the public 

is the key for the success of Green Buildings. "People should 

be made aware and be informed about the benefits of a 

‘Green Building’, he said, noting that environmentally 

friendly buildings are not just about structures. "It is a way 

of life," he stressed. We must "think sustainability of life", 

thus going into green buildings is infact the dawning of an 

era where resources are to be conserved and life itself is 

prolonged by adopting sustainable and green practices. 

Different Shades of green 

"Green buildings can be built at the same cost of 

conventional buildings. Using natural light and proper 

ventilation by way of architectural and engineering design 

reduces the use of power and lowers electricity bills," Mario 

said, adding that the costs may not be the issue but the 

benefits it brings. 

Even with a tight budget, many green building measures 


Case Study 33 

DHL’s Logistics Triumph 

- moves 142,000 soccer balls in and out of the stadium 

142,000 soccer balls are a true challenge for a logistics 

company. Especially when each and every one of them must 

be taken out of its packaging, brought into a stadium and 

then repackaged and transported away on approximately 45 

trucks. And all that in 24 hours' time. This was precisely the 

challenge that DHL took on for the world record set 

recently by its affiliated company, Postbank, at 

Borussia-Park in Mönchengladbach. Approximately 

142,000 yellow balls - rolled into and out of the stadium 

gates by DHL - were placed on the field by 320 Postbank 

employees. 

The planning and organization of logistic supply chains 

and the transport of goods are part of DHL's core business. 

An event such as this is unique in the company's history, 

however, and an example of how members of the Group 

work hand-in-hand together. DHL Express agreed 

immediately when Postbank, a national sponsor of the FIFA 

World Cup 2006, sought more than just transport aid. Over 

9,000 boxes with balls were delivered to the stadium on the 

weekend by adidas in 25 x 40 foot overseas containers. "It 

quickly became clear that we couldn't bring the balls into 

the stadium in their boxes," said Marco Schlüter, Key 

Account Manager at DHL Express. The empty boxes alone 

would have formed a twelve-meter high wall around the 

playing field. So the logistics company decided to unpack all 

of the balls, place them in a 30 x 30 x 2 meter wire-mesh 

trolley and then roll them into the stadium on a ramp. 

When it came time to repackage the balls, the boxes 

were brought onto the playing field on roller tracks built 

specifically for the purpose, filled with balls and then 

pushed back out again. A detailed plan requiring 100 DHL 

employees alone was drawn up for the packaging and 

loading of the balls. After being placed into the 

waiting trailers, the balls were then taken to a Deutsche 

Post central warehouse in Nohra (near Weimar) by 

approximately 45 trucks. From there they were sent to their 

recipients throughout Germany, individually and in small 

groups - via DHL of course. 


34 

Legal 

WHO ARE YOU GETTING INTO BED WITH ? 

- guidelines for picking the right franchise partner 

Franchising is booming in the Middle East. It's 

difficult to keep up with the list of expansions and new 

arrivals; new Starbucks outlets opening at every turn 

and the recent arrivals of Blenz Coffee, Miu Miu, 

Columbus Cafe, Yo-Sushi! and, finally, Prada. The 

concept of franchising is very broad and covers fast 

food businesses, restaurants, hotels, soft drinks and 

clothing amongst others. 

So where do we start? Think of entering into a 

franchise arrangement as kind of like getting married 

for a set number of years. So if you're gonna end up in 

bed together, make sure you know who you'll be waking 

up next to in the morning. 

Quality and Type of Goods/Services. 

Are there any restrictions on the quality or type of goods and 

services used in the franchise and where they may be 

purchased, including restrictions requiring purchases from 

the franchisor or its affiliates? 

Territory and Master or Not? 

Do you have a clear description of the territory that will be 

granted and whether it is a master franchise covering a 

larger territory or just a licence to open one or two outlets? 

Look At Your Options 

There are literally thousands of franchises to choose from. 

If your thing is fried chicken, you will find many franchisors 

who will offer you the opportunity of owning and operating a 

fried chicken franchise! There are many directories you can 

use to take a look. Once you know who you are interested in, 

then the interesting stuff begins! 

Checking Out Your Marriage Partner 

It is important for any prospective franchisee to obtain full 

information about the franchisor. There are none of the strict 

disclosure requirements you have in other countries so if you 

want to know something, you better ask! The kind of 

information you will want is: 

Fees 

You will need information about the initial franchise fee 

and other initial payments that are required to obtain the 

franchise, and also about any continuing payments required 

after the franchise opens. 

Getting Out 

You'll need a clear description of the conditions under 

which the franchise may be repurchased or refused renewal 

by the franchisor, transferred to a third party by the 

franchisee, and terminated or modified by either party. 

Number of franchises in operation. 

The number of franchisees provides some measure of the 

stability and experience of the franchisor. However, it is 

possible that a new franchisor provides a great ground floor 

opportunity. 

Number of franchises no longer in operation 

You need to find the number of franchisees who have been 

closed or repurchased by the franchisor, or gone out of 

business. The more franchisees that have experienced 

problems, the greater your risk becomes in purchasing a 

franchise.However, there are some good opportunities with 

younger franchisors also.

Legal 35 

Type and amount of training 

The type and amount of training the franchisor provides 

can prove critical to your success. 

Type of management assistance provided. 

There should be a large amount of assistance provided 

with the start-up of the business. However, there should be 

continued assistance offered regularly, as well as for 

unexpected crises. 

Financial stability 

The certified financial statement provided by the 

franchisor should indicate a financially healthy 

organization. 

Site location assistance 

An old expression about retail establishments states that 

there are three critical elements to business success: 

location, location and location. While this is an 

exaggeration, it illustrates the importance of site location. 

An experienced franchisor should be able to provide 

sophisticated techniques for accomplishing this task. 

Reputation among franchisees 

The best way to determine how you will be treated as a 

customer and a franchisee is to talk with other franchisees. 

If possible, try to talk with those who are no longer in 

business. 

Projected operating losses 

Determine how long a franchise is expected to operate 

before revenue will be sufficient to cover expenses. This 

will help you calculate the amount of funds you will need to 

raise in order to cover this deficit. 

Potential profits 

A critical element in deciding about a franchise is the 

amount of annual profits that you can expect. Have a cost 

analysis done to determine whether the projected profit is 

enough to ensure a reasonable return on investment. You 

should ask other franchisees whether the profit they make 

each year is close to what 

the franchisor told them to 

expect. 

And Remember the 

Contract! 

After you sign, it is simply 

too late. So make sure you 

have a contract that says 

who does what when and for 

how much! 

How long does the 

contract last for and when 

can it be renewed? 

Remember, if you are going 

Author: 

Mark Hill 

therightslawyers 

Dubai 

to spend millions in the first year but only have a one year 

appointment, you are simply asking for trouble. 

What is the territory being given and is it an exclusive 

appointment (i.e. no one else gets the same thing in the 

same territory)? 

What restrictions are there on selling the franchise on to 

a third party? The more limitations that exist, the more 

difficult it will be for you to recover your money. 

Does the franchisor agree to buy back the franchise if the 

contract is cancelled? This is absolutely necessary or you 

risk losing all of your initial investment in the company. 

Which country's law governs the arrangement and do 

the parties have to go to court or is there a dispute 

resolution mechanism which tries to prompt discussion and 

arbitration? 

How can the contract be terminated i.e. this is the get 

out for the franchisor but also it is an area of great risk for 

the franchisee. 

And when the contract is terminated, what happens then 

e.g. do stocks get returned, are they paid for, is there any 

compensation for goodwill built up during the operation of 

the franchise? If it isn't in the contract, it doesn't exist. 

Remember to check the trade mark and other intellectual 

property rights provisions carefully. 

Oh yeah, and don't forget the money! Who has to pay 

what and when?

36 

Gateways 

DAFZA records significant growth 

Dubai Airport Free Zone Authority (DAFZA), has achieved an exceptional growth 

in the number of registered companies in the first quarter of 2005. 

"During the first quarter of 2005, 105 new companies have registered with the 

Dubai Airport Free Zone Authority. The growth represents an increase of 40 per 

cent over the same period in 2004," stated Shahla Abdul Razak, Director of Sales 

and Marketing, DAFZA. 

Located within the vicinity of Dubai International Airport, DAFZA offers investors 

the most attractive investment packages with 100% foreign ownership and tax free 

benefits, that assists them in growing their business in the region. Currently there 

are 650 companies operating from the free zone. 

DPI Terminals shortlisted 

for Aden management contract 

DPI Terminals (DPI) has been named preferred bidder by the Council of Ministers 

for the 30 year concession to manage and develop terminal operations at the port 

of Aden, Yemen. 

The concession covers the management and operation of both Aden and Ma'alla 

Container Terminals. DPI's development plan includes investing over US$ 370m 

during the life of the concession in new equipment, infrastructure and 

management systems in order to increase capacity to 3.5m TEU. Construction on 

the first phase of the development will commence as soon as DPI engages in the 

project to be completed in 2008. The first phase raises capacity to 1.7m TEU. This 

development would involve increasing quay length to 1100 meters and provide 

seven new Super-post Panamax gantry cranes and supporting yard handling 

equipment. 

The Council of Ministers has also approved DPI Terminals partnership proposals 

for Aden Freezone, Industrial Park and Dry Docks as part of DPI Terminal's complete 

solution for the Port of Aden. 

Singapores’ 

Airport ground 

handling services 

to undergo facelift 

Kedma Holdings Pte Ltd, a fully 

owned subsidiary of Dubais’ Dnata, 

the region’s biggest travel 

management company, will raise 

SD$140 (AED315 million) to finance its 

acquisition of Changi International 

Airport Services (CIAS) in Singapore. 

CIAS is an integrated ground handling 

service provider at Singapore's Changi 

Airport. Dnata initially acquired a 

78.4 per cent shareholding in CIAS 

from Singapore based Temasek 

Holdings (Private) Limited in October 

2004. Subsequently, Dnata acquired 

the remaining 21.6 per cent and 

became sole owner of CIAS. This 

move is in tandem with Dnata's steady 

expansion of its operations overseas, 

with the company alreadyexporting 

its ground handling expertise to 

airports in the Philippines, Pakistan, 

Iran and Sudan. 

Dnata owns world class ground 

handling facilities and equipments, 

among which is the TBL600, the 

world’s first ever towbarless aircraft 

pushback and towing vehicle. TBL600 

is the first A380 compatible pushback 

and towing machine. 

JAFZA to manage 

Tangier Med Free Zone 

Morroco’s Logistics Free Zone at 

Tangier Mediterranean will be 

managed by JAFZA International for a 

period of 10 years. Situated in the 

port complex of Tangier Med, and 

extending to a surface area of 130 

hectares, the logistics free zone is 

one of three free zones associated 

with the Tangier Mediterranean 

project. The agreement between 

Tangier Med Special Agency (TMSA) 

and Jafza International supersedes 

the co-operation agreement awarded 

to Jafza International last October for 

technical advice. Jafza International 

plans to apply the same management 

systems to Tangier that have made 

Jebel Ali Free Zone the fastest 

growing free zone operation in the 

world. 


Gateways 

37 

RAK to spend $1 billion 

for port expansion 

The Ras Al Khaimah Customs and 

Ports Department has announced a 

$1 billion (Dh3.68 billion) expansion 

strategy for the emirate's ports. The 

expansion plan covers all ports of 

Ras Al Khaimah Saqr Port, Ras Al 

Khaimah Port, Al Jazerah Al Hamra 

Port and Ras Al Darah Port. The plan 

for Al Jazeerah Al Hamra Port 

includes development of container 

and general cargo services with 

Qeshem Free Trade Zone and Bandar 

Abbas, Iran. More material handling 

equipments will be acquired in 

preparation for an expected bulk of 

cargo that will come in. An increase 

in the depth of approach channel 

and inner harbour to eight metres 

will also be initiated. 

Qatar plans massive 

dry dock facility 

Discussions are under way to 

select a strategic partner for the 

development of a huge new dry dock 

facility in Qatar. The dry dock is 

slated for commission by 2009. 

This is a consequence of the 

tremendous development of Qatar's 

LNG and GTL facilities, for which it 

has been estimated that around 

3,000 ships per year will need to use 

the port facilities at Qatar's 

northern Ras Laffan Industrial City. 

With an expected average of nine 

ships a day requiring maintenance, 

there is obviously huge potential for 

dry dock facilities in the country, 

and it is hoped the dock would also 

attract business from other ships 

passing through the region. 

$20 billion GCC airport expansion set 

Major airport development and expansions worth more than US$20 billion are 

currently taking shape in the Gulf. 

Apart from the US$4.1 billion expansion of Dubai International Airport and the 

building of the US$5 billion New Doha International Airport, projects attracting 

the attention of suppliers include the US$272 million (Dhs1 billion) Jebel Ali 

Airport, expected to start catering to cargo, logistics and charter flights once its 

first phase is completed by 2006. 

The most recent addition to the region's exciting list of future projects is the 

US$6.8 billion new airport in Abu Dhabi, for which a number of leading airport 

development consultants are currently being short listed. In Saudi Arabia, 

feasibility studies are being performed on plans for a new regional airport in the 

Madinah Province at the coastal town of Dhuba, while a US$1.5 billion expansion 

of the King Abdul Aziz International Airport in Jeddah is now in progress. 

The development and expansion programs in airports forms part of the general 

GCC focus to cement the position of the region as a platform linking Asia to 

Eastern and Western countries. Already, Dubai is activitely pursuing to strengthen 

its global foothold as a major gateway for logistics. 

Jadaf Dubai named world’s No. 1 shiplifting operator 

Sharjah to build new 

Container Terminal 

Sharjah Ports Authority (SPA) is 

building UAE's newest container 

terminal at Hamriyah Port, which is 

scheduled to become operational by 

September 2005. It will be Sharjah's 

third container terminal after Port 

Khalid and Khor Fakkan. Hamriyah 

Port has a depth of 14 metres and 

handles non-containerised breakbulk 

cargo, liquid petroleum gas 

(LPG) and petrochemical vessels. 

Jadaf Dubai has been named the number one shiplifting docking yard in the 

world by Rolls Royce Naval Marine Company, for completing over 59,100 operations 

on all types of vessels. The honour was conveyed to Al Jadaf through a letter from 

Rolls Royce, which also commended Jadaf on its excellent overall performance 

during 2004. 

It is estimated that nearly 70 per cent of the small and medium sized vessels 

passing through the region dock at Al Jadaf for maintenance and repair. In 2004, 

Jadaf Dubai completed 2,181 operations, against the average of 300 operations at 

European docks. 


Banking and Finance 

39 

Banking on data 

BACKBONE OF BUSINESS 

In today’s competitive banking world, time and space is 

tangible. Life in the fast lane is interlocked to speed in 

business transactions, maximized workspaces and enhanced 

human resource output. It is where technological 

advancement comes in handy. Couple it with foresight, the 

net result is efficient business for total customer 

satisfaction. And yes, the business sector, over and above 

individual bank clients, will be too happy not only with an 

enhanced banking system but with speed and ease in 

processing major transactions. 

However, the road to satisfy the ever growing demand for 

efficient service is not short. Aside from finding ways of 

having to satisfy the clients, banks have to consider security 

as a major factor. It is precisely because of these reasons 

why the National Bank of Abu Dhabi (NBAD) took a gigantic 

step in reshaping its office system – to build an integrated 

electronic access infrastructure for content, documents and 

processes. By taking this one giant step, NBAD leap-frogged 

from the technology of the past to the communications 

infrastructure of the new millennium, satisfying the 

growing needs of both clients and the bank itself. 

BIG PROBLEM 

With 60 domestic and 80 international branches, NBAD is 

considered as one of the leading banks in UAE and the gulf 

region. "At the National Bank of Abu Dhabi, millions of 

documents are produced every year. Most often, each 

document has to be copied at least 5 times, this means that 

a large amount of staff time is spent, manually searching 

for and managing documents", Faris Saddi, NBAD IT Services 

manager said. At first, all documents/hard copies of every 

document are manually filed in each branch. In return, 

each branch sends a copy of each file to the head office in 

Abu Dhabi to form part of the central file documents. 

"It takes a lot of space to keep all the files, both in the 

head office and in the branch", Saddi said. To address the 

situation, microfilm was adopted. After some time, 

microfilm "become redundant and obsolete, images are not 

clear and retrieval of data was still a problem". Saddi added 

that "the microfilm system is costly and difficult to maintain 

and it requires at least a week to deliver the requested 

films to the branches". As a consequence, it takes around 

two weeks to process loans and temporary overdrafts. 

He further pointed out that once a transaction is done in 

a branch, the process becomes the authority of a local 

approving officer, as all the documents are forwarded to 

NBAD head office in Abu Dhabi. "The time consumed to 

physically transfer the documents from the branch to the 

head office is already a factor, not to mention the 

processing time taken once the documents reaches Abu 

Dhabi", Saddi said. He further detailed that for a single 

transaction, the back office job is enormous. "Time is also 

wasted retrieving data in cases of disagreements between 

the client and bank records", Saddi pointed out. It is also 

noted that documents and files intended for a particular 

bank officer sometimes fall to a "wrong table" and, at the 

same time, there is a chance that some unauthorized bank 

staff may get easy access to some confidential documents 

as it is being physically carried from one office to the other. 


40 

Insurance 

Guide to Cargo Insurance 

With the beginning of the first century of the new 

millennium, the world of marine cargo insurance 

continues to evolve. As the world economy continues to 

expand, so does the volume of international ocean cargo 

shipments, which in turn needs to be insured. Without 

marine cargo insurance cover, banks would not extend 

credit facilities to international trade and exporters would 

be apprehensive to ship goods to unknown ports. 

Since marine insurance covers international trade, 

standard clauses and wordings are issued by the Institute 

of Cargo Clauses [ICC] London. The standard wordings 

gives all traders a level playing field and all traders are 

aware, or rather should be aware, of their cover. 

There are essentially three types of cover available for 

sea shipments :- 

Institute Cargo Clauses (A) [Also known as "All Risks" 

Cover] 

Institute Cargo Clauses (B) 

Institute Cargo Clauses (C) [Also known as "Basic" 

Cover] 

The above clauses apply to general cargo shipments on 

all regular liner cargo vessels. 

The type of cover to purchase is mainly dependant on 

what type of cargo is being moved, the ICC also has 

specialised cargo clauses for certain types of commodities 

such as Frozen Meat, Bulk Oil, Timber etc. 

The type of cover is dependant on the value, volume and 

packing of the cargo being moved, for example, it would 

be ideal to cover the Electrical items such as bulbs, 

switches, wires etc for ICC ‘A’ Cover, whereas Steel Pipes 

could be insured for ICC ‘C’ or basic cover. 

Certain items cannot be insured for ICC ‘A’ Coverage 

such as timber logs, which are usually shipped break bulk 

or in open vessels. The idea is to insure unforeseeable 

losses, and since the items are not protected from the 

elements, therefore cannot be provided with All Risks 

cover ! 

The importer has to cover the consignment whenever 

the Title to the goods is transferred to the importer, this 

is usually determined by the trade terms. For example, 

PERILS TABLE - IS IT COVERED? 

A,B & C CLAUSES COMPARED 

Fire & Explosion 

Vessel or craft stranded, grounded, sunk or 

capsized 

Overturning or derailment of land conveyance 

Collision or contact of conveyance with external 

object 

Discharge of cargo at port of discharge 

General Average sacrifice 

Jettison or washing overboard 

General average and salvage charges 

Earthquake, volcanic eruption, lighting 

Entry of sea, lake or river water into vessel, 

craft, container etc. or place of storage 

Total loss of package lost overboard, or whilst 

loading or unloading from vessel or craft 

Fresh Water 

Ship sweat, steam of hold 

Contact with other cargo 

Improper Stowage-by Shipowners 

Hook damage, Mud, Grease 

Theft 

Pilferage 

Leakage 

Non-Delivery 

Breakage and other physical loss or damage 

from any external cause 

Deliberate damage or destruction 

Wilful misconduct of the Assured 

Ordinary leakage, ordinary loss in weight or 

volume, ordinary wear & tear 

Insufficiency or unsuitability of packing or 

preparation of goods insured (including stowage 

when carried out by Assured or servant) 

Inherent vice or nature of goods insured 

Delay 

Insolvencey or financial default of the vessel, etc. 

Use of weapon of war employing atomic or 

nuclear fission 

A B C 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes Yes 

Yes Yes No 

Yes Yes No 

Yes Yes No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

Yes No No 

No No No 

No No No 

No No No 

No No No 

No No No 

No No No 

No No No 

No No No 


Insurance 

41 

Ex-Works would mean that the importer owns the goods 

immediately upon leaving the supplier’s premises, 

therefore has the responsibility to insure them. 

Whereas, goods purchased on FOB terms, where the 

title passes on when the goods are loaded onto the vessel 

at the port in the supplier’s country. Technically the 

responsibility to insure the goods begins when the goods 

are loaded onto the vessel. 

It is common practice to insure goods for 10-20% above 

the invoice value, this is mainly done to compensate for 

any charges and or expenses incurred during the 

transaction for example, bank charges, port charges, 

clearing and forwarding etc. 

There are mainly two types of marine cargo policies 

issued :- 

Marine Certificates, issued as as per an open cover 

policy 

Individual Marine Policy, issued as a one-off for nonregular 

shipments 

An open cover policy is designed to cover all shipments 

for a trader, the open policy provides cost advantages as 

it is priced on the annual turnover of the trader and it 

helps the trader with a fixed cost for cargo insurance. The 

open policy defines the cover, the voyage, goods, packing 

and exclusions, all shipments which fall within the scope 

are automatically covered, all the trader has to do is 

declare the shipment to the insurer. 

There is a common misconception that goods shipped 

under Open Policies are automatically covered, it is a 

standard condition of an Open Policy that the insured is 

responsible to declare Each & Every shipment to the 

insurer. Therefore, the onus of declaration is on the 

insured, and not on the supplier or bank. 

"Fac" or Individual policies are issued for one-off 

shipments or shipments which fall outside the scope of the 

open cover. "Fac" policies are usually require the trader to 

get a quote for the cover for each and every shipment 

thereby increasing administration cost. 

Author: 

Sanjay Babur ACII 

Chartered Insurance Broker 

Managing Director 

Cosmos Insurance Brokers LLC 


42 

Information Technology 

RFID: 

Making sense 

of sensor-based 

technology 

Technological breakthroughs have a way of 

hanging around, sometimes for years, 

before finally exploding on to a ready and 

willing marketplace. 

Back in 1985, senior Philips executives were 

talking about new, super-thin TV sets that 

could be hung on a wall like a painting or a 

mirror. It was 12 years before the first plasmascreen 

TVs hit the shops, and another six 

before they became even vaguely affordable. 

Today, they dominate many retailers' 

showrooms and the manufacturers are adding 

extra capacity to meet demand. 

Much the same is true with radio frequency 

identification (RFID) technology, which has 

been around since World War II but is now 

poised to go mainstream on the back of three 

concurrent developments. 

First, semiconductor technology allows the 

chips that form the basis for RFID to be 

produced at viable prices; secondly, the 

Internet has evolved to the point where data 

can be shared easily around the world; and 

thirdly, mobile communication technology has 

evolved so that the huge amounts of data 

from mobile readers can be distributed. 

There are already many small-scale RFID 

solutions implemented around the world, but 

these three developments in tandem will 

enable global supply chain solutions with 

potential benefits totalling $150- 300 billion a 

year (source: AutoID-Center, 2003). 

Indeed, RFID has been described by industry 

commentators as one of the few truly 

disruptive technologies to merge in recent 

years. Given the Middle East's long 

tradition as a trading hub, and its 

growing status as a logistics center 

between East and West, the 

adoption of RFID becomes an 

extremely interesting prospect for 

this region. 

Financial benefits 

The benefits that RFID promises 

to the business community are 

potentially enormous, which is why 

there is so much excitement around 

the technology at the moment. It's 

been estimated, for example, that 

retail giant Wal-Mart alone could 

save $8.35 billion annually with 

RFID-that's more than the total 

revenue of half the companies in 

the Fortune 500. 

The estimated Wal-Mart savings 

breaks down as follows: $600 

million through avoiding stock-outs; 

$575 million by avoiding theft, error 

and vendor fraud; $300 million 

through better tracking of a billion 

pallets and cases; $180 million 

through reduced inventory; and a 

huge $6.7 billion by eliminating the 

need to have people scan barcodes 

in the supply chain and in-store. 

Small wonder, then, that Wal-Mart 

is investing $3 billion in RFID over 

several years and is one of the main 

drivers of RFID implementation. 

Generally, then, RFID promises to 

revolutionise supply chains and 

usher in a new era of cost savings, 

efficiency and business intelligence. 

The potential applications are vast 

as it is relevant to any organisation 

engaged in the production, 

movement or sale of physical goods. 

This would include retailers, 

distributors, logistics service 

providers, manufacturers and their 

entire supplier base. 

While manufacturing across the 

region is still a latent sector, the 

Middle East's booming retailing and 

distribution industries, could derive 

significant advantages from RFID. 

RFID has the potential to improve 

efficiency and visibility, cut costs, 

deliver better asset utilisation, 

produce higher quality goods, 

reduce shrinkage and counterfeiting, 

and increase sales by reducing outof-stocks. 

It can even help improve 

the safety of the food and 

pharmaceuticals we buy. 

The key to delivering all these 

benefits is cost. Industry is hoping 

that tag manufacturers can hit 5 

cents per unit, and that is being 

regarded as a breakthrough level. 

Yet even that is still too expensive 

for, say, an individual can of Coke, 

which is why packaging companies 

and other researchers are looking at 

innovative ways to apply this 

technology. The cost of creating a 

barcode is virtually zero. 

So far so good. But the path to 

RFID nirvana is not without its 

obstacles. Wal-Mart laid down its 

marker as a pioneer in its use and 

accelerating adoption by issuing 

mandates to its suppliers 

throughout the entire supply chain. 

Wal- Mart, Metro Group and US 

Department of Defense have all told 

their top suppliers to incorporate 

RFID tags in all pallet shipments by 


Information Technology 

43 

2005. In March, Wal-Mart relented a little because its 

suppliers would find the deadline near-impossible to meet 

and so would Wal-Mart itself. 

The deadline may have changed, but the intent is crystal 

clear: RFID is very close to being The Next Big Thing. IDC 

predicts spending on RFID software, hardware and services 

for the US retail supply chain will increase from $8.5 million 

in 2002 to nearly $1.3 billion in 2008. 

The Wireless Data Research Group forecasts that the 

global RFID market will grow to $3 billion by 2007. The 

significant investment this represents for business makes it 

critical that companies consider how they can reap longterm 

rewards beyond simply ensuring compliance with 

customer mandates. 

Interest in RFID is also peaking at a time when Middle 

East-based organizations are increasingly looking for ways 

to streamline their supply chains, and increase both the 

efficiency and transparency around that aspect of their 

businesses. 

What RFID generates is data- mountains of it, 

encompassing all aspects of the business value chain. This 

will push the boundaries of information management in 

terms of scalability, reliability and security and will create 

information silos to handle each specific application. 

To protect the initial investment and realise maximum 

long term returns, businesses need to ensure that they base 

their RFID strategy on sound information architecture - an 

architecture that adapts to changes in technology, 

standards and business dynamics, providing an integrated 

'single source of truth' that ensures all parts of the business 

benefit from what RFID has to offer. 

A key value proposition of RFID technology is the ability 

to provide near real-time tracking of any RFID tagged item 

without human interaction. Turning this capability into a 

sustainable competitive advantage depends on how 

effectively all this RFID data can be translated into valuable 

operational intelligence, such as forecasting and inventory 

management, and made available to all enterprise systems, 

applications and users. This capability can provide 

businesses with visibility into their whole supply chain and 

corporate assets with little or no human labour cost. 

If widely adopted, RFID has the potential to eliminate 

human induced data collection errors, reduce inventories 

on-hand, minimize wasted resources and improve safety 

and security, ultimately providing companies with the 

insight to make better business decisions at a low cost. 

Jeff Woods, principal analyst at Gartner, says: 

'Enterprises that can leverage RFID to create RFID-centric 

processes in order fulfillment manufacturing and 

warehousing will achieve strategic differentiation from 

their competitors.' 

Author: 

Ayman Abou Seif, 

Managing Director for Gulf States, 

Oracle Corp. 


44 

Academia 

Logisitics 

Whats in for you? 

By Stephen Errey, MD of Lucidea Consulting Ltd 

It is a common perception that logistics is simply a cost to 

be controlled, or a process to be improved. While these are 

important considerations, the experience of really successful 

companies has shown the value of looking at logistics in a 

radically different way. Companies that grow quickly – and 

sustain that growth – use logistics as a competitive tool. But, 

how can you do this yourself? 

You might imagine that the first time a company meets with 

a logistics consultant the discussion would revolve around a 

logistics problem. In fact, most of the questions wouldn’t be 

about your logistics at all, but about your business, customers, 

competition and your goals for the future. 

There’s a good reason for this; successful businesses don’t 

treat their logistics departments as just an add-on, they look 

at the needs of their customers and then design a system to 

meet those needs. 

Here’s an example that you should be familiar with – office 

stationery. For a stationery supplier, it would be normal for 

one office to be treated as one customer. That means it’s one 

picking note and one drop. But, when looked at from the 

customer’s point of view, what they want is the stationery 

where it’s going to be used, in the amounts in which it’s going 

to be used. A neatly shrink-wrapped pallet on their loading 

dock means considerable work for their staff, and delay while 

everything is processed and delivered across the building. 

What has happened is that customer-oriented suppliers have 

set their logistics up to pick, pack and deliver to their 

customers’ desks – and by thinking outside the warehouse, 

they’ve been able to enlarge their businesses. If you’re 

focused on growth, make sure you’re also focused on what’s 

outside your warehouse. And that’s not just your customer – 

remember to get your suppliers to think the same way as well. 

Successful businesses have, nowadays, found a way to give 

great service at low cost with logistics playing its part. The 

traditional way to cut cost is to shave the pennies off here and 

there – from suppliers perhaps, or with a lower specification 

for particular materials, or by putting off maintenance and 

replacement for a while. 

Of course this helps – no one can afford to let up on cost 

control. But in the end the way to really make a difference, 

cutting out whole swathes of cost and moving up a step in 

levels of service, is to completely revamp the way your 

business is run and, in particular, cut out whole activities. 

Once you start looking, you’ll be surprised how much surplus 

work you can find. Here are three examples to give you a 

flavour of the issues at hand. 

How many links are there in your supply chain? Do your 

products have to pass through intermediate warehouses or 

distributors before they reach your customer? And if so, what 

about changing the way you work so that you can dispatch 

straight to your real customer? It’s this insight that’s made the 

best internet companies like Amazon and easyJet successful. 


Academia 

45 

They understand that there’s nothing magic about the 

internet, merely that it allows you to cut out links in your 

supply chain that cost you money in handling, inventory and 

administration. Amazon and easyJet realised that the high 

street bookstore or travel agent didn’t add value for a lot of 

customers, so they cut out the cost. 

As a second example, pharma manufacturers regularly pick 

into one container and then take everything out and pack it 

into another box. This is something that plenty of companies 

do. It’s far better to cut out the packing activity altogether, 

picking straight into the carton to be dispatched. 

Thirdly, how many hours do you spend checking and 

correcting mistakes that shouldn’t happen in the first place? It’s 

important to worry about quality issues, but not useful to solve 

quality problems by adding more levels of checking, so find out 

what’s causing the problem and then do something to stop it at 

its inception. 

For instance, where companies have different products that 

are packed in almost identical cartons, it may help to add some 

colour to the outsides to make them easier to distinguish. 

Most of management – and logistics is no different – is an 

intangible science; it’s hard to know when you’ve got the right 

answer. This can be frustrating; even when something does turn 

out well there’s always the nagging thought that it could have 

been done even better. That’s why inventory control theory can 

seem so attractive. It’s one of those areas where there’s a right 

answer, but you need to be careful how you use it. It’s easy to 

concentrate on the technique, and forget in the meantime what 

the real objective is. 

Classic inventory management techniques are entirely 

reactive, that is to say, you look at what’s happened in the past 

and use that to predict future patterns. The trouble with this is 

the prediction is invariably wrong, although it can be 

counteracted by making forecasting more sophisticated. 

Whatever the model, you’re still going to end up with the sales 

director on your back because you’ve got stock-outs, and the 

finance director complaining about surplus stock. Instead of 

trying to improve our ability to guess what the customers are 

going to do, would it not be better to take the guesswork out of 

the equation? 

Here’s an example. A company that supplied industrial 

fasteners had a contract with an oil refinery to supply bolts for 

their maintenance programme. Although the project was 

planned months in advance, their customer didn’t see nuts and 

bolts as important, so they only ordered them a day or two 

before they needed them. This meant the supplier had to hold 

lots of items in stock, just in case. 

This could have been avoided if both parties had 

communicated with each other clearly. Getting more involved 

with your customer’s needs also gives you the opportunity to 

influence their behaviour to the point of controlling what they 

buy and when they buy it. With the right incentives it is possible 

to push products out to customers when it suits you, instead of 

waiting for them to place the next order. 

All too often, transport is seen as an add-on to the real 

business – a necessary evil that doesn’t add value. Following 

this attitude, transport is bought from the cheapest supplier; 

schedules are designed simply to keep costs low; and nobody 

monitors performance. Customer requests, like defined lead 

times or delivery time windows, are seen as a nuisance that 

stops transport being operated efficiently. 

However, transport does have a value to your customer. The 

key to real improvement is finding that value, and organising 

yourself to provide it. If this is not achieved, you’ll find 

yourself paying unnecessary costs and missing valuable 

opportunities to increase revenue. 

Cutting out next day delivery, for example, can seem to be 

a good way to reduce your costs. But if your customers really 

need it, you’ll soon find yourself making special arrangements 

to keep them happy. If, on the other hand, you take the 

initiative and offer different levels of service, the customer 

feels they are in control and you have the chance to charge a 

premium rate for a premium service, and use lower priority 

work to keep efficiency high. 

Of course, these are just two examples, but the message is 

clear: start treating transport as a customer service and you 

will feel the benefits. The customer feels cared for, and you 

get the chance to charge realistic rates for services people 

want. 

I hope you can now see ways in which you can start using 

your logistics services to give your business that competitive 

edge. It’s a great way to make your business more successful 

– so why not give it a go? 

about the author 

Stephen Errey has been Managing Director of Lucidea 

Consulting Limited since 2001. He has worked in logistics 

for over 20 years, working with many blue-chip companies 

during that time, including AstraZeneca, Bristol Myers 

Squibb, Fresenius Kabi and Novartis. His experience covers 

Europe, the Middle East, America and Africa.

Link issue#7 may -june2005 - SCLG

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