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EDITOR’S NOTE
EDITORIAL
Group Managing Editor
Vigyan Arya
vigyan@groupinfinity.com
Editor
Patrick Francis
patrick@groupinfinity.com
Contributing Editors
Priya Kumar
Eric Francis
Savio Pimenta
Saida Samai
Editorial Assistant
Jessel Tan
ART / PRODUCTION
Aslam A.K
Boban K.V
Photographer
Amaresh
Advertising & Marketing
sales@groupinfinity.com
COVER
Issue 5 Vol 8 April 2010
The Link is the official publication
of SCLGME. The opinions
and views contained in this
publication are not necessarily
those of the SCLGME as
publishers. Readers are advised
to seek special advice before
acting on information contained
in this publication, which is for
general use and may not be
appropriate for the reader’s
particular circumstances. No part
of this publication or any part
of its contents thereof may be
reproduced in any form without
the permission of the publishers
in writing.
EDITORIAL PRODUCTION
AND CONTENT PROVIDER
Group Infinity FZC;
P.O. Box 9733, Sharjah;
United Arab Emirates
Ph: 06-5571646; Fax: 06-5571656
Email: link@groupinfinity.com
Supplying the Vital Link
The supply chain forms the spine of every economy and for
a place like the Emirates – the trader’s paradise -- the supply
chain and logistics are an essential nerve system running up
the spine of the economy.
Our publication, The Link, is the ear and eyes of the Supply
Chain and Logistics Middle East (SCLGME), which is arriving
to you in a revamped shape with a more diversified editorial
coverage of the industry and its complementary tributaries.
With the intention of linking the industry and its
prominent members in a string of information and functional
communication, The Link, in its new format is an essential tool
and a mouth piece for the industry.
Under the guidance of the members of the board of
SCLGME, The Link intends to gather the momentum of every
member of the organization and offer a platform for all to voice
their point of views and matters of concern. With a dedicated
and guaranteed target audience, its commercial viability and
reach is extremely affective and offers very productive response
to all the advertisers in the publication.
Our dedicated team of editorial, with a network covering the
entire Middle East and beyond will bring to you the latest from
the world of supply chain and logistics, that’s beyond borders
and across all the oceans.
Our visual approach of presentation is intended to offer
illustrative spread to our editorial and hope to maintain a proactive
interaction with all our readers, members of the SCLGME
and its board members for the purpose of continuously
improving The Link and make it a global standard tool for the
establishment to communicate with industry representatives
beyond all borders.
Patrick Francis
Patrick Francis
Editor
4 Link May 2010

INSIDE
Contents
COVER STORY
16
22
TRANSPORTATION
Transport 2010: Middle East’s
Railway revival
Countries across the region are upgrading
their rail transport systems but investment in
roads is lacking
Global container trade in recovery mode: 2010
Container trade is on a recovery path, led by restocking in developed markets, even as the
Middle East consolidates its position as a trans-shipment hub on the Asia-Europe trade
26
MANAGEMENT
42
28 OVERVIEW
REAL REPORT
UAE’s ambitious nation-wide
rail network on anvil
The UAE embarks on its first nation-wide
1,500 km long freight and passenger rail
Supply chain BPO in a
consumer-driven world
The fundamentals of supply chain remain
unchanged since the inception of commerce
Effective applications can
save firms 30%
Logistics and supply chain management
companies can save up to 30 per cent
of cost by using effective applications to
manage their systems
REGULAR FEATURES
10 GCC - NEWS
New management system to ease
logistics at AW Rostamani new
warehouse
34 INNER VIEW - DESTINATION
DP World’s Djibouti Port stay unaffected by
the debt woes of Dubai World and aims to
become main port in COMESA
48 INTERNATIONAL - NEWS
Japan Airlines will ground its freighter fleet
after more than half a century of operations
the loss making airline announced
6 Link May 2010

SCLG INFO
SCLG MEMBERSHIP
Corporate Membership
Membership with the Supply Chain and
Logistics Group (SCLG) is open to all
organisations. Corporate members may
nominate four to six members, depending
on the category of membership – basic,
privileged or premier – they opt for. All
nominated members shall be allowed to
vote at the Annual General Meeting (AGM)
and at any Extraordinary General Meetings.
The Board of Directors (BoD) and Executive
Committee (EC) members shall decide the
annual fees for membership.
Individual Membership
This is 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 BoD and EC members.
Student Membership
Only full-time students can be SCLG
members, but this membership does not
convey voting rights to the individual. The
annual fee shall be set from time-to-time
as deemed necessary by the BoD and EC
members.
Why be an SCLG Member
A membership allows access to educational
training, seminars and networking evenings
at concessional and rebated rates. It
also provides rebates on subscription
of membership to SCLG’s international
partners.
There is also a certificate that
distinguishes a member as a professionally
focused individual or enterprise committed to
the cause of the supply chain and logistics
industry.
For more details, please visit our website
on www.sclgme.org. If you wish to volunteer
to help us foster a better supply chain and
logistics community, please contact Kanchan
Vora on admin@sclgme.org.
The SCLG Middle East is a non-profit
organization working under the umbrella
of the Dubai Chamber of Commerce
and Industry to promote the cause of the
supply chain and logistics industry. It brings
opportunities for personal and professional
development through networking prospects
GLOBAL THOUGHT AND
INDUSTRY LEADERS
Shashi Shekhar
Founder & Group President
SCLGME
Mishal Hamed Kanoo
Kanoo Group
Mohammed Sharaf
DP World
Michael Proffitt
Clifford Cuttelle
Sanjay Naik
Emirates Group
Jinendra Sancheti
TNT Express
Fadi Ghandour
Aramex
Saadi Al Rais
RHS Logistics
David Wild
Hamdi Osman
FedEx
Essa Al Saleh
Agility
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 in the supply chain. It strives
to bring the best in education, seminars
and interaction through partnerships and
alliances with a variety of similar bodies
across the globe.
The group’s official magazine, The
Supply Chain and Logistics Link, addresses
the needs of the supply chain professionals
in the Middle East. It presents news, views,
developments and information drawn from
industry experts.
The first of its kind in the region, The Link
aspires to be a benchmark for the industry
community, offering valuable insights
and information to the target market. The
magazine’s articles and news features cover
innovative supply chain practices, emerging
technologies, e-commerce and market
information from industry leaders.
SCLG’S Mission
The group aims to provide an accessible
and dynamic networking environment that
facilitates the achievements of its members
in a community that encourages professional
development and diversity in the logistics
and supply chain management.
SCLG’S Objectives
¢ To promote the cause of the supply
chain and logistics industry and raise the
standards of all industries on end-to-end
supply chain
¢ To protect the interests of member
organisations and support government
bodies in the formulation of policy
frameworks for logistics organisations.
¢ To encourage the free exchange of
knowledge and skills relating to supply chain
and logistics among its members
¢ To provide members the opportunity
to network among one another and to help
facilitate an efficient commercial environment
¢ To undertake studies and gather
information, statistical data and official
documents relevant to the industry
¢ To establish and maintain good relations
with similar international organisations and
other professional groups, and to provide
members the opportunity to network with
like-minded organisations
¢ To conduct training courses, seminars,
conferences and studies relating to logistics
and supply chain and to establish a
library and research centre to expand the
knowledge base information on the industry
¢ To promote the cause of education in
supply chain and logistics among the UAE
nationals, thereby contributing to build a
cadre of professionals and highly-skilled
citizens to take up current and future
challenges in the industry.
www.sclgme.org

SCLG INFO
REGIONAL DEVELOPMENT
COMMITTEE
Dr. K. M. Madrecha
Dubai World
Dr. Ernst Schmied
East Europe, CIS,
Russia
Madhav Kurup
Hellman Worldwide
Logistics
Capt. Arup Gupta
Sharaf Logistics
INTERNATIONAL ADVISORS
Dr. Dermot Carey
Ireland
Dr. Ernst Schmied
Austria
Dr. Dermot Carey
UK & Ireland
Nigel Moore
Logistics Recruitment
Khalid Bichou
Morocco
Usha Kaul
University of Dubai
Sanjay Babur
Cosmos Insurance
Alan Waller
UK
Ravi Kashyap
Steinweg Sharaf
Mark Millar
Asia Pacific
Dirk Van Doorn
DHL
CONSULTATIVE COMMITTEE
Tim Sensenig
USA
Mark Millar
Asia Pacific
Dr. Dermot Carey
UK & Ireland
Paul Lim
Singapore
Johnson Soans
Extron Electronics
Reinhard Wind
Dr. Craig Voortman
South Africa
Jassim Saif
Emirates SkyCargo
Dr. Cedwyn Fernandes
University of Middlesex
Prof Donald Tham
Canada
Pradeep Melakandy
Pan-Pacific Logistics
Michael Stockdale
Tom Freese
USA
Dave Tootle
Southern Africa
Mohsen Al Awadhi
Dubai Logistics City
Mahendra Agarwal
Singapore
Dany Vermeulen
Australia & New Zealand
Andreas Dur
Xvise Logistics
Vineet Agarwal
India
Tom Nauwelaerts
Al-Futtaim Group
John Halpin
Dominique De Froberville
Mauritius
Melvin Varghese
Transworld Group
Dr. Ganesh Natrajan
India
Brian Forbes
DHL Express
Edward Sweeney
Ireland
BOARD OF DIRECTORS
Stephen Cross
ATMS
Dimitriy Bulaenko
Ukraine
Tayssir Awada
FedEx
Roy Patterson
UTi
Naveen Arun
Hemant Barke
Prudence Insurance
Brokers
Igor Hribar
Slovenia
Dr. Tom Gulledge
USA
Geoff Wheatley
SSI Schaefer (ME)
Dr. Satish Mapara
GlobeApex Management
Consultants
Soma Shekhar
SCLG President
TrackIT
Sebastian Thomas
Terry Lee
Taiwan
Tony Walford
Switzerland
www.sclgme.org

GCC
News
RMM Global FZCO at
DAFZA a boon
For most of the 1,450 companies at the
Dubai Airport Freezone, tax free incentives
such as no levying of company and personal
income taxes are the major factors in the
decision for a multinational company to open
a branch or regional office in the Freezone.
DP World posts 8% decline
in 2009 volumes
Ports giant DP World has faced an 8% down in container volumes in 2009 as against the
previous year earlier, due to the “challenging” conditions facing the global shipping industry.
Excluding the performances of the new terminals that joined the network during the course
of last year, volumes declined by 10 percent - an improvement on a drop of 13 percent in
the first half. Across all 50 of DP World’s terminals, twenty-foot equivalent (TEU) volumes
dropped by 6 percent during 2008, the company announced.
Recall puts brakes
on Toyota’s growth
Toyota has had what might be perceived
to be a nightmare start to the year with
the issue of two recall notices affecting
seven million vehicles globally across its
model range built over the last five years.
Alarmingly the concerns are over cars
accelerating out of control which, thus
resulting in accidents involving several
fatalities in the last decade. Whilst the first
recall issued a few months ago related to
floor mats riding up and catching under
accelerators – which alone affected over
four million vehicles, the latest relates to the
pedal mechanism becoming sticky, causing
it to stay depressed, or returning too slowly
to idle.
“The company’s annual turnover in 2009
touched AED 62 million,” said Naim Zehil,
Director of RMM Global FZCO. “For RMM
Global FZCO, a commodities trading, and
logistics company Dubai’s strategic location
between the Far East and European market,
transparency, security, stability and probusiness
policies of Dubai and
the UAE’s visionary leadership were the
main factors in RMM Global’s decision
to base their worldwide operations’ main
office in Dubai from its earlier location in
London,” he added.
“In 2003 while scouting for a business
location for our company, I told my partner
that I would base the decision to shift based
on the friendliness of the businessmen,
investors, business environment and
customer services,” Zehil said.
This was a very positive indication of
Dubai’s welcoming attitude for investors
and one of the factors in my decision to
move to Dubai.” “As companies engaged in
international commodities, trading partners
in our main markets are Japan, Europe, US,
Middle East, UAE and India. He added that
in his business, his trading partners would
look for the location of trading partners and
would not look kindly to a company based in
a country with in security, instability or follow
laws not accepted in other major countries.
10 Link May 2010

News
GCC
CEVA expands
presence in Middle
East with new
warehouse
CEVA Logistics, a leading global supply
chain management company, today
announced that a new state of the art
warehouse and office facility will be built
in Jebel Ali Free Zone, Dubai, expanding
CEVA’s presence in the Middle East.
The new warehouse supports CEVA’s
growth strategy in the Middle East, which
is focused on increasing its customer base,
and through a truly integrated service, offer
shared user and consolidated services
to existing customers to realize cost and
operating efficiencies. The opening of this
facility will enable the expansion of CEVA’s
contract logistics capabilities in
the region and goes a significant way
towards achieving an ambitious plan to
have 100,000 sqm of warehouse space by
the end of this year.
The new purpose built facility, scheduled
for completion by the end of 2010, will
incorporate the latest technology features
and will be LEED (Leadership in Energy and
Environmental Design) certified. The new
warehouse is developed in collaboration
with Gazeley, global developer of highly
efficient, environmentally friendly logistics
and industrial spaces and designed to meet
the highest standards in environmental
construction and efficiency. This is the
second project CEVA with Gazeley have
partnered on, beginning last year when
CEVA leased a unique 12,000 sq m pyramid
building in Dubai. This state of the art office
and warehousing facility has a pyramidal
structure to embody CEVA’s distinct brand
and now acts as a central hub for all regional
customers, also serving as the Company’s
Middle East headquarters.
New import online system
from TNT Express UAE
TNT Express UAE launched its new Express Import system that gives customers complete
control over their import shipments. As a net importer serving as a hub for the region,
customers in the UAE will be able to use this new web based tool to order the collection
of import shipments with quotations and billing in their local currency to better control
shipping costs. One unique feature of TNT’s Express Import system is the option to request
a quotation before the booking is completed. “TNT Express aims to make importing easier
for its customers across the region,” Mark Woodcock, Sales and Commercial Director, TNT
Express UAE, announced when speaking to the media.
Dubai records 30%
pearl trade increase
A total of AED99.6m ($27.12m) worth of
pearls was transacted in Dubai in 2009,
Dubai Pearl Exchange (DPE), a subsidiary
of Dubai Multi Commodities Centre Authority
(DMCCA), announced. According to statistics
from Dubai World Statistics Department, the
pearl trade rose from AED95m to AED99.6m
last year, driven by a 30% increase in imports.
The trend towards high-quality pearls has
increased significantly in Dubai, highlighting
a shift in consumer preference towards
exclusive pearls, the DPE said in its press
release. Consumption levels for pearls in
Dubai have also increased over the last
year, reflected through lower exports than
the previous year. This increase was driven
by substantial growth in the natural pearls
segment, where volumes increased by 50%
and values tripled, it added.
May 2010 Link 11

GCC
News
Khalifa port
operations to start
in 2012
The new Khalifa Port is expected to have a
capacity of 15 million TEUs and 35 million
tonnes of general cargo. The first phase
of Abu Dhabi’s US$2.18 billion (Dh8bn)
Khalifa Port will become operational in
2012 and the emirate plans to develop
smaller ports to cope with increasing
traffic, according to a senior port official.
The initial capacity of the new port is
two million TEUs and eight million tonnes
general cargo annually, nearly four times
more than the current capacity of the
largest existing port. “The Khalifa Port will
be built in five phases. Phase one will be
ready end 2012,” Mohamed Al Shamsi,
Port Unit Vice-President, Khalifa Port &
Industrial Zone (KPIZ) told the media.
The KPIZ is also focusing on
developing small ports around the
emirate. At least four smaller ports are
under development, including the Mina
Mussafah. The approximately $408 million
Mina Mussafah channel relocation project
is expected to be completed by this June.
“This port will service existing and
future clients in the Mussafah industrial
area and the nearby industrial zones,”
Shamsi said, adding that the port would be
transferred to Abu Dhabi Ports Company
in July. The other ports being developed
are the Shahama port, Ras Al Ghaf and
Al Sadr. An upcoming aluminum smelter
and other plants in sectors such as
chemicals, glass and paper in the
industrial zone will ensure steady traffic at
the Khalifa port. “By 2030 when all phases
of the port are completed, its capacity will
be 15 million TEUs and 35 million tonnes
of general cargo,” Al Shamsi added,
thus contributing up to $22 billion of Abu
Dhabi’s GDP in 2030.
New management system
to ease logistics at AW
Rostamani new warehouse
A W Rostamani Logistics, joint venture of
AW Rostamani Holding in Dubai, Mitsui & Co
and Mitsui-Soko, Japan officially inaugurated
its new warehouse in the South Zone of the
Jebel Ali Free Zone recently.
The new 46,000 square metre facility
which includes 21,000 sq mts of covered
cargo area and over 15,000 pallet positions,
hosts a new management system allowing
barcode control and set up rack services.
A W Rostamani Logistics specialises
in logistics and distribution, warehousing,
freight forwarding, customs clearance,
shipping and container freight station
service and trading. Established in 1997, the
company is the primary logistics partner to
the Dubai metro project as well.
The inauguration of the warehouse
was hosted by the Chairman and Vice
Chairman of AW Rostamani, together
with Japanese partners Mitsui & Co and
Mitsui-Soko Company and Jafza officials.
“The inauguration of this new facility has
marked the next chapter in our company’s
growth,” commented Mitsui & Co and
Mitsui-Soko Company, Managing Director,
Hajime Ogawa. Dr. Mohammed Al Banna,
VP Commercial Sales - Jafza told the media.
“We congratulate AW Rostamani on its
ambitious endeavor and we are sure the
company’s excellent logistics services will
be further enhanced by the newly
developed facility. We remain committed
to giving our valued customers the best
possible infrastructure to help support their
growth aspirations.”
Qatar Shipping joins
hands with Qatar Navigation
Qatar Shipping Co and Qatar Navigation Boards of Directors have approved the merger
unanimously. Under the terms of the transaction, Qatar Navigation will acquire all the
outstanding shares of Qatar Shipping in exchange for new shares of Qatar Navigation.
The deal, which is subject to shareholders’ approval, will create a company capable of a
leading role in Qatar with the potential of a major regional role and international presence,
the two firms stated.
12 Link May 2010

News
GCC
VLCC rates jump most
in five weeks
The cost of delivering Middle East crude
oil to Asia, the world’s busiest route for
supertankers, rose the most in more than
five weeks as the volume of shipments
increased. According to analysts reports,
charter rates for very large crude carriers, or
VLCCs, on the industry’s benchmark Saudi
Arabia-to-Japan route gained 8.7% to 83.24
Worldscale points, the biggest climb since
February 22, according to the Londonbased
Baltic Exchange. Returns from the
voyage surged 19 per cent to US$44,576
(Dh163,716) a day.
Crude shipments to Asia from the Middle
East are expected to increase to 12.86
million barrels a day, up 390,000 barrels
from a month ago, Oil Movements, a Halifax,
England-based company that tracks tanker
deals, said in a report recently. VLCCs haul
two million-barrel cargoes.
“There is a lot of new refining capacity
coming on stream in Asia, and refiners
see this as a time to build stocks,” Oil
Movements founder Roy Mason said. It is a
“bullish signal” for oil prices, he said.
The supply of vessels competing for
cargoes in the region is “balanced” after
demand advanced, Per Mansson, managing
director of Nor Ocean Stockholm AB, said.
He also cited an increased demand for ships
to store cargoes at sea. Daily returns for
suezmax tankers that haul one million- barrel
cargoes added 5.6 per cent to $23,293,
according to the Baltic Exchange.
Returns from aframaxes that carry
650,000 barrels fell for a seventh session,
dropping 19 per cent to $15,634 a day, for a
62 per cent plunge since March 23.
SP Jain Centre of
Management Dubai receives
DED support
The Dubai Department of Economic
Development (DED) in collaboration with its
Foreign Investment Office (FIO) hosted the
Action Learning Programme research teams
of SP Jain Centre of Management (SPJCM)
Dubai to present their research findings in
the logistics sector. This initiative is part of
DED’s continuing support to the Emirate’s
logistics sector.
A 9-member team of the Global Masters
in Business Administration (GMBA)
programme, led by the Director of Industry
Interface Dr Dhrupad Mathur, presented
their research findings to a DED panel
chaired by His Excellency Sami Daen Al
Qamzi, Director General, DED, and Fahad Al
Gergawi, Chief Executive Officer of FIO.
The research studies were conducted
over the last few months in Dubai under
the supervision of David Harris, Director of
International Logistics, FIO and Dr. Rajiv
Aserkar of SPJCM. The three research
projects brought out several strategic
findings that will greatly enhance the
efficiency of the logistics sector.
The team reviewing the international
supply chain interacted with industry
experts, wherein process walkthroughs
and existing challenges were collated. The
process was benchmarked against the
leading ports and a strategic improvement
plan in line with the best practices was
recommended. During the course of this
project, the students got a chance to gain
the insights into the operations of the
industry which would not have been
possible otherwise.
The project to identify barriers dealt with
identifying the operational and entry barriers
for the third party logistics companies in
Dubai. An extensive questionnaire survey
was conducted which was backed by focus
group interviews with the CEOs of world
class 3PL companies. The responses
gathered captured the obstacles that they
faced during the 3PL operations.
The subsequent data analysis helped us
form recommendations for the DED which
would help them reduce the impact of the
barriers that the firms face.
May 2010 Link 13

GCC
News
World’s largest airport to
open on June 27
Paul Griffiths, CEO of Dubai Airports Co
announced that the Al Maktoum International
Airport will open on June 27. The company
is in advanced talks with airlines, both
passenger and cargo, across the globe
to start operations from the new airport,
he said. The new airport, which will be
the largest in the world, is part of the
US$ 33bn Dubai World Central (DWC)
development in Jebel Ali. Besides the
DWC-Al Maktoum International, DWC is
designed to comprise five more specialised
clustered zones: Dubai Logistics City (DLC),
DWC Commercial City, DWC Residential
City, DWC Aviation City and DWC Golf
City. Designed to have a capacity of more
than 12 million tonnes of cargo a year
and 160 million passengers a year, the
initial investment into DWC-Al Maktoum
International rested at about US$ 10
billion (Dh 36.72bn). DWC-Al Maktoum
International airport would open for business
with freighter operations followed by
passenger operations at a later stage. Once
operational, DWC-Al Maktoum International
would also be capable of handling all newgeneration
aircraft such as the Airbus A380
super jumbo.
The first phase of the airport is being built
to accommodate future traffic expansion
with a single A380 compatible runway, a
passenger terminal with capacity of five
million passengers per annum expandable
to seven million passengers per annum,
a cargo terminal building capable of handling
250,000 tonnes per annum expandable to
600,000 tonnes per annum and a dedicated
road link to the region’s largest port in
Jebel Ali, according to Dubai Airports’
recent statement.
Drydocks World
creates new
marketing unit
Drydocks World announced the
establishment of Drydocks World
- Offshore - as a new entity within the
group. This new entity is a marketing arm
specifically set up to sell the significant
offshore capabilities of Drydocks
World, which will move towards offering
complete Engineering, Procurement
and Construction (EPC) solutions to the
company’s clients, as well as continuing
its original core business of ship repair.
Drydocks World - Dubai is already
a facility with an unparalleled capability
for FSO, FPSO and FSRU conversions.
The company’s core business will be
supported by an enhanced engineering
capability focused on concept, basic
and detailed design for both vessel and
topsides, along with project management
and procurement resources to enable it
to offer complete one stop shop services
to its clients.
The Dubai yard has been extended
with 670 meters’ of dedicated conversion
quayside supported with travelling cranes
and fabrication areas. In addition a new
state of the art pipe fabrication facility will
be commissioned mid-year.
Drydocks World’s offshore capabilities
are not limited to vessel conversions;
the company also has a huge capacity
for rig building and offshore fabrication
at its Batam facilities in Indonesia.
Drydocks World - Graha currently has
five rig building slips supported by very
large fabrication areas and specialist
workshops.
Emirates Airline has ‘rethink’ and
delays relocation
Emirates Airline will not move its operations to the new Al Maktoum International
Airport until some time between 2022 and 2030, the airline’s president said.
Tim Clark said, Dubai’s national carrier had had a “rethink” about moving
from its base at Dubai International Airport. “We have refocused here [at Dubai
International],” Mr Clark said. “With a certain amount of investment here, you can
get a lot more out of this airport,” he added.
The airline had planned to move to the airport between 2018 and 2020. Dubai
Airports has added new infrastructure at Dubai International to increase capacity
to 90 million passengers a year.
14 Link May 2010

News
GCC
DP World reports ‘better
than expected’ results
Port operator DP World, a subsidiary of
state-owned Dubai World, announced that
its full-year profit fell 46 per cent to US$333
million (Dh1.2 billion) in 2009 from US$621
million in 2008.
The decline, however, was less than
expected as the company beat analyst
expectations in an industry that has
suffered a global decline in trade volumes.
The company’s revenues fell 14 per cent
to US$2.8 billion (Dh10.3 billion) on the
negative effects of pricing pressure and a
volume decline of 8 per cent.
Last year the operator handled more than
43.4 million TEUs (twenty-foot equivalent
container units) across its portfolio from the
Americas to Asia. The company, however,
expects capacity to increase to around 95
million TEUs over the next ten years, riding
on the back of expansion and development
projects in key growth markets that include
India, China and the Middle East. The port
operator performed better than the rest of
the market as global gross volumes fell
by almost 12 per cent and witnessed a
substantial reduction in the volumes of noncontainer
cargo.
“We are confident about the long-term
outlook for the container terminal industry,”
chairman Sultan Ahmad Bin Sulayem said
in a statement. During the first two months
of this year, the operator’s growth stood at 4
per cent over the same period last year.
“So far, in 2010, we have seen good
signals and we hope it stays that way,” the
operator’s chief executive officer Mohammad
Sharaf told the media at a press conference.
The company reduced fixed costs by 7 per
cent last year, including 1,200 jobs, and
aims to maintain a 3-4 per cent reduction
of fixed costs.
In 2009, it started operations at two
new developments, Doraleh in Djibouti and
Saigon in Vietnam. It also completed the
expansion of its terminal in Jebel Ali.
This year, it will bring further capacity
as port construction of Callao in Peru and
Vallarpadam in India nears completion.
The operator is currently working on the
quay wall for the London Gateway (UK)
terminal development. DP World, whose
shares trade on the Nasdaq Dubai market,
said it would list on the London Stock
Exchange as early as the second quarter
of this year.
Whether more shares will be issued or
not, company officials said the premium
listing, set to be achieved through depository
interest on the LSE, is to improve liquidity
and not to raise more capital.
SCLGME ENDORSED
EVENTS.......
Malaysia
Sustainable Urban Transport
Integration
May 12 & 13, 2010, Prince Hotel,
Kuala Lumpur
Overcoming challenges in implementing
and establishing a safe, reliable and
seamless mass transit system. Efficient
and reliable urban transport systems
are crucial in present city development.
The Urban transport problems are
growing acute mainly because of rapid
motorization. The major challenge is how
to improve the current urban transport
situation in order to accommodate the
rising demand for more efficient and
accessible public transportation.
Kingdom of Saudi Arabia
Supply Chain Saudi Arabia
20-23 June 2010, Radisson Blu Hotel,
Jeddah, KSA
Exploring innovative global supply chain
and logistics methods and applying them
to your business in the Saudi Arabian
market.
Saudi Transtec
Saudi Arabia’s Transportation, Material
Handling, Warehousing & Logistics
Exhibition
25-27 Oct 2010, Dammam, KSA
Saudi Transtec is the Saudi’s
international Transportation, Handling,
Warehousing & Logistic exhibition &
conference. The exhibition will showcase
all transportation services, Warehousing
and Logistic services.
Belgium
Demand Driven Supply Chain 2020
15-16 June 2010, Brussels,
uRedesigning your supply chain to
meet customer and business needs in a
dynamic economic environment
uMaximizing opportunities and
minimizing risk as the global economy
enters a new phase
uFocusing on demand-management
collaboration – internally and externally
uPlanning integrated sourcing,
production, distribution, inventory and
service strategies and processes
May 2010 Link 15

COVER STORY
Transportation
that the “we did not see any decline in
volume in 2009 and 2010 seems to have
started well.” Indicative of this consistency
is the arrival of a new regular feeder service
operated by Yang Ming Lines (YML),
whose ‘YM XIAMEN’ is now a regular weekly
visitor at SCT.
Hennessy welcomes the start of calls by
the 350 TEU, 107m long vessel. “The ship
is easy for us to work and as always, we get
first class professional assistance from Yang
Ming and their agents. We hope that YML
and their customers have a successful 2010
and increased regular business at SCT.”
Civil works to improve the facilities at
SCT are also moving ahead well with the
renovation of Berths 1 through 3 newly
completed. The modifications include a
new, strengthened quay wall, constructed
3 metres seaward of the existing quay wall,
to facilitate dredging work; Mobile Harbour
Crane power supply sockets installed
along the berths, a new 33kv substation,
new bollards and fenders installed along
the length of the three berths; and a new
9.9
per cent throughput growth
in 2009 to TEU 2.75m by
Gulftainer
interlocked quay surface laid between the
seaward and landward rails.
Gulftainer has been operating in the
UAE since 1976, and operates two ports
in the country, SCT and the Khorfakkan
Container Terminal (KCT). SCT was the first
purpose-built and fully-equipped modern
Container Terminal in the Middle East, and
lies adjacent to Sharjah’s industrial area,
which accommodates over 45 percent of the
non-oil manufacturing capacity of the UAE.
It handles containers on behalf of over 30
shipping lines, including all of the world’s top
20 companies.
KCT is strategically located on Sharjah’s
Indian Ocean coast, outside the sensitive
Straits of Hormuz and close to the main
east-west shipping routes, and is one
of the world’s leading container
transshipment ports with numerous feeder
ship connections to Gulf Ports, Iran, India,
Pakistan and East Africa.
18 Link May 2010

COVER STORY
Transportation
Global container
trade in recovery
mode: 2010
Container trade is on a recovery path, led by
restocking in developed markets, even as the Middle
East consolidates its position as a trans-shipment hub
on the Asia-Europe trade. Savio Pimenta reports
Container trade is on a recovery
path, led by restocking in developed
markets, even as the Middle East
consolidates its position as a transshipment
hub on the Asia-Europe trade, according to a
recent research analysis by Credit Suisse.
Capacity constraints will likely reappear
as throughput will grow at a 5.5 per cent
CAGR globally in 2009E–2017E, 3.2 times
faster than the capacity, the report predicts.
The Middle Eastern countries are
investing significantly to expand the ports
infrastructure and the region will consolidate
its position as a transshipment hub on the
Asia-Europe trade. The growth expected in
O&D cargo throughout the region already
seems to be driving the need for capacity
upgrades, the report said.
Container traffic growth typically
replicates the trend of world GDP growth
with a multiplier of c2.7x as global trade
tends to be widely affected by protectionist
measures in recession periods as well as
openness during years of expansion. “We
believe the main change over the past 60
years is the emergence of Asia as the world
trade hub. International trade is now greatly
containerised. Although this process is
seen by industry experts Drewry as having
reached maturity at c80 per cent of volumes,
we think there is still room for expansion in
emerging markets,” the report published.
According to the report, macro data
from the main developed economies shows
that the currently high level of inventory
rebuilding in GDP growth, which directly
affects the dry bulk and container volumes
traded, is forecast by the Credit Suisse
Global Economics team to decline to below
16 Link May 2010

Transportation
COVERSTORY
switching towards Asia. China has become
the world’s number one exporter with 26.5
per cent of volumes of containers by far.”
With regard to the recent boom of intra-
Asia trade, out of the 20 busiest container
trade routes 11 involve Greater China as
origin or destination representing 37.6% of
world volumes. “It is also worth noting that
seven routes have an emerging market for
both origin and destination for 21.3 per cent
of total volumes,” the report said.
During a year of anticipated volumes
recovery, regional differences are expected
to be as large in 2010 as in 2009 in
emerging markets, according to Drewry’s
container volumes forecasts, ranging from
a continued drop of 7.7 per cent in Eastern
Europe to growth of 5.7 per cent in the Far
East sub-region.
“This number includes China, where
there would be a throughput growth of 14.8
per cent,” according to Credit Suisse’s ports
5.5
per cent CAGR globally in
2009E–2017E, 3.2 times faster
than the capacity
analyst, Ingrid Wei. Meanwhile, the Middle
Eastern countries are investing significantly
to expand the ports infrastructure. “We
expect the region to consolidate its position
as a transshipment hub on the Asia-Europe
trade. The growth expected in O&D cargo
through out the region already seems to be
driving the need for capacity upgrades,” the
analysts said.
With Gulftainer, originally operating from
the Sharjah terminal and now expanding in
Kuwait, there is competition to DP World in
the Middle East, to some extent. “Although
we do not think this competition is as strong
as the one that HPH and PSA seem to be
facing in Asia, it could limit the pricing power
of DP World in the region in the future,” the
analysts said.
Gulftainer already reported throughput
growth of 9.9 per cent in 2009 to TEU 2.75m
compared with an expected decrease of 7.2
per cent over the region. The steady flow of
containers through the Sharjah Container
Terminal (SCT) has not diminished as
imported goods continue to move to
supply the businesses in Sharjah and
beyond, according to Sharjah-based
terminal and logistics firm Gulftainer, which
operates the Terminal on behalf of the
Sharjah Ports Authority.
SCT Manager Paul Hennessy confirms
one per cent in as early as third quarter of
2010, and stay below 0.5 per cent in Japan
for the whole period.
The medium to longer-term growth
outlook looks quite moderate and “in
our view, that industry experts rely on
a much more measured recovery than
what would have traditionally occurred with
the past pattern”.
The report also argues that the global
emerging markets regional differences
are high. “Containerised cargo trade has,
for some time already, been significantly
May 2010 Link 17

Transportation
COVERSTORY
Leading international ports management
and logistics company, Gulftainer, has
announced that the Khorfakkan Container
Terminal, which it operates on behalf of
the Sharjah Ports Authority, has achieved
another milestone - eight gantries working
on a single vessel.
The 350 metre-long, 120,000 deadweight
tonnage (DWT), 9,700 TEU ‘CMA CGM
Pelleas’ called at KCT on Monday 15 March
2010, where work was carried out under
eight gantries, for the first time in the history
of the terminal.
The recent acquisition and delivery of
four new ‘Megamax’ Liebherr container
gantries at the end of 2009 now being
put through their paces on the 440m Berth
extension, allowed this historic event to
take place.
Terminal Manager Dag Froehmcke
commented “it was a great sight to have 8
gantries over the ship, and this has been a
busy time - the last 48 hours have seen the
terminal handling nearly 20, 000 teu - so we
certainly appreciate the new cranes and the
extra quay space.”
Speaking of the latest milestone,
Gulftainer Group Managing Director Peter
Richards said, “It is clear that the expansion
is already strengthening the terminal’s
already impressive performance, and I
am confident that this will continue. KCT
is now well known for its efficient, speedy
performance, and is already regularly
handling ships of over 11,000 TEU. The
terminal is recognized as one of the
fastest container terminals in the world, as
evidenced by the continued high productivity
figures and with the expansion of the
terminal having brought the total number of
gantries up to 20, as well as adding over 400
metres of quay, I am confident that we will
continue to increase our reputation for fast,
efficient handling”.
KCT is one of the world’s leading
container transshipment ports, and is
SCT Manager Paul
Hennessy confirms that
the “we did not see any
decline in volume in 2009
and 2010 seems to have
started well.”
strategically located on Sharjah’s Indian
Ocean east coast, outside the sensitive
Straits of Hormuz, close to the main eastwest
shipping routes. Only three hours
from the UAE’s main centres of population,
Dubai, Sharjah and Abu Dhabi, KCT is an
ideal transshipment hub port with numerous
feeder ship connections to Gulf Ports, Iran,
India, Pakistan and East Africa.
The only presence of global operators
in the region comprises APMT in Salalah
(Oman) and HPH in Dammam (Saudi
Arabia). In other regions, Russia’s port
industry is export-orientated with the majority
of goods exiting the country directed to
Europe. “Africa is the only sub-region in the
world where we expect capacity to grow
faster than throughput and privatizations
will be the main driver of port investments,
especially by global operators looking mainly
for transshipment hubs such as Tanger in
Morocco or DP World in Djen Djen, Algeria.
Freight rates have strongly rebounded,
especially on the Europe and Mediterranean
services with some lines back at their peak
tariffs of early 2008. In India and South
Asia although ports operators see a big
opportunity in terms of demand, a severe
lack of infrastructure is hampering the
potential in the short term.
When it comes to Latin America the
analysts argue that up to 2016, at least,
container volumes in Brazil have potential
to grow at c8-9 per cent per annum. “This
May 2010 Link 19

COVER STORY
Transportation
assumption is based on a straightforward
calculation. Brazil’s trade flow-to-GDP ratio
is low, at around 21 per cent, while the world
average is above 50 per cent.
Countries such as Russia, India and
China have numbers close to or above 50
per cent. Brazil’s neighbour, Argentina, has
a trade flow/GDP ratio of 45 per cent. We
believe there is little doubt that the BRL
appreciation has helped this ratio to stay low
in the case of Brazil. However, both Brazil
and Argentina had similar ratios, around
21–22 per cent.
Credit Suisse’s Brazil analyst, Ivan Fadel,
said: “In 2010 the container volume will grow
by 13.5 per cent given by Santos Brasil for
the Santos port (where DP World started to
develop a TEU one million terminal to be
opened by 2012).
“After showing strong signs of a
slowdown across the board in 2009, we
estimate that the Brazilian port industry
will show some recovery in 2010. Given
the appreciated BRL, we should expect
a higher contribution from imports, while
exports should grow by five per cent”, Fadel
concluded.
13.5
per cent container volume
growth expected in 2010
Trade from Asia
Ship container volumes from Asia to Europe
grew by nearly 10 percent year-on-year
in December, staging the biggest monthly
increase in 2009 and indicating a recovery in
seaborne trade, data showed.
The global downturn has hit the container
sector hard especially on key routes from
Asia to consumers in the West carrying
finished goods from electronics to toys.
Data from the Brussels headquartered
European Liner Affairs Association (ELAA)
industry group, showed westbound volumes
to Europe from Asia rose 9.47 percent in
December 2009 to 1.105 million TEUs
(twenty foot equivalent units) from 1.009
million TEUs in December 2008. Container
trade is measured in TEUs.
December was the second month-onmonth
rise in 2009 after November, which
posted a 2.52 percent rise.
“Westbound December 2009 recorded
the highest monthly figure for 2009, breaking
the million box mark for the first time in
2009,” the ELAA said in a statement.
The ELAA said it should be noted that
the December figure was being compared
with December 2008, “a time the shipping
industry was dipping deep into recession.”
“Having said that, there is little doubt that
the figures show signs of a strong recovery,”
it added. The last time container volume on
that route rose above 1 million TEUs was in
October 2008, the ELAA said. “December
shows that the trade is coming back,” Rod
Riseborough of the ELAA told Reuters.
Container volume for the fourth quarter
was down 0.05 percent at 3.029 million
TEUs versus 3.031 million TEUs in the same
period in 2008. Total year-on-year volumes
on the westbound Asia route to Europe in
2009 were down 14.77% at 11.501 million
TEUs versus 13.494 million TEUs in 2008.
Trade from Europe
Westbound trade to Europe from Asia is
20 Link May 2010

Transportation
COVERSTORY
primarily driven by consumer goods but also
includes manufactured items such as car
parts. Exporting countries include China,
South Korea and Japan and exclude India
and Australasia.
Separately, the ELAA said eastbound
trade from Europe to Asia jumped 46.97
percent year-on-year in December to
543,286 TEUs -- the highest monthly volume
in 2009 and 2008. Volume rose 30.17
percent in the fourth quarter versus a year
ago and was up 4.5 percent for the whole of
2009 versus 2008.
Trade is driven by paper and plastics
exports from Europe. “The big growth
is east bound and it is very substantial,”
Riseborough said. Paris-headquartered
market intelligence provider Alphaliner
said there was increased optimism among
operators in the liner sector, but added there
was still significant overcapacity which would
continue to “put pressure on charter rates.”
“The idle fleet still remains high at
10.4 percent of the total cellular fleet with
a significant number of fresh deliveries
expected in 2010 that could add to the
overall capacity surplus,” it said in a report.
Developing countries to contribute
most to resurgence
After the sharpest decline in more than 70
years, world trade is set to rebound in 2010
by growing at 9.5 percent, according to the
World Trade Organization.
WTO economists expect exports from
developed economies to increase by 7.5
percent in volume terms over the course of
If trade continues to
expand at its current
pace, the WTO
economists predict it
will take another year for
trade volumes to surpass
the peak level of 2008
the year while shipments from the rest of the
world, including developing economies and
the Commonwealth of Independent States,
should rise by around 11% as the world
emerges from recession. The WTO said the
strong expansion it expects will help recover
some, but by no means all, of the ground
lost in 2009 when the global economic crisis
sparked a 12.2% contraction in the volume
of global trade — the largest such decline
since World War II.
If trade continues to expand at its current
pace, the WTO economists predict it will
take another year for trade volumes to
surpass the peak level of 2008. The WTO
said measuring trade in volume terms
provides a more reliable basis for annual
comparisons since volume measurements
are not distorted by changes in commodity
prices or currency fluctuations, as they can
be when trade is measured in dollars or
other currencies.
The WTO noted that one positive
development in 2009 was the absence of
any major increase in trade barriers imposed
by WTO members in response to the crisis.
It said the number of trade-restricting
measures applied by governments has
actually declined in recent months.
“We see the light at the end of the tunnel
and trade promises to be an important part
of the recovery. But we must avoid derailing
any economic revival through protectionism,”
said WTO Director-General Pascal Lamy.
The 12% drop in the volume of world
trade in 2009 was larger than most
economists had predicted. This contraction
also exceeded the WTO’s earlier forecast
of a 10% decline. Trade in current U.S. dollar
terms dropped even further than
trade in volume terms (by 23%), thanks in
large part to falling prices of oil and other
primary commodities.
May 2010 Link 21

TRANSPORT
Bridging the divide
Despite all the money spent by
regional governments on building
air and sea ports in recent years,
many of the major transport arteries of the
Middle East remain narrow, congested and
run down. While international sea and air
links are generally strong, overland transport
users have few options beyond often
overcrowded or inadequate roads.
Among the major international links,
the Suez Canal is in healthy shape. In
September 2009, 1,454 vessels passed
through the canal. That was a significant
rebound from the 1,272 vessels that
used the route in February, the quietest
month of this year for the canal, when the
impact of the global economic downturn
was at its worst.
Some other transport links, however,
have fallen into disrepair or vanished
completely. The Hejaz Railway, which once
connected Damascus to Medina, is largely
Transport 2010:
Middle East’s
Railway revival
Countries across the region are upgrading their rail
transport systems but investment in roads is lacking
broken, although Jordan now has
ambitious plans to reopen its section as
part of a JD3.2bn ($4.5bn) nationwide railbuilding
programme.
Across the region, from Iran to Algeria,
there is a revival in railway building
programmes as governments seek to
improve their domestic and international
transport networks.
In the Gulf there are plans for the GCC
Railway, which will link its six member states,
and rail lines in Saudi Arabia: the North-
South, Mecca-Medina. Given the downturn
in inter-national financial markets over the
past year and a half, paying for all these
schemes has not been easy.
Hejaz railway, Syria post 1918
22 Link May 2010

Bridging the divide
TRANSPORT
1,454
vessels passed through the
Suez Canal in 2009
Some countries are seeking international
investors to back billions of dollars worth
of projects, such as the £E4.4bn ($800m)
railway from Cairo to Roubiky and 10th of
Ramadan cities in Egypt, and the planned
Jordanian rail network.
In Saudi Arabia, the government
will finance key parts of the kingdom’s
infrastructure itself after banks refused
to lend money to two multi-billion-dollar
projects: the $7bn high-speed railway
between Mecca and Medina, and the $7bn
Saudi Land bridge rail link connecting the
Gulf and Red Sea coasts.
In other cases, it is unclear whether the
state or the private sector will finance badly
needed developments. In Iraq, for example,
the $1bn privatization of the deep-sea port at
Umm Qasr – the country’s marine gateway
– has been on hold since September,
when Transport Minister Amer Abduljabbar
blocked the appointment of an international
consultant, the US’ Cornell Group, to
oversee the redevelopment of the site.
Suez Canal
Iran’s ability to push ahead with its
major transport projects is just as doubtful,
although the financing difficulties in the
Islamic Republic are further complicated
by the US-led international sanctions and
domestic economic problems.
High-speed lines from Tehran to Esfahan
and Mashhad have been on hold since
January 2008 because the government
cannot afford to pay for them directly. The
$18.5bn project to add 12 lines to the
Tehran Metro before 2030 has also been
stalled for two years.
However, a 1,100-kilometre-long rail line
running the length of the country’s eastern
border, from Mashhad in the northeast to the
port of Chabahar on the Arabian Sea, seems
likely to go ahead at a cost of at least $1bn,
if only because Chinese rail firms are likely
to provide the finance.
Many other international companies
continue to shy away from Iraq and Iran,
however, due to the inherent difficulties
in working in either country and the
opportunities available elsewhere.
Egypt has made significant steps to
open itself to foreign investment since the
government of Prime Minister Ahmed Nazif
came to power in 2004, although further
moves could yet be needed given the
extent of Cairo’s plans. Investment Minister
Mahmoud Mohieldin has drawn up a list
of road, rail and port projects worth up to
£E130bn that the government hopes to
award by the end of June 2011.
The port projects alone will require
£E15bn in investment. They include plans
for a £E5.2bn bulk terminal at Adabiya Port,
to the south of the Suez Canal, which will
import iron ore and export finished products.
At the Mediterranean end of the canal, the
Transport Ministry plans to build a container
terminal and a ship refuelling station, and to
develop the port’s logistics capabilities.
Other schemes cover less strategically
important sites. For example, the Investment
Ministry wants to build a 415km-long
road linking the cities of Asyut, Qena and
Sohag in Upper Egypt to the Red Sea
coast, at a cost of £E1.6bn. In common
with other countries in the region, Egypt is
also expanding its rail system. Orascom
Construction Industries, the country’s largest
construction firm, is currently working on an
upgrade to the Cairo Metro, which is due to
have six new lines by 2022.
The port projects alone
will require £E15bn in
investment. They include
plans for a £E5.2bn bulk
terminal at Adabiya Port,
to the south of the Suez
Canal
Tanger Med Port
May 2010 Link 23

TRANSPORT
Bridging the divide
To make the project more
manageable, the ministry
has split it into four
phases, each of which will
be developed in turn. The
ministry plans to award
the JD795m ($1.1bn)
first phase, connecting
its borders with Syria
and Saudi Arabia via
Irbid, Amman, Zarqa and
Mafraq, in June 2010.
The Transport Ministry is also looking
for investors for a £E360m plan to move
the section of the Matruh Railway running
between the towns of Fukkah and Samalla
in the northwest of the country. The ministry
hopes that moving the rail line will free up
beachfront land for development.
The rail projects elsewhere are even
more ambitious, not least Jordan’s plans
for a nationwide freight network linked to
the borders of Saudi Arabia, Syria, Iraq
and Israel. Its Transport Ministry launched
the fundraising for the $4.5bn scheme to
investors in Paris on 13 November.
To make the project more manageable,
$7bn
high-speed railway between
Mecca and Medina, and the
$7bn Saudi Land bridge rail link
connecting the Gulf and Red
Sea coasts
the ministry has split it into four phases,
each of which will be developed in turn. The
ministry plans to award the JD795m ($1.1bn)
first phase, connecting its borders with Syria
and Saudi Arabia via Irbid, Amman, Zarqa
and Mafraq, in June 2010. A developer is
expected to start work the following month,
with the first freight trains running on the
network in mid 2013.
For Jordan’s rail network to fulfill its
potential, however, its neighbours need to
build their own lines to connect with it. A line
from Damascus to the border already exists,
although its narrow-gauge track is too small
24 Link May 2010

Bridging the divide
TRANSPORT
to take the heavy freight trains Jordan wants
to use, and will need to be replaced.
According to Herve de Villechabrolle,
vice-president of French bank BNP Paribas,
which is advising Jordan’s Transport
Ministry, Syria is likely to finance and build
a line between the border and Damascus.
“The Syrians are ready to start building the
day that Jordan announces it is ready to
start building,” he said.
Saudi Arabia’s rail building programme
does include a link to the Jordanian border,
as part of its North-South rail line, which will
connect mines in the north of the kingdom
with industrial facilities at Ras al-Zour on
the Gulf coast. The line could also connect
to the planned GCC Railway, which will run
along the Gulf coast from Kuwait to Oman.
The GCC Secretariat is expected to decide
on the route next year, including whether
to include a line through Bahrain and to
extend the network as far as Oman’s border
with Yemen. Saudi Arabia is also pressing
ahead with the Land bridge, which will link
its east and west coasts via Riyadh, and the
Mecca-Medina railway, which will provide a
high-speed passenger service between the
two cities.
Elsewhere in the region, city metro
networks are also proceeding, if often at a
slow pace. In Abu Dhabi, the Department of
Transport has been weighing up bids for a
consultancy contract for its two-line metro,
although it is not clear when any award will
be made. Neighbouring Dubai opened the
first stations on the Red Line of its metro
network in September 2009, but work on
Dubai Metro
further stations and lines is running late and
over-budget. The Algerian government has
also delayed the Algiers Metro, which was
due to open in October last year, until the
spring of 2010.
There have been some delays at
the region’s ports, as operators wait for
container volumes to pick up. Among those
affected is Jebel Ali Port in Dubai, where
the local DP Ports World has put its planned
$2.3bn
construction of two new
terminals at Tanger Med port in
Morocco
third terminal on hold.
The development of New Doha Port in
Qatar is also proceeding slowly, with Doha
only planning to award the dredging and
breakwater work in 2010. Bubiyan Port in
Kuwait is in a similar position, with the first
contract for dredging and other marine
works yet to be awarded. One of the largest
port expansions in North Africa, the $2.3bn
construction of two new terminals at Tanger
Med port in Morocco, is also on hold.
But some developments are making
more progress. The first phase of the $2.1bn
Khalifa Port, off the coast of Abu Dhabi
emirate at Taweelah, will open in 2010,
with container capacity for 2 million 20-foot
equivalent units (TEUs) and 6 million tonnes
of general cargo. Four subsequent phases
will result in capacity rising to 22 million
TEUs and 35 million tonnes by 2028.
According to industry trade body the
International Air Transport Association,
Middle East airlines enjoyed 18 per cent
growth in passenger traffic in September
this year, compared with the same month
in 2008, and 15 per cent growth in capacity.
Such healthy growth rates have prompted
the region’s airlines to increase the number
of routes they fly and encouraged airport
authorities to continue expanding capacity.
In Qatar, the airport authorities invited
contractors to bid for the $11bn New
Doha International airport project in June.
Unless the Middle East and North African
economies recover more strongly than
expected in the year ahead, there should
be more than enough spare capacity in
international trade links with other regions.
Tanger Med Port, Morocco
May 2010 Link 25

MANAGEMENT
Information Technology
Effective
applications can
save firms 30%
Logistics and supply chain management companies
can save up to 30 per cent of cost by using effective
applications to manage their systems
Logistics and supply chain
management companies can save
up to 30 per cent of cost by using
effective applications to manage their
systems, Paul Hammond, Infor’s General
Manager in the Middle East announced
recently.
The US$2 billion (Dh 7.34bn) company
develops and customises software for
various sectors including supply chain
management and shipbuilding firms. “We
see customers make a saving in their supply
chain within a range of 15 to 30 per cent in a
short time”, Hammond said.
The privately-owned firm has plans to
go public within this calendar year. Like
many organisations, a public company is
sure to give Infor the extra funding and the
transparency that the market envisages.
Paul Hammond, Infor’s General Manager
in the Middle East told the media that the
company is expecting a double digit
growth and plans to expand its presence
in the Middle East.
With revenues exceeding US $ 2.3bn, the
company has more than 125 offices in 34
countries with more than 70,000 customers
worldwide. “Last year our customer base
grew by about 2,200. Middle East is still
emerging for us. We have more than 800
customers here. We are getting an extra
investment for the region and that will make
us even better positioned to expand here,”
added Hammond.
Currently, Infor is heavily focused on
Saudi Arabia and Qatar and it does not see
the current situation as a crisis. For Infor the
economic downturn is still an opportunity.
In Saudi Arabia, there appears to be
explosive growth, where companies are
taking stock of the opportunities Hammond
said. “They are also very conscious in
The privately-owned firm
has plans to go public
within this calendar year.
Like many organisations,
a public company is
sure to give Infor the
extra funding and the
transparency that the
market envisages.
26 Link May 2010

Information Technology
MANAGEMENT
addressing the cost issue. We have
solutions that help customers control those
costs. We will continue to grow at double
digits in 2010,” he enthused.
Infor’s ERP SyteLine Shipping and
Supply Chain Logistics and Inventory
Management software help companies
reduce supply chain operational costs for
increased profitability, improves customer
service, manages growth and expansion.
The software is available in three options:
Standard Shipping, Advanced Shipping and
Shipping, Warehouse and Mobile.
Using integrated tools that automate
shipping steps, ERP SyteLine Shipping and
Logistics ‘improves efficiency, lowers freight
expenses and increases visibility across
multiple functions and departments’.
Infor SCM Tactical Planner
Determine where and when to make, buy, store, and move
Once a company has designed its network for manufacturing, storing, and
distributing its products more efficiently, the challenge becomes a tactical one:
coordinating the flow of product according to the dynamic change of its demand mix.
Infor SCM Tactical Planner does this for you, helping you determine where and when
to make, buy, store, and move products through your network to your customers. It
provides a time-phased plan of material movement through your enterprise, trading off
capacities and the cost of multiple options to deliver a plan that’s not only optimized for
service, but also for profit.
The system enables companies to
respond to requirements for special labelling,
paperwork and other services, enhancing
customer service. “In addition, if users
do not select their preferred shipping carrier
or service, the system will automatically
select the best option to fulfill the order,”
Hammond concluded.
Infor’s tactical planning
solution helps companies
like yours:
¢ Balance manufacturing,
inventory, purchasing, and
transportation trade-offs
¢ Deliver plans optimized
for capacity and cost
¢ Allocate product to the
most profitable customers
during peak demand
periods
¢ Respond rapidly to
changes in the demand
mix to re-route product
accordingly
May 2010 Link 27

OVERVIEW
Connecting people
Taking specific customer needs into
consideration, is the way the line will be
developed and is expected to be completed
in seven years. Union Railways will be a
Federal Government-owned company and
the entire project could cost in the order of
Dh 30-40 billion. While the financing
strategy has not yet been finalized, it is
certain that the project will be government
run. The focus at the moment for Union
Railways is to ensure that the railway plans
are well developed.
“The planning is very well advanced.
There are a number of factors still being
taken into account. We are focused on the
Shah Ruwais line. The yellow lines are
1.2
million Nol Silver Cards sold
by RTA since the launch of the
Metro on 09. 09.09. 5 million
journeys recorded by Dubai
Metro since inception
inside Abu Dhabi. The alignment is clearly
defined because of the project background.
We are now working very hard in partnership
with all other emirates to make the rest of
the network as well defined,” said Richard
Bowker, CEO Union Railways.
Deutsche Bahn & Masaood Group
awarded contract
German national rail operator Deutsche
Bahn moved closer to a deal worth billions
of Euros to build the rail network in the UAE,
the company had announced after it signed
a memorandum of understanding (MoU) last
month. The (MoU), signed in Abu Dhabi,
lays out a strategic partnership between the
rail giant and UAE-based Al Masaood Group
for the planning, construction and operation
of rail systems.
German Transport Minister Peter
Ramsauer, Bahn CEO Ruediger Grube and
Al Masaood Group Chairman Abdullah Al
Masaood were present at the signing, which
30 Link May 2010

OVERVIEW
Connecting people
28 Link May 2010

Connecting people
OVERVIEW
UAE’s ambitious
nation-wide rail
network on anvil
The UAE embarks on its first nation-wide 1,500
km long freight and passenger rail network at a
cost of Dh 40 billion. Eric Francis reports
The nation-wide rail network stretching
1,500 kms will extend from Abu
Dhabi’s Western region through
Dubai, Sharjah, Umm Al Quwain, Fujairah,
Ras Al Khaimah and Ajman. A feasibility
study is also being undertaken to build a
high-speed passenger rail between Abu
Dhabi and Dubai. The first phase of the
project will include the 270km rail line
specifically for freight linking Abu Dhabi’s
Shah Sour gas field to Ruwais.
May 2010 Link 29

Connecting people
OVERVIEW
Transport (DoT), is in line with the Plan
Abu Dhabi 2030 and has been approved
by HH General Sheikh Mohammed Bin
Zayed Al Nahyan, Crown Prince of Abu
Dhabi and Deputy Supreme Commander
of the UAE Armed Forces, in his capacity
as the Chairman of the Executive Council.
The DoT for the first time revealed the time
frame for the entire plan, that includes a
130-km metro network, covering the Capital
City District, Abu Dhabi International Airport
and other suburbs. The plan also includes
340-km tramway network, new bus services,
waterway transport of ferries and water taxis,
a high speed rail network connecting Abu
Dhabi with other emirates and the Saudi
border besides a 600-km freight railway line.
All the rail networks, including the
tramway, will have two-way tracks and
will be completed by 2030. DoT Chairman
Abdullah Rashed Al Otaiba said the master
plan is complete with the physical work on
the different projects in the plan starting 2011
and first sections of the metro and tramway
operational in 2015.
“The transport infrastructure will be a fully
1,500
kms rail network will extend
from Abu Dhabi’s Western
region through Dubai,
Sharjah, Umm Al Quwain,
Fujairah, Ras Al Khaimah and
Ajman
integrated and interconnected and worldclass
system that would make commuting
fast and easy,” he added. The plan also
outlines a similar transport network to be
developed in Al Ain and its suburbs. Work
on the High Speed Rail (with up to 400kmph
speed) and Freight Railway will begin in
2020 and will be completed in 2030.
The National Transport
Authority (NTA)
The UAE last October created a national
railway company that drafted laws and
policies to create a comprehensive strategy
Bahn hopes will lead to more contracts in
the near future. “What is being planned
involves projects in the double-digit billions
range,” a Bahn spokesman said. Bahn is
already involved in a €17 billion (Dh83.7bn)
project in Qatar.
Phase I of capital’s rail network
to be ready in 2015
Abu Dhabi will have its trams and
metro systems ready for use in 2015,
as announced by the multi-billion dollar
transport infrastructure NTA, which was
officially unveiled last year.
The Surface Transport Master Plan
developed by Abu Dhabi Department of
May 2010 Link 31

OVERVIEW
Connecting people
for rail transport in the country.
The National Transport Authority (NTA)
in Abu Dhabi had approved the formation
of the company and a ministerial decree
formally approved it. “We are expecting
a decree any minute to create a national
railway firm,” said Abdulla Salem Al Katheeri,
Director of Land Transport Department at the
time at the NTA.
Feasibility studies for UAE railway line
have been completed. It will be linked to the
planned GCC railway network.
Abu Dhabi also unveiled the Metro Rail
model in the emirate with the Department
of Transport (DoT) finalising the project
study. The department had invited local and
international consultants to file tenders for
According to the
department, the Metro
rail system in the capital
is being designed and
developed to integrate
with the entire transport
network planned under
the Abu Dhabi 2030
vision
the Abu Dhabi Metro Rail Study with the
interested bidders advised to submit their
proposals by April 13, 2010. According to
the department, the Metro rail system in the
capital is being designed and developed to
integrate with the entire transport network
planned under the Abu Dhabi 2030 vision.
Before the development of the 2030 plan,
Abu Dhabi had a plan for a monorail network
on a smaller scale for the centre
of the city. However, the plan had to be
shelved and replaced with the current one
being developed by the DoT to be in line
with the 2030 Plan.
Plan Abu Dhabi 2030
Plan Abu Dhabi 2030 sets out a schedule for
32 Link May 2010

Connecting people
OVERVIEW
Emirates Steel capable
of meeting demand
State-owned Emirates Steel Industries
has the potential to supply material for
the $8.2 billion (Dh30bn) UAE
rail project, even as it considers
exports into Iraq, the company
announced to the media.
The UAE, which plans to complete
constructing the 1,500km rail system
in 2015 and 2017, will be linked to a
planned Gulf Arab network.
“With a few modifications section mills
will be capable of producing rails which
could supply the rail project,” Ahmed Al
Daheri, Assistant Vice-President
of Projects at Emirates Steel,
informed the media.
Emirates Steel, which produces about
1.8 million tonnes of steel annually and
exports around 10 per cent of its output
to countries including Saudi Arabia and
Jordan, is also considering expanding its
reach into Iraq, Daheri added.
“We are looking at the option of
exporting steel to Iraq, as we see a
lot of potential for growth there,” he
told the media.
Global steel demand has slumped
by more than a tenth in the past year,
but Emirates Steel has pushed on with
expansion plans as it looks to displace
steel imports into the UAE.
developing a world-class transport system,
which includes smaller city blocks that
include more through streets, a hierarchy
of streets that distribute local traffic while
connecting key points within the city, a
light-rail Metro network for everyday and
commuter travel, a frequent and reliable
local tram and bus service, a high-speed rail
line to connect Abu Dhabi with the rest of the
UAE and large parking surfaces to be moved
underground.
According to the DoT, the scope of
the consultancy services for Abu Dhabi
Metro Study includes feasibility study,
concept design, preliminary engineering,
tender documents preparation, award and
fomalisation for construction contracts,
design review and administration of
contracts during execution, defects liability,
and maintenance and contract closure.
May 2010 Link 33

INNER VIEW
Destination
DP World port safe from
debt-port chair
Djibouti Port not affected by Dubai World debt
woes and aims to become main port in African
economic bloc COMESA
DP World-run Djibouti Port hopes to
become a leading regional shipping
hub, unaffected by Dubai World’s
debt problems, the port’s chairman said. The
debt woes of Dubai World, parent company
of port operator DP World, will
not deter plans to boost volumes at the
Doraleh terminal, the Chairman of the
Djibouti Ports and Free Zones Authority,
Aden Douale, told the media in an interview
at his seaport offi ce.
Djibouti, a former French colony which
separates Eritrea from Somalia, hosts
France’s largest military base in Africa and a
major U.S. base. Its port is used by foreign
navies patrolling busy shipping lanes off the
coast of Somalia to fi ght piracy.
“Djibouti is one of the best projects DP
World has. Djibouti was their fi rst external
port. We were their baby. And this baby is
doing well compared to most ports in the
world,” Douale said, as outside his offi ce a
50-metre (164 ft) crane lifted cargo.
“Dubai’s debt problems didn’t impact
Djibouti Port at all,” he said in the interview.
DP World is one of the world’s largest port
operators and is 77 percent owned by
government-linked Dubai World, but
is not included in its parent’s debt $26
billion restructuring plans.
DP World’s activities appear to have been
little affected by concerns over its parent
fi rm’s debt. In January it opened a container
terminal in Vietnam, and in February Yemeni
offi cials said it planned a major expansion of
Aden port.
Douale said he was not worried that
Dubai World’s creditors could demand a fi re
sale of its DP World assets.
Regional aims
Douale plans to make the port the leading
trans-shipment hub for the Common Market
for Eastern and Southern Africa (COMESA)
- a trade bloc grouping around 20 countries.
34 Link May 2010

Destination
INNER VIEW
“Our strategy is to become the number one
port of the COMESA market. We are well
located between the African markets and
China, Japan, India. Last year the volume of
the container terminal was almost 700,000
containers,” Douale said in the interview.
About 70 percent of the space is allocated
to Ethiopia, 20 percent to local business,
and 10 percent to other cargo. Ethiopia uses
Djibouti as a main sea gateway for goods
such as wheat and construction materials.
Big international vessels deliver and store
cargo there, which is then sent by land
routes mainly to East African countries.
Djibouti was their first external port. We were
their baby. And this baby is doing well compared
to most ports in the world,” Douale said.
May 2010 Link 35

IN FOCUS
Expert Talk
Transforming
your business
with TMS
While, introducing a transportation management
system (TMS) may help increase efficiencies
across the business, it also improves customer
service experience
36 Link May 2010

Expert Talk
IN FOCUS
Many organisations are driving
down costs by introducing a
transportation management system
(TMS) into their business. Nick Berry,
Executive Director at RedPrairie, argues that
while TMS can help increase effi ciencies
across the business, it can also improve the
customer service experience.
According to the Council of Supply Chain
Management Professionals, transportation
costs soared to 4.7 per cent of sales in 2008,
while total logistics costs, including inventory
carrying, warehousing, administration, and
customer service costs, were 9.3 per cent of
sales for the average company. With such
large sums being spent, logistics and supply
chain directors need to ensure costs are
as low as possible while meeting customer
demands. No wonder AMR Research found
that global TMS spending will grow at a rate
of 26 percent over the next fi ve years.
May 2010 Link 37

IN FOCUS
Expert Talk
Automating manual processes
Whether your world involves orchestrating
shipments across complex global supply
and demand networks, or simply delivering
goods to local customers, a TMS can
serve your requirements across all areas
of transportation management. Managing
activities such as procurement, load
planning, consolidation, carrier selection,
route optimisation, freight settlement,
and collaboration in a coordinated
fashion is the path to lower cost and
higher quality of service. For example,
one of RedPrairie’s customers experienced
that after implementing TMS it processed
75% of its business without human
involvement. Similarly the TMS helped
the customer better manage its 430-470
daily truckloads across multiple shipping
sites and transportation modes and
resulted in improved customer service
with on-time shipping at 99% and allowing
just-in-time deliveries.
Creating the optimal plan
But gaining the greatest value from your
transportation spend starts long before you
have a load to route or a shipment to tender.
It begins with getting the best possible
rates for your lanes through a structured
procurement process. Truckload (TL), lessthan-truckload
(LTL) and ocean carrier bids
can be modeled into multiple transportation
scenarios to determine the best carrier
options for each lane. A TMS will select
and assign the optimal carriers based on
rates, modes, pre-booked capacity, delivery
constraints and so on.
Maximizing the usage of a private or
dedicated fl eet can be factored in - as can
the joint planning of inbound and outbound
shipments, using consolidated routing to
minimise empty miles and rates. Unused
capacity can be carried over from one
plan to the next to determine whether an
underutilised load should be held for more
freight or if the load needs to be shipped
‘as is’ to meet delivery windows. Systems
can also determine whether freight could
be held at pool points or consolidation
facilities to leverage pre-booked capacity,
or if using market carriers will be necessary
to meet commitments. Automated border
crossings can be factored into route planning
and international shipment documentation
printed accordingly.
38 Link May 2010

Expert Talk
IN FOCUS
Effi ciency and visibility right down to the
last mile are just as important. So long-haul
planning and execution should be combined
with local fl eet routing and tracking. Fleet
management optimises daily routing and
scheduling of private and dedicated fl eets
while load balancing and stop assignments
ensure effi cient capacity utilisation, making
it possible to serve more customers each
day and potentially reducing the number of
vehicles in operation. In-transit routes and
performance can be monitored by GPS or
in-vehicle monitoring devices for the ultimate
in tracking and control.
A portal can connect
shippers, suppliers,
carriers, customers,
stores and remote sites.
It can facilitate actions
such as load tendering
and response, status
updates, track, trace, and
delivery receipt.
May 2010 Link 39

IN FOCUS
Expert Talk
Coordinating with partners
The internet provides the ideal platform for
communication between parties. A portal
can connect shippers, suppliers, carriers,
customers, stores and remote sites. It can
facilitate actions such as load tendering and
response, status updates, track and trace,
and delivery receipt.
For vendors and suppliers, a portal can
support inbound shipment routing requests
for consignee-controlled freight and advance
ship notices on vendor-prepaid inbounds.
Retail DCs can use it for scheduling
appointments with suppliers and alleviate
inbound receiving congestion. Stores can
initiate stock transfers and arrange returns.
And event management can alert users
and customers to disruptions, enabling
alternative plans to be made.
Getting paid
Once freight is delivered, a TMS can allow
40 Link May 2010

Expert Talk
IN FOCUS
Transportation
management systems
can be purchased either
as a fully-integrated,
single platform or you
can pick and choose the
components you require.
Likewise, a TMS can be
licensed as a traditional
on-premise application
or it can be hosted by the
vendor on a software as
a service (SaaS) basis.
shippers to automate carrier settlement
through match-and-pay or self-invoicing.
In match-and-pay, the system compares
invoices to executed shipments to either
issue payments or fl ag exceptions for
investigation. Self-invoicing allows payment
based on shipment records without carrier
invoices. Both approaches reduce the
time and cost of settlement while ensuring
accurate payment for actual shipments. For
logistics service providers, a TMS enables
accurate billing and reporting on profi table
and unprofi table customers, lanes and loads.
How to deploy?
If the functional scope of a TMS can be
somewhat mind-boggling, deployment
options are more straightforward.
Transportation management systems can be
purchased either as a fully-integrated, single
platform or you can pick and choose the
components you require. Likewise, a TMS
can be licensed as a traditional on-premise
application or it can be hosted by the vendor
on a software as a service (SaaS) basis.
Whatever your service, strategy and IT
needs, there’s a TMS out there that can
bring dramatic improvement across your
transportation operations, lower costs, and
deliver a better customer service experience.
And if you need to establish a centralised
transportation function to serve the needs of
multiple business units, installing a TMS can
be a good way to do it.
May 2010 Link 41

REAL REPORT
Consumerism
4PLs introduce the
notion of a “spider within
the web,” coordinating
activities that go well
beyond the direct
capabilities
of the actual enterprise.
While many of these
business process
outsource
(BPO) providers may
owe their origins to a
desire by organizations
to offload simple and
non-strategic operations,
they have nonetheless
become a critical
part of the supply chain
arsenal in dealing with
the challenges above.
developing an effi cient system at every point
along the supply chain.
These experts take many shapes
and forms, but they all can add value to
effective supply chain execution. Original
design manufacturers (ODMs) and contract
manufacturers (CMs) support the design and
manufacture of goods. Third-party logistics
(3PL) providers offer integrated warehousing
and transportation services that can be
scaled and customized based on market
conditions as well as the demand and
delivery requirements for the product.
The emergence of the fourth-party
logistics (4PL) provider broadens support
options far beyond logistics. 4PLs
introduce the notion of a “spider within the
web,” coordinating activities that go well
beyond the direct capabilities of the actual
enterprise. While many of these business
process outsource (BPO) providers may owe
their origins to a desire by organizations to
offl oad simple and non-strategic operations,
they have nonetheless become a critical part
of the supply chain arsenal in dealing with
the challenges above. They have matured
into domain experts and provide a fl exible
execution infrastructure on a global basis.
Tapping into the expertise of a BPO provider
can be the deciding factor in the strength
and execution of your supply chain.
Great expectations
Supply chain outsourcing has gone far
beyond simple transactional services. Many
44 Link May 2010

REAL REPORT
Consumerism
Supply Chain BPO in a
consumer-driven world
The fundamentals of supply chain have remained unchanged since the inception of
commerce. It is well known that raw materials are procured, converted into product,
packaged and delivered for customer consumption. Savio Pimenta reports.
42 Link May 2010

Consumerism
REAL REPORT
The fundamentals of supply chain
have remained unchanged since
the inception of commerce. Raw
materials are procured, converted into
product, packaged and delivered for
customer consumption. It is easy for us to
lose sight of this simplicity of purpose when
considering modern supply chain structures
that span geographies, multiple corporations
and a myriad of technologies.
Today’s supply chain manager is afforded
more options than ever before to aid in the
process of getting product to market. There
are a host of decisions to consider such as,
where to source, manufacture and distribute;
whether to employ a demand pull versus a
forecast push model; what channel structure
to adopt; and how to handle returns. Each
decision will have a direct impact on leadtime,
cost and speed of responsiveness.
In this new environment, products are
continually revised, input costs are always
changing, customer needs are permanently
evolving and competition is fi erce for every
point in market share.
As if this was not enough to handle,
we then task our supply chains with
Sarbanes Oxley compliance, export
compliance, environmental sustainability,
risk mitigation, terrorism prevention, privacy
and the highest ethical standards. The
supply chain has become a complex fi eld
to navigate, with challenges and obstacles
around every corner.
After all of this analysis, what becomes of
the customer that is at the centre of this
supply chain equation? The world has come
a long way from the days of Henry Ford’s
“any colour as long as it is black” motto.
Consumers today want choice and demand
individuality. Companies have responded
with an explosion of product options—from
colour, to style and personalized skins. The
window that we have into these customer
requirements is a forecast any planner can
tell you from experience, will be wrong.
Help is at hand
To keep up with the demand, and continually
evolving landscape, changes in supply
chain support have been necessary. Today’s
original equipment manufacturers (OEMs)
have multiple avenues of support available
to aid in the development of their supply
chains. Most of this support is delivered by a
multitude of supply chain experts
that can alleviate the pressures of
May 2010 Link 43

Consumerism
REAL REPORT
manufacturers never touch the products
they sell. Given the challenges we know that
exist in a consumer-driven supply chain, it
is not surprising that client expectations of
outsource providers have increased.
We are seeing a gap develop between
services rendered and the expectations of
manufacturers. According to the 11th Annual
Third-Party Logistics Survey 2006
by Professor John Langley Jr., Ph.D.,
Georgia Institute of Technology, “3PL users
clearly expect continuous improvements in
service levels and information technology
(IT) capabilities. Among the key challenges
for the 3PL industry in the future are capacity
management and innovation. While 3PL
users acknowledge innovations such as
lead logistics providers and fourth-party
logistics providers, signifi cant room for
improvement still exists in the knowledge
and use of these approaches.”
There are a number of potential
reasons for the emergence of
this expectation gap:
Supply chain value spans across
traditional supply chain functions
The domain expertise of many providers
is deep within traditional supply chain
functions. Many of the effi ciencies within
these functions have already been gained
and are no longer enough. Clients are
turning now to seek value in the total
integration of their supply chains across
these functions.
Fragmented systems infrastructure
resulting from acquisitive growth
Within the 3PL and contract manufacturing
space there has been a surge in large
consolidations developing through
acquisition. Unfortunately, there is a
lag existing in many cases within the
consolidation of disparate legacy
systems, despite the fact that the
capabilities are marketed under a single,
unifi ed global brand.
Alignment within the supply
chain
One third of Hau Lee’s Triple A supply
chain examines alignment issues within
supply chain. Due to the deep functional
origins of many providers, there may often
be confl icting objectives in serving clients.
For many providers there is a real potential
danger if they expand their supply chain
service portfolio to make their core business
more attractive. This raises the possibility
for 3PLs, repair providers and contract
manufacturers to provide expanded solutions
to ship more product, repair more product
or build more product respectively. Contrast
this desire with the typical OEM objective of
creating a dynamic and optimal alignment
between supply and market demand.
Raising the standard
As distinctions between the traditional BPO
labels become blurred, those that will make
a tangible difference to clients are those
that come equipped to solve real customer
supply chain problems. How do you deal
with issues such as demand variability,
SKU proliferation and channel volatility
in a global marketplace? How can you
effectively link supply chain strategy,
visibility and execution capabilities?
These problems—whether in-house or
outsourced—are beyond the realm of
isolated domain expertise or technology only
solutions. These challenges are leading to
the emergence of a new category of supply
chain BPO that is only recently attracting the
attention of the analyst community.
Probably closer to the traditional notion
of a 4PL, providers in this space will bring
a true supply chain focus and customer
alignment to their business.
Recent research articles from AMR
Research highlight a tremendous opportunity
in this space for providers, but it is
contingent to the appropriate investments
May 2010 Link 45

REAL REPORT
Consumerism
being made in technology supporting client
services. Clients are looking at outsourcing
higher value functions in supply chain,
including planning, forecasting and
network optimization.
The BPO providers that deliver this type of
intelligence must stay on the leading edge
of IT developments to stay competitive and
provide real value.
Identifying the keys to
extended value
To be truly successful in delivering this value
goes beyond pure technology investments.
The history of technology solutions in supply
chain is littered with excellent tools that
have failed to deliver their promised value
due to inconsistencies in implementation
and execution. What the BPO provider can
provide in terms of value enhancement
through market intelligence, global
footprint and scope of expertise will be the
determining factor that sets them apart.
Additional investments in key
infrastructure items, such as technology,
cross-functional domain expertise, global
execution and client alignment will be
necessary. In a competitive environment,
these capabilities will need to compare
favourably with other providers and with
internal client resource capabilities.
A culture that supports continuous
improvement and learning can be very
powerful in this environment. The BPO
provider will have access to a broader set
of industry practices, which can then be
channeled into accelerated improvements
in supply chain and solutions. The
commercial application of these solutions
takes the form of more a complete BPO
end-to-end offering. What is unique is that it
can be delivered to companies that wish to
benefi t from the expertise and infrastructure
available to them, but in a variable and
confi gurable manner. They can then
optimize these capabilities as an extension
of their own enterprises.
Risk mitigation and change management
constraints often dictate that companies will
manage these outsource decisions in bitesized
chunks. Where the true supply chain
BPO provider will succeed, however, is in
the ability to execute against initial business
and provide multiple options for further
development of a more comprehensive
The new BPO provider must keep in mind the
bigger picture, and not get bogged down in the details
of the relationship today. In an environment where the
only certainty in supply chain is that needs will change,
this is a very attractive proposition for many clients.
46 Link May 2010

Consumerism
REAL REPORT
Remember our supply
chain purpose?
Raw materials are procured, converted
into product, packaged and delivered for
customer consumption. In order to make
this more effective, companies must
focus on the supply chain partnership
and the key drivers for performance
rewards and measurements. The
organizations that can keep this intrinsic
need in mind, and apply the principals
critical to the most basic functions
across the end-to-end big picture, are
destined to emerge at the top of their
respective market.
relationship down the line.
The new BPO provider must keep in
mind the bigger picture, and not get bogged
down in the details of the relationship today.
In an environment where the only certainty in
supply chain is that needs will change, this is
a very attractive proposition for many clients.
Implications for decision
makers
The emergence of multiple, credible
supply chain BPO providers creates more
options for an OEM facing the challenges
of getting products to market in a
competitive manner. Decisions regarding
the allocation of investments and
resources must be considered, particularly
in terms of what will drive sustainable value
within an organization.
The ability to incorporate world-class
supply chain capabilities into an organization
in an immediate, variable and confi gurable
manner can release funds and management
attention to be used for other critical
business functions.
By the nature of the discipline, effective
supply chain investments provide a roadmap
to cost optimizing and revenue facilitation.
Experience has shown that optimizing
management across the entire supply
chain can yield signifi cantly more savings
than a focus on isolated costs in functional
areas. Consideration of what you want from
a supply chain BPO relationship should
provide some clues on how you assess
the value proposition of potential partners.
An auction process may drive the lowest
price for a defi ned set of services, but can
you be sure that you have defi ned all of the
requirements for a supply chain partner?
If you assess only your current needs,
do you risk building a piecemeal supply
chain structure that lacks a cohesive vision?
Conversely, partners with the cohesive
vision, however, must also be capable of
meeting your needs today.
May 2010 Link 47

INTERNATIONAL
News
JAL to suspend freighter flights
Japan Airlines announced that it will
ground its freighter fl eet after more
than half a century of operations and
continue its cargo business “solely” through
utilizing belly space on its passenger fl ights.
JAL, which is in the midst of a courtmonitored
bankruptcy restructuring,
operated its fi rst freighter fl ight on May 2,
1959, aboard a DC-4 from Tokyo Haneda
to San Francisco. But it said it will suspend
freighter service at the end of October owing
to “market conditions for international cargo.
. .expected to remain severe.” It said its “new
cargo business structure. . .aims to secure a
stable profi t. . .that can boost the recovery of
JAL’s fi nancial standing.”
It insisted it would be “maintaining access
to almost all destinations currently served
by its freighter fl ights with passenger fl ights,”
adding, “The airline will continue its cargo
business by productively using the belly
space of 508 weekly passenger fl ights plying
56 international routes and on 134 domestic
routes with 904 daily one-way fl ights.”
JAL operated 11 freighters on 28
international routes at the end of its last
fi scal year on March 31, 2009, comprising
seven 747-400Fs, one 747-200F and three
767-300Fs. Of those aircraft, six were owned
and fi ve leased.
Japan Airlines CEO Kazuo Inamori, the
iconic Japanese business fi gure who took
the helm of the bankrupt carrier in January,
told the media that he has been surprised
by the lack of business acumen among
company executives but vowed to return
the carrier to operating profi tability as soon
as this fall.
He candidly expressed his assessment
of JAL’s corporate offi ce in a Tokyo news
conference, according to multiple reports,
saying that an “extremely low” number of the
airline’s executives have business sense. He
said he has told them, “You guys wouldn’t be
able to run a greengrocery with your ideas.”
The carrier entered a court-monitored
bankruptcy proceeding in January and last
month reported a record nine-month net loss
of ¥177.9 billion ($1.99 billion) for the fi rst
three quarters of its fi scal year ended Dec. 3.
Inamori, 78, who was lured out of retirement
by Prime Minister Yukio Hatoyama to
revive the troubled airline, said yesterday
that JAL will “have to proceed with drastic
restructuring including cost cutbacks” to
survive. He said operating profi tably on a
monthly basis by this fall is possible.
He rejected suggestions that the
carrier will shrink its international network
signifi cantly, saying, “’I’m fully confi dent that
we can make the international operation
profi table. If
we can’t, there won’t be any reason for
JAL’s existence.”
Japan Airlines posted a net loss of
¥177.9 billion ($1.99 billion) for the fi rst three
quarters of its fi scal year ended Dec. 31,
2009, considerably widened from a ¥1.9
billion loss for the prior-year period.
The result represented a record ninemonth
defi cit for the bankrupt carrier, which
said Friday it is establishing an independent
investigative committee to “examine past
business practices.” It said in a statement
that it “recognizes and is deeply apologetic
for the current situation that has caused
great inconvenience and concern to our
shareholders, fi nancial creditors, customers,
suppliers and other related parties.”
Operating revenue for the nine-month
period slumped 26.6% to ¥1.14 trillion while
expenses lowered 19.3% to ¥1.27 trillion,
producing an operating loss of ¥120.8 billion,
signifi cantly widened from an operating loss
of ¥8.8 billion in the prior-year period. Traffi c
decreased 9.5% to 58.15 billion RPKs on
9.5% capacity dip to 88.91 billion ASKs,
producing a load factor of 65.4%, fl at yearover-year.
Cargo traffi c declined 13.2% to
7.77 billion RTKs on a 14.8% cut in capacity
to 13.05 billion ATKs, producing a load factor
of 59.5%, up 1 point.
Fiscal third-quarter net loss was ¥46.7
billion, widened 21.3% from a ¥38.5 billion
defi cit in the year-ago period, on a 21.6%
slide in revenue to ¥380.8 billion
“The government will support [JAL’s]
efforts,” Hatoyama said, encouraging
passengers to continue fl ying aboard an
airline that operates 1,100 fl ights daily and
has a 66% international market share and
a 46% domestic share in Japan. “Today is
the starting point for JAL’s revival,” Maehara
said. “Needed support will be provided until it
is reconstructed.”
“Delta and SkyTeam fully support
Japan Airlines and stand ready to provide
assistance and support in any way possible,”
DL said. Oneworld said that JAL’s “position
in the oneworld alliance is unaffected”
and that ETIC has assured it that “it
is business as usual for the airline
commercially and operationally.”
48 Link May 2010

News
INTERNATIONAL
UN under pressure to
curb Somali piracy
Despite joint efforts by several countries,
the scourge continues unabated said
Vitaly Churkin, Russia’s UN Ambassador.
Russia pressed for a stronger UN
mechanism to ensure effective legal
action is taken against pirates caught
off Somalia.
Russia’s UN Ambassador Vitaly
Churkin told reporters that the “weak
link” in international efforts to combat
piracy off lawless Somalia was “the
legal process, which would allow us to
be sure that there is no impunity once
pirates are caught.”
He said he introduced a draft
resolution in the 15-member body that
would direct UN chief Ban Ki-moon
“within three months to prepare a
report outlining various options of a
stronger international legal system” to
deal with the pirates caught off the coast
of Somalia.
Churkin said despite joint efforts by
navies of several countries, including
Russia, to deter piracy, the scourge was
continuing unabated. “So far the results
have not been entirely satisfactory. The
problem continues to be there and is
growing,” he said.
And Churkin said Moscow was
concerned by reports that littoral
countries such as Kenya decided to
stop prosecution of suspected Somali
pirates because of the heavy strain
on their over-populated prisons and
congested courts.
Genco shipping to purchase more ships
Baltic Trading, a newly listed shipping
company controlled by Genco Shipping
and Trading, may do a secondary offering
this year to buy more ships, Chief Financial
Offi cer John Wobensmith said.
The New York-based carrier of
commodities such as iron ore and coal
will put all its vessels in the spot market, a
strategy opposite to that of Genco, and will
maintain zero debt, Wobensmith said in his
fi rst interview after
last month’s IPO.
“Investors have
an appetite to get
spot exposure,
and there really
isn’t any other
drybulk company
out there right
now that can give
you that spot
exposure,” said
Wobensmith, who is also Genco’s Chief
Financial Offi cer. “The whole concept of
Baltic is not just to be a spot player, but to
give a good payback on dividend and have
no leverage.”
Baltic Trading raised $228 million
(Dh836.76m) in its IPO, pricing the 16.3
million common shares at $14 each, the
lower end of the target range of $14 to $16.
The company used the proceeds in the
purchase of six ships.
Baltic fell 10 cents, or 0.7 per cent, to
$13.90 on the New York Stock Exchange
yesterday. The shares fell 0.3 per cent in
their fi rst day of trading March 10, reached
as high as $14.27 on March 11 and dropped
as low as $13.05 on
March 19.
Baltic Trading is
“an equity-fi nanced
company” and
will use debt only
as a short-term
bridge facility,
Wobensmith said,
adding that more
equity offerings are
planned to expand
the fl eet.
“We are defi nitely planning this year, but
it all comes down to fi nding the right assets,
being comfortable with what you are paying
and the return numbers, and obviously the
equity market,” he said.
$200m worth deal for Drydocks World
Drydocks World – Southeast Asia (DDW-
SEA), the Southeast Asian subsidiary
of Drydocks World says it has won
newbuilding and conversion orders worth
more than $200 million (Dh734m) since
the beginning of 2010.
The company says that while the new
building and conversion markets for the
shipping and offshore sectors continue
to be challenging, the fi rst quarter of this
year has shown some signs of recovery.
After a worldwide lull in conversion
contracts in 2009, DDW-SEA won two
major contracts in January.
The fi rst is an upgrade from a crane
barge to an accommodation barge for
Leighton Offshore and the second is
a container ship to livestock carrier
conversion for a Saudi Arabian customer
Hamood Al Ali Al Khalaf Trading and
Transporting.
The list of newbuilding contracts
includes repeat business from Coastline
Maritime and Jack-Up Barge for the third
ultra-heavy lift construction support vessel
and the sixth Jack-Up Barge respectively.
Other newbuilding orders clinched by
the company include two dumb barges
for PT Kumala Barito Utara and a RoPax
Catamaran (designed by Sea Transport
Solutions of Australia) for an Australian
client Islands Transport Holdings.
The livestock carrier conversion is a
particularly high value contract worth more
than S$60 million (Dh157.9m) involving
some 5,500 tonnes of steelwork.
May 2010 Link 49

INTERNATIONAL
News
Container shipping industry in ‘fragile’
state: Maersk
The global container shipping industry
remains in a “very fragile” state due to
weak demand and a glut of ships, the
world’s largest shipping company Maersk
Line reported.
Maersk Line said companies should go
slow in bringing back to service hundreds of
ships idled during the recession, otherwise
the sector will extend losses which totaled
15 billion US dollars in 2009.
“The situation remains very, very fragile
for the shipping industry, it is balanced
on a knife’s edge,” said Hennie van
Schoor, Maersk Line’s director of business
performance, at the Asia-Pacifi c maritime
2010 Conference held in Singapore recently.
As global trade slowed during the global
economic crisis last year, freight rates
plunged and 11 percent of the world’s
container shipping fl eet, or about 500
vessels, had to be parked. In terms of
volume, about 80 percent of world trade is
carried by sea.
There are signs of a pickup in global
trade, with the United States and Europe
importing more from the rest of the world,
however, indications show this is being
driven by companies stocking up on
inventories rather than a surge in general
demand. US imports rose 13 percent yearon-year
in the fourth quarter of 2009, but
retail sales in the same period expanded by
only 1.0 percent. For Europe, the continent’s
imports were up 3.0 percent, but retail sales
climbed a mere 1.0 percent.
Van Schoor also cautioned against the
idled ships going back into the market,
saying it will further upset the imbalance
between a glut in capacity and weak
demand.
DHL official logistics provider for the
British Embassy
DHL, the world’s leading express and
logistics company, has signed a contract
with the British Embassy in Doha for the
provision of express courier services to
and from the Embassy.
Head of Corporate Services, Joel
Watson commented, “I am delighted that
the Embassy had been able to reach
an agreement with DHL Express on
the provision of courier services. The
Embassy, like many other organisations,
is looking to increase our operational
excellence and realise effi ciencies.
Establishing partnerships with world
renowned commercial partners such as
DHL is an essential part of the Embassy’s
Corporate Services Strategy.”
“DHL Qatar is honoured to have been
appointed as the exclusive express
and logistics partner, entrusted with the
responsibility for meeting the
British Embassy’s requirements.
This prestigious partnership is
an endorsement and recognition
of our market leadership and
highly professional operation
in Qatar”, said Daniel Kearvell,
General Manager, DHL Express
Qatar.
DHL Express Qatar
celebrates 30 years in operation
in 2010.
US warship ‘sinks
pirate mother ship’
A US warship intercepted suspected
Somali pirates and sunk their “mother
ship” after they attacked an oil tanker off
the Seychelles, the US navy’s Fifth Fleet
said recently.
It said the Sierra Leone-fl agged tanker
MV Evita “came under attack 500 kilometres
(110 miles) northwest of the Seychelles by
three suspected pirate skiffs. During the
attack, the pirates fi red rifl es and aimed
rocket-propelled grenades at the vessel in
an attempt to force it to stop,” but the MV
Evita evaded the pirates, the navy said in a
statement. “The MV Evita was able to evade
attack by adopting industry-recommended
‘best management practices,’ increasing its
speed and fi ring fl ares at the pirates to warn
them off,” it said.
Coalition forces on patrol in the area
were alerted and dispatched the USS
Farragut to track down the pirates on
board the three skiffs. “A SH-60B Seahawk
helicopter, from Farragut, was immediately
dispatched to monitor the pirates while the
suspected pirate skiffs were boarded,” the
statement added.
Eleven suspected pirates were held
briefl y “while the mother skiff was destroyed
and sunk,” it said. “After ensuring that
the suspected pirates had no means to
conduct any more attacks, all 11 were
released on the two small skiffs,” according
to the statement from the Bahrain-based
Fifth Fleet. The USS Farragut is part of
the US-led Combined Task Force (CTF)
151 coalition carrying out counter-piracy
operations in the Gulf of Aden and the
Indian Ocean.
Also on Thursday near the Seychelles,
the USS Nicholas captured fi ve suspected
pirates who had opened fi re from a
small boat.
50 Link May 2010

News
INTERNATIONAL
Australia may expand the tracking
of vessels beyond the northern parts
of the Great Barrier Reef, Prime
Minister Kevin Rudd announced,
as a salvage crew prepared to drain oil from
a Chinese coal vessel stranded in
the marine park.
The ship ran aground four days ago in
broad daylight in the middle of the Great
Barrier Reef. Getting the oil off the Shen
Neng 1 will take time and it will be “days
before there is an actual attempt to fl oat the
vessel and get it off the shoal,” Great Barrier
Reef Marine Park Authority chief scientist
Dave Wachenseld told the media.
Australia, the largest exporter of coal,
is trying to protect an area named a United
Nations World Heritage site in 1981 that
attracts millions of tourists and scientists
each year. The ship left the Port of
Ship tracking at
Great Barrier Reef
Gladstone last month carrying 65,000 metric
tons of coal for export to China, and about
975 tons of fuel oil.
As much as 4 tons of fuel oil was spilled
and has been contained by dispersants,
Wachenseld said. A white plume of sand,
pulverized coral and rock, mixed with toxic
paint from the ship’s hull, remained visible
around the stranded vessel, he added.
“There is without question an immediate
footprint of this wreck hitting the shoal
and this plume of potentially toxic material
moving away,” he said.
Tourism Icon
The Great Barrier Reef marine park, larger
than the Great Wall of China and the only
living object visible from space, is more
than 3,000 kilometers (1,800 miles) long
and runs almost parallel to Australia’s
Queensland coast.
The reef, about 65 kilometers wide
in some parts, is a breeding ground for
humpback whales and is host to the world’s
largest collection of corals, more than 1,500
species of tropical fi sh, more than 200 kinds
of sea birds and reptiles including sea turtles
May 2010 Link 51

INTERNATIONAL
News
and 120-year-old giant clams.
“If the Chinese crew are under any
illusions that this is a minor incident, I’m
sure that when they get off the boat and see
what the world has to say they’ll understand
a bit more clearly just how serious this is,”
Queensland Premier Anna Bligh said in a
media statement.
Full Investigation
Australian Greens party leader Bob Brown
called for a royal commission into the
grounding of the coal ship after it strayed
from a designated shipping area. There will
be a full investigation, the Prime Minister had
said following the spill. If there is a need to
also look at other measures for the future,
including a wider use of pilotage and the
wider use of the vessel tracking system that
applies in the northern parts of the Reef,
then the government will he had said.
Two tugs were in place stabilizing
the carrier, according Maritime Safety
Queensland General Manager Patrick
Quirk. The Pacifi c Responder, a salvage
and response vessel assisted with the oil
transfer. Australia’s Prime Minister Kevin
Rudd announced that the government would
carefully consider changing the rules for
shipping through the Great Barrier Reef.
He had announced that the government
would consider extending a range of piloting
and ship monitoring conditions that were put
in place four years ago.
“Changes were made back in 2006, I’m
advised, by the previous government which
took the pre-existing arrangements for
pilotage and pre-existing arrangement for
vessel tracking from the northern stretch of
the Barrier Reef to include the Torres Strait.
They did not at that stage extend that to
the Southern Barrier Reef where of course
this problem occurred with the Chinese
vessel,” he said.
The captain of the Shen Neng 1 that ran
aground and leaked oil on the Great Barrier
Reef has provoked anger by claiming the
spill was not serious. Captain Wang Jichang
complained that rescuers working to stop
the stranded coal-carrier breaking up and
spewing more oil, were using up its food
and drinking water. After speaking to captain
Wang, Brisbane’s Chinese Consul-General
Ren Gongping told the media that the
leakage was not serious as the captain could
not see any oil on the water.
Long term damage
Peter Harrison, from Southern Cross
University, has been studying oil pollution
and other stress effects on corals on the
Great Barrier Reef for more than 30 years.
He said the dispersants being used to break
up the slick and the oil that’s already leaked
are a toxic combination that may cause long
term damage.
“Some of the oil products if they have
become embedded into the reef structure
could create some long term pollution and
therefore reduce the effectiveness of coral
spawning over the next year or so.”
He said tidal and wave action will spread
the oil and could drive it into the sediment
and the surrounding reef. That may reduce
the coral’s long term ability to reproduce.
Following the spillage, Prime Minister
Kevin Rudd has fl agged an overhaul of
measures to protect the Great Barrier Reef
from environmental disasters.
He was open to the idea of putting more
pilots on cargo ships travelling near the
World Heritage-listed reef. He said, he
would also look at whether there’s a case
to tighten laws to better protect an asset of
global importance.
Existing penalties allowed for fi nes of
up to $5.5 million in such circumstances,
and jail time of up to three years if a captain
was found to be negligent, he announced.
“My view is that the law must be fully and
absolutely applied in these circumstances.
Australians take the Great Barrier Reef very,
very seriously,” he said.
The Government would be “looking at
the laws for the future” as a priority, and
that he was also open to the idea of putting
more pilots on large cargo vessels plying
reef waters, the PM said. “Let’s see what the
experts have to advise”.
Maritime authorities say they’ve stemmed
the oil leak but still fear the badly-damaged
Shen Neng 1 could break up if the weather
turns bad. Equipment was being fl own to
the area so teams could begin pumping
about 950 tonnes of heavy fuel oil and 100
tonnes of diesel oil off the vessel and onto
another ship.
Oil had already been transferred within
the ship from damaged tanks into secure
ones. Authorities were still considering
whether to try to offl oad 65,000 tonnes of
coal, Premier Anna Bligh said.
“If it is possible to refl oat the ship with
the coal on board, that’s how it will be
managed. But the calculations are still being
undertaken by the salvage team,” she said.
There was nothing illegal about its
intended route, although it was not
considered a preferred route. But the vessel
strayed off course and ended up grounded
in a restricted part of the marine park.
“Navigating a ship through these waters is
not rocket science,” Quirk said.
“Any competent crew should be able to
do that and we were just totally stunned to
fi nd where she had gone aground.”
The grounding happened outside the
coverage area of a vessel tracking system,
which would have alerted authorities about
the ship straying off course, Quirk added.
Asked if he’d support an expansion of
the tracking system he said: “There’ll be a
number of recommendations to Government
and we’ll be very forceful in upping our risk
management of this area.”
Australian Greens leader Bob Brown
has called for a royal commission into the
grounding, saying there’s emerging evidence
of ships laden with toxic cargos taking short
cuts through reef areas.
52 Link May 2010

News
INTERNATIONAL
West-to-East VLCC
trade picks up
West-to-East VLCC (very large
crude carrier) trade is gaining
momentum contributing to
almost 16.8 per cent of overall VLCC
demand in 2009, compared to 13 per cent
the previous year. VLCCs saw 39 per cent
increase in demand in West Africa and
India trading and 35 per cent gain in
Americas and Asia trades, offsetting the
losses on other major trades, US-based
analyst McQuilling reported.
The popularity of the West-to-East
trades that gained momentum through
2009 has provided signifi cant tonne-mile
demand for an otherwise over-supplied
VLCC market, said the report published last
week. According to analysts, the crude oil
trades in particular from West Africa and the
Americas to India and the Far East, have
seen year-on-year growth that took off in
the fourth quarter and prompted a rally in
the spot freight rates that has yet to fi zzle
out. “As these trades continue to consume a
greater portion of the fl eet, losses on other
major trades are largely being offset by this
long-haul’s emergence.”
“With updated data refl ecting actual
tonne-mile demand through 2009, we were
able to validate our commentary regarding
changing VLCC trading patterns,” it added.
The traditional “front-haul” TD1, moving
crude between Arab Gulf and US Gulf, lost
more than 28 per cent of its demand since
2008, slipping from a 16.4 per cent share
of total VLCC business to 12.2 per cent in
2009. Besides, the TD4 trade from West
Africa and the US lost 28 per cent of its
demand, emphasizing the detrimental
impact of the US recession on domestic
liquid fuels imports.
In contrast to these losses, VLCCs, the
report said, saw an increase in West Africa
and India trades, Americas and Asia trades,
and West Africa and Asia trading (12 per
cent). These traditional “back-haul” West-to-
East trades combined to take a 16.8 per cent
share of VLCC demand in 2009, up from a
13.3 per cent share in 2008.
“These results lead us to question the
industry’s definition of the ‘front-haul/backhaul’,
highlighting that TD1 now commands
a lesser share of VLCC demand than the
West- to-East trades at 12.2 per cent
versus 16.8 per cent. To be fair, most of
North America was mired in recession last
year while economies in the East continued
to grow,” it said.
Although the hard demand data for
2010 is not yet available, the analysts said
they can attest to the West-to-East trade’s
growing resilience given current spot fi xture
records. “We track VLCC fi xtures on these
routes up 92 per cent year-to-date from the
same period last year. This points to the
growing demand for liquid fuels in China and
India, along with expansions to Reliance’s
refi neries whose Jamnagar complex now
boasts the world’s largest capacity at 1.24
million barrels per day,” it added.
May 2010 Link 53

INTERNATIONAL
News
Airlines boost cargo
capacity on recovery
Airlines are increasing their cargo
capacities as a global recovery spurs
demand for air services in Asia.
Malaysian Airline System announced that it
has ordered two A330-200F freighter aircraft
from Airbus SAS. Thai Airways International
has also begun to deploy two new Boeing
777 freighters to develop its under-exploited
air cargo business.
The International Air Transport
Association announced late last month that
its global air cargo traffi c surged 26.5 per
cent in February from a year ago, and North
American and Asian carriers booked even
stronger growth. The fi rst freighter will be
delivered to Malaysian Air in September
2011 and will have capacity to carry almost
70 tonnes of cargo, said a Bloomberg report
quoting a senior offi cial from the airline.
“The new freighters will enable us to
better serve the intra-Asia route and offer
direct services to Europe from India and
Bangladesh,” Chief Executive Offi cer Tengku
Azmil Zahruddin said. “This complements
our expansion plans in China and will
strengthen our position as a key niche player
in the region.”
The company also said it has confi rmed
orders for 15 passenger planes. The 17
planes will cost $3.6 billion (Dh13.22bn)
based on catalogue prices, he said. The
International Air Transport Association
(IATA) this month revised its 2010 growth
forecast for worldwide cargo demand to
12 per cent from seven per cent. Asian
air-freight markets are particularly strong,
with shipments originating in Malaysia
experiencing a capacity shortage, it said.
Cargo traffi c, which outpaced a 9.5 per
cent rise in February passenger numbers,
must increase a further three per cent to
recover to pre-crisis levels, IATA announced
in a report.
Meanwhile, Thai Airways International
last week started to use cargo capacity
on the B777Fs, which are operated by
Southern Air, a Connecticut-based low-cost
cargo carrier, under an aircraft block space
agreement (BSA) struck last year for a
period of two years.
The airline envisages growing demand
for air cargo delivery from Thailand,
especially for perishable products and
computer parts – hard disks, in particular, as
Thailand produces about half of the world’s
supply. Haulage demand is especially strong
at the moment, having been on an upward
trend since last October, said a report
quoting Pichai Chunganuwad, Managing
Director for Thai’s cargo and
mail commercial department. Earlier this
year Airasia said it sees air freight as a
major growth area for 2010 and inked
several Special Prorate Agreements (SPAs)
with other airlines to achieve its revenue
target for 2010.
The Kuala Lumpur-based carrier said
it was linking with more cargo agents and
large export-import fi rms via its expanding
network. The airline now reaches markets
in South Asia, Africa, the Middle East and
Europe beyond its current route network
through those SPA deals and expects its
cargo revenue to grow by more than 40 per
cent over last year’s fi gure.
Domestic cargo operations are also
expected to receive a boost from increased
demand for cargo services for perishables,
including seafood from West Malaysia.
Seafood and other perishables are currently
among the carrier’s cargo revenue sources.
54 Link May 2010

News
INTERNATIONAL
Antwerp port
begins to expand
global presence
The port of Antwerp, the second-largest
port in Europe, has announced its
partnership with Oman to develop
the port of Duqm as the fi rst step towards
expanding its presence worldwide.
A senior offi cial of the Port of Antwerp
International said it will play a prominent role
in the development and operation of a large
distribution hub in Duqm, under the terms of
a joint venture signed between Antwerp Port
Authority and the Government of Oman.
This is the fi rst foreign venture of
Port of Antwerp, a subsidiary of the Port
Authority set up to implement the strategy to
strengthen the port’s competitive position on
a world scale “with the emphasis on cargo
connections”. The Port Authority will take on
the Oman project in collaboration with Rent
A Port within the “Consortium Antwerp Port”.
Yannick Dufraimont, CEO of Port
of Antwerp International, said in an
interview with the media, “Within the
Middle East our focus for the time
being will be mainly on Oman. We
have been discussing with Oman
offi cials since last year. We worked
on the design of the new Greenfi eld
Harbour. Work has already
started. The dredging is almost
complete. Now they are building the
breakwaters,” he said.
The Omani Government plans to
build a port and industrial complex
in Duqm, with strong emphasis on
petrochemicals. An area of 21,000
hectares has been set aside for
this, with 3,300 ha earmarked for a
refi nery and petrochemical complex
and 116 ha for the port.
“We are not involved with the
dry dock which will be ready by the
end of this year. As for the port, the
work is expected to be complete by
the end of next year when it will be
operational,” he added.
Space has been made available
for a container terminal with an annual
capacity of 200,000 TEU, which will act as a
hub for trade between the Gulf, the Red Sea,
the Far East, South-East Asia and East and
South Africa.
“The government and Belgian port
of Antwerp will each have 50 per cent
shareholding in the new company called Port
of Al Duqm,” said a Reuters report quoting
a statement from the Oman’s Finance
Ministry. Meanwhile, the Port of Antwerp
said it aims to systematically expand its
presence outside Europe, more specifi cally
in economic growth regions capable of
generating trade to develop an international
network of ports. Some of the strategic ideas
for expansion are the Middle East, India,
Sub-Saharan Africa and Brazil.
“We have identifi ed four regions apart
from the Middle East. We are working
very hard on India, the second region. We
are concentrating on Congo and western
Africa. We have to strengthen our team for
our Brazil initiatives,” said Dufraimont. “We
have started off our global initiative with the
Middle East and will continue to work on the
rest of the regions,” he added.
Meanwhile, the second branch offi ce of
Antwerp Port Authority was started in
Pune in India to target IT services, car
production, manufacturing, biotechnology
and other industries.
India recently announced that it plans
to improve its port infrastructure with as
many as 17 public private partnership (PPP)
projects as part of the National Maritime
Development Programme (NMDP). Among
the 17 projects that are to be awarded
includes, cargo berth development at
Paradip Port Trust, Tuticorin Port Trust,
Mumbai Port, Kandla Port.
Development of container terminal will
be undertaken at New Mangalore Port,
Chennai Port, Jawaharlal Nehru Port and
installation of mechanised handling facilities
for fertilisers at Vishakhapatnam Port as well
as setting up of single point mooring (SPM)
and allied facilities at Kandla Port. Chennai
Port has proposed to develop mega
container terminal under PPP mode
at an estimated cost of Rs3.686
billion (Dh301 million). The capacity
of berth is 48 million tonnes per
annum. Tuticorin Port has also
proposed to develop North Cargo
Berth No II under PPP mode at an
estimated cost of Rs33.21 million.
The capacity of berth will be seven
million tonnes per annum.
Meanwhile, the Port of
Antwerp has begun talks with
local companies for investment
opportunities in building new ports
in India.
Meanwhile, he said, the volumes
at the Port of Antwerp have seen
an increase since the beginning of
2010. “The situation now is picking
up compared to the end of 2008
and 2009. While we managed 190
million tonnes in 2008, the volumes
went down to 160million tonnes in
2009. Although it has started to pick
up it will not reach 2008 levels this
year,” he said.
May 2010 Link 55

THE LIGHTER SIDE
Obama’s rules
}Create
Change is what the corporate world needs and
change is what you certainly need to be able to
move on the fast track of your career. Priya Kumar
enlightens with a few lessons to learn from Obama’s
campaign to presidency, which will give you a
refreshing perspective towards success in your own
Priya Kumar
Motivational speaker field of endeavour.
}What’s your tag line: “Change we need” is
what Obama stands for. He capitalised on all
that was not right in America and the world,
and made “change” his purpose. What’s your
purpose? What do you want your presence
to initiate? Are you fi lling just a job position
or are you going to make a difference? The
point is America knew very clearly that when
they get Obama, they can expect change.
So when you enter your offi ce, what is
expected of you? Ponder that.
}Odds don’t count, your contribution
does: Obama was a surprise candidate
to run for President. First afro American to
make it as the Leading Man of the most
powerful nation of the world is proof enough
that the world and people’s
loyalties have tipped in the favour of
progress and contribution than prejudice.
The same is valid for the corporate world. If
your contribution is not real and visible then
you can expect your term to end faster than
the presidents.
}Perceive the problem and be the
message of hope: Obama had the capacity
to inspire and reassure a worried and
divided nation. His triumph was decisive and
sweeping, because he saw what is wrong
with this country, and that won people’s
votes because he “understood”. If you can
develop the capacity to see what’s wrong,
and offer your services as hope and solution,
then the vote of victory is defi nitely headed
for your ballot.
}Give others credit and a share of your
success: Now this is the hardest to do, and I
believe only someone driven by passion and
purpose can have the courage to give credit
of his success to someone else. It does not
make you small, but it sure makes others
big. Obama said in his speech that his
victory belongs to the people,
which is the greatest and
hardest truth ever told. No one
makes it alone. No one. To give
credit where it belongs makes
you so big that your success in
all you is inevitable.
}Empower others towards
greatness: It is only when
you empower people, they will
give you their undying support.
Obama urged the people to
believe in their ability to change
the world more than his. He
believed that when ordinary
people act together they make
a difference. Most of us are
so unconfi dent of our own
contribution that our relationship
with our colleagues is more on
insecurity than empowerment.
Change it.
the urgency: No matter how good
you are, to get what you want you need
to create an urgency to put people into
action. You can’t force people to do anything
whether at work or outside. But like Obama
did, put the hammer down on the date and
reassure that when the choice is made in
your direction, it would be one they would
look back to for strength. But in all humility,
allow others the choice.
}Appreciate your colleagues and
competitors: A good leader lives with a
purpose and not with insecurity. President
or not, everyone is worthy enough to
contribute. To be able to contribute towards
the wellness of your company or even the
world, you necessarily don’t need position
or permission. Obama appreciated his
competitors and sought their assistance
in his mission, making it their mission. To
engage your competitors and unite with
them on the purpose is the mark of a great
president, manager, or even trainee.
}Don’t over promise: Don’t make promises
that you can’t keep. Or rather don’t make
tall claims. People today are smarter, better
informed and more intuitive than they were
in the past. They can see through your
dream selling. Obama clearly mentioned
that in his journey ahead he would need as
much support he can. He even was honest
enough to speak his heart that maybe the
change he promised won’t manifest in one
year or maybe even not in one term, but he
did pledge to his effort to initiate the change
and ride it to the highest peak of progress
that he can.
}You can start small and finish big:
Obama himself says that he was never
the likeliest candidate for this offi ce. He
didn’t start with much money or many
endorsements. His campaign began in
the backyards of Des Moines and the
living rooms of Concord and the front
porches of Charleston. “Today is the time
of possibilities, good possibilities. It is also
the time when we need direction the most
because there are so many ways to reach
the same destination. Like Obama, you too
can campaign for a better life, a
better career if not a better world. And
when we all take responsibility for making
that change towards a better life for
ourselves, we indirectly lend our support
to the world, because now is the time and
“change we need”.
For more information : mail@priya-kumar.com
56 Link May 2010