Middle East logistics industry set for a remarkable period of massive sustained growth

In response to intense market demand and to support the growth of the regional logistics industry, IIR Middle East, organisers of some of the worldÕs most highly respected trade events, has announced the launch of International Freight Week, the only event in the Middle East to comprehensively cover the entire transport and logistics industry (including air cargo, freight transport, ports management and materials handling), which will make its debut at Abu Dhabi National Exhibition Centre, UAE from 23-25 November, 2008.

ÒThird party logistics operators (3PLs) see the Middle East as offering more growth potential for logistics and transport than either North or South America, with up to 25% stating, in a recent study, that their business expansion strategies would include development of their Middle East trade routes and infrastructure,Ó said Sarah Woodbridge, Group Director Exhibitions at IIR Middle East. ÒThe Middle East region is in the midst of exciting global, regional, and local developments in terms of transport and logistics, and with the phenomenal growth of global and regional trade, in particular between Europe and Asia, faces unprecedented opportunities to capitalise on the unique strength of its strategic geographic location and excellent accessibility by air, land, and sea.Ó

Historically a key meeting point and hub for East-West intercontinental trade, the Middle East straddles the crossroads of the major Asia-to-Europe and Asia-to-Africa trade routes. With oil revenues fuelling rapid growth throughout the Middle East and regional economies opening to the outside world, shipping volumes are consistently growing at a rapid pace. Regional ports are set to carry on expanding for at least the next five years, with the current frenetic growth rate sure to continue.

The Abu Dhabi Ports Company (ADPC), DP World and Economic Zones World (EZW) have just signed a cooperation agreement that will see DP World operating the Khalifa Port and EZW operating the Free Trade and Logistics Zone located in Taweelah. One of the largest marine terminal operators in the world, DP World currently has a management services agreement for Mina Zayed in Abu Dhabi. Involvement with Khalifa Port will represent the next stage in its growing relationship with ADPC. Meanwhile, it is hoped that EZW, one of the largest developers and operators of free zones in the world, will manage an initial 25 sq km trade and logistics free zone within the larger industrial zone in Taweelah, located halfway between Abu Dhabi and Dubai.

ADPC aims to create a sustainable growth platform that spurs economic expansion for Abu Dhabi by developing projects in conjunction with the private sector. The Khalifa Port & Industrial zone development includes a multi-purpose port that is 5km offshore and covers an area of 2.2 sq km. It will be able to accommodate up to two million teu's in its first stage, scheduled to be operational by the end of 2010.

The Trade and Logistics Free Zone will cover an area of 25 sq km in its first phase and will be the first trade and logistics free zone in Abu Dhabi. Nasser Al Suwaidi, Chairman of ADPC said: "This is yet another step in the drive towards greater cooperation and integration between Abu Dhabi and Dubai, and another example of how we are continuing to rapidly implement the vision of creating world-class port and zones facilities at Taweelah. It demonstrates our commitment to partner with the best-in-class entities to develop the port area and to serve its ever-growing demand. The new port and trade and logistics hub will solidify the UAE's position as a world class transport and logistics hub."

Also in the UAE, DubaiÕs Jebel Ali and Port Rashid operations handled 8.9m teu, with growth in excess of 20%, and Mohammad Al Muallem, Senior VP, DP World and MD of UAE operations, expects this growth to continue beyond 2007. "We are seeing healthy economic growth across the Middle East, and as our Dubai ports serve this region, all the economic indications are positive. Oil prices remain high, compared with a few years ago, and all the oil-producing countries are benefiting from that stability. Purchasing power remains high, and many projects are taking place that will ensure continued growth across our region."

DP World is further increasing its capacity, with the opening of the US$1.5bn Terminal Two this July, bringing Jebel AliÕs total capacity to 11m teu by the end of December. The second phase will extend the quay to 2,500 metres, increasing capacity to 5m teu by mid-2008. Building for the future, DP World has also started construction of an artificial island that could increase port capacity to 80m teu by 2030. "By starting now, we will be able to add capacity as it is needed - this will allow us to expand 18 months to two years ahead of demand,Ó added Al Muallem.

Designed to become the region's largest logistics hub, Dubai World Central is being developed on an area covering some 140 sq km. Infrastructure costs are estimated at US$33bn. Linked to Dubai International Airport and Jebel Ali Port and Free Zone by road and high-speed express rail links, logistics companies and airlines will be able to move freight and passengers between land, sea and air, all from one location, without ever having to leave the bonded free zone environment. As a rapidly growing transport hub, Dubai has attracted the attention of freight forwarding associations worldwide, according to Manfred Boes, President of the International Federation of Freight Forwarders Associations (FIATA). "Dubai Logistics City's multi-modal hub concept is unique and our 98 national member associations and individual members from 150 countries are unequivocal in their opinion that DLC is a catalyst for change."

Kuehne + Nagel, active in the UAE since 1977 and firmly established in international forwarding in Dubai and across the Gulf region, will open its second Dubai logistics hub at Dubai Logistics City. ÒDubai has developed into an important logistics and distribution hub for the Middle East Ð a region that is strengthening its role in global trade. Increasingly, major international companies are setting up production facilities and building up stocks in Dubai,Ó said Dirk Reich, Member of the Management Board of Kuehne + Nagel International AG.

Ras Al Khaimah has also unveiled an ultra-modern logistics park located at the fast growing industrial zone in Al Jazera Al Hamra. With warehousing space of 2,500 sqm plus a 12-metre-high fully racked warehouse which is capable of storing and distributing around 10,000 cubic metres of cargo plus a new 20,000 sqm Inland Container Depot equipped to handle 1,500 teu.

Road freight is also expanding strongly. DHL, the regionÕs leading express and logistics provider, is investing approximately US$3million a year in its fleet of trucks serving customers in the Middle East region. The investment will initially add an additional 35 vehicles with a further 15 vehicles to be added at a later date, bringing the companyÕs fleet to a total of 250 vehicles on the regionÕs roads. The move comes following unprecedented growth across the Middle East region and will initially raise DHLÕs capacity to 360 tons/1600 cubic metres per day. DHL currently ships on average more than 200 tons/900 cubic metres per day in the Middle East and this is expected to grow significantly this year.

Elsewhere in the region, Middle Eastern and African Delegations representing the local and private sectors, Ministry of Transport, Aqaba Special Economic Zone, Aqaba Development Corporation and Aqaba Container Terminal participated in the 2007 International Federation of Freight Forwarders Associations' RAME (Region Africa Middle East) Meeting that was held in Amman, Jordan, early in June. This gave a boost to JordanÕs international profile as another Middle Eastern country that has achieved a leading position in the transit cargo field.

Royal Jordanian Airlines has added a weekly freighter service to London to support Jordan's growing exports to the UK and Continental Europe. The new cargo service to London Stansted Airport supplements the current weekly freighter operation into London Heathrow. "We have experienced very strong growth in our operations in and out of London, with the cargo volume increasing by around 80%," said Geoffrey Weston, Vice President of Royal Jordanian Cargo, adding that Òthe growth is being driven by an upsurge in exports, mainly consisting of farm produce destined for the UK and other European countries, but also in textiles and garments for the United States.Ó

Saudi Arabia, the most heavily populated of the six GCC states and the worldÕs biggest oil producer, has, as a result of the continued oil price boom, boosted government spending power, allowing it to fund infrastructure and industrial projects. In 2006, Jeddah handled 5.4m tonnes of bulk cargo, 2.2m tonnes of ro-ro traffic, 57,000 teu (twenty foot equivalent container units) of containerised general cargo, 1.1m tonnes of break bulk cargo and 650,000 passengers.

And in Djibouti, the construction of a new container terminal that is designed to meet the growing needs of this expanding market is underway. The US$400 million Doraleh Container Terminal (DCT) is DP World's latest project in the Port of Djibouti and will enable the terminal operator to handle an additional 1.5 million teu annually.

ÒThe business potential of the Middle East region is staggering,Ó added Woodbridge. ÒEvery area of the logistics industry, be it sea, land or air, is incredibly active, and massive government investment in infrastructure is being committed to ensure that the Middle East maximises the opportunity to cement the regionÕs position as an essential logistics hub.Ó