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Introducing transportation concepts as key leverage for increasing the value of logistics' infrastructure for LSPs


Title: CONFIDENTIAL Subject: DB SCHENKER Business Opps in KSA Author: Dauaride Empere Last modified by: DCo Created Date: 8/31/2005 10:33:27 AM Document presentation ... – PowerPoint PPT presentation

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Title: Introducing transportation concepts as key leverage for increasing the value of logistics' infrastructure for LSPs

Introducing transportation concepts as key
leverage for increasing the value of logistics'
infrastructure for LSPs
Workshop Presentation at Kick Off Meeting
  • February 8th/9th of 2010
  • Abu Dhabi / UAE

Workshop Agenda
  1. Personal introduction and outlining of workshop
  2. Dornier's workshop presentation
  3. Group work with participants
  4. Presentation of group results and closing of

0900 a.m. 0930 a.m. 1030 a.m. 1130 a.m.
All Empere, Luebke All Group leaders
Content of Dornier workshop presentation
How does Dornier rate Logistics on a global scale?
How does Dornier experience Logistics in the
Which role do transportation concepts play for
Logistics in the region?
How do real life transportation projects look
Where do we go from here?
Global and regional trends in the Logistics
industry (1/4)
  • Worldwide trade and supply markets extension
    result in changes of goods flows and transport
    corridors used
  • Trade pattern origins and destinations changed
    through increased globalization, e.g. Europe, USA
    and Japan are sourcing from China and India
  • Global container volumes are expected to double
    again in the coming 10 years
  • 3 billion new consumers in Asia - becoming the
    global manufacturing hub - change transportation
    demand and service requirements
  • Logistics is a global business so is
  • Continuous market consolidation, resulting in
    less but larger international logistics service
  • Logistics is increasingly becoming a vital key
    industry with independent rules and development
    mechanisms (No. 4 industry in Germany)
  • Logistics industry possesses high differentiation
    potential and is driven by technology, know-how,
    experience and assets

Global and regional trends in the Logistics
industry (2/4)
  • International transport container traffic and
    intermodal transport will continue to increase
  • The growing economic development will lead to
    higher import and export volumes of consumer
  • Middle East attempts to become a strategic
    location for global logistics
  • Main corner stones have been set and are being
    developed aggressively
  • Global development in logistics offers a key and
    fast growing opportunity especially in the Middle
    East region
  • Ports and inland modes are already congested not
    only because larger vessels are increasingly
    congesting US, Far East and European ports
  • Lack of sufficient, modern Terminal
    infrastructure, however, time lines for
    developing new ports and infrastructure are long

Global and regional trends in the Logistics
industry (3/4)
  • GCC was established in 1981
  • Middle East markets major import markets
  • Low GDP due to low oil prices and a fully
    oil-dependent economy
  • Establishment of Pan Arab Free Trade Area in 1997
  • Important transshipment location
  • First steps of promoting trade and industry to
    minimize reliance on oil
  • KSA and UAE driving economic growth in GCC region
  • Professionalizing bagales to professional retail
  • New airports, seaports, Free Trade Zones
  • Import for sea-air traffic
  • Economic growth due to rising oil price
  • International logistics providers go ME and ME
    providers go global
  • Ongoing development of shipping companies from
    simple carriers to door-to-door operators
  • Import of project cargo
  • Industry acknowledgement of transportation and
    logistics activities as a core corporate process
    that has to be managed professionally
  • Increased willingness of the industry to
    outsource supply chain services
  • Change from passive driven to active driving
  • Increased railway activity

Global and regional trends in the Logistics
industry (4/4)
Container shipping crises. Merges and
Acquisitions, change of shipping lines from
maritime haulagers to carriers haulage/door-to-doo
r services
Import market dominated by shipping line haulage,
however, following classical market structures
and on-carriage organized by forwarders and
Service portfolio of LSPs in the Middle East is
being broadened gradually
Logistics integration level
Requirement planning
Supply chain
Global LSPs Europe today (e.g. DB Schenker)
Supply chain management
Global LSPs Middle East tomorrow
Production planning
Packing / Distribution
Intermodal transport
Global LSPs Middle East today
Railway transport
Land transport
Air/Ocean transport
Global LSPs based in Europe are more and more
facing high quality regional market players
System integrators (4PL)
DHL 500
DB Schenker
Al Majdouie
Agility gt 1
Playing field
System service provider (3PL)
DP World
Freight forwarders
Aramex gt250
Al Futtaim
Four Winds S.A.
Orient Company
Bubble size revenue indicator
Freight volume flows in ME require transportation
concepts focusing on intermodality as well as
road transportation concepts
Source Dornier Consulting GmbH
Global Logistics in the Middle East - a typical
supply chain
Supplier Overseas
Hub 1 Dubai
Hub 2 Abu Dhabi
Constr. Site 1
Steel Factory 1
Bulk storage
Bulk storage
Constr. Site 2
Sea transport
Road transport
Road transport
Constr. Site n
Cement Factory
-gt Logistics infrastructure
-gtShort-distance truck
-gt Long-distance/heavy truck
-gt Information
-gt Financing
Key Performance Indicators (KPIs) from a
logistics point of view
Reaching the goals set for KPIs requires an
integrated approach
Comprehensive transportation concept
  • Framework conditions
  • Standardization
  • Rules regulation
  • Training education
  • Law enforcement
  • General safety security

Transportation network
Security level
Delivery concept
Vehicle specifications
Cargo defines the ideal transportation mix
  • Cost-effective for short distances (regional)
  • Time-effective for long distances
  • Flexibility
  • Heavy cargo capacity
  • Timetables
  • Low failure rate
  • Ability to transport dangerous goods
  • Heavy cargo capacity
  • Very high loading capacity
  • Availability of special vehicles (dangerous
    goods, etc.)
  • Very time-effective
  • Easy packaging

  • Dependant on weather and traffic situation
  • Limited capacity
  • Limitations for dangerous goods
  • Danger of accidents
  • Side tracks necessary
  • Costs for special vehicles
  • Inflexibility
  • Dependant on weather (storm, ice, fog)
  • Inflexibility
  • High costs
  • Limitations for dangerous goods

  • Traffic counts
  • Transport modeling
  • Junction capacity analysis
  • Parking demand
  • External/Internal road network
  • Other traffic (except TL)
  • Mitigation measures

however the realities of the region limit the
feasible options
E.g. LoRoCo
E.g. UAE Rail
E.g. Red Sea Ferry
E.g. Saudi Airlines
  • xxx
  • xxx
  • xxx
  • xxx

Puzzle piece 2 Security level
Transportation as starting point for security
Explosion Events
  • The larger the vehicle, the larger the explosive
    device that could be hidden aboard, and the
    longer the time required for security checking
  • The worst case is a large articulated vehicle
    which could carry an explosive device up to 40
    tons. Such vehicles can be and are usually
    prevented by their size from entering standard
    public parking facilities
  • The next is ordinary trucks which could carry an
    explosive device up to 10 tons. They can be
    prevented by a height bar (usually 3m) from
    entering standard public parking facilities
  • Utility vehicles could carry an explosive device
    of 6 tons, a 4x4 passenger car 1 ton, a saloon
    car a box or large package 150kg, and on a
    person or in a briefcase up to 30kg
  • In explosion events, distance is a crucial factor
    since the blast force decays inversely with the
    square of the distance from the device, e.g. if
    the device is 10m from an object the blast force
    would be 1/100th of what it would be at 1m
  • Confined spaces provide ideal conditions for
    causing damage to a structure because the
    contained pressure from the blast will be much
    higher than in the open air. Survival of the
    building structure is the ultimate issue for
    security. This highlights the importance of
    preventing explosive devices from entering
    covered parking facilities, particularly
    basements and other closed structures. Vents
    through the ceilings of parking stations may be
    used to reduce blast pressure if open to
    unpopulated areas above ground level

Puzzle piece 3 Delivery concept
Puzzle piece 4 Vehicle specifications
Vehicle Specifications have a significant impact
on intermodal potentials
  • Vehicle standards in the GCC are especially
    required if intermodal solutions are planned for
    the future
  • Intermodal solutions road-rail could especially
    help to solve feeder and distribution problems
    from and to the main ports
  • Moving the line haul part of long distance
    transport to rail could contribute to diminish
    the problem of availability of skilled drivers
  • Long-term innovation of the interfaces will be
    required to improve competitiveness and
    acceptance of intermodal solutions as on the
    road solutions are required that focus on a
    selected group of containments to reduce
    complexity and costs
  • Intermodal solutions (IMS) could especially
    contribute to improve the land bridge
  • Besides that innovations of IMS could leverage
    industrial business opportunities in the region

CASE STUDY CHINA (Longer combination vehicles)
Effects of LCVs regarding, CO2, diesel fuel,
transport costs and traveled kilometers.
  • Parameter values for the case study

Source UNESCAP working paper P/07/02
Transport vehicles in the Middle East
  • Similar vehicles to KSA with exception of DP
    World who have road train of 2 x 40ft containers!
  • No proper legislation is in place
  • Mostly 2x4 Truck tractor with tandem semi-trailer

Transport vehicles in North America and Europe
18.75 m and a total weight of 44 tons
25.25 m and a total weight of 60 tons
  • USA transport limited by GVM and the use of long
    cab truck tractors

Transport Vehicle in Australia and South Africa
  • Road trains 53m long (however not used in cities)
  • 22 Meter, GVM 56,000 KG, (net payload of 36-40

Dorniers transportation project experiences in
the region (INPUT LÜBKE)
Conclusion 1 Developments in the region have
formed specific strengths weaknesses
Strengths of the Middle East
Weaknesses of the Middle East
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx

Conclusion 2 Europes highly integrated
logistics services hold numerous opportunities
and threats
Opportunities in the logistics industry
Threats posed by logistics industry
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx

Key Essential
  • Path to an integrated Logistics industry in the
    Middle East places some obstacles...
  • how do we overcome them?

Having carefully listened to the presentation
  • GROUP 1
  • which key opportunities do you see for LSPs in
    the region?
  • what are improvement challenges that have to be
    tackled by LSPs?
  • GROUP 2
  • what are business challenges that have to be
    tackled by LSPs?
  • which risk management measures definitely have
    to be initiated by LSPs?
  • Please use the following template
  • Provide detailed statements

Our approach to create a comprehensive workshop
Industry factors
Regional Factors
Key Opportunities
Business Challenges
Risk Management
Improvement Challenges
Template for GROUP 1
Key opportunities
Improvement challenges
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx

Template for GROUP 2
Business challenges
Risk management
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx
  • Xxx

Dornier Consulting says Thank You
Dauaride EMPERE
Senior Consultant
49 (0) 151 52 630 110
UAE Address Dornier Consulting GmbH Khalifa
Street, Liberty Tower P.O.Box 48327 Abu
Dhabi United Arab Emirates
Michael Luebke
UAE Country Director
971 50 812 24 79
The competition is investing significantly in the
Middle East market
Competitive environment
Global players
Agility Has made the biggest impact through the acquisition of forwarder GeoLogistics and the deal with the supply of the US troops in Iraq
Al Futtaim/Exel Offers full range of supply chain solutions that include warehousing and distribution, road transportation, sea and airfreight forwarding also comprehensive range of VAS
Aramex Revealed that is was negotiating to acquire companies in UK (Priority Airfreight Twoway Vanguard) and in US
GAC GAC Group consists of GAC Shipping, GAC Logistics and GAC Marine the GAC Logistics Park is the largest facility in the Middle East spreading over 125,000 m2 with over 125,000 pallet positions
DP World Large port management operations company dominant in the region PO services PO ferries Terminal at Jebel Ali Free Zone
DHL Possesses 3.2 m square feet operations and have invested significantly in the region
KuehneNagel Regional turnover is 140 m US KN used to operate through a JV company
Panalpina In 2006, three regional oil companies extended their contracts with Panalpina for the provision of logistics services in Saudi Arabia and Qatar, while two global computer and semiconductor manufacturers chose the Group as their distribution partner in UAE
The competition is investing significantly in the
Middle East market
Competitive environment
Regional players
Orient Company Provides national and international customers with international freight forwarding services that range from transportation, import and export by air, sea and land to customs clearance, domestic distribution, turnkey jobs, as well as industrial projects.
Four Winds S.A. Specialized in design and management of local and international transportation, freight forwarding and customs clearance services
ATCO Is the largest specialist company in the KSA transportation and logistics sector offers one-stop transportation and logistics services on a domestic and international basis.
MML Offers freight forwarding services domestic international, Air/Sea/Land Shipping NVOCC Agency, chartering as well as container terminal operations
Namma Handles total movement of cargo from worldwide locations for Saudi Chevron Petrochemical Co., Gulfguard, Saudi Crane, Middle East Power Company, Middle East Battery, Saudi Bea Fasteners and many other companies
Kanoo Offers shipping, airline cargo GSAs, door-to-door air sea cargo, customs clearance transportation, packing and house removal services, project cargo handling, exhibition services, international freight forwarding
Al Majdouie ALMAJDOUIE Logistics Distribution provides SCM solutions and 3PL ALMAJDOUIE Heavy lift transport engineering is a leader in heavy lifting and transport not only in Middle East and generally maintaining a market share of over 50
Backup Transition of World Exports
Backup Transition of World Exports
Source http//socialisteconomicbulletin.blogspot
Backup Doubling of container volumes by 2020
despite downturn
  • Even allowing for the current downturn in global
    trade, and the first potential decline in
    container traffic ever in the more than three
    decades since the inception of wide-scale
    containerization, current projections call for
    world-wide container volumes to double by the
    year 2020.
  • World-wide container volumes may have fallen by
    20 or more during the first months of 2009 as
    compared with last year, but the fact is that
    there are still ports in the developing world
    where limited capacity is still very much a
    significant and current problem, or that
    sufficiently modern ports and terminals simply do
    not even yet exist which can accommodate any
    moderately-sized modern cargo vessels,
    containerized or otherwise, let alone the latest
    generation giants. Current World Bank analysis
    calls for a decline in world trade volume of
    -2.1 for this year, before rebounding to a
    projected 6 growth in 2010.
  • The World Trade Organization foresees a 9 drop
    on manufactured export this year, though-
    significantly- with a smaller decrease among the
    developing economies. While global GDP has been
    forecast to expand by only 0.9 in 2009, the
    anticipated economic growth of the Developing
    World is still 4.5, with sub-Saharan Africa
    projected for 4.6 growth this year, and 5.8 in
    2010. According to the most recent WTO data for
    2008, Africa continues to experience significant
    growth in both exports and imports. Exports
    increased 29 to 561 billion, and imports rose
    to 466 billion, 27 higher than in 2007. This
    reflects increases in basic commodity and mineral
    exports, but also a surge in imported consumer
    goods from an increasingly important African
    trading partner China. Africa will continue to
    see economic and trade growth, and the interest
    of shipping lines and the global and local port
    and terminal developers and operators who serve

Backup Logistics Sector Germany
  • Weighing in just behind trade and the automotive
    industry, logistics is the third largest sector
    in Germany, employing some 2.6 million persons.
    Annual turnover of 166 billion is earned
    throughout the industry, representing
    approximately 7 of German gross domestic
  • The logistics sector also displays
    far-aboveaverage growth. Around 15 billion are
    invested in logistics real estate, technologies
    and qualification measures each year.

/Logistik/Fakten/Germany-Logistics-Hub.pdf Stand
Backup Challenges in the MENA Region
  • Although the region is not as dependent on the
    international economy as are other areas of the
    world, Middle Eastern agriculture and
    manufacturing are the main providers of job
    opportunities and have still become less
    competitive because of the increasing pressure to
    export goods to the global markets at lower
    prices. At the same time, inflation is running
    above 10 in much of the area due to rises in
    commodity prices. Inflation is also being driven
    upward because the currencies of many of the
    countries in the Arab region are pegged to the US
  • Before the financial downturn, the large inflow
    of foreign exchange into the nations of the
    region, whether from oil or aid, resulted in a
    sharp appreciation of domestic currencies. Now,
    with the US dollar depreciating, the region's
    Central Banks are forced to keep interest rates
    below the rate of inflation. With a prolonged
    global financial downturn, consumer price
    inflation in food and oil will not be offset
    through higher revenues from food and oil
    production. Although price increases in
    commodities would benefit some producers and
    investors, wages are not increasing fast enough
    to match the rising costs of food, fuel and
    rents, and this will have a continuing impact on
    poor areas.

Backup Challenges in the MENA Region
  • These combined factors are increasing the social
    and economic disparity in the region between a
    super-rich sector, a lower middle class and an
    impoverished sector. With the recent drop in the
    price of oil to below 70 a barrel, along with
    the loss of Arab investments in world stock
    markets, the level of revenue coming into the
    region from trade and foreign direct investment
    is dropping. A prolonged slowdown in the
    international economy will also cause
    remittances, job creation, tourism and foreign
    aid to decline and unemployment to increase,
    particularly among the youth. The economic
    downturn will also slow the flow of educated Arab
    workers into jobs in the oil sector.
  • Before the global financial crisis, the region
    benefited whether oil prices were high or low,
    since the region has both oil producers and
    consumers. But Middle East producers and
    consumers are now likely to suffer from either
    higher or lower oil prices as the financial
    crisis spreads -- because of the sustained drop
    in foreign investment coming into the region, as
    well as the volatility of regional currency
    values due to the region's monetary pegs to the
    American dollar which is gradually deflating.
    Even if oil prices were to rise to their previous
    high levels of July 2008, this would place a
    heavy burden on the unemployed and poor as well
    as the wealthier social sectors because of their
    reduced purchasing power.