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Value Chain Excellence. Strategy to Results.
Dubai, April 16th, 2015
Camelot Management Consultants
GCC/KSA: Diversification Creating Opportunities
Marcus Meissner
| © Camelot 2015 |
The Euro-centered routes have shifted and the Middle East has become the
global hub with more than 2.25 billion people within a 4-6 day sailing
distance
Source: Emirates Airline, Camelot analysis
Historical trade routes and hubs
Future trade patterns
Emerging economies as the cornerstone of future
growth
By 2020, world trade in goods will amount to USD35
trillion, two and a half times its value in 2010. At the
same time, world trade in services will double to around
USD6 trillion
China’s exports to Europe, at over USD1 trillion will
be almost twice as large as U.S. exports to Europe
Europe’s exports to Africa and the Middle East will
be around 50% larger than its exports to the US
Trade will also be increasingly focused around Asia,
the Middle East and Africa, suggesting that the key
geographical location for companies will change
15 of top 20 trade lanes will have origin or
destination in China – re-export hubs in the
Middle East will gain from this development
!
Global trends and logistics developments – GCC focused
Implications on the global logistics industry
DHL Conference – GCC/KSA: Diversification creating opportunities Slide 2
| © Camelot 2015 |
The logistics sector in the GCC is facing several challenges but also new
opportunities
Investments and economy news
Slide 3
CMA CGM sending new largest ever ship to
Middle East
“One of the largest container vessels calling in the
Middle East”
“CMA CGM Kerguelen will export consumer products
luxury products, as well as industrial products
(industry automotive, electronics, aeronautics, etc.) to
Middle East and Asian markets”
UAE economy to grow despite low oil prices
“Foreign capital jumps 25% to $13 bn in 2014”
“The UAE made similar achievements in FDI, ranking
first among Arab countries and 22nd globally in the
Global Investment Index for 2015”
“Foreign direct investment has immediate benefits such
as providing capital for enterprises, increase of
government revenues, etc.”
Article from 07.04.2015
DHL Conference – GCC/KSA: Diversification creating opportunities
GCC chemicals production rises by 4.5%
“The second highest growth region in the world”
“largely attributed to a surge in plastic production, which
grew by 6 per cent in 2014, nearly twice the worldwide
average”
“The GCC’s chemical production was bolstered by
significant expansion in polymer facilities in the
UAE”
Uncertainty surrounds 2018 GCC rail
deadline
“Individual national rail networks might be delayed a bit”
“Abdullah Bel Haif Al Nuaimi, who opened Middle East
Rail on Tuesday, said that the GCC network might not
be completed until 2020”
“Plans to connect the GCC rail with Yemen through
Saudi Arabia and Oman have been put on hold”
Article from 06.04.2015
Article from 17.03.2015 Article from 30.03.2015
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
Economy Statistics
Economy statistics of the GCC
Slide 4
Location
UAE Oman Kuwait Bahrain KSA Qatar Criteria for Comparison
Population 9,4 mio 3,6 mio 3.4 mio 1.3 mio 27,4 mio 2.17 mio
Size 83,600 km² 309,501 km² 17,820 km² 765.3 km² 2.1mio km² 11,571 km²
FDI (inflow) (mio $) 10,487 1,625 1,843 988 9,297 (-840)
GDP(real growth rate) 4% 5,8% 2.3% 4.4% 3.6% 5.50%
GDP (per capital) $43,049 $21,929 $52,197 $24,689 $25,961 $93,714
Inflation rate 2.7% 5.4% 5.8% 1.5% -1.9% 0.5%
Literacy 90% 86,9% 94% 94.6% 87.2% 94.7%
Unemployment rate 4,2% 15,0% 2.7% 3.7% 5,7% 0.3%
Global ranking for
ease of doing
business 22 123 86 53 49 50
The Foreign Direct Investment (FDI) inflow of UAE and KSA are the highest, which is mainly due to their diversification
plans to survive the aftermath of the oil era.
Benefits of FDI are not solely capital returns, it provides the economy with several other benefits such as new
technology, new methods, new jobs, etc. which are integral factors that an economy needs to have a developed
society.
FDI (inflows)
Source – Trading Economy, World Bank, CIA Fact Book 2014
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 5
Logistics Performance Index
Logistics Performance Index for KSA and UAE
Logistics Performance Index 2014 2012 2010
Rank Score Rank Score Rank Score
Saudi Arabia Overall 49 3.15 37 3.18 40 3.22
Customs 56 2.86 51 2.79 43 2.91
Infrastructure 37 3.34 35 3.22 33 3.27
International Shipments 70 2.93 42 3.10 82 2.80
Logistics quality & competence 48 3.11 47 2.99 32 3.33
Tracking & Tracing 54 3.15 42 3.21 42 3.32
Timeliness 47 3.55 34 3.76 45 4.14
Score: 0 – 5 ( low – high)
UAE 2014 UAE 2012
Rank Score Rank Score
27 3.54 17 3.78
25 3.42 15 3.61
21 3.70 17 3.84
43 3.20 15 3.59
31 3.50 17 3.74
24 3.57 18 3.81
31 3.92 13 4.10
KSA and UAE LPI scores were
impacted compared to 2012
Both KSA and UAE are facing
competition from other ports
internationally
KSA is in major need to improve its LPI
to mainly improve logistical
procedures within the country
Supply chain and logistics is a factor not
to be ignored in order to survive and
thrive
Source : Logistics Performance Index, World Bank, 2014, 2012, 2010
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
Saudi ArabiaOverall
Customs Infrastructure InternationalShipments
Logistics quality& competence
Tracking &Tracing
Timeliness
Logistics Performance Index Score ( 2010 - 2014)
Series2 Series3 Series4 Series1UAE 2014 2012 2010
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
GCC development
The main GCC investments are focused on transportation which are
focused to improve trade among the GCC states and foster growth
Slide 6
EXPO 2020 that is to be held in the UAE has
increased market confidence and FDI inclined
Contracts worth $20bn to be awarded in the UAE
in the transport sector
Major other investments in real estate,
education, health, etc. are undergoing
UAE
Qatar hosting the world cup in 2022 requires
huge investments in terms of infrastructure,
which in return in boosting the economy at a high
pace
The countries FDI is in the negatives due to the
high in country investments
Contracts worth $35.8bn to be awarded in Qatar
in the transport sector
Qatar
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
The new role of the industrial cities in KSA
The Industrial Strategy of Saudi Arabia – The industrial cities play a leading
major role in the competitiveness, connectivity and collaboration in KSA
and GCC
Slide 7
Business and Investment
Environment
Industrial Complexes
Small and Medium Sized
Enterprises
Implementation of NIS
Human Resources and Industrial Skills
Infrastructure
New Industry Verticals
Effective Governance
Strategy Key
Drivers support
the 3 C´s
Industrial Strategy - 2020
‘’To promote industrial
contribution to the GDP to 20%
by 2020’’
Illustrative
Competitiveness
Connectivity
Collaboration
| © Camelot 2015 |
Industrial City (IC) development in Saudi Arabia is a success story:
Within 40 years the IC became the backbone of the successful
growth in KSA
The new role of the industrial cities in KSA
DHL Conference – GCC/KSA: Diversification creating opportunities Slide 8
Industrial cities: 40+
Population in Mio: 29+
Lead the 3 C´s
- Competitiveness
- Connectivity
- Collaboration
of KSA
Industrial cities: 20+
Population in Mio: 27+
Industrial cities: 12+
Population in Mio: 20+
Industrial cities: 2+
Population in Mio: 7+
1975 2000 / 2001
2010 2015+
Illustrative
3 C´s Competitiveness
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 9
The new role of the industrial cities in KSA
Logistics services have to be build up following a bottom up development
on the basis of logistics infrastructure
4PL/
LLP
Services
3PL
Services
2PL/
Carriers
Infra-
structure
providers
Freight
Forwarding
(Air & Ocean)
Road
Transport
Networks
Warehouse
services
(shared)
Rail Shipping
Lines
Trucks Ware-
house
SC
consulting
services
Integration services
Logistics
Management
Services
Logistics
Core Services
Logistics
Execution
Strategic Supply
Chain Services
Material &
Production
Planning
Strategic
Sourcing &
Procurement
Supply &
Demand
Planning
Inventory
Optimization
Network
Design
Airlines
(Planes)
Terminals Rail
network Hubs
Road
network Seaport Airport Infrastructure
Purchase
Order
Management
Transportation
Management
Customer
Order
Management
Logistics Contract/ Partner Management
Managing
“infra-
structure”
Managing
“equipment”
Managing
“capacity”
Managing
“other
providers &
services”
Illustrative
| © Camelot 2015 |
The new role of the industrial cities in KSA: Current Logistics infrastructure
situation in GCC – industrial cities and free zones
Global/
Regional
Level
Plant Level
Industry City
Level
Country
Level
Stage 1: Existing Industry
Cities – all logistics done
individually by industrial
tenants
Stage 2: New Planned
Industry Cities – Central
Logistics areas, access to
infrastructure (e.g. Rail) each
city by itself
Stage 3: Definition of country
wide/ inter-industry cities
logistics strategy, definition of
Free Trade Zones/ Areas
Stage 4: Attracting global
Logistics Service Providers
to invest and offer services in
GCC/ME
Available
Issue: No synergies between
tenants, no USP for new
investors
~ under construction
Issue: How to plan in detail,
how to attract Logistics
Provider investors
~ under way
Issue: Overall strategy not
available, some projects
ongoing (rail, dry port)
~ under way
Issue: No logistics services
alternatives are in place
Zoll
Douan
e
Zoll
Dou
ane
Illustrative
DHL Conference – GCC/KSA: Diversification creating opportunities Slide 10
Changing logistics services in GCC
| © Camelot 2015 |
GCC Sea and Airports hubs
The Middle East’s Multimodal Mega Hubs
Egypt Port Said cap. – 5.4m TEU
Cairo Int. – 1m t
The Middle East is
developing into the world‘s
logistics and transport hub
Existing mega hub
Planned mega hub
Seconday air and sea hubs
Source: Camelot Knowledge Data Base
King Abdullah Economic
City, KSA Port cap. – 20m TEU
(2018)
Jeddah, KSA Port cap. – 6.5m TEU
Jeddah Int. – 0.45m t
Bahrain Khalifa bin Salman Port
cap. – 2.5m TEU
Bahrain Int. – 2m t
Doha, Qatar Port cap. – 6m TEU (2030)
Doha Int. – 0.7m t
Sharjah, UAE Port cap. – 7.5m TEU
Sharjah Int. – 0.7m t
Kuwait Mubarak Al Kabeer cap. –
2.5m TEU (2017)
Kuwait Int. – 0.4m t (2015)
Abu Dhabi, UAE Khalifa Port cap. – 15m
TEU (2030)
Abu Dhabi (AUH) – 2.5m t
Dubai, UAE Jebel Ali cap. – 19m TEU
Dubai (DXB) – 2.5m t
Al Maktoum (DWC) – 1.4m
Sohar, Oman Port cap. - 1.5m TEU (CC) FC: 5m TEU
Sohar (OOSH) – just
opened
Salalah, Oman Port cap. - 5m TEU (CC)
8m TEU (FC)
Note: Figure shown are projected capacity – CC – Current Capacity, FC – Future Capacity
DHL Conference – GCC/KSA: Diversification creating opportunities Slide 11
Illustrative
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 12
Future Sea and Dry Ports in KSA
Rail infrastructure will drive and attract more investments in the next 10 years
Potential Sea & Dry ports planned until 2025
New Dry port
Riyadh
New Seaport
Al Lith
New Container Terminal
Dammam Seaport
Multi Modal Terminal
Dammam 2 Industrial City
Multi Modal
Terminal
Yanbu Industrial
City
Multi Modal
Terminal
Sudair Industrial
City
Multi Modal
Terminal
Jeddah
Sea Port
Expansion &
Rail Terminal
King Abdullah
Port
Under Development
Under Planning Source: Camelot
Knowledge Data Base
Illustrative
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 13
Royal Commission for Yanbu Plans: Multi-Modal Logistics Hub (MMLH) @ Yanbu
Royal Commission for Yanbu Plans: Multi-Modal Logistics Hub (MMLH) @
Yanbu
Future Logistics Gateway of Saudi Arabia
Yanbu with King Abdullah Port and Jeddah
Islamic Port will be the integrated logistics
corridor in the Western Region of KSA
Target to connect with Rail within the next
few years
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 14
Rail, a ‘game’ changer in the logistics environment
MODON: Developing a network of Multimodal Logistics Terminals (MLT’s)
throughout Saudi Arabia with the pilot at Dammam Industrial City 2
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities Slide 15
Free Zones in KSA, a ‘game’ changer in the logistics environment
Status of Free Zones / Economic Zones in KSA
MoCI submitted Free
Zone study to Council of
ministers
Council of ministers
approved the study
with instructions to
RCJY, MODON
and ECA
RCJY, MODON and
ECA to submit the
required incentives
and location for FZ
under their authority
Completed
Royal Decree
for Free Zones
under RCJY,
MODON and
ECA
Next potential steps
Process to realize FZ concept in KSA
Currently KSA doesn’t have any FZ or EZ. Ministry of Commerce and Industry is
leading the process to develop FZ in KSA
Source: Aawasat, Camelot Database
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
Market Statistics
The growth in the annual disposable income and number of internet users
is an indicator of increase in market activity, especially Tech Companies
Slide 16
Location UAE KSA
Criteria for Comparison 2014 2015 2014 2015
GDP Purchasing Power Parity
(PPP) (mio $) 604,960 624,747 1,651,718 1,655,191
Consumer Expenditure (mio $) 204,228 215,107 223,116 232,818
Annual Gross Income (mio $) 310,342 326,112 312,978 328,483
Annual Disposable Income (mio $) 249,593 262,131 250,752 262,706
Internet Users (‘000) 7,364 7,606 17,096 18,429
35%
24%
21%
16% 2% 2%
UAE Smartphone Share
Samsung
iPhones
Blackberry
Nokia
Other
Sony
44%
23%
19%
11% 3%
KSA Smartphone Share
Samsung
iPhones
Blackberry
Nokia
Other
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
Technology & Supply Chain
Technology companies need to focus on improving their supply chain
capabilities, especially if they are to compete in the region
Slide 17
KSA consumer electronics
The increase in consumer
confidence & disposable income
has contributed to the increase in
the number of sales of consumer
electronics
The use of internet and social
media in KSA is increasing
Replacement cycles of electronics
are decreasing due to the high
competition
Asian technology companies have
impacted sales worldwide due to
their low prices
Marketing of retailers have
increased to attract more
customers
Increased costs are reducing the
profit margin
An efficient supply chain
On time delivery and low
inventory levels are the key to an
efficient supply chain. These two
factors are to be achieved
through:
High visibility
Low operating costs
(warehousing, etc.)
Efficient Inventory
management
Fast decision making
High customer satisfaction
and service
Minor data errors
Without an efficient supply chain,
it is difficult to survive in this
region
| © Camelot 2015 | DHL Conference – GCC/KSA: Diversification creating opportunities
Camelot Company Profile Middle East
CAMELOT is an international consultancy with leading expertise in the
value business strategy, process management & information management
Founded 1996 in Germany and the United States with the integrated competences approach: Strategy to results.
Today with huge expertise in chemicals, pharmaceuticals and consumer goods being our core industries
Core competencies around Value Chain Consulting with 200+ consultants in Central Europe based in our offices Cologne, Mannheim, Munich, Basel and Zurich
Lead consultants worked in industry management functions and stand for feasible and quality results
Operations / Supply Chain Management thought and innovation partnerships with leading universities
Global coverage with international teams of 400
consultants in Europe and 1400+ consultants world-
wide
Camelot is a well known member of the GPCA
and regional HQ is in Dubai
Strong local Partner: located in Riyadh
Integrated Management, Process and IT Competence
Strategy Process & Organization IM / Systems
Opera
tio
ns
Managem
ent
Classic strategic consultancy
Process and IT Consultancy
Subcontractor
Classic Strategic Consultancy
CAMELOT MC
Information Management & Systems
Performance and Growth Management
Business Transformation & Organization
Sales &
Customer
Service
Logistics &
Transportation
Operations &
Supply Chain
Management
Sourcing &
Procurement
Strategy & Operations Strategy Implementation
Slide 18
CAMELOT Management Consultants CAMELOT International Group
Value Chain Excellence. Strategy to Results.
www.camelot-mc.ae
Dubai, April 16th, 2015