< PreviousINTERVIEW | SHIPA 20JANUARY 2020 | LOGISTICS MIDDLE EASTwww.logisticsmiddleeast.com What is Shipa Delivery, and what do you do? Shipa Delivery was started as a digital plat- form to tackle the last mile challenges. We build a platform to seamlessly capture the client’s requirements which is; ease of choos- ing your time of delivery, ease of choosing your location, etc. The merchant’s need, which is; us taking care of all the intelligence between where to pick the package, how to dispatch them, etc, as well as taking care ourself internally in the way we communi- cate with clients purely through a digital platform. We did this because people are moving to the next phase of digital adoption, and don’t necessarily want to be dealing with phone calls and some of the other pain points of last mile delivery. Technologies allowed us to leapfrog the starting pains and go straight into end-to-end digital experience for the clients. So your digital platform is integrated with the backend of the e-commerce platforms operations? Correct. It’s completely seamless. Correct. We give a point-to-point integration with clients who have already an existing system. It takes less than a day to do API integration. Sometimes clients don’t have systems, in which case, we give them an interface that they can use to upload something as simple as an Excel file and translated into information that we can use. For the consumers, we have created apps so that the individual consumer can download it and use it. What’s your area of operation? Are you only UAE-based, or are you doing cross borders? We started in Dubai citywide, and then we expanded in dif- ferent cities in the UAE until we reached national coverage. Then came cross-border, and the cross-border elements for us are a mixture of having our own operations, a destination, Kuwait, for example, for obvious reasons for us, or partnerships. Today, we are able to cater to Saudi, Oman, and the whole of the GCC. Some of it you do yourself, some of it you do through partnerships. What is important for your clients is when you go to them they ask us to be their single point of contact. They don’t want to be dealing with multiple parties. In cross border operations, you’re able to make use of Agility’s vast network within the region as well? Definitely. Agility helps us with a whole set of infrastructure, be it from physical warehouses, be it from the knowledge of cus- toms and clearance processes as well as, some cross-pollination of customers when the case may be that they have a traditional presence and want to launch an e-commerce online presence. Who would your main target market be? Is it the UAE- based e-commerce companies, or is it also foreign e- commerce companies that want to sell in the UAE? The spectrum is fairly broad. The ideal client is a client for whom you really solve the problem, or you help him venture into this industry in the first place. That could be for a do- mestic requirement, somebody launching an online platform on top of their physical retail, or somebody wanted to launch same-day delivery or even on-demand, similar to Uber-like products. There is a lot of that domestically. When it comes to e-commerce, the region being highly driven by imports, cross border is a very important element. We have a lot of clients who are domestically based but, they source their products from everywhere, from China, from the US, from Europe. So Shipa Delivery, a leading provider of local and cross-border delivery services in the Middle East, is now offering same-day, next-day and on-demand delivery in five GCC countries, expanding from its original market in the UAE, to launch operations in Kuwait, Saudi Arabia, Bahrain and Oman. Logistics Middle East speaks with Borhene Ben Mena, CEO of Shipa Delivery to find out more. SHIPA FREIGHT PROMISES RAPID DELIVERY Ships Delivery is able to fulfi l same day and next day deliveries. Im a g e c re d it : P h o to by B e n c h Ac c o u n ti n g o n U n sp la shSHIPA | INTERVIEW 21LOGISTICS MIDDLE EAST | JANUARY 2020www.logisticsmiddleeast.com cross-border operations are going to keep growing, I think both domestic and cross-border, when it comes to last mile, are seeing some very healthy growth. With the products that are already being stored here in a central hub in Dubai, what kind of lead times do you off er for delivery nationally in the UAE? We offer different services, which are next day. The slowest across the UAE is next-day delivery. Same day is a very popular product. It was how we initially launched and how we initially gained traction and recognition from our clients. Increasingly, in many cases what we call the on-demand, which is like your food delivery, but equivalent for e-commerce is also popular. It is driven by our clients, customers who are trying to equate the e-commerce experience with the traditional retail experience. So the standard was set years ago by the likes of Amazon for a two-day delivery. I think today the standard is increasingly becoming a same-day delivery. That on-demand option that you mentioned, is that some- thing that you are off ering in the UAE? Yes. What does that mean exactly? It’s a 60-minute delivery. For example, it could be a SIM card. You’ve ordered a SIM card or a phone, and you get it within 60 minutes, it could be medicine that you order from the pharmacy, it could be your credit card. We have all kinds of products that are actually increasingly being requested on-demand basis. How is what you are doing enhancing the e-commerce logistics in the UAE or sort of greying the ecosystem for e-commerce? I think if you think about e-commerce, the natural growth of e-commerce is driven by convenience, and we support e- commerce logistics in that convenience element. More impor- tantly, for our clients who are our merchants, the fastest you can deliver, the lower the return rate. You have to bear in mind that this region is highly driven by what we call COD, cash on delivery. So the client hasn’t committed to make the purchase until he receives it. So the fastest you get it to him, the lowest are the chances of him changing his mind or returning it once he receives it. We see really evidence of that virtual cycle. So you off er COD on all of your deliveries? Yes, this is driven by the clients’ demand. Our clients, being the merchants, would like to see more and more credit card pay- ments and less and less COD, but it’s the reality of the market, COD. You cannot ignore it. It’s such a big component that most of our merchants start with pure credit card, but then quickly join the fold and offer COD. Shipa Delivery was launched sort of around two years ago. How has the growth been over the last two years? The demand is very strong. More and more industries are being pushed into delivering to customers. They tend to be spoiled. Once you get the experience on the passenger side, and once you get the experience on the food side, now the next frontier is your purchases. So the demand is strong, but it’s a complex process to put in place. There are a lot of variables. Payment is one variable. Obviously, what happens on the ground is a lot of value. That interaction with the clients at the door has a lot of variability to it. So it’s really a matter of accompanying the clients through this. It’s a learning curve for us as much as it is for them. So the demand is very strong. The growth is there. It’s just a matter of taking the time to make sure you do a good job and not try to run before you can walk. What is your outlook for the e-commerce sector going forward over the course of 2019? I think the industry would agree that it’s the fastest growing industry here especially driven by like I said, the long tail of small and medium enterprises for whom it became frictionless to sell. Now, the friction is still there for physical delivery, but putting a post and start selling any product has really become trivial using any social media platform. The challenges will be to keep those timelines in check, being competitive from a price perspective, particularly because we see a lot of mer- chandise price very competitively, whether it’s from China or somewhere else, so the logistics costs cannot exceed a certain percentage. But even that, we’ve seen traditionally about 11% to 12% is the logistics costs associated with a seller product. Now com- panies allocate a higher percentage of that. The same product can exist on multiple platforms. What’s going to make the difference? The one who can deliver it fastest is the one that’s going to end up making that sale. You mentioned the actual ordering of the product since that one line has become frictionless. How do you intend to make the last mile more frictionless and faster, even faster going forward? When I say last mile, I’m actually thinking about further down the chain, we are just one piece of it. Frictionless, meaning really the ability to integrate seamlessly into your partner. So there’s the first mile element, there’s the middle mile, there’s a customs clearance process usually, there’s an element of warehousing sometimes, and then the last mile. So the ability to talk the same language is very important. Technology helps a lot in that aspect. Maybe new technologies like blockchain can make that even more frictionless. The key is, one, the ability to have seamless information and, two, the ability to scale and that’s usually driven by the busi- ness model. Like I said, you have to be able to work through peaks. E-commerce is an industry that is known for its peaks. Peaks are manageable as long as you have enough information ahead of time to be able to wrap up and down. The ideal client is a client for whom you really solve the problem, or you help him venture into this in- dustry in the first place.” BORHENE BEN MENA, CEO OF SHIPA DELIVERYINTERVIEW | SALOODO 22JANUARY 2020 | LOGISTICS MIDDLE EASTwww.logisticsmiddleeast.com So what is Saloodo and what makes it a competitive solution for the lo- gistics industry? Saloodo is two things in one: It is a digital freight marketplace where carriers and shippers come together, it is also a digital freight forwarder. What that means is that we create an even playing field for the shippers and carriers who can participate in the market in the GCC. At the same time, we are digital freight forwarder which means we give our shippers assurance, we take the liability and look after any issues which may arise, and we ensure the carriers get paid in time so they have the peace of mind as well. So in this way, would you say that it’s in the SME sec- tor of logistics, and that is gives access to all levels of shippers? A hundred per cent because it really gives everybody and all the players access to the marketplace. There’s no reason why anyone is not allowed to participate. We have lots of different parties participating from the very big companies on the one side down to really small companies who have perhaps one or two shipments a month. There’s no limita- tions also in terms of the carrier side. We really welcome anyone to join us and participate, and we really try to create the best offer for all the parties. There are quite a few great digital platforms in the region already. Would you say that the market is at risk of becoming saturated? Not at all. I really welcome any competitor on the market- place because I believe they help us driving this digital mindset on our customer side, on the carrier side, and the cake is so big. You’re talking about a $30 billion plus market across the GCC for road freight. I’m 100% sure not even 1% of the space is occupied with digital platforms today. So the growth potential is still huge. I really believe any player in the market is just helping us to drive the mindset change of all the players involved. Saloodo is a convenient and fully integrated platform that enables shippers and transport providers to make fast and reliable road freight connections within United Arab Emirates (UAE), Logistics Middle East speaks with Tobias Maier, CEO of Saloodo in the Middle East on its plans for the region SALOODO GIVES ACCESS TO ALL Saloodo is a digital frieght marketplace, opening the market up to a range of shipping companies.SALOODO | INTERVIEW 23LOGISTICS MIDDLE EAST | JANUARY 2020www.logisticsmiddleeast.com You’ve touched on this a bit already, but how is Sa- loodo maintaining a competitive edge in the market? So I think for us it’s really three things. Number one is we are insanely customer oriented and with customers, I mean the shippers on the one side and the carriers on the other side. So the carriers for me are our customer because I need to attract them to the platform to cre- ate an interesting offer site for the shippers. So carriers where it’s used to be perhaps suppliers in the past, they are really my customers today. Secondly, from the point of technology, our platform is state of the art, so it’s a great solution. We keep adding features based on the feedback of the users of the plat- form to make it as customer specific and customer value adding as it possibly could be. We are part of DHL, and we are the contracting party in the middle who provide peace of mind to the shippers on the one side and the carriers on the other side. I think those three points together make us really unique in the marketplace, and we believe we’ll be the driver of success for the platform. Do you think that the fact that you are part of DHL gives you a great advantage in that you’re able to of- fer that reassurance to the customers rather than just being a standalone logistics technology platform, you’re backed up by the logistics expertise of DHL which is the largest in the world? I personally believe being part of the biggest logistics company in the world is a clear advantage. On the one side, it means we are a financial powerhouse. We have a lot of experience and knowledge and know-how on how to organise logistics. Saloodo is fitting well into our overall strategy for the region. We believe the UAE and Dubai in particular, together with Abu Dhabi, are key logistics hubs enabling trade in the GCC. We have big hopes for Saudi and the current strategies there and for all the plans of infrastructure build, attracting produc- tion facilities, and also the consumer side will require a strong logistic backbone. And we hope that Saloodo will be part of that solution in the end. Are you able to expand those plans for Saudi? So in Saudi, I mean we are already long time in the market. We are having a lot of focus on the market as we speak. So we will reinforce our local presence in Saudi. We are looking into plans on how Saloodo we can best tackle the local market. From a cross border point of view, we already offer services into Saudi and from Saudi. I’m confident that before the year ends, we will have also Saloodo in the Saudi market up and running. Is a cross border generally a big source of activity or demand for Saloodo? Yes, I mean, given the nature of UAE as a logistic hub for the GCC, I mean 50% of the cargo coming into UAE is, in the end, moving forward to other GCC countries. Across border is a key factor in our plans. Yes, as I said, we already had our first shipment successfully completed cross border, and we continue focusing on offering that service in an attractive basis to our customers. Are you able to say what sort of growth has been since you launched? I think from our point of view, it has been phenomenal. We launched officially 1 May, so that’s six weeks ago. In the first month, we already completed more than 200 shipments. We have on boarded around 40 shippers and 80 carriers, which means there’s more than 2,000 trucks already available on the platform today. If I compare it with our European colleagues who have 18,000 shippers, 7,000 carriers and more than 250,000 trucks, there’s a way to go. But, when I spoke to our global CEO last week, he was pretty impressed with our numbers and our suc- cess. There’s no reason that that growth journey will continue like that. Saloodo is two things in one: It is a digital freight marketplace where carriers and shippers come together, it is also a digital freight forwarder.” TOBIAS MAIER, CEO OF SALOODO Tobias Maier, CEO of Saloodo.SPECIAL REPORT | HANDLING CARGO 24JANUARY 2020 | LOGISTICS MIDDLE EASTwww.logisticsmiddleeast.com HANDLING CARGO | SPECIAL REPORT 24LOGISTICS MIDDLE EAST | JANUARY 2020www.logisticsmiddleeast.com HANDLING CARGO SPECIAL REPORT: Why Etihad Aviation’s innovations and investments in logistics serve as a golden example to regional operators in their collective battle to turn the tide for the Middle East’s air cargo marketSPECIAL REPORT | HANDLING CARGO 26JANUARY 2020 | LOGISTICS MIDDLE EASTwww.logisticsmiddleeast.com ‘DUMP THE SLUMP’ Recent headlines surrounding the regional cargo market make for disheartening reading. But the industry’s leading lights are showing why players need to now, more than ever, invest and innovate, writes AVB’s editor Joe Peskett. Welcome to Logis- tics Middle East’s first special re- port of the year. An extended, in- depth look at the air cargo sector, over the coming pages, experts in air cargo and the latest indus- try data will shed light on the current market and importantly, discuss ways in which it can improve. There is no hiding or denying the fact that the Middle East’s air cargo industry is going through a rough patch. While the region is geographically blessed and at the centre of some of the world’s most lucrative trade corridors, its air cargo industry largely depends on countries in the East and West freely exchanging goods. The ongoing trade war between the US and China has taken its toll on the local air cargo industry and the ping pong spat shows few signs of dissipating anytime soon. Our region in particular saw some of the sharpest volume drops in the world in recent months and it was particularly disappointing that traditionally busier seasons failed to boost volumes. Data from the International Air Trans- port Association (IATA) shows that air freight volumes in the Middle East dropped at the tail-end of last year – by as much as 8% in September – capping off 12 months of strife. Geopolitical and operational chal- lenges, including airline restructuring, were all blamed for contributing to the decline, but a lot of the heartache stems from elements outside of the control of market players. And therein lies the frustration. It is hard to see a complete transformation of the Middle East’s air cargo market until international trade disputes begin to settle. Nevertheless, a lack of influ- ence over the situation does not mean cargo carriers and businesses support- ing the sector should simply stand still. Yes, everyone must weather the storm, but, there is plenty that can be done to cushion the impact of the decline. After all, industry commentators be- lieve the trough is just that – a dip in fortunes that will eventually improve on its own accord. What businesses do in the coming months could dictate how they emerge out of the other side of the downturn and in what position they are to capitalise on the market when it does begin to revive. Etihad Aviation’s investment pro- gramme in its logistics division (pages 29-32) is a valid case study when looking at how the industry can strive to turn its fortunes around. Its renewed focus on digitalisation and modernising its cargo operation has in fact lessened the impact of the regional slump on its bottom line. And its recent partnership with ag- gregator cargo.one has opened it up to a Could we witness a new dawn for air cargo in the Middle East this year? new pool of untapped European SMEs. Similarly, Emirates’ innovations in e- commerce, and UPS’ collaborative ap- proach (pages 33-36) show how the best players remain ambitious in adversity. The best in the business have spied clear opportunities in partnerships, e- commerce and technology. Online transactions grew by 44% in the MENA region between 2017 and 2018 and more carriers are tapping into this trend with digital platforms. And with Expo 2020 on the horizon, Middle Eastern air cargo operators have the chance to show the world how ef- ficient and effective they can be. While it may be difficult to be optimis- tic in today’s climate, the biggest names in air cargo are showing us all that busi- nesses can carve their own paths by seiz- ing the elements in their control. I hope 2020 will see other carriers follow suit. MARKET OUTLOOK Research compiled by organisers of the Cargo Connect conference crunches the numbers and provides an essential breakdown of the Middle East’s position within the international air cargo market bilateral trade agreements with Asian partners whilst investing in logistics infrastructure. Most cargo commentators, research- ers and industry players cite not just changes in the global trade arena as affecting the industry, yet greater im- pacts coming from environmental man- agement and commercial and techno- logical disruption. The quest to reduce CO2 emissions and changing manner in which people purchase goods and have them delivered will have the greatest impact on the industry. New players The global trade arena is changing to- wards Emerging Market Economies (EMEs) and Asia. The Middle East’s strategic transport location between these emerging trade and manufactur- ing hubs and the European and African markets has seen a range of bilateral trade agreements emerge. The most re- Recent global trade and political influences has generated some uncer- tainty in the global lo- gistics and cargo sector however, research sug- gests this is a short-term issue. In the medium term, Boeing’s predictions for the air cargo industry is that it will sustain a 4.2% growth rate to 2037, much of which will be underpinned by e-commerce. Airbus has issued its own air freight forecasts and predicts a 4.2% CAGR from 2017 to 2027, yet then suggests a slower global growth rate for the following decade at 3.1%. As a long-term prediction, Airbus sees a 3.6% CAGR globally and 3.4% in the Middle East. According to IATA, air freight ac- counts for 1% of the volume of freight moved internationally yet 35% of the value. Where container and sea freight are driven by bulk cargo, the air freight industry is heavily influenced by time critical freight such as e-commerce and perishable goods; which are growing at 20% and 8% respectively. The centre of trade and manufacturing, like the avia- tion industry, is moving eastward to- wards the growing middle classes of Asia and India. Strategically, this leaves the Middle East in an advantageous location as a transit hub between Europe and Asia. According to the OECD, Asia now accounts for 50% of the Middle East’s trade, up from 40% in 1999. The same report recommended sig- nificant investments into logistics infra- structure to capture the trade opportu- nity and growing e-commerce market. The UAE, in particular, has been forging 50% ASIA ACCOUNTS FOR HALF OF THE MIDDLE EAST’S TRADE The global trade arena is changing towards emerging markets. 27LOGISTICS MIDDLE EAST | JANUARY 2020www.logisticsmiddleeast.com HANDLING CARGO | SPECIAL REPORT TOUGH-TO-SWALLOW END-OF-YEAR RESULTS August 2019: Middle Eastern airlines’ freight volumes decrease 6.7% in August 2019 compared to the year- ago period. This was the sharpest drop in freight demand of any region. Escalating trade tensions, the slowing in global trade and airline restructuring impacted the region’s performance. Economic uncertainty from oil price volatility among the region’s oil reliant markets added additional pressure. September 2019: Middle Eastern airlines’ freight volumes decrease 8% in September 2019 compared to the year-ago period. This was the sharpest drop in freight demand of any region. Escalating trade tensions and the slowing in global trade affected the region’s performance due to its strategic position as a global supply chain link. October 2019: Middle Eastern airlines’ freight volumes decrease 6% in October 2019 compared to 2018. This was the sharpest drop in freight demand of any region for the month. Against a backdrop of operational and geopolitical challenges facing some of the region’s key airlines, seasonally adjusted freight volumes in the region resumed a modest upwards trend. CARGO CONNECT TO RETURN IN NOVEMBER 2020 Cargo Connect will return for its fourth edition in Dubai in November 2020 and will bring together the supply chain sector to discuss the latest trends and transportation solutions. The conference and exhibition provides a platform for the international logistics and supply chain industry to meet in the Middle East, a strategic hub for global trade. cent was a $3.4 billion trade agreement between the UAE and China including a $2.4 billion investment into a 5.5 million square metre logistics facility in Dubai. China is currently the UAE’s second trade partner and these agreements are expected to propel it into first position with $70 billion of trade next year. Yet China is not the only country cre- ating trade and logistics agreements in the Middle East. Vietnam and the UAE have a bilateral trade agreement. As both a destination and a transiting point, Vietnamese exports to the UAE were valued at $6.3 billion in 2017. In the same year, Emirates SkyCargo in- creased refrigerated air services be- tween the two nations by five times. In early 2019, Indonesia followed suit as President Joko Widodo undertook several visits to the Middle East to pro- mote trade relations in the wake of a dissolving trans-Pacific partnership. The Philippines is also strengthening ties with the UAE as the two countries’ bilateral trade amounts to $1.49 billion most of which is agricultural and ad- vanced manufacturing. WHERE THE MIDDLE EAST SITS IN GLOBAL AIR CARGO MARKET Source: IATA August 2019September 2019October 2019 AfricaAsia PacificEuropeLatin America Middle EastNorth America 35.4% 23.3% 2.7% 13.2% 23.8% 1.6% 35.4% 23.3% 2.7% 13.2% 23.8% 1.6% 35.4% 23.3% 2.7% 13.2% 23.8% 1.6% Middle Eastern airlines freight volumes decreased by 6.7% in August 2019 as compared to August 2018. 28JANUARY 2020 | LOGISTICS MIDDLE EASTwww.logisticsmiddleeast.com SPECIAL REPORT | HANDLING CARGOHANDLING CARGO | SPECIAL REPORT 29LOGISTICS MIDDLE EAST | JANUARY 2020www.logisticsmiddleeast.com THE POWER OF PIXELS Abdulla Mohamed Shadid, managing director cargo and logistics at Etihad Aviation, is adamant that challenges in the region’s air freight market must be met with continued investment, modernisation and innovation. While most operators in the air cargo space recognise that the industry needs to change to survive, surprisingly, only a handful have invested and acted to tackle the issues faced by the Middle Eastern market. A great shift in any industry requires a trailblazer to grab the gauntlet and take operational and financial risks. One such company is Etihad Aviation. Those following the local aviation market over the last year will have noticed that Etihad has launched a handful of initiatives born from a detailed investment plan designed to boost its cargo division. Etihad’s bosses believe that the digital transformation of its cargo arm will help the company to capitalise on what it sees as a region of huge potential when it comes to in- ternational trade. The geographical location of the Middle East along the Asia-Europe and US-Asia corridor means MENA operators are positioned to capture almost 70% of the world’s trade flows, as long as they can develop effective models. For Abdulla Mohamed Shadid, managing director cargo and logistics at Etihad Aviation, the region may be going through a slowdown for various reasons and there is a constant standard of over-capacity that has been in the industry for a while. Consequently, Etihad has not been afraid of investing in what it believes is an area of serious growth potential when eventually the tide turns. Prior to its digital transformation, Etihad Cargo was busy implementing a new strategy that restructured its network, reprioritised trade lanes and rejigged its fleet to focus on 777 freighters, which today, produce 30% of its revenue. Etihad then revamped its hub infrastructure to cater for speciality products like pharmaceuticals, live animals and fresh goods. The results, Shadid, says have been “quite remarkable and instant”. But, where the firm sets itself apart is its investment in digitalisation, Shadid says. “If you look at the cargo industry, it historically lags behind other industries in terms of digital innovation. Today, you still see about 70% of the industry pretty much relying on paper and email exchanges. There are a handful of airlines that are leading an innovation drive Etihad Cargo.Next >