< PreviousFEATURE | 3PL PROVIDERS 40www.logis tic smiddleeas t .comNOVEMBER 2024 | LOGISTICS MIDDLE EAST trucking to avoid bottlenecks. This versatility not only minimises downtime, but also ensures customer commitments are met, even in unpredictable situations. 3PL providers use data-driven tools to optimise transportation strategies, selecting the most effi cient routes and combinations of modes to balance speed and cost. Predictive analytics also allow them to anticipate seasonal trends or disruptions, such as extreme weather events, and proactively adjust logistics plans accordingly. This ability to pivot seamlessly between modes helps businesses remain resilient and maintain service levels regardless of external pressures. In addition, 3PLs benefi t from established partnerships with carriers across multiple transport networks, giving them access to management tools—which increase operational effi ciency and reduce human error. MULTI-MODAL TRANSPORT FOR CONTINUITY In times of market volatility, having access to diverse transportation modes is essential for maintaining the smooth fl ow of goods. 3PL providers off er businesses the fl exibility to switch between air, sea, rail, and road transport based on current market conditions, helping to mitigate risks and ensure delivery continuity. This multi-modal approach enables 3PLs to reroute shipments when disruptions arise in any one mode. For example, if port congestion or labour strikes delay sea shipments, 3PLs can swiftly transition to air freight or overland capacity when companies need it most. This is particularly valuable in peak seasons or during global disruptions, where securing transport space can be a challenge. By leveraging their expansive networks and diverse transportation options, 3PL providers ensure businesses remain agile and prepared to handle market fl uctuations. EMBRACING THE FUTURE In a world where volatility is the new normal, businesses must adopt agile strategies to stay ahead. 3PL providers are no longer just service vendors—they are strategic partners driving effi ciency, mitigating risks, and ensuring continuity. Through fl exible capacity management, proactive risk mitigation, advanced technologies, and multi- modal transport, 3PLs empower businesses to navigate disruptions and meet evolving market demands. As supply chains grow increasingly complex, the collaboration between businesses and 3PLs becomes essential for long-term success. Those who leverage these partnerships will not only weather uncertainties, but also unlock new opportunities for growth and innovation. With 3PLs at the forefront, companies are better equipped to build resilient, adaptive supply chains that thrive in today’s dynamic global economy. Technology integration is key to streamline logistics operations 3PL companies are fast-becoming essential players in the logistics landscape of the Middle East As volatility becomes the new norm, the reliance on 3PLs for fl exible logistics solutions is growing, and they are helping businesses build resilient supply chains LOG_Nov2024_38-40_Feature-3PL Role_13428172.indd 40LOG_Nov2024_38-40_Feature-3PL Role_13428172.indd 4028/10/2024 21:1828/10/2024 21:18Untitled-5 1Untitled-5 128/10/2024 11:0228/10/2024 11:02OPINION | VALUE-ADDED SERVICES 42www.logis tic smiddleeas t .comNOVEMBER 2024 | LOGISTICS MIDDLE EAST ELEVATING BUSINESS SUCCESS The role of value-added services in economic hubs Since the launch of the UAE’s free zones, the country’s economic hubs have been instrumental in driving economic growth and seamlessly integrating international businesses into the UAE’s economic framework. These hubs simplify licensing, off er tax benefi ts, and provide access to resources, removing many traditional barriers that businesses face when it comes to market entry. However, in today’s highly competitive environment, businesses are no longer being judged solely on their products or services but on the richer experiences they provide. The key lies not just in what you sell, but in how you support your clients. In this context, value-added services have become a crucial diff erentiator, transforming the basic service model into something that not only meets but anticipates the needs of modern customers. This shift is pushing companies and business hubs to embed additional value in every interaction, turning routine service off erings into a comprehensive, client-focused experience. But what additional off erings are being introduced, and what diff erences do they make? LEVERAGING VALUE-ADDED SERVICES FOR MARKET DIFFERENTIATION In addition to their core off erings, many business hubs are now integrating tailored services, including everything from bespoke logistics and legal and fi nancial consulting to specialised technology support and customised human resource solutions. This means they can provide clients with more than just a location for their operations; they can also provide a platform for growth and innovation. Ras Al Khaimah Economic Zone (RAKEZ) is a good example. Known for its robust infrastructure, RAKEZ takes diff erentiation a step further by off ering a suite of value-added services that cater specifi cally to the nuanced needs of its diverse business clientele. From guaranteed assistance with opening business bank accounts–complete with a money-back guarantee if the account By Mohammed Kutyba Al Issa, Value-Added Services and Loyalty Director, Ras Al Khaimah Economic Zone LOG_Nov2024_42-43_Opinion-Elevating Business Success_13415287.indd 42LOG_Nov2024_42-43_Opinion-Elevating Business Success_13415287.indd 4224/10/2024 09:4724/10/2024 09:47VALUE-ADDED SERVICES | OPINION 43www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | NOVEMBER 2024 opening is unsuccessful–to tax consultation and registration, accounting services and even legal consulting. This has set a benchmark in the market, allowing clients to focus on running their businesses while RAKEZ takes care of the rest. These services improve the client experience, help attract and retain a broad spectrum of global clients, and alleviate many administrative burdens that can hinder business growth. TYPES OF VALUE-ADDED SERVICES The specifi c challenges businesses encounter are broad and depend on factors such as industry specialisation, company size, and jurisdictional variances. Still, typically, the services off ered can include the following: 1. Customised logistics solutions 2. Legal and fi nancial consulting 3. Business support 4. Tax, accounting, and compliance services 5. E-commerce services These value-added services not only meet immediate operational needs, but also strategically support businesses’ long-term success and growth. IMPACT OF EVOLVING CUSTOMER EXPECTATIONS Today’s businesses expect more than basic operational support. They need services that help overcome some of the problems inherent in entering a new market or industry. As customer needs become more sophisticated, so too must service off erings. Hubs must adapt by staying on top of market trends and expanding their range of services accordingly. This could involve creating digital platforms that streamline service experience, integrating sustainable practices, or even tailoring consulting services to the unique challenges of diff erent market sectors. It’s important to stay on top of market trends and recognise needs before they become issues. This is the best way to serve clients and ensure that what they off er is relevant and valuable. STRATEGIC BENEFITS OF VALUE-ADDED SERVICES The benefi ts of these services are a two-way street. When clients experience services that go beyond basic expectations, they will be more inclined to expand their engagement and recommend the services to others. Equally, these services create opportunities for business hubs to diversify their income. By off ering specialised services that cater to niche needs, hubs can attract a broader range of clients. For instance, providing advanced cybersecurity solutions or compliance advisory can appeal to tech-centric startups or multinational corporations looking to align with local regulations. Each new service not only meets a specifi c client need, but also opens up a new revenue channel. The availability of value-added services also signifi cantly improves a hub’s market positioning. It becomes more attractive not just to businesses looking to establish operations, but also to those planning expansion or diversifi cation. For example, Singapore’s Changi Business Park off ers a blend of high-tech infrastructure and personalised business support services that have attracted multinational corporations seeking an effi cient gateway to Asian markets. Similarly, Silicon Valley in the United States provides comprehensive intellectual property assistance and networking opportunities that directly link tech startups with investors and legal experts. RAKEZ in the UAE also stands out with its tailored e-commerce solutions that are specifi cally designed to boost the online presence and sales of businesses operating within the zone. These include everything from marketplace account registration and product listing to comprehensive account management and marketing support for platforms like Amazon and Noon. By providing such detailed and focused support, RAKEZ enhances client satisfaction by simplifying the complexities of e-commerce and contributes to clients’ business growth. FUTURE TRENDS IN VALUE-ADDED SERVICES Looking to the future, value-added services are set to become more comprehensive and varied, but also infl uenced by technology. Digital transformation and AI are having a big impact and promise to redefi ne how services are delivered. AI, for instance, can facilitate more personalised and predictive services, from AI-driven legal and fi nancial advisory that can anticipate client needs before they arise, to logistics optimisations that use machine learning to streamline supply chain effi ciencies. The global economic landscape is continually evolving, and factors such as remote work trends and international trade agreements are reshaping business operations. A more dynamic approach to value-added services will be required. Embracing these advanced off erings will be crucial in maintaining your competitive edge, ensuring you stay ahead in a rapidly changing business world. Whether transitioning to remote operations or expanding globally, these services will support your journey, making every step smoother and more effi cient. Mohammed Kutyba Al Issa, Value-Added Services and Loyalty Director, Ras Al Khaimah Economic Zone LOG_Nov2024_42-43_Opinion-Elevating Business Success_13415287.indd 43LOG_Nov2024_42-43_Opinion-Elevating Business Success_13415287.indd 4324/10/2024 09:4724/10/2024 09:47REPORT | OIL AND GAS LOGISTICS 44www.logis tic smiddleeas t .comNOVEMBER 2024 | LOGISTICS MIDDLE EAST LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 44LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4424/10/2024 09:5024/10/2024 09:50OIL AND GAS LOGISTICS | REPORT 45www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | NOVEMBER 2024 NAVIGATING CHANGE DECARBONISING OIL AND GAS LOGISTICS IN THE MIDDLE EAST As global demand for sustainable shipping rises, the Middle East’s oil and gas logistics sector faces the challenge of transitioning to greener practices LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 45LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4524/10/2024 09:5024/10/2024 09:50REPORT | OIL AND GAS LOGISTICS 46www.logis tic smiddleeas t .comNOVEMBER 2024 | LOGISTICS MIDDLE EAST The shipping sector plays a pivotal role in the oil and gas industry in the Middle East, facilitating the transportation of crude oil, refi ned products, and liquefi ed natural gas (LNG) to global markets. Shipping accounts for about 80% of world trade by volume, making it indispensable for the region’s energy exports. However, as global demand for environmental accountability rises, decarbonising shipping has become a critical issue, especially for industries heavily dependent on this mode of transport. Shipping currently contributes approximately 2.7% of global carbon dioxide (CO2) emissions. As economies grow, particularly in developing regions, the demand for shipping will increase, leading to higher emissions unless sustainable solutions are implemented. In response to this challenge, the International Maritime Organization (IMO) has set ambitious targets. These include reducing the carbon intensity of shipping by 40% by 2030 and aiming for a 50% reduction in total greenhouse gas (GHG) emissions by 2050, relative to 2008 levels. The complexity of decarbonising shipping lies in its reliance on energy-dense fossil fuels, such as heavy fuel oil (HFO), which are both cost-eff ective and widely available. Replacing these fuels with greener alternatives—like hydrogen, ammonia, or biofuels—requires not only technological advancements, but also extensive infrastructure investment. Compounding the challenge, most ships have lifespans of 20 to 30 years, meaning fl eet turnover is slow. For the oil and gas industry, decarbonising shipping presents both a challenge and an opportunity. Given that many of the region’s key exports—such as LNG—are fuel alternatives for maritime decarbonisation, the Middle East benefi ts from early adoption and infrastructure development. Ports across the region, particularly in the UAE and Saudi Arabia, can play a leading role by investing in green bunkering facilities and aligning with global decarbonisation eff orts. The pathway to sustainable shipping will require cross-sector collaboration and signifi cant investment. With the oil and gas sector’s established role in global energy markets, the Middle East is well-positioned to lead these eff orts, ensuring its maritime operations align with the broader global push for sustainability. BARRIERS TO DECARBONISING SHIPPING Decarbonising shipping presents signifi cant challenges, particularly for the oil and gas sector in the Middle East. The complexities stem from fi nancial, technological, regulatory, and infrastructure-related issues, creating what industry leaders describe as a deadlock that limits progress. One of the most signifi cant barriers is the lack of market demand for low- carbon shipping solutions. Customers and charterers, including energy companies, often resist paying premiums for green shipping, citing competitive pressures and slim profi t margins. Shipping represents only a small fraction of total supply chain emissions for most businesses, making it less of a priority for decarbonisation investments compared to other areas. In addition, investors and fi nanciers remain reluctant to fund unproven technologies. Over the past decade, low returns from shipping companies have made investors risk-averse, with a preference for established technologies over innovative but uncertain alternatives. Unlocking capital for sustainable shipping projects becomes challenging without customer and investor incentives. The shipping industry also lacks clear, binding global regulations to enforce decarbonisation eff orts. Though ambitious, the IMO’s decarbonisation goals are not legally binding, and progress is often hindered by the slow pace of regulatory alignment among member states. There are concerns that misaligned regional regulations—such as the European Union implementing stricter emission standards— could create an uneven playing fi eld, disadvantaging operators in the Middle East and other regions. Global regulatory misalignment further complicates eff orts to build green infrastructure and promote sustainable shipping practices, as companies are hesitant to invest in compliance measures without certainty about future regulations. A signifi cant challenge in decarbonising shipping is the lack of commercially viable alternative fuels. While hydrogen, ammonia, and biofuels are being explored, each faces substantial limitations in terms of energy density, safety, and scalability. LNG is currently viewed as a transition fuel, but it is unlikely to meet the long-term goals of net- zero emissions due to its methane emissions and infrastructure challenges. Additionally, Energy transition is a key topic for oil and gas companies in the Middle East Shipping accounts for about 80% of world trade by volume, making it indispensable for the region’s energy exports LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 46LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4624/10/2024 09:5024/10/2024 09:50OIL AND GAS LOGISTICS | REPORT 47www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | NOVEMBER 2024 the shipping sector has yet to align on a preferred fuel or propulsion technology. This lack of clarity hinders large-scale investment and delays the deployment of green vessels. Stakeholders fear making investments in technologies that could quickly become obsolete if a diff erent fuel pathway gains traction. Furthermore, the long lifespan of ships— typically 20 to 30 years—makes asset replacement a slow and costly process. Many shipowners are reluctant to invest in new vessels without certainty about future fuel standards and regulations. Retrofi tting existing ships to accommodate new technologies or fuels is also expensive, further deterring investments. In addition, the lack of bunkering infrastructure for alternative fuels is a signifi cant barrier in the Middle East. The infrastructure required to produce, store, and distribute low-carbon fuels is still underdeveloped, especially in key maritime hubs. Bunkering providers and ship operators are caught in a cycle of hesitation, neither willing to make the fi rst move towards investing in net-zero infrastructure without suffi cient demand or regulatory guarantees. Finally, shipping involves multiple stakeholders—such as shipowners, operators, charterers, and fi nanciers— making decision-making complex. This fragmentation complicates the process of aligning investments and responsibilities for emissions reductions. Additionally, contracting models between asset owners and charterers often discourage operational changes that could improve effi ciency, such as just-in-time arrivals or speed optimisation. The challenge of coordinating decarbonisation eff orts across a fragmented value chain is especially relevant for the oil and gas sector, where multiple parties are involved in transporting products from the Middle East to global markets. Clarity on roles and responsibilities will be essential to drive progress. STRATEGIC SOLUTIONS FOR DECARBONISATION To overcome the barriers to decarbonising shipping, there must be an emphasis on collaboration, innovation, and gradual scaling of sustainable solutions. The following strategic initiatives aim to unlock progress and accelerate the adoption of low- carbon shipping practices in the oil and gas sector, focusing on addressing the Middle East’s unique challenges and opportunities. Charterers and customers must commit to long-term contracts and adopt green procurement criteria to create demand for low or zero-emission shipping. This approach is particularly relevant for publicly listed and state-owned companies in the Middle East that seek to align with ambitious carbon reduction targets. Expanding participation in global decarbonisation initiatives, such as the Getting to Zero Coalition, is also needed. Oil and gas companies can take a leading role by consolidating objectives across multiple workstreams, strengthening coordination, and fostering collaborative projects within the sector. Aligning regional and global regulations is also crucial to create a level playing fi eld and reduce investment uncertainty. The Middle East can proactively engage with the IMO and regional bodies to harmonise regulations, encouraging ports and shipping companies to adopt low-carbon operations. Forming alliances among major ports to off er preferential treatment to green vessels— such as priority docking—can incentivise operators to adopt sustainable practices. The region’s strategically located ports can serve as hubs for green fuel distribution, creating a foundation for wider adoption of sustainable shipping practices. To mitigate the risk of investing in unproven technologies, modular designs allow ships to switch between diff erent fuel types and facilitate future retrofi ts. This fl exibility reduces long-term costs and ensures that investments remain viable as new technologies and fuels emerge. Companies are hesistant to adopt green shipping options due to a complex web of challenges LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 47LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4724/10/2024 09:5024/10/2024 09:50REPORT | OIL AND GAS LOGISTICS 48www.logis tic smiddleeas t .comNOVEMBER 2024 | LOGISTICS MIDDLE EAST Running pilot projects on specifi c routes and vessel types with key customers helps demonstrate the feasibility of green shipping technologies. These projects can serve as a model for scaling sustainable operations across the Middle East, leveraging shorter, high-traffi c routes to optimise performance and reduce emissions. Developing green fi nancing products tailored to shipowners can also reduce the cost of capital for decarbonisation projects. Financial institutions can encourage more sustainable practices within the shipping industry by off ering favourable fi nancing terms for investments in net-zero vessels. Investors are increasingly demanding that companies adopt sustainability targets, pushing management teams to prioritise decarbonisation investments. Activist shareholders and ESG-focused funds can exert pressure on shipping companies to align with long-term climate goals to drive adoption of greener shipping methods. Collaborations between energy companies and the shipping sector are essential to develop the capacity needed for green fuel production. As a leader in energy exports, the Middle East has an opportunity to drive this eff ort by building partnerships to produce and distribute alternative fuels like ammonia, hydrogen, and biofuels. Establishing bunkering infrastructure for new fuels at key ports will be critical. Developing infrastructure in a few strategic ports can have a disproportionate impact, allowing ships operating along major trade routes to access sustainable fuel options. Operational improvements, such as optimising vessel speed, enhancing fuel management, and using smart navigation systems, are essential for both new and existing fl eets. Technologies like just-in- time arrivals, weather routing, and digitised energy management can reduce emissions in the short term while supporting the long- term transition to sustainable shipping. ROADMAP TO DECARBONISATION FOR OIL AND GAS SHIPPING Achieving net-zero emissions in shipping by 2050 requires a phased approach, with immediate, medium-term, and long- term actions. For the oil and gas sector in the Middle East, a roadmap off ers a clear pathway for breaking the current deadlock, accelerating innovation, and scaling sustainable practices across shipping operations. In the short term, the industry must focus on overcoming initial barriers to decarbonisation by fostering demand, developing pilot projects, and aligning regulations. These actions aim to create momentum and lay the foundation for sustainable shipping. Early investments in controlled pilot projects are essential to test new technologies and operational models. Collaboration between oil companies, ports, and shipping operators on dedicated routes Oil and gas companies will play a key role in decarbonising the shipping industry LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 48LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4824/10/2024 09:5024/10/2024 09:50OIL AND GAS LOGISTICS | REPORT 49www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | NOVEMBER 2024 will showcase the potential of alternative fuels like LNG, biofuels, and ammonia. As the IMO plans to introduce more specifi c guidelines by 2023, the oil and gas sector must actively engage with regulators to align national policies with global standards. This regulatory clarity will reduce uncertainty and incentivise investment in green infrastructure and vessels. Encouraging customers and charterers to adopt sustainable shipping solutions through green procurement policies will be critical. State-owned and listed companies can lead this eff ort by embedding low-carbon shipping criteria into contracts. To meet IMO targets, the fi rst net-zero vessels must enter the global fl eet by 2030. In the medium term, the focus shifts to scaling infrastructure, deploying advanced technologies, and ensuring market-wide adoption. Developing green fuel infrastructure at key Middle Eastern ports, such as Jebel Ali and Dammam, will enable a broader transition to sustainable shipping. Collaboration with energy companies will be essential to ensure a reliable supply of alternative fuels. Modular ship designs that allow for easy retrofi tting will reduce the risks associated with fuel uncertainty. Shipowners in the oil and gas sector can gradually replace ageing fl eets with vessels capable of running on multiple fuel types, ensuring compliance with evolving regulations. Establishing dedicated green fi nancing products will be essential to attract investment for decarbonisation projects. Investor pressure will also play a key role in driving shipping companies toward sustainability goals by incentivising emissions reductions and ESG compliance. In the long term, the shipping sector must complete the transition to net-zero operations. The focus will be on optimising existing systems and ensuring all vessels run on sustainable fuels. By 2050, carbon-neutral fuels, such as green hydrogen and ammonia, must be widespread across the global fl eet. Middle Eastern ports and operators must ensure their infrastructure supports these fuels to remain competitive in global trade routes. Even as new fuels become the norm, operational improvements will remain critical. Digitalisation, smart navigation, and real-time data management will enhance effi ciency and reduce emissions across fl eets. Sustained collaboration between governments, ports, energy companies, and shipping operators will be crucial to maintain momentum. By fostering strong public-private partnerships, the Middle East can position itself as a leader in green shipping and sustainable energy logistics. The decarbonisation of shipping is both a challenge and an opportunity for the oil and gas industry in the Middle East. With its pivotal role in global energy logistics, the region faces pressure to align with international climate goals and reduce its carbon footprint. However, the transition requires overcoming signifi cant barriers, including technological constraints, regulatory uncertainties, and a lack of market incentives. By embracing collaboration, investing in green infrastructure, and adopting innovative technologies, the Middle East can position itself as a leader in sustainable shipping solutions. Early adoption of low-carbon fuels, fl exible fl eet designs, and green fi nancing models will be crucial to staying ahead of regulatory demands. As the industry embarks on this transition, the oil and gas sector has the potential to not only meet decarbonisation targets, but also gain a competitive edge in the evolving global market, ensuring long- term resilience and sustainability in maritime operations. The International Maritime Organization has set ambitious targets to reduce the carbon intensity of shipping by 40% by 2030 and aiming for a 50% reduction in total greenhouse gas (GHG) emissions by 2050 Collaboration between industry stakeholders is key to driving decarbonisation LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 49LOG_Nov2024_44-49_Decarbonising Oil and Gas Logistics_13428216.indd 4924/10/2024 09:5024/10/2024 09:50Next >