Camelot Management Consultants - etouches Transport Networks Warehouse services (shared) Rail...

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


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


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



Industrial cities: 40+

Population in Mio: 29+

Lead the 3 C´s

- Competitiveness

- Connectivity

- Collaboration

of KSA







1975 2000 / 2001

2010 2015+

Illustrative

3 C´s Competitiveness



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


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


Illustrative


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


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


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


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


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


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 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

http://www.camelot-mc.ae/



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