Figures cited in a September 2009 study conducted by
Adrian Gonzalez of ARC Advisory Services for Wared
Logistics provide some indication of how quickly these
economies are expanding. “According to the World Trade
Organization, GDP growth in the Middle East and Africa in
2008 was 5. 7 and 5.0 percent, respectively,” he wrote in the
study, On the Growing Edge: Logistics in the MENA Region.
That was well ahead of GDP growth rates in many other
parts of the world, noted Gonzalez, who is the director of
ARC’s Logistics Advisory Council. While growth cooled off
during the global recession, a World Bank report issued late
last year noted that the MENA region had nonetheless
weathered the downturn better than many others.
Clearly, the market opportunity is there. But how does a
company go about setting up operations in the MENA
region? Those who’ve been through the experience warn
that careful preparation is crucial. “We advise clients to do
their homework, to understand the environment, rules, and
restrictions,” says Basso.
It also helps to find a partner on the ground who can open
doors. “Select an agent or vendor you can work with to help
navigate the intricacies and complexities,” advises Basso. “It
takes a lot of time, but it’s important to do that exercise.”
Choice Logistics did just that when it needed a way to
expedite shipments to Saudi Arabia. “We turned to a vendor
in Dubai [Aamro Freight & Shipping Services LLC] and
looked at the requirements for using Dubai as a hub,” Basso
reports. Choice became interested in shipping via Dubai
because of the potential to reduce both transit times and
paperwork. Both Dubai and Saudi Arabia belong to the Gulf
Cooperation Council (GCC), a political and economic
organization that opened a common market in 2008.
“Because Dubai is part of the GCC, it gets preferential treat-
ment for shipments into Saudi Arabia,” Basso explains. In the
end, Choice established a strategic stocking location in
Dubai, which it uses as a point of dispatch into the region. As
a result, it was able to reduce the clearance time for its ship-
ments to just two days.
As for what it was like to work with Dubai (which is
part of the United Arab Emirates), Notarangeli of
Choice has nothing but good things to say. Dubai has proved
itself to be friendly to business, much like Rotterdam and
Singapore, he says. “Their business practices lend themselves
to getting products in and out of the region,” he adds. “It is
becoming a major player in our network.”
Getting better all the time
Choice’s experiences with Dubai bear out what MENA
experts have been saying for some time: that the region’s
trade climate is improving. “Doing business is becoming
easier in the region,” the World Bank stated in its 2009
annual report on MENA.
That’s partly the result of large-scale investments in infrastructure to support logistics activities in this market. One
of the most notable developments is the massive Dubai
World Central (DWC) project, which aims to enhance
Dubai’s status as a regional logistics hub. It includes the
Dubai Logistics City free trade zone, which offers warehousing, transport, and logistics services. DWC is also
developing what it claims will be the world’s largest passenger and cargo airport, DWC-Al Maktoum International
Airport, when construction is completed.
Evidence of infrastructure improvements can be seen
elsewhere across the region. The Kingdom of Saudi Arabia
is investing on the order of $80 billion in the King
Abduallah Economic City, Gonzalez of ARC reports. The
development, which is specifically geared to attract foreign
investment and global trade, includes a seaport and what
the developers call an industrial valley. In addition, last year,
the World Bank approved major infrastructure projects for
Egypt, Jordan, Lebanon, and Morocco.
Not surprisingly, all that infrastructure expansion has led
to increased demand for third-party logistics services.
Problem is, the 3PL market in the region is still in the early
stages of development, according to Gonzalez. In the
September 2009 study, he described the 3PL market as highly fragmented, dominated by small players that offer discrete
services such as transportation, warehousing, or freight forwarding, as opposed to integrated end-to-end solutions.
“Few providers have nationwide capabilities, and even fewer
have the people, assets, and IT sophistication to serve clients
across the entire region,” he wrote.
