‘Saudi Arabia is an emerging logistics hub’

MENA countries also lead in sea and air trade routes with the UAE and Saudi Arabia recognized as among the “top 10 air freight lanes” globally. (Reuters)
Updated 04 February 2017

‘Saudi Arabia is an emerging logistics hub’

JEDDAH: With the global logistics market growing rapidly and is expected to generate $15.5 trillion in revenues by 2024, the Middle East and North Africa (MENA) region is fast emerging as the hub of logistics industry, said a report issued by Al-Masah Capital.
In the region, Saudi Arabia and the United Arab Emirates (UAE) are the most attractive targets for logistics investments and easiest markets to operate in.
Other MENA countries, particularly those in the Gulf Cooperation Council (GCC), such as Qatar, Oman, Kuwait and Bahrain, along with Morocco, Jordan are also emerging as potential investment destinations.
The growth of transportation and logistics (T&L) in the region is being driven by government initiatives toward economic diversification from energy-based industries to expansion into other commercial sectors such as trade, export, import and tourism, the report said.
“This renewed focus on commercial sectors is paving the way for investments in transport infrastructure, including seaports, airports and major rail initiatives across the region,” the report added.
The MENA region, the report said, has trade relations with almost every country/region across the globe.
The region exports hydrocarbons and hydrocarbon-related products that are in great demand and meets a large part of its food requirement through imports.
Data from the World Trade Organization (WTO) suggests that MENA engages in maximum merchandise trade with Asia (55 percent of all exports and imports), followed by Europe (31 percent) and North America (8 percent).
MENA countries also lead in sea and air trade routes with the UAE and Saudi Arabia recognized as among the “top 10 air freight lanes” globally. The region has 134 seaports handling a total of 48.3 million 20-foot equivalent container units (TEU) of container traffic. The GCC countries alone have nearly 41 ports, which together handle 68 percent of MENA’s container port traffic.
Besides sea transport, the region has 114 international and domestic airports of which 43 airports are located in the GCC.
According to the report, 34 free-trade zones, non-existent corporate tax and full ownership rights coupled with unlimited repatriation of profits, makes the UAE an appealing business environment for producers and manufacturers alike, as well as to logistics service providers.
In terms of volume, the global T&L industry is expected to reach 92.1 billion tons by 2024. The report also mentioned that the global Third-Party Logistics (3PL) market is expected to grow at a compound annual growth rate (CAGR) of more than 5 percent by 2020. Factors such as the rapid globalization, increasing trade volume, and the revival of the global economy are some of the major contributing factors to the growth of the 3PL market, the report said.
Highlighting the sector’s role in international trade, the report said that robust trade, economic growth and liberalization policies followed by many countries worldwide have resulted in increased trade volumes, thus boosting transportation, handling and warehousing needs, which has led to a demand for integrated logistics solutions.

Gulf Marine CEO quits after review sparks profit warning

Updated 22 August 2019

Gulf Marine CEO quits after review sparks profit warning

  • Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence

DUBAI: Gulf Marine Services said on Wednesday Chief Executive Officer Duncan Anderson has resigned as the oilfield industry contractor warned a reassessment of its ships and contracts showed profit would fall this year, kicking its shares 12 percent down.

The Abu Dhabi-based offshore services specialist said a review by new finance chief Stephen Kersley of its large E-class vessels operating in Northwest Europe and the Middle East pointed to 2019 core earnings of between $45 million and $48 million, below $58 million that it reported last year.

A source familiar with the matter told Reuters that Anderson, who has served as CEO for 12 years, was asked to step down. Anderson could not be reached for comment.

The company, which in the past predominantly operated in the UAE, expanded operations and deployed large vessels in the North Sea and Saudi Arabia nine years ago and listed its shares in London in 2014.

Tensions in the Arabian Gulf, a worrisome global growth outlook and uncertainty over oil prices have recently dampened investor confidence.

The North Sea has seen a revival in production in recent years due to new fields coming on line and improved performance by operators following the 2014 oil price collapse.

Still, the basin’s production is expected to decline over the next decade, according to Britain’s Oil and Gas Authority.

“(The CFO’s) review has coincided with a pause in renewables-related self-propelled self-elevating support vessels activity in the North Sea, which will impact several of the higher day-rate E-Class vessels,” Investec wrote in a note.

Gulf Marine appointed industry veteran Kersley as chief financial officer in late May as it sought to halt a slide which has seen the company’s shares fall nearly 80 percent last year and another 23 percent so far this year.

The company said market conditions remained challenging and that it was still in talks with its financial advisors regarding a new capital structure.

“Management, the new board and the group’s advisors, have been in negotiation with the group’s banks on resetting its capital structure and progress has been made,” it said in a statement.

Last year, Gulf Marine said contracts were delayed into 2019 as the company was seen to be in breach of certain banking covenants at the end of 2018.

The company said it was still in talks with its banks and individual lenders with hopes of getting a waiver or an agreement to amend the concerned covenants.