Kingdom sees big demand for logistics, mail services

Updated 13 October 2012

Kingdom sees big demand for logistics, mail services

DHL Express, a leading logistics and express mail services company, has announced an ambitious plan to invest more than $20 million in Saudi Arabia to better tap into the country’s growing demand for logistics and mail services.
The investment will be used for opening two new gateway terminals at the King Khalid International Airport (KKIA) in Riyadh and at the King Fahd International Airport (KFIA) in Dammam respectively besides building other infrastructural facilities for the company.
The announcement was made by Ken Allen, DHL’s chief executive officer, in an interview with Arab News at the DHL’s Saudi Arabia headquarters in Alkhobar recently.
Allen, who has a long track record of successfully turning around business at DHL, gave a brief overview of the DHL’s global operation in the interview with special reference to the progressively growing DHL’s business in the Middle East.
He was speaking at the groundbreaking ceremony of the DHL’s10,000 square meter gateway at King Fahd International Airport in Dhahran recently.
Allen also spoke about the trends in the logistics industry, the key growth markets globally and the company’s plans to hire more Saudi nationals.
Nour Suliman, DHL’s chief executive officer for Middle East & North Africa (MENA); Geoff Walsh, DHL’s country manager for Saudi Arabia; and Ali Thabet, national marketing manager were also present.
Allen was visiting the Eastern Province to participate in the groundbreaking ceremony of the gateway terminal at KFIA and to hold talks with senior official and key clients.
At the outset, the DHL chief pledged to promote localization of DHL workforce, when asked about Saudization drive that will eventually help to cut reliance on foreign workers.
He said the new gateway project would provide jobs to about 100 Saudi nationals within the next 12 months.
A large number of Saudi officials including Khalid Al-Mazel, KFIA senior official, attended the groundbreaking ceremony.
The DHL has plans to set up similar facility in Riyadh, said Allen.
Referring to the gateways to be opened at KKIA and KFIA, Allen said that “the combined area of the new gateways exceeded 20,000 square meters, allowing DHL Express to increase operational capacities in the region.”
He thanked the Saudi government led by Custodian of the Two Holy Mosques King Abdullah for ensuring peace and security in the Kingdom.
He lauded the visionary leadership of the Kingdom in maintaining safety and security at a time when several neighboring countries are witnessing political unrest and uprisings.
In reply to a question about the DHL’s investment and expansion plan in the Gulf region despite political uprisings taking place in several countries, Allen allayed fears of any major crisis in the Kingdom.
To this end, he said the DHL is still operating in all those countries including Syria, which have been caught in the crossfire of unrest, domestic violence and bloody power struggle.
“Even during the Gulf war, DHL crew were on the grounds working round-the-clock. We never left the frontiers during the war,” said Allen.
He expressed optimism about the growth in DHL’s business in the Middle East region, especially the Gulf countries. He pointed out that “the DHL had reported 17 percent growth in business in Egypt, while the UAE and Oman were also growing fast together with other Gulf states.”
To this end, he said the DHL was operating nine flights a week to/from Riyadh, which indicates the growth in business in the Kingdom.
“We will be shortly back in Jeddah also,” said Allen, while referring to the strategic business location of the city.
Spelling out the benefits of the two gateways, the DHL chief saidthe gateways would link with all DHL’s major distribution hubs, including nearby Bahrain.
The company, which has operated in the Kingdom since 1976, outlined a series of projects to boost its local market share, including a significant increase in the number of DHL service points.
“We are committed to providing our customers in Saudi Arabia with greater access to DHL services, which will be delivered with the highest standards in logistics infrastructure, delivery fleets and customer service,” said Allen.
“Through this latest investment, we are planning to open several new service points,” he added.
He said the DHL’s focus on Asia, particularly on the Middle East, in recent years had helped it build a more comprehensive intra-Asian business, which are more focused on longer-haul routes from the region to Europe and North America.
“I am convinced that the Middle East region, particularly Saudi Arabia, will remain the fastest growing region in future, and we will focus on these markets,” said Allen.
In fact, the focus has paid off as the economic troubles in the West have hurt demand for logistics services, said the DHL chief, adding that he expects demand for business in the Middle East and in Asia to remain robust despite signs of slowing growth in a few countries.
While Asia-Pacific already accounts for almost 20 percent of the company’s DHL revenues today, the revenues generated in Asia-Pacific should contribute around one-third to the DHL top line by 2017.
With more than 30 years of experience in the market, DHL is the number one logistics brand in Asia, said Allen.
Referring to the satisfactory business results achieved by the DHL, he said“the September 2012 was an exceptional month with similar upward trend in revenue growth being predicted for October this year.”
He said strong oil prices would ensure better business outlook locally and regionally.
On the question of the impact of UPS move to acquire TNT, Allen said that “DHL does not care about it.”
He pointed out that the European Union regulators are still analyzing whether the purchase of TNT Express by United Parcel Service would pose unfair competition and create problems in the market. The UPS agreed to buy TNT last March for $ 6.66 billion.
Asked about the community initiatives undertaken by the DHL as part of its corporate social responsibility (CSR), he said the company had been working to fulfill its obligations under its CSR plan in different fields.
“We are involved in community programs locally, regionally and globally,” said Allen, adding that the DHL’s disaster response team acted swiftly when Japan was hit by Tsunami.
He said that the company would continue sponsoring Formula One in 2013.
The partnership between DHL and Formula 1 has officially gone into overdrive, he said.
After eight impeccable years as Official Logistics Partner, DHL have a proven track record for getting F1 onto the world’s starting grids. It’s a race against time as DHL matches the speed, precision and teamwork of a well-oiled F1 team to deliver the fastest and most efficient logistics in the business. The DHL Fastest Lap Award is given to the driver with the fastest laps in the Formula One season.
Allen also said the DHL is encouraging its employees, customers and business partners to take part in the company’s Global Volunteer Day for the second year in a row.
This year’s program was scheduled for September 6 to 16. But employees can continue to volunteer beyond this 10-day period, providing assistance to the elderly, helping the disadvantaged and cleaning up the environment, among other areas.
“This is evident from what you will see downstairs in our office,” said Allen, while referring to the special decoration made on the basement floor of the DHL office in Alkhobar.
“With our workforce of 470,000 people in more than 220 countries and territories, we have a tremendous reservoir of knowledge and energy,” said Allen.
The DHL also wants to use this energy on behalf of society as a whole and make a positive contribution to the communities where it does business, he said.
DHL Express with its headquarters in the German city of Bonn is a division of the German logistics company DPDHL.

Tankers defer retrofits to cash in on freight rates

Updated 19 October 2019

Tankers defer retrofits to cash in on freight rates

  • The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week

SINGAPORE: Tankers that had been scheduled to install emissions-cutting equipment ahead of stricter pollution standards starting in 2020 have deferred their visits to the dry docks to capitalize on an unexpected surge in freight rates, three trade sources said.

US sanctions on subsidiaries of vast Chinese shipping fleet Cosco in September sparked a surge in global oil shipping rates as traders scrambled to find non-blacklisted vessels to get their oil to market.

The rates for chartering a supertanker from the US Gulf Coast to Singapore hit record highs of more than $17 million and a record $22 million to China earlier this week.

By comparison, prior to the sanctions, shipping crude from the US Gulf to China cost around $6 million-$8 million.

The extraordinary spike in freight rates proved too good to miss for some shipowners who were due to send vessels to the dry docks for lengthy retrofitting and maintenance work.

“We can confirm several owners have postponed dry docking earlier scheduled for the months of October and November to take advantage of the skyrocketing freight rates,” said Rahul Kapoor, head of maritime and trade research at IHS Markit in Singapore.

The shortage of ships to move crude oil was so acute that some shipowners also switched from carrying so-called “clean” or refined fuels like gasoline to “dirty” cargoes that include crude oil, despite the costs of having to clean them later.

“Current rate levels are a no-brainer for pushing back scrubber retrofitting,” said Kapoor.

Starting Jan. 1, 2020, the International Maritime Organization (IMO) requires the use of marine fuel with a sulfur limit of 0.5 percent, down from 3.5 percent currently, significantly inflating shippers’ fuel bills.

Only ships fitted with expensive exhaust cleaning systems, known as scrubbers, which can remove sulfur from emissions, will be allowed to continue burning cheaper high-sulfur fuels.

Ships must be sidelined for up to 60 days for fitting these, according to IHS Markit and DNV GL.

While freight rates have abruptly come off their recent highs, shipowners can still profit from the higher charges.

“One cargo loading at current elevated rate levels can not only finance the scrubber capex, but also account for extra costs incurred to install the scrubber at a later date,” said Kapoor, referring to the capital expenditure of fitting the scrubber.

Freight rates are expected to hold firm for the rest of the year.

“With seasonal demand support and tanker supply deficit still pronounced, we expect (fourth-quarter) tanker freight rates to stay elevated and end the year on a high note,” Kapoor said.