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April 28, 2010

Building Logistics in the Middle East

Keith Mwanalushi continues his look at the Middle Eastern airports industry. This month, he catches up with RSA Logistics operations executive Abhishek Shah for an insider's view on the issues surrounding its rise.

By cms admin

RSA Logistics is relatively new as far as companies are concerned, but that has not stopped it from entering one of the fastest growing airport markets, as the Middle East takes the fast lane to become a logistics hub.

Offering distribution, transportation, warehousing, freight forwarding and supply chain management solutions, as well as air cargo transportation, RSA was one of the first companies to offer services at Dubai Logistics City, a giant free zone covering all areas of logistics distribution, storage, air and sea freight at Dubai World Central, Al Maktoum International Airport.

Keith Mwanalushi caught up with Abhishek Shah to ask how he was settling into the logistics centre, and into business, in a year that has seen the Middle East hit not only with increased demand, but also economic woe.

Keith Mwanalushi:The new RSA Logistics facility began operations right in the middle of the global economic downturn. What has been the impact on business?

Abhishek Shah: The business we were expecting within our first year has not been evident. 2009, as for many in our industry, was a very tough year, with both volumes and rates remaining very low. 2010, however, has had a more positive outlook so far.

“The Middle East is taking the fast lane towards become a logistics hub.”

RSA is steadily increasing its client list, as well as volumes handled. The impact has not been all negative, it has allowed RSA to grow with a strategy in mind that entails targeting a range of companies, which vary in size and product. One particular method has been targeting other non-asset-based logistics companies such as APL Logistics and UTI.

The overall outlook for 2010 is positive, but it is far from an ideal scenario.

KM: Al Maktoum International Airport will have an impressive 12 million ton annual cargo capacity. What opportunities will this present?

AS: The cargo projections for Al Maktoum International Airport would make anyone in the industry’s mouth water. However, being the first company to start up in Dubai World Central, we have witnessed the speed at which developments are taking shape. Even though it is rapid, we know it will be some time before those volumes are reached.

On the basis of such mass cargo being a capability of the new airport, however, RSA built its 25,000m² facility. With room to expand another 16,000m², and another warehouse in the freight forwarding zone almost complete, we have invested for the future and will be able to handle large-scale volumes.

With these facilities in place and ready to go when the airport opens, we hope to be the ones that everyone turns to for their 3PL services.

KM: There are major airport expansion projects happening all around the Gulf, especially in Qatar, the UAE and Saudi Arabia. Do you think the market is ready to accommodate this kind of growth?

AS: This region is expected to grow, and with it the throughput volumes. I think it is with this in mind that such large scale "mega projects" have been proposed in the region. However, I do agree that these may not be fully used in the coming years and may take much longer than expected for many countries to see their projected volumes.

KM: What are the design features of your new facility at Dubai Logistics City?

AS: As previously mentioned, the current facility is 25,000m², built up. With a fully racked system accommodating 26,585 pallet positions (a combination of selective and double deep), including 2,100m² of mezzanine for value-added services and 2,100 square meters of temperature controlled chambers. We have a fully furnished 700m² office, as our headquarters.

“RSA is steadily increasing its client list, as well as the volumes it handles.”

Externally, the facility can park up to 40 trucks at one time and has an area of 20,000m² for break bulk storage, primarily meant for project logistics. We have recently completed the implementation of a WMS system, EXceed from Infor. It has been implemented by SPAN group, which is based in the UAE. It is a fully automated system that handles all functionalities in the warehouse from inbound, ASN, put-away strategies and pick, pack, load and ship. This is all handled on the warehouse floor.

KM: What are your projections for the region?

AS: The Middle East is still forecast to be one of the largest regions in terms of CAGR growth over the next five years with 8.50% growth. The only difference between the last five years and the next is that the growth is not in double digits anymore, but still higher than the rest of the world.

The largest volumes, however, still lie with Europe, South-East Asia and the Americas. We have plans to develop further in the UAE and have already formulated plans for Singapore, India and East Africa.

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