CASE STUDY: Agility expands in Abu Dhabi
Agility is planning to build a new warehouse facility in Abu Dhabi as part of its expansion plans in the emirate with an AED 100-million investment in a 21,000 sqm warehouse and acquisition of 50 new trucks. Bassel El Dabbagh, chief executive officer of Agility in Abu Dhabi, told Logistics Middle East that the logistics giant plans to have the facility fully operational by Q4 2018.
“The new warehouse will cater to the needs of retail customers, oil and gas companies and the government sector in storage and distribution of goods,” says El Dabbagh.
Talking about the opening of the new mid field terminal at Abu Dhabi International Airport, El Dabbagh added that air cargo is expected to grow. “When the new terminal opens, we would see more cargo coming to Abu Dhabi. This would benefit our company,” he explains. The new AED 10.8 billion mid field terminal is expected to be opened in 2019.
The Kuwait-based logistics firm also plans to strengthen its presence in Kizad by developing a number of logistics services at the industrial zone in addition to the new warehouse facility in Musaffah Industrial Zone.
“We are strengthening our presence by leasing a 200,000 sqm plot of land at Kizad to offer a number of services including open yard storage and container services. In the long run, we plan to build a warehouse at Kizad to accommodate more cargo as the UAE focuses on the diversification of the economy” he explains.
Agility handles around 40,000 containers of cargo a year in Abu Dhabi and the diversification efforts are important as it has traditionally relied on the oil and gas sector for a lot of its activity in Abu Dhabi. Its fleet of 250 trucks for example provides services in breakbulk and containerised cargo for the oil majors and EPCs, with around 50% of all trips dedicated to this sector.
“The drop in oil price has not led to a decrease in volumes, but demand has stayed flat,” explains El Dabbagh. “On top of that, the challenge we face is that for the same volumes the revenue is decreasing; most companies, and in particular the oil and gas companies, are asking us to drop the rates for the same volumes.” Nevertheless, Agility’s commitment to breakbulk and Oil & Gas remains paramount.
“We are continuously trying to improve our efficiency while reducing our costs through technology and optimisation, and having solutions and new infrastructure that costs less to operate is part of that,” he says. “We believe that this is a cycle, and we are committed to this economy for the long-term. We are investing in the ‘slow’ cycle because we are confident the economy will pick up again. We are optimistic that this will happen in the near future and we want to be ready for that.”
Agility’s new warehouse will enable it to serve the Oil & Gas industry better. “We do door-to-door services. We mostly import pipes, rigs, steel structures, modules and spare parts that are destined to the oil and gas sites in Abu Dhabi. We import from anywhere in the world, from the factory itself, whether it is in China, or south-east Asia, or Europe, or the US. We then clear the cargo at the port, and we transport it through specialized transport vehicles to the site, because most of it is overweight and oversized type of cargo.”
Some of that cargo is brought to one of Agility’s existing logistics facilities in Mussafah, so that value-added work can be done to it before it is sent to site. The open logistics yard in Mussafah is 375,000 sqm, and the four warehouses offer a combined 21,000 sqm, but the new additional distribution facility is needed to cater for the growing demand.
“It will definitely strengthen our warehousing and distribution services across the UAE. Primarily, our warehousing facility is mostly for the local market. It will help us enhance the offering for our customers and the companies that are entering Abu Dhabi,” says El Dabbagh. “A lot of companies use Dubai as a base for warehousing and distribution, so they serve Abu Dhabi from Dubai, but in the last couple of years, we have seen the number of outlets, malls, hotels, and cafes growing significantly. In retail and FMCG a lot of companies now realize that they need to have their inventory stored in Abu Dhabi for distribution across the emirate. It no longer makes sense, with the increasing number of distribution points in Abu Dhabi, to distribute from Dubai. The new facility will help us better serve our multinational customers as they enter and increase their Abu Dhabi destined volumes.”
With plans to serve different sectors, Agility has a specialized design for the new warehouse facility. “It will be divided into five ambient and temperature-controlled chambers, and will also have a section that is dedicated to physical document archiving. This section needs different specifications in terms of humidity control and firefighting,” says El Dabbagh. “For a start, the fire suppression system is gas-based not water-based.” The design of the warehouse is complete and construction is expected to start in Q4 2017.
“Because we’re targeting to store retail goods, FMCG goods as well as oil and gas and general industrial goods like spare parts and equipment, we needed a very flexible arrangement,” says El Dabbagh. “So we plan to have a mix of selective racking and very narrow aisle racking with specific sections for oversized cargo that will not be racked. We will also have a mix of light and heavy MHEs”.
The development of a brand new distribution facility is one aspect of Agility’s Abu Dhabi expansion, albeit the largest. Earlier this year, the company has also acquired an additional 50 new Mercedes trucks and deployed its own fleet and transport management system, called MicroTransport. The system includes several features, providing accurate tracking and reporting to safety adherence requirements, along with information on the mechanical condition of the truck and its location. The system enables Agility to minimize downtime and offer customers unique visibility of their goods at all times.
The Actros trucks were incorporated into the Abu Dhabi fleet during the first half of 2017 “Agility actually runs an asset-light operation in other markets, but here in the GCC and wider MENA region we’re forced to bring our overland transport in-house.” According to El Dabbagh, this is because out-sourced commercial fleet operators in the region do not meet the safety and quality standards demanded by Agility.
“The challenge is that in the developed markets like Europe and the U.S., overland transport is commoditized, but in emerging markets there is a big differentiation in the standards of health and safety and environmental protection between our own fleet and third party providers,” he says. “Out here you will find a lot of transporters that do not provide the standards that we currently provide. And for the customers that we target, mostly like oil and gas customers and other customers that have very sensitive cargo, we differentiate ourselves by being able to provide such trucks. Also, from an environmental perspective, our trucks are very environmentally-friendly, more so than other transporters.”