Special report: Halal logistics

The growing importance of halal logistics in the Middle East and Asia.
Halal logistics is a buzz term in the industry
Halal logistics is a buzz term in the industry

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The logistics world is waking up to the enormous potential of the halal industry. Benefiting from a ready-made global customer group of nearly two billion Muslims, the international halal food industry was valued at US$570 billion during 2005. And with the total spend on logistics operations accounting for around 5-10% of total revenue, its not surprising that logistics companies all over the world are keen to grab a piece of this growing market.

However, it is fast discovering, the complexities of the halal supply chain extend much further than the usual concerns regarding unbroken cool chains and the efficient delivery of fresh food produce. To be at the top of the halal logistics game, players need to be well versed in the whole ethos in order to maintain what is known as the 'halal integrity' of a food product. With the legitimacy of some halal products coming under fire, the industry is now demanding more specialised halal compliant solutions for its supply chain process.

"The reality is that science has moved far ahead. It has become very simple to test whether some thing is halal or not," elaborates Nordin Abdullah, co-founder and executive director of KasehDia, and trustee for the International Halal Integrity Alliance (IHI Alliance). "This means that any contamination, however small, can be detected. Food manufacturers have too much riding on the integrity of their brands and, if halal is part of that, anything that brings that into question could be a very costly affair."

The halal industry implements a 'farm to table' operation, presenting opportunities for various players in the logistics industry to climb aboard the process including ports, shipping and freight forwarding, warehousing and handling facilities. Abdullah maintains that this area still needs great improvement.

"Developing nations, need to look at improving their supply chain and become more competitive in the global food market," he asserts. "What needs to happen is that all parties, including major ports and logistics companies, come together and be a part of the development of industry best practices to avoid confusion at a later stage."

With global standardisation in the certification process for halal products now including strict criteria throughout the supply chain process, some countries such as Malaysia, Singapore and even some western countries are stepping ahead of the Middle East when it comes to taking halal logistics very seriously.

Meat & Livestock Australia (MLA), for example, has launched a halal brand for Australian meat in the Middle East, in recognition of the increased sophistication of meat retailing throughout the Muslim world. This response has already brought impressive dividends. In 2006, Australia exported 43,071 tonnes of mutton, 17,685 tonnes of lamb and 3312 tonnes of beef to the Middle East, valued at US$242 million. "Australian meat exporters wishing to supply halal meat to Muslim countries must source meat from abattoirs operating under the Australian Government Muslim Slaughter (AGMS) programme, which is under the control and oversight of the Australian Quarantine and Inspection Service (AQIS)," explains Ian Ross, MLA's regional manager for the Middle East and Africa.

With such a stringent process supported by government regulation and supervised by independent Islamic organisations, all Australian halal meat products are identified with government secured stamps. Meat consigned to Muslim countries also bears an official certificate which is endorsed with an original authorised Islamic Organisation stamp.

The usual requirements of ensuring an adequate infrastructure to transport, store and market fresh produce such as cold chain management are also on the top of MLA's priorities for halal meat.

In addition, staff are trained on the specifics of halal logistics to ensure that all personnel involved in the supply chain understand and respect the religious, regulatory and technical requirements to safely deliver halal meat into Islamic markets.

Measures to preserve the halal integrity of the meat continue throughout the supply chain process, under the watchful eye of the Australian government. "As well as correct slaughter procedures, the welfare of animals being raised for slaughter is a key requirement of Sharia law," Ross points out. "Careful and highly regulated transportation of livestock is a key logistical component as is the separation of halal products from those which are ‘haram'; after slaughter, during processing, storage and transportation to the customer."

Avoiding compromising halal integrity in this way may become an issue of contention for those companies who deal with both halal and non-halal products. Nevertheless, the separation of halal products is one of the most critical components of an intact halal food chain process, and measures need to be put in place throughout to avoid such contamination from occurring.

As one of the most reputed halal distributors across the Middle East, Al Islami Foods is well versed in these necessities of halal food logistics. With sales boosted by 25% up to an impressive US$41 million between 2004-5 alone, the company has been going from strength to strength, capitalising on its long-standing experience of the industry.

"Halal supply chains include everything from the procurment and preparation of genuine halal ingredients to the manufacturing and delivery of the final product all the way to customer shelves," explains Hasan Rimawi, chief technical officer at Al Islami Foods. "This includes the separation of halal ingredients or finished products from non halal products, such as alcoholic or pork-related products, throughout the entire chain. Similar measures need to be adopted in other areas of the logistics process, such as transporting halal fed animals to slaughterhouses or when shipping chilled or frozen halal meat in enclosed shipping containers."

Al Islami proactively avoids comprising the integrity of its products by taking control of the entire process from production, storage and transport, and through the supervision over the local suppliers it uses for certain products. "Supervising the process is the single most important aspect of controlling genuine halal products," Rimawi emphasises. "Al Islami has joined hands with multiple partners in different regions to ensure that each product is manufactured to the highest quality standards and is not mixed with any non halal ingredients."

Earlier this year the company announced a strategic Memorandum of Understanding (MoU) with one of its most ambitious partners, Malaysia's Halal-Industry Development Corporation (HDC), to introduce the Al Islami Cart franchise concept to Southeast Asia and identify further opportunities in the region.

With Malaysia setting itself up to be the world hub for halal products and the leading edge on halal supply chain logistics, other companies in the region are also jumping on the bandwagon to develop partnerships with the ambitious country. Amongst those, Emirates SkyCargo is keen to be in the forefront of supporting the Malaysian government's initiative. With its Dubai hub having the vantage point of being a geographically-placed meeting point between East and West, the carrier is optimistic that it can provide the much needed synergy in the distribution of Malaysia's halal products globally. "This development will be good to promote halal food and non-food based products, especially to cater for the West Asian market," explains Bobby Chang, cargo manager, Emirates in Malaysia. "The move will also help pave the way for more Malaysian producers and manufacturers to penetrate the West Asian supply market."

According to Chang, Emirates currently carries a few hundred tonnes of cargo nine times a week in the belly of its B777-300 widebody aircrafts from Kuala Lumpur to Dubai, with connections to more than 80 destinations worldwide. "We have sent halal food products from Malaysia to the Middle East meant for local distributions in the past, with shipments arriving fresh to various Middle East markets," he explains. To ensure that the halal products that it uplifts arrive fresh and in good condition at the appointed destinations, the carrier has developed a new service called Cool Chain, which is a premium solution designed especially for the movement of perishables and temperature sensitive products. Using specialised air cargo temperature controlled containers, Cool Chain offers a seamless air transportation chain suitable for the carriage of halal food products. "This service has been well-received by the food industry and had proven to be able to meet the high service standards required for uplift of halal food products," Chang elaborates.

For Emirates SkyCargo, driving forward its service is the enormous business viability of the halal goods market and it is clear that the carrier has totted up its sums in this area and come back smiling. "An increasing number of companies are producing halal goods to tap into the billion dollar global demand," Chang points out. "With more than1.8 billion muslims globally, the global halal food and non-food industries is estimated to have an expected growth rate of 10-20% each year," he calculates.

With logistics companies doing similar money-making equations on their potential profitability from the halal industry, it comes as no surprise that so many are eager to learn how to position themselves most favourably in the marketplace.

Christine Weaver, group exhibition director of IRR Middle East, organisers of this year's inaugural Halal World Expo in Abu Dhabi, agrees. "For the logistics industry, halal is a dynamic market that should not be ignored," she says. "The rate of growth driven by consumer demand for high quality halal products worldwide is a market to be taken seriously."

Undoubtedly the halal logistics sector will be one of the fastest changing areas to watch out for in the region. With increasing awareness and demand amongst its growing customer base as to the logistical processes involved, it seems halal food producers will have to work harder to ensure that their supply chain participants meet halal requirements.

Malaysia: The new halal superpower

Keeping its eye on the growing halal market value, Malaysia is firing on all cylinders to make sure its already impressive reputation in the halal industry becomes second to none. Spearheaded by the world's first development corporation specifically dedicated to the halal sector, the Halal-Industry Development Corporation (HDC), the country is pulling out all the stops in innovation and professionalisation of the halal industry - leaving the Middle East trailing in its wake.

The HDC manages efforts to review standards, develop the local industry and promote Malaysian halal products in international markets. Combining the modern day reliance on information technology with a need to standardise and monitor the halal industry, HDC is working with Microsoft Malaysia to create an internet portal for worldwide halal trading and certification.

Other hot developments in Malaysia include the building on an US$18 million Halal Food Park, due to start operating by 2008. The Kuala Lumpur based company behind the initiative, Prima Agri-Products, expects the food park to produce 200 metric tonnes of halal products a day when at full capacity, exporting 60% throughout the world.

Malaysia's MISC Integrated Logistics Sdn Bhd (MILS) also has plans to create a standard halal certification on handling and processing logistics with various government authorities. In addition, the company is working on a halal logistics freezone hub in Malaysia's Port Klang and a new liner service, aptly named the MISC Halal Express - operating between Port Klang and Singapore, to Colombo, Jebel Ali, Dammam and Karachi. The new service aims to provide exporters and importers with a total end-to-end halal compliant supply chain, complete with faster transit times for temperature sensitive cargo.

 

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