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Academic analysis

The Gulf University for Science and Technology (GUST) in Kuwait has established itself

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The Gulf University for Science and Technology (GUST) in Kuwait has established itself as one of the Middle East's leading educational institutions for educational programmes in the supply chain arena. Professor Philbert Suresh, industry veteran and founder of the GUST Logistics Forum looks at the industry outlook as we start the new year.

Do you think the Middle East logistics market is crowded?

By creating and equipping terminals for the new generation of ships, Middle East ports are gearing up to reap the associated rewards.

The presence of good strong players in the logistics sector will naturally set high standards of performance and excellence in quality that smaller operators can emulate to survive the competition. The competition that has developed in the Middle East will raise the performance bar in an industry sector that is yet to be regulated. More importantly, it is a welcome trend to see established companies relocating to a region well focused on the potential revenues the next five years will bring.

What are the biggest challenges facing the industry?

It will be imperative for all countries in the region to address intermodal transportation (connecting sea, land and air modes of transport) at both the policy and operational level, with cooperation of a GCC secretariat that champions free trade in the region. Short haul road operations would benefit from more paved roads in each GCC state. Overland links are currently limited and problems still arise at collection and distribution points in the intra and inter-regional trade. Also, long haul rail operation will also become a reality with a GCC transport network in the next five years, so a co-ordinated scheduling of the service between intermodal freight hubs will be a priority.

How should government institutions aid this development?

Most directly through the policy and planning of intermodal transport in terms of entitlement for government funding at all levels, local, regional and national. In particular, the provision of feasible intermodal transport services, which would allow the shift of freight from the road to non-road modes and improve safety as well as reducing the societal and environmental effects of heavy transport.

What developments outside the marine industry are affecting the sea freight sector?

The integration of emerging economies, particularly India and China, has seen the volume of goods travelling by sea freight boom, which has had an effect on the way goods are shipped around the world. The adaptation of supertanker principles and the introduction of mega cargo carriers such as the 11,000 TEU Emma Maersk has enhanced global trade in commodities and containerised cargo.

How has this affected the Middle East?

To meet the demands of these trends, successful ports like Dubai, Rotterdam, Hong Kong and Singapore have invested heavily in port infrastructure and maritime industrial development. By creating and equipping terminals for the new generation of containerships that are driving globalised trade through dramatic efficiency gains and transport cost reductions, Middle East ports are gearing up to reap the associated rewards.

Are the industry signs positive heading into the new year?

My outlook for 2008 is optimistic. If you look at factors such as the public appetite for the DP World IPO and the development all around us, there is a wave of support for the regional shipping industry. The promise of growth in inter-regional and international trade within GCC states has increased public and private interest in the development of intermodal transportation and logistics facilities designed to handle the new traffic.

How will the regional shipping sector develop in 2008?

I think strong double-digit growth can be anticipated, supported by developing policies and strategies for the region. So far strategy has mostly been led by frontline players such as Dubai, Qatar and Jordan. The governments of Middle Eastern countries such as Kuwait, Bahrain and Saudi Arabia) should embark on a coordinated development strategy for the logistics sector. This strategy should represent focussed infrastructure investments, the adjustment of policies and regulations, and the optimisation of government services to support the chosen strategic play.

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