Freight activity is under pressure

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What we're tracking today

TODAY: Qatar to switch 35% of vehicles and 100% buses to electric by 2030 + Suez Canal Authority adjusts fixed rebates for vessels altering their destinations + Kuwait extends deadline for railway consultancy contract

Good morning, friends. The region appears to still be shaking off the Eid cobwebs as we ease back into the flow of things, giving us a relatively quiet morning in the world of Logistics.

THE BIG LOGISTICS STORY- The Salalah Freezone has signed an OMR 88.5 mn (USD 230 mn) investment agreement with Chinese silicon industry company Besto Hengda Oman to set up a ferrosilicon and packaging paper production plant, while Tunisia has now completed the required procedures to begin implementing the African Continental FreeTrade Area agreement.

HAPPENING TODAY-

IATA World Cargo Symposium 2023 is on its third and final day in Istanbul, Turkey, bringing together air cargo professionals from across the world to network, share insights, and explore new avenues for business.

Global freight is slowing down amid Sudan crisis:The escalation of conflict in Sudan has made global freighters — including Danish shipping company Maersk, Germany’s Hapag-Lloyd, and French transport company CMA CGM — reluctant to continue trade, or take new bookings of goods and cargo, supply chain news agency Loadstar reports. These disruptions are adding further pressure to global supply chains already under strain due to the Russia-Ukraine war, causing supply chain managers to face challenges in fulfilling their customers’ requirements, according to Loadstar.

Some are just taking extra precautions: CMA CGM will begin implementing an additional USD 500 surcharge for “extra risk coverage” on all cargo and dry reefer shipments from Europe, the Middle East, and the Indian Subcontinent to Sudan, according to a statement. Some Gulf airlines have also halted flights, with Emirates announcing earlier this month it is canceling all its flights to Khartoum until the end of May as Sudan closed off its airspace through to the end of April. has suspended their flights through to the end of the Month.

Meanwhile, roads and bridges in Port Sudan are still open for the transport of goods and loading and discharge are normal, according to maritime ins. provider West of England P&I Club.

The Suez Canal Authority has adjusted the rates of fixed rebates for ships that change their destination after sailing from their port of origin, according to a navigational circular (pdf) issued last week. Vessels that submit a port of origin or destination not mentioned in their initial rebate request will be granted a higher rebate percentage.

Oman’s oil exports dropped 6.8% y-o-y in 1Q 2023 to 76.04 mn barrels, with average production rising 2.6% y-o-y to 1.064 mn bbl / d, Muscat Daily reports, citing data from the National Center Statistics and Information. The biggest buyer of Oman’s crude oil was China, which received over 90% of the country’s total oil exports during the quarter. Oman’s oil exports to China hit 69.8 mn bbl in 1Q 2023, rising 8.6% y-o-y.

Kuwait extends bid submission deadline for the Kuwait Railroad Project: Kuwait has extended to 30 May the bid submission deadline for the consultancy contract for the design and document preparation for the Kuwait Railroad Project’s first phase, according to the Central Agency for Public Tenders. The initial deadline for the 111 km railway project, which will be used by freight and passenger trains, was 21 February. The contract involves the study, critical review, and concept designs for the railway, as well as completing the detailed engineering designs and technical documents necessary for tendering.

Qatar plans to switch 35% of vehicles on its roads and 100% of its public transport buses to electric by 2030, The Peninsula reports. Qatar has already created thelargest electric bus depot inthe world, with a capacity of 478 buses, which relies on 11k PV solar panels to generate 4 MW of power. Meanwhile, QatarEnergy plans to reach 5 GW of solar power production by 2035.

COME TO OUR NEXT ENTERPRISE FORUM-

The Enterprise Exports & FDI Forum, our latest industry-specific conference, is taking place on Monday, 15 May. The Enterprise Exports & FDI Forum will give insiders and newcomers alike the chance to talk about how to develop an export-centered business and how their companies can help Egypt build an export-led economy that makes us a magnet for foreign direct investment (FDI).

Why exports & FDI? In the wake of successive floats of EGP, exports and FDI have never been more important to our economy — or our businesses. We’re gathering some of the CEOs, top execs from local companies and multinationals, investors, bankers and finance folks to speak on how businesses can adapt their strategies to be export-oriented and what Egypt as a country can do to draw foreign investment and much-needed FX. Expect it to be heavy on lessons learned in Egypt and other global growth markets — and lots of success stories.You can learn more on our conference website here.

And what better place to discuss moving our goods than Egypt’s original logistics zone — the Nile. That’s why we’re looking forward to holding the event by the river’s vistas at the Four Seasons, Nile Plaza.

Some of the biggest names in business and finance are on board — are you? The Enterprise Exports and FDI Forum is taking place with the generous support of our friends, including:

Banking partners: Banque Misr | Al Baraka Bank | Emirates NBD | HSBC

Event partners: Beyti | Concrete | Global Corp | Grant Thornton | Hassan Allam Utilities

WANT TO BECOME A COMMERCIAL PARTNER? Ping a note to Moustafa, our head of commercial, here.

HAVEN’T REQUESTED AN INVITE YET? If you’re a C-suite exec, business owner, DFI staff, export executive, investor or banker, please fill out the form here to signal your interest, letting us know your name, title and where you work.

CIRCLE YOUR CALENDAR-

The Select USA Investment Summit in the US’ Maryland gets underway next Monday, 1 May and runs through Thursday, 4 May.

Deadline for Salalah-Thamrait trucking road bids: Companies have until next Thursday, 4 May to submit proposals for the design, construction, finance, operation, and maintenance of Oman’s Salalah-Thamrait trucking road.

The Airport Show is scheduled to kick off in Dubai on Tuesday, 9 May. The three-day event wraps on Thursday, 11 May.

Check out our full calendar on the web for a comprehensive listing of upcoming news events, national holidays and news triggers.

Oman’s Salalah Freezone signs USD 230 mn investment agreement with Chinese silicon company for production plant

China’s Besto Hengda Oman agrees to set up USD 230 mn packaging paper + ferrosilicon plant in Salalah Freezone:The Salalah Freezone has signed an OMR 88.5 mn (USD 230 mn) investment agreement with Chinese silicon industry company Besto Hengda Oman to set up a ferrosilicon and packaging paper production plant, according to a company tweet on Tuesday and Oman’s state-owned Oman News Agency. Salalah Freezone is a subsidiary of Omani logistics firm Asyad Group.

SOUND SMART- Ferrosilicon is a metallic substance composed of iron and silicon and is used for steel making.

The details: The production plant will process ferrous alloys and high-quality recycled wrapping paper. It will be built on 300k sqm and will have a production capacity of 90k tons of ferrosilicon per annum in its first phase and 180k tons in its second phase. The production capacity of packaging paper annually will be 300k tons, according to the news agency. No details were provided on the expected timeline for the project.

Tunisia finalizes AfCFTA legal procedures

Tunisian businesses can now trade under the African Continental FreeTrade Area (AfCFTA) after the Tunisian government finalized the procedures and requirements for the agreement earlier this month, according to a statement from the Trade and Export Development Ministry. Tunisian businesses wanting to trade within AfCTA can now use a certificate of origin document which can be issued by chambers of commerce, the statement said.

Background: Tunisia signed the agreement to join AfCTA in 2018, and by 2020 ratified the agreement and officially became a member of the agreement. By joining, the country could potentially double its exports to Africa by 2035, according to the UN’s Economic Commission for Africa and GIZ.

About AfCTA:AfCTA is a trade agreement initiated in 2018 with an eye to streamline and strengthen intra-Africa trade. The agreement covers trade in goods and services, with a focus on value-added products as well as customs facilitation and also includes a dispute settlement mechanism. To date, 46 of the 54 signatory countries have ratified the trade agreement, including Egypt, Morocco, and Algeria. Trading under the agreement began in 2021.

Russian oil exports are helping the UAE become a major crude oil hub

The UAE’s standing as a leading energy trading hub is getting a boost as Western sanctions on Russian oil redraw energy trade routes:The country’s location, as well as its well-developed maritime ins. and shipping industries, have made it a hub for the transhipment of Asia-bound Russian oil. The UAE is now reaping windfalls from the new traffic in the form of shipping, ins., storage, and other fees — with Fujairah on track to becoming a major hub for oil exports.

How it all started: A price cap of USD 60 per barrel on shipments of Russian oil mandated by G7 countries and Australia has been in the works for some time and came into effect in February. The regulation seeks to curb revenues that Moscow can divert to its war in Ukraine while also ensuring relative stability in global oil supplies. The new rules meant that Western companies involved in the transport or ins. of Russian oil shipments priced above the cap risked being slapped with hefty fines.

Western insurers are staying safe: Despite the fact that Russia’s flagship Urals blend was trading below the cap when the regulation came into effect — and continuesto do so — Western outfits chose to give Russian oil exports a wide berth so as to not be caught out should the caps or mandates change. Given that the global maritime shipping and ins. industry is dominated by Western actors, Russia suddenly found itself without a supply chain to deliver its lucrative oil cargoes to customers in Asia.

Enter the UAE, which has well-developed maritime shipping and ins. sectors, and is not subject to Western price caps. “Shipping through the UAE helps Russian exports circumvent sanctions and the price cap by providing a route that avoids Western financial institutions and shipping companies,” Andika Akbar (Linkedin), an energy policy consultant at the International Energy Agency (IEA), told Enterprise. Akbar spoke to Enterprise in a personal capacity, noting that his statements are not representative of the IEA.

Location is key: The UAE is also conveniently placed as a pitstop halfway between Russian ports on the Black Sea and the Baltics and big buyers of Russian energy in Asia — most notably China and India.

The UAE and Russia have several methods for the export of Russian crude, an anonymous source in the industry told us. One method sees the UAE importing Russian oil for its domestic uses, and re-exporting its domestic production to the west, “making at least USD 15 per barrel margin,” the source adds.

As for riskier trade of Russian crude that is priced close to the price cap, Russia makes use of two shipping lines in Dubai — Fractal Marine and India-based Gatik — to haul cargoes of crude from ports on the Baltics and the Black Sea to the UAE, the source told us. Ins. for these shipments is provided by Russia’s state owned Russian National Reinsurance Company, the source tells us. The exact dynamics of how Russian oil gets in and out of the UAE remains a black box, however, with our source stressing that “we will never know” the full details of what goes on due to the sensitive nature of the topic.

Fujairah is crucial to the UAE’s oil hub ambitions: The UAE has its mind set on cashing in on the influx of Russian oil. “This includes increasing the capacity of the Fujairah oil hub and allowing trade using the AED,” Akbar says. He adds that the UAE’s state-owned energy giant ADNOC is carrying out upgrades at Fujairah that will see storage capacity at the port increase from 11.1 mn cubic meters to 42 mn cubic meters. These expansions, together with the increased traffic, will bolster Fujairah’s position as a “major crude oil hub in the Middle East, alongside Singapore and Rotterdam,” Akbar explains. The influx of Russian oil has already led to a spike in storage fees at Fujairah which reached record highs in 1Q 2023.

The rerouting is also a boon for Asia: Other big beneficiaries include India and China, which for decades had to contend with higher energy prices than Europe due to the so-called Asian premium. Traditionally, India and China’s high demand for hydrocarbons — as well as their remote location — placed them squarely as price-takers for oil exports from OPEC and accordingly had their shipments priced at a premium over Europe. The latest changes mean that Russian oil formerly bound for Europe is now diverted to Asia, thus lowering prices. The reduction in Asia’s energy bills could provide stimulus to their economies, according to a Reuters report.

UPS reports lower 1Q 2023 revenue as freight volumes remain strained

UPS’ revenues fell 6% y-o-y in 1Q 2023 to USD 22.9 bn, according to the company’s earningsrelease (pdf). The quarter’s revenues fall short of analysts’ average estimate of USD 23 bn, which “demonstrates that the economy is slowing and the company is seeing volume risk in 2023,” Third Bridge analyst Anthony DeRuijter said, Reuters reports. The company’s projected full-year revenues for 2023 are USD 97 bn, which is at the lower end of its previous forecast of USD 97-99.4 bn.

The explanation: Delivery firms are saddled with a bloated delivery capacity after the spike in online sales during the covid-19 pandemic started to dissipate due to high inflation, affecting discretionary spending. This could lead to a delayed recovery in volumes for the shipping industry, which was expecting relief in the back half of the year.

Egypt’s AAST to roll out locally-made electric cargo EV next month

AAST to launch two models of light EVs over the coming six months: Egypt’sArabAcademy for Science, Technology and Maritime Transport (AAST) is working to start rolling out its first locally-made electric cargo transport vehicle next month, Dean of Applied Research at the AAST Mohamed El Ghamry told Egyptian state-run MENA news agency. The car aims to replace the widespread three wheeler used to transport various items from fruits and vegetables to furniture. The academy will also introduce passenger EVs over the coming 5-6 months.

US wants a blanket ban on exports to Russia

The US is pushing for a complete export ban on Russia: G7 countries are considering a US proposal for a blanket ban on exports to Russia as western nations look to tighten the screws on the Russian economy, the Financial Times reports. EU and Japanese officials have distanced themselves from the idea, with one official telling the salmon-colored paper that “it is simply not do-able.”

Calendar

APRIL

25-27 April (Saturday-Monday): World Cargo Symposium, Hilton Istanbul Bomonti Hotel and Conference Centre, Istanbul, Turkey.

MAY

May: The Suez Canal Economic Zone (SCZone) plans to hand over a new 1k-meter container berth to the East Port Said Port.

May: The ArabAcademy for Science, Technology and Maritime Transport (AAST) will roll out its first locally-made electric cargo transport vehicle.

1-4 May (Monday-Thursday): Select USA Investment Summit, National Harbor, Maryland, USA.

4 May (Thursday): Deadline to submit proposals for the design, construction, finance, operation, and maintenance of the Salalah-Thamrait trucking road in Oman.

9-11 May (Tuesday-Thursday): Airport Show, Sheikh Saeed Halls 1-2, DWTC, Dubai.

9-12 May (Tuesday-Friday): Transport Logistic, Trade Fair Center Messe München, Munich, Germany.

10-12 May (Wednesday-Friday): The African Aviation Summit: Air Finance Africa Conference & Exhibition, Sandton Convention Centre, Johannesburg, South Africa.

15 May (Monday): Exports + FDI Forum, Four Seasons Hotel Cairo at Nile Plaza, Cairo, Egypt.

15-16 May (Monday-Tuesday): Middle East Rail, Abu Dhabi National Exhibition Centre, Abu Dhabi.

15-16 May (Monday-Tuesday): Mobility Live Middle East, Abu Dhabi National Exhibition Centre, Abu Dhabi.

15-16 May (Monday-Tuesday): The Road and Traffic Expo, Abu Dhabi National Exhibition Centre, Abu Dhabi.

15-17 May (Monday-Wednesday): Global Fleet Conference, Cascais, Portugal.

16-17 May (Tuesday-Wednesday): Africa Forum of Investment and Commerce, Sheraton Hotel, Algiers, Algeria.

16-18 May (Saturday-Monday): Baltic and Black Sea Ports & Shipping, Radisson Hotel & Suites, Gdansk, Poland.

16-18 May (Saturday-Monday): Seatrade Maritime Logistics Middle East, Dubai, UAE.

16-18 May (Saturday-Monday): IATA Ground Handling Conference, Abu Dhabi National Exhibition Center, Abu Dhabi.

18 May (Monday): UN-Turkey-Russia Black Sea grain agreement extension expires.

24 May (Friday): Fleet and Mobility Summit, Dubai.

29-31 May (Monday-Wednesday): Translogistica Libya 2023, Misurata, Libya.

JUNE

June: Suez Canal Economic Zone holds a roadshow in Delhi.

6-7 June (Tuesday-Wednesday): Ports and Customs Week, Cape Town, South Africa.

14-16 June (Wednesday-Friday): International Conference on Models and Technologies for Intelligent Transportation Systems, Nice, France.

20-23 June (Tuesday-Friday): Conference on the Marine Transportation System Innovative Science and Technologies Toward Greater Sustainability, Washington, DC, US.

JULY

1 July (Saturday): A new greenfield liquid bulk terminal in Khalifa Port Abu Dhabi will kick off operations.

16-17 July (Thursday-Friday): The Levitate Conference and Exhibition, St. Regis Amman Hotel.

24-25 July (Monday-Tuesday): ICSG Istanbul, Istanbul Lutfi Kirdar Convention & Exhibition Centre, Istanbul.

SEPTEMBER

20-22 September (Wednesday-Friday): Transport Evolution Africa Forum and Expo, Inkosi Albert Luthuli ICC Complex (Durban ICC), South Africa.

OCTOBER

3-5 October (Tuesday-Thursday): Smarter Mobility Africa Summit, South Africa.

NOVEMBER

1 November (Wednesday): Smart Maritime Network Dubai Conference, Conrad Dubai, UAE.

14-15 November (Tuesday): Supply Chain & Logistics Arabia, Narcissus, Riyadh, Saudi Arabia.

15 November (Wednesday): Leaders in Logistics UAE Summit, Dubai.

21-23 November (Tuesday-Thursday): Intermobility Expo 2023, Dubai World Trade Center, Dubai, UAE.

EVENTS WITH NO SET DATE

2H2023: Construction of Neom’s first hydrogen fueling station will kick off.

2024

12-13 February (Monday-Tuesday): Breakbulk Middle East conference, Dubai Trade Centre.

12-15 February (Monday-Thursday): African Air Expo, Cape Town.

28 February-1 March (Wednesday-Friday): MENA Transport Congress and Exhibition 2024, Dubai.

2025

Iraq will complete phase one of the construction of the Grand Faw Port.

DHL and Aramco’s logistics and procurement hub in Saudi Arabia will commence operations.

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