Dnata to provide ground services for Air India at Zurich Airport

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What we're tracking today

TODAY: PMIs are in for KSA, UAE and Egypt + Dnata expands European footprint

Good morning, folks. It’s a relatively calm morning on the news front as we head into the weekend, but we have a handful of M&A stories we’re tracking this morning, along with a deep dive into the latest PMI reports from UAE, Saudi, and Egypt. Let’s jump right in.

WATCH THIS SPACE-

#1- AD Ports files bid for container terminal at India’s Chidambaranar Port: A consortium spearheaded by AD Ports Group has reportedly filed initial bids on a state-run Chidambaranar Port Authority tender to build a USD 845 mn, 4 mn TEU capacity container terminal at the port, Indian news outlet the Economic Times reports, citing people it says have knowledge of the matter. DP World is unlikely to proceed past the initial bid stage due to security concerns regarding its operation of a container terminal at Pakistan’s Karachi Port and its business ties with Cosco Shipping in, the sources told ET.

#2- Gulf Data Hub mulls offloading a minority stake: UAE-based data center operator Gulf Data Hub tapped JP Morgan Chase as an adviser for a potential sale of a minority stake to investors, Bloomberg reports, citing people it says are in the know. While the company has not reached a final decision yet on the timing or the value of the sale, it could be looking to bag as much as USD 1 bn and wrap it as early as 3Q 2024. Several global private equity firms have reportedly voiced their interest in the company.

#3- Adnoc and Saudi Aramco are reportedly studying bids for Australian oil and gas firm Santos, Bloomberg reports, citing sources it says are in the know. The company has a market value of some USD 16.7 bn, and has liquefied natural gas projects in Australia, Papua New Guinea and Timor-Leste.

Adnoc has been expanding its investments abroad: The energy giant acquired a 10% stake in a concession Mozambique's Rovuma basin, and an 11.7% stake in the first phase of sustainable liquefied natural gas (LNG) producer NextDecade's USD 18 bn Rio Grande LNG export facility in Texas. It is also now in formal discussions for a potential takeover of German chemical company Covestro.

#4- Egypt’s Act Financial plans to use the EGP 1 bn raised from its IPO to invest into three EGX-listed companies this year, Managing Partner Mostafa Abdel Aziz told Enterprise. The investments will range from 5-30%, depending on the size of the company and Act Financial's plan for it. The company is also exploring potential investments in six non-listed local companies with the hopes of eventually listing them on the EGX, Abdel Aziz said, adding the company has met with over 100 non-listed companies so far.

Acquisitions could include logistics companies, Abdel Aziz told Mubasher in a separate interview. The company is in the process of finalizing an IPO on the Egyptian Exchange, where it has set its price at EGP 2.9 per share. Act Financial is expected to rake in EGP 1 bn in capital from its 360 mn share offering, representing 32% of its total shares.

#5- Amazon is working closely with UAE authorities to expedite its rollout of electric vehicles for deliveries, the National reports. They are also addressing challenges, such as the impact of extreme heat on battery performance with partners to ensure the successful implementation of their goal to use 100k EVs for last-mile deliveries globally by 2030. “In this region, because of the extreme heat, there is not yet a scalable, fully-proven commercial electric vehicle model. Right now that is a challenge because of the temperature and the batteries,” Prashant Saran, director of operations at Amazon Turkey and MENA told the National.

The initiative has kicked off with pilot testing, though a launch timeline has not been set. “We are already working with delivery service partners who are using electric scooters to deliver in some of the dense areas,” Amazon MENAT Operations Director Prashant Saran told the National.

#6- Saudi Arabia plans to begin manufacturing ships this year in a bid to transform the kingdom into a leading logistics player, CEO of the country’s National Industrial Development and Logistics Program (NIDLP) Suliman Almazroua told Asharq Business. Shipyards will begin to be set up in the Ras Al Khair region this year with the involvement of Hyundai, Bahri, and Aramco, Almazroua said.

#7- Egypt has received two out of 21 planned natural gas shipments to combat power cuts, Ahram Online reports, citing comments by Ministry of Petroleum and Mineral Resources Spokesman Hamdy Abdel-Aziz. One ship carrying liquefied natural gas arrived in Ain Sokhna port on Monday and another’s natural gas shipment has been offloaded on a gasification vessel before integration into the national grid, according to LNG Prime. As more gas shipments arrive, the government will begin easing constraints it has placed on gas supplies to fertilizer companies, according to Abdel-Aziz. The government has also said that it aims to end nation-wide power outages by the third week of July.

REMEMBER- Egypt needs to import some USD 1.18 bn worth of mazut fuel oil and natural gas to end ongoing daily power cuts, its Prime Minister Mostafa Madbouly said last month. Egyptian state-owned gas firm EGAS is reportedly looking to acquire seven shipments of LNG cargoes in July, six more in August, and four more in September. The country briefly extended power outages for a week last month due to a gas field in a “neighboring country” being offline for a 12-hour period.

MARKET WATCH-

#1- Oil prices dipped slightly in early trading as US employment and business activity data showed signs of the economy cooling, Reuters reports. Brent crude futures traded at USD 87.04 per barrel at 00.30 PM GMT, while West Texas Intermediate crude futures traded at USD 83.56 per barrel, says the newswire.

#2- Baltic index has seen an upwards tick for the fifth day straight on the back of solid capesize demand, Reuters reports. The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments – was up 1% to 2,179 points. Capesize rose 2.6% to 3,888, while the panamax dipped 1.3% to 1,640 points. The smaller supramax segment fell 18 points to 1,351.

#3- Global fleet capacity is up amid the Red Sea shipping disruptions, a Maritime Strategies International 2Q report found. Around 1.7 mn TEU of new containership capacity has left shipyards since the end of November. Asia to Europe services have added 1.4 mn TEU of capacity since the end of November.

CIRCLE YOUR CALENDAR-

Saudi Arabia will host the Global EV and Mobility Technology Forum on Wednesday, 10 July and Thursday, 11 July in Riyadh. The event will bring together international policymakers, NGOs, corporations, and start-ups to discuss industry topics including fleet electrification, autonomous and connected vehicles, and sustainable transport solutions.

Check out our full calendar at the bottom of this email for a comprehensive listing of upcoming news events and news triggers.

KSA and UAE non-oil private sector activity softens in June while Egypt experiences growth

How Egypt + Saudi + Egypt’s non-oil private sectors performed in June: Purchasing manager indices (PMI) tracking non-energy sectors in the three countries told a mixed tale in June. Saudi Arabia and the UAE’s held above the 50.0 mark threshold, but softening demand underpinned growth in both countries. Egypt saw a growth in its headline PMI, supported by stable demand prospects, new orders, and purchases.

REMEMBER- The all-important 50.0 mark is the threshold separating contraction from growth. Anything above 50 denotes expansion, while anything below indicates contraction.

First up, Saudi Arabia: Non-oil business activity in the Kingdom maintained a steady growth rate in June, as output levels grew despite a drop in new orders, input purchases, and employment, according to Riyad Bank Saudi Arabia PMI (pdf). The headline reading dipped to 55.0 in June, from 56.4 in May, recording its lowest reading in over two years.

New order intakes fell to their lowest level in some 2.5-years, as demand softened in the Kingdom. Intake rates were partially buoyed by a strong boost to export sales, which jumped up at the fastest rate recorded this year. June saw businesses’ reduce their purchasing activity, following a period of unparalleled inventory expansion in recent months, resulting in purchases growing at its weakest level since September 2021.

Output increased on the back of existing order books, cutting down backlog volumes in the Kingdom’s non-oil sector. Businesses reported a rise in their employment numbers, yet rates were “only modest and milder than in May”, tapered by wage pressures forcing constraints onto operational costs. Delivery speed continued to improve. Inflation declined, yet, overall input costs increased at their quickest pace in the last four months.

Optimistic despite the slowdown: “Looking at the second quarter as a whole, the growth figures for Q2 still indicate a positive outlook for non-oil GDP in Saudi Arabia, with expectations of growth exceeding 3%,” Riyad Bank Chief Economist Naif Al-Ghaith is quoted as saying in the report.

Over in the UAE: Non-oil business activity grew at a slower pace in June due to recovery from disruptions from April’s floods and persistent supply chain pressure from the Red Sea crisis impacting output growth, backlogs, and input prices, according to S&P Global’s PMI (pdf). The country’s headline reading slipped to 54.6 in June, from 55.3 in May, hitting its lowest point in some 16 months.

Output growth softened across the non-oil private sector, with businesses citing competitive pressures as the reason for slow inclines. Backlogs continued to spike upwards at the end of 2Q, pulled up by solid demand and weighed down by limited capacity due to the lasting effects of floods and the Red Sea disruptions.

ICYMI - Business growth came in at its slowest pace in 14 months back in May, as new order volumes slowed and consumer demand eased amid business disruptions caused by the flooding in April.

Purchasing expenses were high: Inflation rates rose, modestly, to its highest level in almost two years, causing non-oil companies to experience a spike in input costs during June. Businesses linked the rising prices to growing shipping fees, overheads, and raw material costs. Output prices subsequently grew, for the second month in a row, to balance out input cost increases.

The silver lining: Demand rose across the UAE, hand-in-hand with an increase to new orders. With a swell of new work recorded in June, edging up to its highest level since 1Q. Businesses also saw export volumes tick upwards. As a result, output forecasts were sustained and purchasing activity was propelled forward.

And good news from Egypt: Egyptian non-oil business saw order volumes rise for the first time in three years supported by an easing of price pressures and stabilizing economic conditions, according to S&P Global’s Egypt PMI (pdf). Egypt’s headline purchasing managers’ index edged up to 49.9 in June, from 49.6 in May, settling marginally below the 50.0 mark and reaching its highest level in three years.

New orders increased in June, with more firms reporting a growth in demand for the first time since late 2021. Manufacturing and service sectors recorded an increase in new orders, while construction and wholesale & retail sectors reported declines. The upturn in sales and a jump in new export orders are attributed to an advancement in international and domestic conditions. Input purchases also grew in June, supported by the rising demand.

Output rates dropped at their softest level in almost three years, with price pressures “remaining much cooler,” said S&P Senior Economist David Owen. Suggesting that if we continue to see increased sales and purchases in the second half of the year, “firms should have the motivation and need to expand their output.”

Inflationary pressures on firms dropped in 2Q: Input costs jumped up, amid rising material prices, causing firms’ to modestly boost their output charges. Yet, input price inflation rates still remain significantly slower than Q1, a symptom of easing Egypt’s FX crisis.

Employment rates steadied, with some businesses opting to expand their workforce as new orders poured in. Nevertheless, many companies continued to report layoffs and non-replacement for those made redundant.

Sentiment remained upbeat in KSA + UAE: Saudi Arabia’s PMI underscores a promising outlook, Al-Ghaith says, with improving market conditions propelling market confidence. Firms in the UAE are also optimistic, banking on strong demand prospects to boost their input purchase volumes.

But Egypt is still iffy: Over in Egypt, confidence took a dip as businesses’ remain doubtful about future activity and economic prospects although “businesses appear to be heading on the road to recovery,” Owen said.

Stay tuned for our coverage of Kuwait, Lebanon and Qatar’s indices next week.

Dnata to provide ground services for Air India at Zurich Airport

Dnata ramps up activities at ZRH: Dubai-based airport services provider Dnata inked a multi-year contract with Air India to provide passenger, ramp, and baggage services for Air India’s four weekly flights between Zurich and Delhi at Zurich Airport (ZRH), according to a press release. Dnata will service over 200 flights annually. Neither the value nor the duration of the contract have been revealed.

IN CONTEXT- The contract comes as Air India returns to Zurich after a 27 year hiatus. The connection was resumed on 16 June with four direct flights between Delhi and Zurich using Boeing 787-8 crafts, according to a statement.

Dnata ? Swiss: Dnata is operating at airports in Zurich and Geneva, providing ground handling and cargo services to over 30 airlines, according to the statement. Between 2023 and 2024, Dnata handled over 12k flights, 2 mn passengers, and 26k tons of cargo at ZRH.

Dnata is active in Europe: Dnata inked an agreement with Swiss International Air Lines along with Lufthansa, Austrian Airlines, and Air Dolomiti back in May, to provide passenger and ramp services at Amsterdam Schiphol Airport. Dnata is also managing Turkish budget-airline Ajet’s ground operations in Switzerland for flights connecting Zurich and Geneva to Turkey’s capital Ankara.

REMEMBER- The company has been looking to expand its international footprint. The air services provider is holding talks with 40 companies and has a slew of international mergers and acquisitions in the pipeline.

Egypt and Iraq eye transport and infrastructure collaborations

Egypt’s interested in building Iraqi infrastructure: Former Egyptian Minister of Transport Kamel Al Wazir expressed Egypt’s readiness to collaborate with Iraq on road, bridge, and tunnel projects in a meeting with the Iraqi Ambassador to Cairo Qahtaan Taha Khalaf, according to a statement. The two sides discussed enhancing trade exchange and using the Arab Navigation Bridge for transport via the Aqaba/Nuweiba line to Egyptian Mediterranean ports and onward to Europe. A possible MoU for passenger and goods transport is being considered to boost trade.

Maritime and rail updates from Egypt and the UAE

SHIPPING + MARITIME-

SCZone’s waste management initiative kicks off: The Suez Canal Economic Zone (SCZone), Antipollution Egypt, and the Egyptian Company for Supplies have signed a contract to provide waste management services at the northern entrance of the Suez Canal, according to a statement. The contract also includes supervision of waste disposal by Antipollution Egypt and recycling marine waste. The efforts will be expanded to the South entrance.

In the works for a while: News of the initiative broke last April regarding a new waste management system aimed at reducing waste dumping from ships. The system will ensure no ship crosses the canal with solid or liquid waste onboard. The Egyptian Marine Supply and Contracting company — affiliated with the Ministry of Transport — will oversee contractors hired to collect waste from the passing ships and provide a legal umbrella for its handling.

About Antipollution Egypt: SCZone and Greek waste management company Antipollution — a subsidiary of marine services company V Group — agreed to form the joint stock company last March to establish a waste treatment plant in Egypt’s SCZone. The waste treatment facility will process fluid and soluble waste collected from vessels transiting through the Suez Canal to be repurposed as part of Egypt’s efforts to boost its blue economy.

RAIL-

DP Word boosts rail capacity at London Gateway by 50%: The UAE’s DP World has inaugurated two new USD 12 mn rail-mounted gantry (RMG) cranes at its London Gateway rail terminal, which will boost the volume of freight carried to and from the terminal by rail, according to a statement. The cranes, which will go into operation in mid-August, have a lifting capacity of 41 tonnes and are set to expand box handling capacity by 75% at the terminal. The move also seeks to reduce supply chain carbon emissions by relying more on rail to ease congestion on roads. The cranes will be used to handle cargo at the London Gateway’s new GBP 350 all-electric berth set to open later this year.

LOGISTICS HANDLING-

Aramex to offer special logistics services for businesses in the Dubai Chamber of Commerce: Dubai-based logistics firm Aramex inked an MoU with Dubai Chambers to offer comprehensive logistics services for businesses registered with the Dubai Chamber of Commerce, according to a statement. No further details were provided on the type of services covered in the packages.

Emirates Post is getting more branches: Emirates Post, the postal arm of 7X and the UAE's official postal services provider, plans to expand its network of 87 outlets by opening new branches, Wam reports. Meanwhile, EMX, 7X’s courier and parcel arm, plans to expand its reach by adding new destinations. EMX operates a fleet of more than 600 couriers and ten delivery centers. 7X was formerly known as Emirates Post Group before its rebranding earlier this year.

Norway’s DOF snaps up Maersk Supply Service + EU considers imposing customs to curb cheap Chinese retail

Norwegian supply shipping company DOF Group will acquire Maersk Supply Service from Maersk Supply Service Holding (MSSH) in a USD 1.1 bn cash and stock transaction, Reuters reports. DOF will pay USD 577 mn in cash and issue new shares, with MSSH gaining 25% ownership in DOF. The acquisition will be executed through a new subsidiary, DOF Offshore Holding Denmark, and is expected to close in 4Q 2024. The transaction will be financed by a USD 500 mn debt facility and up to USD 125 mn in equity.

The EU plans to impose customs duties on inexpensive goods from retailers including Chinese online retailers Temu, Shein, and AliExpress, Reuters reports, citing a Financial Times exclusive. The European Commission will propose scrapping the current EUR 150 duty-free threshold for online purchases from outside the EU later this month, sources told the FT.

Why the change? 2 bn parcels valued under EUR 150 were shipped to the EU last year, straining customs resources, according to the European Commission, which says that “the sheer volumes of e-commerce are testing customs' limits.” The EU has been discussing abolishing the limit since May 2023, but could look to speed up its adoption in light of the surge in cheap imports from China.

Adding fuel to the fire: Shein and Temu have also been driving up freight rates by buying up a significant portion of aircraft space. This is adding to market concerns of a capacity overload during the peak festive season this year. Air freight prices out of Asia rose by some 40% y-o-y in June, a season that is usually slow ahead of the end-of-year holiday rush.

Calendar

JULY

10-11 July: (Wednesday-Thursday): Global EV & Mobility Tech Forum, Riyadh, Saudi Arabia.

14 July (Friday): AI Integration and Autonomous Mobility, Berlin, Germany.

AUGUST

21-22 August (Wednesday-Thursday): Rex Fuels Global Expo & Conference 2024- Bitumen, Petrochemicals & Products, Dubai, UAE.

SEPTEMBER

2-4 September (Monday-Wednesday): Saudi Warehousing & Logistics Expo, Riyadh, KSA.

3-5 September (Tuesday-Thursday): Egypt International Airshow, El Alamein, Egypt.

10-11 September (Tuesday-Wednesday): SkyMove MENA, Riyadh, KSA.

18-19 September (Wednesday-Thursday): Saudi Maritime & Logistics Congress, Dammam, KSA.

23-25 September (Monday-Wednesday): WorldFreezonesOrganization’s Annual International Conference and Exhibition (AICE) , Dubai, UAE.

23-26 September (Monday-Thursday): Freight Summit 15th Global Conference, Dubai, UAE.

25-26 September (Wednesday-Thursday): Global Aerospace Summit, Abu Dhabi, UAE.

30 September - 2 October (Monday-Wednesday): African & Middle East & Islamic Finance Aviation 100 Awards, Dubai, UAE.

OCTOBER

6-8 October (Sunday-Tuesday): Routes World 2024, Bahrain.

8-10 October (Tuesday-Thursday): The Global Rail Transport Infrastructure Exhibition and Conference(Global Rail), Abu Dhabi, UAE.

7-9 October (Monday-Wednesday): AFSIC – Investing in Africa, London, UK.

8-10 October (Tuesday-Thursday): AntwerpXL Expo, Antwerp, Belgium.

13 October (Sunday): International Transport Workers’ Federation (ITF) Congress, Marrakesh, Morocco.

16-17 October (Monday-Tuesday): Global Airport & Aviation Forum, Jeddah, Saudi Arabia.

21-22 October (Monday-Tuesday): Smart Ports & Logistics Transformation Summit, Riyadh, Saudi Arabia.

22-24 October (Tuesday-Thursday): Asean Ports and Logistics, Johor, Malaysia.

22-24 October (Tuesday-Thursday): Global Ports Forum, Singapore.

26-27 October (Saturday-Sunday): International Conference on Tourism, Transport, and Logistics, Dubai, UAE.

NOVEMBER

11-12 November (Monday-Tuesday): World Advanced Manufacturing Logistics Summit & Expo, Riyadh, Saudi Arabia.

11-12 November (Monday-Tuesday): Saudi Airport Exhibition, Riyadh, Saudi Arabia.

11-14 November (Monday-Thursday): ADIPEC Maritime and Logistics Exhibition and Conference, Abu Dhabi, UAE.

13-15 November (Wednesday-Friday): The Bahrain International Airshow, Sakhir Airbase, Bahrain.

18-20 November (Monday-Wednesday): The Heavy Equipment and Truck Show, Damman, Saudi Arabia.

19-21 November (Tuesday-Thursday): Saudi International Maritime Forum, Dammam, Saudi Arabia.

18-19 November (Monday-Tuesday): G20 Summit, Rio de Janeiro, Brazil.

20-21 November (Wednesday-Thursday): Saudi Rail Exhibition, Riyadh, Saudi Arabia.

DECEMBER

2-3 December (Monday-Tuesday) Wings of Change Middle East, Riyadh, Saudi Arabia.

10-11 December (Tuesday-Wednesday): Rail Industry Summit, Casablanca, Morocco.

10-12 December (Tuesday-Thursday): Middle East Business Aviation, Dubai, UAE.

20 December (Wednesday): The Iran-Senegal Joint Economic Cooperation Commission, Dakar, Senegal.

EVENTS WITH NO SET DATE

IATA Annual General Meeting (AGM) and World Air Transport Summit, New Delhi, India.

1H 2024: Civil Construction subcontracts for construction firms in Oman for implementation of the Abu Dhabi - Suhar rail link to be announced.

2H 2024: Bahri’s barges for Saline Water Conversion Corporation (SWCC) to begin initial and commercial operation.

King Salman Energy Park is set to become operational.

The Cross-Border Digital Trade Forum, Dubai.

2025

APRIL

16-17 April: Global Ports Forum, Dubai, UAE.

Mid-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.

AD Ports-operated Safaga Port’s multi-purpose terminal will become operational.

Phase 3 of APM Terminals Tangier MedPort to be complete and operational.

1Q 2025: Sadr Park’s Logistics Center in Riyadh to be completed.

1Q 2025: Phase twoof Jafza Logistics Park to be completed.

2026

2026 UNCTAD Global Supply Chains Forum, Saudi Arabia.

2027

4Q 2027: Oman’s Musandam Airport construction to be completed.

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Egypt and Iraq eye transport and infrastructure collaborations

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Dnata to provide ground services for Air India at Zurich Airport

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TODAY: PMIs are in for KSA, UAE and Egypt + Dnata expands European footprint

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KSA and UAE non-oil private sector activity softens in June while Egypt experiences growth

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Dnata to provide ground services for Air India at Zurich Airport

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Egypt and Iraq eye transport and infrastructure collaborations

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Maritime and rail updates from Egypt and the UAE

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Norway’s DOF snaps up Maersk Supply Service + EU considers imposing customs to curb cheap Chinese retail

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