Emirates orders more Boeing 777s despite delivery delays

1

What we're tracking today

TODAY: Emirates orders more Boeing 777s despite delivery delays + More warehouse space Abu Dhabi Airports Freezone

Good morning, folks. We have a compact issue this morning with updates across the regional logistics sector from aviation to warehousing to the beginning of our 3Q earnings report recap.

BUT FIRST- Please join us in extending our heartfelt sympathies to the Allam family on the passing of May Allam, beloved sister of our friends Hassan and Amr Allam, the CEOs of Hassan Allam Holding, and of Mariam. May (1991-2024) passed after a long and courageous battle with cancer. She was a remarkable woman whose grace, resilience, and courage touched all of those who knew her. May she rest in peace.

WATCH THIS SPACE-

#1- Egypt has plans for Fayoum’s industrial zones: Egypt’s Minister of Industry and Transport Kamel El Wazir has directed the Industrial and Mining Projects Authority to conduct feasibility studies to develop infrastructure at the North Fayoum Industrial Zones, according to a statement. Plans are said to include the addition of a cargo slipway or dry ports at high-speed rail stations situated near industrial zones to streamline the transportation of goods. Egypt’s Land Transport Regulatory Authority — in coordination with the Fayoum governorate and Ministry of Interior — has also been directed to develop regular transport lines to and from existing industrial zones in Fayoum.

IN OTHER EGYPT NEWS- Alexandria ports to see increase in freight rates: The Association of Local Car Owners and Transport Offices at Alexandria and Dekheila Ports is raising freight rates by 20% on the back of the hike in fuel prices by 8-17%last Friday, Al Mal reports. A number of land freight service providers also raised shipping rates by 20%.

Transportation and logistics platforms are also adjusting their fees, with Al Mal reporting that a number of sector companies are preparing to hike prices 7-10% across the board to preserve profit margins.

SAY IT AIN’T SO- Feerum Egypt hasn’t backed out of the grain silo factory: The Egyptian arm of the Polish grain silo manufacturer Feerum has not withdrawn its investment from its planned EGP 1.6 bn grain silo project with Egyptian construction and engineering firm Samcrete and the state-owned Egyptian Holding Company for Silos and Storage, Feerum board member Ahmed El Mofty told Al Borsa. He added that the company is set to hold a meeting with Supply Minister Sherif Farouk next Sunday to get final approval for its grain silo manufacturing plant in East Port Said.

The backstory: Earlier this week, Al Mal reported that Feerum would be pulling out of its grain silo project after the Supply Ministry canceled an order for a silo, reportedly hampering negotiations with local banks over financing. The company had been in talks with the Commercial International Bank, Banque Misr, the National Bank of Egypt, and First Abu Dhabi Bank to secure an EGP 1.8 bn loan to help fund the factory, which is set to cost EGP 2.3 bn.

#2- Sudan to resume export of South Sudanese oil: Sudan will resume exporting oil from its landlocked neighbor South Sudan, but no timeline has been revealed, Bloomberg reports, citing a government statement released earlier this week. The pipeline across Sudan previously transported over 150k barrels of crude oil to the Red Sea coast before halting operations back in February due to a blockage caused by gelling in the line.

#3- Newbuild vessel prices have risen 52% since 2020 on the back of strong order volumes, inflationary pressures at shipyards, and firm forward cover, Splash reports, citing a report by Clarksons Research’s Newbuilding Price Index. The average price of newbuilds has jumped to USD 90 mn per vessel, some 30% above the previous high in 2022. Prices have surged to highs not seen since their peak in 2008, with boosted container and LNG vessel order activity in 2021 and 2022 putting pressure on shipyard capacity and building. The orderbook-to-fleet ratio for tankers has risen by 180% as of September this year, with bulk carriers growing by 43% and gas carriers increasing by 29%. The expansion of green technology, a high value product mix, and a larger average size of ships on order have pushed up the market price of ships. The average size of ships on order this year is up 40% to 54k gt on the 10-year average.

#4- Airbus is set to outpace Boeing in terms of deliveries in the next 10 years, according to a recent Aviation Week Commercial Fleet and Maintenance Repair and Overhaul forecast report. Nearly 22k new commercial aircraft deliveries are slated to take place over the next 10 years, with deliveries of Airbus’s A320neo expected to overtake Boeing’s 737 Max. Airbus is forecasted to make up over 50% of the new deliveries at 11.2k new aircraft, whereas Boeing is expected to deliver some 40% at 8.8k.

The bigger picture: The two top aircraft manufacturers will maintain their dominance over the market, accounting for some 91% of all new aircraft deliveries between 2025 and 2034. MRO demand is expected to rise by 3.2% annually to hit USD 1.4 tn. The integration of increased use and longer-lived engines is forecasted to result in over 95k overhaul instances over the next 10 years, amounting to USD 557.6 bn in demand for engine shop visits.

MARKET WATCH-

#1- Oil prices fell in early morning trading as demand slowed in China and calls for a ceasefire in the Middle East continue, Reuters reports. Brent crude futures for December fell USD 0.26 to USD 74.03 a barrel by 00.46 GMT, while US West Texas Intermediate (WTI) futures for November slipped USD 0.02 to USD 70.54 a barrel. The more active WTI futures for December lost USD 0.23 to USD 69.81 per barrel. Both futures closed nearly 2% higher yesterday regaining some of last week’s losses as the market continues to brace itself for further fallout and escalated regional tensions as Israel weighs its retaliation against Iran.

#2- Baltic index continues its decline: The Baltic Exchange’s dry bulk sea freight index — which tracks rates for the capesize, panamax, and supramax vessel segments — dropped 1.9% to 1,546 points on Monday, registering at its lowest reading since early February. The capesize index lost 85 points to 2,191 points, while the panamax index fell a further 7 points to 1,278 points. The smaller supramax remained steady at 1,250 points.

***YOU’RE READING EnterpriseAM Logistics, the essential MENA publication for senior execs who care about the industry that connects producers and retailers to global markets. We’re out Monday through Thursday by 9:15am in Cairo and Riyadh and 11:15am in the UAE.

EnterpriseAM Logistics is available without charge thanks to the generous support of our friends at Hassan Allam Utilities, Transmar, and AK-Ships.

Were you forwarded this email? Tap or click here to get your own copy of Enterprise Logistics.

Want to send us a story idea, request coverage, ask for a correction, or otherwise get in touch? Reach out to us on logistics@enterprisemea.com.

DID YOU KNOW that we also cover Egypt, Saudi Arabia, the UAE, and the MENA climate industry ?
***

CIRCLE YOUR CALENDAR-

The UAE will host the International Conference on Tourism, Transport, andLogistics on Saturday, 26 October and Sunday, 27 October in Dubai. The event will gather scientists, scholars, and engineers from around the world to discuss new ideas and research development projects in the industry.

Saudi Arabia will host the Saudi Airport Exhibition on Monday, 11 November and Tuesday, 12 November in Riyadh. The two-day exhibition will bring together global industry leaders to discuss the latest technologies around the world in the aviation industry. It looks to encourage discussion between Saudi aviation leaders and the global supply chain industry.

The UAE will host the ADIPEC Maritime and Logistics Exhibition and Conference on Monday, 11 November and Thursday, 14 November in Abu Dhabi. The event looks to explore ways to reduce emissions through innovative solutions. It will bring together industry leaders, regulators and decision makers in the global maritime and logistics sector.

Bahrain will host The Bahrain International Airshow on Wednesday, 13 November and Friday, 15 November near Awali. The three-day event is bringing together over 180 participating companies from over 59 represented nations globally.

Egypt will host the Autotech Exhibition on Sunday, 17 November until Tuesday, 19 November in Cairo. The event will bring together prominent local and international companies to discuss and evaluate the latest developments and trends in the automotive aftermarket and feeder industries.

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

Emirates places new order for Boeing 777s despite delivery delays

Emirates has ordered five additional Boeing 777 freighters to be delivered in 2025 and 2026, bringing its total orderbook for the freighter model to 21, according to a statement. The investment ticket for the order has not been disclosed. The airline is looking to boost its freighter capacity and will continue with plans to convert 10 passenger Boeing 777-300ERs into freighters, says the statement.

It doesn’t end there: The UAE airline has also inked a multi-year lease extension for four Boeing 777s in its current fleet with aviation services firm Dubai Aerospace Enterprise, the statement said. Based on the two investments, Emirates Skycargo is slated to double its existing fleet of 11 units to 21 production-built Boeing 777s by December 2026.

Air cargo demand is booming: “We’re investing into new freighter aircrafts to meet surging demand and provide our customers around the world with even more flexibility, connectivity, and options to leverage market opportunity,” Emirates Chairman and Chief Executive Ahmed bin Saeed Al Maktoum said in the statement. This aligns with the UAE’s plans to invest AED 128 bn to boost capacity to process 12 mn tonnes of cargo at Al Maktoum International Airport and support the growth of adjacent logistics district Dubai South, according to the statement.

Not just regionally: Air cargo consistently outperformed alternative modes of transport and is slated to grow by two-thirds by 2043, supporting the 4.1% annual growth in air cargo traffic. Over 1k freighter jets are slated for new delivery over the next 20 years.

Background: Emirates’ cargo arm Emirates SkyCargo placed a USD 1 bn order for five Boeing 777 freighters, slated for immediate delivery between 2025 and 2026 back in July. Once operational, the new orders will boost the airline’s main deck cargo capacity by 30%.

Boeing dominates the market: The aircraft manufacturer supplies over 90% of dedicated freighter capacity globally, with the 777 freighter being its top-selling of all time, according to a statement. Boeing expects some 2.8k additional freighters to enter service over the next 20 years to meet the rising demand from global trade and e-commerce.

A rocky relationship: Emirates President Tim Clark slammed Boeing last week for its 777x delivery delays, saying that his company plans to have “serious conversations” with the aircraft manufacturer in the coming months. The airline has “had to make significant and highly expensive amendments to [its] fleet programmes as a result of Boeing’s multiple contractual shortfalls,” Clark stressed. “I fail to see how Boeing can make any meaningful forecasts of delivery dates.”

Ongoing delays: Boeing pushed back delivery dates of its new 777x aircrafts earlier this month, with first delivery of its 777-9 airplane forecasted to be in 2026 and its 777-8 freighter aircraft in 2028. Delivery delays have been attributed to setbacks in flight testing for the individual aircraft models and a labor strike at the company. Clark predicted back in July that Boeing’s 777X aircraft would not enter commercial services before 2026, and that he “would not take kindly” to further delays caused by a growing backlog of orders.

Nevertheless, expansion is on the horizon: Emirates’ air freight division plans to further increase its capacity with 15 freighters by 2025 through new deliveries and its freighter conversion program. It also aims to boost its fleet to more than 300 aircraft by mid-2030, while planning to add 20 new destinations to its freighter network.

Radius + Abu Dhabi Airports Freezone expand warehouse capacity

Abu Dhabi Airports Freezone (ADAFZ) inked a musataha agreement with Radius Group to develop a AED 320 mn warehouse complex in the Al Falah District, according to a statement. The project, spanning 140k square meters, will offer over 90k square meters of premium warehouse space and is expected to be completed in two years.

Why is this important? ADAFZ is looking to meet the rising demand for high-quality light industrial space in the UAE to boost trade and FDI flows. Radius Group will install cutting-edge climate control systems, energy-efficient light, security features, and adaptable storage solutions at the warehouse sites.

ADVISORS- Knight Frank Mena’s Industrial & Logistics division advised Radius on the land lease process.

Rising demand: Abu Dhabi’s warehouse market has been absorbing spillover demand from Dubai and is accelerating the development of new leasable spaces. ADAFZ plans to develop new warehouses on an area of over six square km at Al Falah Free Zone. The first phase of the project includes a 16k sqm temperature-controlled Grade A warehouse, built within a 30k sqm plot, slated for delivery in 2025.

Other projects in the pipeline: Radius Group partnered with Knight Frank MENA to launch the Radius City Logistics project at Dubai Investment Park 2 back in July. Commissioning and tenant access for the project — Radius Group’s first in the UAE — is expected by August 2025.

About Radius Group: Founded in 2006, Radius Group is a global development company specialized in warehousing and industrial real estate. The firm, which opened its Dubai office in 2023, was the first developer in its market to obtain BREEAM and LEED certifications.

Abu Dhabi plans to offer subsidies to agrofood producers in a bid to boost exports

Abu Dhabi plans to offer subsidies to local and international agrifood producers in a bid to become a “net exporter in the future,” head of Abu Dhabi Investment Office’s (ADIO) food and water division Fatima Al Dhaheri told Bloomberg. The subsidies will cover everything from livestock and fish farming, to alternative proteins and algae, and will be offered on a case-by-case basis, Al Dhaheri explained.

Subsidies are not all that’s planned: The government could also move to invest directly in some businesses. The investment office will also work with companies to use tech that can boost efficiency in food production, such as desalination, Al Dhaheri added.

Becoming a net exporter is within reach, experts say, despite the UAE currently importing 85-90% of its food, according to the climate change and environment ministry (pdf). The government has “already been very proactive in terms of having greater control and scaling up supply chains,” said Christian Henderson, a lecturer on Middle East studies at Leiden University in the Netherlands.

Nakilat’s bottom line up 7.2% y-o-y in 3Q 2024

Qatari shipping and maritime company Nakilat saw its bottom line grow 7.2% y-o-y to QAR 1.28 bn (c. USD 351.6 mn) in 3Q 2024, according to a press release. The shipping firm’s revenues dipped 0.4% y-o-y to QAR 3.29 bn, driven by lower income from joint venture shipyard and LNG vessels, but this was offset by higher results from wholly owned vessels, lower depreciation, and lower finance costs, according to the company’s IR presentation (pdf).

Expanding its portfolio: The firm attributed its performance to efforts to boost operational efficiency, including forging strategic partnerships and fleet modernization. Nakilat has been working on expanding its fleet, placing a new order back in January for six advanced gas vessels from Hyundai Samho Heavy Industries. The firm’s fleet will reach 114 ships upon delivery of the ships on-order. QatarEnergy and Nakilat also inked a time-charter party agreement in March for the operation of 25 conventional size LNG vessels as part of the second ship-owner tender under QatarEnergy’s LNG Fleet Expansion program. They also inked a long-term agreement in May to charter and operate nine QC-Max LNG ships.

On a roll: Nakilat saw a 7% y-o-y increase in its bottom line to QAR 829 mn in 1H 2024 while bringing in QAR 2.29 bn in revenues in the same period.

What’s next? Nakilat said it intends to snap up an additional 20% stake in Qatar Shipyard Technology Solutions last June. The development comes after Nakilat’s partner in the JV, KSI Investments Limited, expressed willingness to exit the investment and offload its stakes. Nakilat currently holds majority voting rights and a 79% share in the JV, and has expressed willingness to uptake KSI’s minority stake.

Trade, cargo, warehousing, and roads from Egypt, the UAE and Oman

TRADE-

A boost for Egyptian exports: Raya Food’s parent company Raya Holding will direct USD 20 mn of Helios Investment Partners’ USD 40 mn bid for 49% of the subsidiary towards building a second factory partly dedicated to freeze-dried fruits and vegetables in Egypt, Raya Holding CEO Ahmed Khalil told Al Arabiya (watch, runtime: 4:07).

All part of a bigger plan to increase exports — and in turn FX revenues: The plan is to turn the company from the country’s second-largest frozen produce exporter — with an annual production capacity of 50k tons — to the country’s largest, the company said in a statement (pdf) released earlier this week. The new factory will most likely be set up next to its existing factory in Sadat City, according to Khalil — and its use of freeze-drying produce will play an important role in helping the company boost exports.

Expansion and export are also on Domty’s agenda: EGX-listed dairy company Domty has plans to invest EGP 200 mn next year, with a focus on the baked goods sector and expanding exports, CEO and Vice Chairman Mohamed El Damaty told Al Mal. The investments will follow EGP 150 mn already invested so far in 2024, El Damaty added. Domty is in negotiations over a 25k sqm land plot adjacent to its factories in Sixth of October to accommodate its planned expansion.

It’s been a big month for Domty: Danish Arla Foods was given the go-ahead earlier this week by Domty’s board to conduct due diligence for its bid to acquire up to 100% of the local cheesemaker in a transaction that valued the company at some USD 183 mn. A full takeover seems unlikely, however, with Arla expecting the founding El Damaty family to keep a stake in the company, with El Damaty to continue to lead the company as CEO.

CARGO-

Egypt plans to set up a cargo city: The Egyptian government is planning to establish a cargo city — dubbed Cairo Cargo City — that will double the volume of goods transported, Asharq Business reports, citing comments made by Egypt’s Civil Aviation Minister Sameh Elhefny.

Remember: Chinese state-owned construction firm and China Energy subsidiary Gezhouba Group proposed establishing a “logistics cargo city” at Cairo International Airport during a meeting with the Aviation Ministry in September.

DIGITALIZATION-

Adnoc using AI to optimize operations: The Abu Dhabi National Oil Company (Adnoc) Distribution is developing more than 20 tools powered by artificial intelligence (AI) to optimize its operations, CEO Bader Al Lamki told The National on the sidelines of Gitex Global 2024. The firm is also utilizing AI and analytics to determine locations for building new stations, which includes analyzing traffic conditions and demographics. The AI-powered tools are also helping Adnoc optimize the stock movement at its convenience stores to help customers and allow the firm to tailor needs and respond to trends. Adnoc aims to roll out a new generation of AI-powered self service checkout kiosks at its stores, which can recognize products fast and help complete transactions in less than 30 seconds.

STORAGE + WAREHOUSING-

Chery opens spare parts warehouse in UAE: Chinese automotive manufacturer Chery has opened a new parts warehouse in the UAE — its largest in the region — to boost after-sales support for its regional customer base, according to a statement. The facility, covering 12k sqm, is a 15-minute drive from both Jebel Ali Port and Al Maktoum International Airport. The warehouse’s inventory covers over 20k different varieties of components.

ROADS-

Oman to launch road rehabilitation projects: Oman’s Transport Ministry has inked two agreements to improve road infrastructure in Dakhiliyah governorate, according to a statement. The first agreement aims to complete the Saih Qatna project in Wilayat Al Jabal Al Akhdar, which aims to enhance traffic movement. The other agreement seeks to rehabilitate the Bidbid-Nizwa Road, fixing damaged sections of the 100 km dual carriageway.

OTHER STORIES WORTH KNOWING THIS MORNING-

Gulf Air to expand Singapore route: Bahrain’s national carrier Gulf Air will increase its direct flights from Bahrain International Airport to Singapore International Airport to seven weekly flights from the current three by the end of October. (Bahrain News Agency)
IAG Cargo to bring back London-Jeddah service: International Airlines Group’s (IAG) cargo division, IAG Cargo, is launching a six-time weekly service between London Heathrow Airport and Jeddah King Abdulaziz International starting 2 November 2024. (Statement)

Boeing’s proposed wage hike could cost over USD 1 bn

Boeing’s proposed strike settlement could leave firm with USD 1 bn bill: Boeing’s proposed contract to settle its labor strike would have it shell out over USD 1 bn in wage-related expenses, although its shares inched up 3% on Monday on hopes of an end to the crippling strike saga, analysts told Reuters. Some 33k workers are expected to vote on the contract proposal on Wednesday. Seth Seifman from JP Morgan estimates that wage increases could raise Boeing’s costs by over USD 1 bn, while Sheila Kahyaoglu from Jefferies put the number at around USD 1.3 bn.

It’ll take a while to turn the ship around: Even if the new contract is approved by members, the manufacturer will still need to quickly ramp up production to pre-strike levels once workers come back. “Based on our analysis of prior Boeing strikes, it has taken an average of 6-12 months after the conclusion of the strike for production rates to return to pre-strike levels. Moreover, the impact the strike has had on the already fragile supply chain is uncertain,” RBC Capital Markets analysts said.

What’s Boeing’s proposal? Boeing has reached a tentative agreement to offer striking machinists a 35% pay bump over the course of four years as the airline giant seeks to put an end to a five-week-long strike that has crippled production of some of its more popular aircraft. The offer includes a one-time USD 7k ratification bonus and increased employer contributions to worker retirement accounts, but is lower than the union’s targeted 40% pay bump and does not include the reinstitution of defined benefit pensions, another of the union’s key demands.

ICYMI- Boeing took its 30% pay raise offer off the table last week in union negotiations after the talks reached a stalemate yet again. The strike is taking place at Boeing’s 737 Max Jets production hub. This has worsened the company’s already existing supply chain issues and delivery delays, pushing them to stop issuing purchase orders for the 737, 767 and 777 jets to preserve the company’s credit rating.

Calendar

OCTOBER

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.

13-15 November (Wednesday-Friday): ITC North-South – New Horizons, Astrakhan, Russ

17-19 November (Sunday-Tuesday): Egypt 2024 Autotech Exhibition, Cairo, Egypt.

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

FEBRUARY

4-5 February (Tuesday-Wednesday): Seatrade Maritime Qatar, Doha, Qatar.

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.

NOVEMBER

4-6 November: The International Air Cargo Association TIACA’s Air Cargo Forum 2025, Abu Dhabi, UAE.

2026

2026 UNCTAD Global Supply Chains Forum, Saudi Arabia.

2027

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

Sections

About

Privacy & Support

Get EnterpriseAM daily