Agility to draw down EUR 1.3 bn in hedging agreement

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What we're tracking today

TODAY: Saudi Arabia is on a Latin American roadshow + new maritime ESG index coming this September

Good morning, lovely people. We have a tight issue for you this morning, with a couple of interesting stories coming out of the UAE and Kuwait.

THE BIG LOGISTICS STORY- Kuwaiti logistics outfit entered a multi-year derivative transaction with several major banks to hedge its investment in Danish global freight forwarder DSV for the second time this year. Over in the UAE, China’s GAC Motors has inaugurated a car parts distribution center to slash order cycle times for MENA customers.

HAPPENING TODAY-

Burning car carrier saga continues: A burning cargo ship carrying cars off the Dutch coast is being towed to a temporary site away from shipping routes, Reuters reports, citing Dutch authorities. The towing operation was set to begin earlier but had to be put off due to unfavorable winds.

ICYMI- The Panama-flagged Fremantle Highway had just left Germany and was en route to Egypt when a fire erupted on board, killing one crew member and injuring several others. The fire — which has since died down significantly, officials say — could have started in the battery of an electric car, Dutch broadcaster RTL reported.

KSA on Latin American roadshow: Saudi Investment Minister Khalid Al Falih isheading a high-level delegation to seven Latin American countries to strengthen economic relations, Saudi Press Agency (SPA) reports. The delegation kicked off the trip — which will run until 9 August — in Brazil yesterday with the goal of drumming up investments in Saudi Arabia’s mining, food processing, agriculture, transport and logistics, healthcare, entertainment, pharma, and biotechnology sectors, SPA said. The delegation will later head to Chile, Costa Rica, Argentina, Panama, Paraguay, and Uruguay.

WATCH THIS SPACE- ESG Index for maritime sector unveiled: Two maritime academic institutions — the University of Plymouth and the National and Kapodistrian University of Athens — have developed an ESG reporting framework and index for the maritime sector in collaboration with an advisory committee of industry experts, according to Assafina Online. The index, based on extensive global research spanning three years, aims to fill the gap in credible benchmarking in the industry and help shipping companies adhere to upcoming stricter ESG reporting requirements. It is based on an assessment of over 70 shipping companies. The official launch of the index will take place at London International Shipping Week 2023, which kicks off on 11 September.

DATA POINT #1- Oman’s civil aviation sector is approaching pre-covid operation levels, with airports running at 70% of pre-pandemic capacities, Zawya reports. Aircraft traffic increased 28.4% y-o-y to 9.8k flights during 1H 2023, while forecasts for the upcoming months suggest traffic will exceed 2019 activity levels. Oman is gearing up to introduce Oman Air — its new national carrier — to new destinations, President of CAA Naif bin Ali Al Abri said.

More air transport agreements coming? Oman’s Civil Aviation Authority has signed several air transport agreements over the past few years, including with the EU and Belarus. “Negotiations are underway with several countries, with the total number of agreements already standing at 122, including 66 open skies agreements,” Abri said, adding that the coming months could see more agreements signed.

DATA POINT #2- Turkey’s airports received 1.8 mn tons of cargo in 1H 2023, up 1.6% y-o-y, Turkey’s Transport and Infrastructure Minister Abdulkadir Uraloğlu said in a statement. This marks the beginning of an upward trend, and Turkey aims to boost air cargo operations by 6% by year’s end, he added. Uraloğlu cited speed, safety, and smoother customs procedures as drivers for increased demand for air freight, according to the statement.

DATA POINT #3- Saudi Arabia’s air traffic increased 43% y-o-y in 1H 2023, registering 403k flights during the period, state run Saudi Air Navigation Services (SANS) said in a statement. June in particular saw high numbers, the company added. Total domestic and international flights to the kingdom came in at 305.2k, 27% higher than the same period last year, while transit flights rose 25% y-o-y to 98k. The number of destinations served also increased 15% when compared to 1H 2022, settling at a little below 7.2k, according to SANS’ figures.

CIRCLE YOUR CALENDARS- The Enterprise Finance Forum is taking place on 18-19 September at the St. Regis Hotel in Cairo. This flagship forum is the latest in our must-attend series of invitation-only, C-suite-level gatherings that allow senior members of our community to openly and frankly discuss critical issues in key sectors of the economy.

TAP OR CLICK HERE if you want to express interest in attending. We’ll be sending out the first batch of invitations soon.

Do you want to become a commercial partner? Ping a note to Moustafa Taalab, our head of commercial, or fill out this form and we’ll be in touch.

LISTEN TO OUR PODCAST-

DID YOU MISS THE ENTERPRISE EXPORTS AND FDI FORUM? Tune in to the EnterprisePodcast and listen for yourself: The Enterprise Podcast is back with another installment of our forum series, where we bring you audio recordings of what was said on stage at the Enterprise Exports and FDI Forum,which took place in May.

IN THIS WEEK’S EPISODE- We look at whether industrial clusters — which have been used to great effect elsewhere — can be a way for SMEs to be part of a potential export-oriented economy. Our speakers shed light on where industrial zones are working for us already, how Egypt can leverage clusters to get a bigger slice of that cross-border trade, and how industrial clusters can bring together SMEs to work with larger firms. We were joined on that panel by Shady Williams, managing director of IDG, Mohamed ElGebely, team leader at USAID Trade, and Nada El Ahwal, CSO of Transmar.

WANT TO LISTEN? Head to: Apple Podcast | Spotify | Google Podcast. We’re releasing a new episode every Sunday morning.

CIRCLE YOUR CALENDAR-

The UAE’s Finance Ministry is holding a digital public consultation on its website that began last week and runs until tomorrow,as part of the UAE’s corporate tax freezone regulations,Emirati news agency WAM reports.The consultation aims to gather feedback from freezone-based companies, WAM added.

Iranian Foreign Minister Hossein Amirabdollahian is planning to visit Pakistan on Thursday, Tasnim news agency reported, citing Pakistani daily The Nation. Amirabdollahian is expected to meet with his Pakistani counterpart Bilawal Bhutto Zardari and other Pakistani officials during the two-day visit.

The next edition of the World Freezones Organization’s Annual InternationalConference and Exhibition(AICE) will be taking place on the 19-21 June 2024 in Bari, Italy, coinciding with the G7 summit taking place in Puglia. The event serves as a platform for dialogue and collaboration on topics such as freezones, advancements in artificial intelligence, digital transformation, and ESG objectives within the framework of the Global Alliance of Special Economic Zones, WAM reports. It will bring together key stakeholders to discuss how freezones can boost trade and drive economic growth, WAM added.

The Global Pharma Logistics Summit 2023 will take place on 12 September at ITC Maratha in Andheri East in Mumbai, India. The one-day conference will bring together pharma companies and their logistics service providers to discuss trends transforming the industry’s future, and how they can work together to build a reliable global pharma supply chain.

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

Agility hedges DSV investment with EUR 1.3 bn equity collar in the second transaction of the type this year

Agility to draw down some EUR 1.3 bn from hedging agreement:Kuwait’s Agility has entered into a derivative transaction with Morgan Stanley, Citibank, National Association, and HSBC, to hedge its investment in Danish global freight forwarder DSV for the second time this year, the company said in a statement. Agility will be able to begin drawing down up to EUR 1.3 bn within a few weeks, according to the statement. Enterprise Logistics was unable to receive a comment from company representatives ahead of dispatch time.

The details: The company is set to receive EUR 1.3 bn of relatively “cheaper liquidity” as the agreement is funded for 8 mn of Agility’s shares in DSV, which amounts to a 4% stake. This in turn is expected to strengthen Agility’s balance sheet, the statement said. The collar agreement will be accounted as a fair value hedge, and be reflected in Agility’s financial statements at fair value through comprehensive income.

Background: Agility is DSV’s second largest shareholder, with an 8.8% stake in the company. The logistics giant purchased the stake when it sold its subsidiary, Global Integrated Logistics (GIL), to DSV in an all-share agreement in 2021. Agility moved to hedge its investment in DSV in April via another funded equity collar agreement that saw the company rake in EUR 1 bn of relatively cheap liquidity.

What’s a collar agreement, you ask? It’s a form of derivative where the investor sells a call option on a long stock position and buys a protective put option at the same time. It protects against downside risk in share price by creating a range of values (the “collar”) within which the asset can trade during a specific time period.

The rationale: “Given continued market uncertainty and the significance of the DSV stake on Agility’s overall value, Agility has undertaken this hedging transaction, out of prudence, to protect the value of the investment and shareholders’ value,” the company said in the statement. The derivative does not “imply that the company is selling its DSV shares,” it said, adding that it will enable Agility to “benefit, to some extent, from the increase in the DSV share price, while at the same time limiting the impact of a possible decline in DSV stock price in the future within the agreed limits.”

The company had a good 1Q 2023: Agility saw its bottom line rise 20% y-o-y to KD 15.3 mn in 1Q 2023, according to its most recent earnings. The Kuwaiti warehousing and industrial developer’s revenues soared 142.7% y-o-y to KD 320.5 mn during the quarter.

GAC Motors launches distribution center in UAE

China’sGAC Motors opens parts distribution center in Jebel Ali freezone: Chinese-based automobile manufacturer Guangzhou Automobile Group (GAC) subsidiary GAC Motors opened its new parts distribution center at the UAE’s Jebel Ali Freezone last week, according to a press release. The center — dubbed the Middle East Parts Distribution Center — is the first of seven warehouses GAC plans to set up overseas as part of its expansion plans.

The details: The center’s warehouses currently have in their stock over 2k types of component car parts worth more than USD 1.5 mn, according to the statement. The center helped reduce the order cycle time from 25 days to just a week during trial operations, which began in June. The warehouse will also ensure the provision of GAC’s models — including GS3, GS5 and GS8 — and its new EMKOO and EMZOOM models, the statement said.

Iraq + Kuwait agree to resolve maritime border dispute + boost trade

Hope for Iraq + Kuwait’s long standing maritime border dispute? Iraq and Kuwait have agreed to bolster their bilateral relations, Iraqi News Agency reports. Kuwaiti Foreign Minister Salem Al Sabah and his Iraqi counterpart, Fuad Hussein, discussed increasing cooperation in several fields, including economy and investment, as well as resolving outstanding issues between the countries, the news agency writes. The two also agreed to work towards completing the demarcation of the maritime borders between the countries through talks between various technical committees, according to an Iraqi Foreign Ministry statement. They also touched upon ways to promote investment and trade to achieve common interests and strengthen relations, Qatar News Agency added.

Maritime borders? Iraq has long contested the UN’s de facto maritime border demarcation for Kuwait after Saddam Hussein’s invasion of Kuwait, demanding that it continue accessing Gulf waters, which are a lifeline for its economy and oil exports, Voice of America reports.

Shipping firms are expanding capacity at an unprecedented rate + rising temperatures are a threat to logistics workers

Shipping industry sees a record USD 90 bn in ship orders: The shipping sector — well-known for its “cycles of boom and bust” — is currently seeing an unprecedented USD 90 bn global ship order pipeline, Bloombergreports, citing data from Drewry Maritime Research. There were 890 ships on the global container vessel order book as of 1 July, asmajor companies, including MSC, Maersk, CMA CGM, and Hapag-Lloyd, use their pandemic gains to acquire new vessels, mostly from Korean and Chinese shipyards. This could boost net new capacity next year by a record 1.82 mn TEUs, Drewry says.

The rapid expansion of capacity could backfire, experts say: The industry is facing uncertainty due to freight rates dropping and concerns of overcapacity rising, with numerous shipping tycoons making pessimistic forecasts for the upcoming months. “There will be shipowners — tonnage providers — out there that will have stretched themselves,” the CEO of a vessel finance firm told the business news information service. “Although the last couple of years have been profitable for shipping, the accumulated earnings are far from enough to fund the investment in new technology and ships in the coming decade.”

A lot of these new orders are for less polluting vessels: “The supply-demand balance for the next period will likely be under pressure because capacity will grow more than trade,” CMA CGM’s CFO said, who noted that helping counteract that effect is the scrapping of older vessels for new, less polluting ones, and the slowing down of engine speeds to curb emissions and meet the new IMO carbon emission requirements.

Rising temperatures are making logistics workers jobs harder: Rising temperatures are becoming more of a concern for delivery workers and those in the logistics field who face demanding tasks of carrying goods and driving vehicles that often lack air conditioning, causing worker productivity to slump, and sparking health concerns, the Financial Times writes. Some 317 workers from UPS, United States Postal Service and Fedex were hospitalized between 2015-2022 due to heat exposure, according to data from Occupational Safety and Health Administration picked up by the newspaper.

Solutions need to be comprehensive: Some governments — including Qatar, Spain, and California — have implemented regulations governing working during such extreme heat. Companies are also taking measures such as replacing vehicles with air conditioned models, and providing heat related gear, but economics and experts say the problem also requires a bigger, more fundamental change in the industry that would give workers the power — and capacity — to prioritize their wellbeing. Educating employers to identify signs of heat stress and enforcing safety measures on behalf of workers is also crucial, they added.

AD Ports, Saab team up on maritime surveillance solutions + Asyad VLCC finds buyer for VLCC trio. PLUS: More from Oman

SHIPPING + MARITIME-

AD Ports Group and defense company Saab UAE have inked an MoU to boost safety and efficiency in port operations, according to a statement. The new agreement builds upon existing partnerships between the two outfits and will see them collaborate on the development of maritime surveillance solutions and sensors. AD Ports Group will provide access to test sites, infrastructure, and operational feedback for Saab UAE to roll out next generation maritime surveillance technologies. The statement did not disclose details around the investments and timelines concerned.

ZONES-

Iraq has inked an agreement with Singapore’s Allied Container Group to train Iraqi port employees and upgrade logistics operations at Iraqi ports, according to a Transport Ministry statement. Allied Container will train employees in handling goods, allowing them to benefit from the container company’s expertise in handling containers, managing truck movements, and electronic monitoring and management. The agreement comes following a visit by an Iraqi delegation to Singapore’s ports, according to a seperatestatement.

More cooperation coming? The cooperation between the two may also involve Allied Container Group contributing to the development of the Iraqi ports of Umm Qasr and operating Faw Port, the statement added.

DIGITIZATION-

Saudi Arabia moves to unify transport platforms: Saudi Arabia’s Deputy Transport Minister Rumaih Al Rumaih has signed a cooperation agreement with the country’s Digital Government Authority to unify and integrate its transport and logistics platforms, according to a Transport Ministry statement. The unified logistics platform will encompass various sectors related to logistics and transportation, including air, land, maritime and rail transport. The move aims to enhance overall user experience and the kingdom’s digital services.

ALSO WORTH KNOWING-

South Korean Sinokor Merchant Marine will reportedlypurchase three of Oman’s Asyad Shippin’s VLCCs that were put for sale earlier this year— Saham, Sifa, and Fida — for some USD 191 mn, according to brokers. (Splash)
Oman is launchinga tender for consultancy services for its 400km Adam-Thumrait dual carriageway, which links Muscat and Duqm to Dhofar. The last day companies can submit their applications is 28 August. (Statement)
Head of Jordan Chamber of Industry (JCI) Fathi Jaghbir and Iraqi Federation of Industries (IFI) President Adil Okab discussed establishing a joint industry chamber to enhance industrial cooperation and streamline trade procedures, as well as finding a way to implement direct authentication of certificates of origin without involving third parties. (Jordan News Agency)
Saudi Arabia’s Transport General Authorityhas launched the second phase of its project to localize offices for land freight brokers. (Statement)

New tentative agreement reached in Canada’s port labor dispute

Dock workers and employers reach a new tentative agreement in Canada’s port labor dispute: A new tentative agreement has been reached between the International Longshore and Warehouse Union Canada (ILWU) and BC Maritime Employers Association (BCMEA), CBCreports. The Canada Industrial Relations Board helped in reaching the agreement. The union had voted to turn down a mediated agreement last Friday, prompting Labor Minister Seamus O’Regan to intervene. Details of the new agreement — which is pending ratification by union members and employers — have not been disclosed. The dispute had led to a strikefrom 1-13 July, impacting an estimated USD 7.6 bn worth of cargo movement.

Shipping containers repurposed as homes are on the rise

Out-of-service shipping containers are finding new lives — as people’s homes:Affordability, short delivery times, and positive attitudes towards the use of recycled materials is driving demand for housing constructed out of repurposed shipping containers, Spanish daily El Pais reported. Despite gaining traction in the Netherlands, the US, Australia, the UK, and now Spain, many are wary of the method and have trouble associating it with comfortable living.

Prices vary depending on materials used, but they tend to average USD 1.5k per sqm, making these homes very affordable, El Pais writes. Moreover, delivery times for ready-to-furnish units range between three to five months, substantially faster than traditional methods. With this in mind, investors are beginning to see the method’s value as an investment, with plans by some to develop units and rent them out to tourists.

Comfort is not an issue, if done right: “The secret to turning these units into comfortable homes lies in their insulation,” El Pais writes. However, it is important that the container used is in good condition and that whoever is contracted to convert it for living purposes has the necessary knowledge and experience. .

Calendar

AUGUST

31 July-9 August (Monday-Wednesday): KSA trade delegation headed by Investment Minister Khalid Al Falih tours Brazil, Chile, Costa Rica, Argentina, Panama, Paraguay, and Uruguay.

Oman will award Ras Al Hadd Airport consultancy contract.

28 August (Monday): Registration for Emirates Postal Group’s Logistics Unleashed competition concludes.

SEPTEMBER

4-8 September (Monday-Friday): Logistics and Transport Management, Dubai.

5 September (Tuesday): The Leaders in Logistics KSA Summit, Crowne Plaza Al Waha, Riyadh.

6-7 September (Wednesday-Thursday): Sustainability LIVE London, Business Design Centre, London.

11-14 September (Monday-Thursday): The Libyan Moroccan Forum for Trade and Business, Tangiers, Morocco.

11-15 September (Monday-Friday): London International Shipping Week 2023, International Maritime Organization, London, United Kingdom

12 September (Tuesday): Global Pharma Logistics Summit 2023, ITC Maratha, Mumbai, India.

18-19 September (Tuesday-Wednesday): Enterprise Finance Forum, St. Regis Hotel, Cairo.

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

20-23 September (Wednesday-Saturday): MTB Workboats, Hyatt Regency Dubai, Dubai.

25-27 September(Monday-Wednesday): Airline Economics Growth Frontiers Middle East & Africa, The Ritz-Carlton, Dubai, UAE.

26-28 September (Tuesday-Thursday): ProcureCon, Hyatt Regency Barcelona Tower, Spain.

26-28 September (Tuesday-Thursday): Breakbulk Americas, George R. Brown Convention Center, Houston, Texas.

September-November: Emirates Postal Group’s “Logistics Unleashed” competition, UAE.

OCTOBER

Egypt’s Suez Canal Economic Zone (SCZone) goes on a roadshow to South Korea.

3-4 October (Tuesday-Wednesday): IATA World Sustainability Symposium, Madrid, Spain.

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

10-12 October (Tuesday-Thursday): Autonomous E-mobility Forum, Doha, Qatar.

24-25 October (Tuesday-Wednesday): Future Fuels Europe, Amsterdam, Netherlands.

26-29 October (Thursday-Sunday): International Congress of Aviation and Space Medicine, Conrad, Etihad Towers, Abu Dhabi, UAE.

30 Oct-2 Nov (Monday-Thursday): IAPH World Ports Conference, Abu Dhabi, UAE.

30-31 October (Monday-Tuesday): Gartner Supply Chain Planning Summit, London, UK.

September-November: Emirates Postal Group’s “Logistics Unleashed” competition, UAE.

NOVEMBER

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

9-15 November (Thursday-Wednesday): Intra-AfricanTrade Fair, Cairo, Egypt.

13-17 November (Monday-Friday): Dubai Airshow, Dubai World Center, UAE.

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

14-17 November (Tuesday-Friday): IATA Slot Conference, Dubai World Trade Centre, Dubai, UAE.

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

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

21-23 November (Tuesday-Thursday): Touchdown Middle East, Gulf Hotel, Bahrain.

23 November (Thursday): Global Supply Chain and Logistics Summit, Grand Millennium Hotel Business Bay, Dubai, UAE.

30 November-3 December (Saturday-Tuesday): Handling Expo, Egypt International Exhibition Center, Cairo, Egypt.

September-November: Emirates Postal Group’s “Logistics Unleashed” competition, UAE.

DECEMBER

10-11 December (Tuesday-Wednesday): Invest in Logistics, St.Regis Almasa Hotel, New Administrative Capital, Egypt.

EVENTS WITH NO SET DATE

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

2H2023: Expansion of Baghdad International Airport to begin.

3Q 2023: Design and supervision contract for Oman’s proposed Musandam Airport to be awarded.

Before the end of the year: The first phase of the Ain Sokhna port redevelopment will wrap.

2024

1Q 2024: Construction of phase 3 of Agility’s logistic park in Abidjan, Côte d’Ivoire to be completed.

1H 2024: Work is scheduled to begin on the 162 km Rasht-Astara railway in Iran.

FEBRUARY 2024

13th World Trade Organization Ministerial Conference, Abu Dhabi, UAE.

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.

MARCH 2024

5-6 March (Tuesday-Wednesday): MRO Middle East, Dubai Trade Center, Dubai, UAE.

12-14 March (Tuesday- Thursday): IATA World Cargo Symposium, Hong Kong International Airport.

MAY 2024

2-3 May (Thursday-Friday): Geneva Dry, Geneva, Switzerland, Hotel President Wilson.

JUNE 2024

19-21 June (Wednesday-Friday): World Freezones Organization’s Annual International Conference and Exhibition, Bari, Italy.

DECEMBER 2024

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

2024

The Bahrain International Airshow will kick off to mark a decade of success

2025

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.

2027

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

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