Is Boeing setting up shop to Saudi Arabia?

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What we're tracking today

TODAY: Is Boeing heading to Riyadh? + Warehouse demand is booming in the UAE and KSA

Good morning, friends. We have a compact issue this morning with the latest PMI reports from Qatar and Lebanon and an in-depth look at the storage and warehousing sector in the UAE and KSA.

PSA-

GAFI kicks off tenders for industrial plots: Egypt’s General Authority for Investment and Free Zones, in collaboration with the Industrial Development Authority, has opened tenders for upwards of 450 land plots for industrial development,distributed across 15 industrial zones and 10 governorates, according to a statement. Interested parties can sign up for the initiative here, with a map detailing the sites available here.

WATCH THIS SPACE-

#1- Is Boeing setting up shop to Saudi Arabia? KSA is currently examining a potential project with Boeing to set up an aircraft-grade aluminum manufacturing plant, Boeing Saudi Arabia President Asaad Al Jomoai told Al Eqitsadiyah. The talks are being led by the Public Investment Fund (PIF), Industry Ministry and Mineral Resources and state-owned mining giant Ma’aden. The project’s feasibility studies are set to be finalized this year before making its way to the PIF for review and approval if an agreement is reached, he said.

ALSO- Boeing has submitted a request to set up a regional HQ in Riyadh, Al Jomoai said, with an approval from the Investment Ministry expected within the next few months.

There’s more: Saudi national shipping company Bahri subsidiary Bahri Logistics signed a MoU with Boeing to boost supply chain operations in the Kingdom for the global aerospace company in the kingdom, its President Soror Basalom told Asharq Business in an interview (watch, runtime: 2:40).

#2- Emirates is preparing to send engineers to oversee Boeing’s 777 production line at Boeing and its supplier Spirit AeroSystems, Emirates Airlines CEO Tim Clark told the Financial Times. Clark says there has been a “progressive decline” in Boeing’s manufacturing standards, which he attributes to mismanagement. Emirates has plenty of skin in the game as one of Boeing’s biggest customers. The airline placed a USD 52 bn order for 95 wide-body 777 and 787 Boeing aircraft in November. Boeing declined to comment on Clarks’ remarks to the FT.

#3- China to boost Iran’s logistics fleet: Tehran municipality intends to make a EUR 12-13 bn purchase of urban transport vehicles from Chinese companies including some 1 mn vans, buses, and motorcycles, as well as 751 rail wagons, IRNA reports, citing a statement by Tehran Mayor Alireza Zakani. No timeline for the purchases were disclosed.

ALSO- US DOJ clamps down on IRGC financing: The US Department of Justice (DOJ) has announced new terrorism and sanctions-evasion charges targeting oil traffic it says is funding Iran’s Islamic Revolutionary Guard Corps (IRGC) and other groups, Reuters reports, citing a DOJ statement. The actions saw the DOJ seize USD 108 mn — which it says was being laundered through US banks via an Iranian front company — as well as 520k barrels of Iranian crude aboard a tanker anchored in the Yellow Sea between China and South Korea, the newswire said, citing Kpler and LSEG tracking data.

DISRUPTION WATCH-

Israel’s El Al will not be resuming Ireland and Morocco flights: El Al Israel Airlines will not resume direct flights to Dublin and Marrakech this summer due to what it says is a shift in customer demands since the Gaza War, Reuters reports.

Australian regulator blocks re-export of stranded livestock to Israel: An Australian regulator has denied an application made by Israel-based shipping company Bassem Dabbah to send 16k of livestock stranded aboard a vessel to Israel after it was forced to turn back due to the shipping disruptions in the Red Sea, Australian news outlet ABC reports. The regulator said that the shipper failed to demonstrate that it had made the necessary arrangements to preserve the health and welfare of the animals and animal welfare advocates have called for the immediate offloading of the livestock in West Australia.

Taiwanese companies are not feeling the effect of Red Sea disruptions, as the tensions have coincided with the usual seasonal lull in demand for exporters, Reuters reports, citing Taiwanese Economic Minister Wang Mei-Hau. Taiwanese container shipping line Evergreen Marine said it would start rerouting ships around the Cape of Good Hope last December.

MARKET WATCH-

Oil prices inched higher yesterday as Washington hinted at further strikes targeting Iran-backed groups and Ukraine attacked Russian oil infrastructure, counteracting last week’s sharp drop, Reuters reports. Brent rose 0.3% to USD 77.59 a barrel by 07.09 GMT, while West Texas Intermediate (WTI) rallied 0.2% to USD 72.41 a barrel, the newswire said. Both benchmarks were down 7% at the end of trading last week as better-than-expected US jobs data implied that interest rate cuts would happen later than expected, and progress on negotiations looking to end the Hamas-Israel war yielded optimism, the newswire added.

DATA POINTS-

#1- The UAE is expected to boost its logistics market by over 6.2% CACR until 2028, Industry Today reports, citing data from leading market research company IMARC Group. The growth in the UAE’s logistics sector is due to the country’s strategic location in the region, its business-friendly regulatory policies, and its adoption of state-of-the-art technologies, according to IMARC.

#2- KSA’s King Abdulaziz Dammam Port handled 215k TEUs of cargo in January, breaking the port’s prior monthly record, according to a statement.

CIRCLE YOUR CALENDAR-

The UAE will host Breakbulk Middle East on 12 and 13 February in Dubai. The networking event brings together government officials, oil and gas players, and contractors with representatives from upwards of 8k companies from 98 countries.

The UAE will host Sustainable Aviation Futures MENA from Monday, 12 February through to Wednesday, 14 February in Dubai. The event will see 80 expert speakers and upwards of 200 high level attendants and will handle topics pertaining to regulation, financing, and investments in Sustainable Aviation Fuels (SAF) in MENA.

The UAE will host the Future Warehouse & Logistics Conference from Monday, 12 February to Wednesday, 14 February in Dubai. The event will handle means for supply chain leaders to boost resilience and overcome challenges, with discussions on disruptions, sustainability, Internet of Things (IoT), automation, workplace management and other topics.

The UAE will host The World Trade Organization's 13th Ministerial Conference fromMonday, 26 February to Thursday, 29 February in Abu Dhabi. The event will gather ministers from around the world to assess the operation of the multilateral trading system and make key decisions regarding the future tasks of the WTO.

The UAE will host theTradeTech Forum on Tuesday, 27 February in Abu Dhabi. The forum will see some 180 trade leaders and experts discuss the technologically advanced trade environment and a showcase of trade tech solutions.

The UAE will host The Logistics Middle East Award on Wednesday, 6 March in Dubai. The awards ceremony brings together industry experts to celebrate the sector’s biggest accomplishments over the previous 12 months.The deadline for submitting nominations is Friday, 19 January.

KSA will host a special World Economic Forum event from Sunday, 28 April through to Monday, 29 April in Riyadh. The event will focus on global collaboration and energy.

The UAE will host The Electric Vehicle Innovation Summit from Monday, 20 May to Wednesday, 22 May in Abu Dhabi. The event will see industry leaders come together to discuss sustainable mobility and tapping into groundbreaking advancements in electric vehicles while engaging with key decision-makers.

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

January non-oil private sector activity in Qatar saw expansion, while Lebanon inches closer to stabilization

How Qatar and Lebanon’s non-oil private sector performed in January: Purchasing manager indices (PMI) tracking non-energy sectors in Qatar and Lebanon both saw improvements, with growing demand fuelling markets in Qatar improving outlook. Lebanon, although still in contraction, moved closer to stabilization on the back of slower inflation and softer rates of decline in new orders and output.

Qatar’s non-energy private sector in January saw improved business conditions,according to Qatar Financial Center PMI (pdf).The headline number tracked at 50.4 in January — slightly above the 50.0 threshold separating contraction from growth — up from 49.8 in December. Output, new business, and backlogs of work all drove the reading higher, showing monthly growth. The higher readings were partly offset by a decline in firms’ input stocks.

Qatari firms saw boosted demand in January: Demand conditions grew in January — building on 2023’s robust growth — with bolstered sales attributed to new customers, marketing campaigns, competitive pricing, and tourism brought in by the AFC Asian Cup. New orders boosted total activity at a slower rate than the 2023 average, partly explaining the rise in backlogs. The two-time surge in backlogs over the past three months indicate pressures on operating capacity. Qatari firms also employed more, extending growths in jobs to an 11-month streak.

Purchases of inputs fell, as firms reported sufficiency and made do with existing stocks, but input stocks fell at their fastest since November 2022, alleviating pressure on supply chains and shortening lead times for the twenty-first consecutive month.

Prices also fell across the board: Input prices fell in January on the back of wages and purchase costs, with output prices continuing to fall for the third month.

Lebanon’s PMI moved closer to stabilization, inching up to 49.4 in January from December’s eleven month low of 48.4 pushing it closer to the 50.0 threshold, according to BlomInvest Banks’ PMI (pdf). Steady employment levels and softer declines in output and new orders buoyed the figure, and input cost inflation also slowed. Stability in the exchange rate contributed to the index’ improvement, Blominvest Bank General Manager Fadi Osseiran said in the report.

Business activity fell at a milder and softer pace seen at the end of 2023,with respondents citing restrictions due to the local political and economic scene. Limited spillover from the Hamas-Israel conflict, so-far confined to the country’s south, also reassured surveyists, Osseiran added.

Concerns related to the neighboring war did curb demand, especially in tourism: The month saw a downtick in sales and firms took on less new work, with uncertainty cutting demand, the report said. Exports and tourism were particularly hard hit, but the overall fall in demand was moderate with the respective index maintaining above long-term averages.

The silver lining: Employment was steady in January, despite the fact that backlogs of work fell for the fourth straight month. Operating costs also showed greater stability for the month, with inflation in input costs marginal and at their slowest in about two and a half years. Charged prices did increase however, indicating that firms sought to boost their margins, the report said.

While Qatar’s outlook remains positive, Lebanon’s outlook is more uncertain:Qatar's rise in demand contributed to a brighter 12-month outlook than at the end of 2023, according to QFC’s PMI. Firms in Lebanon cited local and regional uncertainty as hindrances to growth in the coming year, and although January’s sentiment was subdued, it was significantly better than that observed over the previous four years.

ICYMI- The UAE and Saudi Arabia’s non-oil private sectors saw slower expansion in January, with UAE’s headline figure inching down to 56.6 and KSA’s activity improving at its slowest rate in two years dipping down to 55.4. Egypt’s PMI dropped slightly to 48.1 in January from 48.5 the previous month.

Warehouse sectors in UAE and Saudi are trying to keep pace with booming demand

Demand for warehouse facilities in the UAE and KSA continues to grow, as both countries experienced a boom in non-oil industries in 2023, according to reports (here and here) by UK-based real estate consultancy group Knight Frank. Investments are being funneled to expand warehousing facilities in the UAE and KSA in a bid to leverage higher demand and surging rents, the reports found.

Why is this happening? Both countries saw rapid growth in the non-oil sector in 2023, resulting in an accelerated demand for warehousing. Abu Dhabi saw a 63% y-o-y boost in industrial licenses in 1H 2023 with 116 new industrial permits granted and Dubai witnessed 30k new companies join its Chamber of Commerce in 1H 2023. Similarly, KSA saw 557 new industrial licenses issued and a 31% y-o-y increase in foreign investment licenses in 1H 2023, with 505 non-oil producing factories kicking off production in the period.

An e-commerce boom: Many of the new licenses issued in both countries were for e-commerce outfits who need centrally located warehouse space for raw materials, work-in-progress inventory, and other stocks. Amazon inaugurated a new logistics center in Dubai last March, boosting their storage capacity in the UAE by 70%. This was followed by online shopping platform Noon launching a 100k square meter (sqm) advanced e-fulfillment center in Khalifa Economic Zones Abu Dhabi (Kezad).

Occupancy rates are nearing full capacity: The UAE saw a 98% warehouse occupancy rate in most Light Industrial Units (LIU) while KSA occupancy rates reached a record high of around 96% in 1H 2023.

Rent prices are on the up and up: With occupancy rates peaking and new projects still in development, rents are rising sharply in both GCC states, the reports note. KSA rent rates grew by an average of 20% y-o-y in Riyadh and increased in Jeddah by 15% y-o-y in 1H 2023. Rent plateaued and remained stable between 1Q to 3Q in Dubai and Abu Dhabi warehouse rent continued to rise on the back of the spillover from Dubai.

Abu Dhabi is lapping up Dubai’s spillover: Abu Dhabi’s warehouse market — particularly in Kezad — has been absorbing spillover demand from Dubai and is accelerating the development of new leasable spaces, the report notes. The freezone added some 230k square meters of leasable space between late 2022 and early 2023 and kicked off a slew of developments last month expected to boost its pre-built industrial and logistics warehousing capacity by 43% by the end of 2025.

ADAFZ has also outlined plans for growth: Abu Dhabi Airport Freezone (ADAFZ) has unveiled a new “masterplan” covering 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, the report said.

KSA is also doubling down on expansions: KSA has approved major plans for warehousing developments to accommodate growing demand at its major cities and industrial hubs. The Saudi Authority for Industrial Cities plans to build 14 high-tech warehouses in Jeddah, to be rented by global e-commerce firms. The country also has plans to build 12 logistics centers in Riyadh, 12 in Makkah, 17 in Eastern provinces and 18 in other undisclosed locations across the country. At present, 21 logistics hubs are under-construction in the Kingdom, the report added.

IndiGo to lease five Qatar Airways Boeing 737 Max aircraft

AVIATION-

Indian airline IndiGo will lease five Boeing 737 Max aircraft from Qatar Airways for six months to meet summer season travel demands, India’s Economic Times reports. The proposed agreement is for a damp lease, under which Qatar Airways would provide maintenance and cabin crew along with the aircraft. IndiGo is grounding around 30 Airbus A320 Neo aircrafts between January and March 2024 due to engine recalls for inspection by engine manufacturer Pratt and Whitney, according to a statement.

LOGISTICS HANDLING-

Landmark Group + Addverb partner to automate Kuwait fulfillment center: Dubai-based GCC retail and e-commerce conglomerate Landmark Group has kicked off a strategic partnership with Indian robotics outfit Addverb Technologies to revamp its fulfillment center in Kuwait, according to a press release. The upgraded center now features Addverb's Zippy robotic sorters which process some 1k sorts per hour and Quadron carton shuttles which handle 100 crates an hour each. The upgrade is slated to increase operational efficiency at the fulfillment center and boost customer satisfaction by improving order delivery speed and accuracy, the statement said.

OTHER STORIES WORTH KNOWING THIS MORNING-

Moody’s upgrades rating for Nakilat:Moody's has upgraded its credit rating for Qatari shipping and maritime company Nakilat, with senior secured notes raised from to Aa3 from Aa1 and subordinated debts to A1 from A2. (Statement)
AD Ports to introduce electric freight vehicles: AD Ports is looking to introduce the UAE's first electric freight vehicle at Khalifa Port Autoterminal Station. (Statement)
Iran boosts railway fleet:Iran has introduced 685 new domestically-made and renovated freight and passenger wagons into its countrywide railway network. (IRNA)

The global LNG industry is set to hit a newbuild delivery record this year

The LNG industry is set for a record-breaking year with 89 newbuild deliveries, a 48% increase from 2021, Splash reports, citing a Clarksons report. The increase — over double the 10-year average — will bring a capacity boost of 14.9 mn cubic meters. The upward trend is forecasted to continue through 2025 with 131 vessels already on order for 2026-2027. The container shipping industry is anticipating the delivery of 478 vessels with a total capacity of 3.1 mn TEUs in 2024, averaging to 1.3 new ships daily.

OTHER STORIES WORTH KNOWING THIS MORNING-

China's e-commerce logistics index reaches two-year peak: China's e-commerce logistics index reached 125.3 points in January, a two-year high, reflecting a robust comeback in supply and demand, fueled by a growth in retail services and high demand for local specialty foods. (Wam)

Calendar

FEBRUARY

5-7 February (Monday-Wednesday): Middle East Bunkering Convention, Dubai, UAE.

5-7 February (Monday-Wednesday): Cargo Facts EMEA 2024, Amsterdam, Netherlands.

6-7 February (Tuesday-Wednesday): The Middle East ProcureTech Summit, Dubai, UAE.

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

12-14 February (Monday-Wednesday): Sustainable Aviation Futures MENA, Dubai, UAE.

12-15 February (Monday-Thursday): Future Warehouse & Logistics, Dubai, UAE.

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

22-24 February (Thursday-Saturday): International Freight Forwarders Conference, Dubai, UAE.

26-29 February (Monday-Thursday): World Trade Organization's 13th Ministerial Conference, Abu Dhabi, UAE.

27 February (Tuesday) :TradeTech Forum, Abu Dhabi, UAE.

28 February (Wednesday): Industrial and Building Technology event, Dubai, UAE.

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

MARCH

3-5 March (Sunday-Tuesday): Sustainable Green Blue Infrastructure Conference 2024 (Marlog), Green Plaza Mall, Egypt.

4-8 March (Monday-Friday): Logistics & Transport Management 2024, Dubai, UAE.

5-6 March (Tuesday-Wednesday): ShipTek International Conference & Awards 2024, The Address Dubai, UAE.

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

6 March (Wednesday):The Gulf Ship Finance Forum, Waldorf Astoria Dubai International Financial Centre, UAE.

6 March (Wednesday): The Logistics Middle East Awards, Dubai, UAE.

7 March (Thursday): Truck and Fleet Conference 2024, Dubai, UAE.

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

20 March (Wednesday): Construction work scheduled to begin on the 162 km Rasht-Astara Railway in Iran.

APRIL

27 April- 1 May (Saturday-Wednesday): Iran Expo 2024, Tehran International Permanent Fairground, Iran.

28 April - 29 April (Sunday - Monday): World Economic Forum, Riyadh, KSA.

29 April- 2 May(Monday-Thursday): GLA Global Logistics Conference, Dubai, UAE.

30 April- 2 May(Tuesday-Thursday): Autonomous E-mobility Forum, Doha, Qatar.

April: Driftx. Abu Dhabi, UAE.

MAY

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

2-4 May(Thursday-Saturday): The International Conference on Logistics Operations Management: smart, sustainable and green logistics (GOL), Marrakesh, Morocco.

3-5 May (Friday-Sunday):2024 IEEE 15th international conference on Logistics and Supply Chain Management, University of Sousse, Tunisia, Tunis.

7-9 May (Tuesday-Thursday): Annual Investment Meeting (AIM) Congress, Abu Dhabi, UAE.

14-15 May (Tuesday-Wednesday): Seamless Middle East, Dubai World Trade Centre, UAE.

14-16 May (Tuesday-Thursday): Airport Show, DWTC, Dubai, UAE.

20-22 May (Monday-Wednesday): The Electric Vehicle Innovation Summit (EVIS), Abu Dhabi, UAE.

21-23 May (Tuesday-Thursday): WAGA 2024, Riyadh, Saudi Arabia.

JUNE

2-4 June (Sunday-Tuesday):IATA Annual General Meeting (AGM) and World Air Transport Summit, Dubai, UAE.

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

OCTOBER

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

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

22-24 October (Tuesday-Thursday): Asean Ports and Logistics 2024, Johor, Malaysia.

NOVEMBER

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

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

DECEMBER

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

20 December (Wednesday): The 5th Iran-Senegal Joint Economic Cooperation Commission, Dakar.

EVENTS WITH NO SET DATE

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

1Q 2024: Egypt’s Transport Ministry to launch pre-qualification tender for Cairo-Alex freight railway.

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.

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.

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.

2027

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

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