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Q&A/UPDATE - MIDDLE EAST - AUGUST 2010
Interview with Stephen Knight, Safmarine West and Central Asia Executive.
What has business been like for Safmarine in the Middle East in 2010?
The business environment in the Middle East in 2010 has been stronger than expected following the downturn in 2009 caused by the global financial crisis. Volumes have been good with high capacity utilisation on our vessels and the freight rates have increased to more sustainable levels.
Are there any particular business/consumer trends which are influencing your business in this region?
GDP has increased across the region and this, along with an improvement in the job market, has led to a growth in consumer spending. In particular we see an increase in the imports of electronic goods, clothing and automotive components. We have also seen an increase in construction materials as building projects have resumed.
How is business compared to 2009?
Our 2010 iImport volumes have seen strong growth especially from Europe which is our largest market and also from North America. The exports have also increased with the main growth being to our core markets in East, West and South Africa.
What are your expectations for the container business for the rest of 2010?
Our expectation is that the volumes will remain strong to and from the Middle East region.
What is Safmarine's business focus for the Middle East region?
Our customers remain at the core of our strategy and we are continually looking for ways to improve our service levels and our accessibility. Tight cost control is also high on our agenda. Shipping is an industry with traditionally low returns, so we are continually focusing on improving our processes and efficiency. We have also been reducing the layers in our organisation and empowering the front line more so that they can react and respond to our customers needs more quickly. The huge investments in the Middle East - a combination of transport and industrial development projects within the oil based Gulf countries - represent exciting opportunities for our business. We also welcome the investments in new petrochemical production facilities, particularly in Saudi Arabia, Iran, Qatar and the U.A.E.
Has port congestion been an issue for your region?
We have not had any challenges this year.
What is your key message to customers in the Middle East region?
The Middle East is a core market for Safmarine and through building partnerships with our customers we are continually looking at ways to improve our service in the region. We believe in offering personal service and are focused on delivering high levels of customer satisfaction.
Has Safmarine introduced any new services or service enhancements which impact the Middle East?
a) We have re-introduced the ME 3 service between the Mediterranean and Middle East. The focus of the revised ME 3 service is on providing an improved product, rather than on increasing capacity, hence the decision to add a direct call at Ambarli and to deploy smaller vessels on the revised service. Together the changes made to the ME 1 and ME 3 services will result in an improved Intra-Middle East service as these services will provide more frequent departures from West and North India to Jebel Ali and the ports served in this region.
b) The Asia to the Horn of Africa and Red Sea service has also been introduced - this service has added a call at Jebel Ali, giving us connections to and from the Gulf.
c) We have added Sharjah, UAE to the rotation of the Masiika Express, thereby giving direct access to east Africa.
What is the status on rates into and out of the Middle East? How do rates compare to 2009 and is there still a need to increase them?
The rates in 2009 were loss giving and unsustainable. They started to increase in the fourth quarter 2009 and that trend has continued in 2010 across most of the trades.
What is the status on reefer into and out of the Middle East?
The Middle East is an import market and consists mainly of shipments of fruit and meat from South Africa, South America, Northern Europe and Egypt. Volumes for 2010 YTD have been much higher that the first six months of 2009 with good growth across all of the countries in the region.
What is the status on vessel/container capacity to and from the Middle East?
The ships have been full on all services to and from the region through the first six months of the year with especially strong demand to/from Europe and North America.
Which countries are showing the most promise in the Middle East region?
Saudi Arabia is the largest economy in the region and we are seeing high growth in both imports and also exports, the later primarily due to the increased capacity of the petrochemical plants in the country. We are also starting to see increased volumes into Iraq as oil and reconstruction projects are started. Qatar is also developing well, with growth driven by the high GDP growth and wealth in the country due to the oil and gas industry.
Which are the highest performing sectors in the Middle East and what are the reasons for this?
Petrochemicals is the largest export commodity with a huge growth in capacity in Saudi Arabia, Iran and Qatar over recent years and further projects still under construction. Consumer goods, foodstuffs, vehicles and construction materials are the highest volume import commodities.
Which countries are the Middle East region's key markets?
UAE is the biggest market largely driven by the free zone in Jebel Ali and the high number of traders located in Dubai. Saudi Arabia, Iran and Jordan are the next largest countries in the region for Safmarine.
Which trades are the three most important trades for Safmarine into and out of the Middle East region?
For Exports:
Prime (Middle East to Europe)
Simap (Middle East to North America/Canada)
From Middle East to East Africa
From Middle East to West Africa
For Imports:
Prime (Europe to Middle East)
Simap (North America/Canada to Middle East)
Feme (Far East - Middle East)
ends
as at August 11, 2010
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