Logical logistics in Oman

Due to its strategic location, the Sultanate of Oman was dealing with logistics long before the word had ever been coined, having been a hub for cargo movement and transshipment for thousands of years. But where once trade was carried in dhows from small coastal ports, now it is in tankers, dry cargo freighters and bulk container ships, and the business of logistics is paramount.

Oman is putting in place the infrastructure needed to turn the country into a major logistics hub, one that can move goods at speed from one destination to another, load and unload and meet the needs of the global transport industry.

With both regional trade and consumer demand for imports on the rise, logistics firms are looking increasingly at Oman as a base of operations. In mid May, leading logistics company BDP International announced it was teaming up with Oman's Mustafa Sultan Enterprises to provide freight forwarding and other logistics services in the sultanate through a newly formed company, Arshhiya Logistics.

Richard Bolte, BDP's president and chief executive officer, said the joint venture would offer logistics services to clients operating out of Oman and in the region.

"Oman is a core market for our business," he said at the launch of Arshhiya. "By the second quarter of the year, we are also looking to expand further in Oman with a branch office in Sohar."

And it is the Port of Sohar that Oman has pinned much of its hopes on to snare a major slice of the logistics trade in the region. Quite apart from handling the ever-increasing output from the heavy industries sprouting up in the Sohar industrial zone, and receiving the flow of raw materials needed to sustain these facilities, the port is increasingly becoming a centre for transshipment for the region.

More than $12 billion has already been committed to the construction and equipping of the port, which is managed under a joint venture agreement between the government and the Port of Rotterdam through the Sohar Industrial Port Company (SIPC).

Its location at the mouth of the Strait of Hormuz makes the port a potential gateway to the countries of the Gulf Co-operation Council. Transshipping cargoes to land-based transport means that vessels do not have to enter the strait and the Arabian Gulf, making for faster ship turn-around times, thereby cutting costs and reducing insurance premiums.

Sohar's road network allows freight to be moved in hours by land to Dubai, Abu Dhabi, Al Ain and Muscat, all of which are within 240 kilometres of the port.

Jan Meijer, the chief executive officer of SIPC, said that while the port was mainly designed to handle Oman's exports, Sohar has the potential to become a major regional trading hub.

"Sohar is also within close reach of the booming economies of the Indian subcontinent and the eastern coast of Africa," he said in a recent interview. "Therefore, Sohar potentially is an international logistics hub."

As is so often the case in the region's economy, the biggest competition comes from Dubai, which has ploughed billions of dollars into upgrading and developing its logistics infrastructure and offered incentives for international firms in the sector to base their Middle East operations in the emirate.

However, Patrik Hallden, the managing director of the Gulf Agency Company Oman, said that strong growth in the sultanate and the logistics sector bode well for the future.

"Logistics activities are growing in Oman and we foresee that this sector has tremendous potential for a majority of import as well as export sectors," he told the local media in April.

Complementing Sohar is the Port of Salalah, to the south on Oman's Indian Ocean coast, which has become one of the world's largest container terminals and is now a global leader in transshipment services. Together with Muscat's Sultan Qaboos Port, which handles the bulk of Oman's domestic trade, a commitment by the government to support the transport sector with investment, and blessed by a location astride one of the world's busiest trade routes, Sohar and Salalah are at the hub of the region's logistics.


Jason J. Nash is Head of Research at the Oxford Business Group
(www.oxfordbusinessgroup.com)

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