Will Qatar really become the Gulf’s premier logistics hub of the future? Nadia Khan investigates
After winning its bid to host the FIFA World Cup 2022, the State of Qatar has been propelled into the global limelight. Now the race is on for the country to perfect its transportation and logistics infrastructure in time to show the world what Qatar can really deliver. Determined no longer to be overshadowed in the global logistics arena by its neighbour Dubai, the government has taken up the challenge by channelling billions of dollars into redefining the State as one of the leading logistical hubs in the region.
With its prime geographical location in between trading continents, Qatar has always held the enormous potential as a global logistics hub. “The country’s peninsular geography allows for ports such as Ras Laffan, Mesaieed and Doha to offer significant competitive trade advantages, particularly for its exports of oil and gas,” says Srinath Manda, programme-manager for transportation & logistics practice at consultants Frost & Sullivan.
But this potential has remained unrealised, with Qatar’s woefully inefficient transport infrastructure seriously hampering the growth of the country’s logistics market. But all indicators now show that the country is poised for a logistics turnaround, driven by strong commitment from government as part of the Qatar National Vision 2030.
Last year, Qatar’s transportation and logistics market made around US$7545 million in revenue, registering an impressive climb of 16.5% from the previous year. By 2016, this market is expected to soar to over $11,930 million. “Qatar’s import dependence in several industries is expected to rise significantly to support the development in the country,” says Manda. “The development plan for the country, now in high gear, has resulted in a simultaneous boom in several sectors, which requires time and cost-efficient logistics to support the growth.”
According to Manda, the most important step in Qatar’s quest for logistics dominance lies in overcoming two major shortcomings: one being the lack of integrated multiple modes of transportation, and secondly, the poor supporting warehouse infrastructure. “Developing an integrated multimodal transportation infrastructure for the seamless flow of goods is essential,” he says. “We also need to see the development of world class warehousing zones, like Dubai’s Jafza, for Qatar to boost its logistics industry to global standards.”
On the upside, the substantial investment being channelled into both these areas shows that the Qatari government is seriously committed to addressing these concerns. With multimodal logistics and warehousing in mind, the first phase of Logistics Village Qatar (LVQ) was completed in April this year, with further expansions planned for 2014 and 2015. “The project provides a platform tailor-made to meet the specific needs of regional logistics players and large corporate houses,” says Abdulaziz Zeid Al-Taleb, managing director, board member and acting group CEO of Gulf Warehousing Company (GWC), the company tasked with setting up LVQ. “LVQ aims to eliminate transport and distribution costs and to integrate logistics along the supply chain,” he adds. “It also complements the national effort of moving trade to the global arena by offering a clear venue for all in-bound and out-bound logistics operations.”
As a globally-integrated logistics provider in its own right, Gulf Warehousing Company has been benefiting from the success that comes with a growing logistics industry. The first quarter of this year has seen the company’s profits jump 12.8% above last year’s. Furthermore, Al-Taleb is confident that the growth in professional logistics organisations in Qatar has seen some reversal of the traditional trend in big businesses to keep their logistics operations in-house. “As the country’s infrastructure and industry grows, we expect to see logistics procurement habits begin to mirror those in other countries such as the UAE’s average 25% of outsourced logistics or Europe’s 35-40%,” Al-Taleb predicts. “As a result, it has been estimated that the third-party logistics segment will grow to 15% of total logistics operations by 2016.”
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