The success of Kuehne + Nagel has spread throughout the world. Now, with ambitious plans to increase operations in the United Arab Emirates, the veteran logistics company is planning to capture a larger share of the Middle East market.
Kuehne + Nagel has emerged as a leading international player in the logistics industry.
Across its network of 830 offices, located in over 100 countries throughout the world, the company offers a range of multi-modal transport services, together with contract logistics and value-added activities.
“Although Kuehne + Nagel started as a traditional freight forwarder, the market has experienced a massive shift in customer demand. Today, customers expect a diverse range of logistics related services from a single provider,” says Gary Black, managing director of Kuehne + Nagel’s operations in the United Arab Emirates. “As a result, Kuehne + Nagel has grown into a global provider of integrated logistics solutions. We provide seafreight, airfreight, overland and contract logistics services, with a focus on providing IT-based supply chain management services.”
The company’s track and trace system, KN Login, has proved particularly successful in the past, winning industry awards in Europe. The solution, which was produced inhouse, is customisable to suite the unique requirements of each customer – for example, a report writing option allows the user to design the type of reports required.
“Its also proactive against key defined events, so if something doesn’t happen on time, the customer gets alerts and details on why it didn’t happen,” explains Black.
“The feedback on the technology is always very encouraging and it’s looked upon fairly enviably by competitors.
It has given our customers substantial savings in terms of total supply chain costs, which is obviously very beneficial.”
As the Middle East logistics industry continues to boom, Kuehne + Nagel has highlighted the region as a target market for future growth. The company currently operates in a number of different countries within the region, including its regional headquarters in Turkey, together with the likes of Kuwait, Saudi Arabia, United Arab Emirates, Bahrain and Jordan.
“The Middle East’s status as a leading international hub for the logistics industry is constantly growing. It’s a very important market for Kuehne + Nagel,” says Black. “In my opinion, its a very diverse market here. Across the board, the major global organisations share the market with small niche players.
There is probably no clear leader, so there is a desire to bring the benefits of Kuehne + Nagel’s network here. We also hope to utilise our IT solutions in this part of the world.”
In Dubai, the company currently operates a warehouse in the Jebel Ali area, measuring 14,500m2. The facility is split between temperature controlled and ambient storage, with added services such as packaging and labelling also available to customers.
This has proved a value resource in attracting regional customers, especially from a variety of niche markets. For example, Kuehne + Nagel has experienced considerable success by servicing the specialist logistics requirements of the hospitality industry in the Middle East. The company actually targeted the sector in 2000, setting up KN Hotel Logistics, an integrated single source supply chain for hotel amenities.
From the Jebel Ali warehouse, KN Hotel Logistics supplies a full range of in-room products, such as cosmetics, toiletries, shower caps, laundry bags, sewing kits and coasters, to Dubai’s vast hotel sector.
“Hospitality is a big target market for us,” says Black. “We do the packaging and labelling for some of the world’s leading hotel groups, handling items such as soaps and shampoos for instance, and then we distribute the stock. We can also manage the Arabic labelling if required.”
The problem of over-ordering is common and costly in the hotel sector.
The limited storage facilities available to most hotels means problems are likely to occur in periods of unexpected demand.
KN Hotel Logistics therefore orders in bulk and store the amenities at the Jebel Ali distribution centre, allowing customers a ‘safety blanket’ in times of high demand.
This proved to be mutually beneficial for both hotels and Kuehne + Nagel. By importing several full container loads a year rather than two consolidation shipments each month, the company were able to cut freight and freight related costs, for example administration and customs clearance expenses.
Again technology proved to be at the forefront of Kuehne + Nagel’s operations. A hospitality e-commerce solution was created by the company to enable hotel procurement departments to place orders via the internet. If a hotel in the United Arab Emirates places an order before midday, KN Hotel Logistics promise the goods will be delivered by the same time the next day. A 24-hour call centre is also available for emergency replenishment situations.
With such a hive of activity currently taking place at Kuehne + Nagel, it is to no real surprise expansion plans have been set in place and that Dubai Logistics City (DLC) was the selected site for the new facilities.
“We have taken a lease agreement in Dubai Logistics City, which is very exciting. We are at the initial planning stage with the authorities in terms of how the site will look and how it will fit in terms of the logistics city,” explains Black. “We expect to be operational there in the early part of 2008. Dubai Logistics City is going to very important for us and the growth of the market.”
Kuehne + Nagel signed the contract with Sheikh Ahmed Bin Saeed Al Maktoum last September, with DLC also sealing the signatures of other global industry leaders, such as Aramex, Danzas and Panalpina.
The current 2.5 million square metres of land that constitute DLC is expected to expand to over 6 million square metres of land by 2008.
The first phase of grading the DLC is currently completed, which means companies are allowed to begin construction, although Kuehne + Nagel are yet to start work on their own facility.
The company has signed for 52,000m2, a huge investment that symbolises its level of intent for the region. “Our investment in Dubai Logistics City confirms that we recognise Dubai as the gateway to and from the Middle East,” concludes Black. “At this strategic hub, we are adding to our established global facilities and we will be able to provide our customers with sophisticated, integrated logistics solutions across the Middle East, as well as Sub Asia and Africa, thereby further enhancing our strong market position in the region.”