By Robeel Haq
Dubai's location makes the emirate an ideal candidate to serve the tea industry as a logistics superhub.
Strategically located between the world's leading tea consumers and producers, Dubai is often considered the traditional tea-trading hub for the Middle East and CIS countries.
Over the years, the emirate has defied a general downturn in the marketplace and generated substantial trading volumes in the form of re-exports to the region and further afield. Not even the severe droughts experienced by Kenya last year, which led to a massive 25% increase in the cost of tea, could deter Dubai from establishing itself as a logistical powerhouse for the tea-trading community.
Since we are focused on increasing our international coverage, its important to have a sufficient warehousing facility to support this growth - Sanjay Sethi.
"Its been a challenging time for the tea industry, which faced a number of challenges throughout the world in 2006, mainly due to factors beyond its control," explains Sanjay Sethi, head of Dubai Tea Trading Centre (DTTC).
"However, despite these challenges, the Middle East actually managed to experience significant growth over the past twelve months. Take Dubai for example, which marked 2006 with record gains, indicating its growing importance on international trade routes for the industry."
At present, the Middle East accounts for approximately 27% of global tea imports - a figure that continues to grow annually. Dubai has succeeded in winning the lion's share of this market, trading a record breaking 105.5 million kilos of tea in 2006, an increase from 96.6 million kilos during the previous year.
These growing volumes have highlighted the importance of a specialist facility to service the tea industry's unique supply chain operations, with the required infrastructure available to traders under one roof. This was precisely the remit provided by Dubai Multi Commodities Centre (DMCC) when it decided to create the Dubai Tea Trading Centre (DTTC) two years ago, with operations beginning in March 2005.
"The region's prime position between Asia and Europe makes it ideally placed as a logistical hub for the tea industry," says Sethi, a professional tea taster with 22 years of experience in the industry, who has been instrumental in establishing the concept for DTTC and now manages the centre.
"The DMCC successfully identified this market opportunity and conceived the DTTC as a vehicle to facilitate trade between tea producers, exporters, importers and merchants on a regional and international basis," he states.
The concept has already proved fruitful. In total, DTTC has stocked and traded 6.7 million kilos of tea since the inception of its facility, located in Jebel Ali Free Zone. In addition, its growth rates are showing no signs of slowing down, especially since the centre is planning to target a number of new international territories in the future.
"In keeping with our mandate to further increase Dubai's tea trade, we have expanded our range to process tea from 13 countries around the world. At the moment, DTTC facilitates sales with buyers from countries throughout the GCC, in addition to Iran, Iraq, Jordan and CIS countries," says Sethi.
"This year, we are focused on further growth and strengthening our interaction with buyers in existing markets, while also increasing our coverage area to include Afghanistan, Pakistan and other selected Middle East and European countries," he adds.
This growth strategy will undoubtedly place a huge amount of pressure on DTTC's existing facility. In response, the centre has earmarked a plot of land in the southern section of Jebel Ali Free Zone for a larger, more ambitious building, which promises to bypass any operational limitations in the form of storage shortages.
"DTTC has already experienced considerable success, which is testament to our innovative business model," says Sethi. "Since we are focused on increasing our international coverage and further developing the volume of trade coming through the Middle East, its important to have a sufficient warehousing facility to support this growth."
The total land of the new facility covers approximately 24,000m2, with construction currently underway in the free zone. The building work has already been approved and will be completed in a phased manner. The first phase, which is expected to cover 12,000m2, is scheduled to become operational by the middle of 2008. "DTTC's new facility will include several areas," says Sethi. "It will have various pre-set areas, which will be used for office space, warehousing, blending units and packing units. Regional and international tea companies, who are members of the DTTC, can lease these offices to have a permanent presence in Dubai," says Sethi.
Members of the centre can also utilise DTTC's warehousing space, which is being equipped with standard racking systems for the storage of teas and other related materials. In addition to ambient conditions, a section of the facility has been reserved for temperature-controlled storage, which will be separated for both normal and flavoured tea. The packing and blending areas will also be demarcated with separate rooms set aside for black and/or green teas and for flavoured teas. "The storage requirements for tea are rather unique, which explains the separate areas being designed into the warehouse," explains Sethi.
"Tea, by its very nature is hygroscopic, which means it would easily absorb the smells and flavours from the surroundings. If normal teas are stored alongside the flavoured ones, there is a danger of the flavour being absorbed by the normal teas. Flavoured teas need to have a completely separate, cordoned off area," he adds.
With food safety at consumers' forefront, distributors and retailers are looking for ways to ensure that their customers are buying a safe product. The new DTTC facility is therefore being built to international standards as per HACCP certification. HACCP stands for Hazard Analysis and Critical Control Point, and the programme is used to find the points in each company's production process where loss of control could result in biological, chemical or physical harm to the consumer.
"With this new facility, it was important to match and even exceed anything being offered in other parts of the world. In my opinion, the DTTC concept is unique and provides another example of Dubai's innovative vision to become a leading logistics hub for a diverse range of industries. It's a very exciting stage in our expansion and I'm honoured to play a role in this development," he concludes.