Gateway to Logistics Excellence

CURRENT SCENERIO
Transportation Module
EX MIDDLE EAST

Prepared by
Melvis Furtado
+973 36841848
melvismusic@gmail.com
 Gateway to Logistics Excellence

T
ransporters in MIDDLE EAST specialized in Cross Borders FOR curtain trailers, Box
trailers to accommodate 26 Standard Pallets, 25 Tonnage are in the average of
around 20 Major Players but the real issue is 75% of the trucks for overland transport
is controlled and owned by single owners of Origins of three countries resulting in
“MORE DEMAND and LESS SUPPLY OF EQUIPMENT”. Most of the trailers out here in
EVERYONE IS MIDDLE EAST outbound are 2nd hand purchased from European markets which are in the
range of 04 yrs upto 20 yr olds. Very Few MNCs used cost effective measures to look at costs
FOCUSING ON
and First cross border supplier that introduced the concept of two way transport between
WAREHOUSING AND Saudi and MIDDLE EAST & other Gulf countries leading to cost & time savings to CUSTOMER
TECHNOLOGY BUT IS which the objective was not to just look at backhaul saving costs but also getting the equip-
ANYONE LOOKING AT ment back to MIDDLE EAST to load the next load out so that fulfillment can be on not just
CURRENT STATE OF ready load, transit time, Batha Bottlenecks but a feasibility of maximizing your exports in a
monthly bucket. So as of today we have to source single owned trucks with or without a firm
AFFAIRS WITH
commitment of the driver being reliable and accountability can be defined in terms of safety
TRANSPORT to our cargos. Its not that these drivers can vanish with the cargo and run off to their home
EQUIPMENT ? countries but Pilferage issue or damages to the cargo is the real issue. There is no GPRS or RFI
ISNT ID control via technology very openly used by 75% of the existing transporters which is wor-
TRANSPORTATION rying. While we understand the reasons for the new logistical approach, we give below our
view-point so that we can have a well-rounded off and careful implementation.
MODULE THE KEY
BRIDGE BETWEEN STRENGTH & WEAKNESS OF THE SPLIT IN TRAFFIC BETWEEN FOOD & HPC
WAREHOUSE AND A) STRENGTHS
END OF THE CYCLE - The most important is the relationship building and the credibility of not just negoti-
DISTRIBUTION TO ating a rate BUT CUSTOMER SERVICE and BEING A GOOD LISTENER TO THE TRANSPORTER ON
SUPPLY CHAIN UNDERSTANDING HIS ISSUES
- VISIBILITY BY Transport companies and customers is very IMPORTANT
SOLUTIONS ?
- Clear communication between CUSTOMER &Transporter on what is required and
IS IT BECAUSE when. So careful planning from customer with a forecast on requirements to be conveyed so
TRANSPORT that Transporter can actually SECURE the Driver, Equipment and COMPLETE the MODALITIES
PROCUREMENT OF of PLACING THE TRUCK AT The customer’s warehouse on time. It would be clear for CUS-
NEW EQUIPMENT TOMER to identify the transporter which is different from the existing system where different
transporters do the movement of same brand of products.
OUT OF USA AND
- Communication during transit is also easy for CUSTOMER as they know blanket / vis-
EUROPE FOR ibility who is the transporter product wise. (TRUCK VISIBILITY REPORT and HANDS ON CON-
TRAILERS IS 170K $ + TROL OF WHERE THE DRIVER IS MOST IMPORTANT)
FREIGHT RESULTING - ALWAYS Pay the transporter on time based on Credit terms or whatsoever and then
IN A DEFENSIVE Service can be Obtained. Set KPIS for Transporters and also Benchmark the services offered
on regular intervals.
APPROACH BY
B) WEAKNESS
TRANSPORTERS ? - The waiting time for the Certain products like Soaps & Consumer / electronics for
transporter is more as being experienced presently. To give you the recent example a few of
trucks are waiting for over a week for loads ex Jebel Ali due to Batha Border clearance delays
and bottlenecks.
- The turn around time for Most NON FOOD products is more time consuming than
Foods for e.g. as FOOD is non-dutiable & can pass through the border formalities quite fast.
For SOAPS it is more time consuming.
- Average of trips for e.g from Dubai to Jeddah for Foods could be 3 or more per month
where as for Non Food could be not more than 2 per month.
- Obviously the cost is higher for Non Foods transportation for the transporters.
Where as the cost of the Food is spread over 3 trips per month it has to be covered in 2 trips
for Non Foods products ultimately hiking the per trip cost.
- More equipment needs to put into the traffic due
to higher turn around time. SO MORE INVESTMENTS of
MINIMUM 01 MILLION AED FOR 2 TRUCKS
- If a Law DOES COME IN THE FUTURE where RTA or
Transport Authorities IMPLEMENT THAT ONLY 07 YRS AND
BELOW VEHICLES CAN BE ON THE ROAD, IMAGINE the
IMPACT ON TRANSPORTATION MODE.
- The wear and tear on the vehicle is more as NON
FOOD products are more heavier than the FOOD type of
products which makes maintenance cost higher.
- All the above could result in sourcing the equip-
ment from market more costlier & difficult too. REASON is
SOME SINGLE OWNED TRANSPORTERS BID FOR HIGHER
VALUE OF INCOME ON FREIGHT.
COST BEHAVIOR AS OF FEB 2009 WHEN COM-
PARED TO 2005/06
• Increase of market prices of Trucking services
• Shortage of Transport suppliers ex MIDDLE EAST
• Increase of Fuel prices in MIDDLE EAST from 5.5 /
gallon in Jan 05 to 12.5 / gallon today
• Increase of all costs including tyres/ equipment
(Trucks and trailers etc).
Examples / trends of cost increases
General Issues:
- Driver Hiring – presently takes 9-12 months when
compared to 1 month a year earlier.
- Traffic ban timing is almost 6.5 hours a day.
- Salaries of the drivers have doubled.
- Traffic fines increased by almost 1000% in most cases
Detention charges are AED 650/- per day per truck/trailer.
Border & customs clearance charges are not included in the
above rates.
Various Issues with regard to loading/offloading both in
MIDDLE EAST/KSA.
1. NON FOOD loadings from Jebel ali are always from two
locations for most companies and loading takes approx 8 to
10 hours. Please note that in such cases an additional
amount of AED 500 will be applicable. LOADING should be
prompt
2. Off-loading of FGI loads at Consignee end in Various GCC
Markets is always delayed due to space problem etc and
due to which the drivers are very much reluctant to load FGI
for Jeddah or customers who donot offload
3. Most Drivers also have a tendency not to take loads to
certain customers in GCC where Back haul is not giving pref-
erence to TRANSPORTER due to reason not known. (eg.
They end up coming back empty as the customer has given
the load to some other transporters!)
4. Short loading from MIDDLE EAST for various destinations
are not informed to the consignee's and when the truck
reaches the destinations there are delays which they have
to rectify resulting in further delays.
SUGGESTIONS FOR IMPROVEMENTS
1.Loading /off loadings at various points have to be
improved on top priority and the trucks should be released
immediately after offloading without keeping them waiting
for hours/day.
2. Internal issues like fax+computer printout+shortloadings
should not result in offloading delays for one or two days.
3.Drivers should be informed about the actual reason for
the delays and not just a common excuse of fax not recd or
communication flow between Exporter and Importer
should be streamlined etc.
4.Weekly requirements should be Centralised as given by
one person and not by different people.get requirement
frm 3 different locations as far as Exports is concerned.
CUSTOMER has to decide the priority destinationwise and
inform the transporter.
5. Advance planning with regard to requirements and also
inform the consignee about the loads arriving at their end
so that they can plan accordingly. In case of any space prob-
lem/holidays/stock count the transporters should be
informed in advance.
COMMITMENT
This has to work both ways on Long term commitment basis
Where NON FOOD loads are not available due to any rea-
son, TRANSPORTER shall be provided with alternate loads to
avoid equipment being idle. To share with you, last loading
of NON FOOD with TRANSPORTER was on 20th Feb 2009 &
no loads of NON FOOD are available till 24th Feb 2009.
Would like to avoid idling of equipment under such circum-
stances. Dedicated trucks for vari-
ous destinations as requested by About Author
CUSTOMER, TRANSPORTER can be Melvis Furtado
worked out once we are clear with Originally from India,
the requirement from your end. has been working for
New Law: Just a word of caution. As the last 15 years with
given to understand, there is new 4 MNCs (Kraft Foods,
regulation being introduced by Unilever ME, Philips
Saudi Government which imposes ME & EMI Music /
the transportation of food products Virgin Records in
into K.S.A is to be done only reefer Supply Chain and
trailers which could apply to FOOD Logistics Roles across
also. For discussion : Number plates ME, Check his profile
of Dubai cannot be used in Saudi on linkedin
and GCC for local trips http://www.linkedin.co
New Laws are coming in force can m/in/melvis
be tough
For your views :
review@log4scm.com