hrob sign Ther) ess. the es 00 re Oman: One of the World's Next Great Logistics Hubs?* Aristides Matopoulos Aston Univer

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Hrob Sign Ther Ess The Es 00 Re Oman One Of The World S Next Great Logistics Hubs Aristides Matopoulos Aston Univer 1 (80.21 KiB) Viewed 94 times

hrob sign Ther) ess. the es 00 re Oman: One of the World's Next Great Logistics Hubs?* Aristides Matopoulos Aston University, United Kingdom Panagiotis Nikolaou Oman Logistics Centre, Oman INTRODUCTION Oman at the entrance of the Arabian Peninsula. The discovery of oil in 1964 turned Oman's economy accounting for over 30% of the country's gross domestic product (GDP) (Central Bank of Oman, 2020). With oil prices tumbling over the last decade, boosting non-oil economic activities and non-petroleum sectors remain pivotal to reduce dependence on the petroleum sector and to ensure sustainable growth over the medium to long run. Logistics along with manufacturing and tourism are amongst the sectors identified as central to Oman's post-oil future, and this is also reflected in Oman's 2040 vision initiative (Oman 2040, 2020). Key facts Oman has a population of about 5 million people (of which approximately 45% are expats). It is strategically placed at the mouth of the Gulf at the south-east corner of the Arabian Peninsula (Figure 1) and, in the 19th century, vied with Portugal and Britain for influence in the Gulf and Indian Ocean (BBC, 2020). The country borders Saudi Arabia, Yemen to the south and the UAE to the west (Figure 2). Oman's close proximity to a market of 2.5 billion people and its location on two major international ship- ping routes, which are within two weeks journey time of some of the world's major ports , and the country's reputation as a stable, peaceful nation that maintains good relations with its neighbours make it an attractive entry point to the Arabian Peninsula for global freight. sion rather than to illustrate either effective or ineffective planning "The material used for this case was compiled from public sources and is intended to be used as a basis for class discus Z009ZZES
CASE STUDIES OMAN: ONE OF THE WORLD'S NEXT GREAT LOGISTICS HUBS 295 SOLS 2040: A plan for moving logistics forward Whilst logistics is already a significant contributor to Oman's economy after petroleum, contrib- uting US$2.8 billion to its GDP in 2018, the goal is to make the logistics sector the country's second largest source of GDP (reaching up to 14% by 2040), and a global logistics hub (Oman 2040, 2020). The sector has already shown its potential ( with the highest growth rate of 33% among some of the Gulf countries such as Saudi Arabia, Kuwait, the UAE, Qatar and Bahraini but the country is still a long way from establishing itself as a regional powerhouse, les share of total logistics activity in the region has remained low at about 2% (DHL, 2019). The Sultanate of Oman Logistics Strategy 2040, known as SOLS 2040, was initiated by the Supreme Council of Planning, under the auspices of the Ministry of Transport, with the purpose of establishing the country as a global logistics hub. The implementation of SOLS 2040 draws on four main pillars trade facilitation, market segmentation, human capital and technology, Current logistics network and activities Oman has a good logistics infrastructure network and has seen many improvements in the field, but there are still a lot of development projects underway. Roads Oman has announced plans to expand and modernise its main and secondary road networks in order to link rural areas with urban centres in the Sultanate. In 2018, the length of paved roads in Oman's road network was about 15,000 km, and currently several projects underway or close to completion, of which a new Muscat-Salalah road and the construction of a parallel highway to the one currently linking Muscat to Dubai. In January 2020, the Al Batinah Expressway opened to the public that connects Muscat with Sohar and the UAE border (leading to Dubai). The 191-km motorway (approximately US$250 million budget) stretches from the Wilayat of Bidbid to the Wilayat Al Kamil Wa Al Wafi (Ministry of Transport, 2018). Ports There are three main commercial ports in Oman (Figure 3), which together run approximately 200 weekly maritime services to 86 commercial ports across more than 40 countries (see Appendix) providing a vast network for clients (ASYAD, 2020). Sea transport accounts for more than 80% of freight (Ithraa, 2016). The competition from ports around the area is already fierce, so each of the ports has its own key development focus and are meant more to supplement each other than compete directly. For example, Sohar Port is located in the North of the country, outside the congested Strait of Hormuz, and was set up as a 50:50 joint venture with the Port of Rotterdam in 2001. It is Oman's largest industrial port and free zone and one of the few global ports equipped with deep-water jetties, which makes it capable of handling the world's largest ships and a wide variety of dry, break and liquid bulk, as well as container shipping. It handles almost 60 million tonnes of cargo, over 800,000 twenty-foot equivalent units (TEUS) per annum with planned capacity to reach 7 million TEUs per annum, and it is structured around the following clusters: hydrocarbons, pet- rochemicals and plastics; iron and steel; aluminium, food and automotive distribution. It has good connectivity with other countries and direct road connections to Saudi Arabia and UAE (Sohar Port, 2020). 20089ZZESE
CASE STUDIES OMAN: ONE OF THE WORLDYS NEXT GREAT LOGISTICS HUBS 297 which result in knowledge spill overs. Often, there are specific bilateral agreements in place duties, 0% personal income tax for employees and dedicated sector specific zones and chusters which offer additional benefits. For example, in the case of the Port of Salalah, the Oman-US Wade Agreement guarantees exporters duty-free access to the US market provided at least 35% of their value is generated in Oman There are additional development plans to further increase the port Infrastructure and improve Tornectivity. For example, Oman's South Al Batinah tard port to commence in 2019-2020. This Inland dry port is designed to serve as a midway point to facilitate the transport of containers from the Port of Sohar and other ports, but also to upgrade the overall transport capacity, expedite the clearance process and reduce the total cost for the traders (Logistics Middle East, 2019 Airports The two biggest airports (Muscat International Airport and Salalah Airport) have been rebuilt and expanded Salalah expanded airport opened in 2015, and the new Muscat International Airport opened in 2018 and handled over 15 million passengers and 200,000 tons of freight in its first year. This could increase eventually up to 75 million passengers a year. Four other airports, Sohar and Adam (in the North), Ras Al Hadd (East) and Ad Duqm (East South), have also opened recently (Oman Airports, 2020). Rail Oman Rail Company was founded in 2014 to develop a 2135-km railway network, which also forms part of a wider proposed trans-Gulf rail network connecting all six GCC states (ie. Oman UAE, Saudi Arabia, Bahrain, Qatar and Kuwait). When complete, it will connect Oman's three deep-sea ports to the rapidly growing national and GCC-wide industrial, commercial and popu- lation areas (Times of Oman, 2018; ASYAD, 2020). Logistics service providers and human capital Logistics infrastructure is of paramount importance to develop competitive and modern services, but the existence of a sufficient number of competent companies, along with qualified personnel, could influence significantly any strategic plan. Oman has seen the emergence of a wide network of Omani and foreign logistics service providers being actively involved in the country. For exam- ple, there are about 20 international and local shipping agents currently operating in Oman's ports. In addition, there are currently some 15 logistics, transport, cargo operations, aviation and international trade-related programmes offered by 11 colleges and universities around the coun- try. Three logistics-related programmes are also offered at the master's level. Lately, effort has been put into developing the vocational education and training sector in order to make training avail able for the vast amount of opportunities given at the vocational level. A competency-based skills framework is underway, while regulated qualifications and apprenticeships are also currently under development. This is important due to the significant growth of the workforce in the sector, which is expected to increase from around 85,000 in 2020 to 200,000 in 2030 and up to 300,000 in 2040.
296 PART FIVE SUPPLY CHAIN DESIGN AND IMPROVEMENT Afghanistan Iran Jordan Iran Pal اور مالی LA Saudi Arabia E Sharport Om Duam port n Eritrea Yemen Salata port Oyberry Ethiopia Figure 3 Key commercial ports in Oman (Source: Google Maps, 2020.) Dugm Port central-eastern of Oman, is a joint venture with the Port of Antwerp. The port has a quay 3,5 million TEUs per annum and a general care certainer with capacity of 5 million tons of com- modities (eg, dolomite and limestone, silica sand, clay/shale) per annum (Port of Duqm, 2020). In addition, it specialises on oil and gas and its Liquids and Oil Terminal serves major refinery and planned petrochemicals complexes. In addition, it is a hub for international military and naval logistics, and South Korea's Daewoo Shipbuilding and Marine Engineering has been operating a dry dock at the port, where ships and tankers can also be repaired, since 2012 (CNN, 2018). Its economic zone is the largest in the Middle East and North Africa (MENA) region. Salalah Port in the South of the country provides almost zero deviation from the major trade lanes of Asia-Europe, Indian Subcontinent-Europe and Middle East-Europe providing considerably bet- ter transit times (approximately 30%) than other competing ports in the Gulf. It is one of the most important container and cargo terminals in the region handling per annum close to 4 million TEUS and over 70 million tons of cargo (wet, dry and bulk). The port can serve any size or type of vessel be it container, cargo, crude carriers or even cruise ships (Port of Salalah, 2020). It has also an 18 square kilometre free zone adjacent to it. The port is structured around the following clusters: manufacturing, warehousing, logistics and distribution, office facilities, retail outlets, resort and residential developments (Port of Salalah, 2020). The nearby airport provides air cargo connectiv- ity, which will further be strengthened by the Gulf Cooperation Council (GCC) rail network that will make Salalah the fastest connection point between the GCC market and the rest of the world. In many cases, ports in Oman are adjacent to freeport zones, which offer some key advantages such as 0% corporate tax for a specific period, low operating costs, 0% import and re-export