JEDDAH ISLAMIC PORT

Saudi Arabia 2019-2020 | INDUSTRY | VIP INTERVIEW

TBY talks to Farooq Shaikh, CEO of LogiPoint, on Jeddah Islamic Port, competitiveness, and the use of blockchain technology.

How can automotive players benefit from the facilities you offer at Jeddah Islamic Port? And how can the private sector help raise the competitiveness of the logistics industry on the western coast?

Automotive industry has been using the LogiPoint facilities for many years now and we have been a part of the supply chain of almost all the automobile brands being imported in the Kingdom. Automakers lease our yards and store their vehicles here free of VAT and customs duties until they are finally sold and delivered, which is when the VAT and customs duties are paid. LogiPoint also offers an excellent option to automobile-makers, who have more than one representatives in the Kingdom, to maintain their inventory here in the Jeddah Islamic Port under their own control and dispatch units to their clients not only in the Kingdom, but to other clients in the region as well. The Private sector has to actively play its part in realizing the objectives set forth by the Government in the Vision 2030 plan. We will need to collaborate with and work extensively with all the stakeholders in the Logistics industry including first and foremost the regulatory authorities, the shipping and logistics companies, the freight-forwarding industry, as well as the end-users including traders, manufacturers and retailers. Our perspective is that everything can be pictured as a unified chain. We should not fixate on any one mode of transportation as long as everything is conducted with complete transparency, efficiency, reliability and security. At the end of the day, we are in the business of moving goods; it does not matter whether we do it using sea, land, or air routes.

Are Jeddah's logistics solutions sophisticated enough to make it a regional hub?

That's a very good question. Sophistication is an ongoing process, and over the past decade we have seen Jeddah emerge as an increasingly sophisticated market vis-à-vis logistics solutions. We have to cover some ground before we can be amongst the world's most sophisticated logistics hubs, but we have two great enabling factors working in our favor – one is the vision and the will of the leadership to transform not just Jeddah but the Kingdom into a sophisticated market, and the other is technology. These two elements act as great accelerators for sophistication in any field. It is then for the Private sector enterprise to leverage the opportunities and break new ground. On the specific question of sophistication, while enabling regulatory measures and investments in infrastructure development are paramount, right now the focus should be on the next phase, which is to optimize the existing assets and infrastructure and to maximize their output. The Jeddah Islamic Port is the logical geographical gateway between the East and the West, lying as it does on one of the world's busiest shipping corridors. However, over the past few decades, other regional hubs have acquired greater sophistication because of which many businesses, including even some of the largest Saudi businesses, have opted to transit their cargoes through them despite the longer transit times involved. That is all now set to change in a big way, as Jeddah takes its rightful place alongside the world's logistics hubs through a commitment to innovation as well as through collaborations with the industry stakeholders. At LogiPoint we pride ourselves at having been at the forefront of the sophistication drive. Today, our clients can terminate East-bound imports from the Western origins in Jeddah Islamic Port, and move them under bond to all destinations within the GCC by road. Our Value Added Services in the Bonded Zone have enabled clients to import goods here, customize them for their respective markets, and serve their clients with just in time deliveries. We are already receiving air imports for import clearance as well as re-export via LogiPoint. More than anything else, we have brought an enabling mindset to the Logistics market of Jeddah, which has opened up a world of opportunities for regional and global trade.

How have new technological developments such as Fasah impacted Logipoint's business and the logistics sector in Saudi Arabia?

The 24-hour customs clearance took us to the same level as the rest of the world. Customers' first priority has never been time, but rather transparency and certainty, because planning a supply chain for your business requires knowing a lot of details about inspections and rates in advance; however, the current decline in business volumes has led us to think of alternative solutions: shipping a container from one part of the world to another has never been easier given the present availability of services and all-inclusive solutions in the market. Our customer composition is going to change totally over the next few years in a way that shipping lines will form the largest segment of our customers. Clients are keen to work with a single company that takes care of every step instead of turning to a company for maritime shipping before finding another for customs clearance. As such, big industry players will become even larger and smaller players will start working for large players because they cannot afford the technological transition. At the same time, there are many manufacturers and logistics companies that are beginning to use blockchain-powered tracking technologies, something that all players will need to integrate into their supply chain system within two to three years, particularly as the shipping industry becomes more digitalized by the day.

What is required from the Saudi government to kickstart economic activity and promote a viable, competitive business environment?

Our economy has been traditionally reliant on oil prices and government investments, but activities in the construction sector can change this situation, given its size. After three years of decline, consumption is on the rise again, which is seen as a positive improvement; however, stronger investments from the private sector are necessary to move away from the current heavy reliance on government spending, a trend that has completely taken off. Having good regulations that encourage competition and private sector participation are both important, but implementing these regulations and people's compliance is of equal importance.