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Briefings from Oman Logistics Logistics 2 Briefings from Oman The Public Authority for Investment Promotion & Export Development Briefings from Oman Logistics Logistics 2 Briefings from Oman Briefings from Oman Published by Ithraa, the Sultanate of Oman’s inward investment and export development agency, Briefings from Oman is a series of ten sector-specific documents that explore waste management, logistics, tourism, health, manufacturing, agriculture and fisheries, and more. Designed to connect the world with contemporary Oman and its dynamic business community, each Briefing provides a snapshot of one sector in the sultanate and the ambitious projects and innovative business ideas currently driving that space. Informative, realistic and easily digestible, the Briefings are intended to inspire business, investors and our partners at large to consider the significant opportunities these sectors present. Distribution Briefings from Oman are offered free-of-charge and distributed to Omani embassies, ministries, foreign trade missions, at international trade shows, B2B meetings, as well as to schools, colleges and companies across Oman. If you would like to share Briefings from Oman in a hotel or at a business event, please send an email to [email protected] for further information. Disclaimer Although every effort has been made to ensure the accuracy of the material contained in this document, complete accuracy cannot be guaranteed. Ithraa will not accept any responsibility whatsoever for loss or damage occasional or claimed to have been occasioned, in part or in full, as a consequence of any person acting, or refraining from acting, as a result of a matter contained within this document. All or part of this document may be reproduced without further permission, provided the source is fully acknowledged. Published December 2016 Editorial: Taleb Al Makhmari Editor-in-Chief Dave Pender Advisor Sajda Al Ghaithy Senior Editor Nadia Al Lamki Editor Lubna Al Harthy Production Manager Walyam Al Said Production Associate Design: Lamahat www.studiolamahat.com Photography courtesy of Ithraa & PEIE 3 Oman Logistics A Snapshot The logistics sector plays a vital role in Oman’s modern and ambitious economy and is key to increasing inward investment, non-oil exports and the nation’s competitiveness. Logistics isn’t only an important sector in its own right but also a critical enabler for businesses of all sizes operating across the sultanate - from the gypsum quarry in Thumrait, hypermarkets in Seeb, battery manufacturer on Rusayl Industrial Estate, the pelletizing plant in Sohar to the plastics exporter on Salalah Free Zone. A well-oiled logistics sector provides Omani businesses and manufacturers with ways to increase efficiency, go greener and drive profits. Earning revenues of US$7.87bn in 2013 that are forecast to reach US$12.02bn in 2017, Oman’s logistics sector is already competitive, contributing 4.9% to the sultanate’s GDP in 2015. The industry is led by multinationals offering a comprehensive range of sophisticated logistics services, down to smaller national freight forwarders offering the simple storage and shipping of merchandise. Oman’s logistics industry is expected to grow at a CAGR of 7% between 2015 and 2020. The key drivers for economic growth are the infrastructure investments in ports, free zones, industrial estates, roads, airports and rail network, economic diversification efforts and trade with GCC states, Asia and Sub-Saharan Africa. Logistics 4 Briefings from Oman A BIGInvestment Following an announcement in October 2013, Oman will spend over US$50bn in infrastructure projects over the next 15 years, US$20bn of which is earmarked for the transport sector. This sizeable investment in infrastructure offers widespread and attractive opportunities for logistics providers, particularly those with a significant presence in the global freight forwarding business. Investment in infrastructure is also expected to create 80,000 jobs in logistics by 2020, rising to 300,000 by 2040. 5 Network Sea Road Air Serving the emerging markets of the The recently opened 680km road Recent investment in Muscat, Salalah, GCC, Asia, Africa and Iran are the between Oman and Saudi Arabia which Sohar and Duqm airports, the growing deep-water ports of Salalah, Sohar and runs through Rub Al-Khali will increase number of Oman Air destinations and Duqm and their respective free zones. road freight by providing a more direct the launch of Salam Air, the sultanate's Oman’s three key terminals offer route between the two countries as first low-cost carrier will all help further businesses an attractive alternative well as reducing the number of border facilitate international trade and the to more costly ports of call in the Gulf, crossings. The highway on the Oman development of Oman’s logistics sector. saving time and fuel and providing side is about 160km long, starting from access to other modes of transport. Tanam in Ibri and ending at the Saudi border. From Saudi Arabia, it stretches Sea transport accounts for more than 247km from the Omani border to the 80% of freight which is expected to grow Shaybah Oil Field and 319km from by 4.8% in 2016, this growth is being Shaybah to the Batha-Haradh road, driven by increasing intra-region GCC which leads to Riyadh. trade as well as demand from Europe and the emerging markets of Asia and Africa. Rail Oman continues to develop a national rail network: a modern, mixed traffic railway for the movement of freight and The Project is one of Oman’s passenger services. This new railway system will connect largest infrastructure projects, the centres of population and growth drivers of Oman and will form part of the wider GCC Railway Network. To achieve with a capital investment this, Oman Rail will link the Sultanate’s three main deep water ports, free zones, logistics hubs, mineral resource and expected to be up to US$20bn. petroleum development areas with the population centres of the country and with the GCC. It will provide customers with an efficient domestic and international rail-based logistics solution for intermodal containers, bulk minerals and liquids, break bulk and industrial freight, bulk minerals/liquids and passengers. The railway network will be a major step in Oman’s journey to become a key logistics hub for the region and the gateway to the GCC. The Oman Rail Project offers a unique opportunity for the country to enhance local capacity - people and industry - whilst substantially contributing to the overall wealth of the country through In Country Value (ICV) and wider socio-economic benefits. Once completed, the estimated total length of the railway network will be 2,135km. The Project is one of Oman’s largest infrastructure projects, with a capital investment expected to be up to US$20bn. Logistics 6 Briefings from Oman Key Trends Driving Oman's logistic Sector Oman’s location Direct on two major Deep-water ports international shipping routes trade routes to which are within two weeks of some of the world's GCC major ports. India in Salalah, Duqm and Sohar. Africa Publication of the Sultanate of Oman’s Strategically located Logistics Strategy 2040 (SOLS 2040). free zones in Sohar, A blueprint designed to transform Oman into Duqm, Salalah and a world top 10 logistics location by 2040. Al Mazunah. Major re-development Sophisticated road of Muscat and Salalah network linking ports, Airports and the free zones, airports Construction of a national railway construction of regional and industrial estates. network and its connection to the airports in Sohar, Duqm GCC rail network, improving efficiency and reducing logistics costs. and Ras Al Hadd. 7 Oman’s logistics industry currently employs 30,000 people and handles over 3 million TEU. However, by 2020 the logistics sector is targeted to employ 80,000 people and handle over 10 million TEU. Leveraging free trade agreements with the US and Oman’s strategic location in the Arabian Gulf makes it a major trans-shipment hub on the East-West trade route. As a member of the GCC, Oman benefits from Singapore, the GCC customs regional trade policies, customs regulations and the integration of national and union and the General Arab regional transport corridors. Free Trade Agreement. Investment in infrastructure Launch of Oman Global and technology to upgrade Logistics Group SAOC, ports and free zones in Investment of over US$180 million a government holding Sohar, Salalah, Duqm and in large-scale extensions of PEIE’s company, to synchronize Al Mazunah. industrial estates. and leverage government investments in the sultanate’s ports, free zones, logistics centres Completing 49 road and rail, maritime and projects at a cost of land transport companies The introduction and US$5.4 billion covering and to achieve strategic roll-out of a National 1,650 kilometres. development objectives. Broadband Strategy. Logistics 8 Briefings from Oman Potential Oman lies at the crossroads of two important waters – the Arabian GCC markets - land based transport with rail could be up to 36 hours Sea and Indian Ocean – through which a sizable chunk of global faster than shipping with feeders. More reliable access into and out shipping and trade passes. Suitably leveraged, Oman’s strategic of the GCC markets, avoiding the politically sensitive Strait of Hormuz geographical location offers comparative advantages to industries and the congested ports of other GCC countries. Cheaper access into and investors targeting markets in the GCC, Asia and East Africa. and out of the GCC markets up to US$250,000 savings on fuel Indeed, the sultanate’s location offers faster access into and out of the charges per vessel. Cost Savings For Oman’s ports the logistics opportunity is there for the taking. Ministry of Transport & Communications commissioned research Suez Canal on consolidation in the container shipping industry estimates that on a benchmark voyage direct from Singapore to Suez, a weekly call at Salalah for an ultra-large container vessel would represent an Jebel Ali (UAE) annual cost of US$4.47m, at Duqm US$8.69m and at Sohar US$17.09m.
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