Integrated efficiency in shipping and dry-docking

Oman

Ibrahim Al Nadhairi, CEO of Asyad Shipping & Drydock, talks to The Energy Year about the synergies found in combining Asyad’s Shipping and Drydock arms, the company’s ambitious fleet expansion plans and how its ship-building activities are developing. Asyad is Oman’s flagship global provider of integrated logistics services.

Can you walk us through Asyad Shipping & Drydock’s recent integration and main lines of services?
In early 2020, Asyad integrated its shipping arm with its dry dock company, and Asyad Shipping & Drydock was created. We share one executive team to optimise efficiency and align leadership, leveraging the synergies between our drydock and shipping activities.
Today, Asyad Shipping is Oman’s leading global shipping provider that serves customers around the world and connects Oman with key regional and global markets. We have an ever-growing fleet of 65 ships, and in January 2021, we bolstered it by adding three brand-new VLCCs to replace three older models. The average age of our ships is between 10 and 12 years, particularly for VLCCs; our aim is to maintain a lineup of modern ships that not only ensure efficiency in terms of operational costs but provide a competitive advantage and better environmental impact. The younger the vessel is, the lower fuel consumption and carbon emissions it offers; this translates to higher efficiency both operationally and ecologically.
Our diversified fleet features 15 VLCCs, six LNG tankers, 15 product tankers, two container ships (as we have recently penetrated the container market) and 11 bulk carriers. We also charter about 10 more ships to bolster our bulk shipping capabilities. Our bulk carriers include Valemax-class ships with a capacity of up to 400,000 dwt, the biggest ever constructed.
Supporting our comprehensive shipping fleet, Asyad Drydock, based at the Port of Duqm, operates one of the largest dry docks in the MENA region, able to handle vessels of up to 600,000 dwt. Currently, we have almost 4,000 workers, and we have doubled our capacity in the last few years, from 14 to 28 large-size ships while using the same assets already at our disposal.
With its current facilities fully utilised, we invested in buying a Panamax-size floating dock, which is expected to become operational in Q2 2023 and ready to accommodate the growing global demand for the dry dock’s services. This substantial addition will allow us to manage one of the largest vessel types in circulation, from 50,000-80,000 dwt, and expand our capacity by 20%. As it stands, the dry dock is designed to service up to 200 ships per year. And thanks to the floating dock, we expect to be able to take 40 additional ones, bringing the yard’s annual repair capacity to 240 ships.

What would you identify as the company’s key strengths for ensuring consistent management and operational efficiency?
In Asyad Shipping & Drydock we are an example of a virtuous combination of local talent, with a strong 85% Omanisation rate, and international experts adding valuable global expertise and transferring the know-how. Within our organisation, human capital is paramount; we have built an elite in-house technical and commercial management team working together under the same roof towards realising Asyad’s vision.
In addition to optimal planning of human resources, our efficiency comes from the synergy between our shipping and drydock arms and the fact that we use our fully owned shipyard. This enables us to be flexible in terms of assessing when it is convenient for the shippers to deploy the ships – so that it does not compromise their ability to acquire new customers – and, at the same time, when to offer our ships to meet their needs. When demand for dry docking is high, we want to capitalise on it. This is the type of synergies that makes Asyad a provider of truly tailored and dynamic solutions that meet customers’ needs.
In other words, we set the timing of ship entry and exit in a way that maximises efficiency and makes the best use of our assets. Our business model is to avoid keeping the shipyard fully booked. Whenever we see that it is a good time to host ships, we do not occupy the entire yard with our own. At times of low demand for dry-dock services, we enter the yard; at times of high demand, we leave. This allows us to ensure maximum operational efficiency, optimise resource allocation and maintain our own fleet in top shape.
Finally, Oman has recently been ranked first in the GCC region on the Trading Across Borders Index published by the World Bank, excelling in shipment Customs clearances, inspection rates, and pre-arrival container clearance. The country was also ranked fastest in the world for port call hours in 2020 according to UNCTAD, with Asyad achieving a 2.5% Customs goods inspection rate. This compares to an average of 3% across the EU and positions us as industry leaders, meaning that almost all Customs preclearance is done through advanced screening processes that ensure low dwell times and save money.

What is the company’s commitment to sustainability and to reducing its carbon footprint?
Global shipping accounts for about 3% of CO2 emissions worldwide, and as an environmentally conscious global corporation, we are very proactive in playing our part to cut down emissions. For us, sustainability is a matter of culture.
To lower emissions and reduce our carbon footprint, we are following three main approaches: reduce the speed of our vessel in order to consume less fuel, thereby lowering the resulting pollutants; adopt the latest technologies such as the so-called exhaust gas cleaning system, a device installed onboard vessels that scrubs harmful oxides from exhaust gases; utilise new, modern ships that burn low-sulphur fuel of between 0.1% and 0.5%, in line with the IMO 2020 regulation, which reduced it from the previous 3.5% allowed.
Our commitment to sustainability goes beyond the quest to reduce GHG emissions. We are actively building strategic partnerships and developing collaborations with different institutes, within both academia and industry, to understand how to improve the efficiency of our ships, better control the emissions generated and boost our R&D approach to deal with these challenges.

How does reducing the speed of the vessels to cut emissions impact on-time delivery?
Following the 2009 global recession, the shipping industry adopted the so-called slow steaming protocol, a process of deliberately reducing the speed of cargo ships to cut down fuel consumption and pollution from emissions. In collaboration and agreement with our charters, we are applying this practice, which is particularly effective when travelling short distances – for example, for ships going to India or the upper Gulf. The situation changes for long hauls; if a ship is going to the US, Brazil or China, reducing speed might eventually increase emissions because it will extend the number of days it takes for the cargo to reach its destination.
We carefully deploy such emissions-reduction techniques along with other sustainability initiatives that aim to increase our efficiency and better utilise every voyage and every mile. For example, in early 2022, we launched the new direct shipping line connecting Oman with Singaporean and Malaysian ports: an initiative to promote the competitiveness of our ports, provide added value to the national economy and strengthen Oman’s position as a global logistics hub and transit gateway.
In addition, we are constantly adopting the latest cutting-edge technologies to realise our sustainability objectives. Starting this year, we will soon receive and put in operation modern ships of the latest models, that feature significantly lower fuel consumption and the ability to reach higher speeds. We expect to receive two ships in 2023 to support our container business. This will support us in our journey towards sustainability in maritime and shipping, becoming more environmentally friendly while meeting rising customer demand.

Can you give us an overview of Asyad Shipping’s current and future market position?
Asyad is not perceived as a major international player yet, mostly because the majority of goods that reach Oman are coming either from China or Europe, where the big mainline operators are. So, our market share for shipping is around 30%.
In the container market, our focus at the moment revolves around Oman, India, Singapore and the upper Gulf region, which represent our direct reach, and we also built a reliable network of partners and collaborators with big players in the market. We are aware of the importance shipping has today for the country’s logistics chain, and we recognise our role in securing the supply chain vital for our national economy and society. To that end, we continue to pursue our bullish development plans and aim to expand our fleet by 50%, reaching around 95 fully owned ships by 2027/2028, to which we plan on adding around 60 additional charter ones.
Moreover, we have set an ambitious programme to open new routes of strategic value. Our plan for 2023 is to add the Red Sea and East Africa to our destination portfolio. For 2024, we are targeting China. Looking west, we have no foreseeable plans to go beyond the Suez Canal, but it is a situation we are closely monitoring. If business looks promising in that direction, then we might consider that area as well.
In the LNG market, Oman in 2021 reached its highest LNG export rate in the last 10 years. In 2022, about 35% of Omani LNG exports were transported on our ships. Meanwhile, Asyad has shipped around 11% of total domestic bulk exports.

What is your assessment of the main challenges preventing your company from penetrating the crude transportation segment further?
Oman’s crude production is around 1 million bopd, and our company’s VLCC transportation capacity is approximately 30 million barrels as each ship can take up to 2 million barrels. In short, we could meet the country’s whole demand for crude transport.
However, Omani crude oil is sold on a free-on-board (FOB) basis, meaning that the buyer decides which shipping company to use to move Oman’s oil. Since most of these buyers – from China, the US or Europe – have their own shipping lines, this leaves a relatively small share of Omani crude for us to transport.

Oman is experiencing major downstream developments in the oil industry. Do you see opportunities for Asyad Shipping & Drydock in that area?
We see many exciting opportunities there, especially regarding the Ras Markaz crude oil storage terminal developed by OQ subsidiary Oman Tank Terminal Company (OTTCO), where our crude carriers can be used to transport the crude to the tanking plant. We also see promise in the soon-to-be-commissioned OQ8 Refinery in Duqm, where our product tankers can be used to export the refined products coming from the facility.
We are already in negotiations with OQ for them to utilise our ships and since both the OQ8 Refinery and Asyad are owned by the Oman Investment Authority, making us a sort of sister company, our work together has the potential to generate added in-country value. We are optimistic about this synergy considering that one of our ships has already been allocated to transport the crude for the commissioning phase of the refinery, making us an active contributor to bringing the project to completion.

Can you share some highlights of Asyad Drydock’s activities and business direction?
In line with our overarching development strategies, we are expanding our activities in terms of ship building. In 2022, we delivered two ships of less than 50 metres to the UAE. One of them is made of aluminium, which required a much more sophisticated approach than the most common steel ships in terms of the welding and the technology used. We provided an end-to-end service, taking care of the whole process from A to Z, from design to manufacturing.
Now we are building a fishing trawler for Fisheries Development Oman, as well as a landing craft ferry equipped for passenger and vehicle transport for the National Ferries Company. Our aim within this segment is to be able to locally build ships of up to 100 metres, which would mean covering naval ships for military use, Coast Guard, fishing, tugboats, etc.
With all these ongoing projects, Asyad seems on track in its plans to diversify its shipbuilding products and repair services and grow its clientele to become a leading regional and global dry-dock service provider.

Do you plan to diversify Asyad Drydock’s business portfolio and explore new segments?
We are exploring opportunities to create an industrial division that will cater for renewables. Asyad has the advanced capabilities and the top-notch assets required to fulfil the niche requirements of this industry. Take, for instance, wind turbines: their towers are currently imported, but at Asyad Drydock, we have high-capacity workshops equipped with the technology and skilled human resources to manufacture them. This is the way forward for the Drydock: targeting all those projects, from wind and solar to hydrogen, whose equipment can be made in Oman, thereby seizing growth opportunities and acting as an enabler of sustainability in Oman and beyond.
In addition to having the in-house capacity to undertake such projects, we can also take advantage of the fact that many of these alternative energy projects will materialise in Duqm, representing a huge boost to our production value chain. Asyad Drydock operates within the Special Economic Zone at Duqm (SEZAD), which gives us an unparalleled competitive advantage with regard to both the flexibility we can offer and the costs we need to sustain.
So, the raw material reaches the Port of Duqm then goes straight to our workshops, where the final product is built then exported by our ships. Instead of trucking from outside, we manufacture almost everything in Duqm, and that is the height of efficiency. This entire integrated process is also backed by a simple logistical consideration: the furthest oilfield from the dry dock is less than 280 kilometres away, whereas the closest well-equipped workshop to any oilfield is about 500 kilometres.

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