There is high competition in the shipping industry.

Maad Ehsan Abdul JAWAD Managing Director GLOBE GROUP

On the ready

August 4, 2017

Maad Ehsan Abdul Jawad, managing director for Globe Group, talks to TOGY about the latest trends in the shipping sector, the threat of cyberattacks and how the government’s Vision 2030 initiative will change the business landscape of Saudi Arabia.

Established in 1976, Globe Group is one of the largest marine services companies in the country. The group has operations that cover shipping, logistics, industrial works, port operations, cargo surveying and operations and maintenance.

• On Vision 2030: “I think Vision 2030 will improve the shipping industry because the government said it would spend a lot on the main business stream, which we believe is oil and gas and petrochemicals. We will start seeing the improvements from Vision 2030 after 2030. We will not see the full outcome of vision straightaway, but rather we will notice the change day by day.”

• On Cyber-Threats: “If one [company] has a problem, it affects all of us. We consider ourselves to have robust security systems in place, but you never know what could happen.”

Maad Ehsan Abdul Jawad also discussed how Globe Group has remained remained strong despite the downturn that has hit the container industry. Most TOGY interviews are published exclusively on our business intelligence platform TOGYiN, but you can find the full interview with Maad Ehsan Abdul Jawad below.

How have you remained strong during the downturn that has hit the container shipping industry?
It is a very tricky market. It has been tough since 2011 when the oil prices were at about USD 100 and we were facing a huge oil bill. When prices went down during the last oil crisis, many shipping companies went bankrupt due to a huge price war. The remaining players in the market are affecting their own market by dumping the prices, which is good at the end of the day for the customers, but you have to be realistic and quote a fair price. We quote a fair price, not to hurt the industry, our clients or our partners.
Globe has been around for more than 40 years. Our clients have been with us on the bad and good days. They know they can rely on us.

What is your assessment of the rise and fall of movement in the global shipping sector over the last couple of years?
It went into a huge dip last year. We believe this year is still a correction year. It is still tough. However, we believe that in 2018 things will start to stabilise. We have seen an increase in prices since 2017. Of course, oil prices are still low, which means the cost of operation is still low.
Two major players went out of the market last year. One is moving now, and two mergers are happening this year. We believe there will be three new alliances coming in 2018.

What is the key business area for Globe Group?
We export Saudi Arabia’s goods. We primarily export petrochemicals; Saudi Arabia has billions of dollars of petrochemical goods that we export. We export what the factories produce.

 

What can you tell us about your merger with Hoyer GmbH?
One of our sister companies did that merger. We call it JV Hoyer Saudi Arabia. We are a Saudi transport company. We need a strong partner in some areas to give us strength in some sides of the business, a backbone and the professionalism of an international partner to meet our strategy. We are happy and Hoyer is happy to have a strong partner in Saudi Arabia that knows the market. We will help each other in our areas of expertise.

Have automation and IT started to play a larger role in operations?
Yes and no. The main investment is human capital; we always need people to operate the entity. We have been implementing the Saudisation policy for eight years to try to have an 80% Saudi workforce by 2030. While IT is a good improvement to add to the business, you cannot rely on it 100%. We always need people, a group, to run operations smoothly and integrate the various sectors. IT only assists our operations.

Are ships moving towards using LNG as fuel?
Maybe in the future, but as of today, you still need diesel. These big ships need time to be tested. It is a difficult industry, and you can’t immediately change. You would go bankrupt if a big change like this happened overnight.

Is the shipping sector vulnerable to cyberattacks, such as the one that hit Maersk in June 2017?
Yes. If one [company] has a problem, it affects all of us. We consider ourselves to have robust security systems in place, but you never know what could happen.
There is high competition in the shipping industry. That is how the market survives: by giving the customer the best service.

Have you been diversifying the company to remain competitive?
Yes. We have two facilities for tank cleaning, one in Jubail and one in Jeddah. Additionally, we have our own tanks for transportation and export.

How will government initiatives change the face of the shipping industry in Saudi Arabia?
I think Vision 2030 will improve the shipping industry because the government said it would spend a lot on the main business stream, which we believe is oil and gas and petrochemicals.
We believe more plants will come [on line], which will support the shipping market. They are starting a car plant and a rubber plant. We will have more specialised and diversified exports. You cannot export everything, but the government is focusing on the 2030 Vision to focus on other projects.
We will start seeing the improvements from Vision 2030 after 2030. We will not see the full outcome of vision straightaway, but rather we will notice the change day by day.

For more information on Globe Group in Saudi Arabia, including the company’s merger with Hoyer GmbH, see our business intelligence platform, TOGYiN.
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