A push for infrastructure

Oman

Gulf Agency Company Oman general manager Daniel Nordberg talks to TOGY about Oman’s developing logistics industry and highlights the growing competition among logistics companies and ports in the region. The local logistics company was established in 1972 as a shipping and forwarding agent.

Why were cargo activities moved from Port Sultan Qaboos to Sohar Industrial Port (SIPC)?
Cargo activities were shifted from Port Sultan Qaboos, about 230 kilometres to the northwest, to SIPC in September 2014, to divert industrial shipping from Muscat and boost industrial development in Sohar. The shift was also part of Oman’s broader vision of becoming a gateway to the Middle East. SIPC is capable of handling larger vessels and volumes.
The change required new logistical alternatives for several clients. The main issue was that consumers faced delays and additional costs due to port congestion, long waits in Customs clearance and additional transportation costs. These delays put a lot of pressure on logistics companies to provide competitive service.

How competitive is Oman’s logistics industry?
Many new companies are entering Oman’s logistics market. This is due to the increasing number of projects and the Sultanate of Oman Logistics Strategy 2040, an initiative to turn the country into a regional logistics centre.
The projects coming up in the near future will result in a surge in freight coming in from the GCC and various countries around the world. The Port of Duqm is still developing and will hopefully have regular container traffic by mid-2015. The Port of Salalah and SIPC were already capable of handling these large volumes.
Both the domestic logistics industry and ports in the region are becoming more competitive. Abu Dhabi has invested significantly in developing Port Khalifa. The Port of Jebel Ali continues to grow and Hamriyah Port in Sharjah is emerging as a key logistics centre. Companies in the sector are also competing fiercely to attract the best talent. There is a big push towards hiring Omanis despite a limited pool of workers.
The construction of a 2,135-kilometre national railway network will facilitate cargo transport to the customer. New railways usually lead to more opportunities for logistics companies.

How has the logistics sector been affected by low oil prices and growing international trade with new markets such as Iran?
Markets will be tougher, and some projects will be postponed. Some customers ask for price reductions as they have been pushed for discounts by their clients. We have to cut waste, increase efficiency and focus during this oil crisis.
Oman remains an oil and gas country, and most of our clients are related to the hydrocarbons industry. Growing bilateral trade, both oil and non-oil, between the sultanate and Iran has had a positive effect on the country’s trade balance. However, due to international sanctions we had not been allowed to do any work with any companies and cargo related to Iranian interests.

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