The imminent opening of the road linking Oman and Saudi Arabia through Rub al-Khali (the Empty Quarter) is expected to foster greater integration between the two economies, particularly in terms of trade.
Land-based access to the region’s largest market, in addition to the ongoing multibillion-dollar investments in ports, economic zones, airports and much-delayed railway schemes, could bring Oman’s logistics sector closer to its stated objective of becoming one of the world’s top 10 logistics hubs by 2040.
As of 2016, however, the sultanate is still ranked just 48th on the World Bank’s bi-annual global Logistics Performance Index.
It was with a mind to raising the country’s status as a centre for logistics on the world stage that Oman bid for, and was selected to host, the 32nd edition of the International Road Union Congress in November 2018 – a global event for the industry that gathers together experts in mobility and innovation.
The congress is expected to highlight the sultanate’s multiple initiatives to foster a globally competitive logistics sector, which hinges on its strategic location on the Arabian Sea and Indian Ocean, where a significant portion of global shipping and trade passes.
Like most of its Gulf neighbours, Oman also bridges Asia and Africa, home to some of the world’s fastest-growing economies.
As in many industries, new technologies and innovations are expected to radically alter the landscape of the logistics sectors in the years ahead.
Advanced technologies such as automation, Big Data and artificial intelligence promise to deliver more efficient services, while at the same time displacing low-skilled jobs, such as those required to operate warehouse facilities.
Despite the imminent threat to jobs, Nabil Salim al-Bimani, group chief of ports and free zones at Oman Global Logistics Group (Asyad), prefers to look at the potential of these technologies to make the sector more attractive to locals, particularly for young Omanis.
“On the one hand, [technological innovations] can displace jobs; on the other, they can incentivise logistics jobs for young people who love to learn and use new, smart technologies,” he tells MEED.
Indeed, the advent of the Internet of things and digitalisation holds immense potential for technological disruption across the supply chain and is expected to revitalise the logistics sector. These changes are not necessarily the top priority for new graduates and young people when choosing a career, however.
“We have tried to identify what the future [logistics] jobs look like, and how we can position ourselves to be ready for that future,” Al-Bimani says, adding that the development of technology and human capital are among the key pillars of Oman’s long-term logistics strategy.
“We want to have the right resources as we grow. We will miss more opportunities if we ignore new technologies.”
However, the introduction of new technologies and redesigned processes comes with its share of challenges. “Most of us are used to doing things a certain way so there is a general reluctance to accept redesigned processes or new technologies. It takes people away from their comfort zone,” Al-Bimani tells MEED, though he is quick to point out that the company has already overcome that difficult stage.
According to Al-Bimani, the firm is now putting in place new measures to increase the logistics sector’s overall contribution to the sultanate’s GDP, in line with the long-term Sultanate of Oman Logistics Strategy.
The programme revolves around the development of technology, human capital and new markets, as well as the removal of trade barriers.
Al-Bimani says strong government support has been playing an important role in the ongoing transformation of the sultanate’s logistics sector.
“We see very good support from stakeholders to move in that direction,” he says, adding that progress is happening much more quickly compared to just a couple of years ago.
“There has been a very good synergy. Even local communities are starting to realise that.”
As it stands, the development of Oman’s deep sea ports and free zones in Salalah, Sohar and Duqm are at various stages of development.
The location of these ports outside the Strait of Hormuz is seen to offer an attractive alternative to the more costly ports in the Gulf, such as Dubai’s Jebel Ali Free Zone.
But so far, despite initial doubts about the feasibility of successfully hosting three ports, Oman’s strategy appears to be gradually paying off – with investors from China, India, Brazil and Singapore all among the first to invest in the free zones located alongside the ports.
Generally, the free zones are designed to attract light to heavy industries that either import raw materials from overseas sources, or utilise feedstock generated locally. These companies then use the port services to export finished products to global markets.
The opening in March of the new Muscat International airport, the sultanate’s largest, is further expected to improve Oman’s status in terms of air cargo and logistics.
In addition to the planned mining railway and national railway schemes, it could offer the best chance yet for Oman to catch up with its neighbours and fulfil its long-held aspiration to become a global logistics player.
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