Forbes Middle East

Navigating Growth

Abdulrahma­n Salim Al Hatmi, Group CEO of Oman’s state-owned ASYAD, has been steering the company through choppy waters while taking steps to raise the sultanate’s global profile as a logistics hub.

- By Samuel Wendel

Abdulrahma­n Salim Al Hatmi, Group CEO of Oman's state-owned ASYAD, has been steering the company through choppy waters while taking steps to raise the sultanate's global profile as a logistics hub.

Its government is pouring billions into infrastruc­ture, from railways to ports, while entrusting its state-owned logistics company ASYAD, founded in 2016, to propel the sector's developmen­t in Oman.

Already, those lofty ambitions are being tested. The COVID-19 pandemic brought global trade disruption­s and exposed supply chain vulnerabil­ities, creating a nightmare scenario for industry players everywhere. There was a point of panic, says Abdulrahma­n Salim Al Hatmi, ASYAD's group CEO, as countries closed borders and prioritize­d domestic needs. That forced the Muscat-based group, which manages all of Oman's logistics investment­s under one umbrella, to adapt. “We kept our head down, we looked at different solutions,” says Al Hatmi, who's led the company since its inception.

Oman's deep water ports, which ASYAD runs in partnershi­p with global operators, secured supply chains by connecting to new hubs. That included starting a direct shipping line between Oman and India to import fruits and vegetables, while the sultanate's ports grew to connect directly to 86 counterpar­ts. “There was no moment in Oman in 2020 where our shelves were empty,” says Al Hatmi.

Simultaneo­usly, the pandemic offered a wider glimpse of how Oman's logistics investment­s are positionin­g the country as a hub. Omani ports saw growth in operationa­l and commercial business in 2020, according to ASYAD, with more than 9,000 vessels calling on the sultanate. Local ports processed about 54 million tons of general cargo and witnessed rises in liquid bulk and container volumes, as well as a nearly 40% increase in livestock imports. That came as segments like vehicle and machinery shipments dipped.

Al Hatmi reports that Salalah experience­d increased usage as a storage location for commoditie­s destined for the U.S. and Europe, as customers spread supply chain exposure across more hubs during the pandemic. “Salalah benefited from that,” he says. “Decentrali­zation I think is going to be a factor going forward, so we should utilize that.”

ASYAD's balance sheets reflected these results: net profits in 2020 rose double digits over the previous year, according to Al Hatmi, part of continuing growth for an enterprise that had $3.6 billion in consolidat­ed assets as of 2019. “Net profit has been growing double digit since we started,” he says.

But the onset of the pandemic could have caused problems for ASYAD, admits its CEO, had the group not taken the steps it had in recent years. “Because of the way we were integrated, we managed to respond and to adapt to the pandemic,” says Al Hatmi. That's a key reason ASYAD was founded—to integrate Oman's different logistics assets.

The group consists of a wide range of companies, centered mainly on logistics corridors around Oman's three major deep water ports: Sohar, Salalah, and Duqm. The sultanate has developed these ports over

Perched on the southeaste­rn coast of the Arabian Peninsula—near internatio­nal shipping lanes busy with traffic—Oman aspires to become one of the world’s top ten logistics hubs by 2040.

recent decades, combining them with road and air transport, and establishi­ng nearby free zones. ASYAD's portfolio also includes a shipping fleet with 60 vessels, an express and postal business, a dry dock, port terminal operations, transport companies including Oman Rail, and a maritime college. Previously, these holdings were all different legal entities with varying agendas. “So we came in and we connected the dots,” says Al Hatmi.

Combined, these make ASYAD a driving force behind Oman's national logistics strategy, SOLS 2040, which itself is a key part of efforts to diversify away from oil. Looking to capitalize on the country's strategic location—which allows customers to bypass the Strait of Hormuz and Gulf hubs—the sultanate's decision makers are prioritizi­ng logistics as a major part of its economic future. Oman hopes the sector can contribute roughly $36 billion to GDP by 2040, up from $2.6 billion in 2016, while also creating 300,000 jobs.

Already, industry watchers see ASYAD driving potential for the sector. “The establishm­ent of a dedicated stateowned logistics company—coupled with its own clear and consistent strategy— represents unwavering commitment to the cause,” says Oman-based Arif Mawany, head of corporate commercial for regional law firm Al Tamimi & Company. “ASYAD's strong board and executive management possess the talent and drive to catalyze Oman's 2040 vision of becoming a global logistics leader.”

But that journey is still just beginning. ASYAD's focus over the last

five years has been on consolidat­ing group companies and streamlini­ng collaborat­ion with government agencies. That's included restructur­ing some assets and pushing a new corporate mindset. Those moves have played out as recently as early 2020, when ASYAD integrated its shipping arm with its dry dock company.

A big focus, says Al Hatmi, has been improving trade facilitati­on and ease of doing business. One area Oman has made strides in is automating customs systems. Now, 90% of shipments clear customs within an hour of arrival, while only 2.5% of goods need to be inspected. As recently as 2014 the inspection rate was 80%. “2.5% is world class,” says Al Hatmi.

Adopting new technologi­es is another way ASYAD is boosting efficiency and cutting costs. The port of Sohar now has automated cranes and road gates, while the group has turned to drones to inspect maritime equipment, rather than divers. ASYAD has also invested in e-commerce fulfillmen­t hubs and supported the launch of a national cloud-based logistics-as-a-service platform helping with last mile delivery. Then there are technology trials, such as a blockchain project with Maersk in Salalah and a 5G proof of concept its dry dock launched in December 2020 alongside local telecom Omantel.

Looking forward, Al Hatmi now believes ASYAD is ready to take new steps to drive growth. He's eying acquisitio­ns and expansion, including outside Oman. The group's financial performanc­e has provided the financial footing to pursue deals, with a focus on third-party logistics and fourthpart­y logistics providers—which assist with outsourcin­g logistics execution and fulfillmen­t processes—and the e-commerce space. There's also port expansion planned for Salalah, as well as investment­s in developing its fleet and adding to its dry dock capabiliti­es. “Growth is the name of the game for ASYAD for the next five years,” says Al Hatmi.

Of course, Oman is far from the only GCC country pursuing growth in logistics. The region is home to formidable competitio­n. The U.A.E. is already a leading logistics hub underpinne­d by Jebel Ali port, with potential boosts coming from another internatio­nal airport and the Dubai South developmen­t. Qatar is another hub, while Saudi Arabia aims to become a center of trade between Asia, Europe and Africa as part of its economic transforma­tion plans.

An area Oman has an opportunit­y to excel in as a GCC logistics player is food and perishable­s. The country stands out for undertakin­g key initiative­s in recent years to develop food self-sufficienc­y and security, according to Gopal R, global leader for consultanc­y Frost & Sullivan's supply chain and logistics practice. Those initiative­s are supported by a food cluster and silo storage for grains at Sohar, as well as food storage facilities at other ports and terminals.

“It is critical for Oman to progress on these lines, plan for future capacity and service requiremen­ts, and anticipate global trade lane shifts and procuremen­t opportunit­ies,” says R. Oman can be a key food logistics hub in the region, he adds, but it needs to support logistics capacity with service capability and digital and physical networks spanning the GCC and beyond.

“ASYAD’s strong board and executive management possess the talent and drive to catalyze Oman’s 2040 vision of becoming a global logistics leader.”

Still, Oman’s overall efforts to boost its logistics sector appear to be working so far. According to the most recent World Bank Logistics Performanc­e Index, which is a national benchmark, as of 2018 Oman ranked 43rd globally. That was up five spots from the previous ranking two years earlier and 16 notches above 2014. That made Oman the region's third ranked country in 2018, behind the U.A.E. at 11 and Qatar at 30, but ahead of Saudi.

The pandemic delayed the World Bank's 2020 index, but when it arrives Al Hatmi expects that Oman will have made progress. Either way, as CEO of ASYAD he's already played a key role in helping Oman's logistics ambitions gather momentum. Although this wasn't always the industry where he thought he'd make his mark.

He studied engineerin­g at the U.K.'s University of Bradford, getting his start in 1994 with Petroleum Developmen­t Oman as a constructi­on supervisor in the Nimr oilfield, overseeing constructi­on for well hook-ups and processing plants. From there he spent more than a decade working in various roles in oil and gas.

But in 2008 he decided to set out as an entreprene­ur, co-founding an engineerin­g consultanc­y firm in Muscat serving the oil and gas industry. That business would grow to employ over 250 people and had a top line of $7.5 million. However, he left that behind in 2013 to serve as CEO of the newly created Oman Rail, enticed by the opportunit­y to make an impact outside the private sector. “You are looking at a national objective,” he says. “Something that's going to create legacy.” There he led developmen­t of the GCC and national rail project in Oman, overseeing the preliminar­y design of a rail network in excess of 2,000 kilometers.

By then, Oman's government was making big moves around logistics. In 2013, it earmarked $20 billion for projects in the transport sector over the coming 15 years, followed shortly by the launch of SOLS 2040. This unfolded as GCC countries were weathering an oil slump, further highlighti­ng the need for fossil fuel-reliant economies like Oman to diversify.

When the government decided to consolidat­e its logistics activities under a new holding company in 2016, it turned to Al Hatmi. It was a natural evolution, he says, from rail to logistics overall.

He didn't need to worry about spearheadi­ng massive new infrastruc­ture developmen­ts: Sohar and Salalah were already major ports, while Duqm was in its first phase of developmen­t as part of a joint venture with Consortium Antwerp Port. That meant ASYAD could focus on asset integratio­n and issues like trade facilitati­on.

By late 2017, Oman was already making progress there by conducting a pre-clearance trial for imports at Sohar. Within a few months 14% of goods passing into the port were being cleared ahead of time, compared to 1% before the trial. Since then, ASYAD has helped deliver continued progress.

“Taken by itself, the significan­t investment made by the government to the ports, airports and road infrastruc­ture is a signal to all onlookers that its logistics sector is the one to watch,” says Al Tamimi & Company's Mawany. Oman may still have a long way to go before reaching its goal of becoming a top ten global logistics hub, but early returns point to positive results ahead.

 ??  ?? Abdulrahma­n Salim Al Hatmi, Group CEO of ASYAD
Abdulrahma­n Salim Al Hatmi, Group CEO of ASYAD
 ??  ?? More than 9,000 vessels called on Oman’s ports in 2020.
More than 9,000 vessels called on Oman’s ports in 2020.

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