How has regional political tension impacted business for FedEx? How has this changed market dynamics for the UAE?
OSMAN: The political situation in the region today has definitely affected business. The financial situation in some of the countries in the region has come to a halt and government offices have been out of commission. This has all had implications on the reputation of the region and on tourism. As a result of that, industry and manufacturing and the arrival of goods for import and export have slowed down. So obviously the transportation industry overall has been affected. What is good about the UAE and the UAE’s policies and politics is that this is a great place to do business. It makes it a great place as a hub for the Fortune 500 and all multinationals from all over the world. Companies can excel at what they do due to the climate. It is easy to convince employees to come here as it is easy to raise a family here. Education in the UAE has improved tremendously in recent years. We see the schools and big name Universities from all over the world that are here now. As a result, this is a very unique place. This has helped the transportation business here because all of these companies have selected the UAE as a base. In consequence, Dubai has become as Amsterdam is to Europe or Singapore to Asia. Dubai and the UAE in general has become the gateway to the Middle East, Africa, India and Central Asia, just like Hong Kong to China.
What kinds of growth is FedEx seeing in the region today? What are your projections for the future?
OSMAN: We see growth coming from three sectors. The first sector is the cargo industry in general. That sector has been on the rise for the last four or five years. This sector has been steady with maybe a slight decline during the financial crisis, but excelled right afterword because of the UAE’s position as a hub for the region. The second sector is sea-air. This has continued to grow and has always been the growth catalyst throughout the region. The last is land transport. Future growth in the UAE in transportation and logistics will come from more industry moving to this part of the world. Industrial production creates a lot of business for transportation and that could be air, sea or ground. In terms of the position of the UAE, all of the emirates have invested heavily in their ports. This is very unique to have the sea containers and road infrastructure and the airports, 6 or 7 operating as international airports, which enables all of the operators from freight forwarding, air cargo and transportation companies, to utilize the UAE as a hub. Today, there is more production in technology, cars, finished goods, and food stuffs. As a result, there is a big increase in that regard. The GCC is the center of the oil industry, therefore a lot of equipment is needed. The airlines have a lot of needs for parts. Increase in production out of Saudi and Turkey has pushed the UAE to become the warehouse and the logistics hub for the Middle East and Africa.
Are new infrastructure developments and upgrades enhancing logistics and transportation operations in the UAE? What new infrastructure projects are going to have the greatest impact on the industry?
OSMAN: There have been a lot of changes and improvements to airports. With the increases in airport capabilities from Al Ain to Ras Al Khaimah to Sharjah to the two airports in the emirate of Dubai, capacity is added to the airlines that we did not have five or ten years ago. I do not think any of the surrounding countries have that mass of airlines, and all of them have been successful. Now we have three low-cost airlines, and another three five-star airlines. As a result, these airlines really help the transportation industry. Having the infrastructure at the airport allows you to have manufacturers around the airport and you see that over the past 200 years. When an airport is built with good infrastructure, it will bring with it good airlines, and this will bring manufacturers around the airport that will in turn increase our business. More than just the air interface, there have been improvements at the airport for land transport as well. There have also been improvements in land infrastructure in the free zones of the UAE.
How would you describe the level of competition among logistics and transportation companies in the region? Will Dubai retain the title of the hub of logistics and transportation for the region?
OSMAN: There is always going to be competition for Dubai both within the UAE, within the GCC, and within the Arab world. Dubai and the UAE in general has an advantage because of the open sky policy. The biggest challenge is the bottleneck with the neighboring country. The issue at the Saudi border must be resolved and made less painful for the UAE to excel as a gateway for export to the north and south. I do not think anyone doubts that Dubai is going to continue to excel. If you look at the infrastructure and the amount of free zones, and the policies that are in place, Dubai is still positioned very well. There are a few challenges that remain in the UAE. For the UAE to prosper and make it to 2050 without any dispute or doubt that it is on top, we need to enhance transparency and cohesiveness between all of the government departments and authorities. Everyone has one common goal, which is to make the UAE the flagship of the Gulf and the Arab world and to do that we have to figure out the free zone policies.
Future growth in the UAE in transportation and logistics will come from more industry moving to this part of the world. Industrial production creates a lot of business for transportation and that could be air, sea or ground.
What kind of investment is made into security and counter terrorism for transportation and logistics companies in the region today?
OSMAN: Investment into safety and security has always been our number one job in FedEx. In the last 37 years, I have never seen anyone ever take safety and security lightly. The transportation and logistics industry in general needs to tighten up. There are bad guys out there who are always trying to be two steps ahead of everyone else. We always have to be on our toes and make sure that we harden the way business is being done. We take this very seriously.