Fears of a global recession and concern over a US – China trade war have not diminished the resilience of the emerging markets in this broad-based logistics survey.

The rise of digital technology has spurred the growth of ever more complex business ecosystems. As companies partner with competitors and become “frenemies”, traditional boundaries are dissolving and co-opertition is now the new normal.

At an event hosted by Agility alongside the 2020 World Economic Forum Annual Meeting in Davos, Switzerland, global business leaders from diverse industries and roles discussed the ways they are using collaborative and interdependent ecosystems to drive growth at their companies.

Watch the video highlights to discover how Unilever has shifted its mindset from looking to drive savings from its suppliers, to a relationship where they partner for mutual growth. Toshiba’s Chief Digital Officer introduces “ifLink”, a new IoT platform and shares his 3 ‘A’s approach to building a successful platform: affordability, agility and availability. Siemens Nigeria CEO describes how she uses partnerships to expand to local markets and also to drive collective action towards solving issues such as cybercrime and corruption. And PayPal’s SVP core markets explains why whether you build, buy or partner, platform integration is key.

MoU signed with the aim of providing ADNEC customers with world leading logistics solutions

Abu Dhabi-UAE: 07 January 2020: Abu Dhabi National Exhibitions Company (ADNEC) has renewed a five-year strategic partnership agreement with Agility’s Fairs and Events, a division of Agility Global Integrated Logistics. This MoU will continue to enhance ADNEC’s service offering to exhibitors and event organisers with a full range of logistics and freight forwarding services.

 

 

Agility is one of the largest integrated logistics providers in the world with more than 26,000 employees and operations in 100 countries. Under the MoU, ADNEC and Agility will continue the success of their established, mutually beneficial cooperation with the aim of providing ADNEC customers with world-leading logistics solutions.

Commenting on the agreement, H.E. Humaid Matar Al Dhaheri, MD and Group CEO of ADNEC at ADNEC said: “ADNEC is committed to providing our clients and customers with the highest quality services across our facilities. To further show our commitment on this, we have partnered with Agility again to ensure the seamless provision of highly efficient and cost-effective logistics solutions to exhibitors and organisers.”

H.E. added: “The collaboration with Agility will continue the significant improvements we’ve put in place with them over the last five years with operational and cost efficiencies, while further showcasing a competitive edge. Additionally, this partnership will continue to boost the leading status of Abu Dhabi as a key destination for business tourism.”

Elias Monem, Agility GIL, CEO – Middle East, said, “This strategic partnership with ADNEC further strengthens Agility’s position as a market leader within the fairs and events sector, allowing us to provide highly sophisticated logistics solutions to ADNEC customers. Agility offers a wide range of supply chain solutions to meet both traditional and complex customer needs. In addition to air, ocean and road freight forwarding, warehousing, distribution, Agility Abu Dhabi also offers specialised services for fairs and events that mirrors the specific needs of ADNEC and its exhibitors.”

Successful implementation could see 80m jobs transferred from Asia

African leaders after agreeing to establish the African Continental Free Trade Agreement at an African Union summit in Kigali, Rwanda in March 2018 © AFP/Getty Images

 

May 2019 saw the launch of the African Continental Free Trade Agreement, creating a single market of 1.3bn people that will grow to an estimated 2.5bn by 2050. A market where 60 per cent of the population is under 25, and where there’s an appetite for high levels of consumption of fast- moving consumer goods. The challenge is: how do we make it work?

The AfCFTA has been signed by 54 of the 55 countries in Africa (only Eritrea has not signed it) and ratified by over half of the signatories. It creates a real opportunity for Africa to liberalise over 90 per cent of intra-Africa tariffs and deliver significant growth on the continent.

Successful implementation of the agreement has the potential to establish Africa as a global manufacturing centre and could, ultimately, result in an estimated 80m jobs in Asia being transferred to Africa.

CEOs of African businesses have their fingers crossed that this is, finally, tangible progress towards a homogenous single market. But they remain sceptical that such an ambitious agreement can be successfully implemented, given the limited success of previous African regional free trade zones and initiatives.

The first step to a successful AfCFTA was a high level of participation which, against all odds, has been achieved. The second step, due to commence in July 2020, is the implementation and practical adoption of the trade practices, processes and infrastructure required to establish a working free zone across 54 countries. Precedent for such a Herculean task exists: the Asean free trade zone has been a notable success, creating a platform for manufacturing, regional trade and a stimulus for jobs and prosperity.

 

2040

By this year Africa will have a larger working population than China and India combined

 

Much of the momentum to date has been driven by the African Union and the continent’s development finance institutions, which have ushered the process forward, often having to use all the leverage and persuasion they have available. Encouragingly, they are now fully committed to implementation, resourcing and supporting a meaningful launch and delivering achievable steps by July 2020. The agreement will take until 2030 to be fully operational.

South African President Cyril Ramaphosa takes on the presidency of the AU in 2020 and understands the benefits of the AfCFTA and the need to drive the process forward. There is concern, however, that he will be preoccupied with the domestic issues boiling in South Africa. It remains to be seen how important the AfCFTA is on his agenda and how much time he is able to allocate to advancing the process.

Africa currently has the lowest intraregional trade in the world. Only 15 per cent of African trade is cross border between neighbouring countries, whereas cross-border trade represents around 65 per cent of the trade in developed markets. The free movement of goods has the potential to trigger a manufacturing boom and establish Africa as a world centre for manufacturing.

Asia’s transformation into a global economic engine began with the production of cheap goods in countries where wages were low and workers abundant. What followed was the development of sophisticated regional value chains, knowledge transfer and upskilling, and the transition from export-led economies to more balanced ones with rising domestic consumption.

Africa has yet to experience anything like that. The lack of cross-border trade today stifles manufacturing across the continent, constraining production to local markets that are difficult to scale. The elimination of tariffs will stimulate trade, enabling companies to expand and develop as they address larger regional markets.

The manufacturing sector will also begin to draw foreign direct investment. This, in turn, will lead to larger production volumes and bring about new efficiencies, enabling African manufacturing to finally have the ability to compete not only in domestic and regional markets but to be more competitive with global manufacturing.

 

For Africa, successful implementation of the AfCFTA is a game changer with the potential to move millions from a rural subsistence agriculture- based society to an early stage industrial society

 

By 2040 Africa will have a larger working population than China and India combined. Low wages on the continent are attracting manufacturers from high employment industries, such as the apparel sector, which can manufacturer at a lower cost in Africa than in traditional Asian production centres. The current slowdown in developed markets means that increasing numbers of multinational companies are becoming interested in the African opportunity as a market and as a global manufacturing base.

For Africa, successful implementation of the AfCFTA

is a game changer with the potential to move millions from a rural subsistence agriculture-based society to an early stage industrial society.

Manufacturing wages are five times more productive for GDP growth than agriculture.

Many of the criteria needed for Africa to prosper finally appear to be aligning. These include a highly competitive young workforce that is willing and able to adopt new technology and embrace the fourth industrial revolution, combined with increasing political stability across the continent and vast, untapped energy resource discoveries that are attracting billions of dollars of foreign investment.

The latter is generating dividend payments for governments in countries such as Mozambique, Tanzania, Senegal, Ivory Coast, Ghana and Mauritania that are sufficient for them to develop as they become net energy exporters.

The AfCFTA has the ability to bind all these prospects together and deliver real growth.

China is first out of the blocks. It is interacting with the private and public sectors in Africa to realise the benefits anticipated from the AfCFTA. Already at the forefront of infrastructure projects in Africa, Chinese manufacturing initiatives are now spreading across the continent.

Chinese companies are relocating their manufacturing hubs from China to Africa in the expectation of tariff-free regional trade and competitive export markets. The alignment of Africa with the Chinese Belt and Road Initiative is now at the forefront of all Sino-African intergovernmental discussions.

If Africa can implement the agreements in practice, and other countries and trading blocs follow China’s lead, the AfCFTA has a good chance of living up to its promise, propelling Africa to the forefront of global manufacturing.

Geoffrey White is chief executive of Agility Africa, a logistics company.

beyondbrics is a forum on emerging markets for contributors from the worlds of business, finance, politics, academia and the third sector. All views expressed are those of the author(s) and should not be taken as reflecting the views of the Financial Times.

 

Copyright The Financial Times Limited 2019. All rights reserved.

Leveraging the Agility network of logistics and supply chain experts, Agility launched the Smart Shipping content hub, a dedicated page providing practical and timely content focused on three main topics: Incoterms, Regulations, and Shipping Tutorials.

How the next wave of innovation is changing the supply chain. What you need to know about blockchain, IoT, Robotics Process Automation, AI, data science and how they are changing your business.

Q2 2019
(Million KD)
Q2 2018
(Million KD)
Variance
(%)
H1 2019
(Million KD)
H1 2018
(Million KD)
Variance
(%)
Revenue 396.3 384.2 3.2% 775.0 756.0 2.5%
Net Revenue 129.1 124.3 3.9% 253.0 248.9 1.6%
EBITDA 48.6 37.1 31.2% 95.0 74.8 27.0%
Net Profit 21.6 20.0 8.1% 41.9 38.9 7.7%
EPS (fils) 12.99 12.02 8.1% 25.18 23.38 7.7%

Numbers above are rounded
The effect of the implementation of IFRS 16-Leases on the Income Statement and the Balance Sheet are disclosed in the Consolidated Interim Financial Statements.

KUWAIT – August 13, 2019 – Agility, a leading global logistics provider, today reported second-quarter earnings of 12.99 fils per share on net profit of KD 21.6 million, an increase of 8.1% over the same period in 2018. Q2 EBITDA grew 31.2% to KD 48.6 million, and revenue increased 3.2% to KD 396.3 million.

First-half earnings of 25.18 fils per share and net profit of KD 41.9 million were up 7.7%. First-half EBITDA was KD 95 million, an increase of 27%. Revenue for the first half was KD 775 million, an increase of 2.5%.

Tarek Sultan, Agility Vice Chairman and CEO, said: “We had a good Q2 despite the tough environment we operate in. GIL reported very good results and continues to implement its strategy to drive operational efficiency. Agility’s Infrastructure companies performed well, and key initiatives in each business unit are moving ahead according to plan.”

Agility Global Integrated Logistics (GIL)

Global Integrated Logistics achieved EBITDA growth of 7% (excluding IFRS 16 impact) despite higher operating expenses related to new facilities and higher staff costs for operations and commercial requirements. GIL’s Q2 reported EBITDA was KD 15.9 million, or KD 10 million excluding IFRS 16 vs. KD 9.3 million in Q2 2018.

GIL Q2 gross revenue fell 2.6% to KD 281.9 million, mainly due to currency fluctuations. On a constant-currency basis, GIL revenue grew 1%. Net revenue increased 4% to KD 69.4 million, mainly as a result of better Ocean Freight and Contract Logistics performance.

The global Air Freight market continued to be under pressure.  GIL Air Freight net revenue decreased 1.8% as the result of lower job volume and tonnage, although the decrease was offset in part by higher yields. Q2 2019 tonnage fell 8% vs. Q2 2018. The decrease was the result of weak market conditions and lower demand across industries and geographies, along with a return to more normal volumes following a spike in high-volume shipments a year earlier. The Air Freight market was affected by volume declines and shifts that have resulted from US-China tariffs and import restrictions.

Strong Ocean Freight performance was driven primarily by yield improvement, despite a 2% drop in TEUs. Ocean Freight performance was strongest in the Americas and Asia Pacific.

Contract Logistics growth continued in Q2 with gross revenue of KD 32.8 million, a 1% increase from the same period in 2018. The Middle East-Africa region, notably the Kuwait and Egypt markets, was the key driver of growth and improved margins.

Net revenue margins for GIL improved to 24.6% in Q2, up from 23% a year earlier.

During the first half of 2019, GIL EBITDA improved 69.5% on a reported basis, taking into account the impact of IFRS 16 (it remained at the same level after excluding the IFRS 16 impact). Revenue decreased 1.9% on a reported basis (or increased 2.1% on a constant-currency basis). GIL net revenue improved 3.1% in the first half.

GIL is focusing on accelerating the roll-out of its global operating platform, as part of a broader digital transformation strategy that is intended to drive improved customer experience, more effective supplier management, enhanced business efficiency and productivity, and better data for decision-making.

Agility’s Infrastructure Companies

Agility’s Infrastructure group EBITDA rose 18.2% to KD 32.8 million in the second quarter. Revenue grew 21.2% to KD 118.2 million.  First-half EBITDA grew 14.7%, and revenue increased 15%. All entities in the group contributed to this performance.

Agility Logistics Parks (ALP) reported 15% revenue growth for the quarter. Revenue from facilities completed in late 2018 contributed to this growth, as did yield improvement at existing facilities. In Kuwait, ALP is looking to develop new facilities that optimize the use of its existing land bank. In Saudi Arabia, ALP has completed the development of two of the three warehouses it is building in 2019, each with 40k SQM capacity. ALP Saudi Arabia is now moving ahead with the development of the third warehouse. In Africa, ALP projects are progressing well. New warehousing space at the ALP in Ghana will be delivered soon. More space in other locations will be added towards the end of 2019.

Tristar, a fully integrated liquid logistics company, posted 23.2% revenue growth in the second quarter, driven by increases in road transport and warehousing operations from new contract wins from new and existing customers, in addition to the shipping business. Tristar continues to execute and to look for opportunities to unlock additional value for its shareholders.

National Aviation Services (NAS) grew revenue 1.6% in the second quarter. NAS’s performance this quarter was affected by airspace closures and a decrease in commercial flights in some countries where it operates. However, NAS anticipates a rebound towards the end of the year.

At United Projects for Aviation Services Company (UPAC), a leading real estate and facilities management company operating in Kuwait, revenue fell 2.3% in the second quarter. The decline was largely the result of a shift in passenger traffic to dedicated airline terminals, along with a reduction in the number of flights operating out of Sheikh Saad Terminal.

Earlier this year, UPAC began car park management operations in (T4), the newly dedicated Kuwait Airways terminal. In Abu Dhabi, construction continues to progress on Reem Mall, the $1.2 billion project set to become the new retail and leisure attraction in the Emirate. Reem Mall is scheduled to open in late 2020. UPAC continues to optimize its existing real estate management platform in Kuwait and work to expand its presence there and elsewhere in the region.

GCS, Agility’s customs modernization company, posted revenue growth of 12%, driven by increased trade activity in Kuwait, in addition to new service offerings. GCS continues implementing initiatives to drive efficiency and improve profitability.

Recap of Agility second quarter 2019 Financial Performance

While SMEs expect their export revenues to grow in the next three years, almost all have faced difficulties…

Agility Reports Earnings Increase of 7.3% for First Quarter 2019

Q1 2019
Reported
(Million KD)
Q1 2018
Reported
(Million KD)
Variance
(%)
Q1 2019
Excluding
IFRS16

(Million KD)
Q1 2018
Reported
(Million KD)
Variance
(%)
Revenue 378.8 371.8 1.9% 378.8 371.8 1.9%
Net Revenue 123.9 124.6 -0.6% 123.3 124.6 -1.1%
EBITDA 46.3 37.7 22.8% 39.3 37.7 4.1%
Net Profit 20.3 18.9 7.3% 20.8 18.9 10.2%
EPS (fils) 12.19 11.36 7.3% 12.52 11.36 10.2%

Figures in the table above have been rounded

Kuwait – May 12, 2019: Agility, a leading global logistics provider, today reported first quarter earnings of KD 20.3 million, or 12.2 fils per share,  an increase of 7.3% from Q1 2018 (Excluding IFRS-16 Impact it will be an increase of 10.2%).  First-quarter revenue was KD 378.8 million, and EBITDA was KD 46.3 million, increases of 1.9% and 22.8%, respectively.

Agility Consolidated Results

“Again a good start for Agility this year, though we are witnessing an environment where growth is slowing.   We have seen good improvement across the board, and are accelerating our efforts to achieve our targets. On a reported basis, EBITDA increased 22.8% and net profit improved 7.3%,” said Agility Vice Chairman and CEO Tarek Sultan.

Sultan said Agility’s core logistics business, Agility GIL, continues making significant and important investments in digital transformation that will position it for long-term success and differentiation in the market. He said Agility continues also to invest in its Infrastructure group companies, each of which is pursuing a growth strategy.

Agility Global Integrated Logistics

Excluding IFRS16 impact, Agility GIL reported Q1 EBITDA of KD 6.8 million, a 9% decrease compared to the same period a year earlier, the drop is attributable to costs associated with GIL’s digital transformation and commercial investments.

Agility GIL first-quarter revenue was KD 275 million, a decrease of 1.1% from KD 278.1 million in the same period a year earlier.  Q1 GIL revenue was affected by currency fluctuations. On a constant currency basis, GIL revenue increased 3.4% vs. the same period a year earlier. Net revenue increased to KD 65.4 million, a 1.2% increase over Q1 2018 (excluding the IFRS-16 impact). The net revenue increase was driven primarily by Ocean Freight and Contract Logistics, offsetting decreases in Project Logistics and Road Freight.  On a constant currency basis, GIL net revenue growth was 5.1%. GIL’s overall Q1 net revenue margin was 23.8% against a 23.3% a year earlier.

Air Freight tonnage grew 5.2% in Q1 2019; Air Freight grew across multiple trade lanes and sales channels with very strong performance from strategic customers.

Ocean Freight net revenue performance was driven primarily by yield improvement and TEU growth of 2.3%. GIL had stable Ocean Freight performance across geographies and sales channels with volume growth primarily from strategic accounts.

Q1 Contract Logistics performance was strong, with revenue growth of 3.6%. The Middle East/Africa region (mainly Kuwait, Dubai, Egypt) was the key driver of growth and improved margins.

GIL’s digital strategy involves the development of systems and technology that will improve productivity, differentiate its products, and position it as the industry’s leading innovator.  By accelerating its digital transformation, GIL will enhance customer and supplier connectivity, create innovative customer solutions, increase the efficiency of its business processes, and enable comprehensive business insight.

Agility’s Infrastructure Companies

The Infrastructure group reported EBITDA of KD 32.5 million (excluding IFRS 16 impact), an increase of 7.4% in Q1, on a revenue increase of 10.7%.  Agility is investing in these companies to drive its future growth.

Agility Logistics Parks (ALP) reported 23% revenue growth for the quarter, an increase that resulted from strong performance at new facilities completed in late 2018, as well as yield improvement at existing facilities. In Kuwait, ALP’s focus is driving the efficiency of existing assets and identifying new opportunities based on market demand. ALP expects to deliver 150K sqm of warehousing space this year, mainly in Saudi Arabia and Africa. It expects to begin construction of another 275K sqm of warehousing space to be delivered in 2020/21.  With respect to Africa, ALP is currently developing 68K sqm of new facilities in Ghana, Mozambique and Ivory Coast, with another 36k sqm opening in Nigeria at the end of the year and a planned further 100k sqm opening during 2020.

Tristar, a fully integrated liquid logistics company, posted 13.3% revenue growth in Q1, the main drivers for this growth are road transport and warehousing operations, in addition to the shipping business. Tristar continues to grow its business with existing customers as well as expand its customer and geographical reach. In the first quarter, Tristar signed a five-year charter contract with Shell – with five optional years – to deliver six medium-range products tankers by 2020.

National Aviation Services (NAS), the fastest growing aviation services provider in the emerging markets, grew revenue 3.5% in the first quarter of 2019. NAS continues on its strategic road map to expand and be the leader in Africa.

NAS Cote d’Ivoire delivered double-digit growth; Egypt improved significantly with the launch of a new lounge in Cairo; and Tanzania and Morocco are delivering on their turn-around plans. NAS Uganda is slightly below projections due to a decrease in UN business and commercial flights but is expected to rebound.

At United Projects for Aviation Services Company (UPAC), a leading real estate and facilities management company operating in Kuwait, revenue declined 9.2%, primarily due to the shift of some airline traffic to dedicated terminals, along with a reduction in the number of flights operating out of Sheikh Saad Terminal.

In February 2019, UPAC formally started operations in Terminal 4 (T4), the new dedicated Kuwait Airways terminal. UPAC has a new five-year contract to manage the car parks and related facilities in T4. In Abu Dhabi, construction continues to progress steadily on Reem Mall, the $1.2 billion project set to become the new retail and leisure attraction in the emirate. Reem Mall is scheduled to open in late 2020. UPAC continues to optimize its existing real estate management platform in Kuwait and expand its presence in Kuwait and the region.

GCS, Agility’s customs modernization company, posted revenue growth of 6.8%, driven by increased trade activity in Kuwait. GCS also added new services and continues implementing initiatives to drive efficiency and improve profitability.

Reported Financial Performance for the first quarter of 2019 (including IFRS 16 impact)

Closing

“We have a clear and consistent strategy that is translating into year-on-year improvements. We are also off to a good start in 2019. Agility is going to substantially invest in business transformation to drive operational excellence for the future,” Sultan said.

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