Bahrain Logistics Zone (BLZ) Leading Logistics Zone in Upper Persian Gulf

The global contract logistics market grew at 5% in 2008 according to the latest report published by Transport Intelligence, this represents a significant weakening of the market after several years of growth at around 10%. What is your frank assessment of the logistics sector globally and how does it compare to the GCC region?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Of course this sector is affected like all other sectors across the global, however, the difference in this part of the world is that there are some lesser affects across the board but there has been an affect in the building material export/import in particular with Bahrain. Bahrain is a consuming market and so is the GCC, whatever we import is for local consumption. Therefore we see a bright future and the growth will continue although it may slow for a year or two.

What are the challenges and opportunities that concern the region?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: In my opinion there are challenges but the opportunities are great. We are becoming a producing market. The petrochemical industry is developing the end product and becoming an exporter. The area is in need of many products across the world so the potential for logistics is quite great.

What are the prospects for growth in your opinion?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: I would think 6 to 7% growth is quite conservative for the region.

How feasible is it for you to create an alternative logistics park in the region such as Bahrain Logistics Zone? In other words, what is the potential of the region?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: There is a huge amount for potential in the region. There are many competitors, many players, and we in Bahrain are an alternative to the competing market, namely the UAE. We are another option to compliment our neighbors and another option for investors and logistics companies to serve the northern Gulf.

With this great potential in the market, some would naturally thing that other countries will start doing the same thing you are doing here. How are you competing on an international level?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: All countries have plans. Bahrain is lucky to say that we have had a head start and most importantly for us is to maintain our customers and make sure they are satisfied with the international global standard we provide.

How advantageous is it to set up headquarters in Bahrain as opposed to Saudi Arabia or Kuwait?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: There are quite a few advantages and incentives. For instance you can have 100% foreign ownership in Bahrain and the labor market is basically abandoned and there is an educated workforce in Bahrain willing to take both small jobs and managerial jobs. The cost of living and the living standard here is quite decent here compared with our neighbors and a lot of companies feel at ease doing business in Bahrain.

You mentioned that we run a tenant action and screening process to make sure that we have the right companies and the right mix, out of more than 70 companies, 20 were selected. What were the criteria for selection and in your opinion do you have the right mix of companies in the zone?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Yes we do have the right mix, local companies and regional companies, as well as international companies. With regard to the criteria, we have the foreign direct investments at the top and we are interested in companies that create jobs and increase the volume to make Bahrain a transshipment hub. We want goods and ships to come into Bahrain and then the logistics companies can handle these goods and also add value to it.

You mentioned Bahrain is a consuming market and not a transshipment hub as of yet so when do you expect Bahrain to become a transshipment hub?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Bahrain is not starting from scratch, we already ranked second in the Middle East when it comes to logistics according to the World Bank we are the second most active airport in the region and we are linked by causeway to Saudi Arabia where trade is already happening and we have over 1000 trucks crossing the border everyday. All of these factors together make us a true logistics hub and the difference is we were a consuming market due to limitations with our old port’s depth and with the new port and APM terminal we can bring goods into Bahrain and add to our facilities at the airport.

What are the major players you have been able to attract to date and are they fully operational at the moment? When will the zone be fully operational?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: The zone will be fully operational next year at this time because we are signing contracts shortly and then the companies should commence the construction of their facilities. We are also offering pre-built facilities that we are constructing and they will be ready for lease as serviced warehouses.

Are you going to sign the contracts soon?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Yes, within the next two weeks.

Have you already signed some contracts?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: We have signed MOUs with certain companies, selected the companies, and hired an engineering company to do the zoning. We have placed the companies in a logical manner according to their operations and we have put building guidelines in place to meet international standards to help us achieve the type of places we desire within the zone. These things help companies make up their mind.

The 20 tenants who had decided to come on here were selected and will be there?

Yes.

How much space do you have for the others?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: We have very limited land bank because we are in negotiations with other international companies and this land bank is to be assigned to certain companies in the near future.

How do you compete with your competitors form the other GCC states? Especially Dubai?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Dubai gets all of the credit for putting The Gulf on the map and they have brought the goods. We are also benefitting and complimenting them by selling our geography. We are in a better location and its proven that if you operate out of Bahrain you are closer to your markets if you market is Saudi Arabia, Kuwait, Iraq, Iran or Qatar. There is cost-savings if you operate out of Bahrain and time saving which is important for logistics.

You said you have been trying to travel around the world to attract big names in the logistics business throughout the world and have place adverts in the media, how challenging is it to create world wide recognition for logistics for Bahrain Logistics Zone as a transshipment hub?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: We have been all over the map from Japan to the US and to make logistics companies aware you exist there are quite a small number of international companies and these handle most of the cargo worldwide. It is a challenge and also it is not that difficult to identify these companies and inform them of the services you provide. A relationship takes time and it can develop over a year or two with trust, which we are good at. If their customers are in The Gulf they can see that we will give them good results.

Have you seen any change since the inception of the global economic downturn in the behavior of your clients/companies, and how has this impacted your operations?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Our clients are quite eager and their companies have highlighted that during good times people cant keep up with demand but in bad times its all about cost-savings and Bahrein is a good choice. Bahrain is a very good alternative for operating in survival mode and operating efficiently- we see more demand by companies for this type of service that we are very good at providing.

What steps is your company taking towards being green and what is your policy for sustainable development both internally and also towards the companies that are going to come and establish their operations here?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: We encourage companies to think green because it isn’t expensive and actually saves costs. There a lot of technologies in the logistics sector and in transportation to save money by being green. We have taken the building guidelines into consideration to think green with their insulation and other quality measures. In regards to sustainability, we want companies to know there is a lot in Bahrain to ensure that their operation wont last for a short period.

The prospects sound very good but what is your real challenge?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: The biggest challenge for us is time. We have to work very hard as soon as possible. We have to make sure our port was up and operating in a timely manner and the government is also improving the infrastructure. In the future we will have even more challenges with the other countries and we have to beat them with the speed of our developments.

To finalize the interview, what is your long term vision and dream for Bahrain Logistics Zone?

Bahrain Logistics Zone (BLZ), Hamad Fakhro: Bahrain Logistics Zone IT is getting bigger and there is an extension coming up. We would like specialized zones outside of the current location to facilitate to other industries. We envision that Bahrain will take a major role in Logistics and that sector will grow and provide jobs and investments in Bahrain and also will put Bahrain on the map as a distribution hub for the northern Gulf.