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The Public Authority for Investment Promotion & Export Development

Briefings from Oman Logistics

Published by Ithraa, the Sultanate of Oman’s inward investment

and export development agency, Briefings from Oman is a series

of ten sector-specific documents that explore waste management,

logistics, tourism, health, manufacturing, agriculture and fisheries,

and more.

Designed to connect the world with contemporary Oman and its

dynamic business community, each Briefing provides a snapshot

of one sector in the sultanate and the ambitious projects and

innovative business ideas currently driving that space.

Informative, realistic and easily digestible, the Briefings are

intended to inspire business, investors and our partners at large

to consider the significant opportunities these sectors present.

DistributionBriefings from Oman are offered free-of-charge and distributed

to Omani embassies, ministries, foreign trade missions,

at international trade shows, B2B meetings, as well as to schools,

colleges and companies across Oman.

If you would like to share Briefings from Oman in a hotel or

at a business event, please send an email to [email protected]

for further information.

DisclaimerAlthough every effort has been made to ensure the accuracy

of the material contained in this document, complete accuracy

cannot be guaranteed. Ithraa will not accept any responsibility

whatsoever for loss or damage occasional or claimed to have

been occasioned, in part or in full, as a consequence of any person

acting, or refraining from acting, as a result of a matter contained

within this document. All or part of this document may be

reproduced without further permission, provided the source is

fully acknowledged.

Published December 2016

Editorial: Taleb Al Makhmari Editor-in-Chief Dave Pender Advisor Sajda Al Ghaithy Senior Editor Nadia Al Lamki Editor Lubna Al Harthy Production Manager Walyam Al Said Production AssociateDesign: Lamahat www.studiolamahat.com

Photography courtesy of Ithraa & PEIE

Briefings from Oman

LogisticsBriefings from Oman 2

The logistics sector plays a vital role in Oman’s modern and ambitious economy and is key to increasing

inward investment, non-oil exports and the nation’s competitiveness.

Logistics isn’t only an important sector in its own right but also a critical enabler for businesses of all

sizes operating across the sultanate - from the gypsum quarry in Thumrait, hypermarkets in Seeb,

battery manufacturer on Rusayl Industrial Estate, the pelletizing plant in Sohar to the plastics exporter

on Salalah Free Zone. A well-oiled logistics sector provides Omani businesses and manufacturers with

ways to increase efficiency, go greener and drive profits.

Earning revenues of US$7.87bn in 2013 that are forecast to reach US$12.02bn in 2017, Oman’s logistics

sector is already competitive, contributing 4.9% to the sultanate’s GDP in 2015. The industry is led by

multinationals offering a comprehensive range of sophisticated logistics services, down to smaller

national freight forwarders offering the simple storage and shipping of merchandise.

Oman’s logistics industry is expected to grow at a CAGR of 7% between 2015 and 2020. The key

drivers for economic growth are the infrastructure investments in ports, free zones, industrial estates,

roads, airports and rail network, economic diversification efforts and trade with GCC states, Asia and

Sub-Saharan Africa.

Oman LogisticsA Snapshot

3

Following an announcement in October 2013, Oman will

spend over US$50bn in infrastructure projects over the next

15 years, US$20bn of which is earmarked for the transport

sector. This sizeable investment in infrastructure offers

widespread and attractive opportunities for logistics

providers, particularly those with a significant presence

in the global freight forwarding business. Investment in

infrastructure is also expected to create 80,000 jobs

in logistics by 2020, rising to 300,000 by 2040.

BIGInvestment

A


Rail

AirRoadSea

Oman continues to develop a national rail network: a modern,

mixed traffic railway for the movement of freight and

passenger services. This new railway system will connect

the centres of population and growth drivers of Oman and

will form part of the wider GCC Railway Network. To achieve

this, Oman Rail will link the Sultanate’s three main deep

water ports, free zones, logistics hubs, mineral resource and

petroleum development areas with the population centres of

the country and with the GCC. It will provide customers with

an efficient domestic and international rail-based logistics

solution for intermodal containers, bulk minerals and liquids,

break bulk and industrial freight, bulk minerals/liquids and

passengers. The railway network will be a major step in

Oman’s journey to become a key logistics hub for the region

and the gateway to the GCC.

The Oman Rail Project offers a unique opportunity for the

country to enhance local capacity - people and industry -

whilst substantially contributing to the overall wealth of

the country through In Country Value (ICV) and wider

socio-economic benefits. Once completed, the estimated total

length of the railway network will be 2,135km. The Project is

one of Oman’s largest infrastructure projects, with a capital

investment expected to be up to US$20bn.

Recent investment in Muscat, Salalah,

Sohar and Duqm airports, the growing

number of Oman Air destinations and

the launch of Salam Air, the sultanate's

first low-cost carrier will all help further

facilitate international trade and the

development of Oman’s logistics sector.

The recently opened 680km road

between Oman and Saudi Arabia which

runs through Rub Al-Khali will increase

road freight by providing a more direct

route between the two countries as

well as reducing the number of border

crossings. The highway on the Oman

side is about 160km long, starting from

Tanam in Ibri and ending at the Saudi

border. From Saudi Arabia, it stretches

247km from the Omani border to the

Shaybah Oil Field and 319km from

Shaybah to the Batha-Haradh road,

which leads to Riyadh.

Serving the emerging markets of the

GCC, Asia, Africa and Iran are the

deep-water ports of Salalah, Sohar and

Duqm and their respective free zones.

Oman’s three key terminals offer

businesses an attractive alternative

to more costly ports of call in the Gulf,

saving time and fuel and providing

access to other modes of transport.

Sea transport accounts for more than

80% of freight which is expected to grow

by 4.8% in 2016, this growth is being

driven by increasing intra-region GCC

trade as well as demand from Europe and

the emerging markets of Asia and Africa.

The Project is one of Oman’s largest infrastructure projects,

with a capital investment expected to be up to US$20bn.

Network

5

Key Trends Driving Oman's logistic Sector

Publication of the Sultanate of Oman’s Logistics Strategy 2040 (SOLS 2040). A blueprint designed to transform Oman into a world top 10 logistics location by 2040.

Direct trade routes toGCC India Africa

Major re-development of Muscat and Salalah Airports and the construction of regional airports in Sohar, Duqm and Ras Al Hadd.

Sophisticated road network linking ports, free zones, airports and industrial estates.

Construction of a national railway

network and its connection to the

GCC rail network, improving

efficiency and reducing logistics costs.

Deep-water ports

in Salalah, Duqm and Sohar.

Strategically located free zones in Sohar, Duqm, Salalah and Al Mazunah.

Oman’s location

on two major

international shipping routes

which are within two weeks

of some of the world's

major ports.


Oman’s logistics industry currently employs 30,000 people and handles over 3 million TEU. However, by 2020 the logistics sector is targeted to employ 80,000 people and handle over 10 million TEU.

Oman’s strategic location in the Arabian Gulf makes it a major trans-shipment

hub on the East-West trade route. As a member of the GCC, Oman benefits from

regional trade policies, customs regulations and the integration of national and

regional transport corridors.

Launch of Oman Global Logistics Group SAOC, a government holding company, to synchronize and leverage government investments in the sultanate’s ports, free zones, logistics centres and rail, maritime and land transport companies and to achieve strategic development objectives.

Investment in infrastructure and technology to upgrade ports and free zones in Sohar, Salalah, Duqm and Al Mazunah.

The introduction and roll-out of a National Broadband Strategy.

Completing 49 road projects at a cost of US$5.4 billion covering 1,650 kilometres.

Investment of over US$180 million

in large-scale extensions of PEIE’s

industrial estates.

Leveraging free trade agreements with the US and Singapore, the GCC customs union and the General Arab Free Trade Agreement.

7

Singapore

Suez Canal

Salalah

Duqm

Sohar

Jebel Ali (UAE)

$US24.62m

$US8.69m

$US17.09m

$US4.47m

Estimated annual costs for a weekly call for ultra-large container vessels

Jebel Ali (UAE) Sohar Salalah Duqm

Ambitions Top Spots

Oman jumped 11 places in the World Bank ranking of global

logistics performance, reflecting major improvements in

logistics quality, customs, infrastructure and competence.

According to the World Bank's latest Logistics Performance

Index Report, Oman is ranked 48th globally as against 59th

in 2014.

With regards fastest-growing emerging market sea freight

trade lanes to the US and EU, Oman occupies the top two

spots - up 56.7% to the US. Sea exports from Oman to the

US have increased following the 2009 free trade agreement

between the countries.

For Oman-EU freight, growth of 56.7% is predicated on

chemical-related exports, with organic chemicals and

fertilizers sparking most of the growth. EU-Oman sea

freight was up 59.4% in 2015.

Potential

Cost Savings

Oman lies at the crossroads of two important waters – the Arabian

Sea and Indian Ocean – through which a sizable chunk of global

shipping and trade passes. Suitably leveraged, Oman’s strategic

geographical location offers comparative advantages to industries

and investors targeting markets in the GCC, Asia and East Africa.

Indeed, the sultanate’s location offers faster access into and out of the

GCC markets - land based transport with rail could be up to 36 hours

faster than shipping with feeders. More reliable access into and out

of the GCC markets, avoiding the politically sensitive Strait of Hormuz

and the congested ports of other GCC countries. Cheaper access into

and out of the GCC markets up to US$250,000 savings on fuel

charges per vessel.

For Oman’s ports the logistics opportunity is there for the taking.

Ministry of Transport & Communications commissioned research

on consolidation in the container shipping industry estimates that

on a benchmark voyage direct from Singapore to Suez, a weekly call

at Salalah for an ultra-large container vessel would represent an

annual cost of US$4.47m, at Duqm US$8.69m and at Sohar

US$17.09m. Dubai’s Jebel Ali, by contrast, would cost an estimated

US$24.62m.


SoharSOHAR PortSOHAR Port received its first vessel in 2004 and today welcomes well

over 2,500 vessels a year and handles over one million tonnes of

cargo every week. With investments exceeding US$25 billion, Sohar is

one of the world’s fastest growing port and free zone developments.

Located outside the congested Strait of Hormuz and with a draft of up

to 25 meters, it is the deepest port in the Gulf and South Asia region.

Set-up as a 50:50 joint venture with Port of Rotterdam in 2001.

The adjacent Freezone was added in 2010.

The Port and Freezone operate on a landlord-tenant basis.

Leading global partners were on board from the outset to operate

the port’s main terminals: Oiltanking Odfjell for bulk liquid and gas

storage; C. Steinweg for general cargo and stevedoring; Hutchison

Whampoa for containers; Vale for dry bulk; and Svitzer for marine

services, among others.

The port was established around three main industrial clusters:

metals, logistics and petrochemicals. Recently a fourth, food cluster

was added. Work is progressing fast on the construction of a US$170

million state-of-the-art Food Zone, combining the region’s first

dedicated agro terminal with rice, flour, and sugar mills, as well as

the infrastructure for downstream food manufacturing and

processing industries.

Once completed, the new Food Zone will be able to handle 700,000

tons of grain and 1.5 million tons of raw sugar imports every year,

largely eliminating the need for the sultanate to import refined sugar.

Improvement work is nearly completed at Orpic, to reduce

environmental impact and increase capacity at their Sohar refinery

to over 198,000 barrels/day. Furthermore, the recent US$6 billion

investment in Liwa Plastics Project at SOHAR Port supports Oman’s

ambitions to become a global leader in the plastics industry.

The project will give Orpic a total of 1.4 million tons of polyethylene

and polypropylene production by around 2020, and will create one of

the best-integrated refinery and petrochemical facility combinations

in the world, creating many opportunities for new, downstream

businesses in the Port and Freezone.

In 2014, all commercial traffic from

Port Sultan Qaboos was redirected to

Sohar to make way for new tourism

facilities and a modern cruise ship

terminal at the old city port in Muscat.

This increased container traffic at

Sohar by over 60% in the following

year, that also saw a 46% rise in

break bulk cargo. Container throughput continues to grow steadily,

increasing over 18% in the first half of 2016. The new container

Terminal C boasts remote controlled quay cranes that are ready for

next generation 20,000 TEU vessels. Terminal C is equipped for 1.5

million TEU and planning work for a fully automated Terminal D, that

will boost capacity at Sohar to 6 million TEU, is also well underway.

Massive investments in infrastructure are creating modern and

uncongested highway links that will connect Sohar across the

region and reduce onward transportation times. These include

a new direct highway to Saudi Arabia that will avoid the UAE

borders altogether and will cut the journey from Sohar to Riyadh

by around 800 kilometers.

The recent opening of Sohar Airport comes after Middle East cargo

carriers reported a 7.8% growth in demand for airfreight services.

Located just a few kilometers outside the city, the new airport

underpins plans for the transformation of the regional economy

along the North Batinah coast. With a planned capacity of 50,000

tonnes of cargo and 500,000 passengers a year, the new facilities

bode well for Sohar’s long-term growth strategy.

Sohar not only offers easy access to Saudi Arabia, the UAE and Iran,

it is also within easy reach of a market of more than two billion

consumers across Asia, India and Africa. As one of the driving forces

behind Oman’s US$2 billion plus trade surplus, the planned Rail

Terminal in Sohar will be an important junction along the Sultanate’s

2,135 kilometer leg of the new GCC railway network.

With the advent of rail connectivity and modern rail-to-port material

handling logistics technologies, it is estimated that SOHAR Port’s

commodity handling capacity could be increased by tens of millions

of tonnes per annum.

Metals

Food

Plastics

Petrochemicals

9

Duqm

Port of DuqmFrom a geographical and geopolitical standpoint, overlooking the

Arabian Sea and Indian Ocean, and its proximity to some of the

world’s busiest shipping lanes, the Port of Duqm is one of the

GCC’s most promising mega ports. A 50:50 joint venture between

Consortium Antwerp Port and the government of Oman, the Port

of Duqm Company SAOC was set up in 2010 to develop the new

maritime gateway via a 28-year concession, which formally started

in July 2015. Duqm’s operations were launched in May 2012,

and ever since, the port’s activities have grown at steady pace.

The current focus is on the handling of general, break bulk and heavy

lift cargo, primarily for the oil and gas industry. The port has also

started with bulk exports of mineral products, produced in quarries in

its direct vicinity. The Port of Duqm is already capable of handling

containers in an early operations container terminal. In the next

phase, the Port of Duqm is preparing for the commissioning of state

of the art container handling terminals which will have access to 1,600

meters of quay and a handling capacity of 3.5 million TEU per annum.

As a green-field port surrounded by an abundance of available land,

the Port of Duqm enjoys a location that places virtually no limits on

its potential for growth in the long-term.

With the advent of rail connectivity and modern rail-to-port

material handling logistics technologies, it is estimated that the

Port of Duqm’s bulk mineral capacity could be increased to

50-60 million tonnes per annum.

Consolidation & Distribution HubA key par to Duqm’s appeal lies in its

potential to become a consolidation

and distribution hub serving the

wider region. With the massive area

available around the port,

multinational manufacturing

companies could set-up consolidation

and distribution centres in Duqm to supply markets in the Indian

Sub-continent, East Africa and the Middle East.

The Port of Duqm’s appeal will be further accentuated when it is

connected to Oman’s National Rail Network and the newly-opened

680-kilometre road cutting through the Rub Al-Khali at Ibri linking

Oman to Saudi Arabia. The new road will reduce the travel distance

between Oman and Saudi Arabia by 800 kms, as previously, the only

route was via the UAE. Air connectivity between Duqm Airport and

other international and domestic airports within Oman will also fuel

sea-air freight growth.

Location, Location, LocationMoreover, the location of Duqm involves minimal deviation from the

Asia-Europe trade lane. Dubai is located 2,092kms from the route

between Suez and Singapore, whereas Salalah and Duqm are only

209kms and 644kms away, respectively, added to which Duqm is

much closer to the GCC, enabling it to better double up as a gateway

port and trans-shipment hub.

Salalah

Port of SalalahIdeally located to service the lucrative East-West shipping lanes,

the Port of Salalah, part of the APM Terminals Global Terminal

Network, reached 1.584 million TEU in the first half of 2016.

This represents a 29% increase over volume handled during

the same period the year prior.

The Port of Salalah, on the Arabian Sea, is one of the largest container

ports in the Middle East Region with a 2015 volume of 2.56 million

TEUs. Its general cargo terminal (GCT) handled 12.543 million tons

in 2015 as compared with 10.314 million tons in 2014.

The completion of a new deep-water General Cargo and Liquid Bulk

Terminal in December 2015 has enabled significant growth, with the

facility handling approximately more than one million metric tons

monthly. This mainly reflects increases in shipments of limestone

and gypsum as well as methanol and bagged cement. The new berths

are used for discharging grain, loading bagged cement, berthing of

the multi-national navies engaged in anti-piracy operation, and for

cruise vessels. With the advent of rail connectivity and modern

rail-to-port material handling logistics technologies, it is estimated

that the Port of Salalah’s bulk mineral capacity could be increased to

50-60 million tonnes per annum.

The container liner services that call at

the port link all major ports in Europe,

the Mediterranean, the US East Coast,

East Africa, the Indian Sub-continent,

the Red Sea and the Arabian Gulf.

The port’s efficiency and

record-breaking productivity is second

to none. The Port of Salalah prides itself on customer service levels,

which have helped attract major shipping lines as well as the

world’s naval fleets and increasing numbers of cruise ships.

The Port of Salalah is increasingly turning to a new model to drive

growth in the logistics sector. In addition to its trans-shipment

and other historically successful port activities, improved trade

facilitation and better access to onward land and air routes are

seen as keys to future success.


Duqm

Barka

Oman Drydock Company

Oman Shipping Company S.A.O.C.

South Al Batinah Logistics Area (Khazaen)

Oman Drydock Company (ODC) is one of the largest and most modern

ship repair yards in the Middle East. Located in the Port of Duqm,

ODC is strategically located on the southeast corner of the Arabian

Peninsula outside the Strait of Hormuz and is in close proximity to

the busy regional trade routes traversing Oman’s coastal area.

In addition to its ship repair activities, ODC’s capabilities include:

the engineering, procurement, fabrication, erection, installation, tests,

and trials for offshore projects; fabrication of steel structures for steel

bridges and buildings; and fabrication

of structures and components for

other industrial uses. ODC’s strategic

location, climate, world-class yard

facilities, experienced technical team

and integrated services provide

significant benefits to its international

and domestic customers.

As Oman’s preeminent maritime transportation services provider,

OSC is key to the government’s logistics plans. It is a closed joint

stock company, incorporated in 2003 and owned by the government

through the Ministry of Finance (80%) and Oman Oil Company (20%).

OSC’s customers have included: Shell, Mitsubishi Corporation,

Itochu Corporation, Oman LNG, Qalhat LNG, VALE, Sohar Aluminum,

Oman Trading International, Petronet, Qatar Gas and Oman Refinery

& Petrochemical Company.

OSC has established a feeder line linking SOHAR Port, Port of

Duqm, Port of Salalah and Dubai’s Jebl Ali Port. The feeder line

is a multi-purpose vessel with a capacity of 650 containers,

or 8,874 tonnes.

OSC has a total of 50 vessels under operations. This will increase

to 52 by the end of 2016 for a total load carrying capacity of over

8 million dead weight tonnage. With OSC’s future expansion plans,

the fleet is expected to swell to a formidable 60 vessels in the

next five years.

The South Al Batinah Logistics Area (Khazaen) promises to further

drive the Sultanate’s ambitions to become a logistics gateway for

the wider region. A project site spread over 95 million square meters

has been identified at the intersection of the Barka - Nakhal Road

and the Muscat - Al Batinah Expressway route, as well as the planned

National Rail link between Sohar and Muscat. Khazaen’s strategic

location, coupled with the abundance of land earmarked for the

project, will help underpin its long-term growth.

Activities and facilities at Khazaen will include a customs bonded

inland port (dry port), an intermodal rail terminal, warehouse and

distribution facilities, light industry, cold storage facilities,

open area storage yards, truck parking and service centres.

Business activities in Khazaen’s light industrial area are expected

to include textile production,

electronics manufacturing,

food processing, commercial

bakeries, automobile and equipment

machinery repair and processing.

In addition, Khazaen’s commercial

and residential area will attract and

support investment in real estate, retail outlets for consumer-based

products, wholesale facilities, office space, restaurants,

car showrooms, a convention centre, hotels and other

community facilities.

11

Rail connectivity promises to be a transformative force for Oman’s

logistics industry – a game-changer. Divided into nine segments,

the 2,135 km network will run the length of the sultanate from

Buraimi and Khatmat Malaha in the north to Duqm in the southwest

and Salalah and Mazyounah in the south and southwest.

Linkages with industrial estates, special economic zones – current and

future, mining and logistics clusters, as well as major urban centres

will help fuel growth in all parts of the sultanate.

The railway will be double track, non-electrified and designed to serve

mixed freight and passenger traffic. It has been designed based on

international standards and best practices to achieve interoperability

with the GCC railway network.

When completed and brought into operation, Segment 1 will connect

SOHAR Port with the GCC rail network at Oman’s border with the UAE

at Buraimi and Khatmat Milahha. It will also serve as a logistics

corridor for rail-based freight to and from SOHAR Port to markets

deep in the Arabian Peninsula.

Four intercity passenger stations are planned along

the 207 km route of the Sohar-Buraimi corridor,

representing Segment 1 of the 2,135 km National

Rail Network. These are Hafeet (medium GCC

intercity type), Sohar City (medium GCC intercity),

Zurub (commuter) and Buraimi (small/medium

GCC intercity).

Once operational, the railway will provide the most

cost effective and reliable international logistics

corridor into and out of the GCC.

Oman Rail: Connectivity

Sohar

Muscat

Ibra

Duqm

Salalah

Thumrait

Mazyounah

Haima

Ramlet Khelah

Buraimi

Khasab

Oil Field

Gas Field

Minerals

Cities/Towns

Ports

Free Zones/Logistics Areas

Oman’s Economic Free ZonesOman has four economic Free Zones. Three are located adjacent to

the deep water ports in Sohar, Duqm and Salalah, each comprising an

efficient port-free zone industrial and commercial cluster. The fourth

is located in Mazyounah, providing investors with efficient access to

the Yemen market border gateway located only 4 km from the Free

Zone. All four comprise large land areas with existing commercial and

industrial developments as well as unoccupied space to accommodate

future expansion and development. The Free Zones are supported by

modern road networks, telecommunications infrastructure and other

necessary utilities and services. Their strategic location and framework

of incentives provide investors with attractive investment opportunities.


Oman Rail – Value PropositionThe establishment of the rail network will help Oman capitalize on

its geographically advantageous location, increase the sultanate’s

competitive advantage and boost international trade.

Once operational, the railway will provide the most cost effective

and reliable international logistics corridor into and out of the GCC.

ContainersIt’s expected the railway will attract a significant increase in

international container traffic to Oman’s ports within the first year

of operations, to be distributed into and out of the wider GCC by

rail. Given the sultanate’s strategic geographic position, the rail

network will enable Oman to capture a disproportionate volume

of GCC cargo growth (current growth rate of 8% p.a.).

Industrial Goods, Bulk Commodities and Consumer ProductsIt’s expected that the railway will attract numerous shippers of

industrial goods, bulk commodities and consumer products to

import/export their goods through Oman ports to avoid the

politically sensitive Strait of Hormuz.

Inward InvestmentOman’s rail network will drive growth in attracting inward investment.

As more customers distribute their GCC destined cargo through the

sultanate, the opportunity for Oman’s free zones and logistics centres

to offer value added services such as warehousing, packaging and

assembly will increase. In addition, as the establishment of the rail

network enables a more efficient and reliable value chain, Oman will

become more attractive to international companies looking for a safe

and secure GCC business base.

CompetitivenessThe rail network will provide Omani companies with a more efficient

value chain solution, enabling them to become more cost competitive

domestically and internationally. In addition, the railway will

enable Oman to exploit its significant natural resources such as

gypsum, limestone, dolomite, chromite, gabbro and marble due

to improved capacity and logistics solution economics.

It’s estimated that the transformative nature of the railway

can be used to transport many tens of millions of tonnes of

commodities per annum to each of the three major ports following

the implementation of rail-to-port connectivity.

Currently, a 60,000-tonne bulk commodity ship can take

approximately 3 – 5 days, or more to load using traditional

transportation, material handling and loading methods.

Integrated mine, rail and port bulk commodity logistics solutions

employing modern high capacity material handling equipment and

infrastructure can improve that significantly to achieve a 60,000

tonne ship turn-around within less than a day, thereby improving

marine transport efficiency and increasing port capacity.

AutomotiveBy 2020, over 3 million new cars are forecast to be sold annually

in the GCC. Currently, new vehicles are distributed by car

manufacturers to each GCC country. There’s clear potential to

consolidate distribution in one country, with Oman being able to offer

a highly attractive value proposition once the railway is developed.

Rail & Mineral ExportsOman has a substantial mineral resource base, predominantly found

in the mountains which span 700 kilometres by 150 kilometres –

containing chromite, dolomite, zinc, limestone, gypsum, silica,

copper, gold, cobalt, iron and other resources. The sultanate has vast

non-metallic mineral wealth that is proving to be highly popular

internationally. For example, approximately 70% of the marble mined

in Oman is exported, all of which is in processed “finished” form.

Exports of Omani gypsum and limestone, among other minerals,

are projected to grow exponentially with the launch of Oman’s

ambitious rail network which will connect the country’s mining areas

to the sultanate’s world-class, deep-water gateway ports at Sohar,

Duqm and Salalah. Such an increase provides Oman the opportunity

to meet the rising mineral needs of India, Japan, Taiwan, Indonesia,

Vietnam, Bangladesh, East Africa and beyond. Exports of processed

finished marble are also expected to grow with improved

transportation and terminal logistics solutions.

Finally, the railway will reduce congestion on Oman’s roads,

improve road traffic safety and provide a more environmentally

sustainable logistics solution for the country and the GCC region.

The establishment of the rail network will help Oman capitalize on its geographically advantageous location, increase the sultanate’s competitive advantage and boost international trade.

13

Airports

Air Freight

Ground-handling & Warehousing

Integral to Oman’s logistics ambitions is a modern air transport

system comprising a network of international and domestic

airports connected by a world class fleet of aircraft. The new US$1.8bn

facility at Muscat International Airport will have a net floor area of

334,995m², capacity of 12 million annual passengers in the first

phase, 24 million in the second, 36 million in the third and 48 million

in the final phase. In addition, a cargo terminal with a capacity of

260,000t of cargo per year will be part of the terminal.

The airport’s runways are being extended to a length of 4,000m and

width of 60m. Both runways will be able to accommodate the Airbus

380 aircraft, the world’s largest aircraft, after the expansion. The first

runway expansion was completed in December 2014. The expanded

airport is due to open Q2 2017.

The upgraded US$777m Salalah International Airport opened in

June 2015. The improved airport includes a new runway, terminal,

control tower, cargo terminal of 100,000tpa capacity (expandable

to 200,000tpa) a wide body hangar and maintenance, repair and

overhaul facility. Salalah has the capacity to handle 1 million annual

passengers. Further expansions to 2 and 6 million annual passengers

are planned when the demand arises.

New airports in Duqm and Sohar opened in July and November 2014,

each with a terminal capacity of 250,000 passengers per annum and

passenger terminal floor area of 6,000m2. Runways are 4,000 x 60

metres capable of serving the Airbus A380. The Ras Al Hadd Airport

will have 500,000 passenger terminal covering over 8,000m2 as well

as a 4,000 x 60 metre runway. All boast sizable air cargo terminals

helping airfreight logistics grow exponentially in the coming years.

With the current development of Oman’s ports, linked by the National

Rail Network to GCC countries, coupled with the development of

airports, Oman is in a strong position to develop its logistics sector.

Air freight is a key driver within the SOLS 2040 strategy and in 2015

Oman Air partnered with Luxembourg-based Cargolux, one of

Europe’s largest scheduled all-cargo airlines. The joint venture

agreement provides Cargolux with access to the belly capacity of

Oman Air’s passenger fleet, which operates to 11 destinations in

India, as well as destinations in East Africa. This gives Cargolux

opportunities to carry livestock, cargo aircraft-only freight, odd size

cargo, vehicles and aircraft engines from Oman to India and a

number of other large emerging markets.

It’s anticipated the Oman Air – Cargolux partnership will build on the

success of its high-quality air cargo service to Chennai and Mumbai

and in the future expand airfreight services from Oman to destinations

in China, Europe, Africa and the United States.

Oman Air has also partnered with Singapore-based ground-handling,

warehousing and freight specialist SATS to create a new joint

venture company for cargo handling at the airline's Muscat hub.

The arrangement will see Oman Air transfer its cargo-handling

business and related assets to its subsidiary Oman Air Cargo.

SATS will acquire a 33% equity stake in the business which will

be renamed Oman SATS Cargo. This strategic partnership will

enhance connectivity for cargo customers across Asia and

strengthen Oman’s position as a transit hub.

The new company is expected to begin operations in 2016 and will

become the single source provider of cargo-handling services firstly

at Muscat International Airport's existing cargo facility and then at its

new, state-of-the-art cargo terminal. The strategic partnership is

expected to enhance connectivity for Oman Air’s cargo customers

across Asia and strengthen the sultanate’s position as a transit hub.


MENA E-commerceAccording to research, 60% of consumers in the MENA region are

under the age of 25. These are current and future online buyers.

In the GCC, 43% of Internet users buy online at least once a

month, and the average value of e-commerce orders is US$102 for

domestic purchases, compared to US$139 for overseas purchases.

E-commerce in the MENA region is expected to grow from

US$95 billion in 2013 to US$200 billion in 2020.

B2C e-commerce will represent 30% of the total value followed

by government-to-business or customer (G2B/C) at 25% and

B2B e-commerce at 20%.

As B2C e-commerce grows, so do home deliveries. For the postal

services, the volume of letters is falling, while package

deliveries are rising. This affects the supply chain, requiring

logistics companies to provide warehousing, inventory,

delivery, invoicing, handling cash-on-delivery and product-returns

support. In brief, the role of logistics in B2C e-commerce is to

reduce the risk that arises from the virtual relations.

Additionally, e-commerce logistics needs to reduce the risk in the

relationship between the vendor and the buyer by ensuring that

the right product is delivered to the right customer, at the right

place and at the right time. Moreover, unlike brick and mortar

stores where delivery is immediate, e-commerce firms are still

grappling with the challenge of the speed with which the ordered

product reaches their customer. Oman’s logistics sector stands

to play a key role in overcoming such disadvantages, enabling

domestic and international e-tailers to grow, expand and prosper.

Soft Infrastructure

Cross-border B2C e-Commerce

A key component of the ‘soft infrastructure’ necessary to underpin

Oman’s logistics industry is pervasive Internet connectivity

and high-speed broadband access. Towards this end a National

Broadband Strategy was adopted in 2013. The aim is to provide

efficient and affordable broadband infrastructure connecting

all residents and businesses in Oman. A key outcome of the

plan was the establishment of the Oman Broadband Company

(OBC), a government start-up mandated to implement a national

broadband network. The National Broadband Strategy centres on

a plan for the rollout of high-speed and large capacity broadband

infrastructure across the length and breadth of the country over

a 10-year timeframe and at a potential cost of around US$1.3bn.

The strategy calls for, among other things, providing key Omani

cities with fibre-to-the-home, fibre-to-the-building, especially

government buildings – improving 4G and LTE mobile Internet

access for most of Oman. For remote areas, Internet access via

satellite services is envisaged.

Currently, around 2.7 billion people - 39% of the world’s

population - have Internet access. Increasingly, those 2.7 billion

people are making online purchases. According to Accenture,

the global B2C cross-border e-commerce market will balloon in

size to US$1 trillion in 2020 from US$230 billion in 2014.

Today, the supply chain has now been extended as a result of

changes in consumer buying patterns. As people turn to the

Internet to purchase lighter-weight, less-expensive goods and

do so more frequently, the supply chain extends right to the

customer’s mailbox.

2014 2020

USD

230billion

USDtrillion1

15

Urban Logistics

Urban Deliveries

Urban logistics is essential to the functioning of Oman’s city

economies, ensuring the supply of goods in stores and for local firms

it forms a vital link with suppliers and customers. As it currently

stands, almost all urban freight is delivered by motorised vehicles

often transporting very light goods. For example, the average payload

transported in European cities weighs less than 100kg and has a

volume of less than 1m3. Of the 1,900 vans and trucks entering the

city of Breda in the Netherlands each day, less than 10% of the

cargo being delivered requires a van or truck and 40% of deliveries

involve just one box.

Like most cities, it’s easy to bring goods into Oman via plane, ship,

or truck but it’s much harder to bring what’s been ordered to houses

or offices from the central point to which it was delivered.

Indeed, the final mile of urban logistics plays a crucial role in Oman’s

supply chain. Get it wrong and you risk alienating consumers, get it

right and you may just gain a customer for life. To meet this challenge,

we need to reconsider urban delivery solutions that are more effective,

customer-centric, sustainable and eco-friendly.


Final Mile – The New Logistics FrontierThe final piece of the logistics puzzle, the figurative final mile, is the

transportation of goods from a delivery depot to a customer’s home or

office. This stage can be key in determining a customer’s satisfaction,

since it’s often the only direct touchpoint they have with a brand or

service. The exponential growth of e-commerce in the GCC is having a

profound effect on the region’s logistics industry from the first click to

final delivery.

Even high-profile international e-tailers, who have succeeded in

offering customers inexpensive and rapid delivery options,

are struggling to maintain efficient final-mile logistics solutions in

a cost-effective and profitable way. Today, there’s a need to offer

expanded delivery capabilities, while increasing convenience without

passing on price increases to the customer. Whether consumers are

researching, evaluating, or purchasing products online or in store,

their expectations about product availability, delivery charges and

flexibility, return policies and payment options are on the rise.

Fast DeliveryAccording to a Voxware survey, 62% of respondents were less likely

to shop with a retailer if an item wasn’t delivered within two days

of the date promised. The survey also revealed that 43% of

respondents expected delivery within three to four days,

while another 40% expected delivery within five to six days.

Instant GratificationThe survey suggests that today’s hyper-connected consumers would

abandon shopping with a retailer online and in the store with just one

error or delay. 59% of respondents stated they’d abandon shopping

with a retailer altogether if they received two to three incorrect

deliveries. 55% of respondents would discontinue shopping from a

retailer after two to three late deliveries. With consumer expectations

increasing along with the increase in online shopping, efficient, timely

and accurate final mile delivery services are more crucial than ever.

OpportunitiesThe final mile of the supply chain may be the shortest physical stage

in a package's journey but it represents about 30% of total logistics

costs. And the most uncertainty and opportunity in the final mile lies

in the nuts and bolts of how a product/package’s chain of custody is

outsourced, moved and delivered. New experimental entrants like

grocery delivery service Instacart, crowdsourced, same-day delivery

service Deliv and Uber are emerging as key players in this space.

However, as traditional logistics firms face stiff new competition,

there’s a need to provide better tracking and greater package security

to meet customer expectations.

Final mile logistics isn’t insignificant. If you’re delivering a spare part

or installing a piece of equipment on Rusayl Industrial Estate and it

can be organized, delivered and fitted in a two-hour window from the

time it was ordered, then it can be sold as a premium logistics service.

Indeed, what’s the world’s best-designed supply chain worth if it falls

short at delivery?

The Final Mile

Today, 64% of all travel happens within urban environments and the total amount of urban kilometers travelled is expected to triple by 2050. Freight transport is responsible for 20% of road traffic, 30% of road occupation and 30% of CO2emissions in cities.

17

Investing in Logistics:A Step-by-Step Guide

Step 1 Step 2

Ithraa Open Bank Account

OCCI

Company Stamp

License*

Logistics

All organizations mentioned below can be contacted via the One-Stop-Shop • Ithraa • Oman Chamber of Commerce (OCCI) • Local Municipality • Ministry of Manpower (MoM) • Royal Oman Police (ROP)

Obtain Commercial Registration

Timeframe: 2 hours

*Required documents: • Copy of partner’s passport • Copy of Omani partner’s ID card • New commercial registration (CR) form signed by all partners • Sample of authorized signatories

* In some cases, security approval is required (1-5 weeks)

Criminal record clearance is to be attached by Omani Embassy in applicant’s home country

Timeframe: Depends on the Bank

*Required documents: • CR • Passport copies • Articles of Association • Sample of authorized signatories

*Some banks may require additional documents

Collect Membership Card

Timeframe: 1 hour

Required documents: CR payment receipt

Obtain Company Stamp

Timeframe: 1o minutes

Required documents: CR

Timeframe: 6 months

*Required documents: • Copy of partner’s passport • CR • OCCI certificate • Local municipality permit • Approval form Ministry of Environment & Climate Affairs

*This step doesn’t affect other steps. Preliminary approvals from relevant government agencies depend on the requested type of commercial activity.


-

Step 3 Step 4 Step 5

Ministry of ManpowerRental Agreement Municipality

Complete Ministry of Commerce & Industry Investor Application Form

*Required documents: • CR • List of machinery • ID card

*to apply for a rent of land, submit all the documents to MoCI

Obtain Investor ID Card

Timeframe: 1 day

Required documents: • Investor Visa • Passport copy • Present for fingerprinting

Obtain Municipality Permit

Timeframe: 1-3 days

*Required documents: • Commercial registration • OCCI membership card • Rental agreement

*Additional documents may be require – depends on the planned activities

Obtain Investor Visa

Timeframe: 2 – 7 days

Register company on: www.manpower.gov.om and print application form

Required documents: • Application form • CR + company stamp • OCCI membership card • Passport copies • Rental agreement • Municipality permit • Commitment letter

Obtain Investor Visa

Timeframe: 1-2 Weeks

Print visa application from: www.rop.gov.om

Required documents: • Application form • Medical report • Two passport-style photographs • CR + company stamp • OCCI membership card • Copy of passport • Rental agreement • Municipality approval • MoM approval

ROP

ROP Civil Status

19

The Public Authority for Investment Promotion & Export Development

Formed in 1996, Ithraa is Oman’s award-winning inward investment and export development agency.

We are an ambitious organization committed to promoting the

business benefits of Oman to a global audience. Our experience,

expertise and global reach helps companies of all sizes realize

their potential.

IthraaDirectorate General of Investment Promotion PO Box 25, PC 117, Sultanate of Oman.Tel: +968 2462 3300 | [email protected]

Ministry of Transport & CommunicationsPO Box 684, PC 100, Sultanate of OmanTel: +968 2468 5000 | www.motc.gov.om Oman Global Logistics Group SAOCPO Box 470, PC 115, Sultanate of OmanTel: +968 2236 4300

Sohar Industrial Port Company & FreezonePO Box 9, PC 327, Sohar, Sultanate of OmanTel: +968 2685 2700 | www.soharportandfreezone.com Salalah Port Services Co. (S.A.O.G)PO Box 369, PC 211, Salalah, Sultanate of OmanTel: +968 2322 0000 | www.salalahport.com Salalah Free ZonePO Box 87, PC 217, Al-Awqadain, Salalah, Sultanate of OmanTel: +968 2313 2500 | www.sfzco.com Special Economic Zone Authority DuqmPO Box 25, PC 103, Bareeq Al Shatti, Sultanate of OmanTel: +968 2450 7500 | www.duqm.gov.om Port of DuqmPO Box 2409, PC 111, Sultanate of OmanTel: +968 2434 2800 | www.portduqm.com Public Establishment for Industrial EstatesPO Box 200, PC 124, Rusayl, Sultanate of OmanTel: +968 2417 0700 | www.peie.om Oman Airports Management CompanyPO Box 1707, PC 111, CPO Seeb, Sultanate of OmanTel: +968 2434 1000 | www.omanairports.co.om

Oman Logistics Company (S.A.O.C)PO Box 994, PC 116, Mina Al Fahal, Sultanate of OmanTel: +968 2422 5353 | www.khazaen.om

Oman AirHead Office, PO Box 58, PC 111, Muscat International Airport

Sultanate of Oman.

Tel: + 968 2453 1111 | www.omanair.com

Promoting the Sultanate as the best destination for investment

and trade in the world.

To attract sustainable investment and promote the export of

Omani non-oil goods and services that support the Sultanate’s

ambitions for growth and prosperity.

Tel: +968 24 62 33 00

Fax: +968 24 62 33 36

www.ithraa.om

Ithraa, PO Box 25, Wadi Kabir 117, Sultanate of Oman.

Vision

Mission

Talk to Us

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