US logistics specialist BDP International has teamed up with Bahrain-based firm Kanoo Freight in a joint venture to serve the rapidly growing needs of the chemical and petrochemical industry in the Middle East, particularly Saudi Arabia.

The new venture, named BDP Kanoo Chemical Logistics, will be based in Dammam with the two parent companies having a 50:50 ownership.

BDP Kanoo said three firms had already signed up to have it run their logistic operations, winding up their contracts with others.

Expectations are that the JV will handle some 2.5 million tonnes per year initially, taking into account existing business and new business, a Kanoo official said. It is targeting growth of 25 per cent annually.

According to World Trade Organisation (WTO) figures, Saudi Arabia’s petrochemical exports topped $14 billion in 2008.

BDP handled about 1 million teu per year of incoming and outgoing chemicals in the Middle East in 2009 plus other volumes in bulk.

Petrochemical production in the Middle East grew 14 per cent in 2009 when it was down 12 per cent in North America and 6 per cent in Europe.

BDP and Kanoo quoted industry analysts forecasts that have the Middle East accounting for approximately 75 per cent of the world’s petrochemical exports led by Saudi Arabia in the next 10 years.

A full suite offered

“BDP Kanoo Chemical Logistics will offer a full suite of logistics services including freight forwarding, customs brokerage, marine, air and ground transportation, warehousing and distribution, project and energy logistics, regulatory and security compliance, process management and supply chain solutions,” a joint statement said.

“Supporting these services are knowledge of the unique logistics requirements of the chemical industry, dedicated teams of specialists, a Six Sigma culture, and advanced technology for easier management of global logistics with true visibility at every stage of delivery.”

Fawzi Ahmed Kanoo, board director, Yusuf Bin Ahmed Kanoo Group, and chairman, Kanoo Freight, said: “With the emergence of the Middle East as a global logistics hub, customers in the chemical and petrochemical sector place a get deal of importance on reliable on-time supply, and BDP Kanoo is designed to focus on delivering against or exceeding these expectations.”

BDP president and CEO Richard J Bolte observed that in the context of significant investments in the downstream petrochemical industries and abundance of feedstocks, the Middle East, particularly Saudi Arabia, was becoming the epicentre of the global petrochemical industry.

“We have a substantial base of clients operating in the region who stand to benefit from our strong presence in the global chemical and petrochemical sector complemented by Kanoo’s deep expertise in regional and local trade and regulatory practices,” he said.

Tracing the rise of the Saudi petrochemical industry, Bolte said the kingdom was an importer of petrochemicals 30 years ago but production and exports had advanced considerably and the expectation was that production would double in the next 10 years.

The new JV was in a fine position to take advantage of the next wave of chemical production. Although the petrochemical market had witnessed challenges, the outlook for the Middle East was much better than for other regions.

Seismic shift

“There is a seismic shift with the epicentre of the industry migrating from North America and Europe to the Middle East, particularly Saudi Arabia,” Bolte remarked. 

The joint venture leveraged a global network and would provide services with minimum disruption while eliminating risks and finding solutions. BDP was happy to partner one of the largest and most successful enterprises in Saudi Arabia.

Colin Clarke, executive general manager, Kanoo Freight, said his firm handled 1 million tonnes of chemicals in 2009. As regards containerised cargo, the traffic was 100,000 teu in 2009 and 75,000 teu in 2008. The company’s sales revenues were $200 million in 2009 and $180 million in the previous year.

“With the joint venture and the synergies of the current business and the visibility and technology tools that BDP will bring prospects will be bright,” said Clarke.

BDP Kanoo Chemical Logistics is making the pitch that it is a recognised leader in logistics and transportation management combining global presence with local expertise to serve the finest multinational companies in the chemical industry through a balance of people, process and technology backed by a solid presence in every major manufacturing and consumption market.

It has pledged to raise the supply chain performance through advanced technology tools such as BDPSmart and BDPSmartVu. The company offers a global suite of trade logistics business application tools.