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Halal logistics hits the Middle East

The ‘halal logistics’ concept is gaining prominence in several Muslim countries and looks set to become a lucrative niche market for 3PL companies in the Middle East.

The halal food industry is demanding better supply chain efficiencies to cut costs without compromising on the halal status of products. The ‘halal logistics’ concept is gaining prominence in several Muslim countries and looks set to become a lucrative niche market for 3PL companies in the Middle East.

Concerns on the malpractice of meat exports into the Middle East have created genuine concern over the legitimacy of halal products being imported from non-Islamic countries. The situation has highlighted the importance of supply chain solutions aimed at the halal food industry.

Food manufacturer Al Islami Foods has pioneered the concept of halal logistics for several years. Since its inception, the Dubai-based company has obtained special permits allowing the employment of Muslim slaughterers and senior supervisors abroad to ensure meat was being produced according to Islamic teachings. The company also implemented strict guidelines to ensure its products remained completely halal during the distribution process.

“Products manufactured by Al Islami Foods must be completely halal in all respects,” Hasan Rimawi, chief technical officer, Al Islami Foods told Logistics Middle East. “The main factor jeopardising the halal status of food products during distribution is the mixing of halal and non-halal products in the same container.”

Al Islami Foods handles distribution inhouse and packs meat into sealed containers to avoid contamination. “Many logistics companies will deal with both halal and non-halal products. We avoid risks of mixing both types of meat by placing our products in sealed containers and distributing them in the company’s own fleet of vehicles,” added Rimawi.

Whilst companies such as Al Islami Foods control their own supply chains, the concept of halal logistics could prove a lucrative niche market for third party logistics companies throughout the world. The international halal food industry is worth a staggering US $570 billion during 2005 with the total spend on logistics operations accounting for roughly 5-10%.

Malaysia is amongst the first countries to notice the potential of these figures. The local government has revealed plans for Halal Industrial Food Parks, reserved for food producers and logistics companies offering halal cold storage and transportation services.

The Dubai-based Emirates Airline, which currently flies eight times a week from Kuala Lumpur to Dubai, is supporting the Malaysian government’s ambitions by providing some synergy in the distribution of halal products. “This development will promote halal food products and we hope to get a piece of the market for cargo,” said Bobby Chang, cargo manager, Emirates Malaysia.

Malaysia-based MISC Integrated Logistics is offering halal logistics solutions to customers and plans to negotiate with various government authorities to create a standard halal certification on handling and processing logistics.

MISC Integrated Logistics is also constructing a halal logistics hub with free zone status in Malaysia’s Port Klang, allowing manufacturers, importers and exporters to consolidate multi-country warehouses at a single location. The site is being developed in three phases and spans a total of 41 acres. The first phase should be operational by early 2007.

“The centre will offer 90,000m² storage and processing facilities,” Hilmi Mohd Nashir, managing director, MISC Integrated Logistics told journalists. “It will be the biggest cold room facility in the region and help to boost the government’s intention of developing Malaysia into a halal logistics hub.”

MISC Integrated Logistics already has strategic ventures in Indonesia and wants to create further halal logistics facilities in Europe and America. It also plans to enter the Middle East following the announcement of a 50:50 joint venture with Rais Hassan Saadi Group (RHS), one of Dubai’s oldest shipping agents. The joint company, titled Rais-Mils, will be based in Dubai with links to the Malaysian hub. It will provide a full range of supply chain solutions covering the entire Middle East.

“This allows MISC Integrated Logistics to immediate start operations in Dubai, serving the Middle East market in collaboration with the Rais Hassan Saadi group,” added Nashir. “Our facilities will include the newly-constructed air cargo hub at the Dubai International Airport, which will be offering a full range of logistics services, including the management of halal products to and from our hub at Port Klang.”

The joint venture is subject to approval by the relevant authorities and should commence operations this summer. However, Nashir seems optimistic about growth in the niche market. “Opportunities are there,” he concluded. “I anticipate that we can see some growth in the next couple of years.”

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