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Talking total cost: Swaidan, DAF and Sennebogen

Al Naboodah Group firm Swaidan Trading has been a hive of activity over the past 12 months with a slew of lucrative deals and more recently, with a spate of brand acquisitions.

The first big deal of 2016 was signed in April by First Vehicles — an Omani joint venture between Swaidan and Oman’s Al Izz Group — for the supply of 40 low-floor VDL-brand buses to Oman National Transport Company. In an indication of how shrewd Swaidan Trading is, the establishment of First Vehicles was, from the start, aimed squarely at the bus contract.

The deal also built on the first bus order that Swaidan signed in 2008 with Dubai’s Roads and Transport Authority (RTA) for 518 VDL buses and their service and maintenance over 10 years. At the time, Swaidan secured the distribution rights for VDL buses with the express aim of targeting large RTA contracts.

In October, Swaidan Trading also partnered with another Dutch brand, DAF Trucks, according to Harris Kaladi, general manager for the commercial vehicles and heavy equipment division at Swaidan Trading.

“We hope to have a great year ahead for our division. We are now dealing with nearly 20 brand franchises from across the globe, and we have just signed with DAF Trucks from the Netherlands, and we will soon launch these trucks into the UAE market — so that is one of the products that is being added to our portfolio in 2017,” he says. “We have already delivered the first few trucks to our own company, Al Naboodah Construction.”

DAF Trucks is headquartered in the historically industrial city of Eindhoven, which is also the home of VDL buses.

The brand was previously distributed in the UAE through Al Tayer Motors, but Al Tayer has also been representing competing manufacturer Ford Trucks since 2014.

Kaladi adds: “For the last 15 years they were inactive in the market — so after discussions between the principle and the dealer, Al Tayer gave up the agency and it was awarded to us.”

The heavy truck brand also neatly fills an omission in Swaidan Trading’s portfolio. Previously, Swaidan’s sole truck interest had been Avia light trucks — an Ashok Leyland-owned Czech product. The agency is not such good news for Dubai’s Al Shirawi Enterprises, which as the distributor for Scania in the emirate was previously supplying all of the trucks for Al Naboodah Construction.

For the Al Naboodah Group as a whole, however, the inside order is a win-win. It keeps the cash flow in-house and, as Kaladi notes, acts as a type of indirect marketing as well, by allowing potential customers to come and have a look at DAF trucks.

Kaladi adds: “We already have around 15 trucks on the road and there are 60 more on the way. The first 35 trucks will be in operation with Al Naboodah Construction by the end of March, and we hope to have 150 trucks on the road by the end of the year — that’s our plan for 2017. Given the market situation and size, 150 is a good market share.”

Kaladi is also plenty confident that the trucks will take off in the market for reasons beyond the fact that Al Naboodah Construction will keep buying them.

He attests: “Whoever has experienced DAF will prefer to go forward with DAF because of the quality of the end product. It is considered to be one of the best trucks among European trucks. Even in Europe, DAF Trucks became the number one truck in 2016 for tractor heads and it is currently in third position for rigid trucks.

“So as far as the product is concerned, it is of the highest quality, and there are operators in the UAE that consider quality to be the position to take — so we will initially be targeting only those customers who value quality of total cost of ownership.”

Kaladi reveals that Dubai Municipality also used to be a staunch customer, with an entire DAF fleet, while a number of waste management firms, including Bee’ah, are also counted as former customers.

He continues: “For a lot of companies, downtime costs them a lot in terms of their operations, so they would prefer to go for a reliable product over the price of the truck.”

And while Kaladi admits that price is still king for the moment, he notes that Swaidan has another trick up its sleeves. It is offering comprehensive maintenance packages just like the one it is currently providing for the RTA’s fleet of VDL buses — entailing maintenance and repairs, including tyres, batteries and other parts — paid on a kilometre basis.

For DAF Trucks, he explains: “We are offering a similar maintenance package along with the truck, so that the customer knows what he’s going to spend for the next 10 years — then he doesn’t have any headaches. He just gets his insurance, driver and fuel and runs it.”

Swaidan Trucks will host an event to mark the relaunch of DAF Trucks in April.

ELECTRIC ATMOSPHERE

DAF Trucks is also but one of Swaidan’s irons in the fire. Another is a focus on catering to the UAE government’s drive towards greener mobility solutions, including electric vehicles, which are considered green in the sense of producing low emissions and noise pollution.

A rather niche line of business that the company is cultivating is the supply of small electric utility vehicles for Dubai Safari Park, which is operated by Dubai Municipality.

The vehicles are manufactured by an Italian company called Alke and are golf buggy sized micro trucks that can be equipped with a range of bodies, including beds and small dumpers. In Dubai Safari Park, they will primarily be used to enter enclosures collect and remove animal waste, where their low emissions and low noise characteristics will minimise disturbance to the animals.

Kaladi adds: “We have also bagged the order for the electric train which will be transporting guests across the park after signing an agreement with a company called Dotto Trains from Venice, Italy.”

The company has also delivered the first electric school bus in the UAE to Emirates Transport, which already operates 1,300 Sunwin buses purchases from Swaidan.

Kaladi says: “This was a pilot project initiated by the customer, by the manufacturer and, as the dealer, by us to receive some feedback on how electric buses behave in this region.”

As with most forms of electric mobility in the region, the challenge that this presents is first the twin burden of the AC and the drive system on the batteries and secondly, keeping the batteries cool enough to work efficiently.

Large batteries on both the roofs and undercarriages of vehicles are exposed to higher than optimal temperatures in the UAE summer. Buses left in the sun heat up rapidly, and the surface temperatures on the road can also far exceed ambient air temperatures, reaching up to 70°C. This places a strain on the batteries and requires efficient cooling systems to make the batteries work effectively. Otherwise, the charging capability drops and consequently, so does the range.

HANDLING BUSINESS

However, while the jury is still out on whether this makes electric buses feasible in the region, there is far less uncertainty for Swaidan in its advocacy for brands that deliver high total cost of ownership.

Since 2007, one brand the distributor has been championing is Sennebogen, a crane manufacturer that is strong in material handling cranes, telescopic crawler cranes and duty cycle cranes.

Material handling cranes are perhaps what Sennebogen is best known for the region, and Swaidan recently supplied an 880 EQ crawler-mounted equilibrium crane to Bilal Transport.

With an operating weight of 270 tonnes and fast cycle time, the crane is an efficient machine for major reclamation work and key wall construction, and Bilal has purchased it for use in coastal projects in Dubai.

Kaladi states: “There are rival machines that are similar in construction, but the cost of operation and fuel consumption are much higher than with the Sennebogen semi-equilibrium type machines.

“The material handling segment is also very promising due to the move by various municipalities and the federal administration away from landfill waste management solution towards recycling — a segment with plenty of opportunities for material handling machines.”

Kaladi is also particularly interested in the potential of telescopic crawler cranes in the region, and notes: “Sennebogen is the biggest telescopic crawler cranes manufacturer, with a range from eight tonnes to 120 tonnes.

“Telescopic crawler cranes need almost no rigging time — they can be transported on a low-bed trailer and once unloaded at site, can immediately go to work. It’s a proven concept in Europe and we expect it to gain ground in the Middle East.”

Critically the cranes have the ability to lift their full load in 360°, and since the machines are tracked, they can work in poor site conditions. Their lack of outriggers also makes them suitable for sites where space is limited and high mobility is not required.

“In the last two years we have sold around eight telescopic crawler cranes to different customers, but we were successful with these customers because they had a connection with their European counterparts,” explains Kaladi.

“They know the advantages of the cranes from using them in Europe, but it will take time for the concept to be accepted by local contractors — it needs education about the ease with which the crane can do the job.”

Kaladi continues: “We also supply heavy duty or duty cycle cranes, and one landmark was the supply of a 130t duty cycle crane to Belhasa Six Construct in 2016 that was used in the construction of the Dubai WaterCanal.”

On balance however, duty cycle cranes have not quite taken off as Swaidan had hoped.

Duty cycle cranes are used for a variety of activities linked to ground preparation work and are often found equipped with dynamic compactors, casing oscillators, diaphragm wall grabs and vibrators for sea piling.

They are reinforced to withstand heavy loads and have more powerful duty engines for shorter cycle times, making them highly efficient in their dedicated heavy applications.

But this upgrade comes at a cost upfront, and so duty cycle cranes provide the best value for end users that have a clear project pipeline laid out, where value can be maximised by keeping the units constantly busy.

Kaladi notes: “Most ground preparation companies acquired fleet in 2007 and 2008, and this is still relatively new due to the lack of projects — because of this we have had limited opportunities to sell duty cycle cranes.”

There is a lack of awareness in the UAE about the benefits of duty cycle cranes in certain applications, as well as the damage that can be down to regular cranes used in place of duty cycle cranes by many contractors in the region, he says.

Kaladi notes: “In most of the sheet piling and vibro-hammer applications in the UAE, local contractors or piling companies have purchased normal lifting cranes in place of duty cycle cranes in order to save money.

“Of course, they save in terms of initial investment, but the overall structure of a lifting crane is not suitable for duty cycle applications and you get cracks developing all along the structure — whether it’s the boom, the super structure, the wheel bearings, wherever — it all gets damaged in no time.

“So even though they save some money in the initial investment phase, in the long run they will end up paying more than double.”

They are reinforced to withstand heavy loads and have more powerful duty engines for shorter cycle times, making them highly efficient in their dedicated heavy applications.

But this upgrade comes at a cost upfront, and so duty cycle cranes provide the best value for end users that have a clear project pipeline laid out, where value can be maximised by keeping the units constantly busy.

Kaladi notes: “Most ground preparation companies acquired fleet in 2007 and 2008, and this is still relatively new due to the lack of projects — because of this we have had limited opportunities to sell duty cycle cranes.”

There is a lack of awareness in the UAE about the benefits of duty cycle cranes in certain applications, as well as the damage that can be down to regular cranes used in place of duty cycle cranes by many contractors in the region, he says.

Kaladi notes: “In most of the sheet piling and vibro-hammer applications in the UAE, local contractors or piling companies have purchased normal lifting cranes in place of duty cycle cranes in order to save money.

“Of course, they save in terms of initial investment, but the overall structure of a lifting crane is not suitable for duty cycle applications and you get cracks developing all along the structure — whether it’s the boom, the super structure, the wheel bearings, wherever — it all gets damaged in no time.

“So even though they save some money in the initial investment phase, in the long run they will end up paying more than double.”

Many of the Sennebogen duty cycle cranes currently in the UAE have also been brought from overseas by international contractors.

Kaladi notes: “Johnson Arabia is not a direct customer of ours, but we support those cranes. We have cranes with Al Faris, CCC and Sarilar — which are all multi-national rental companies — and even Mammoet, but these are normally purchased used from the European market and brought over.”

The cranes that Swaidan has supplied in the UAE have been predominantly used for sheet piling and key wall construction.

Kaladi adds: “Once you have more maturity in the piling segment, our chances of selling Sennebogen duty cycle cranes will increase.”

However, the Sennebogen speciality that is most likely to see success in the immediate future is material handling cranes with respect to waste management — a segment that also presents an opportunity for electrification.

Kaladi explains: “Cranes are predominantly diesel-powered, but we are trying to push for material handling machines with electrical power, because it’s greener. This has been a theme in our conversations with the municip-alities and waste management entities like Tadweer, Bee’ah and Dubai Municipality.”

So, whichever way Swaidan Trading looks at it, the future of its business is green.


Sources

http://www.arabianindustry.com