Iraq is looking towards China for investments as it struggles with slow economic growth, global declines in oil prices and its war against Islamic State militants. Trade between the two countries has been growing in recent years. According to Iraq’s Ministry of Foreign Affairs, 2014 trade was valued at USD$28bn and is expected to well exceed USD$30bn this year.
Trade is not only oil and energy related, it also includes goods and technology. As China works towards achieving its ‘Silk Road’ strategy, this region will be an important component.
As such, last week, Worldwide Logistics Group (WWL) and NAWAH announced an alliance to expand their combined capabilities to southern Iraq. According to NAWAH’s President and CEO, “Southern Iraq is undergoing unparalleled development today with an expanding middle class of citizens who increasingly demand the continual flow of essential goods from Asian markets. WWL and NAWAH have strategically aligned to offer a unique and reliable end-to-end logistical solution to meet these market dynamics.”
According to the joint press release, Worldwide Logistics is headquartered in Shanghai with 30 branches throughout China and the region. It provides warehousing, customs brokerage and is ranked as one of the top freight forwarding companies by China’s International Freight Forwarders Association.
Meanwhile, NAWAH (North America Western Asia Holdings) is a distribution and logistics provider headquartered in Dubai.
Although the supply chain risks may be high, this extension is likely to contribute to the shift in trade lanes that has been underway for quite some time. While the US and Europe continue to dominate many trade lanes in terms of tonnage and value of goods, a shift favouring emerging markets is underway as China looks to exercise its influence. It’s quite possible the need for raw materials/ oil is behind this expansion in investments but, regardless, it is also resulting in encouragement in goods manufacturing in these countries which will likely grow along with the local middle class as domestic demand picks up.
This move from WWL and NAWAH can be considered a step towards developing unique logistics services to meet the needs of additional Middle East and African shippers wishing to trade with China and Southeast Asia.