Introduction
The United Arab Emirates (UAE) is undergoing a significant growth into a modern world through enhanced economy and development projects. Infrastructure has been a vital component of development as huge investments have been put in building modern transportation networks hence creating an enabling environment for development. The establishment of the Etihad Rail came about in the year 2009 that had an objective for constructing a modern rail network that would connect populations and the countries within the GCC region. The project conducted by Etihad rail is not only vital in modernizing the transport industry but has a great role to play in strengthening the economy through international cooperation.
Etihad Rail
The Etihad Rail establishment came after the enactment of the Federal Law number two that rebranded the Union Railway Company that overlook rail projects in the region. Etihad Rail formation had the goal of managing railway construction projects within the UAE that would cater for the transportation of people and cargo within the region. This rail project is the current one that is established to improve the economy in relation to Vision 2021 of the UAE and the Abu Dhabi Economic Vision for 2030. The rail is to be built according to international standards and the major principles guiding the company are safety, efficiency, economic growth as well as sustainability (Etihad Rail, 2014).
The vision of the company involves construction of rail transport system that is sustainable and safe. Its mission is using innovation, technology and modern practices in ensuring a secure and sustainable rail transport for people and goods. The foremost strategy for the company involves construction of a rail system that is in relation to customer expectations and needs. The largest client for the Etihad Rail is Abu Dhabi National Oil Cooperation (ADNOC) who will exploit the rail system in transportation of Sulphur. Various companies also are signing agreements with Etihad Rail to be provided with rail services. All operations of Etihad rail are done in collaboration with multinational consultants. Various stakeholders within the company include GCC Secretariat General, Abu Dhabi Ports Company, Zones Corp, Dubai Ports and other local agencies ensure that the project brings advantages to the entire population (Etihad Rail, 2014).
Strengths and Weaknesses of the Company
Etihad rail enjoys various strengths both internally and externally. From the external perspective, the company receives great support from the local and the federal government while as the project is one of a kind in available histories, the population has more interest in it. The project is appreciated as it aims to link different regions while the benefits are expected within the economical, social and the environmental spheres. The company is enjoying partnerships with many agencies while the project is a unifying component that also is progressing at a very fast rate (Gavin, 2013).
Internally, the company is an attractive professional ground with a growing outlook hence enjoying the best available knowledge and expertise. The working environment is encouraging as it is modernized according to international standards with the place being a better environment for development of talents. The weaknesses internally are communication challenges for some of its employees who are not based within the company and the fact that rail transport is a new field in UAE that needs more corporate culture building. From the external environment, the weaknesses include low levels of brand awareness within some regions that are experiencing misunderstanding on who is the real owner of the company. The interaction with other private agencies is minimal while lack of accuracy within media reports is also an issue (Gavin, 2013).
Etihad Rail Project
Currently the UAE is interconnected through road networks hence the rail project is expected to bring efficiency, alternatives and sustainability within the transportation field. The rail project estimates 1,200 kilometers with an approximate cost of $11bn while the construction is being done in three phases. The network will link the UAE with other countries as Qatar, Oman, Kuwait, Saudi Arabia as well as Bahrain while the expectations are that by 2018 the project would have been completed (Dev, 2014). The first phase would cover 264 kilometers starting from Shah and Habshan all the way to Ruwais while the second stage would cover 628 kilometers from Ruwais to Ghweifat as well as from Tarif to Dubai and Al Ain linking to the Oman border. The third phase that is yet to commence will be starting Dubai to Fujairah as well as Ras Al Khaimah covering 279 kilometers (Etihad Rail, 2014).
The first commenced and is almost being completed while the second is under the process of tendering. The project will be an advantage to more than 15 million travelers and cargo of more than 50 million tons is expected to be transported. Outcomes of the development would be felt across all populations within the region (Dev, 2014). Advantages in the economic side include cost effective cargo transportation, provision of employment, reduction of traffics and cost effective passenger transportation. Environmentally, the region will reduce air pollution as trains lowly pollute the environment. Generally, social diversification and globalization will be enhanced within the region as efficiency, reliability and safety characteristics attributed to rail transport will have been attained (Etihad Rail, 2014).
Progress
Etihad Rail made an announcement early this year that the first phase of the project was almost over and that it would be operational by the end of 2014. Currently the phase is under trials while operations are expected to start by next year. The first phase is positioned for transportation of Sulphur and already wagons as well as locomotives have been acquired this is according to Reuters (2014). By September this year, Etihad Rail reported that it is about to get finances for the second phase operations while it is in the process of acquiring the best contractor for the construction. The federal government is the principle financier of the second construction phase (Gazzar, 2014).
Operational Plan and Objectives
Various initiatives as well as activities are established to implement the project of Etihad Rail to a successful completion. The strategic objectives that guide the company include construction of a safe railway network that is sustainable and compliant to the environmental requirements. This will be achieved through awareness on environmental issues and safety requirements as well as compliance to safety guidelines that are within international guidelines. The second objective is timely development of all phases of the project within set financial requirements based on the company’s mandate and the demands of the population. This will involve proper preparation and readiness for all operational activities in line with professional advice within all stages (Etihad Rail, 2014).
All processes from the construction to the operational phase will involve adequate consultations. Proper designing mechanisms are taking place starting from the first stage to the last while the tendering process is done with transparency. A regulatory framework will be put in place to ensure that all laws and policies are followed to the latter and that the business when operational is not oppressive to consumers. The GCC is incorporated within all operations of the project, as the region is the principle beneficiary while the contract management will be joint in nature (Etihad Rail, 2014).
The third objective of Etihad Rail is to maximize outcomes of the project being implemented through proper management of funds as well as ensuring that contracts are given out within transparent structures. This will be attained through proper pricing mechanisms for processes and all materials while the company will engage in making agreements and collaborations with other agencies for enhancement of the revenues. Secured funding is needed by the company to ensure the project runs smoothly. Objective five is to increase the competitive nature through innovation, automation and implementing projects in line with current technological requirements. The systems for technology and information should be integrated while the company implements proper procurements of electronic services (Etihad Rail, 2014).
Objective six is to make the company the best employer for all populations both locals and internationals. This will involve acquiring of the best local talents as well as retaining workers and ensuring that training and development programs are adequately provided to enable the growth of the company. The last objective entails ensuring stakeholder satisfaction by conducting surveys on the same and ensuring the image of Etihad Rail is embraced. A participative approach is essential as well as awareness education programs to the communities to ensure they appreciate the project and company’s activities at large. Adequate management systems are essential to ensure the current project is successful and that contribution is received from all spheres of the region (Etihad Rail, 2014).
External Assessments – Porter’s Five Forces
The supplier power of Etihad Rail is so strong in that the company is dependent on a small number of contractors as well as operators sometimes only a single firm providing the required resources. The threat of entry into the market is very minute as it is the only company mandated for railway activities within the region as well the processes of formation of another company to compete with it is tiresome due to the requirements of the project. The buyer power is a challenge as some are accessed to substitutes while politics may affect utilization of services (Etihad Rail, 2012).
The threat for alternatives is highly available as passengers within the UAE are many thus most prefer the use of road transport by means of buses and personal cars. The huge number of cargo within the UAE with many companies going for truck and sea transportation mechanisms is a threat to the Etihad Railway project. The competitive rivalry of railway industry within the UAE is minimal as monopoly rules the industry. The customer profile needs strengthening while there is need to source for various suppliers to avoid monopoly in the industry (Etihad Rail, 2012).
PESTLE Analysis
Political
Within political area present are diverse features that influence the Etihad Rail project. Lack of regulation within trucking companies offers unjust competition to the rail business. The government at times has its priorities on the projects to offer while funding is a challenge. On a positive note, the countries within GCC appreciate the project as it encourages cohesion and development within the region. The procedures within the borders may be prohibitive while the company and the government has pressure on the amount of debts it is putting the country into as well as the availability of local skills in handling the project. Government policies about procedures for tendering are a challenge to various companies whereas the stability politically within the region is a benefit toward the project (Etihad Rail, 2012).
Economic
In the economic perspective, different factors affect the project along with the company as a whole. The criterion used by the banks in offering loans for the implementation of the project is restrictive due to crisis within the world financial sector. The resources required for the implementation of the project are demanding requiring huge investments within integrated systems.
The economic sector within the GCC is positioned to develop through generation of job openings as well as the diversification of the economies. Inflation is a challenge of the project as infrastructural costs are on the rise with significant expectations about the project. The development is an avenue for growth by linking various regions and countries creating competitive nature within the transport industry (Etihad Rail, 2012).
Social
The public through implementation of this project will enjoy many social benefits. The interlinking of different regions is what the community need and Emiritization of employment openings will improve the social nature within the region. The community and the businesses are in demand of high-speed transportation and they want passenger systems to be prioritized within the train sector. Confidence may be shuttered due to the high profile that the public has for rail accidents as compared to the road. The perception for the area being unattractive for the youth and women is a challenge while flexibility of the transportation sector is what the community need.
Technological
Information security is a concern for both the population and company. Development of the transport sector by utilizing technology is important while the social media has a great influence of activities in the present world. Reducing costs through utilization of the current technologies is vital while the internet has created the urge for the community to get the right information at the right time. Information technology systems are required in the management of activities within the terminals while there are need for systems for proper transmission of information within the company its customers and other stakeholders (Etihad Rail, 2012).
Legal
The main legal challenge affecting Etihad Rail is solving the puzzle about requirements by the various countries affected by the project and the specific challenges affecting these countries. Changes within the employment policies and oversight regulation of the rail industry means that the company need to constantly evaluate their activities to ensure that they meet all requirements.
Environmental
Policies on the utilization of green energy along with reduction of harmful emissions to the atmosphere are an essential factor. The company needs to implement the project to ensure that it brings many benefits to the transport sector as compared to the alternatives. Sustainability of the project is important, as the company needs to ensure all natural resources are protected and where destructions are made, reconstruction is done to maintain a healthy environment. The hostile conditions that the railway line is passing through are also a factor affecting Etihad Rail (Etihad Rail, 2012).
Problem Statement
This being a huge infrastructural development within the region there are massive expectations across the populations about it. The biggest dilemma of the project is whether to dwell on only freight services or centre as well as in passenger transportation. In 2011, the Etihad Rail suspended building of passenger railway networks that had been planned for. Even though there are plans to include a passenger network, these plans have stalled as even the route is being speculated to pass through desert region (Gale, 2011).
According to Khaleej Times (2014), there have been feasibility studies by the transport department on the possibilities of constructing a rail network for passenger services within the emirates. The decisions have not yet been made meaning that they currently settle on cargo transportation with a mix of passengers.
There are expectations from the population that passenger rail will in future be constructed and that they will be prioritized to meet passengers needs. Though not urgent, rail passenger services is an important service the population requires to ease the barriers within the transportation field that draw back growth in UAE (Gale, 2011). The main question is should Etihad Rail incorporate commuter rail system in collaboration with the current project or not?
Analysis
There is no specific reason provided by the Etihad Rail on why on why the passenger rail system was suspended. The main response from the authorities is that they want to focus first on construction of a combined system for both passengers and freight while the single network for passengers would come later. Speculations are that there may be political as well as institutional reasons that may have caused the suspension. Pressure from the policy makers on the wage implications may be one of the reasons. Institutionally, Etihad may have seen it better to construct a freight system with the available resources that are scarce because most of its customers are within the cargo transportation demands.
The persons affected by the suspension involve the public where most populations rely on public transportation. Populations need a cheap fast and reliable transportation system hence the construction of the passenger system would have been a benefit to them. This is the first railway project within the GCC furthermore, it is essential that it should be done with care to maximize its results. The suspension of the program may mean that Etihad Rail is going against its objective of providing transportation according to the needs of all its customers but it is an advantage to the freight sector that are a challenge within road transportation.
Alternatives
After the suspension of the construction of a passenger rail system there are commitments that Etihad Rail needs to work on to ensure that the public gets to the positive side. The first alternative is the stand taken by the company, to work on a system that accommodates both passenger and cargo at the same time. As cargo transportation has been a main challenge within the GCC, after the completion of the current project, it is essential to regulate the industry in a way that traffic will be eased and passengers will enjoy travelling using the buses. It is important that the present project be implemented to success so that people will see the need and importance of a separate passenger railway system.
Recommendations
The Etihad Rail being a new rebranded company within the UAE is seen to be heading to the right direction through successful implementation of their mandates and by using appropriate strategies. We have seen the success within the first phase construction that is almost operational.
It is recommended that Etihad Rail continue engaging all stakeholders to ensure the success of the project as well as regulate the industry to fit the demands within the market and ease the transport sector. Appropriate awareness program is important for the public to know more about Etihad Rail and embrace its operations. It is finally important that Etihad Rail integrate the current rail project with other local railway systems for instance Dubai Metro as well as Abu Dhabi Metro that is proposed.
Conclusion
Rail transport project initiated by Etihad Rail is a significant intervention within the transport sector. Expectations are high about the benefits the project will bring as well as how the project will initiate growth of the region. The benefits attributed to the project are important within all sectors of life as development through bringing together the various countries is a factor for development. It is essential for all stakeholders concerned to work in collaboration in ensuring that all railway projects are implemented successfully.
References
Dev, S. (2014). Project Management : “Etihad Rail”. Academia.edu. Retrieved from, http://www.academia.edu/9515010/Project_Management_Etihad_Rail_
Etihad Rail, (2014). Factsheet. Retrived from, http://www.etihadrail.ae/sites/default/files/pdf/factsheets.pdf
Etihad Rail, (October 2012). Corporate Presentation Retrieved from, http://www.enterprise- ireland.com/EI_Corporate/en/Export-Assistance/Market-Research-Centre/MEED-Etihad-Rail.pdf
Etihad Rail. (2014). Etihad Rail | Latest Updates. Retrieved from, http://www.etihadrail.ae/en/newsmedia/overview
Gale, I. (2011). Railway gives priority to freight lines over passenger services | The National. Thenational.ae. Retrieved from, http://www.thenational.ae/business/economy/railway-gives- priority-to-freight-lines-over-passenger-services
Gavin, J. (2013). Phase 1 of Etihad Railway to see huge interest | Supplement | MEED. Meed.com. Retrieved from, http://www.meed.com/supplements/2013/etihad-railway/phase-1-of-etihad-railway-to-see-huge-interest/3179907.article
Gazzar, S. (2014). UAE’s part of Etihad Rail in phase one of testing, but Oman and Kuwait face possible delays | The National. Thenational.ae. Retrieved from, http://www.thenational.ae/business/industry-insights/economics/uaes-part-of-etihad-rail-in-phase-one-of-testing-but-oman-and-kuwait-face-possible-delays
Khaleej Times, (2014). Etihad Rail to launch next phase of UAE railway network. Retrieved from, http://www.khaleejtimes.com/kt-article- display1.asp?xfile=data/uaebusiness/2014/October/uaebusiness_October16.xml§ion=uaebusiness
Reuters. (2014). Etihad Rail set to launch next phase of UAE railway network. Retrieved from, http://english.alarabiya.net/en/business/aviation-and-transport/2014/09/30/Etihad-Rail-set-to-launch-next-phase-of-UAE-railway-network.html