E-commerce and digitisation dominate the Leaders in Logistics Summit talks

E-commerce and the impact of technology on logistics and supply chains dominated discussions during the tenth annual Leaders in Logistics Summit
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‘Logistics is in a constant state of flux’ says Ken O'Rahilly at Leaders in Logistics 2019
During his keynote address during the Leaders in Logistics Summit 2019, held on November 26th at Grosvenor House, Dubai, Ken O'Rahilly, VP Logistics at ASYAD Group, reminded delegates that they need to adapt and change as fast as the logistics industry is.
“Our industry is in a constant state of flux. Our customers are now talking to each other in ways we would never have imagined a generation ago,” he said. “The key focus now is on cheaper, more convenient, and faster.”

He pointed out that when it comes to e-commerce in particular, the greatest opportunity lies in customer spend ‘per basket’. “The biggest opportunity in the current marketplace is in the size of baskets, the spending per basket,” he said, emphasising that logistics partners need to help their customers find ways of increasing this.

The solution lies in repeat purchases. A consumer might make a small order with an e-com platform the first time, but return for a bigger purchase if their experience is a good one.

“The number of people, and the amount of time they’re spending on-line has gone up, but the attention span has gone down significantly. A driving force in our organisations has to be customer engagement, and response to problems is the key,” he said.

The second major challenge he outlined lies in the future consumer. “The environment and CSR is going to be the next frontline effort where organisations will either flourish or flounder in the court of public opinion,” O'Rahilly told delegates.

“If you look at Greta Thunberg, she only has 2.9-million followers, but can reach an audience of more than two billion if her two top followers retweet her message. The climate debate isn’t going away. Customers’ judgement of companies based on their efforts against slavery and reducing their carbon footprint isn’t going away,” he said.

Summing up his message to delegates at the Leaders in Logistics Summit 2019, O'Rahilly referenced a quote by Winston Churchill: “To improve is to change; to be perfect is to change often.”

‘It’s been a hectic year’ says Elesar Abu Zayed of NAFL at Leaders in Logistics 2019

During his Regional Industry Review & Outlook presentation during the Leaders in Logistics 2019 Summit, Elesar Ibrahim Abu Zayed, branch manager, NAFL, summed up the thoughts of many in the industry when he said 2019 had been “a hectic year”, replete with a multitude of challenges.

“It’s been a hectic year, there are a number of challenges with which we’re faced, but the UAE Vision 2021 plan is providing invaluable support to the UAE economy and the logistics industry by default,” he said.

Following a number of years combatting low oil prices and a deteriorating business environment, the region’s economic outlook is finally improving. Oil prices, so critical to the economic fortunes of the GCC, rose almost 20% at one point this year and government economic diversification programs have started to see results in the last year.

As the region continues to pursue political transformation and economic diversification and with the continued rapid pace of urbanisation across the Middle East, the logistics sector is set to play an important role in facilitating its development.

With strong support from governments and authorities to help bring innovation to this sector, as one of the fastest growing e-commerce markets in the world and as a strategic partner to China’s Belt & Road initiative, the Middle East’s logistics and transport players have a wealth of opportunity to capitalise on today and in the future.

“Efforts to make the UAE the best place to live affect all aspects of society and the economy, from infrastructure and transport to technology and regulations, all of which are becoming more streamlined and convenient from a business perspective,” Abu Zayed added.

This evidenced by the development of Dubai Smart City, EZ Dubai and CommerCity, according to Abu Zayed, all of which are specialist freezones providing a logistics hub for digital brands and the technology and ancillary services providers that support them.

NAFL is also doing its best to support the UAE’s logistics sector. The organisation has 380 large and SME members and plays a key role in networking and supporting SME growth in the logistics sector.

“As part of FIATA we have access to more than 44,000 freight forwarders and logistics company members worldwide and NAFL promotes our members business and the UAE as a logistics hub,” he said.

Leaders in Logistics 2019 Panel: E-commerce growth in the region

The Middle East, and especially the Gulf region, benefits from high spending potential, as the region boasts a high per capita income. The fact that internet penetration and social media penetration is also some of the best in the world means that the Middle East is ripe for online business.
It continues to grow and as a brand, it’s important today to have a presence in the major marketplaces in the Middle East. Marketplaces such as Souq, Noon, Namshi, eBay, Amazon etc. can be a great way to reach more consumers and increase sales.
This session looked at the disconnect between high per capita income and social media penetration, versus e-com sales themselves and the challenges that businesses face in bridging the divide, specifically, what is the role that logistics plays in that process?
Moderator: Deepak Khushalani, founder & MD, Premier Logistics

  • Abhishek Ajay Shah, co-founder & managing director, RSA Logistics
  • Madhav Kurup, regional CEO Middle East & South Asia, Hellmann Worldwide Logistics
  • Ali Thabet, regional ecommerce director, DHL Express Middle East and North Africa
  • Shobhit Elhance, associate vice president - Business Development (MENA), LogiNext

Key Quotes:
Madhav Kurup: Logistics industry has traditionally been geared for B2B, not many have pursued the B2C segment. The challenge for the industry is in bridging the difference. If you look at warehousing, B2B is supply led process, while B2C is demand led. In the former you can forecast and plan ahead, but with the latter you’re more vulnerable to the whims of the market at any given time. 3PLs in this region are not fully geared to those challenges. Less than 5% of the market is B2C at this point in the GCC, so change is necessary and once its embraced fully, there’ll be huge opportunity for further growth.

The last mile and the returns process are major issues that we aren’t geared to meet. I think we may need more satellite fulfilment centres and move away from the central hub concept that has been the norm for the past few decades.

Abhishek Ajay Shah: Demand and supply in the B2B2C model is definitely an issue. The problem with forecasting is that its invariably incorrect and the role of companies like ours is to bridge those gaps in resource management, vehicles, manpower, storage etc to manage the peaks reactively. This doesn’t of course enable companies to provide more efficiency and cost reduction in the supply chain, but this is where we have been trying to develop integration capability with as many partners as possible to utilise technology to be more organised in the downstream because the more information you have the more you can plan. Planning is a delicate problem, this year for example we over-estimated the demands of the market for our partners. So the need to get that reactionary and proactive management to work in tandem is extremely important.

Ali Thabet: The main challenge in global cross-border is last mile, which isn’t just finding the location, it’s the multiple delivery attempts. Our productivity is built on the number of stops and the volume at the stops. In B2C you will make fewer stops with greater volumes at each than B2C which will be smaller volumes. We need to educate customers about the importance of putting the correct delivery address and being available at the time that they select. Then there is the cash on delivery problem, which has declined, but not at the rate we would like. There’s a bigger percentage of returns for COD, but the main reason for that is because we couldn’t find the customer. We need our customers, our retail partners, to have an extra verification step, but they want to stick with what has been done for the last ten years. This is because they want to have more orders to boost their profit and loss account, but it creates a headache in the last mile. Some 50% of deliveries we do can have problems with the address in the last mile.
Speed of delivery is undoubtedly more important to the customer in our experience than the cost of fulfilment.

Shobhit Elhance: There isn’t much difference between Dubai and Hong Kong when it comes to infrastructure and regulations, but its impossible to implement a mainstream 55 minute or even same day delivery guarantee here because of the lack of adoption of technology. Companies are pursuing digitalisation, but optimisation remains lacking. As an example, we have more than 130 e-com companies in the region, but we only know of the top two who are offering same or next day delivery, this shows the importance of faster fulfilment to the market. The major problem in the e-com market is the location, the planning, the visibility of stocks and deliveries, all of which needs to be integrated and optimised to provide logistics partners with full control over the process.

Integration essential to supply chain says Saud Alshawareb at Leaders in Logistics 2019
Further integration of the supply chain is essential to the future growth of the UAE logistics sector, said Saud Alshawareb, managing director, Dubai Industrial City, at the Leaders in Logistics Summit 2019.

“We’re leveraging the UAE’s strategic location for our partners,” he said during his presentation ‘The Importance of Logistics in Developing an Advanced & Sustainable Manufacturing Sector in the UAE’. “Within the UAE our location is second to none midway between Dubai and Abu Dhabi, two of the biggest markets in the region. We offer value for money because we have a comprehensive range of products and services available and we have suppliers and their end users present in the same location.”

Dubai Industrial City is also developing the hinterland infrastructure necessary for logistics. “We have 110 kilometres of road developed and high-end fibre optic internet connections to support business operations,” he added. “More than 30% of our growth last year was from the expansion of our existing partners, which shows the extent to which we are able to help businesses grow their operations within our hub.”

China and India are huge growth areas for us and the wider UAE supply chain. Halal in particular is a major growth trend. We’re working with the UAE government to promote products made in the UAE, we want to play a key role in changing the UAE from a transhipment hub to a manufacturing hub as well.”

This development of a manufacturing base is key for further growth in the UAE logistics sector. While Dubai Industrial City has countless tenants that have benefitted from its approach, Alshawareb highlighted Norka Coffee and Standard Carpets as examples.

Norka exports coffee from Dubai to Canada, while Standard Carpets makes carpets here and exports globally, but particularly to Australia and Asia.
“Two-thirds of the world’s population is located within an eight hour flight,” said Alshawareb. “These are just two examples, but these manufacturers require logistics services and support, which shows the integrated nature of the freezone’s various verticals.”

Business cannot survive without people, says Eugene Mayne at Leaders in Logistics 2019
Tristar was established not only to provide safe operations in over 20 countries and territories, but also to build a sustainable business that contributes positively to communities, says Eugene Mayne, Group CEO, Tristar.

Speaking during the Leaders in Logistics Summit 2019, Mayne, during his Business for Purpose presentation, highlighted some of the key challenges facing the world from a socio-economic perspective and said businesses need to exist for a greater purpose rather than just profit.
Tristar is built on the foundation of ‘Business for Purpose’ and is guided by an Environmental, Social and Governance (ESG) framework, he said.
“Business leaders should support the 10 Principles of the UN Global Compact (UNGC), ‘not just by lip service but by action’. The 10 Principles cover four areas related to human rights, labour, environment and anti-corruption and directly contribute to the 17 Sustainable Development [Goals SDGs],” he said.

The SDGs are a set of economic, social and environmental goals ratified by 193 countries, including UAE at the UN in September 2015 which aims to ‘end all form of poverty, fight inequalities and tackle climate change’ by 2030.

“Business cannot survive in a world in which people don’t and everyone deserves access to clean air and water, and a sustainable economy,” added Mayne. “Business leaders have to respect the 10 Principles of the UN Global Compact. The UAE has launched 17 sustainable development goals. We must achieve these goals for our own sake and for future generations. Inequality, environmental sustainability, gender equality, these are some of the key issues to create a better world.”

To underscore his point, Mayne highlighted a shocking statistic. The global population will be 10 billion by 2030, but 1 billion currently go to bed hungry, while 30% of all food produced globally is wasted.

“Inequality is creating unrest all over the world, and one of the major causes is tax evasion. The gap between rich and poor is widening,” he said.
“This inequality is seen in the logistics sector as well. Road safety is a major concern for our industry, and while high-income countries have seen a significant reduction in road deaths, low income countries have not,” said Mayne.

“We need to be responsible for road safety not just within our own organisations, but with our partners as well, particularly the third parties we work with globally.”

Leaders in Logistics 2019 Panel: Warehouse automation
With increased uptick in technology use inside warehouses, innovative organisations are adopting robots to absorb peaks, squeeze picking time, keep costs down and mitigate staff shortages. This trend is illustrated by the region’s largest online grocery retailer whose success relies on automating key parts of its supply chain and warehouse in Dubai to keep produce as fresh as possible.

New entrants to the market such as IQ Fulfilment are also providing automated infrastructure to SMEs without the CAPEX to deploy it themselves, while established retailers such as Al Marai and Mai Dubai have teamed up with Swisslog to automate their production and storage facilities. This session looked at the disconnect between the benefits of automation and its relatively untapped potential in the GCC.

Moderator: Deepak Khushalani, founder & MD, Premier Logistics

  • Jacques Adem, co-founder & managing director, Logsquare FZCO
  • Sean Bradley, managing director, Freightworks
  • Ako Djaf, vice president, Contract Logistics /SCM & Land Transport, DB Schenker
  • Bassel El Dabbagh, CEO Abu Dhabi, Agility

Key Quotes:
Ako Djaf: We are currently testing robotic AGV in Europe, its goods to man to increase our productivity in packaging operations. This isn’t the first time we’ve done this, we have been testing this technology for several years, particularly in Sweden. This is an integral part of our future operations and will be rolled out to more locations in the years to come. Our automation solutions are based on a value proposition, we only want to pursue those technologies that are going to result in a cost saving for our customers. We’ve started to slowly introduce some elements of automation across our 200,000sqm of warehousing in the Middle East, an example is that we have gone paperless across the region.

In a few weeks we’ll be launching our new facility in Dubai South, which will become our regional test bed for the testing for future technologies for implementation in the region, like hands free picking to automated MHE vehicles. It’s a slow and careful process though, because as I said, the value proposition has to be certain.

Jacques Adem: Warehouse automation is new to this region, it started out in airports and has very recently become a part of the supply chain on the manufacturing side. We see it now in fashion retail, in food and beverage, but it is not mainstream in logistics yet. It only became a part of vertical fulfilment in e-commerce in the last two years or so. Part of the reason for this is that implementation times and CAPEX have all been reduced, which results in a faster and higher ROI.

Sean Bradley: In real terms when running a SME like Freightworks and dealing with organisations like Dubai Customs, automation becomes more important in the communication with customs than on the picking side. Dubai Customs is one of the only customs offices where I actually enjoy using their services because of the smart government initiatives.

You have to innovate, or you die, differentiation is essential, and one of the ways Freightworks is doing that is in our relationship with Dubai Customs and our readiness to utilise their new technologies and smart services to speed import and export processes. There isn’t any point to automation unless its improving efficiency, and through greater efficiency there is scope for growth in other areas of the business.

Bassel El Dabbagh: The automation sector is currently worth US $500-million in the Middle East, but is expected to triple in the next five years, and its being driven by e-commerce, because customers want faster delivery for less money. You can’t do that by hiring more people or operating a larger warehouse, you can only do it through robotics and automation. In addition, logistics providers are moving fulfilment centres closer to urban areas where land is more expensive, so you need a smaller warehouse, and you maximise volumes through automated systems.

Businesses need to stop resisting digitisation says Sam Achampong at Leaders in Logistics 2019
The logistics industry needs to accept that technological advancement, manifested currently in digitisation and automation, is an unstoppable force, said Sam Achampong, general manager, CIPS MENA at Leaders in Logistics 2019.

Speaking during his presentation ‘Digitalisation in Procurement & Supply’, Achampong said that too many companies are only reacting to technology and letting it lead them, rather than the other way round.

“The reality is that there are things technology can do better than humans, and what we need to do is stop resisting that and focus on the things that humans do better, the things computers can’t emulate or improve,” he told delegates.

“Blockchain is not what we consider Industrial 4.0 technology, it isn’t quite there yet in terms of roll out and use, but those things we do consider Industry 4.0 are being used by 97% of companies that responded to our survey. This includes Cloud Computing, the Internet of Things, senor technology and so on,” he added.

According to Achampong we are in an implementation curve, not all companies have fully realised their goal of becoming more competitive through digitisation. “Because technology can’t be implemented for the sake of it, it needs to work in tandem with your people, your processes and your systems,” he said.

“This equilibrium needs to be maintained, if you implement a more sophisticated digital system, you need to train your people or hire more qualified people,” Achampong added.

This is why the modern procurement and supply chain professional is no longer required to have negotiating skills, but to have emotional intelligence, to be able to influence, and be able to analyse big data.

“Don’t let technology lead your business, you don’t want to be like the London cab drivers who required government intervention to protect them from Uber.”

Leaders in Logistics 2019 Panel: Logistics revolution drivers
The logistics industry is evolving fast through digitisation, led by three main drivers – IoT, Blockchain, and Artificial Intelligence (AI). Since everything is already internet-connected, these three make the supply chain more efficient. Businesses must understand why this trend is taking place, and this panel looked at its potential costs, obstacles, and benefits, and what it means for the future of logistics in the UAE.
Moderator: Atif Rafiq, CEO & founder, Qafila

  • Walid Daniel, managing director, SPAN Group
  • Ahmad Chamseddine, commercial manager, IQ fulfilment
  • Mustapha Kawam, CEO & managing partner, IBX Logistics
  • Brent Melvin, CEO, Gallega Global Logistics

Key Quotes:
Ahmad Chamseddine: IQ Fulfilment is the first fully automated warehouse operator in the region. The challenge with disruption is that it isn’t about disrupting for the sake of it, it is about identifying what the future demand is going to be and putting in place a product to meet that demand. The overriding demand has always been for a faster and more professional service and through automation we’re able to do that.

Technology is shaping the future. We don’t fully comprehend what these technologies are going to do for our future. Who would have thought the smart phone would cause the explosion we’ve seen in e-commerce? The only thing we can do is ensure that we stay abreast of the potential threats presented by these new technologies. It’s a catalyst for digitisation and through that business can ensure its in the best position to be able to adapt.
Mustapha Kawam: Disruption is about what you want to offer to your customers. In the US there is a shortage of drivers for example, so Uber Freight has worked very well, in this region we have a surplus of drivers, so it isn’t relevant. But what we do face is a problem of trucks returning empty after doing deliveries to Saudi Arabia. How do we optimise to ensure we aren’t doing empty hauls? This is a more important issue for logistics operators in the UAE in particular.

You don’t want to invest in technology or the next big disruption just for the sake of it and then find that it doesn’t give you the ROI you need. For example, everyone is talking about automation in warehousing right now, but a more important aspect in my opinion might be compliance. Integrating systems to ensure that you are compliant with global regulations can vastly increase the transit times in cross-border logistics, to a much greater extent than robotic vehicles or drones or any of these other buzzword technologies.

Brent Melvin: The shipping container standardised the industry, while digitisation is doing the opposite. It’s driving change and creating disruption. We won’t be an industry talking with one voice. An example is blockchain, which has not been embraced by everyone and won’t offer the same benefit for all supply chain operators.

When it comes to digitisation it’s about understanding what it means to you as an organisation. It’s a minefield of software solutions and providers and they all offer the world, but I need to take different elements and stitch them together to offer what I need to my customers in order to remain ahead of the curve. Deciding what components are most important to your business is the most important question. Asking what is the next disruptor is probably the worst question, because that’s not for us to ask. We need to ask how these new technologies impact our business and how can we use them to enhance our operations. Don’t be fooled by the buzzwords like digitisation, IoT and so on.

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