FOCUS: Digitisation can boost GCC logistics

The logistics and material handling industry in the UAE and GCC can benefit from digitisation says Ipsha Barooah, analysts at Allied Market Research.
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By Ipsha Barooah

The material handling and the logistics industry in the Middle East and UAE are gaining momentum. Stacked with immense potential, the countries of the GCC continue with their large scale infrastructural and logistics developments. Key transport and shipping hubs have been identified including export processing and freezones. The countries also predominantly depend on import of goods and services which bring about the need to make the logistics industry more reliant. 

Industry stakeholders, suppliers, traders, and buyers have had plenty of networking and interactive platforms. Due credit goes to the materials handling industry in the Middle Eastern regions. Ahmed Pauwels, the CEO of Organizers Messe Frankfurt Middle East stands by his statement that the industry has created a conducive atmosphere for the latest developments in the logistics segment. 

Automating operations to foster the flow of goods will drive growth in the material handling industry. The global production companies are looking forward to overcoming challenges by offering end-to-end solutions as far as warehouse solution engineering is concerned. Neeraj Mahajan, the director of GENAVCO said: “We design to develop custom-made concepts and so projects are delivered from one source and in the timeliest manner.”

The UAE’s leading player GENAVCO boasts a comprehensive line-up of material handling solutions from a number of leading international brands. The company will continue to enhance its presence in the region.

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Recent railway developments in the GCC will bring about a sea change in transportation and freight transportation. The UAE, Oman and Saudi Arabia are moving ahead with their domestic rail projects, this is set to uplift the industry as well as bring benefits to health, safety, security and environment for society. The domestic network will be part of an integrated system where the vast network of railways can ferry people from one station to the other quickly and reasonably.

The state-of-the-art freight services of the UAE’s Etihad rail network will also provide passenger services. Various industries and communities will now look to rail for ease of transport. It is a major game changer for supply chain and logistics. The current mode of transport in the UAE and GCC is freight trucks. The freight train will replace 50 trucks and carry 1000 tons of goods in one go. This will reduce road accidents, freight damage, it will save time and cost and will be economically viable.

Freight trains will also reduce bottlenecks and atmospheric pollutants thereby eliminating energy cost by 60 to 80 percent. The initial construction timeline of 2018 has been pushed back to 2021 due to the oil price plunge. The 2,117 km-long rail routes in the GCC regions will cost about $200 billion. 

Oman Global Logistics Group is currently setting up two rail networks internally for the mining industry. The first will connect Sohar Port and Dank. The second will connect Thumrait, Duqm, and Shuwaimiya.

Lately, GCC logistics firms are missing out on a crucial field– digitalization. The firms do not regard digitalization as important despite the threat from competitors.  The logistics firms are standing still when they have a long way to go. In Europe and North America, price automation is more advanced but there is still some space to put in upgraded functional systems.

It is said that the biggest revenue and profit generating potential for logistics companies in the digital world lies in design and pricing. In reality, there is a slight confusion. They are mixing the concept of online pricing with Electronic Data Interchange which is a standardized booking platform.

Digitalization brings with it pricing based on algorithms, based on customer price drivers such as volume, request urgency, industry and the financial value of transported goods. Each customer gets the right quote based on their willingness to pay. 

It can be noted that Uber is working on a road freight offer and Amazon is bringing up its own logistics services giving FedEx, UPS, and DHL Express a run for their money. Logistics and material handling processes in the GCC markets cannot risk losing their USP and customers relationships. Comprehensive digitalization is still in its early format that has a long way to go if the firms plan to automate complex tasks.

According to an extensive study done by Allied Market Research, the global logistics market will accumulate a sum of $12,256 billion by 2022 registering a CAGR of 3.48%.

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