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Collaboration and technology will pave the path to recovery for logistics

Filed on August 19, 2020

(KT file)

Logistics has emerged as an essential business in the Covid-19 pandemic.

From groceries to oil, everyone needs their goods transported on time in order to preserve supply chains and fulfil demand. However, even though logistics has been deemed an essential service by some countries, the industry has not been immune to the impact of the coronavirus pandemic.

In the global energy industry, fluctuating oil prices, although an issue for many years, compounded the effect of Covid-19 and US oil prices turned negative for the first time in history as demand dried up. Low oil prices compounded with movement restrictions due to mandatory quarantines and border closures temporarily impacted energy logistics and subsequently supply chains.

Despite temporary setbacks, the logistics industry revealed itself to be a key player in keeping the economy afloat and providing relief aid.

For example, the UAE leveraged its location as a gateway to Arab, Asian and African markets and used its logistics and warehousing capabilities to provide coronavirus aid to 71 countries, according to data from the International Humanitarian City. Dubai South has also provided fee waivers to new logistics companies, providing a strong incentive for the industry to grow in the UAE. 

This shows how logistics, if deployed wisely, can pivot quickly in times of crisis.

Looking ahead, there are three key focus areas for logistics players as they work towards the economic recovery of the industry and the country.  

Government collaboration

Across the Middle East, working with regional governments will be key to making supply chains resilient enough to weather through a pandemic. The goal can be to help governments procure supplies, or it can be to help them develop processes and infrastructure that will enable uninterrupted supply of essential goods through sustainable supply chains.

The UAE currently leads the region in the World Bank's Logistics Performance Index and is ranked 11th globally. The country can move even higher up the index if there is a greater level of collaboration between private sector firms and the government, with a focus on sustainable business practices.

There are also opportunities in industrial real estate, which can cement the UAE's position as a hub for energy logistics.

Selective automation

Logistics firms should look to invest in technology that protects and enhances human productivity and reduces operating costs, for example, robotic process automation, remote vehicle management and artificial intelligence solutions to help with predictive maintenance and forecasting analysis.

These technologies can ultimately reduce processing times by automating repetitive tasks and preserving labour for high-value tasks. Some automation technologies offer the added benefit of saving energy and materials.

Additionally, blockchain can be leveraged to provide real-time oversight of warehousing and transportation processes. As an added benefit to the customer, the integration of these technologies can improve the efficiency of logistics firms' service offerings and in turn drive commercial value. 

Customer preservation

When a crisis emerges the first action is to establish a business continuity plan. These plans often focus on preserving the bottom line by implementing cost-cutting measures, which can include a large proportion of workforce reduction, and can sometimes overlook customer preservation.

In energy logistics, a people-led approach to business whereby there is a focus on long-term contracts with customers can go a long way in preserving business continuity in times of service disruption or crisis.

I believe that the logistics industry across sectors including energy has a key part to play in the economic recovery of the UAE and the wider region following the COVID-19 pandemic. Hailed as an essential service, it will be up to logistics firms and providers to construct effective business continuity plans with a long-term view, invest in appropriate technology and work with governments to insulate supply chains and increase their resilience.

Put together, all these factors will pave a solid path to long-term recovery for the logistics sector in the Middle East.

Eugene Mayne is the founder and CEO of Tristar Group. Views expressed are his own and do not reflect the newspaper's policy.

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