UAE logistics has a bright outlook
Trade, e-commerce will drive growth in logistics as key industry players set to capture the untapped potential of cross border trade
The UAE logistics industry has a bright outlook due to quick rebound in economic activity and boom in e-commerce activity in the wake of the Covid-19 pandemic, says an industry executive.
Geoff Walsh, country manager at DHL Express UAE, said logistics has, and always will remain a necessity for trade and commerce to endure, and despite the initial shock to the industry in the first few months of the pandemic spread, “our industry was a vital service provider” during these times.
“We have seen positive activity resume gradually and looking to the future, we are very optimistic of the industry’s growth potential which we anticipate will be primarily driven by e-commerce activity, a sector that has witnessed an unprecedented spike during this very challenging time period as people switched to online shopping,” Walsh told Khaleej Times during an interview.
Latest research suggests that the Mena’s e-commerce market is estimated to surpass $15 billion at 35 per cent CAGR in 2020, while global retail e-commerce sales are expected to reach a new high and hit $50 billion by 2025. E-commerce will definitely continue on an upward trend and this is a golden opportunity for logistics players to expand their operations, and capture the untapped potential of cross border e-commerce.
Walsh said the UAE’s logistics sector is substantial, and makes up about 13 per cent of the UAE’s total gross domestic product (GDP).
“As we get closer to EXPO 2021, and with the UAE’s 2030 industrial plans in place, the logistics and supply chain segment is expected to strengthen even further. DHL Express UAE already has a strong foothold in the market with a growing network and solid value proposition to support new online operators entering the market,” he said.
“We anticipate the airline and tourism sectors to drive the UAE economy forward; the restarting of travel and tourism business-related activity in the country kicked off much earlier on compared to some other GCC states, which definitely helped the UAE to reboot its recovery. With travel and tourism comes increased people and cargo flows, which have had a positive knock-on effect on logistics.
“We are also seeing accelerated development in new technologies being introduced in the logistics industry, in the likes of data analytics, AI, robotics, IoT technologies and Cloud services. As the pandemic transforms the future of work and business, the speed of innovation in our industry will be crucial to manage customer expectations,” he added.
To a question about the impact of the Covid-19 crisis on DHL business, he said the first few months of the pandemic were quite challenging for every business, and logistics was no exception.
“We had to navigate unchartered territory and scramble to keep essential supplies moving in light of transport disruptions, constrained cargo capacity, broken links and delays. For an express service provider, ensuring seamless and timely delivery with airports and borders closed down, was one of our biggest hurdles,” he said.
“Thankfully, as a global company, we have a very robust contingency and business continuity plan in place to prepare us for every eventuality and ensure our business units can continue to function seamlessly even during emergency situations, so in this respect, DHL adapted quickly to meet world-wide demand for service continuity.
“We started relying more on our own air fleet of 250 freighter aircraft to make up for the loss in commercial belly space and increased flight frequencies and rotations to maintain steady supply links between priority markets such as UAE, Saudi Arabia and Egypt. We also worked diligently to strengthen our Mena air network by adding two Boeing 767-300Fs to our regional aviation fleet, increasing our load capacity by over 25 per cent, while non time-sensitive shipments were shifted to road or sea.
“Fortunately, our business remained resilient and we saw a steep growth in cross-border e-commerce volumes in the UAE as well as in other GCC markets.”
About the UAE infrastructure for connectivity and ICT, he said it is amongst the most advanced in the world. Referring to the recent DHL Global Connectedness Index 2020, which tracks international flows of trade, capital, information and people across 169 countries and territories, he said the UAE emerged as one of the top five most globally connected countries in the world, on the same rank as the Netherlands, Singapore, Belgium and Ireland.
Similarly, the UAE continues to be among the most attractive ICT markets in the Middle East driven by digitalisation initiatives and aided by the increased adoption of leading technologies such as Cloud, big data analytics, internet of things (IoT) and artificial intelligence (AI).
While Covid-19 has disrupted business and life around the world, it has not severed the fundamental links of the UAE to the global arena, which stands testament to the country’s robust and highly resilient infrastructure and ICT networks.
In reply to a question, he said there are many lessons to be learnt from navigating through the disruption to global supply chains and shopping habits caused by the pandemic, and like so many other businesses, logistics is in the midst of a transformation with many trends here to stay while new ones constantly surfacing.
“As airports and borders slowly open up and the situation stabilises, the pressing question for our business is how to anticipate and plan for what consumers and businesses will do next to be better able to support customers and ensure speedy, seamless delivery is not impacted,” he said.
“Considering that the way in which companies act or adapt now will have huge ramifications on their future, we are taking note of the shift in the B2C and B2B landscape and its new wave of users and re-aligning our investments to match future trends.
“And with more people now working from home, we need to make sure we are closer to where our customers are and make ourselves present in areas that are closer to the target locations,” he said.
He said digitisation, investment in our air network, increasing our courier and customer service capacity, and innovating last mile delivery methods will become a primary focus for DHL.
“We are also analysing reliance and spend on partner airlines and looking to continue to maximise usage of our own fleet.”
He said the UAE is one of DHL’s most substantial markets in the region and “we will continue to invest in our local infrastructure, air and road capabilities to meet the growing demand of our customers” for global trade.
“Our expansion plans are fully aligned with the UAE’s economic vision which continues to strength its position as a global logistics hub. We are currently working on our new 40-million euros airside facility in Abu Dhabi that is planned to be operational in 2022. This new addition to our already extensive infrastructure and network will enhance our handling capacity and processing capabilities for a faster, more efficient service.
“We will continue to review the market and stay ahead of the curve in making investments in the UAE and wider Mena region, to support our clients, while exceptional customer experience will continue to be our driver,” he said.
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