UAE logistics shines in Covid era; ensures non-stop supply chain
The UAE's logistics industry has been resilient and vibrant during the lockdown period, ensuring uninterrupted supply chain to stave off any shortages of essential goods and medicine unlike countries in other regions, according to a report released by Dubai Future Foundation.
The resilience of supply chain in the UAE is due to the significant investment in multimodal facilities and infrastructure over many decades. As a result, supermarket shelves have remained fully stocked in the UAE, and throughout most of the Mena region, said the report.
"While the products available have sometimes been substitutes for familiar brands, the UAE has not seen shortages of the scale experienced by countries in some other regions. This is an indication of the resilience of the country's supply chain and its high inventory levels," said the report titled 'Life after Covid-19: Logistics' launched jointly with the Dubai Future Council on Logistical Services.
The Dh220 billion UAE logistics sector, which is expected to contribute eight per cent to the UAE economy by 2021, has largely benefitted from the country's free zones and massive infrastructure investments, with significant growth anticipated in the coming year, according to the Federal Competitiveness and Statistics Authority.
The strategic and technological investments made in its ports, airports and free zones are paying off, allowing them to remain open and fully operational." The report's findings claim the need for higher buffers of inventory levels, and the recent growth in e-commerce has put the focus on industrial real estate, with investors already having begun to identify opportunities.
"What we have seen over the past three months is a focus on securing supply chain and improving resilience. The advent of digital advancement has been significant. We, at DP World, have accelerated plans to launch new digital platforms to ensure we can continue to deliver during the crisis," said Sultan bin Sulayem, chairman and CEO of DP World.
"We have also seen that many of our customers are looking for diversity of supply of materials and sourcing these closer to home. With our global portfolio of assets, we can easily adapt to these changes, and work with our customers to find solutions to improve resilience and effectiveness of supply, particularly in essential categories," said Sulayem.
Khalfan Belhoul, CEO of the Dubai Future Foundation, stressed the importance of strengthening collaboration between the government and private sector as well as international organisations. "Such collaborations are needed not only to support and build a resilient logistics sector, which is seen as one of the vital economic sectors in the UAE, but also to anticipate changes and propose suitable solutions to overcome those changes that are imposed by the global health pandemic.
Belhoul said report aims to serve as a source of insight and information on what the future of logistics locally and globally may look like post pandemic, as well as to identify the current situation, highlight key trends and proposes short- and long-term recommendations as a means to support leaders and decision makers within the sector to mount a reliable plan of action.
The report noted that despite high levels of automation and advanced robotics in manufacturing industries, the pandemic has shown that securing the supply-side capacity of supply chains alone does not prevent the disruption of business. "The interruption of highly automated supply chains and the shutdown of automated production plants are proof. It has become clear that no amount of automation can prevent a recession if 'human agency', the ability of humans to engage in social and economic activities, is undermined."
The report suggests free zones should introduce incentives to logistics tenants to support the industry. In addition, manufacturers should produce products with longer shelves-lives to minimize the impact from potential supply chain disruption. Looking at the long-term changes, the report recommends developing a regional storage hub, allowing nearby countries to secure their supply chains, and letting suppliers to maintain demand. A resilient supply chain is dependent on an increased dependence on automation and robotics in manufacturing and ports.
"Covid-19 has taught us something which we might have forgotten in the last decade of growth which is about being self reliant. And logistics industry is one of the most vital sectors which helps keeping the economies and govts function smoothly in making sure the supply-chain for essential and non-essential needs of the respective populations are taken care off," Shailesh Dash, board member, Gulf Pinnacle Logistics, said.
"It sets off many important aspects of a economy which requires us to make sure not only that we are self reliant on producing the essentials but also that the people have access to it by making sure the supply-chain is stong enough and fool proof to meet such emergency needs as well," he said.
He said the UAE during the time of crisis has shown that the vision of leadership and the strategy implemented till now has stood the test of time and has kept the economy going and people being served as well during the Covid.
"The recent 3 months were challenging and innovative for us as a logistics player at the same time reemphasizing and singling out the importance of logistics industry across the globe. Essentials cannot reach unless proper and efficient supply chain is in place and that's why we are proud to doing our bit as a logistics player," he said.
As part of the UAE's economic diversification plan UAE Vision 2021, Abu Dhabi Economic Vision 2030 and Dubai's Industrial Strategy 2030, the report said the development of the logistics sector is seen as a strategically important goal for sustained long term success of the national economy.
Studies developed by the Ministry of Economy believe that the country's integrated free zones, massive investments in infrastructure and fast-growing e-commerce are some of the key reasons that are driving the logistics industry and putting the UAE ahead of the most of the emerging markets globally.
In the Mena region, there is a sufficient supply of industrial real estate in the free zones adjacent to ports. Some of the larger free zones in the region include King Abdullah Economic City (KAEC) in Saudi Arabia next to King Abdullah Port, Khalifa Industrial Zone Abu Dhabi (Kizad) in the UAE next to Khalifa Port, Jebel Ali Free Zone (Jafza) in the UAE next to Jebel Ali Port, and Free Zone in Oman next to Sohar Port.