Startups will lead transformation in the logistics ecosystem
Covid-19 related disruptions provide opportunities for the startups to focus on the development of innovation-based solutions
Startups will lead transformations in the logistics ecosystem as high market fragmentation, inefficiencies in freight transportation and last-mile delivery has opened up investment opportunities in the sector, say industry experts.
Referring to latest Mena Venture Investment Report, top executives in logistics industry said 2021 will be a pivotal year in the startups ecosystem with transport and logistics sectors are expected to attract lead share of investment to address the challenges of the industry in the wake of the Covid-19 pandemic.
Sachin Gupta, general manager of Gulf Pinnacle Investments (GPI), the UAE subsidiary of Gulf Pinnacle Logistics, said Covid-19 Covid-19 related disruptions provide opportunities for the startups to focus on the development of innovation-based solution offerings.
“The UAE maintained its leading position in the Mena region with 56 per cent of funding allocated to its startups due to a strong support offered by the government despite challenging environment across the globe,” Gupta said.
Gulf Pinnacle Logistics is a logistics and transportation company that aims to become an ‘integrator’ of the highly fragmented mid sector market, encompassing four business models — freight-forwarding, warehousing, road transportation and courier and e-commerce services.
Logistics startups in top league
Gupta said the Covid-19 pandemic has made a clear impact on inudstry focus with e-commerce, fintech, healthcare and delivery and logistics have seen increased demand in 2020, receiving the most transactions.
“With 25 deals registered in delivery and logistics, the sector increased 8 ranks up to 4th position in 2020 and the similar trend is expected to continue amid growth opportunities in the sector,” he said.
About key factors that driving growth in the sector, he said inefficiencies in freight transportation, storage and warehousing are some of the key challenges being addressed by most of the logistics startups.
“Last-mile delivery challenges, empty-mile run by road freight vehicles, lack of supply chain visibility, absence of real-time cargo monitoring, slow adoption of digitalisation are some of the factors contributing to the growth of logistics startups in the region” Gupta said while referring to Frost & Sullivan report released recently.
Focus on innovations
Najeeb Kabeer, partner and managing director of Century Express Courier Services, said supply chain disruptions reated to the coronavirus pandemic have provided growth opportunities to logistics startups to focus on the development of innovationinnovation-based solution offerings.
“Digital freight platforms, freight aggregation, warehousing, e-commerce logistics and cargo monitoring, among others, are some of the key areas that offer high growth prospects,” Kabeer said.
Century Express Courier Services caters to the domestic and international markets through its own fleet and a network of agents delivering shipments to more than 195 countries. The company focuses on same-day and next-day express delivery services catering to the growing demand of priority shipments.
Govt support is vital
Rodney Viegas, chief executive of Abdul Muhsen Shipping LLC and So Safe Logistics LLC, said the UAE government’s vital support to young entrepreneurs played key role in strengthening the startup ecosystem in the country.
“The government has announced several programmes and initiatives to promote the UAE as an innovation and a knowledge hub in the region. Incentives such as equity-free grants or exemptions of fees, subsidised housing, office space and health insurance coverage for companies have promoted the startup ecosystem and nurtured entrepreneurship in the country,” Viegas said.
He said Dubai future foundation, Ghadan 21 in Abu Dhabi, and Sharjah Entrepreneurship Centre are some of the institutions supporting the development of startup ecosystem in the country.
Abdul Muhsen Shipping LLC was established in 1991 to provide shipping and warehousing services, focusing on import and export services mainly by sea through the Jebel Ali Port. The company has its head office in Dubai and the warehousing facility in Jebel Ali Free Zone.
“The UAE in general and Dubai, Abu Dhabi and Sharjah in particular have established a strong base for future entrepreneurs and will emerge as preferred locations for the logistics startups,” Viegas said.
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