Strengthening the chain: The impact of technology on logistics in the Gulf

It’s no secret that technology has changed the face of business in recent years.

The word ‘disruption’ has cut a swathe through reports, surveys and analyses from sector to sector, with automation, smart technology, AI, the Internet of Things, and numerous similar terminologies proving equally ubiquitous.

The behemoth that is the logistics industry is, of course, no exception. From shipping to air cargo, and warehousing to outsourcing, changing technologies have always been a driver for its evolution.

It is no surprise, therefore, that the industry is at the forefront of technology adoption – constantly looking for ways to improve its efficiency, as well as adapting to impacting trends from other avenues.
The most recent developments have arrived at a difficult time for many logistics players across the region, with competition increasing and economies waning.

“The major challenge has been the global downturn, which affected business adversely,” explains Girish Nair, managing director of UAE-based Elite Airborne Express, which has a network that also covers Qatar, Oman, India and China.

“Competition has also increased, with unhealthy price competition due to the pie getting smaller,” he adds.

“There has been a growth in the number of players in the market due to the ease of data management – the software is cheaper with great capabilities. This has put pressure on established companies in retaining their existing clientele.”

Similarly Raman Kumar, managing director of Al-Futtaim Logistics, points to demand from customers to deliver products with less cost and within the shortest period of time.

“Many companies now outsource all or part of their supply chain to logistics specialists when it’s not their core business. For logistics providers, the value proposition rests on three key deliverables: optimising logistics costs for customers, shortening the length of the order completion cycle and capital expenditure,” he says.

But while challenges persist, new technology has brought with it a raft of opportunity.

“The logistics industry is dealing with the new technology that can optimise the loading and route planning,” Kumar adds.

And Nair points to the upturn in e-commerce deliveries over the past year as an example of positive signs for the industry.

“Technology is playing a major role in transforming the way the industry works,” he says.

“New and advanced software and hardware is driving quality and efficiency levels to a different dimension, and they are aiming higher all the time.”

Across the industry, companies are developing, co-opting or investing in cutting edge technologies to enhance their service, improve their offering and keep them up to speed with competitors – perhaps even outstrip them.

Dubai’s DP World, for example, has made a number of recent moves, from using ENOC’s RFID-based technology to help reduce fuelling time for its fleet and enhance the efficiency of transporting products around the world, to investing in high-speed transportation concept Hyperloop, which could dramatically cut down the time it takes to deliver cargo.

Tech trends

Tom Nauwelaerts, CEO of Momentum Logistics – a subsidiary of Gulftainer – argues that a number of trends including the Internet of Things, automation, and others, have become commonplace in logistics, but there is still some way to go to optimise their use.

“Technology is becoming the mainstay of logistics operations, given its potential to streamline key business processes and increase operational efficiency,” he says.

“The Internet of Things plays a huge role in transport operations today, whether it is in freight forwarding or fleet management. Automation in warehousing is another trend that we are observing in the region.

“However, a lot of the systems we have today operate interpedently of each other. There are separate systems for transportation and routing, management of assets and vehicle tracking.

“While there are some platforms that are certified to communicate on an IoT layer, and a few that provide fleet management solutions and transport planning that integrate with IoT, these systems are still nascent. Once we see these systems integrate, which is only a matter of time, we can expect that they will be a game-changer for the industry.”

IoT has allowed companies to implement enhanced connectivity technologies, which can increase efficiency in port and road logistics. With so much more connectivity comes real-time information, monitoring, controlling, measuring, learning, and other capabilities. All of which streamlines the supply chain. IoT will undoubtedly become more sophisticated in the coming years. Drones and driverless cars have also made waves in recent months, with huge advances on both fronts.

While the popular opinion is that drones won’t be used on a grand scale any time soon, the technology has been a long-held and high profile ambition of logistics giants such as Amazon, which announced the completion of its first drone delivery in December last year. Meanwhile, airspace rival 7-Eleven has reportedly made almost 100 aerial deliveries already.

In the UAE, drones have been touted as delivery mechanisms since early 2014, when the ‘aerial drone project’ was launched at the second annual Government Summit as part of an initiative by the UAE Prime Minister’s Office. During its first phase, it was suggested the drone would initially deliver identity cards, driving licences and other permits.