Transport & Logistics Middle East by creativemaul

A CBM MEDIA GROUP PUBLICATION

Insights on the move to a ‘just-in-case’ supply chain

TLME Innovation Awards 2022: A Vision

A NEW ERA OF INNOVATION As the world awakens from the pandemic, it’s time for the innovators to shine

TRANSPORTANDLOGISTICSME.COM | EDITION 4 - SPRING 2022

Exclusive interviews with leading innovators across the globe

Thanks to our partners for a milestone year at Etihad Cargo

Contents 4

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From the

Innovation

The View from

Founder

Awards 2022

Dubai

28 18 30 24 INTERVIEWS

INSIGHTS

Technology

Sea Cargo

Logistics

Air Cargo

Review

Q&A: Wolfgang

Q&A: Prof. Jean-

Lehmacher

Paul Rodrigue

Q&A: Kris

Q&A: Tim

Kosmala

Robertson, DHL

Advertiser Index

IBC + 1: ETIHAD 2,3: Saudia Cargo 7: Mercedes 21: DIMOS 27: Almajdouie 33: Project 44 35: Al Futtaim Logistics IBC: LogiPoint OBC: Etihad

Introduction FROM THE FOUNDER & CEO

reetings reader and welcome to this first postpandemic edition of Transport & Logistics Middle East. It’s certainly been a turbulent couple of years which is why the team and I wanted to mark this new era with a bang! This is why our buzzword in the office has been ‘innovation’. We’ve seen a great deal of innovation during the pandemic – under highly challenging circumstances I might add – yet now is not the time to revert to old methods, but harness the revolutionary energy garnered during tough times and implement that into a new tomorrow. The Middle East region has been at the very centre of global innovation in recent years, and this is no different in the supply chain, which is why we have morphed our annual Excellence Awards into the Innovation Awards 2022. As you may see, ‘excellence’ very much refers to elite performance, while ‘innovation’ refers to new ways of performing, and this is what we intend to mark in this edition and at the Innovation Awards. We have a variety of Awards in each of the key areas of the supply chain to present to the companies that have shown a blend of original thinking, industriousness, and creativity (as well as good old hard work and consistency) in our sector. As always, it’s a pleasure to host the very best of the region and produce a memorable night for all involved. Enjoy reading through this edition that provides the framework for this event and the future of our sector. . Sam Khan, Founder & CEO, TLME

EDITORIAL editorial@cbmmediagroup.com Editor Sunil Thakur Head of Editorial Richard Joy Head of Digital Juzer Karbalai juzer@cbmmediagroup.com COMMERCIAL Publisher & CEO Sam Khan sam.khan@cbmmediagroup.com

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AWARDS

Now in our fifth year of industry-leading Awards Ceremonies, this piece charts the journey from excellence to heroes to innovation

THE TLME INNOVATION AWARDS 2022: A VISION

The foundation story

e’ve been on quite a journey since TLME held its inaugural awards ceremony in 2018, yet with all the goings on in the world since then, it feels somewhat longer ago! The awards ceremonies TLME has commissioned since then have reflected the changing world – we began with the Excellence Awards, these focused on the very finest of the sector, the elite operations that were changing the Middle East region and the wider world. Next came the global pandemic, a pandemic that changed everything. Given the global context at the time, it wasn’t right to hold an event on excellence in the supply chain, but instead look to the sterling

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efforts companies and individuals were making in the chain at a time of great importance. Now we sit on the cusp of the post-pandemic world. We must learn the lessons of recent years, but also look to a brighter future, a future that will see the Middle East grow and flourish, a future that will see new working models, new technologies and new ways of doing business. In essence, we’re going to see a lot of innovation.

Innovation Awards 2022 So now we’ve witnessed the transition from excellence to innovation, it’s worth exploring what this means and what’s in store for 2022. Where

potential to change how we work by letting computers, machines and robots do what man can, only more efficiently and safer. Given we just had a pandemic in which the interaction between humans was limited to the very essentials of life, the automation argument had another major boost. As well as this, there are changing public demands for safety of workers and an expectation surrounding working environments and quality of life. With the above in mind, the awards will investigate how key players across the chain are changing the ways in which we work to offer better, safer, and more sustainable working practices.

Sustainability Another advantage of digitalised and robotised operations is that it offers the opportunity to be more sustainable by utilising predictive analytics to isolate key areas of downtime when machinery can be programmed to release no excess emissions. However, the industry will have to go much further than that. Just as the pandemic expedited many processes in the sector, the recent COP26 meeting in Glasgow, UK, has also given the sector a new mandate on clean energy and eco-efficient working practices and forced it to innovate. We’re on the verge of a raft of new developments including new technologies, new fuels, new business transactions and new machinery. This will also mark a key area at the TLME Innovation Awards 2022.

Remote Working Only a decade or so ago it may have seemed unthinkable to have a workforce based largely from home in an arena as tangible and complex as the supply chain, yet for a new generation of workers, and after the covid pandemic, it is slowly becoming a prerequisite. Yes, complexities remain across the chain in moving reliance on tried, tested, and trusted physical labour, but the raft of positives continue to grow for remote working. The aforementioned meeting of modern worker expectations is one plus, but there are also benefits in efficiency, where peaks and troughs can be planned for, as well as providing unrivalled safety measures. A major issue with the supply chain since its inception has been worker safety, and it remains one of the most dangerous sectors to work in. Remote working offers the opportunity for innovation, and this is something the Innovation Awards 2022 will take into consideration.

Cybersecurity

excellence is all about performing extremely well within current models, innovation is all about changing those models to create a new paradigm within which excellence can flourish. This begs the question, where are we witnessing such innovation? The answer to that isn’t quite as simple as ‘during the pandemic’ as much of the innovations implemented during this time have been long in the post, the global pandemic merely expedited the process. The innovations being referred to here are of course things such as remote working, digitalisation, collaboration, automation as well as safety and sustainability.

Automation & Safety During the last decade, automation has been a big word in the supply chain, seemingly having the

Cybersecurity is becoming a bigger issue every year. One downside of digitalisation and automation is the opportunities it provides cybercriminals. Defending against attacks isn’t as simple as you may think either. The times of hiring an expert hacker to pushback against attacks are waning because cybercriminals can make huge profits at this stage, far more than individual companies can justify paying cybersecurity staff. Again, this leaves the sector ripe for innovation. Yes, such innovation will mean new cyber trends and software, but it will also mean fostering new conversations around what the supply chain is and its value. This may bring in players from outside of our sector as conversations must be had from a security, social, political, and even philosophical standpoint.

The Future One great aim of the global supply chain has been a smart future. A time in which cities, ports, ships, planes, trucks, and roadways ‘speak’ and organise the most efficient, safe, and clean way of travel. This development has brought in the gaze of the world, as it really promises a new tomorrow. The Innovation Awards 2022 will showcase the very best in this regard and provide a platform for the companies that are building a new tomorrow. TRANSPORTANDLOGISTICSME.COM

OUTLOOK TLME serves the whole of the Middle East from its HQ in Dubai, and we’ve long felt the developments in this city are key to developments in the sector, so this piece offers an insight into the latest from the Emirate.

The View from Dubai An Outlook from a World Leader W

hile greatly impacted by the coronavirus pandemic, Expo 2020 has still been able to push through the challenges and produce a platform that’s grabbed the world’s attention. The themes of Expo 2020 are threefold: sustainability, mobility, and opportunity, with each participating country building their pavilion around one of these themes. The UAE itself went for the theme it’s most renowned for – opportunity. It is this opportunity that’s seen the UAE – and by extension Dubai – grow exponentially over the last few decades and that growth looks set to continue with the IMF predicting further growth in the UAE’s GDP in 2022. Although outside of the figures, what’s probably more

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telling is how UAE cities like Dubai are increasingly perceived. Out of the major oil producing nations, the UAE has perhaps been the most effective in diversifying its portfolio, and this has made Dubai a cultural hub for visitors from East and West. Just think in your own perception what Dubai is now, is it a tourism hub? Go online and you’ll see endless videos of young people enjoying the fun and glamour Dubai has to offer. Is it the business opportunities? Travel down Sheikh Zayed Road in downtown Dubai and it feels like you’re in a city from the future, with magnificent skyscrapers all around and a talented international workforce on the ground. Or is it a key strategic hub for the global supply chain?

OUTLOOK

Supply Chain & Logistics

Out of the major oil producing nations, the UAE has perhaps been the most effective in diversifying its portfolio, and this has made Dubai a cultural hub for visitors from East and West."

Of course, Dubai is all the above things. Yet for us in the industry, Dubai is one of the most exciting places to be as it blends the aforementioned opportunity with technology, hunger for growth, and innovation. One needs only to look at the key partners of Expo 2020 to see how big of a role the supply chain plays in Dubai. DP World, Cisco, Accenture, Emirates – each of these are major players in their own right. DP World has had a particularly good 2021, recently stating that it handled 58.4 million TEU (twenty-foot equivalent units) across its TRANSPORTANDLOGISTICSME.COM

OUTLOOK

global portfolio of container terminals in 9M2021, with gross container volumes increasing by 11.9% year-on-year on a reported basis and up 11.4% on a like-for-like basis. On a 3Q2021 basis, DP World handled 19.8 million TEU, up 8.1% year-on-year and up 7.9% on a like-for-like basis. Gross volume growth was mainly driven by Asia Pacific, India, Middle East & Africa, and Australia with a strong performance from Qingdao (China), Mumbai (India) and Sokhna (Egypt). Jebel Ali (UAE) handled 3.4 million TEU in 3Q2021, up 0.6% year-on-year. At a consolidated level, its terminals handled 11.4 million TEU during 3Q2021, increasing 7.6% on a reported basis and 7.2% year-on-year on a like-for-like basis. Group Chairman and Chief Executive Officer Sultan Ahmed Bin Sulayem commented: “We are delighted to report another strong quarter for DP World with throughput growth of 8.1%, which is once again ahead of industry growth of 6.4%. This strong performance illustrates the resilience of the global container industry, and DP World's continued ability to outperform the market. “Encouragingly, all our regions continue to deliver volume growth with India being a key driver, and we continue to make solid progress 12

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on our strategy to deliver supply chain solutions to beneficial cargo owners. “The near-term outlook remains positive, but we do expect growth rates to moderate in the final quarter. Furthermore, we remain mindful that the Covid-19 pandemic, continued supply chain disruptions, and geopolitical uncertainty could continue to hinder global economic recovery. “Overall, we are pleased with the year-to-date performance and remain focused on growing profitability while managing growth capex. The strong nine-month volumes leave us well placed to deliver an improved set of full year results and we remain focused on delivering our 2022 targets.” Meanwhile, Dubai’s main airport (DXB) has retained its place as the world’s busiest for international travel, with around 29 million passengers shuttling through the global gateway last

OUTLOOK

Dubai is one of the most exciting places to be as it blends opportunity with technology, hunger for growth, and innovation.” 2024. The CEO of Dubai Airports, Paul Griffiths said that “Dubai has done such a good job in reassuring travellers. It’s a safe city to visit and to come and holiday and do business. So, I think the actual trends to recovery are very encouraging, indeed.” It marks the eighth consecutive year that Dubai International Airport clinches the mantle of the world’s busiest for international travel, surpassing London’s Heathrow, and Atlanta’s Hartsfield-Jackson for global travellers, although the latter is among the busiest in terms of overall passenger traffic.

Economic Outlook

year. The 2021 passenger figures are encouraging for the tourism-driven economy of Dubai, regarded as a critical link between East and West. The numbers are a sign that international travel has picked up somewhat since the coronavirus pandemic spawned unprecedented global lockdowns and border closures in 2020. Last year’s figure represents a 12% increase in traffic at Dubai International Airport compared to 2020, which had recorded nearly 26 million travellers. Even with 29.1 million passengers crisscrossing last year through Dubai International Airport (DXB), the figure is nowhere near the pre-pandemic milestone of 86.4 million in annual traffic logged by the airport in 2019. The CEO of Dubai Airports, Paul Griffiths, said DXB forecasts 57 million travellers to come through the airport this year, and a full recovery to pre-pandemic figures by

The Central Bank of the United Arab Emirates has said it expects the UAE economy to grow 4.2% in 2022, accelerating from last year's 2.1% growth. The central bank's projection, in its latest quarterly report on the economy, is rosier than that of the International Monetary Fund, that projects the UAE economy will grow 3% this year. Non-oil real gross domestic product (GDP) is expected to increase by 3.9%, due to a continued increase in public spending, positive outlook for credit growth, higher employment, and better business sentiment with a world fair EXPO event in Dubai, the bank said on its website. All in all, the UAE and Dubai had a strong finish to 2021 and this growth looks set to continue well into 2022, placing Dubai in a powerful position to move forward as a genuine global leader across many domains. TRANSPORTANDLOGISTICSME.COM

INSIGHT

TECHNOLOGY REVIEW 6 Trends to Watch in 2022

ou could be forgiven for thinking that recent events have set the supply chain back years, yet in some senses, the challenges of the last few years have actually expedited a move towards new working methods, unheralded levels of collaboration and a boom in demand for new technological processes. As tends to be the way with large-scale changes in the supply chain, the making of any big moves must be justified by a pressing demand – and boy have we had that. Extremely turbulent supply and demand, the challenge to disseminate a vaccine around the world and a raft of new working practices that rely more on technology and less on manual labour have shifted the industry focus to one core competency; in a word, that is resiliency.

Resiliency, Recovery & Innovation

It is widely agreed that it will take the best part of 2022 before we see the global supply chain back on its feet, and in this time, there lies a chance for key players in the chain to increase resiliency across global supply chains. In order to do this companies are challenged with rebalancing on-shore, near-shore, and offshore strategies for manufacturing locations. The innovations implemented during the global lockdowns will have to continue, with the industry identifying alternate sourcing strategies to reduce dependencies on individual suppliers in low-cost regions. This means that inventory optimization strategies will continue to be crucial, helping decision-makers identify key materials, intermediates, and products, as well as to determine how much and where to store them across the supply chain. Organizations will also need to improve collaboration and increase visibility with suppliers, logistics service providers, contract manufacturers and other key trading partners.

Sustainability

After the high-profile COP26 in Glasgow towards the end of 2021, the focus on sustainability is once again intensified. At COP26, over 140 countries pledged to reach net-zero emissions. Yet it is the supply chain itself that unites these countries, meaning the supply chain itself is both a major contributor to the problems, and a key area of focus where we can take action to address the problems. However, there’s a close gap between sustainable mission statements and the ability to carry them out. This was a major finding from an Oxford Economics survey of worldwide supply chain decision makers across industries: 88% have either created a clear mission statement around sustainability or they're in the process of writing one, but only 52% have put those words into action and reduced their shipping miles.

What’s more, less than half of those respondents said they had significant visibility into their own sourcing of sustainable products. And only 21% had complete visibility into their supplier sourcing of sustainable products. As environmental, social and governance (ESG) initiatives continue to be a corporate priority in 2022, companies will look to their supply chains for answers, and increase pressure on their partners to become more socially responsible.

There’s a gap between sustainable mission statements and the ability to carry them out. This was a major finding from an Oxford Economics survey of worldwide supply chain decision makers across industries"

Digital Transformation

Future Tech in Supply Chains

With recent events exposing the complexity and inherent vulnerabilities in global supply chains, a whole new demand upon digital transformation – and the pace it can be rolledout – has been triggered. This has led to a new wave of technological investment focusing on building supply chain intelligence, resilience, and agility to better respond to events, risks, and opportunities. Areas set to see major growth include artificial intelligence (AI) and machine learning (ML), digital twin technologies, and cloud technology, with older software making way as it can’t keep the pace of the modern supply chain. One of the major advantages of AI is the ability to model the future. New sources of data and AI driven models can be applied across companies’ product development, supply chain, and sales lifecycles to give them greater confidence, knowing they are on the right path to growth. Ultimately, learning from the future can help companies prepare for risks. Finally, we’re now coming to a point at which we can review the effectiveness of AI models and ML processes that have been implemented in recent years, and this will surely lead to a refocusing of aims in this regard. One of the most challenging aspects of implementing AI and modern technology is utilising it correctly. It can be a bit like giving a top of the range Ferrari to a learner driver at times – we know the power and potential is there, but can we handle it correctly? As time moves on, our experience grows, and expect to see a spate of remodelling and refocusing in the supply chain as key decisionmakers figure out how they can best prep for the future.

Over the past 18 months, leading organisations have developed the ability to rapidly adapt business models and supply chain ecosystems to live with a high degree of volatility and disruption. In many cases, driven by necessity, companies used this period to increase overall investment in digital supply chain technologies and replace legacy platforms. As we move out of lockdowns and panic stations and into the ‘new normal’, the focus TRANSPORTANDLOGISTICSME.COM

INSIGHT

With recent events exposing the complexity and inherent vulnerabilities in global supply chains, a whole new demand upon digital transformation – and the pace it can be rolled-out – has been triggered.”

will be less on managing risk and disruption and towards exploiting future growth. To accelerate this growth, innovation and investment will target winning in the market with new products, service offerings and consumption models. Emerging from the pandemic, companies are already moving to provide value and building the foundations to scale and drive the next level of intelligence and automation. Other priority technologies expected for 2022 include cloud, digital twins, and augmented reality (AR) technologies.

Cybersecurity

Would you care to guess what was the most targeted sector by cybercriminals in 2020? I’ll extend the text a bit for you to have a think… Final answer decided? It was indeed – and perhaps predictably – the financial services sector. I don’t think we need Einstein to figure out why that was, but in 2021, the financial services sector was no longer the most targeted. Instead, the IT and communications sector, including telecommunications providers, software developers, managed security service providers, and others faced the most attempted cyber-attacks. At the recent TLME Future of Logistics conference, event host and CEO of Vespucci Maritime Lars Jensen was very eager to stress the danger of cybersecurity, explaining how 16

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the potential money criminals can make now far outweighs what private companies can pay experts to defend themselves. Chilling stuff. The reality is that criminals are now seeing huge opportunities in hacking software and developer infrastructure, platforms, and providers, as these are all entry points into governments, corporations, and critical infrastructure. The supply chain is very much at risk here. British IT company Darktrace specialises in tackling cybercrime and its researchers have observed that its artificial intelligence autonomously interrupted around 150,000 threats each

week against critical infrastructure, government, and corporations in 2021. These research findings are developed based on Darktrace data generated by ‘early indicator analysis’ that looks at the breadcrumbs of potential cyber-attacks at several stages before attributing them to any actor and before they escalate into a full-blown crisis. From this analysis, Darktrace predicts that, in 2022, we will see threat actors embed malicious software throughout the software supply chain, including proprietary source code, developer repositories, open-source libraries, and more.

and attracting new talent with stateof-the-art tools. Also, as the degree of automation increases, it frees up the workforce from repetitive tasks, and allows them to focus on more complex problems and decisions that required human interactions. One thing is clear. Supply chains have had major challenges and been in the spotlight for the past 20 months, and they will continue to do so well into 2022. Here is to a happy (and less eventful) new year.

Conclusion & What’s Next…

IoT

With plenty of data building in the bank, cities, ports, airports, and roads increasingly ‘smart’ and a wealth of connected programmes and apps, Industry 4.0 is now ready to ramp up in 2022. The aforementioned machine learning and AI can use volumes of IoT-based and social media data from people, devices, assets, products, and vehicles across the supply chain to automate decisions and processes. Meantime, predictive analytics will empower employees to make more informed, real-time decisions, and drive new business models. From

smart factories featuring 5G, greater connectivity and enhanced AI solutions, to smart products and assets across the supply chain, Industry 4.0 has a lot to offer companies who have invested in these technologies. The coming year will bring greater focus on companies using Industry 4.0 within their factories, across the supply chain of smart assets, and into the hands of consumers and customers leveraging the smart products and devices it enables. Technology will also help alleviate worker shortages and improve retention by improving the productivity and decision making of existing employees

With the above supply chain trends set to dominate the sector, it’s worth covering the key issues we will still face as we continue the move to digital in the light of the pandemic. Issues such as driver shortages, logistics provider capacity issues, inflation, shipping delays, increased freight costs, depleted inventory levels, labour shortages and dealing with demand peaks all require attention. It is essential for key players to learn how to balance the oversight of crisis response with the strategic thinking that is required beyond these immediate challenges. Whilst they have been taking a back seat over the last 12-18 months, it is however these transformation mandates and their successful implementation that are likely to determine an organization's success post-pandemic. It is now more important than ever to ensure operations are as flexible and resilient as possible, so it is vital that these projects are carried out, keeping operations up to date and avoiding unnecessary added cost and resource requirements that can be experienced if existing operations are not modernized. Management should ensure that they adopt a scalable, crisis management process, ensure they have sufficient leadership capability in place, and document their experiences and learnings throughout the pandemic to ensure they are able to balance the short-and-long term priorities so focus on essential change projects is not lost. To address the rigidity, companies should focus on building a network of trusted vendors (customers, supply chain partners, and suppliers) to help manage disruptions and support business continuity. Cultivating a resilient supply chain means that the organization can be better at anticipating, reacting, and planning against the unexpected by enabling cross-functional integration and collaboration with its ecosystem of vendors. TRANSPORTANDLOGISTICSME.COM

INSIGHT

SEA FREIGHT OUTLOOK Is it still waters or stormy seas on the horizon?

he shipping and port sector has always been like a massive and very complicated jigsaw that even the sharpest minds have trouble truly grasping, yet it can help to bring things back to their most basic function when we face such complexity. The shipping sector is simply about moving one box to another place and keeping trade moving. With that in mind, it’s worth asking, ’has there ever been a bigger challenge for the industry than the past two years?’ Aside from the two world wars, the answer is ‘probably not’. Yet the sector has done what it

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has always done and pushed through. It simply must. If sea-freight stops moving, so does the world. This is a truism the wider world doesn’t often take much note of; yet had to in the last couple of years as the world’s attention looked upon the supply chain as the key arteries that keep the lifeblood of our civilisation turning. This is the spirit in which this insight will be conducted, providing an insight into the health of the shipping sector, the port arena, and the trends to watch, with a special focus on the Middle East region too.

The Shipping Sector After the turbulence of 2020 and 2021, the general outlook on the global shipping sector is reliant upon a continued economic recovery and the clearing of congestion, as well as the outcome of the implementation of new working modalities implemented during the pandemic. A continued global economic recovery is important for all shipping segments to maintain their favourable supply-demand balances into 2022. Key downside risks include a slower-than-forecast economic recovery or a resurgence of Covid-19 cases, leading to a collapse in demand.

that freight rates drop is good news, especially for importers. However, it is highly unlikely that they will drop back to the 2019 level. After all, in 2020 many factories shut down manufacturing or halted production for a more extended period. Since the demand (especially in e-commerce) surged, it put pressure on shipping agents and further complications arose. Despite the shipping fleet being fully deployed, it is not enough. In recent months it has been more challenging to find a place on a container ship; in August 2021, delays caused the transport capacity to decrease by over 3.1 million TEU (12.5% of sea transport). In 2022, this situation is to change for the better – it will be easier to secure a place for a container. Since there will be more shipping spots, more containers will be for hire. It is estimated that containerized export will increase by 2-3% in 2022. In 2022, it is also expected that the global fleet will be expanded. In 2020, the fleet increased by 3%, in 2021 – 4.3%, and in 2022 it is expected to increase by 4.5%. However, the biggest increase is forecasted for 2023 – 7.5%. In 2022, at least 22 large container ships (COSCO Shipping, CMA, OOCL, and MSC) are set to debut. Furthermore, new players will appear on the shipping market: Taiwan and Thailand. Taiwan plans to launch 46 containerships, and the Taiwanese carrier Wan Hai Lines intends to expand its Trans-Pacific range. On the other hand, Thailand wants to launch new container lines; therefore, by 2025, it will order several containerships.

The Port Sector

On the other hand, pandemicrelated restrictions have also led to supply-chain issues, including port congestion, which have supported rates, particularly for container shipping. A potential increase in trade protectionism during the recovery could limit demand in some segments. Developments in International Maritime Organization (IMO) or EU emissions regulations could affect the medium-term outlook for cost structures or the earnings capacity of some shipping segments too. It is estimated that freight rates will drop by 30-40% in 2022. The fact

Blockages around the globe have been the key marker of recent months, yet with lockdowns lifting and more and more of the global populace being fully vaccinated, the potential shoots of recovery are starting to peek through. Such a recovery may take its time, however, especially when one considers that almost six times worth of containership capacity has been caught up in wrangles in ports than an average year. Things seem to be especially bad in Europe and the United States, with congestion hitting record highs towards the end of 2021, with minor improvements in the beginning of 2022. In terms of liner reliability, bottleneck problems look set to continue for the foreseeable future, meaning ports and terminals will have to remain on their toes. Before the pandemic a big word was going round the port sector – no, not automation – infrastructure. This became a big talking point around 2018/19 yet fell by the wayside for

obvious reasons, yet now it’s coming into prominence again. While key players in the Middle East and Asia have been able to prepare for this with a raft of investment in greenfield terminals and the gift of space (as well as prior planning), everyone must deal with infrastructure problems around the world as blockages in one country affect the whole chain. Another challenge at ports is that there is a global container imbalance. That means instead of shipping empties back across the ocean, some are sitting at ports. Port and dock workers are henceforth unable to unload full containers and get them shipped inland fast enough. Warehouses are full, truck chassis are scarce and adding workers to help unload full containers fast enough is hard to find. It’s created a challenge that is not going to correct itself soon.

Middle East As has been widely reported, ports in the Middle East have attracted huge amounts of investment over recent decades and the high level of investor interest in the Port of Beirut, as well as other ongoing port projects in Israel, Oman, and Jordan, underlines how attractive these assets continue to be. Ports on the Eastern Mediterranean, the Persian Gulf and the Red Sea have seen significant investment over the past decade, with many ports aggressively adding capacity. While ports were until recently mostly state-owned assets, private investment is increasingly common, driven in particular by China’s Belt and Road programme. While China and other countries see political gain from controlling ports along major trade routes, how attractive are the region’s ports from a business perspective? There were already signs of overcapacity and low productivity at container terminals across the region before the pandemic and the shipping sector has only become more unpredictable since then. Container shipping meanwhile remains vitally important to the Middle East region. Geographically located as a bridge between Europe and Asia, the region’s ports handle a significant amount of globally traded goods. It should also be added that Middle Eastern port giant DP World has reported a 9.4% rise in 2021 container volumes, though growth rates moderated in the fourth quarter which the Dubai state company said was expected due to the impact of COVID-19, inflation, and supply chain issues. DP World said it handled 77.9 million shipping containers across its portfolio with its Asia Pacific & India, TRANSPORTANDLOGISTICSME.COM

INSIGHT shortage of hauliers but the backlog of containers and increased cargoes in the post-lockdown rebound have resulted in clogged ports. Many of these are considering introducing increased fees for long-dwell containers. AI will make these fines easier to police and will incentivise logistics companies to get their own businesses in order. This means more connectivity and AI.

Blockchain technology Distributed ledger technology (DLT), such as blockchain, will be heavily adopted by the maritime insurance industry. This will help streamline and ironclad multiparty arrangements and reduce overheads (by an estimated 40%) in the insuring office. This means more connectivity and AI. Digitalisation, IoT, ship operations… and what’s happening in my container? Increasing adoption of the Internet of Things (IoT) will transform risk management of containers in transit, especially those needing to be stored at very specific temperatures (such as vaccines). The ability to monitor the cargo inside containers in realtime will not only reduce spoilage of time-sensitive products but also reduce the risk of fires. These have become an increasing claims trend on large containerships. This will be aided by better labelling conventions, assisted by DLT, to avoid an unknown concentration of containers carrying potentially flammable cargo. This means more connectivity and AI.

Sustainability

and Americas & Australia regions both recording double digit growth. Chairman Sultan Ahmed bin Sulayem said there had been an encouraging start to 2022 and that DP World expected the portfolio to "continue to deliver growth". But he also said the pandemic, ongoing global supply chain disruptions, rising inflation and geopolitical uncertainty "could continue to hinder the global economic recovery."

Trends in 2022 & Beyond In terms of the future of the sector, we can expect major changes in the following key areas:

Ports will remodel Logistic companies have been using ports as cheap storage areas. Many factors contribute to this including 20

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Sustainability has been a focal point for the maritime world over the last few years. Reaching the target of a 50% reduction in CO2 emissions by 2050 remains firmly on the agenda – development of green technologies and the implementation of eco-friendly shipping practices such as hull cleaning are just a few practices the industry is utilising to mitigate the contributions we’ve made to harmful gas emissions. A growing concern around the state of our planet has also given rise to the eco-conscious consumer. Consumers are increasingly questioning the environmental price tag of their purchases – they are looking to align themselves with companies that share their green values. As the world embraces a sustainable future and attempts to mitigate the effects of climate change, businesses will have to adapt and face the challenges that come with going green but will ultimately reap the profitable rewards.

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INSIGHT

Logistics 2022

ne thing about large-scale changes in large-scale industries is that they’re not easy to reverse once implemented. The global logistics industry has had to change its ways extremely quickly, which isn’t too easy for the behemoth it has become over recent decades, because of the global pandemic. Yet as we start to move towards the end of the pandemic (we hope), it’s not as if the changes we witnessed – such as increased levels of collaboration and flexibility – will fade into the ether. The demand for optimal digital practices and streamlined services are still high on the agenda, with investments in transport infrastructure also topping the bill. This is what we’ve seen occurring in the United States, which has worked at improving its somewhat aged ports and airports to make them more efficient. China has also made big waves with the launch of new logistics giant China Logistics Group (CLG). Reports indicate that CLG has a charter capital of about US$4.7 billion as it’s a merger of five state-owned companies. These companies are China Railway Materials; China National Materials Storage and Transportation Group; Huamao International Freight Limited Company Shenzhen Branch; China Logistics; and China National Packaging Corporation. It's expected that CLG will be something of a one-stop-shop for logistics services, having warehousing, distribution, packaging, intermodal transportation, and cross-border e-commerce capabilities. CLG already owns 120 specialized railway lines, 42 warehouses (and other storage facilities) and a transportation network that currently covers 30 Chinese provinces and has a presence in five continents. Such a move will give China extra might in its One Belt, One Road (OBOR) initiative, showing it is the dominant force of the future in global logistics. Yet whenever an industry starts thinking about macro trends, it’s easy to forget the micro too. In this case, that micro is the humble truck driver. The issue with a lack of drivers has been a global issue, as has a general shortage of labour across the chain. Add onto this the new demands stemming from the

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A macro (and micro) analysis of logistics in 2022 and beyond

requirement to be sustainable, and you have quite the challenge. This is a good place to start for the trends to expect in logistics that are listed below:

The Truck Driver & Trucks The crux of this piece revolves around how macro-trends effect the micro, but also how micro trends effect the macro. Nowhere is this more accurate in logistics than with truckers. Trucking remains one of the most common jobs people have worldwide, and until the dawn of full-scale truck automation (which is still some way off), truckers are vital. Naturally, a shortage of trucking capacity equals container volume sitting idle at capacity-constrained facilities. Further, when goods and raw materials don’t move, business operations suffer. Yet the problem isn’t just that there aren’t enough truck drivers, there aren’t enough trucks either. Forbes has stated that there is one qualified driver for every 9 job postings and that trucking companies have no incentive to increase capacity due to rising prices. This stops them from investing in new trucks. The solution to this is simple, start listening to truckers needs and demands, as those who can retain truck drivers will be the eventual winners. Furthermore, liaising with truckers offers the ability to introduce new technologies that can benefit everyone, such as technologies that can report upon congestion at pick-up points and deliver optimal times to enter ports, depots, and airports to pick-up/dropoff goods. In theory, this is a way of loosening the supply chain bottlenecks in the last mile. Another option is to pay drivers per drop or delivery in the last mile as opposed to a salary or hourly rate. This business model, coupled with tools to make the drivers’ lives easier, incentivizes them to make more deliveries each day and can increase driver retention.

Localization Another key trend is localization. Whereas it once took several days for an ecommerce order to arrive, consumer behaviour now requires that everything be available for ultra-rapid fulfilment

at a reasonable price. Due to the highly competitive market, on-demand delivery is quickly turning into a differentiator. However, most supply chains struggle with providing same day delivery. Same day delivery is becoming the new normal, in fact it’s now expected. Players like Amazon, ever the leader in supply chain efficiency, offer lightningfast delivery for Prime members. Therefore, localizing the supply chain has become so common in the quick commerce market. To fulfil same day orders, supply chains must be shifted to the local level. If in the past inventory and shipping were managed on a regional level, today, supply chain leaders are fulfilling orders from local stores. This method has a wide variety of benefits including the ability to use up local inventory when desired. On a local level, supply chain management, or SCM, means fulfilling orders from stores or urban fulfilment centres. This way, delivery can be done

quickly and efficiently, boosting the customer experience, and keeping up with the supply chain trends.

Sustainability After COP26 in Glasgow, new demands are being placed on logistics and this is coming from the very top (government, NGO’s, and trade bodies) and from the end-users and members of the public – in short, everyone wants sustainable operations in the supply chain. Climate change has been a massive issue for years now, and those concerns haven’t gone anywhere. To address the challenges the industry is facing now, sustainability in the supply chain needs to become a matter of efficiency and optimisation. That can start with something as simple as route optimisation for last mile logistics – a process that can reduce fuel consumption significantly – but it also needs to include a more holistic approach to finding and rooting out inefficiencies across the supply chain in 2022. Another key trend is alternative fuels, electric vehicles and automated operations that can monitor emissions and provide detailed analytics into efficiency. It is upon the sector to constantly seek new methods of manufacturing, storing, and distributing products in a way that reduces the carbon footprint,

pollution, and waste in all supply chain links. Furthermore, by adding more pick-up points, promoting microfulfilment centres (that are closer to major cities) to prepare orders, and by moving to zero-emissions fleets, the industry can both minimize waste and consume far less energy.

Agility & Forecasting The supply chain management technology landscape is changing rapidly and to keep up, processes require automation, systems and data need to be integrated, workers need to have new resources, and managers need to have better supply chain visibility. All of this requires investment into a supply chain optimization platform that can do all of the above. When researching such a system, one must focus on the needs of each key decision maker in the company, as well as what can provide the end-customer with the best possible experience. It is important that whatever SCM technology businesses use will integrate with the business’s existing supply chain systems, from the TMS and WMS all the way down to inventory management and CRM systems. A robust, two-way data synchronization ensures that every supply chain and business platform, as well as all team members, are always aligned.

Regarding forecasting inventory and delivery needs, last mile delivery volumes are rising, which is no surprise. But how can retailers and logistics providers prepare for peak season? Well, there’s no reason to run the supply chain in the dark anymore. Supply chain managers must use the available SCM technology to forecast inventory and delivery to know what to expect and how to deal with it before the rush begins. Supply chain tech today offers the opportunity for increasing visibility into supply chain data to never-before-seen levels. Big data and predictive analytics are still an untapped resource that can potentially provide insights which help anticipate or respond to events or disruptions. Yet before insights and analytics can be leveraged for a better supply chain, there’s a huge task at hand for the many organizations that need to first collate data points from all sources and align them to their business operations. Machine learning and artificial intelligence (AI) can turn supply chain data into assets for informing and improving business operations. Using logistics management software, logistics companies can both plan in advance and forecast inventory and delivery issues as well as keep on top of real-time issues that come up along the way.

Whenever an industry starts thinking about macro trends, it’s easy to forget the micro too. In this case, that micro is the humble truck driver and the issue with a lack of drivers has become a macro issue"

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INSIGHT

AIR CARGO REVIEW

4 key trends to look for in 2022 and beyond

021 data for the global air freight market from the International Air Transport Association (IATA) shows that full-year demand for air cargo increased by 6.9% when compared to 2019 and 18.7% compared to 2020 following a strong performance in December 2021. This marked the second biggest improvement in year-on-year demand since IATA started to monitor cargo performance in 1990 (behind 2010’s 20.6% gain), outpacing the 9.8% rise in global goods trade by 8.9 percentage points. Obviously, comparisons between 2021 and 2020’s monthly results are heavily distorted by the massive impact of COVID-19, and unless otherwise noted, all comparisons below are to 2019 which followed a normal demand pattern.

2021 Global demand in 2021, measured in cargo tonne-kilometres (CTKs), was 24

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up 6.9 % compared to 2019 (7.4% for international operations). Capacity in 2021, measured in available cargo tonnekilometres (ACTKs), was 10.9% below 2019 (-12.8% for international operations). Capacity remains constrained with bottlenecks at key hubs. Improvements were demonstrated in December; global demand was 8.9% above 2019 levels (9.4% for international operations). This was a significant improvement from the 3.9% increase in November and the best performance since April 2021 (11.4%). Global capacity was 4.7% below 2019 levels ( 6.5% for international operations). The lack of available capacity contributed to increased yields and revenues, providing support to airlines and some long-haul passenger services in the face of collapsed passenger revenues. In December 2021, rates were almost 150% above 2019 levels. Economic conditions continued to support air cargo growth right up until

the end of the year with global goods trade rising 7.7% in November (latest month of data), compared to pre-crisis levels. Global industrial production was also up 4.0% over the same period. That said, as ever, there were some drawbacks. The huge supply chain issues witnessed across the logistics chain have slowed the pace of growth in November. These issues are due to labour shortages (partly due to employees being in quarantine), insufficient storage space at some airports and processing backlogs that continue to put pressure on supply chains. December saw a relief in these supply chain issues and that enabled an acceleration of cargo growth – an auspicious note for 2022.

2021 Regional Performance Strong variations were evident in the regional performance of air cargo in 2021 compared to 2019. North

Air cargo has been able to pick-up the overspill from the issues sea cargo has faced over the past two years as the capacity squeeze worsened, yet this trend may well continue in a lesser form as market forces and a changing industry create more demand for air-bound cargo. "

bound cargo. With an increasing need-for-speed in the logistics chain due to new customer expectations of next-day delivery potential, many big names that have retrofitted aircraft to deal with the capacity swell during the dark days of the pandemic are keeping their cargo fleets to meet new needs. The growth of e-Commerce and the general economic recovery are likely long-term trends. Fed by new technologies and new business practices, we can expect long-term growth. And that will further challenge the trend of scarce air cargo capacity. 2.Diversification American carriers were the strongest performers, reporting an annual increase in international demand of 20.2%. Middle East and African carriers also reported double digit growth in international demand in 2021 (10.6% and 11.3%, respectively) compared to 2019. Asia-Pacific and European carriers saw international demand rise 3.6% in 2021 compared to 2019. And Latin American carriers were the only ones to record a contraction in international demand of 15.2% compared to 2019. Middle Eastern carriers reported an increase in international demand of 10.6% in 2021 compared to 2019 and a fall in international capacity of 10.1%. Growth decelerated towards the yearend, partly driven by a downward trend in volumes on the large Middle East-Asia route. In December airlines in the region recorded a 5.7% increase in international demand compared to December 2019. International capacity decreased by

9.2% in December compared to the same month in 2019.

Trends for the Future The air cargo arena has been able to boom while its sister sectors in the logistics space have suffered under the weight of the pandemic. This shift will naturally self-correct, yet there’s a slim chance that the air cargo sector is going to go back to 2019-style operations. Below are several trends that are going to have a big influence post-pandemic. 1. e-Commerce Air cargo has been able to pick-up the overspill from the issues sea cargo has faced over the past two years as the capacity squeeze worsened, yet this trend may well continue in a lesser form as market forces and a changing industry create more demand for air-

As the economy picks up, we will see a flurry of activity related to the diversification of supply chains. We can expect increased activity due to onshoring and near-shoring. As businesses transfer manufacturing from China to places like Mexico and Canada, regional air traffic should increase. This represents more than a surge. Regional air cargo shipping will likely take hold as an established shipping mode. Don’t forget other modes have limited capacity availability. Thus, consumer demand and capacity constraints are unlikely to abate anytime soon. Also recall vaccine deliveries have saturated distribution networks because vaccine distribution relies heavily on-air transport. With Covid-19 coming under control in the U.S, air cargo deliveries will shift to South America and India. The mid- and long-term appear to be shaping up with air cargo as a key mode of transport. Supply chain diversification will trigger near-and midTRANSPORTANDLOGISTICSME.COM

INSIGHT

term increases in air cargo. Meanwhile, the long-term prospects for air cargo will likely increase, too, as more companies diversify their supply chains to mitigate risk. 3.Rising and Volatile Shipping Rates Shipping rates have been anything but stable since the pandemic hit in March 2020. If demand for cargo space exceeds supply, rates will continue to rise. Currently, international travel is 88% below pre-crisis levels. That’s significant because passenger planes transport 60 percent of all air cargo. IATA reports that more air cargo planes are flying today than in pre-crisis times. In total, 1,100 air cargo planes are operational – 240 more planes than in January 2020. Yet, the industry still has a 39 percent capacity shortage. To ease capacity constraints, manufacturers are building more cargo planes and retrofitting passenger planes. While helpful, it takes time to manufacture and retrofit planes. So, stable rates remain elusive for the long-term. As distribution of vaccines shifts to international deliveries, rate volatility will likely persist. Also, the uneven opening of economies should further delay stabilization of rates. 26

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4.Sustainability The air cargo sector is always under the microscope as it isn’t traditionally the greenest way to move trade, yet several new measures are being mooted to change this perception and see the industry become greener. Sustainable aviation fuel (SAF) is one option here. SAF can be made from feedstocks, agricultural residues, algae, waste oils

The air cargo sector is always under the microscope as it isn’t traditional the greenest way to move trade, yet several new measures are being mooted to change this perception and see the industry become greener."

and even carbon. Various forms of SAF have been available in relatively small quantities so far, but it is growing in popularity. According to the Air Transport Action Group, SAF can have up to 80% fewer GHG emissions than traditional fuels throughout their life cycle. ATAG claims that SAF also results in lower sulphur and particulate matter emissions, resulting in cleaner air. This all depends on what the SAF is made of and how much is blended with conventional fuels. Another option is more efficient air transport. Air cargo carriers, including FedEx and UPS, are investing in more efficient aircraft to lower emissions. They are looking at design, weight, and fuel efficiency to minimize environmental impacts as they strive to deliver packages to customers’ doors quickly. Also, Delta has announced a US$1 billion investment in more efficient planes and carbon offsetting measures this year. Finally, although it’s been around for some time, e-freight is still gaining ground in air shipments. E-freight digitizes the paperwork necessary every time a plane touches down with goods. From shipment details to customs forms, e-freight makes going paperless as quick and painless as possible.

EXCEEDING EXPECTATIONS Almajdouie Logistics provided direct receiving, inventory control, crane services, storage, and heavy transport for the Dumat Al-Jandal windfarm project. This aerial view photo shows a convoy transporting components from Duba port to the project site in the Al Jouf region.

INTERVIEW

Q&A WOLFGANG LEHMACHER EX-WORLD ECONOMIC FORUM GLOBAL SUPPLY CHAIN EXPERT

As the supply chain rises from the pandemic, what do you foresee as the major trends in the next few years?

The first trend is the life with SARSCoV-2. From the start of the pandemic, I have been saying that we should find ways to operate despite the virus. The efforts to leverage technology and create infrastructures allowing us to do so remained limited. As Omicron is much less violent and deathly, countries like Switzerland have ended the measures. So far, people show up at work and life goes on like before the pandemic. The second trend is accelerated digitalisation. Companies will manage their supply chains near real-time and collectively on internal collaboration platforms. Everyone needed is connected and can contribute to sensemaking and problem-solving. The platforms will be expanded beyond a company’s borders across supplychain networks or at least interfaced with other platforms in the system. Companies will move their models to platform-driven businesses. The pandemic has already accelerated the 28

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transition towards e-commerce and direct-to-consumer strategies. The third trend is the transition towards a more sustainable economy and society. This shift should be the most natural as it protects our well-being and the lives of future generations. However, it is the hardest because it requires significant changes in behaviours and practices and a rebuild of the economy. The magnitude of the task is reflected in a LinkedIn post of Jacob A. Sterling, Senior Director, Head of Decarbonisation Innovation & Business Development at Maersk. “The current production of green methanol is approx 30,000 ton/ year. For the 12 vessels (Maersk has ordered), we need 500,000 ton/year. And by 2030, we need millions of tons of green methanol".

How do you see technological change impacting the sector?

The urge to innovate is in our genes and with the arrival of the digital age new technologies-driven solutions mushroomed. Technologies improve over time which helps adoption bringing prices down, creating a spiral

that will continue until the entire world is digitized. We will see this also in supply chain and logistics. This will naturally drive the digitalisation of the industry and support trends like the transition towards zero-emission transport. The signals of emerging super technologies are the influx of massive funds into a field followed by consolidation of the market. A significant amount of venture capital financing went into improving supply chain visibility. Asset tracking, a subset of visibility solutions has attracted most of the funds, garnered around US$900 million in startup funding from 2010 to 2019. Now, this market is in consolidation. One of

Mr Lehmacher believes the challenge to create a healthy, clean environment is one of the most exciting issues we face as a global community at present

the latest consolidation events is the acquisition of European supply chain visibility player NIC-place by FourKites in January 2022. Such developments in the supply chain visibility industry will help to establish true end-to-end visibility. The data generated through the solutions offered by visibility players will turn supply chain into a data-driven sector. Those supply chain and logistics companies that are unable to make the transition will vanish. Those that master it may become the undisputed champions of the future.

With regard to the Middle East region in particular, what do you see as the key opportunities and challenges?

For hundreds of years the Middle East, previously called the ‘Near East’, has been a trading platform between the West and the East. This position which is anchored in its geostrategic location has been solidified by the construction of modern seaports and airports in recent years. Among the shortcomings are the geopolitical tensions and the low level of industrialisation, with

Turkey being the most industrialised country ranking amongst the top 20 most industrialised nations. Climate change which brings rising temperatures will put pressure on crops and already scarce water resources which potentially increases migration and the risk of conflict. Huge opportunities reside in the Middle East as a trading hub. Wellconnected with India, Africa and Europe the region has been a key location for regional head offices and distribution centres. A number of services can be structured around the centres, such as quality control functions, assembly plants and recycling businesses. This helps to gradually industrialise the region and attract more investment and activity into the region. Industry 4.0 with its high level of automation can support the development.

What should key players in the logistics chain look to do now to future proof their businesses?

Digitalisation and automation are critical to participate in the future economy. Also, compliance with social, environmental and governance standards will be a prerequisite to participate in large parts of the global commerce. Public and private sector leaders need to evaluate the impact of climate threats, reducing interconnectivity and rising geopolitical tensions on the current position. It is important to establish a few probable scenarios representing possible futures and to develop a strategy that allows us to navigate and hopefully thrive under all circumstances. Digitalisation and automation starts with taking paper and gradually manual work out of the process, in the private but also the public sector. Establishing a platform or a common mandatory interface for all communication are good places to begin. As digital transformation is about talent not technology the players in the region need to ensure that enough digital talent is available in their organisations. The leadership is required to engage in a holistic change programme.

In their own interest, the nations in the region should also help to replace the take-make-waste model with the circular approach to reduce waste and CO2 emissions. The future is circular and with this transformation come a lot of opportunities. There is a need for centres that support the repair, reuse and remake sectors but also totally new ways of manufacturing. Understanding these trends and becoming a leader in this field is an opportunity for every region in the world.

What are the key areas of innovation that excite you the most in the supply chain?

The most exciting innovation is the largest technology-driven project the world has ever seen: the transformation of the current linear economy into a circular world with minimal waste and CO2 emissions. The supply chain is critical for this transition as the supply chain is the economy because the economy has been built to deliver what private individuals and businesses need. Without circular supply chains there is no circular economy. Building and running circular chains requires first of all a circular design, i.e. that products are made to last long, be repairable, reusable and re-makeable, and that all parts largely consist of recyclable materials and that the entirety of the materials used are recyclable. Recycling isn’t the circular economy, it’s only its last resort. There will be no circular economy without digitalisation. Data is not only the oil of the digital economy but in particular the circular economy. Circularity requires data about all materials used in parts and products to allow for continuous use. The circular economy is unthinkable without the internet-of-things and artificial intelligence but also without data sharing which may require neutral partners so that intellectual property is protected. We also need new standards that ensure consistent quality of recycled materials. A lot needs to be done which means a lot of innovation is needed and a lot of money can be made. The circular economy is not an altruistic undertaking but the biggest opportunity the world has ever faced. TRANSPORTANDLOGISTICSME.COM

INTERVIEW

Q&A RENOWNED SUPPLY CHAIN EXPERT

PROFESSOR JEAN-PAUL RODRIGUE,

HOFSTRA UNIVERSITY, NEW YORK As the supply chain rises from the pandemic, what do you foresee as the major trends in the next few years?

It is widely acknowledged that the Covid-19 pandemic had substantial impacts on global supply chains, and a paradigm shift is ongoing. Initially (early 2020), demand dropped as lockdown measures were implemented, and a temporary scarcity was observed around some food, pharmaceutical, and household items. Then, as demand patterns shifted and governments responded with stimulus measures, demand surged faster than expected, creating stress on several segments of global supply chains (late 2020). The maritime sector was particularly impacted, as several major terminals in China, North America, and Europe ran out of capacity, creating a decline in the velocity of the related supply TRANSPORTANDLOGISTICSME.COM

chains (2021). The outcome that we are currently contemplating involves some scarcity, high commodity prices, record transportation costs, and capacity shortages. These provide strong incentives for implementing more resilient supply chains, which can be done through several strategies. One is the trend towards reshoring, which began before the pandemic, and which is now facing a new impetus due to notable changes in the input cost structure. Another may involve redesigning existing supply chains to adapt to the new reality, such as reducing the footprint of long-distance transportation through higher cargo density and assembly closer to final markets.

How do you see technological change impacting the sector?

Digitalization and automation have

Professor Rodrigue believes we are changing from a "just-in-time model" to a "just-in-case model"

Automation at terminals (ports and airports) and distribution centres is also becoming ubiquitous, allowing increased throughput and flexibility in operations. New and emerging technologies also come with some risks such as cybersecurity events have become recurrent.” as cyber-security events have become recurrent.

With port automation on the rise, a future of smart ports beckons

been key trends transforming the logistics sector. The logistics sector is transaction rich, implying the substantial benefits of establishing protocols and platforms, allowing for better interactions along the supply chain. Big data is enabling logistics service providers to gather large quantities of information in real-time, which can be used to analyze operational flows, pinpoint bottlenecks, and assess various scenarios. Electronic forms of documentation supported by blockchain technology are allowing more efficient and secure transactions across supply chains, including financial transactions. Automation at terminals (ports and airports) and distribution centres is also becoming ubiquitous, allowing increased throughput and flexibility in operations. New and emerging technologies also come with some risks

With regard to the Middle East region in particular, what do you see as the key opportunities and challenges?

The Middle East has been able to assume the role of an intermediary location along long-distance trade flows and supply chains. This role is particularly apparent over air transport and maritime shipping networks that have seen the emergence of megahubs such as Dubai and Abu Dhabi. The advantages of this intermediacy are being challenged as long-distance international trade could be impeded by the current inflationary context and the push towards reshoring. Still, an intermediary location has opportunities to capture elements of this reshoring.

What should key players in the logistics chain look to do now to future proof their businesses? Resilience has become a key concern as it relates to issues that are readily implementable to mitigate a changing prioritization of risks. In addition to the multidimensional impacts of the Covid-19 pandemic, the Suez Canal blockage in 2021 has been a sobering event for Asia-Europe supply chains,

and the recent conflict in Ukraine has opened a new set of uncertainties. The classic concept of “ just-intime” is being reassessed to become more oriented towards “ just-in-case”. Since each supply chain has its own characteristics, strengths, and vulnerabilities, risks and their related resilience need to be considered in terms of factors such as high levels of supplier concentration, how easy it is to substitute to new suppliers, the level of dependence on a single region or supplier, and an appropriate inventory level able to create buffers at its key stages. This adds costs and duplications, but a functioning supply chain is obviously preferable to one that is leaner, but less resilient.

What are the key areas of innovation that excite you the most in the supply chain?

The potential to see a fully operational port-centric automated transport chain where containers are handled from the pier to distribution centers. Terminal automation, such as automated stacking cranes (ASC) and automated guided vehicles (AGV), would be completed by self-driving drayage trucks connecting ports to distribution facilities. Such as system would allow the port-hinterland chain to operate 24/7. TRANSPORTANDLOGISTICSME.COM

INTERVIEW

Q&A

As the supply chain rises from the pandemic, what do you foresee as the major trends in the next few years?

The existing trends will continue, but their development priority and pace will change. I am hoping that the trends that will become more important relate to what we’ve seen as challenges during the pandemic: unexpected shortages of people affected by pandemic counter measures, unreliable capacity supply from the transporters, lack of real visibility of the shipments at the granularity required for optimal planning, and lack of full demand awareness (segment, product, geography, etc.) resulting in too many out-of-stock or overstock situations. The issue of workforce reliability will accelerate automation, especially in ports, railway yards, consolidation/ deconsolidation facilities, distribution centres and warehouses. The warehousing sector has probably hired most of the people willing to accept pay & work conditions. Increase in wages might increase interest from the workforce, but not to cover shortages. Visibility must come from greater progress in high quality tracking and tracing IoTs and ability for multiple independent platforms being able to query those devices upon permission of the shipper/BCO. Currently, the shipper/BCO is at the mercy of track & trace capability (often very limited) offered by their logistics provider(s) and must log in into multiple portals if splitting their volumes between more than one provider. This innovation and transparency will not come from the logistics providers who consider secrecy and opaqueness their major protection against competitors. Demand awareness was always 32

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the domain of technology in form of forecasting and demand planning tools. Shortages of products on the shelves during the pandemic showed how fragile those tools are considering uncertainty and paid changes and showed the major gap in demand-oriented tech tools talking to supply-oriented tech tools. Software vendors were all aware of limitations imposed on planning and optimization by their tools, but it took a pandemic to bring those shortcomings into sharp focus.

Regarding the Middle East region, what do you see as the key opportunities and challenges?

The ME region faces unique constraints. The countries in this region don’t trade with each other, so all inbound and outbound flows require efficient operations in gateway arrangement. Digitalisation of inbound documentation/procedures execution and outbound documentation/ procedures execution must be given. Another constraint is that the outbound trade is mostly bulk, while the inbound trade is mostly containerized. There are no efficiencies to be gained from harmonizing digital technology to handle both types on single platform(s). Automation in container ports and bulk ports is not interchangeable either, so not much of an opportunity to create new value. However, there is value that can be extracted in integrating two modes of transport for faster moves of timesensitive freight. PSA and Singapore Airlines showed how this could be done profitably moving chilled (much more valuable than frozen) lamb by air from New Zealand to Singapore, then consolidating shipments as sea

freight for the rest of the journey to Europe. This avoided the limitation of once weekly ship services linking New Zealand with Singapore by using multiple daily passenger flights with belly hold cargo capacity catching much more frequent ship departures from Singapore to Europe. Given frequency of services offered worldwide by major ME airlines, similar air+sea integration could offer ME countries opportunity to become

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INTERVIEW

Further innovations like DP World's Boxbay will be very important for the Middle East region

logistics trans-shipment hubs with broader scope than today’s air+air offerings. This requires synchronization of schedules and different approach to shipping. While UASC was competing against larger and larger ships of their competitors, DP World focus on acquiring smaller, nimbler carriers utilizing smaller ships may offer solution to ME which right now does not control its own carrier. On top of synchronization of

Logistics businesses are at the mercy of their customers. While ease of doing business is high on customers’ agenda, the price is always the key consideration.” 34

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timetables and services, the ME will need better facilities that can capture deconsolidation/consolidation of shipments (smaller air shipments into FCL/LCL sea freight packets and vice versa). As these shipments are smaller and may be changing, the warehousing/logistics centres must be easily reconfigurable. This should be innovation on the innovation scale of Boxbay. Again, what PSA has done in this area is worth looking at.

What should key players in the logistics chain look to do now to future proof their businesses?

Logistics businesses are at the mercy of their customers. While ease of doing business is high on customers’ agenda, the price is always the key consideration. Without assets of their own and ability to control the asset-related cost base, their only response is to have better information technology that prevents customer churn and always responds by achieving objective dear to each individual customer (aka segment of one). If customer A values price above everything else, but customer B values transit time above everything else, current processes and IT tools may offer to optimize for only one objective at the time, thus limiting LSPs ability to be agile, flexible, and creative with their

Kosmala believes that visibility must come from greater progress in high quality tracking and tracing IoTs

service offers/products without serious human, i.e., manual effort. Lack of those traits will result in losing customers. Future proofing must correspond to the objective of the businesses. If their objective is to be acquired by another player, their only value is in the customer base they can bring across. And customer loyalty is achieved by actions described above. If their objective is to grow and become wider reaching than their global competitor(s), they must have acquisition, merger and integration strategies and toolkits across business and technologies. This is the path taken by DSV.

2020 READY

Integrated supply chain solutions that move your business forward. When it comes to integrated logistics solutions across the supply chain, you can trust Al-Futtaim Logistics to get your business moving ahead. Automotive: Vehicles, Spare Parts, Machinery | Retail: Fashion, Footwear, Food, Electronics, High Tech, Furniture Engineering | Industrial | Project Cargo: Heavy Lift and Break Bulk | Humanitarian

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INTERVIEW

"WE’RE ENTERING EXTREMELY EXCITING TIMES FOR THE INDUSTRY" Q&A with CEO of DHL Global Forwarding in the Americas region Tim Robertson. He outlines why the industry should be very excited about the future, and the importance of security and innovations in the sustainability space

Hi Tim, thanks for being with TLME today, can you start off by telling us how you see the future logistics landscape given the experiences of the last few years? Hi, great to be with you. In answer to the question, in essence we’re looking at 4 key future trends right now. These are e-commerce, globalisation, sustainability, and digitalisation. These are going to be the key drivers in the industry for years to come as a more connected, more automated and more customer-centric sustainable supply chain takes centre-stage. 36

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We’ve seen a lot of talk surrounding the move from a ‘ just-in-time’ supply chain to a ‘ justin-case’ supply chain, is that influencing your thinking at DHL too? In a word; yes. We’ve seen a significant shock to the system of the global supply chain in recent years and the pandemic showed us that the just-in-time supply chain was convenient, but not resilient. This means the whole sector is having to remodel how we conceptualise the

Sure, DHL has long had the mantra ‘connecting people and improving lives’ and that has never been more relevant than today. Over the past year or so, in the Americas alone we delivered 250 million covid-19 vaccines while supporting other key regions such as the Middle East. We also have somewhat shifted our strategic focus to delivering excellence in a digital world and one way in which we’re doing this is our new customer service agent AIDA. AIDA allows our customers to track their goods and deliveries, get vital FAQs answered in real-time and to get a whole host of key information immediately over platforms like WhatsApp. On top of this, we’re also investing in industry verticals such as pharmaceuticals, cold-chain, warehousing & distribution, and e-commerce. That’s very interesting here, what about supply chain visibility tech, are you investing more in that? Yes, we are, and this is a very exciting space at the moment. Longer-term investments depend largely on the customer and market need, yet in the present we already have MyDHLi that gives customers the opportunity to get immediate quotations and to book services immediately. With regards to IoT (Internet of Things) technology, we’ve implemented CapTrack, which focuses on the temperature of cargo and the state of goods with an IoT tag built into the shipping label, while offering end-to-end visibility. On that note, we’re really excited about the potentialities blockchain is offering as we believe this is the tech that can enable full end-to-end visibility across the whole chain – that includes ships, planes and groundbased transport methods. The pandemic has been very hard for everyone globally, yet it has also forced our sector to collaborate on a new level, and we’ve never seen the convergence of technology as we have right now, along with such demand for new solutions. We really are at the precipice of major change and it’s extremely exciting for us and the sector at large. supply chain and how we work. When we look at our customers, we see that many are retooling and changing models. To keep pace with this, we’ve been working on a full suite that can operate in a multimodal environment. This allows customers visibility across land, sea and air and

will allow us to stay malleable to the changing needs of our customers and the changing models of the market. Well that certainly sounds very exciting and timely, are there any other exciting plans you can tell us about that DHL has in the pipeline?

So, if collaboration is to increase, how will competition of the future work? In essence, future competition within the sector will be conducted on a different basis. A lot of the gains for companies will be in the ability and skill in extracting key trends in TRANSPORTANDLOGISTICSME.COM

INTERVIEW

The very frontline is where we’ll see the true dynamism and creativity fostering new working models and opportunities in real-time, so a lot will depend on which companies can nurture such relationships and how we work together"

shared and stored data. Secondly, the new frontier for competition will be in how frontline operators interact with customers. The very frontline is where we’ll see the true dynamism and creativity fostering new working models and opportunities in real-time, so a lot will depend on which companies can nurture such relationships and how we work together. Sustainability is a massive issue at the moment, in fact, it’s more than just an issue, it’s a demand. What is DHL doing in this regard, and is it coming from genuine concern or the demands of the global consensus? Well, firstly, DHL engages in all of its sustainable operations because we are just as concerned about the planet as everyone else at the moment. This is evidenced by our major efforts reaching back more than a decade, long before the recent round of new legislation developed at COP26.

We’ve long-been engaging in tree planting in South America and the USA, as well as having a goal to hit net zero by 2050. In order to do this, we have several aims for 2030. What we want to do is burn clean and burn less and embrace sustainable fuels. Secondly, we want to have 60% of our fleet electrified by 2030 and every building we’re investing in to be carbon neutral. Finally, a very important step is that we have to embrace what is known as circularity. Circularity is the practice of reusing, recycling, and refurbishing key products as we’re seeing in the consumer electronics and fashion sectors. In fact, DHL has already partnered with companies in the fashion sector in this regard. You may have noticed many DHL signs at Formula 1 races? Well, we’ve been working to repurpose these banners with names in the fashion sector to create luxury luggage and to highlight sustainability initiatives. It’s initiatives such as this we intend to continue.

Another major threat for the future is cybersecurity, how is DHL shaping up in that regard? We’ve seen many major names be prey to cyberattacks and we are taking this very seriously. Obviously, I can’t say too much on what we’re doing technically, but we have rehearsed several scenarios to prepare ourselves for any eventuality. Finally, what do you make of the Middle East region and Dubai? Well, this is my first major trip outside of the Americas after the pandemic and it says something that it’s been to Dubai. Dubai has huge opportunities for investment between the Americas and the Middle East as each look to diversify its consumer base. DHL aims to play its role in facilitating this development and I foresee trade growing exponentially between the two regions.

Thanks to our partners for a milestone year at Etihad Cargo