Pole position: How the Middle East is catering to global F&B logistics

The region is home to key shipping routes and the crucial Suez Canal

With the global food and beverage (F&B) market set to grow exponentially in the coming decade, the Middle East looks well positioned to play a key role for the sector.

The F&B market is constantly evolving, adapting to cater to the specific needs, tastes and lifestyles of consumers. Thanks to globalisation, customers are now seeking cuisines and produce from across the globe as fresh as the day they were picked and in plentiful supply.

That presents a challenge that requires a robust and sophisticated supply chain to navigate with success. Resources, infrastructure and expertise are required to meet the unique needs of the F&B sector while staying flexible to seasonality and changing consumer demands.

The Middle East is well positioned to play a significant role in global F&B logistics. Located at the crossroads of global commerce connecting Asia and Europe, the region is home to key shipping routes such as the Suez Canal. And when paired with its world-leading logistics facilities, ports, airports and free zones, it has a critical role to play in facilitating global trade.

To capitalise on this burgeoning sector, logistics providers must enhance their facilities and operations to remain competitive in this increasingly challenging market.

Growing market

According to a report by US-based World Resources Institute, global demand for food will increase by 56% from 2010 to 2050 due to population growth and changes in diets and income.

Particularly for the Middle East, food consumption is expected to rise from 46.8mn tonnes in 2020 to 52.5mn tonnes in 2025, based on data from Dubai-based investment bank Alpen Capital.

Climatic conditions such as water scarcity and a lack of arable land have created significant challenges for farming in the Gulf which imports 85% of its food. While massive investments have been made in agriculture, agri-tech and food manufacturing to boost domestic food production, imports remain essential to meeting the region’s food security needs.

“The F&B market in the Middle East, and the world, is growing rapidly and we are witnessing surging demand from customers for state-of-the-art facilities and operations to support the safe, efficient storage and delivery of perishable cargo,” remarked Fredrik Nystrom, Group Vice President, Middle East, GAC Group.

“Our world-class warehousing and distribution centres in the Middle East have been supporting the demanding F&B sector and the wider fast-moving consumer goods (FMCG) market effectively over the years. We recognise the need to continuously adapt to market trends and customer requirements, and have actively enhanced our services, invested in facilities and expanded our operations in key markets to future-proof supply chains,” he added.

Adaptability remains a vital aspect of F&B logistics as market demands are always fluctuating, with goods subject to seasonal demand and store discounts.

“Our long experience has equipped us with the ability to remain flexible to supply chain changes and challenges. Coupled with our robust distribution network and strategic facilities across the region, we provide effective operations that get the cargo safely to its destination in the fastest time possible,” Nystrom observed.

Under one roof

GAC Qatar recently opened a new multiuser contract logistics facility and office building in Ras Bufontas Free Zone, catering specifically to the F&B market. The warehouse, which features up to 40,000 pallet positions, as well as four temperature and humidity-controlled chambers, boasts two crucial features needed to service F&B operations: food-grade cold storage and value-added services (VAS).

“Cold-storage services are now a musthave for logistics providers servicing the F&B market,” stated Adrian Peiris, Business Manager for Contract Logistics, GAC Qatar. “Our facility also has more than 500sqm of space dedicated to providing VAS beyond cargo storage and handling, such as labelling, co-packing and order fulfilment. By outsourcing the mundane yet necessary tasks to us, customers can better focus on their core business,” Peiris further noted.

The facility was built to house all its services in a single location to enhance the efficiency of its F&B logistics services by improving the turnaround time of cargo moving in and out of the centre.

“By keeping our operations in one place, we can boost our operational efficiencies and synergies, while keeping costs down for our customers through economies of scale,” he added.

Transparency and technology

As with any other sector, technology is poised to change the future of operations. In logistics, advanced warehouse management systems (WMS) enable providers and their customers to keep track of inventories in real-time.

This is critical for F&B as food items have an expiration date, and the failure to pick and deliver the right products in the right state can lead to wastages in inventory and lost revenue for our customers.

“Our in-house WMS has automated features to capture production details, expiry dates, shelf lives, lot numbers and batches to ensure accuracy of orders which, not only minimises wastages in inventories, but also improves efficiencies in distribution operations to meet customers’ expectations,” added Peiris.

“We use the data to improve our productivities, plan storage and order processing and provide maximum transparency to customers to help them drive their demand planning and decisions to push stocks to market in the most effective way.”

Forward thinking

The Middle East’s position as a global hub for F&B trade between Asia and Europe will only reach its full potential if the infrastructure and services are there to support it. Logistics providers across the Gulf are rapidly expanding and enhancing their services to cater to the sector’s specific needs.

Nevertheless, the ability to adapt and meet customer trends will be what makes the difference and enable the leaders to stay competitive in the long term.