Digital transformation: The catalyst for sustainable logistics operations

According to a report by the Global Logistics Emission Council, the logistics industry generates close to 6 per cent of the global greenhouse gas (GHG) emissions globally.

Keeping in view the environmental concerns associated with GHG emission, the UAE government in line with the UAE Vision 2021 National Agenda focuses on improving the quality of air, preserving water resources, increasing the contribution of clean energy and implementing green growth plans. The National Agenda also highlights the importance of infrastructure and aims for the UAE to be among the best in the world in the quality of airports, ports, road infrastructure, and electricity.

On the most recent logistics performance index issued by the World Bank once every two years, the UAE made huge strides rising from 27th to 14th globally and is the first in the Arab region to perform so strongly. This reflects the growth and development witnessed in the logistics sector. This index measures the quality of infrastructure support for logistics based on a global survey which examines areas including the effectiveness of border and customs management in terms of simplicity and speed, and the quality of trade and transport infrastructure. It also includes the ease of shipping at competitive prices, the efficiency and quality of logistics services, the ability to track and trace cargo, and the arrival of cargo to destinations on time – all done in a sustainable way.

Under the National Agenda, UAE businesses are required to reduce carbon footprints to bring a competitive advantage in terms of regulatory compliance, cost reduction, operational efficiency, and improved social acceptance. By adopting digital logistics, businesses can make their operations sustainable and environment friendly.

Within the UAE, a key example of digital revolution is in Dubai, where Dubai Customs have recently launched the new virtual freight and logistics corridor, which has radically streamlined the process of transferring cargo between shipping operators and handling authorities.  The corridor automates many customs procedures, allowing cargo to be moved in hours rather than days or weeks, with very little administration.  Technology-central approaches like this need vision and commitment at a very senior level of government – and Dubai is taking great steps to drive forward more customer-focused approaches to logistics, constantly strengthening its position as a global hub and port.

The digitisation revolution in logistics is resulting in strong business for the global logistics outsourcers, such as DHL Supply Chain. In August 2017, the firm increased its Middle East revenues by 18 per cent (year to date), citing strong growth for the outsourcing of supply chains, with country economies under pressure and large private as well as public sector organisations looking to drive increased efficiencies and focus on their core business activities.

Apart from making the operations environment friendly and efficient, logistics companies can also create several value added services on top of this platform. These offerings include – but are not limited to – time-slot deliveries, parcel shops and locker deliveries, direct to consumer model, easy returns, elastic logistics, crowd-sourcing, customising client happiness dashboards, personalized deliveries and many others. These increase revenue streams and give businesses a competitive edge.

The logistics sector is one of the most vital sectors in the UAE, especially in light of the UAE’s strategic geographic location as a major trade hub. This is also due to its economic diversification and the significant developments in transport and the efficient implementation of the latest innovative technologies. With correct implementation, sustainability can spur new streams of efficiency
and innovation.

To be ready for future concerns and regulations about environment, and to improve the market competitiveness, businesses should reduce their carbon footprint across the logistics value chain. The above case study is a clear indicator that digital logistics will be the key driver for this change.

Kushal Nahata is co-founder and CEO of FarEye