CEO Predictions 2013: Tarek Sultan, Chairman & MD, Agility

Exclusive: The logistics industry must work with customers to reduce risk and manage uncertainty, writes Agility’s Sultan.

Our industry is linked to world trade flows, so the global economic outlook directly affects our business. I think it’s clear to everyone that 2013 and beyond will be mixed.

Developed countries, especially in the Eurozone, continue to struggle. For emerging markets, the picture is somewhat different – we are seeing continuing growth at relatively high rates, but activity is also slowing in response to “cooling” policies and weakened demand from developed economies. These factors point to a global economy that will remain mixed and somewhat embattled for years to come.

As manufacturing hubs increasingly shift to emerging markets with less developed infrastructure, supply chains are more exposed to the risk of disruption than ever before. Today, customers are concerned about limiting their exposure if there was a crisis.

Working with customers to develop a plan for how to reduce risk and manage uncertainty is an increasingly important trend in our industry and our company.

As an example, severe flooding in Thailand in 2011 jeopardised production for one of the world’s leading hard-drive manufacturers. As the waters rose, Agility worked with the customer on a plan to slow and then halt production at the main facility and move machines, parts and goods out before the water reached them.

The list of possible threats is long and varied: floods, earthquakes, volcanic eruptions, political unrest, sudden demand shocks, export/import restrictions, terrorism and even economic uncertainty.

Logistics companies increasingly have to be agile, responsive, and able to make quick, on-the-ground decisions.

Throughout the industry, pressure is growing to work with customers to find green solutions.

For example, Agility partners with one of the world’s largest global telecommunications providers to consolidate goods in transit. Cargo that comes in on standard air pallets is broken down and reconsolidated on densely packed, specialised pallets. This reduces cargo weight between six and nine per cent, and eliminates “dead space” in airplanes, meaning fewer flights are needed. It’s this kind of thinking that we see becoming increasingly more important in the future.

We are a young company, and our journey has not been without its challenges. The company has restructured significantly in the last couple of years, and we have to continue to stay focused and disciplined in order to complete the transition.

Overall though, we’re in a strong financial and competitive position. Despite the mixed economic landscape, I approach this year with commitment and confidence.