How has the pandemic impacted the MENA’s logistics sector?

The year 2020 saw Covid-19 challenge governments, economies, healthcare systems, businesses, and individuals; and the logistics industry was no exception as operators scrambled to keep essential supplies moving in light of transport disruptions, movement restrictions and volatile supply chains.

One year later and the world is still coming to grips with Covid’s recurring waves. In the face of uncertainty, businesses are preparing for lasting changes to adapt and minimise risk, shifting their business models to meet the dramatic shifts in global patterns and consumer behaviour.

Logistics too was affected by the disruption to global supply chains, constrained cargo capacity, broken links, and the decline in world trade and business. But the industry adapted quickly to meet world-wide demand for service continuity. Industry players re-purposed their fleet capacities and re-engineered their operations to accommodate the shifting trade and consumers patterns amidst the most challenging circumstances. Companies had to embrace innovative solutions to help overcome difficulties and maintain operations.

One of the biggest triggers was the global surge in e-commerce activity. Imposed social distancing measures and curfews caused a mass switch to online shopping. Traditional brick-and-mortar brands started experimenting and restructuring product offerings to meet new consumer demands, whether that meant going digital and selling online, exploring the direct-to-consumer (D2C) model, or working creatively to take an experience-based business into people’s homes.

Globally, DHL’s network saw a 35 per cent spike in e-commerce volumes in 2020, reaching historical peaks in the third quarter with shipment quantities jumping over 50 per cent compared to the same period in 2019.

In the MENA, DHL Express also saw a steep growth in cross-border e-commerce volumes led by Kuwait which topped 157 per cent and followed by Oman at 123 per cent and UAE at 115 per cent. The company added two new Boeing 767-300Fs to its MENA aviation fleet to boost load capacity, increasing its air load by over 25 per cent.

In the realm of the pandemic, logistics became even more of a necessity for online merchants and will continue to be crucial to their business survival. Covid-19 is expected to accelerate the e-commerce boom, while the growing levels of globalisation and digitalisation will drive online shopping and shipping around the world to new heights. According to a report by management consultancy Kearney Middle East, worldwide retail e-commerce sales are expected to reach $50bn by 2025. This indicates a steady upward trend which is heavily reliant on a comprehensive logistics infrastructure.

One area that did witness the biggest impact however, was the healthcare sector and the immediate demand for critical supplies. The timely provision of medical products was disrupted due to lockdowns and air travel bans and what became very clear was that there is still much work to be done to improve the medical-products supply chain.

Vaccines have now entered most global markets and their ability to end this pandemic depends on an effective supply chain that can connect diverse production locations to the public. On a global scale, logistics providers are rapidly challenged to establish a medical supply chain to deliver vaccines of unprecedented amounts of more than 10 billion doses worldwide, and this includes regions with less developed logistics infrastructures, where approximately three billion people live.

To provide global coverage in the next two years, up to 200,000 pallet shippers and 15 million cooling boxes as well as 15,000 flights will be required across the various supply chain setups. That is a huge task for logistics to undertake.

Although the pandemic will eventually subside, it is crucial that the logistics industry is better prepared when the next health crisis comes around. Logistics experts need to do their part to help improve these systems and ensure medical supplies always find their way to wherever they are needed.

The lessons learned from this global phenomenon have been invaluable in setting a precedent for emergency operations within the industry as well as others.

Forming partnerships with logistics service providers who can complement existing network-related capabilities will be a strategic necessity in securing life-saving products and supplies during any crisis.

It seems inevitable that supply chains will be different not only in the short term but well into the foreseeable future. But one thing is for sure; there are a lot of lessons to be learnt from this pandemic and as businesses are coming to terms with these lessons, the desire for more resilient supply chains is increasing.

It is a crucial time to prepare for the post-Covid phase to make sure the industry is ready and able to capitalise on the opportunities that arise. With more people now working from home, logistics players need to be closer to their customers.

And just as it is important to stay focused on improving external operations, internally, the safety of employees needs to also remain a priority, considering the logistics industry is highly dependent on human interaction. High focus should be placed on sustaining safety and well-being of employees because their mental and physical state is critical to maintaining optimum levels of service.

With the pandemic effectively changing the future of work and accelerating digital and automation agendas, and as more and more organisations continue to rely heavily on digital methods of operation, consumer trends have taken a rapid turn towards more automated products and services.

Artificial intelligence, robotics, quantum computing, sustainability and global volatility are some areas that the DHL Logistics Trend Radar predicts will help shape logistics in the future. Technological advancements such as data analytics, AI, robotics, IoT technologies, cloud services, and APIs signal a new normal for logistics and are pushing the industry to keep up with the technological demands in the field. Breakthroughs in quantum computing, blockchain and space logistics indicate new niches for logistics providers to solve large-scale problems and create new services to cater to evolving needs.

While the Covid-19 pandemic may not be over yet, there is gradual stability with airports and borders slowly opening up, and economies resuming business activity. The logistics industry, similar to the rest of the world, finds itself in the midst of a transformation with many trends here to stay while new ones are constantly rising. It is important to keep abreast of the new wave of logistics to capitalise on the tremendous opportunities that are in store.

Nour Suliman is the CEO of DHL Express Middle East and North Africa