Stefano Pollotti is managing director, Gefco Dubai
Thanks to its location, its infrastructure and its relative ease of business, it is no surprise Dubai has been hailed so often as the crossroads of East and West, one of the most strategic commercial hubs in the world and an essential traditional trade route.
Such phrases may be overused, but there is no doubting that Dubai has earned its reputation.
What is more surprising is that despite its massive logistical advantages there is still a reluctance by many companies to take full advantage of them.
There can often be a lack of understanding in importing, exporting and transport, which leads dealers, manufacturers and distributors down the wrong business path. In many cases, the historic view that keeping logistics in-house saves money is simply no longer valid.
Gefco is one of Europe's ten largest automotive logistics integrators and opened its Dubai branch three years ago, believing as we do that there are plenty of opportunities to be more time-effective and cost-efficient there.
Already a city with an extremely rich history as a successful trading post, the phenomenal effects that have come with Dubai’s rapid rise within a leading world economy have changed the way we conduct business and the way we expand, though not necessarily the way we think.
With cargo that can cross seven land borders and three shipping zones, we have seen companies try to work out which is the cheapest supplier for each leg of the journey. But as a competent logistics consultant will confirm, there are one-stop-shop solutions that can deliver discounts via economies of scale and eliminate unnecessary investments in time and money.
Consultants are not a threat to firms’ logistics networks but act as a partner to help them progress and develop their options. It is a question of mindset, as well as business acumen.
One recent example of this involved the distribution of vehicles from Korean manufacturers Hyundai and Kia to Jordan and Iraq. The cars were initially being exported directly to Jordan from Korea, which looked on paper like the best option. But taking into account the well-developed customs, import and export procedures of Dubai, the timings, the length of transit and its sophisticated infrastructure, we advised the distributor to export via Dubai. Not only did this save considerably on costs, it also avoided any contact with the Syrian conflict, shipping the cars to Iraq by sea to Um-Qasr and then taking them on by road well south of that danger-zone.
Moving things onLogistics, storage and distribution are an extremely competitive business, particularly in the Middle East, and the way to progress is to adopt new practices and accept new services. We live in an age where companies must constantly reassess their operations and outgoings. Tough competition is always a danger, but false economies can be the greatest threat of all.
Many of the developing markets in the Middle East took some time to come to terms with the essential technology that drives the modern logistics industry. This is something that needs consistent evaluation, revisiting and where necessary, upgrading. There are no short-cuts when it comes to the latest software and clients want to be absolutely certain their product will arrive, not just in one piece and on time but also in optimum condition.
As a logistics company associated with the automotive industry, we see those criteria being enforced more and more. Just last year, Dubai customs released figures showing that trade for auto parts and accessories was worth more than AED 44 billion ($12 billion), a 10% increase over the previous year. Exports and re-exports accounted for AED 18 billion of that, making it more essential than ever to transport efficiently, effectively and economically.
There are hundreds of technology solutions to choose from and no excuse for not investing in the most effective one. Saudi Arabia, Iraq and Afghanistan have been Dubai’s biggest export and re-export markets for auto parts, accessories, tyres and engine components, accounting for 23% of export trade. There are logistics companies in the UAE who rely almost solely on those markets and those that have succeeded have invested heavily in innovation.
Like all of our competitors, Gefco must make its case for being the preferred service provider. Whoever you are and whatever your background, you need to stand on your own two feet and prove that you are worthy of being a partner. Complacency can be the final nail in the company coffin.
There is, of course, an extremely positive element to being part of such an exciting and competitive market, for both buyers and suppliers. For the clients, the costs are significantly lower and the quality significantly higher, as logistics companies vie for their business. For the providers, there is a constant evolution to refine operations and increase efficiency.
We are in an all-consuming, sometimes see-saw industry that demands continuous investment and rapid development.
The Oxford English Dictionary defines logistics as ‘the practical organisation that is needed to make a complicated plan successful when a lot of people and equipment are involved’.
That may be a bit of a mouthful, admittedly – but it’s still easier said than done.