Mahmood Al Bastaki, CEO, Dubai Trade says that what is happening in ocean freight today mirrors what happened to the IT sector twenty years ago, and that logistics players in the Middle East must adapt or risk irrelevancy.
“There was immense consolidation in IT a few decades ago and only the big players, the Oracles, Microsofts and Apples stayed,” he said, speaking at the Leaders in Logistics 2017 conference. “They bought everyone else, integrating the aspects they liked into their own business.”
“What is happening now in ocean freight is a sea change and as players in the logistics market we need to think about how this will impact us,” he added.
The new alliances are affecting ports, some are getting more port calls, others are losing out, Al Bastaki told delegates. “This affects the end-user in the planning of your supply chain. Through alliances the shipping lines are also changing the routes of world trade.”
But Al Bastaki added that the large LSPs are pushing back. “Ports’ customers have always been the shipping lines, but now they’re starting to see freight forwarders, the traders, as the customer as well,” he said.
What this means is that GCC ports with large ‘anchor’ freight forwarders based in their freezones, are pushing back with ocean lines and telling them to arrange their networks according to the port’s client.
Al Bastaki also spoke about e-commerce and pointed out that in the same way as the shift in ocean freight, there is a major change in mindset required to confront e-commerce logistics.
“E-commerce is changing our world, retailers have been pushed to go online, they never considered this before,” he said. “The consumers of the future want us to shift our logistics in a new direction. SOUQ.com was acquired by Amazon and was born in Dubai, we’re very proud of this. There is Noon.com as well and their ambition is inspirational.”
Al Bastaki said that Noon.com is talking about carrying out delivery within a few hours of purchase. “E-com is pushing logistics in ways that were unimaginable a few years ago. We need to keep changing, if we don’t continue to evolve and adapt, we will become irrelevant.”