Every single company in the world has a logistics requirement, a supply chain that must be managed and run as efficiently as possible. The only difference is the complexity.
The supply chain for a one-man app development company, for example, will be incomparable with the logistics operation being run by a chain of grocery stores, or a FMCG trading company. In the Middle East, an added complexity is the import-heavy nature of the economy, 90% of food is imported, for example, while 40% of all food imported into the UAE is actually intended for re-export to other GCC markets. It’s no wonder then that the logistics industry is one of the greatest contributors to the country’s GDP, and within the logistics industry, 3PLs are one of the most common business models.
Because every business has a logistics need, and because the complexity of those needs increase exponentially relative to the size of the company, it makes sense for a 3PL to be brought in to manage the supply chain on the company’s behalf. It is for this reason that, as the GCC economy has grown in recent years, there has been an explosion in the number of 3PL companies.
This growth has continued through the instability of 2016. According to Chandrakala, director, CFS & LCL, Consolidated Shipping Group, this is because, even in the current market, there is opportunity for 3PLs. “With the current market conditions, a lot of people are trying to outsource whatever they can. They want to outsource to reduce their overhead costs.” It is for this reason that CSS has expanded into the 3PL sector as part of an aggressive 11-point plan to grow the business globally.
CSS started out as a freight forwarder offering LCL consolidation in India, before expanding into FCL ocean and air freight and project logistics. It’s 5,400 pallet position distribution facility in Jebel Ali was opened three years ago to support its 3PL activities, with additional DCs at Dubai Airport and in Sharjah, Abu Dhabi, Oman and Bahrain. It will soon break ground on a 3PL facility in Saudi Arabia as well. This expansion has been led by Ajay Krishnan, vice president, freight forwarding, Consolidated Shipping Group.
“Establishing these facilities has given us a consistent network across the region,” he says. “This gives us an advantage because we have more control over the process, which is necessary in 3PL operations. Anyone can do port to port or a CFS to CFS. Anyone can do a clearance and delivery before this but the ability to break it get down to the individual SKUs and have them delivered to individual locations, that requires a specialised facility.” CSS has also recently upgraded its WMS with new MC 32 portable data terminals and has gone live with three of its largest customers. “3PL can be very label intensive, if you have a box with 100 power banks within it and you have to take each one out and scan it individually, it’s going to require at least two people and take a long time. These MC 32s allow us to finish up a box like that in six minutes.”
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