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Sun 19 Jul 2009 04:00 AM

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Ask the expert: Mohammad Shaiq

Question: Is the Middle East logistics industry prepared for a recovery from the market slowdown?

Ask the expert: Mohammad Shaiq

Question: Is the Middle East logistics industry prepared for a recovery from the market slowdown?

An unexpected turn of events

The severity of the economic recession was never expected in the Middle East and companies were not prepared to handle the situation. Fortunately, it seems the worst is behind us, and there are currently two schools of thought in regards to a recovery. Some believe the boom we experienced in the near past was a periodic bubble and the real worth of our economy will now be discovered.

Others believe this was a periodic slump and we can return to former glories. Regardless of these opposing views, we have learned that the economy is not a static phenomenon and keeps altering from one state to the other. Since the current state is bound to change for better or worse, are we ready to meet the challenges of the next stage?

The role of logistics activities

Logistics is a service industry and unlike the financial, manufacturing and real estate sectors, we are not a main driver of economies. However, the importance of the logistics industry as a wheel in the whole economic mechanism cannot be denied.

It is now the collective responsibility of all logistics professionals to ensure that this industry can meet the challenges and requirements of what the global economy might face in the near and distant future. A collective and global effort is needed to handle these challenges. After all, logistics cannot be considered a regional activity. It connects a number of regions and economies around the world and therefore plays a role in helping or hampering economic activities as a whole.

Taking a global approach

Since we're living in a global village, the world must unite to tackle a number of issues. The safety and security of cargo is a prime example. Global politics has triggered a range of land and air terrorist activities, in addition to pirate attacks on cargo vessels, which should be addressed to rescue this historic transportation mode. In addition, a greater level of standardisation is also required in the industry, whether its business terminologies, measurement units or handling procedures.

These need to be standardised around the world to benefit the supply chain process. Finally, the logistics industry must take advantage of advanced communication technology to share information on a real-time basis. Proper agreements to gather, store and share information by the private and public sector will benefit the global industry as a whole.

Search for internal solutions

Each country has its own set of problems, depending on its specific location and the availability of local resources. However, there is plenty of scope for improvements in infrastructure, regulations, bureaucracy and training, which can help the logistics industry to flourish in general. For instance, the development of physical infrastructure - whether it's airports, seaports, road transportation or railway networks - is really effective in encouraging developments within the economy and boosting the logistics industry too.

Shifting the focus to Dubai

Due to its location, Dubai is gifted as the centre point for all movements around the globe. We are fortunate that the visionary leadership of Dubai has realised the importance of its geographical location and developed the emirate as a hub for global logistics activities. Moving forward, this needs to be utilised with continuous updates in logistics-friendly policies. As the world's third largest deep water port, Dubai must understand and embrace the need of the countries that use its logistical and supply chain function in the region.

It is also a fact that Dubai is not well resourced in terms of manpower and since logistics is a labour intensive industry, the authorities must ensure a smooth and cost effective supply of manpower to companies. Its imperative that along with other facilities, Dubai must concentrate on making and keeping Dubai as an attraction for the influx of labour that is coming from other Middle Eastern, South Asian and Far Eastern countries.

Also, free zones are the back bone of the local logistics industry, playing a vital role by providing the best in storage and transhipment facilities. However, their policies, fee structures, paper requirements and pre-requisites for operating a business should be constantly evaluated to provide the best return on investment.

A summary of events

Change is inevitable and for countries that fail to recognise this fact, their economies may continue to suffer, even when the economic situation has improved in the future. Consistent and perpetual efforts are essential to address the various points that have been raised in this column, together with a host of other important issues that have not been discussed. These efforts will have a direct impact on the performance and efficiency of storage, transportation and other supply chain activities in the future and should not be ignored.

This month's article was written by Mohammad Shaiq, general manager of Dubai-based Maxx Logistics.

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