Although the concept of automated warehousing has become increasingly commonplace in Europe and North America, its time for the Middle East to jump on the bandwagon, says Reinhard Wind, general manager at Ecolog.
How is the logistics industry in the Middle East reacting towards the possibility of automated warehousing?
As a company, Ecolog has operated in the Middle East for a year. When I first arrived in the region, everyone believed that automation would enter warehouses in Dubai within the following three or four years. On the contrary, we now have something like 10 companies interested in implementing some form of automated solutions. Nothing has been implemented in the Middle East yet, but that's because projects take 12 to 24 months to complete. So, implementation will start taking place in the middle of next year, depending on the industry.
How successful has your first year been in the Middle East?
It's been a very busy, but successful year for Ecolog. In terms of the local market's knowledge about automated solutions, a lot of individuals and companies didn't know much about the concept initially. It was literally our mission to explain how automated warehousing works and the benefits associated with it. Since our company entered the region, we have seen logistics companies experiencing higher operating costs, especially in terms of salaries, facilities and administration, which has reinforced the cost saving benefits of automated warehousing. Dubai is a logistics hub and there is a shortage of trained manpower to support the logistics industry. Our solutions can leave companies less reliant on human resources, whilst providing greater flexibility and freedom.
Has Ecolog now established its offices in the Middle East region?
We already have an office located in the business centre at Dubai Investment Park and we are also increasing our workforce there. In addition, we're still in the process of setting up new offices elsewhere in Dubai. We already have office space reserved in Dubai Logistics City, so hopefully we will move there in the near future.
How does the market for automated solutions in the Middle East compare to Europe and the US?
There are basically two factors that need to be considered. The first is salary levels and the second is operating costs. Both salaries and costs are still relatively low in the Middle East compared to Europe and the US. Since the costs are higher in those regions, the return on investment is faster. For example, the return for companies with automation in Europe is approximately two to five years. In comparison, the return in Dubai is between five to ten years. We can achieve a return of between seven or eight years, although this depends on the solution and the potential savings in terms of employee numbers and amount of material handling equipment being used.
How long do you believe it will be until there are warehouses with fully automated solutions in the Middle East?
Actually very soon, because the interest in the market is high. I believe decisions are already being made with various leading companies. All the big players, whether in 3PL or production, are looking into automation. It is not the labour cost alone which it cuts, it is also defines the processes.
What other countries and industries is Ecolog targeting in the Middle East?
The focus is currently on the United Arab Emirates, especially Dubai and Abu Dhabi, with the second country being Qatar. We also have to take care of Saudi Arabia, because its a really big market, although there are some challenges there. We need some partners in Saudi Arabia who have good knowledge of the local market and clients. In terms of the industries we are currently targeting, the appeal of automated solutions cuts across several different sectors. In particular, we see major opportunities in the 3PL, retail and production industries in the Middle East.