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Wed 16 Jan 2008 04:00 AM

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Finding your niche in the logistics industry

As demand grows for specialised logistics services throughout the region, are niche markets the next big thing for the industry?

A number of prominent topics made the headlines of Logistics Middle East last year, including concerns about warehouse security, the lack of liability insurance amongst freight forwarders, the potential boom in storage automation and the growing importance of environmentally friendly supply chains.

The opinions relating to these topics were diverse and spawned a series of healthy debates, which are bound to continue unabated in 2008. However, with the new year comes new challenges, so what other themes will be pushed onto the logistics industry's agenda in the coming months?

A lot of people are talking about niche markets as the "next big thing" at the moment, which has been fuelled by the growing demand for specialised logistics services throughout the region. As usual, an elite group of logistics companies have already benefited by showing some foresight into this potential boom and launching niche services before their competitors. For example, the events industry has proved lucrative for the likes of Airlink, Freight Systems and GAC, while hospitality is now the forte of Kuehne & Nagel. In addition, Equitrans has succeeded in conquering the market for animal transportation, Aramex has launched a new service for fashion retailers and Pharma World Holdings has been established to make a splash in healthcare transportation.

It's perhaps the increased willingness of these sectors to outsource their logistics operations that has boosted the demand for niche services. The defence sector, in particular, has traditionally handled its supply chain inhouse. However, as you'll read in this issue of the magazine, the military is facing increased pressure to improve its operational efficiencies and has turned to logistics companies such as Agility and GAC for help.

So, how can the logistics industry actually benefit from this approach towards market development? For starters, the diverse nature of logistics is common knowledge and the days of offering standard warehousing and transportation services are coming to an end. Instead, customers are demanding a more focused, specialised approach to suit their individual requirements - whether its cold storage solutions for frozen food distributors or high security options for companies dealing with antiques and fine art. With so many logistics companies currently competing for business in the Middle East, the customer has enough power to demand a more customised service.

However, an opportunity exists with this situation, especially for the smaller freight forwarding companies. Struggling to compete with the brut force of industry heavyweights, a smaller player can forsake the mass market and create a forte for themselves in markets that are currently underserved. After all, the biggest advantage a niche player can bring to the table is a greater understanding of the nuances within a certain industry and this can be achieved regardless of size - on the contrary, the flexibility of a smaller player could be a hidden advantage.

Of course, there are risks involved too. A company must research the market thoroughly before making any decisions - is there really sufficient demand for a niche service? What makes your company an ideal candidate to service the niche market? Do you have the relevant infrastructure to make this a success?

We can expect a lot of developments in niche logistics services this year and it's a topic that will be extensively covered in Logistics Middle East over the next twelve months. I'm very interested to hear your views too, so if you have any comments on the subject, please send your views to robeel.haq@itp.com

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