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Mideast’s Export potential on Track despite pandemic: Logistics sector attractive to Global Investors in 2021

//Mideast’s Export potential on Track despite pandemic: Logistics sector attractive to Global Investors in 2021
International Logistics company

 The COVID-19 pandemic has had a detrimental effect on the global economy, demonstrating a downward trend as several nations started implementing lockdown measures to deal with the devastating impact of the coronavirus. However, despite the deteriorating effects of the virus, the Middle East led by UAE is emerging out as a high-performing export hub that can attract a colossal inflow of global investors towards its thriving logistics industry.

The Middle East region boasts an export capacity worth USD 1.13 trillion and is continuously rising in the ranks of the ‘Logistics Performance Index. UAE is the highest performing nation that ranks 11th on the list. Oman comes second among all other Arab nations ranking 43rd globally with an LPI score of 3.20. These countries are followed by Saudi Arabia, Bahrain, and Egypt. The impressive global performance is generating popularity and trust, which play a decisive role in bringing in substantial investment worldwide.

Overview of the logistics sector of the Middle East:

The logistics industry of the Middle East was valued at around USD 66.3 billion in 2020 despite the covid situation exhibiting a CAGR of 4%. Billions of dollars invested in the sector are driving the performance of the industry. Disruptive technologies like the Internet of Things, big data analytics, artificial intelligence, and machine learning are continuously stimulating the performance of the logistics sector. Data analysis is giving valuable insights that inform a better decision-making process that is key to the industry’s growth for International Logistics company.

The emerging technologies dominating the complex field of logistics promise opportunities worth billions of dollars. Do you ask why?

Because they are-

  • Providing the gift of precision and
  • Speed of operations.

Both of the above are driving the current growth in the logistics sector.

  • With rapid technological advancements, robotics solutions are entering the arena to eliminate the chances of defects and bolster overall productivity. AI, ML, and IoT play a superb role in dominating the scenario and providing a considerable edge.

A significant trend is that of the shift towards digitization. This is helping the industry to cope up with the sheer shortage of human resources faced during the pandemic. The growth in the freight management system market is demonstrating the trend of digitization of the operation processes. The logistics industry is also becoming increasingly dependent on smart containerization to deal with large volumes of freight that need to be transported within a shorter period at more affordable costs.

The exponential growth of Fresh Chain Logistics and Cold Chain Logistics in the Middle East region is evident. It is because more and more people use e-commerce platforms to purchase fresh groceries and other temperature-controlled commodities like pharmaceutical products, which are leading to the rapid development of the logistics industry of the region to facilitate the transit of temperature and time-sensitive goods for the consumption of the teeming multitudes.

COVID-19 and the growth of the Middle Eastern logistics industry:

 

International Logistics company

Unlike the generalized impact of coronavirus on the global economy, the virus has not led to a downward curve in the trends of the global logistics industry, especially in the Middle East. The COVID-19 pandemic has led to the rise of several factors that have stimulated the logistics sector’s growth. The global freight forwarding market is growing at a CAGR of 4% despite the covid situation. It is no different from the industry in the Middle East, which is being driven by the following factors in the pandemic.

  • Ever since the COVID-19 wave has hit the world, people have tried to restrict their outdoor activities, resulting from which the retail footfall has sharply decreased. This has led to a rise in online shopping, thus accentuating the growth of the freight transportation market.
  • Primarily due to the pandemic, it has become essential to transport biopharmaceutical products like medicines and vaccines at a regulated temperature. This has led to the development of the cold chain logistics system, which has caused holistic growth in the industry.
  • Due to the COVID-19 pandemic, the workforce at the disposal of logistics has sharply decreased. When specialized human resources are not available in times like these, there has been a trend of digitization and automation all across the industry, which has increased the speed and accuracy of the operations of an International Logistics company.

 

Key drivers of the growth of the Middle Eastern logistics industry despite the pandemic

While the COVID-19 pandemic hindered the growth of the Middle Eastern logistics industry with innumerable constraints, other forces have served as the key drivers.

 

When the pandemic had hit the Middle East, like the rest of the world, had experienced a significant impediment that slowed down the sector’s progress. However, as these factors come into play, the entire scenario has briskly changed.

 

  • The increased local networking

 

This has proved to be of tremendous advantage in times of restrictions imposed due to the pandemic. Businesses worldwide need to be prepared to survive in conditions like this and, therefore, increased stress on local networking rather than overseas freight movement.

 

  • The rise of e-commerce

 

The Middle East region has experienced a huge source in the number of orders placed on e-commerce platforms, increasing the transport of goods all around the Middle East. This will compel businesses to improve their last-mile delivery operations.

 

  • Diversification of services

 

As the COVID-19 pandemic started spreading massively, it became evident that diversification of services was the key to surviving in these challenging times. Several airlines had launched the passenger freighter network during the pandemic, which was built upon passenger planes being used to deliver cargo to keep up the business.

 

  • Automation in logistics

 

Automation in logistics has been a major driving force during the pandemic when the industry lacked skilled manpower to continue operations. Automation reduces the possibility of errors and improves the speed of performing critical tasks, which enhances the performance of the sector. 

The Middle Eastern nations modernize their logistics and freight movement infrastructure and work on futuristic projects while maintaining affordability and sustainability. An International Logistics Company can provide a seamless experience to every customer. Despite posing initial challenges, the pandemic has had proved to have the latent potential to propel businesses in the logistics sector of the Middle East region. As sustainability is being integrated into the concept and design of the logistics services being rendered, technology is being fully leveraged to generate intelligent data and meaningful insights to drive businesses. 

 

The Middle Eastern markets have effectively balanced the flow of supply and demand, maintaining a sound flow of goods all across the region.

 

A worthwhile investment in the multimodal infrastructure and facilities over the years has resulted in a stable logistics industry in the Middle East, which has proved to be effective in maintaining a regular supply of food and medicine throughout the region, even during the pandemic.

 

This spectacular performance by the Middle East’s logistics industry is attracting domestic and foreign investors who are considering the region to be an emerging export hub. The massive influx of investments promises a brighter future for the Middle Eastern logistics market. Although the pandemic has been a disastrous year in the history of humanity, it has compelled businesses to take up courses of action which they perceive as choices and not necessities. It led to the unprecedented growth of some sectors of the industry, even in these diabolical times.

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