Interview: Charles Menkhorst
How will the challenges associated with the Covid-19 pandemic influence logistics in the future?
CHARLES MENKHORST: The logistics sector has experience dealing with risks to supply chains stemming from changes in regulations, military conflicts, cyberattacks, trade disputes and pandemics. During the current health crisis transport and logistics companies managed to ensure the flow of vital supplies. However, the extent of the disruption and instability has been historic, leading to considerable losses across the global economy. As a result, even after the pandemic subsides, the heightened awareness about the importance of supply chain resilience will not fade.
Before the pandemic innovation was taking place in road transportation, especially regarding last-mile delivery services. However, all transport and logistics companies are now reviewing their traditional strategies and methods, with a particular focus on the potential of new technologies, including process digitalisation and the use of predictive tools such as artificial intelligence. As port and terminal operators strive to become end-to-end service providers, companies developing and integrating new technological enablers are set to see more investment. As such, we expect considerable capital flows in that direction, given the renewed interest of private equity investors and sovereign wealth funds.
To what extent is the focus on environmental sustainability shaping logistics services?
MENKHORST: Environmental sustainability is a major theme across economies worldwide and the Middle East is no exception. However, even as environmental awareness is gaining ground in the region, transport and logistics companies are lagging behind their peers in Europe and North America – markets where being environmentally friendly is a qualifier. Here, such an emphasis is a differentiator around which competitive strategies can be built. While sustainability is discussed in most boardrooms, many companies are focused on surviving the pandemic and therefore are not actively transforming their business to better align with environmental standards. As a result, logistics companies able to position themselves as emissions-free providers will have a competitive edge in the future.
What can be done to capitalise fully on the main competitive advantages of Sharjah’s position as a transport and logistics centre?
MENKHORST: Sharjah holds significant potential.
First, one of its key competitive advantages is its highly diversified economy, which makes it more resilient in times of crisis. Second, Sharjah’s geographic location gives it access to both the Gulf of Oman and the Gulf. Along with the quality of its transport infrastructure – which will be further improved upon once the environmentally friendly rail system begins operation – access to both coasts means that the shortest route to any point in the GCC from India is through Sharjah. Third, Sharjah is an industrial centre, with many companies in manufacturing assembly and sub-assembly, and this is a strong demand driver. This is complemented by the emirate’s network of free zones, with Sharjah Airport International Free Zone and Hamriyah Free Zone focused on industrial activity and allowing full foreign ownership. Furthermore, Gulftainer – with support from the Sharjah Investment and Development Authority and Invest in Sharjah – will develop the Sa’jaa Industrial Park into a logistics centre for Sharjah and the Northern Emirates.
Sharjah’s attractive business climate is at least partially due to its minimal bureaucracy and competitive costs when compared to its local and regional counterparts. It has also been sustained by exceptionally low barriers to entry, authorities who are modern in their thinking and easy to engage with, and a younger generation that is well-educated and strives to bring the emirate to the next level in terms of professionalism.
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