Digitisation, differentiation and new demands driving growth

Mustapha Kawam, President and CEO, Globe Express Services, spearheading the company’s meteoric rise

For the past over four decades, Globe Express Services has offered globally integrated, end-to-end logistics and supply chain management solutions through a current network of over 70 corporate offices overseeing over 100 countries across Asia, Europe, the Middle East and the Americas.

Mustapha Kawam has been in the top position since June 2015. He joined Globe Express Services in 1995 and has held a wide range of leadership positions in the company.

LogisticsGulf.com spoke extensively and exclusively to him on a recent business visit to the UAE on a wide range of industry subjects.

As a Global Express Services (GES) veteran and now at the helm, what briefly is your take on the current progress of the company under your watch?

Leading GES into a new era of logistics where digital transformation and quality management are key determinants in global competitiveness, I strongly believe that we are on the right track to become a partner of choice by providing sustainable solutions and customer-driven experience, delivered by people who care.

There were developments under way including the completion of our industrial warehouse and office in Jebel Ali Free Zone which vastly improved our regional and global logistics reach.

However, one of my key priorities is the engagement of employees in training and development and we have successfully done it in many levels. Another key aspect of the business is raising our quality management systems to international standards, which we achieved with the ISO 9001:2015 certification.

How did GES perform in 2017 compared to 2016 and what is your forecast for 2018?

While 2016 saw the development of GES road map for the next three years, the year 2017 was one of the most remarkable years for us in terms of ongoing improvements within the company.

Last year’s accomplishments have left the GES team with increased motivation and enthusiasm for improved performance while effectively navigating challenges along the way. I attribute our constant revenue growth to the team’s efforts and key initiatives that were rolled out to fully optimise opportunities for the benefit of the company and to our customers for their trust in our services.

Comment briefly on the present state of the logistics industry in the region, GCC, wider Middle East and globally?

The UAE’s strategic geographic location as a main global trade hub along with the launch of initiatives such as the ‘Authorised Economic Operator’ programme, makes it one of the 63 countries worldwide that facilitates smooth functioning of trade, customs operations and supply chains.

An evaluation of the past trends and observation of the present allows an extrapolation of what might be in store for logistics and supply chain management in the future. The increasing emphasis on globalisation, free trade, and outsourcing, all contribute to a continued and growing interest in logistics and supply chain trends. According to market studies, by the year 2020, 80% of the goods in the world will be manufactured in a country different from where they are consumed, in contrast to the current 20%.

We see a tremendous shift in the movement and consumption of goods in store, giving rise to a demand for better management of the associated supply chain processes. The focus of logistics and SCM has been on efficiency in the past and physical distribution was highlighted as the last frontier of cost economies.

What are the opportunities and challenges for the logistics industry going forward?

The spike in trade and economic activities ahead of the upcoming Expo 2020, compounded by the country’s determined efforts to achieve UAE Vision 2021 goals, advancements in ICT industry, economic diversification and the customer-centric approach to services create immense opportunities for the sector.

With its highly specialised free zones of international standards, network of industrial areas, business parks, advanced telecommunication systems, world class seaports, and a major international airport and cargo village, the UAE is the most developed business hub in the region.

The players in the rapidly evolving logistics sphere here are evaluated on the basis of how well they deliver technology innovations, real-time solutions, integrate with their customers, and drive efficiency gains into the supply chain as they scale.

How are digital disruptions and transformations impacting the logistics industry? Please cite one or two examples.

Both individual and industrial customers now expect faster shipments, more flexibility, and increased transparency at a lower price, putting both operating models and profitability under strain. Large manufacturing and retail customers may experience a faster pace of transformation, compared to private final consumers.

In the B2B sector, manufacturing industries are facing far greater expectations around efficiency and performance factors than ever before. Customers are increasingly expecting faster time-to-market, lesser defect rates and customised results. Eventually, the result may be a goal that was once deemed impossible, where each product is manufactured to the specifications of a specific end-customer.

The ongoing shift to automation and data exchange in manufacturing technologies, also known as the ‘Industry 4.0,’ is allowing manufacturing companies to redefine everything, from the way they interact with customers to how they structure supply chains. This will have a huge impact on transportation and logistics.

The need to integrate data analytics and social supply chains for better traceability, predictability and lower costs must not be overlooked by LSPs, 3PLs and 4PLs. Being digitally sound is becoming the most integral aspect of every logistics company.

Logistics companies that serve individual customers are still facing challenges in that area as consumers are more digitally evolved than retailers. The leading players are adopting what we call ‘total retail’, which is an operating model across bricks and mortar, online mobile and other retail channels. ‘Connected retail,’ where retailers align personalised marketing, the physical store, the digital experience, and the payment options to create one seamless brand experience, is very essential to complement total retail.

How far has GES come on the digitisation curve?

As you can see, technology is changing every aspect of how logistics companies function. ‘Digital fitness’ has become imperative for success. Businesses that understand how to leverage a whole range of new technologies, from data analytics to automation and platform solutions will emerge winners. Again, defining a clear digital strategy that is integrated into your business approach is crucial, as there are so many technologies competing for management’s attention and investment.

Advanced IoT solutions are capable of providing improved supply chain transparency, safety and efficiency and environmental sustainability, while data analytics provide improvements in customer experience and operational efficiency; greater inventory visibility; management and better predictive maintenance.

What are GES’ expansion plans for the region? How significant is the GCC for GES?

We currently enjoy strong market presence in the GCC, especially in KSA and the UAE. The MENA travel and leisure (T&L) industry generated US$ 73 billion in 2015, of which the GCC’s transport and logistics industry accounted for US$ 12.8 billion. T&L is emerging as one of the key drivers of economic activity in the region, especially in the GCC, whereby it now constitutes a major industry sector. Saudi Arabia’s logistics market is the largest in the GCC, accounting for nearly 40% of the total market size in the region.

The GCC’s highly business-friendly environment has also helped in the growth of companies building their distribution operations based out of here. E-commerce is rapidly growing in the region and is now becoming a key growth driver for the logistics industry. The MENA e-commerce industry, where players are diversifying their product portfolios, is experimenting with new segments and as a result, several start-ups are emerging.

The number of online buyers has increased by nearly 21% from 2016 to 2017, thanks to increasing smart-phone penetration and changing consumer behavior and access to technology.

In which countries do you foresee growth in the logistics sector? Comment specifically on Saudi Arabia and UAE and the wider GCC?

The UAE and Saudi Arabia are the most promising targets for logistics investments and easiest markets to operate in the region. Oman, Kuwait and Bahrain, along with Morocco, Jordan are also emerging as potential investment destinations. The presence of 34 free trade zones, non-existent corporation tax, full ownership and the sanction for repatriation of profits make the UAE an extremely alluring business location for producers, manufacturers and logistics service providers alike.

The advent of technology is driving intelligent supply chains and is transforming the future of the global logistics industry. The UAE is home to a growing population that is way ahead in the adoption of new technologies, making it a key market for the transportation and the logistics industry in the future.

A large segment of the UAE’s economy is going through digitisation through technological innovation, including artificial intelligence, 3D Printing and automation. This creates tremendous business prospects for the logistics sector to benefit from private and public-sector initiatives that aim to redefine speed and operational efficiency.

Is consolidation a possible way forward for the logistics sector in these lean times? How about mergers and acquisitions?

Despite an increasing demand for services, the GCC’s logistics industry is seeing fierce competition, difficulties in attracting talent, and challenges posed by new market entrants. Mergers and acquisitions in the industry might become integral for companies to achieve growth, along with integration of new technology, and expansion of offerings.

Briefly talk about your partners / agents? What in your opinion constitutes the key strengths of GES?

We consider our unwavering commitment to core values of professionalism, constant adoption of modern technology and its integration, and increasing customer confidence in our global logistics expertise as the key strengths. Dynamic international trade activities are fundamental to our growth and our capacity to address the increasing demand for top logistics services in support of the rising global trade activities influenced our solid financial performance during the first half of 2017. We have also placed huge importance on the education and training of our employees, where we constantly invest. We empower our team to serve clients with professionalism.

The rapid growth of the logistics sector demands constant human capital development as knowledge, skills and navigation of challenges evolve together with the technology.

GES offers a unique blend of size and scope with unmatched flexibility. We have made it a practice to regularly tailor our services, from operating procedures to systems, to fit the needs of our customers.

We differentiate ourselves through our customer service. Dubai’s reputation as a logistics hub in the Middle East and globally, gives us an advantage in bidding for big projects.

How competitive is the logistics industry in the UAE and the GCC? Is the growth sustainable?

Our four logistics scenarios for the future of the industry are based primarily on different ways of collaboration and competition that could evolve within the sector.

Sharing the Physical Internet or PI, a dominant theme in this scenario, is the growth of collaborative working, which allows the current market leaders to retain their dominance. This could for example see a greater use of PI solutions, based on a move towards more standardised shipment sizes, labelling and systems.

A start-up, shake up scenario is when new entrants in the form of startups make a bigger impact. The most challenging and costly ‘last mile’ of delivery becomes more fragmented, exploiting new technologies like cloud platforms and crowd-sharing. A complex competition occurs when competitive sets evolves in a different direction, as large industrial or retail customers and suppliers become players in the logistics market themselves, not just managing their own logistics but turning that expertise into a profitable business model.

In the ‘scale matters’ scenario, the current market leaders compete for a dominant market position by acquiring smaller players, achieving scale through consolidation, and innovation through the acquisition of smaller entrepreneurial start-ups.

The UN report ‘Roadmap to a Sustainable Logistics Industry,’ provides a focused set of recommendations on how the transportation sector can contribute to sustainable development, which includes integration of sustainable transport planning efforts with an appropriately balanced development of transport modes.

This can be supported both by the development of multimodal transport solutions that address customer needs while reducing emissions and by increased collaboration and capacity sharing initiatives between transport companies across their respective networks.

Where does GES go from here? What is your vision for the future?

Maintaining and nurturing clients’ and employee satisfaction, along with sustained business growth and expansion will always remain our priority. The basis for competitive advantage in the logistics industry is changing fundamentally.

An established network may become a deterrent rather than becoming an advantage. New approaches based on new technologies, concepts and dynamic pricing may take capacity utilisation more fully into account.

Businesses need to ensure that they possess the distinctive capabilities they need to compete. They must develop these capabilities, use collaboration to succeed and focus on ‘digital fitness’, cost efficiency, asset productivity, and innovation if they want to meet changing expectations.