The pandemic has restrained growth across the board in the various facets of supply chain sector as many governments restricted the movement of goods across countries due to Covid-19. So how has the industry responded to the challenges posed by the pandemic? Ramez Hamdan, Managing Director–Industrial Equipment (FAMCO, HINO, Toyota Material Handling), Al-Futtaim Automotive, shares his insights.
It is a truism that commercial vehicle makers have also felt the impact due to trade restrictions and consumption decline, forcing manufacturers to slow down, or even halt production altogether due to lack of parts and components.
As the world continues to grapple with the worst crisis in living memory, the silver lining for commercial vehicle distributors came as a result of the meteoric rise of e-commerce, a trend which has been significantly more poignant in the GCC compared to other, more mature markets, where e-commerce penetration was already high.
In fact, during the lockdown period in the UAE last year, Al-Futtaim Commercial Vehicles (AFCV) recorded our highest sales for HINO trucks in a single month, largely due to the popularity of our HINO 300 Series light truck, which is ideal for ecommerce bulk pick up and deliveries.
During the strict lockdown period we were also able to obtain the necessary approvals from the respective UAE authorities and dedicated more resources to high-demand sectors such as FMCG, waste management, logistics, e-commerce and water distribution to ensure these critical sectors continued to operate smoothly.
Adherence to safety
We followed world-class standards for health and safety for our staff and customers, enabling us to provide total support to our customers without delay or disruption.
As a whole, the commercial vehicles sector is a key contributor to the AED220bn UAE logistics industry which ranks third globally behind China and India.
According to the UAE Federal Competitiveness and Statistics Authority, the commercial vehicles sector is forecasted to contribute 8% to the UAE economy during this year.
The role of e-commerce in this growth in the UAE is significant considering that online shoppers in the Emirates spend an average of US$ 122 per transaction, compared to US$ 76 in mature markets and US$ 22 in emerging markets. In a nutshell, the higher the appetite and demand for online parcels and deliveries, the higher the demand for logistics services, from fulfillment, to storage all the way to last mile delivery.
E-commerce rising
The e-commerce sector in the GCC is set to reach US$ 50bn by 2025, on the back of strong growth driven by the Covid-19 pandemic. This projected surge in demand for e-commerce services in the region has underpinned a growing demand for the creation of more warehousing facilities, which is another area of AFCV specialisation, with our wide range of Toyota Material Handling equipment’s.
With ever growing investments by the region’s two major platforms, Amazon and noon, e-commerce will continue to flourish, and with it, logistics services providers need to keep up with soaring demand for storage and delivery. This domino effect means that demand for commercial vehicles and storage equipment in the region will continue to rise.
Relevance is the key, whether facing the chaotic effects of a global pandemic or the unpredictability of technological innovations that are currently in the lab and will soon be on the roads.
Ultimately, the commercial vehicles sector and by extension supply chains and relevant industries and sectors, have an imperative need to continually adapt and overcome the challenges presented by the ever-changing business environment. The commercial vehicles sector must be well prepared to offer solutions and support to requirements as those arise.
At AFCV, we try to stay ahead of developments and doubled efforts to satisfy the sales and after sales activities following demand patterns and trends as required by our customers and business partners operating in essential industries.
