Middle East contract logistics sets course for an AI-focused future
By Trevor Stamp, Head of Contract Logistics, GAC Dubai
Over half a century, GAC has been at the forefront of transforming the Middle East into a pioneer of modern logistics practices to claim its part as a crucial link in the global supply chain.
As the sector has evolved, the global boom in online retail and e-commerce has sparked even greater demand for smart contract logistics services in the region. And since enforced lockdowns in response to the Covid-19 pandemic changed consumer habits forever, there is an even greater call for sophisticated warehousing, fulfilment and last-mile delivery support for retailers tapping into the Middle East market.
That trend shows no signs of slowing. Just in the last six months, we have witnessed an increase in trade of almost 20% in the e-commerce sector, owing to an earlier than expected peak season for the holiday period as many sought earlier deliveries to avoid the risks associated with a potentially disruptive supply chain.
Logistics powerhouse
With demand continuing to rise in the short term, the Middle East is now looking to ensure its long-term position as a logistics powerhouse is secure.
The business is evolving beyond the ‘pallet in, pallet out’ business model towards a future that focuses on cross-docking setups. This method of processing cargo through warehouses is designed to boost efficiency and reduce costs to meet customer demands more effectively.
Technology and digital platforms play a key role. Their intelligent application can enhance visibility of cargo movements and boost workforce efficiency. And that is essential in light of the scale of modern logistics operations in the Middle East.
In Dubai, for example, GAC’s contract logistics operation can process enough throughput to fill its 4,300 m³ base, which includes more than 250,000 pallet locations and 300,000 pick faces. Handling such volumes of cargo on a daily basis puts greater pressure on the processes, but that is taken care of by systems that embrace automation, digitalization, Artificial Intelligence (AI), Blockchain and the Internet of Things (IoT).
Innovation
Such innovation is essential to ensure we have market-leading technology to support our customers’ requirements–and GAC’s recent adoption of the Manhattan SCALE platform for some of our operations is a clear example of that evolution.
The software offers real-time and configurable insights for the entire logistics workforce, giving our teams access to greater planning capabilities, labour management tools and forecasting elements – all critical elements for contract logistics in a booming e-commerce market.
That improved efficiency, visibility, planning and productivity helps our customers boost their business, strategize better and thrive.
Using an AI-focused approach, we have boosted throughput in our Dubai hub by more than 15%.
If the Middle East is to continue to flourish as a contract logistics hub in this new era, it must embrace technology and new digital ways of working. But we must also be wary of the risks of how we integrate these systems into our processes – that’s why GAC takes a cautious approach by carefully considering the implications and testing each innovation.
Apprehension
It is natural for there to be some apprehension when it comes to adopting new processes, particularly those that involve AI. Workforces that are accustomed to working in a certain way can be reluctant to take on major changes or even suspicious of what they entail. But this ‘AI phobia’ is linked to a misunderstanding of its benefits in terms of data security, efficiency and reliability.
We saw this first-hand at GAC. Some of our tenured professionals have been with us for more than 25 years, so some uncertainty about big changes was to be expected. We tackled that by switching on functions gradually, reallocating resources and personnel accordingly, and continuously educating our teams on using the system to their advantage.
So far, the adoption of AI-based software at GAC Dubai has been overwhelmingly successful with our wider workforce. It is the biggest shake-up and update in contract logistics we’ve seen in more than two decades, but we have gradually upskilled our team, bringing joint benefits to our own people and crucially, our customers.
Date-driven decisions
It also enables us to make more data-driven decisions and has reinforced our position in the Middle Eastern contract logistics market.
The smart application of technology enables us to make more data-driven decisions and reinforce our already strong position in the Middle Eastern market. Despite some initial skepticism and AI-phobia, the long-term competitive benefits have already begun bearing fruit, in terms of productivity and efficiency gains.
If the Middle East is to remain at the epicentre of modern logistics, the digital transition will be key to ensuring the region’s long-term competitiveness in a constantly changing market.
