How Kuehne+Nagel is tackling GCC supply chain disruptions head-on

The Gulf Cooperation Council (GCC) is a regional organisation comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

How Kuehne+Nagel is tackling GCC supply chain disruptions head-on
X

Lee I’Ons, GCC+ Cluster Managing Director, Kuehne+Nagel

Listen to this Article

Earlier last month, Kuehne+Nagel reported strong third-quarter 2024 results, driven by growing demand for flexible logistics solutions amid ongoing supply chain disruptions. The company posted a net turnover of CHF 18.0 billion for the first nine months of 2024, with EBIT (Earnings Before Interest and Taxes) of CHF 1.2 billion and earnings of CHF 915 million.

The Switzerland-headquartered logistics company’s sea logistics division saw a turnover of CHF 6.7 billion and EBIT of CHF 653 million, handling 3.2 million containers (TEU). On the other hand, its air logistics grew 4% year-on-year, reaching CHF 5.2 billion in turnover, with a 6% increase in air freight volume.

Kuehne+Nagel also expanded its sustainable efforts by partnering with Cathay Pacific and Mercedes-Benz to reduce CO2 emissions. Moreover, K+N’s road and contract logistics saw CHF 2.6 billion in turnover, with a boost from the acquisition of City Zone Express in Southeast Asia. Contract logistics reported CHF 3.5 billion, driven by a new automated hub for Adidas in Italy, processing up to 500,000 shipments daily.

Reflecting on Kuehne+Nagel’s regional strategy, Lee I’Ons, GCC+ Cluster Managing Director, shared insights with The STAT Trade Times on the company’s growth vision for the GCC region, one of the world’s fastest-growing markets. I’Ons described the unique challenges and opportunities within the GCC, emphasising Kuehne+Nagel’s commitment to sustainable practices and operational excellence.

From state-of-the-art facilities to strategic adaptability amidst shifting trade routes and geopolitical factors, Kuehne+Nagel aims to support the region's diversification efforts beyond oil. I’Ons also underscored the critical role of dedicated teams in building customer trust and delivering superior logistics services.

With a workforce of over 80,000 across nearly 1,300 locations in 100 countries, Kuehne+Nagel serves 400,000 customers worldwide. The company is actively reducing its own environmental footprint while providing clients with low-carbon logistics solutions, aligned with its science-based targets initiative commitment.

As the Managing Director for Kuehne+Nagel’s GCC region, what are your primary objectives for the company, and how do you envision driving growth and innovation in this dynamic market?

The GCC region includes some of the fastest-growing economies. Saudi Arabia, UAE and Qatar top the list, but we also see growth in other countries in the region.

As a managing director of a region with such growth and resilience, I like to apply cautious optimism. We are in a comfortable position, but the logistics industry is dynamic and unpredictable, and our teams must be ready to support our customers in an ever-changing logistics landscape.

As the economies diversify from the oil sector, we see the rise of alternative industries, in line with global trends. E-commerce, healthcare, aerospace, and other sectors are thriving in the GCC, and we are investing in meeting the demands of the markets. In Dubai, Kuehne+Nagel is set to open a state-of-the-art fulfilment and delivery centre with a bonded logistics corridors connecting to Jebel Ali Port and the new Al Maktoum International Airport [$35 billion expansion of Dubai's Al Maktoum International Airport (DWC) in Dubai South, a major new project separate from DXB in Dubai city] for the efficient distribution across the GCC region. We are also looking to expand our geographical footprint, bolster our fleet and contract logistics capabilities.

Undoubtedly, the cornerstone of our success is our team. Their dedication, expertise, and commitment to our customers are the driving force behind our achievements.

We have the right talents to support our customers and build relationships based on trust. We will continue to attract young logistics professionals wanting to accelerate their careers in the industry and contribute to the growth of the region.

GCC-based employees at Kuehne+Nagel
In Dubai, Kuehne+Nagel is set to open a state-of-the-art fulfilment and delivery centre with a bonded logistics corridors connecting to Jebel Ali Port and the new Al Maktoum International Airport for the efficient distribution across the GCC region.

Kuehne+Nagel's net earnings saw a 48% decline in 2023, but the second quarter of 2024 showed a boost in demand for air logistics, particularly with supply chain disruptions in the Red Sea. How do you plan to build on this recovery and further strengthen K+N’s position in air logistics?

Despite the significant impact of Red Sea disruptions on the supply chain, our operations have demonstrated resilience. This was not just a local issue in the Middle East but a global one. Many customers, faced with potential delays, opted for alternative routes. Depending on their locations, some of these detours involved navigating the Cape of Good Hope, thereby extending the lead time.

However, many of our customers were in the position of not being able to increase the lead time and were looking for alternative options. Our Sea-Air solution gained popularity because it eliminated delays and was economically attractive to the customers.

On the other hand, air logistics continues to be the top choice for shipping perishables, high-tech, and high-value products. Its secure and timely delivery capabilities provide a sense of security to our customers, ensuring their products reach their destinations in optimal condition.

The booming e-commerce industry actively adds to the air freight volumes. Customers are now used to ultra-fast delivery, which can be achieved only with air logistics; in fact, this industry is gaining speed as we speak, with more emerging markets and countries with better access to online banking and online shopping and a young population that wants products “now.”

We work very closely with the airlines. We build long-lasting relationships based on trust and reliability, which are fundamental to successful operations. We have dedicated global teams that specialise in specific industries or products and have a deep understanding of requirements, an organisation highly appreciated by our customers who know they can rely on our capabilities.

All those elements and ingredients form a coherent vision and strategy that place Kuehne+Nagel in a leading position in the logistics industry.

Despite recent earnings challenges, Kuehne+Nagel continues to be a market leader in sea freight, particularly within the GCC region. Could you provide some concrete data to support this, such as the volume of shipments handled and the key trade routes where you maintain a strong presence?

We have continued to grow our sea freight volumes year after year, demonstrating our resilience and adaptability.

However, it is not the volume of cargo that makes us the market leader; it is the operational excellence we provide to our customers. The knowledge of the supply chain, the expertise, and the network position Kuehne+Nagel in the leadership position.

Our strategy at Kuehne+Nagel is to continue growing organically, by expanding our customer base and increasing handled volumes across all business units and verticals.

With increasing market consolidation in the logistics sector, how does Kuehne+Nagel plan to sustain its leadership in sea freight while regaining momentum in air freight?

Our stance on this matter is bold: we are number one in sea logistics and want to remain number one. We have built solid relationships with our customers and business partners and will continue to prove that those relationships are meaningful. Our teams are ready to win new customers and continue to grow the business across all regions and all business units. Together, united, we will not step down from the podium without considerable effort.

We are confident that our offering, capabilities, heritage, and, most importantly, our incredible teams are the ingredients to achieve the ultimate goal – being our customers' most trusted, number-one logistics partner.

In a recent statement, Kuehne+Nagel’s CEO emphasised that “bigger isn’t always better,” highlighting their focus on quality, not just size, through their Roadmap 2026 strategy. Are we witnessing a shift towards consolidation, where major players are absorbing smaller and mid-sized companies to strengthen their market position?

The logistics market is highly fragmented. Kuehne+Nagel, the number one freight forwarder in sea logistics, controls between 3 and 4% of the sea freight market globally. This number changes between the countries and regions; still, it proves that even large consolidations do not monopolise the global market and leave room for small and medium-sized logistics companies.

Is Kuehne+Nagel looking into mergers and acquisitions? We are always on the lookout for the right partners, especially for the niche markets and services that can support our global network and offerings to our customers.

Our strategy at Kuehne+Nagel is to continue growing organically, by expanding our customer base and increasing handled volumes across all business units and verticals. Our Vision 2030, to become the most trusted supply chain partner supporting a sustainable future, remains steadfast. Our Roadmap 2026 provides clear guidelines on how we plan to achieve this ambitious goal, with our cornerstones reflecting our key priorities: the Kuehne+Nagel Experience, Digital Ecosystem, Living ESG, and Market Potential.

At Kuehne+Nagel, our focus remains on quality and customer experience, rather than sheer quantity. As our global CEO, Stefan Paul, has articulated, our approach to growth is about becoming better, not necessarily bigger.

Is Kuehne+Nagel looking into mergers and acquisitions? We are always on the lookout for the right partners, especially for the niche markets and services that can support our global network and offerings to our customers.

With the rise of super forwarders, how do you see the dynamics evolving between carriers, shippers, and forwarders, especially in the GCC region? And how is Kuehne+Nagel positioning itself to navigate these changes?

The UAE alone has around 7,500 freight forwarding companies. Some support only a few customers and ship a dozen containers monthly. Some specialise in a single activity, such as customs clearance.

I believe the fragmented market creates healthy competition and gives customers a selection of partners they want to work with.

At Kuehne+Nagel, our top priority is building and maintaining strong relationships with our customers, business partners, and freight forwarders. We achieve this by providing the experience and quality our customers and their cargo deserve and fostering transparent and respectful cooperation with all parties involved.

Our advantage is that we offer our customers a full range of services. We also have expertise and experience in handling specific, demanding products, such as healthcare, semiconductors, perishables, high-tech, or high-value. For large customers with large volumes, having one contact person instead of multiple teams for all the logistics-related services is a great relief. In case of market disruptions, no matter the kind, we can utilise our network and instantly offer alternative solutions, something that small forwarders simply cannot do.

The GCC is also well-positioned for emergency and relief logistics due to its proximity and access to Asia and Africa.

For many years, there have been discussions about whether some customers will shift to working with carriers directly, bypassing freight forwarders. While this certainly happens, we often see these customers returning to us. The reason is simple: working with a carrier means lost flexibility and a significant increase in workload for the customer, who would rather focus on their core business than the logistics. By choosing Kuehne+Nagel, customers can enjoy the benefits of our comprehensive services, industry expertise, and commitment to making their logistics experience as smooth and efficient as possible.

The logistics industry in the GCC region faces unique challenges, such as geopolitical tensions and shifting trade routes. What are the main obstacles you see in the region, and how is Kuehne+Nagel adapting to overcome them?

Disruptions, whether geopolitical, natural disasters, socio-economic or cyber, are the new norm globally.

The GCC region, situated at the global crossroads, hosts some of the most dynamic economies. The area created the resilient modus operandi and operational readiness.

Our Sea-Air solution is a prime example of a product that empowers customers with alternative routing and a different freight model. Seaexplorer enables customers to monitor vessel movements, port congestions, and areas of disruption, providing them with immediate and varied options.

Resilience, flexibility, and agility are no longer just desirable qualities, but essential for a robust supply chain. Our teams collaborate to devise solutions and alternatives, going beyond the conventional Plan B to include Plans C and D. We think innovatively, quite literally outside the box, to ensure the supply chain's adaptability.

The GCC is also well-positioned for emergency and relief logistics due to its proximity and access to Asia and Africa. In Dubai, Kuehne+Nagel cooperates with International Humanitarian City, a humanitarian emergency preparedness and response hub, and works with many humanitarian organisations.

The first aid items are stored in our warehouse, and once the need arises, our fulfilment and delivery team prepares the response kits (depending on the nature of the disruption) for shipment.

Kuehne+Nagel has been recognised for its sustainability initiatives, such as its collaboration with Mercedes-Benz in utilising sustainable aviation fuel. Could you shed light on the company's future sustainability goals in the GCC and how these initiatives impact your operations?

Sustainability is integral to Kuehne+Nagel’s strategy and our vision of “Becoming the most trusted supply chain partner supporting a sustainable future.” We committed to the Science-Based Target initiative (SBTi), a programme that provides a clearly defined path to reduce emissions in line with Paris Agreement goals.All Kuehne+Nagel’s owned warehouses in GCC are powered entirely by solar energy. We recently expanded our geographic reach on SAF thanks to the partnership with Cathay Pacific, our first Asian partner airline to join our SAF programme. We are also working on extending similar partnerships to the airlines in the Middle East, such as Qatar Airways.

All Kuehne+Nagel’s owned warehouses in GCC are powered entirely by solar energy.

One of the focus areas for Kuehne+Nagel is the electrification of our road fleet in the GCC. We are actively monitoring the development of this market and the progress of the charging and maintenance network because although the network exists to support passenger cars, the requirements for trucks are more complex.

The logistics landscape is rapidly evolving, with technological advancements, sustainability demands, and customer expectations reshaping the industry. What trends do you foresee in the next few years, and how is Kuehne+Nagel positioning itself to stay ahead of the curve in both sea and air logistics?

Automation at Kuehne+Nagel is not just about efficiency; it's about creating a safe and comfortable work environment for our fulfilment and delivery teams. For instance, at Campus South, a facility in Mantova [Northern Italy], which handles the distribution of Adidas products to 19 countries, 700 employees are supported by 700 robots and automated solutions.

One of the main drivers of Kuehne+Nagel is technological advancement.

Kuehne+Nagel constantly develops its tools and technologies to the best advantage of our customers, colleagues, and communities.

We also include AI to support simple tasks and free our team members to focus on more complex tasks. However, at Kuehne+Nagel, we treat AI as a new team member supporting human peers, not an independent knowledge source. Seaexplorer, our interactive supply chain planning tool, provides real-time data, such as vessel positions, current disruptions, delays and alternative routes, so our customers can have complete visibility of their sea freight shipments.

To attract more female talents, we need to change the perception of the industry and show that it is not just inclusive but also an exciting and fulfilling industry in which to build a career.

These sophisticated, fully automated fulfilment centres are the future of contract logistics. They provide maximum efficiency and accuracy for our customers and a positive work environment for our teams.

Diversity and inclusion are becoming increasingly important in the logistics sector. How is Kuehne+Nagel working to promote a more inclusive workplace, and what strategies are in place to attract, hire, and retain women talent in what has traditionally been a male-dominated industry?

To attract more female talents, we need to change the perception of the industry and show that it is not just inclusive but also an exciting and fulfilling industry in which to build a career.

In the GCC, Kuehne+Nagel cooperates with several universities to provide internships and later offer full-time positions, such as Saudi Logistics Academy, German Jordanian University and Zayed University in the UAE. The female candidates are recognised for their talents and achievements, and once on board, they can join several programmes that support development and career advancement. For example, our WILL - Women in Logistics Leadership programme offers international mentorship options and allows our female colleagues to explore various fields of logistics.

Logistics is an industry that operates 24/7, which can make work-life balance challenging. How is Kuehne+Nagel ensuring that employees, particularly women, have access to flexible working options, and what are some of your initiatives to promote well-being and work-life balance?

Absolutely, the logistics industry never stops because the movement of goods never stops.

The work-life balance, or as I prefer to call it, “life balance”, is a matter that I drive personally.

At Kuehne+Nagel GCC+ cluster, we offer much more than a hybrid working model and flexibility. We aim to have a broader picture and implement solutions that enhance the work environment. For example, we realised that many of our team members in Dubai have a long commute to work, and we decided to offer transportation on a dedicated luxury bus. The team can relax during the commute, and we also took a dozen cars off the busy roads and freed parking spaces.

October is a month of well-being for all Kuehne+Nagel colleagues globally. Each country organised a series of events dedicated to well-being in terms of physical and mental health. I was impressed to see such interest in activities among the teams across the entire GCC+, keen to learn about nutrition, the role of sports or how to combat work pressure.

Employee Experience is a part of the first cornerstone of our Roadmap 2026. We want to create an extraordinary experience for all our team members and create trust that they can approach the dedicated HR team for support. This trust is the basis of everything we do and want to achieve.

Tags:
Next Story
Share it