Changing landscape of multimodal logistics

“When I came to the Middle East 33 years ago, textile was carried using a handcart, which was then loaded into a dhow, and off it went – that was multi-modal logistics for me,” said David Phillips, President, NAFLA, while moderating a session on multi-modal logistics at the Middle East Air Cargo & Logistics Conference 2014 held at Abu Dhabi.

Further explaining the multimodal concept, Phillips drew a comparison to the Indian ‘dabbawala’ approach, which is an interesting case study in the supply chain space. In his view, the three-tiered process of movement of lunch boxes from home to office serves as an excellent example of multi-modal logistics, which has never failed.

The discussion was focused on the strong demand growth for multi-modal transport services along with key market characteristics and potential opportunities for logistics service providers. It also highlighted what the logistics industry must take into consideration – sea cargo services, transshipment services; logistics infrastructure enhancement beyond the UAE – GCC level distribution, interlinking regional logistics – its current status and future outlook.

“You can have the best infrastructure but if you do not have the processes in place, it will not work,” argued Gerhald Mewald, managing director, Barlo Worldwide Logistics. Multimodal logistics has tremendous potential to increase supply chain efficiencies. The right policy incentives from the government and interests from the private sector should together go a long way to spur growth in this sector, he added.

While it presents an array of opportunities, multimodal logistics brings along several challenges also. If it has to grow quickly, all stakeholders need to invest time and effort in its development. Mewald identified three focus areas – infrastructure, regulation and technology – which demand attention from the stakeholders.

Mewald spoke of how external shocks changed the transport industry. The global economic crisis sent ocean-air freight carriers into an economic disarray which led to massive and sustained over-capacities and freight rates dropped to unsustainably low levels. At such times, multimodal logistics such as combination of sea-air freight helps; sea-air is a hybrid transportation mode which is cheaper than air and faster than sea. Mewald pointed out that Africa’s economic growth and geographical conditions offer striking benefits for sea-air freight. In fact, sea-air freight emerges as a crucial demand of contemporary supply chain concepts.

However, the efficient operation of transport modes and nodal points are dependent on reduced barriers, institutions and simplified legal regime in order to effectively implement integrated logistics operations. It is viewed that trade is not possible without transport therefore support for integrated transport will facilitate national and international trade by ensuring an uninterrupted and smooth flow of cargo and giving better control over the supply chain.