Road Runner

The logistics industry’s reliance on the road network is evident throughout the Middle East.

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By  Robeel Haq Published  May 7, 2006

|~|roadrunner2.jpg|~|Duncan Watson, head of commercial, DHL Middle East|~|The Middle East’s road network remains the logistics industry’s most favourable mode of transport. Since the region’s ambitious plans for a rail network remains work-in-progress and airfreight is often deemed too expensive, the amount of landfreight being transported throughout the GCC is reaching record levels. “Logistics companies in the Middle East are dependent on the road network to deliver consignments,” says Duncan Watson, head of commercial, DHL Middle East. “The amount of delivery vehicles transporting products across the region is constantly increasing and the numbers are likely to increase.” Logistics companies are utilising different types of vehicles to transport products. The number of larger trucks being driven in the Middle East seems to be increasing at the highest rate, followed by light commercial vehicles such as delivery vans. Only motorcycles, which are generally restricted to deliveries within the same city, are not matching the same level of growth. “There are insurance issues associated with motorcycles because of higher accident rates, which means the industry is shying away from them,” says Watson. “The number of trucks and light commercial vehicles are growing at a much faster rate.” A number of reasons can be attributed to the logistics industry’s reliance on the Middle East road network. One of the primary factors is the lack of options faced by companies wanting to transport products between GCC countries. Unlike many parts of the world, this region is not equipped with a rail network for cargo, whilst airfreight is considered too costly. “Landfreight is normally the most reliable and financially viable option. It reduces logistics costs without compromising on control over the supply chain,” says Watson. “Without a rail network, the main alternative is airfreight, but most companies find this method of transport too expensive.” The region is currently planning to introduce a rail network in the future, which means companies will finally have another option to land transport. It will take some time before the project becomes a reality, but logistics companies are already considering how a rail network could affect the industry. “In my experience, rail is a relatively inflexible and costly mode of transport in terms of logistics,” says Watson. “Certain types of material are suitable for transport by rail, although most commodities handled by companies such as DHL are incompatible. I would not envision them being moved around and distributed in bulk through a rail network,” Watson feels another reason why logistics companies are showing a preference towards landfreight is because customers also prefer this mode of transport. “Many logistics companies are not listening to their customers enough,” he says. “Companies should have a comprehensive understanding of their customer’s needs. Many customers actually favour road transportation for their deliveries, which should be reflected by the logistics services being offered in the region. This is very important in a growing market like the Middle East.” Another major contributor towards growing volumes on the road is Jebel Ali’s evolution into a logistics superhub. The freezone provides straightforward access by road to countries throughout the Middle East. This allows companies to ship their cargo into the local port and reach neighbouring countries by road. “The success of Jebel Ali as a gateway into the Middle East has changed the face of logistics,” explains Watson. “Companies previously shipped their products directly to each country. However, the majority of cargo is now reaching Jebel Ali and being redistributed by roads to other parts of the region. Governments are working hard to make the road network more efficient to handle this extra demand.” Indeed, the Middle East’s road network is constantly improving, although quality varies between different countries. The United Arab Emirates and Saudi Arabia, for example, generally have a modern and well-maintained infrastructure, whilst Qatar is also re-developing its roads on a national level. “The standards of roads are pretty impressive, especially on the main routes,” says Watson. “The major business centres across the region are well connected and the conditions are improving to handle the growing volumes.” Unfortunately, despite a good infrastructure, the Middle East has gained a negative reputation due to large amounts of traffic congestion. In particular, Dubai’s huge growth in population has rocked the number of vehicles on the road. As a result, traffic congestion is a common problem, which has negatively affected logistics companies, especially because customers are now demanding just-in-time deliveries. The local government in Dubai has already started a variety of initiatives to improve the situation, although the problem will not vanish overnight. “Traffic is becoming a constant topic of conversation for people in the region,” says Watson. “Vehicles are generally inexpensive and therefore affordable to most people. I personally believe the government should move towards the Singapore model, where car ownership is more expensive with high levels of tax. This should somewhat help ease congestion problems and improve the environment at the same time.” One of the solutions enforced by governments to combat the congestion problem is placing traffic restrictions on commercial vehicles. The UAE and Saudi Arabia have constrained trucks being used on specific roads during certain parts of the day. The initiative has successfully helped to ease the problem, although as a result, logistics companies are sometimes forced to use longer routes to reach their destination. “Logistics companies generally remain flexible because these restrictions are being placed for a good reason,” concludes Watson. “We work around the restrictions, although it does add extra time to journeys and increases fuel costs. But companies generally avoid passing these additional costs onto the customer.” The reliance of logistics companies on the Middle East road network is likely to remain strong in the coming years. Although issues such as traffic congestion and vehicle restrictions place some pressure in terms of deliveries, the improving infrastructure throughout the region should help ease the situation in the future. Indeed, the booming economy alone should ensure that the power of land transportation reaches higher peaks in the future. ||**||

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