DHL identifies barriers to growth for KSA UAE and Turkey on logistics front

The United Arab Emirates, Turkey and Saudi Arabia are two Middle East economies identified among twelve emerging ‘Hotspots’.

Rob Siegers , COO, DHL Global Customer Solutions, said: “ Twelve emerging ‘Hotspots’, identified in the IMF World Economic Outlook released earlier this year, have a greater growth potential than the main economies of the developed world combined. While this is something to cheer about, a closer look at supply chain logistics is vital to ensure that these economies can deliver on their growth promises in the short and long-term. ”

‘Hotspot’ economies include the UAE, Saudi Arabia, Mexico, Turkey, Russia, China, Korea, Taiwan, Thailand, India, South Africa and Brazil. Together, they are expected to achieve an average GDP growth of 7.2 per cent in 2015, compared to the projected 2.1 per cent of the G-7 nations. The combined GDP of these “Hotspot” economies is expected to command a 38 percent share of global GDP by 2015 – two per cent more than the G-7’s global GDP. Last year, the average GDP growth for these hotspots stood at 2.8 per cent, compared to -3.4 per cent for the G-7 nations. Global GDP market share was 32 per cent, just 9 per cent lower than the G-7’s stake.

As a global expert in international express, air and ocean freight, road and rail transportation and contract logistics, DHL plays a key role facilitating trade between more than 220 countries and territories, including all emerging and key economies. As a result, DHL believes that to meet anticipated growth and increasing logistics needs, emerging markets will need to rapidly increase network capabilities along all modes of transport infrastructure, speed market liberalization and free trade zone development, and slash customs costs.

Richard Owens, CEO, DHL Global Customer Solutions, Asia Pacific, said: “In Asia Pacific, almost 15 per cent of supply chain costs are still related to customs and regulations procedures, compared to just three per cent in Europe. As logistics is the backbone of worldwide trade, easing the movement of goods and services via better logistics processes, infrastructure systems and government policies in these markets will allow emerging markets to reach their goals on schedule.

Key growth industries such as textiles and garments, pharmaceuticals and renewable energy also need to play a part in driving improvements and sustainability in the supply chain.”

A study by the World Bank suggests that the logistics performance of a country has a relatively high impact on any country’s economic and trade growth vis-à-vis its peers at the same level of development.  DHL, as an industry leader, has made sustainable development a priority and it aims to improve carbon efficiency by 30 per cent by 2020.

Owens added: “For long-term success, emerging markets need to put sustainable supply chain solutions high on the agenda. From moving diverse cargos and commodities to supporting infrastructure energy-related projects to complex customs clearance, the logistics industry can play a critical role in enabling emerging markets to continue their upward trajectory in regional/global integration by supporting, investing and expanding logistics capabilities ahead of the demand curve.”

Other emerging market challenges identified by DHL include: fragmented markets; political volatility, youthful, growing population with limited income, language and communication issues and large socio-economic divisions within populations.

To maintain a competitive edge during this transformation stage, companies doing business in or with emerging markets need to partner an experienced logistics provider. In a 3PL survey conducted by DHL in 2006 over 80 per cent of respondents indicated that they rely on providers such as DHL to gain local market knowledge as they expand their operations into emerging markets such as China, for example. Since then, the number of companies which engage DHL to design their supply chains has risen – and continues to rise – especially in markets such as the Middle East, India, Vietnam, Latin America and Russia.