Digitalisation is just the tonic for regional shipping’s ills

Unsplash/William William

The global trading system has been tested since the 2008 financial crisis, while recent geopolitical tensions have exacerbated the fragilities of the existing system. 

Covid and post-Covid challenges were once front of mind; today it is Red Sea events that are testing the supply chain. All stakeholders are expected to find lateral and innovative ways to keep industry wheels turning.  

Port operators and logistics services providers are closely monitoring the growth and decline of various trade lanes as our region handles the world’s commerce through strategically located hubs in the Middle East – most of the trade happens in the Indian Ocean rim, comprising East Africa, the Indian subcontinent and the Gulf.

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The Middle East and Africa population is set to hit 581 million by 2030. And despite the global economic growth moderating in 2023, the MEA region has demonstrated high levels of resilience.

Looking ahead, there is an air of optimism underpinning economic forecasts, primarily driven by the burgeoning non-oil sectors. 

However, unlocking growth in emerging and developing MEA economies hinges on the transformation of the global supply chain. It must adapt to cater to the specific needs and sustained growth plans of these economies, particularly the small- and medium-sized enterprises (SMEs) that serve as their backbone.

SMEs constitute up to 40 percent of GDP in emerging economies and create seven out of 10 jobs. They face significant barriers in accessing international markets, such as complying with export regulations, lack of purchasing power and less capital to undertake market research or access an international shop window.

Containerised supply chains today, set up in the 1970s, are designed to handle large-scale industry movements, moving big blocks of containers for large “Walmart-style” consignments.

However, there is a gap between courier services and large-scale container movements that has not been met yet. Unlocking the potential of SMEs in developing economies to access international markets requires shipping and supply chain digitalisation and common data platforms.

Given the stuttering globalisation process, developing this access could be the required tonic to keep up global growth rates.

Unlocking the potential of SMEs to access international markets requires supply chain digitalisation and common data platforms

Digital transformation and data platforms are the key to making this happen. However, the current state of supply chain digitalisation is still in an interim “proof of concept” state, with most discussions focused on visibility on services provided.

So, when there is visibility provided, what happens next? A lack of clear mutual goals and expectations among industry transport providers means that there are a hundred solutions in the market looking for a problem. 

To bridge this gap, we need to link data platforms with physical transport operators, data sources from competing entities – AI that can make routing decisions, and sources of knowledge such as customs and legal regulations.

The ability to make the step to alternative routing decisions when there are supply chain bottlenecks is the most immediate step required.

One-click consignments

Sensor technology that links the physical movement of machinery to databases is already available in the ports and terminals industry; this technology can be leveraged to create a common data platform that enables SMEs to smoothly access global markets.

Amid continuous geopolitical tensions, supply chain turbulence is a significant issue that requires our collective effort and attention.

Developing economies, particularly those in the MEA region, need to be integrated into the global supply chain ecosystem.

To do so, there is much work to be done to develop a system that can handle small and intermediate size specific consignments sent from one end of the world to the other with just one click. 

It is time for our industry to come together and collaborate to create a system that can meet the demands of emerging economy actors – be it traditional legacy transportation operators growing from their asset bases into the new digital landscape, or digital natives bursting onto the scene and outflanking those heavy with assets but slow to grasp the new landscape.

Andrew Hoad is chief commercial officer at ports and logistics company Gulftainer