Gulf logistics has much to be optimistic about in the year ahead

Alamy

2025 looks likely to be another tumultuous year for the global economy, with significant implications for the GCC supply chain and logistics sectors. 

Continued political instability in Europe, a new president in the White House, trade and security tensions between the West and China, as well as multiple geopolitical conflicts, will combine to create an environment of uncertainty. 

Set against this, the growth of regional trade, investment in local infrastructure and soaring ecommerce volumes will provide many opportunities in the GCC.

At the forefront of many supply chain and logistics executives’ minds is the impact that president-elect Trump’s policies will have on world trade after he is inaugurated this month.

There has already been a surge in volumes as many US importers try to beat the imposition of tariffs that could amount to 60 percent (or more) on Chinese products and 10 to 20 percent on goods from everywhere else. 

If trends of the past are repeated, which is likely, this surge will be followed by a drop in demand, resulting in shipping rate volatility.

However, in the longer term it is likely that tariffs will impact trade flows more than actual volumes. 

In order to avoid punishing tariffs, Chinese manufacturers will off-shore production to other countries in Asia and parts of the Middle East and Africa.

In fact, a fundamental re-assessment of China’s relationship with the US is likely to accelerate Beijing’s attempts to build new trade structures with markets outside the west, especially Brics and its new members in the Gulf. Much more regional integration will be the result, with the GCC at its heart.

Despite the turmoil of recent years, the transport industry in the region has much to be optimistic about. 

A resolution to the conflict in Lebanon and Gaza and the change of regime in Syria could result in some normalisation of political relations throughout the region, leading to a re-opening of overland trade routes to and from the Mediterranean. 

Post-war reconstruction of infrastructure will need huge investment from the global community, requiring the facilitation of shipping and logistics services.

A further dividend could be the end of disruption from Houthi attacks on ships passing through the Suez Canal. This will boost trade flows to all the GCC ports, especially those in Saudi Arabia on the Red Sea.

An end to the conflict in Ukraine is also on the cards, if a deal can be brokered by Trump. A resolution will result in normal trade relations being resumed with Russia (albeit not immediately), which will help the GCC’s shipping industry once international sanctions have been lifted. 

Flows of goods originating in Ukraine and Russia will be boosted, especially supplies of grains to Africa. 

The global market re-opening to Russian energy supplies will mean that there is downward pressure on prices of oil and gas, good news for shipping, air cargo and trucking companies , although not so good for the revenues of those GCC countries dependent on high prices. 

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While the GCC’s position as a global and regional hub leaves it vulnerable to disruption from international events, there is more certainty about its own economic development. 

Across the region a number of massive infrastructure projects are under way, driven by the green energy transition, housing and tourism as well as, of course, development of ports, airports, railways and roads. 

This domestic investment will suck in huge amounts of materials and generate numerous jobs. All transport modes will benefit, as will the warehousing sector and advanced logistics services.

As well as this, the surge in demand for ecommerce goods, the majority of which are manufactured in China and shipped to the West, will continue to drive the sea and air sectors, with positive implications for warehousing property in the region. 

Chinese exporters are already looking to cut costs by using hybrid sea-air services, particularly those routed through GCC ports and airports. This could continue the demand already driven by shippers seeking to avoid the delays to consignments caused by the diversion of shipping around the Cape of Good Hope.

Throughout the disruption and conflict of the past few years, the GCC has provided a stable and secure environment for businesses, residents and investors. 

If some of the region’s conflicts can be resolved, there will be significant bonuses for logistics and transport companies, as the GCC becomes a hub for reconstruction materials moving to the affected countries and areas. 

Even if this view proves overly optimistic, the region’s stable economy, supply chain integration and the growth of domestic construction projects will continue to drive the sector’s growth in 2025.

John Manners-Bell is CEO of Transport Intelligence Insight and founder of Foundation for Future Supply Chain