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Analysis: Sustainable supply chain in the Middle East

by Ahmad Lala

Global Research institute APMG-International announced last month that the UAE alone is using 225 per cent more energy than Europe.

“In fact,” said Alan Harpham, chairman of APMG-International: “The UAE’s per capita footprint of 9.5 hectares is four times more than the global per person 2.1 hectares availability.”

He added that the UAE must step up management of its ecological footprint, in response to research which revealed that the equivalent of 6.5 planets would be needed to regenerate resources and absorb carbon emissions, if everyone on the globe lived like the average Middle Eastern resident. “With international arrivals to the Middle East expected to reach 68.5 million by 2020, carbon footprint management is key in generating projects that create an effective presence within the UAE to ensure ecological, economic and social success,” said Harpham.

However, for the region’s logistics companies, reforms are already in place, with many of the global firms doing their part for sustainability. One of those companies is Kuwait-based Agility. Agility’s senior manager for corporate social responsibility, Frank Clary, agrees with this view.

“The short answer is yes, for global organisations,” says Clary. “Global organisations, like Agility, operating in many different markets, are legally compliant. In addition to that, most global logistics organisations are working with global consumer products goods. We have a lot of customers that are dealing with consumer products goods and their priorites now are different from those they had twenty or thirty years ago.

“There’s always room to do more, but I think that by and large global organisations, like Agility, are doing all that they can for the environment.

However, Clary says that the problem may lie with smaller logistics firms. Most of the world’s logistics operations are, after all, performed by smaller organisations. “Smaller organisations don’t seem to be doing as well as they should,” he says. “I don’t think it’s because they don’t want to, I think it’s because there’s a lack of awareness. There seems to be a lack of incentive for them to upgrade their fleets and reduce their emissions and so on.

Clary adds that more customer pressure would force logistics companies to reassess their operations. This in turn would lead to a more sustainable industry. “We often think of the logistics organisations as being the driver of incentives or the government, but there’s a third party and that is consumers and the end users of products,” he says.

“If you can build awareness, then those consumers can demand different environmental practices from the organisations that are producing products and supply chain organisations that are managing the delivery of those products to market.

“If you look in places like Africa or the Middle East and some places in Asia, there’s no real drive from consumers to say, ‘I want to know what the environmental impact of my purchasing decisions is, so I can give my input to the producers of these products, and tell them I’m happy or not happy with the amount of CO2 or emissions that are associated with it.

“This would, in turn, encourage producers of products to try to work with the supply chain providers to improve their environmental performance. Then you actually end up with a flow downwards towards smaller organisations.

“Most logistics operations are performed by smaller organisations. So, without the consumer pressure and the regulatory pressure on the producers of goods, it can be nebulous. There’s no real incentive for small organisations to improve their environmental performance if their peers are not doing the same thing.

“You actually have to allocate some resources to this.

“You might achieve novel savings on the back hand, but unfortunately small organisations don’t always have the ability to understand that holding off a little bit, making some innovative solutions and putting them in place might actually result in improving quality of service and reducing cost.

“So it takes awareness at the consumer level, awareness at the small operator level and encouragement for the producers of goods to tell the logistics and supply chain organisations that these are the levels of service quality that are required.”

Frank Clary of Agility has identified 10 trends that he feels will be key to achieving a greener supply chain by 2050.

[1] The more a logistics organisation can understand its customers’ needs and requirements, the better opportunities and solutions that organisation can offer to reduce their environmental impact. So, when regulations change, or when consumers start putting pressure on the actual producers, I think what we’ll see is the producers asking logistics organisations what they can do. And I think the first thing we’ll see are more highly evolved relationships between logistics providers and producers.

[2] I think we’ll also see a clear trend towards continuous improvement and use of IT. Information management is hugely important, and critical to the success of contemporary logistics operations. You’ve really got to manage information if you want to move products globally, or regionally, or even locally. If you want to maximise efficiency you really have to know what you’re doing. IT enables you to understand what’s going on within a particular climate, and it also enables you to understand what’s going on with your business as a whole and to look for innovative ways to improve your overall operational efficiency.

[3] I think a third thing that you might see is more locally produced items. We’re seeing these now in the Gulf, where cities like Abu Dhabi are producing goods locally, and making headway in developing the industry locally. This will have a positive impact on the local economy, the regional economies, but it will also improve environmental performance; at least I hope it will, because there’ll be less need to ship stuff long distances around the world.

[4] Of course there are going to be changes in regulations, as awareness builds up and environmental rules and regulations strengthen around the world. There are a number of different conferences taking place in different parts of the world, for example in Rio and Copenhagen. There’s certainly more awareness within governments, and there’s room for even greater awareness.

[5] I think a fifth trend you’ll see is improved infrastructure, certainly in Asia and the Middle East, with regard to transportation systems, port services and port infrastructure. We’ll also see some changes to fuel, in terms of the extent of refinement of the fuel that is used for transportation fleets for long haul or rail or aircraft.

[6] The sixth trend will be related to access. The way long haul transportation will be managed will be different. Again, this will be related partly to infrastructure, and partly to the way trucks are manufactured and maintained, inspected and tested on a regular basis.

[7] We will also see improvement of rail services in China and other Asian markets, as well as here throughout the GCC.

[8] I think at some point in the future, probably in the next twenty or thirty years, we are actually going to start seeing electric vehicles on the road.There are some ports, like the port of Los Angeles, where they use only electric trucks for shunting operations in the port.

[9] I also think that we’ll see reverse logistics. Instead of being cradle-to-grave life cycles, or many consumer products or some consumer products, we’ll actually start seeing more cradle-to-cradle, right across 
the board.

[10] And lastly, just continued innovation within the supply chain. We will see organisations, like Agility, doing things related to schedule management for customer consignments, to try to get them to integrate marketing and logistics within the manufacturing framework. We’ve seen that already, where goods are being transported on the water as opposed to by air, and that’s better for the environment. We’ll also see improved air freight management.



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