How do logistics companies operate?

Logistics and transportation are vital components of millions of businesses around the world. With globalization and the growth of e-commerce, more organizations rely on logistics firms than ever before. Logistics companies help with the transport of goods by planning, implementing, and executing the correct movement and storage of products and materials in the supply chain. This includes the transport of goods, shipping functions, warehousing, inventory management, and packaging and labeling.

This article will help you understand how your business can benefit from operational efficiencies when you employ a transport and logistics company.

Logistics companies: what are they?

Logistics companies play an increasingly important role in commerce today. The world is more connected than ever, with countries across continents benefiting from free trade and the easy movement of capital. Free markets present growth opportunities for organizations. Today, due to e-commerce and increased digitalization, businesses all over the world can expand their pool of potential customers and gain access to markets previously not open to them. By incorporating digitalization, automation, and IoT into their fold, today logistics companies can help businesses streamline complex national, regional, and global supply chains.

What functions do logistics companies perform?

Logistics companies are asset-bearing firms. That means that they invest in and own their transport fleets and storage facilities. They are well suited to provide a range of transport and logistics functions within a business’s supply chain. They can source material, manage all warehousing and packaging responsibilities as well as execute the final distribution of the goods—even serving the ‘last-mile delivery’ segment. This leaves businesses with the time and resources to focus on their core competencies, i.e., manufacturing, leaving all the logistics tasks to the organizations that do it best.

You may be wondering how partnering with a logistics company can be beneficial for your organization. We’ve already mentioned that supply chains are of vital importance to enterprises. Disruptions like the global COVID-19 pandemic can affect companies’ procurement processes and distribution of goods. As a single business managing its logistics, you will not be able to weather such disruptions. Conversely, logistics companies have inbuilt systems, methodologies, and processes that help them not only bounce back faster but also institute checks that make them far more resilient. These functions make the logistics processes more efficient, optimized, and cost-effective. When you partner with a transport and logistics company, you benefit from economies of scale, cheaper movement of goods, and added customer satisfaction—things that can help your business profit and grow.

Transport and logistics companies, therefore, can carry out and manage information, transportation, inventory, warehousing, material handling, packaging, disposal, and security for an organization like yours.

Logistics companies: Role of transportation

The role of transportation in logistics processes essentially means moving the products from the beginning of the supply chain (sourcing and procurement) to the end, i.e., to the customer. As the world has become increasingly globalized and connected, transport and logistics play a significant role in any supply chain because products are rarely produced and consumed at the same location. What’s more, the success of any supply chain is closely linked to the mode of transportation used. The idea is to maximize profitability by opting for the most streamlined way to move goods from point A to point B.

While transportation may seem like a straightforward process, it is anything but. It includes complex procedures with multiple subordinate and complementary functions, all of which require robust planning, execution, and management. Additionally, it requires specialized labor workforces that coordinate amongst themselves to operate seamlessly.

Logistics companies: Modes of transport

Some modes of transporting goods include the following:

• Truck transport: One of the most used ways to transport products, logistics companies usually offer truck transport in two ways: Truck Load (TL) – where the full truck contains one business’s consignment, and Less than Truck Load (LTL) – where one truck stocks more than one business’s products.
• Package carriers: Package carrier transport is when a logistics company carries packages ranging from small sizes to shipments weighing about 200-250 kg. These can be done via sea, air, rail, or land transport.
• Railways: Railways are a cheap and convenient way to transport goods. As they are competitively priced, they are an ideal option for large shipments that need to be moved over long distances.
• Waterways: These include transportation by ships and boats and are ideal for bulk products and consignments. (Example, containers, vehicles, heavy machinery).
• Air transport: As it is a costly mode of transport, air transport is ideal for small, time-sensitive packages.
• Intermodal transport: As logistics is a complicated process involving multiple modes of transportation, logistics companies operate all vectors across their network when moving goods from one place to another.

 What role does a freight broker play in the transport of goods?

A freight broker acts as a liaison between businesses that need materials and goods shipped, and carriers that provide transportation. They do not own the goods or the assets that perform the logistics functions, but they are responsible for arranging shipments by optimizing and navigating the different interests and requirements of all the parties involved in the process. They align timings, packaging requirements, and special handling requests between manufacturers and transport carriers.

As freight brokers are typically non-asset-based service providers, they have flexibility in sourcing and utilizing the most efficient mode of transport for your shipping needs. What’s more, freight brokers work with multiple freight carriers, intermediaries, and partners to help businesses source the most reliable options. This relieves you from the taxing work of surveying the market, finding trustworthy, and cost-effective options. Not only does this save you precious time, but it also reduces the cost of transportation as a freight broker can find you the best deal.

What is the difference between a freight broker and a third-party logistics company?

A third-party logistics (3PL) provider is a company that provides an extensive suite of logistics and transportation services. Some of the functions that a 3PL can cover include freight shipment, tracking, distribution, warehousing, order fulfillment, and long-term supply chain management.

Similar to freight brokers, 3PLs can also function as intermediaries between shippers and carriers. However, whereas freight brokers provide an ad hoc service, 3PLs enter into long-term arrangements with a company and work to enhance a business’s supply chain functions for greater profitability and efficiency. When a business works with a 3PL for a longer period, the logistics company can gather more insightful knowledge about how you operate.

This information enables a 3PL to provide more customizable and effective solutions that meet the gaps in the underperforming areas of your organization’s supply chain. On account of the size of 3PL firms, as well as the nature of their work, they have wider networks with carriers and other intermediaries that ensure that their clients are paired with the most consistent and reliable solutions.

While freight brokers also function as intermediaries in the logistics chain, they differ from 3PLs by providing a limited range of services. Conversely, 3PLs work with their clients as partners and not subordinates. They operate by integrating logistics functions across core areas of business.

What are the advantages and disadvantages of hiring a third-party logistics company?

Due to the size and nature of their work, 3PLs have a broad network of carrier options. Depending on the requirements of your business, 3PLs can curate feasible solutions that are not only cost-effective but also streamline your supply chains. They can also help organizations like yours by arranging for storage, warehousing, packaging, and labeling of goods. As their area of expertise spans across all segments of the supply chain, they can provide more control through sharper inventory management during the movement of goods and materials.

The most important advantage of employing a 3PL is the intermediary’s long-term orientation. 3PLs build their brand equity by providing viable and future-focused solutions that help businesses improve efficiencies—meaning, a 3PL has a greater vested interest in the performance of its client’s business compared to a freight broker. As your business benefits from the services of a 3PL, it helps build a logistics company’s brand equity. This symbiotic relationship offers benefits to both parties involved.

However, with these advantages, there are also some disadvantages that businesses should be aware of before entering into an arrangement with an outside logistics and transportation provider. When working with a 3PL, you are likely to hand over some control of your product. This is because you have effectively outsourced its movement to a third-party. As a 3PL runs and manages storage and distribution, the client can’t exercise complete control over some important decisions regarding their product. Another thing to keep in mind about 3PLs is that they aren’t equipped for last-minute shipping. As they operate across established networks and supply chains, they are not very flexible when it comes to quick changes to routine functions.

Fourth-party logistics suppliers: the complete logistics supply chain solution

Fourth-party logistics companies (4PLs) are intermediaries that businesses employ for their logistics and transportation needs. Usually working with big organizations, 4PLs provide complete supply chain solutions from beginning to end. Depending on your requirements, both 3PLs and 4PLs can provide logistics support; however, 4PLs are generally better suited for medium-to-large businesses, while 3PLs are a better fit for smaller organizations. 3PLs focus on daily operations whereas 4PLs integrate across core operations within a business to optimize all logistics functions. They also own their assets like trucks and warehouses and can effectively coordinate the activities of third-party logistics providers. Generally speaking, 4PLs act as a single point of contact for every vendor across a business’s supply chain to provide the highest level of logistics services for greater value.

Conversely, 3PL firms are more focused on one-off transactions. They typically provide warehousing, packing, as well as inventory management of a client’s products and stock. With a third-party logistics company, you have more control of managerial decision-making. Your 3PL provider takes care of all your logistics and transportation needs under your name and brand.

4PL firms, on the other hand, manage the overall supply chain—from managerial decisions regarding operations, all the way to legal paperwork. This means that when a business enters into a contract with a 4PL firm, it signs over complete control of its entire supply chain. Following the formalization of the contract, the 4PL uses its resources and capital to ensure that it meets the supply chain needs of your business. How a 4PL achieves this goal is beyond the purview of the client, who no longer has total control over the operational aspects of their supply chain.

What are the functions of a logistics company?

• Order management: Order management functions refer to the process of receiving, tracking, and fulfilling customers’ orders. This function is typically undertaken in-house by businesses. However, when a company is aiming to grow and expand, the paperwork required to manage inventories stocks becomes too much. They can outsource order management to a logistics company that is equipped to meet their needs.

An effective order management system organizes and streamlines everything to fulfill demand and meet customer expectations of timely goods delivery in great condition. Order management processes, therefore, involve tracking the entire journey of a product and addressing roadblocks as they occur. It also includes order handling whereby units of goods are picked, sorted, tracked, and shipped. Order processing can either be manual, such as handwritten order log sheets, or advanced technological and data-driven procedures that employ software and tracking. As a business scales, manual order processing needs to be replaced by more advance tech-based processes, such as those used by logistics companies.

• Materials handling logistics: The material handling function is tasked to the warehouse department within logistics companies. Warehousing services help businesses sort large volumes of products, which need to be organized and stored before distribution. As warehouses store thousands of units of products, misplaced or damaged goods not only cost money but also cause delays in order processing. Such delays can cause significant setbacks to a business. Trusting a reliable logistics company can reduce the chance of errors by streamlining stock management, inventory, packaging, and distribution procedures.
• Warehousing logistics: Businesses that deal in products that are in high demand need their manufacturing processes to be efficient and timely. When demand is high, manufacturing and order processing should be fast so that the market is not overtaken by your competitors. Warehouses play a vital role in such products. Apart from the warehousing function itself, the distance of the warehouse from the point of consumption also matters. If the distance between the warehouse and the distributor is too much, the order processing can get delayed and deliveries will ultimately be slowed down. Choosing the right warehouse can, therefore, determine your sales volume.
• Inventory control logistics: Inventory management is of utmost importance in logistics. More often than not, inventory management can be the determinant of a company’s profit. Experienced logistics companies can help businesses manage inventories by matching demand for a product and ensuring that the movement of goods is proportionate to timelines. By outsourcing inventory control, a business can scale up or down faster to meet demand. This helps negate wastage or losses for a firm.
• Transportation logistics: Transportation is the physical delivery of goods. It involves the movement of goods from a warehouse to a dealer and from the dealer to the end customer. Logistics companies are most widely used for their transportation functions. Freight shipments via air, sea, and land, form the largest segment of logistics and transportation. The proper transport of goods is essential to a business as a single mistake across the supply chain can adversely affect a company.
• Packaging logistics: Packaging is also an important component of the logistics chain. The correct kind of packaging protects products from damage in transport as well as moves goods safely and efficiently. Inadequate insulation and packing can cause damage to goods, and cost shippers and businesses money.

Key considerations before hiring a logistics company

One important factor to consider when outsourcing logistics is professional expertise. Not all logistics companies are specialists in every component of supply chain management. You should identify your business’s priorities and find a logistics company that best complements the functions and requirements of your organization.

Another thing to keep in mind is cost. Before entering into an arrangement, you must ascertain whether the logistics company’s pricing is transparent. Find out about hidden costs and evaluate whether or not the price being quoted is appropriate for the service offered.

Lastly, you must consider reliability. Companies with decades of experience in the field have brand equity that cannot be matched by newcomers. Especially when considering hiring a 3PL or 4PL, you must find a logistics firm that is reliable. Conduct background checks and carry out market research to get a clear picture of what a company has to offer.

SBT is a premium, market-leading transport, warehouse, and logistics company. For more information on how we can help you streamline your supply chain functions, get in touch with us.

SBT is a premium, market-leading transport, warehousing, and logistics company based in Saudi Arabia. Logistex functions as SBT’s main division—operating as a single point of coordination and providing logistics services across an expansive range of business needs.

With a strong and well-connected network, as well as over three decades of industry experience, Logistex provides import and export services, facilitates business supply chains, and supports logistics processes through non-core functions. The company’s integrated value chain contains components that any business—big or small—can benefit from. SBT’s expertise with e-commerce supply chains allows it to service small and medium enterprises just as well as larger corporations.

As an ISO, OHSAS, and SQAS-certified third-party logistics provider, Logistex is well equipped to deliver professional logistics services and solutions that businesses can trust. Our entire operational network ensures environmental safeguards and complies with international standards for carbon emission control and reporting. We seek to deliver excellence through the global integration of various logistics networks and a KPI-centric internal administrative view.

Working closely with clients to create, manage, and execute customized integrated solutions throughout the supply chain, Logistex is a dedicated provider of express transportation, as well as warehousing and distribution. Our wide range of logistics services includes port services, customs clearance, air freight, sea freight, and more.

The company’s suite of logistics services is discussed in more detail below:

1. Logistics services: Port service

Port services are a key component of an efficient logistics process. They include freight handling, nautical technical assistance, and other services relating to storage, domestic transport linkage, and transit.

Over the last decade, the volume of container throughput handled at Saudi ports has nearly doubled, due in large part to privatization, regulatory changes, and the wider use of high-tech equipment. The multitude of commercial activities that now takes place at ports within the Kingdom, as well as all over the world, requires experienced and professional logistics providers who are familiar with procedures and protocols.

Partnering with Logistex ensures that your business gets the right port services that mitigate disruptions, streamline docking procedures, and speed up permits and clearances.

2. Logistics services: Customs clearances

Customs clearance for goods is an important step in a business’s logistics procedures. It includes the preparation and submission of the relevant documents that are needed for the movement of goods to and from a country. Customs clearance work also involves representing the client during customs examinations, assessment of goods, payment of duties, and clearance of goods before delivery. After authorization by the authorities, the customs process requires the tracking of goods—especially sensitive or precious cargo across international boundaries. Various documentation and forms need to be filed for the transport of goods to be deemed legal. The process can often seem daunting, especially to new-to-market 3PL companies that lack the requisite logistics services and experience.

With years of regional familiarity, Logistex has built a network of contacts across both Saudi and the wider MENA region. Our professional guidance and assistance have helped multiple clients navigate custom clearance processes with ease.

3. Freight management logistics services

Businesses rely on the efficiency of their supply chains to deliver value to customers and to remain competitive in the market. Worrying about logistical inefficiencies should not be a paramount concern for any organization. Instead, time and resources should be invested toward growth and innovation.

This is why freight management logistics services are critically important to businesses. They ensure that the delivery of all kinds of cargo is timely, is routed to the correct destination cost-effectively and that the goods arrive commensurate with client expectations.

Effective freight management logistics services guarantee businesses smooth supply chains. By calculating time, transportation, and costs, Logistex can devise client-customized flow charts that take care of dispatch, procurement, and final delivery to a destination—making the entire process not only worry-free but quicker and more affordable on account of economies of scale. Through its freight management support functions, Logistex helps clients operate on leaner inventories and just-in-time manufacturing methodologies.

4. Logistic services facilitating import and export functions

Nowadays competition within industries is tight. If a company wants to distinguish itself in the market, it needs to not only produce quality products but also remain a financially viable choice at all times in customers’ minds. That’s why businesses are always looking for new ways to function where their supply chains are continuously being optimized.

This is where Logistex can help companies through their import-export functions. Trusting a reliable logistics service provider with transport and route options can help businesses grow significantly. As the number of goods to be carried on a daily, weekly, or monthly basis can greatly affect an organization’s bottom line, Logistex can create effective import-export systems that help ensure a company meets its customer demands, as well as controls inventory levels.

5. Air freight logistics services

When businesses require time-sensitive shipments to be delivered promptly, they opt for air freight. While air freight is one of the more costly methods of shipment, it enables safe and quick cargo transfers. Depending on the nature of goods, Logistex can provide:

• Consolidated air freight logistics services (i.e. multiple shipments on a single flight)
• Back-to-back or direct air freight logistics services (i.e. one shipment per flight)
• Chartered air freight logistics services (i.e. entire freight plane chartered for a single delivery)

By using Logistex, clients can expect two-to-three-day deliveries for goods—including the time required for custom clearance processes. Businesses can also explore air freight options for smaller deliveries where cost is charged on the weight of the shipment instead of volume. Moreover, with air freight logistic services the risk of damage/loss to product is greatly reduced. As Logistex’s air freight deliveries are easily tracked and quick to move, they are ideal for precious cargo, medicines, pharmaceuticals, and time-sensitive goods that need special handling and care.

6. Sea freight logistics services

When the price per shipment is a consideration for a business, it’s a good idea to consider sea freight as your ‘go-to’ choice for logistics. As air freight is an expensive option that comes with more paperwork and stricter border controls, some companies may be deterred by its restrictions. For example, for consolidated air freight, logistical services customers often have to wait until the flight is full, which can cause additional delays on cargo.

Conversely, sea freight is a more cost-effective shipping solution. 90% of consignments in the world are shipped via sea.  Sea freight offers a considerably greater capacity for cargo as well as value, where costs per good are greatly reduced due to economies of scale. Additionally, as sea freight has a significantly smaller carbon footprint relative to air freight, it is a “greener” option for companies conscious of maintaining eco-friendly supply chains.

Within sea freight logistical services, businesses can avail one of four options:

• Full Container Load (FCL) logistics services: Depending on the volume of the goods that need to be shipped, businesses have an option to choose between FCL and Less than Container Load (LCL) logistics services. In FCL shipments, the entire capacity of a container belongs to a single shipper.

Clients can opt for Logistex’s FCL shipments when transporting larger loads. It’s a more cost-effective option when shipping more than 10 standard pallets or the cargo occupies more than 14 cubic meters. FCL logistics services offer more security as a single client has exclusive rights and control over a container. This increased protection ensures that there is no fear of contamination from other shippers’ products.

• Less than Container Load (LCL) logistics services: Conversely, LCL shipments are consolidated shipments, where more than a single shipper uses one container to deliver goods. LCL shipments are a good option for clients when shipments are smaller in number and size—they work particularly well for low-volume shipments of between two- and 13 cubic meters. Shipments with volumes less than two cubic meters may also be shipped with LCL, under certain circumstances. While LCL logistics services are a cheaper freight option, they can cause slight delays on shipments as containers need to be consolidated before they can sail. However, for businesses that are not under a time crunch and have budgetary constraints, LCLs are an ideal shipping option.
• Roll-on/Roll-off (RORO) logistics services: Logistex’s RORO ships are cargo ships designed to carry wheeled cargo, such as cars, trucks, semi-trailer trucks, trailers, and railroad cars, that are driven on and off the ship on their wheels or using a platform vehicle, such as a self-propelled modular transporter. Combined with air freight logistical support, Logistex can customize safe, reliable, cost-effective ways to ship wheeled cargo in and out of Saudi Arabia.
• Bulk shipping logistics services: Bulk shipping is when unpacked and loose shipments are loaded in bulk directly into the shipping vessel. The vessel itself acts as a container for the goods, which are quantified using mass or volume measurements.

The process of bulk shipping includes three steps: unloading, storage, and loading. When a bulk shipment is imported, it arrives at the destination port where it is unloaded from the vessel and transported to special storage facilities at that port. There, arrangements are made for its collection by the receiver or for transport inland.

Logistex provides bulk shipping options for solid bulk goods and liquid bulk goods. Solid bulk goods include grains such as wheat, rice, barley, and oats; minerals like bauxite, copper, and limestone; chemicals such as resins, pellets, plastic granules, and fertilizers; as well as other items like salt and wood. Liquid bulk goods include chemicals such as liquid nitrogen, natural gas, and petroleum; edible products such as cooking oil; and refrigerated goods like milk or fruit juice.

7. Logistics services: Cargo shipments

Logistex also offers general cargo logistics services where shipments are packed as load units as opposed to loose-volume goods. Single goods are transported in packages or containers and the total shipment load is counted in units. General cargo is further divided into three categories:

• Breakbulk: Cargo carried in drums, bags, pallets, or boxes.
• Neo bulk: Cargo where each pre-packaged unit is counted. For example, lumber bundles, paper rolls, steel, and motor vehicles.
• Containerized: The cargo is carried in container load units. For example, door-to-door cargo services for domestic furniture, etc.

 

8. Logistics services: Warehousing solutions

Warehousing is a crucial part of the supply chain. Businesses need proper storage of their goods to avoid inventory fluctuations and distribution delays, and to keep the cost of repairs and replacement low. Good warehousing logistics services are needed to provide safe, secure, and organized storage of goods so that they are easy to track.

As warehousing plays an important role in the customer experience, Logistex is conscious that proper management of goods is fundamental to a business’s success. We employ state-of-the-art digital warehouse management systems (WMS) to store items, as well as track their time of arrival, duration of stay, and quantity. By prioritizing operational excellence to include forecasting and management of labor and goods volume, Logistex ensures the implementation of all safety practices that meet regulatory compliance rules. By planning and managing distribution, we can record and track the movement of goods 24/7 from all inbound and outbound shipments to deliver logistics services that are consistently lower on costs and high on productivity.

9. Logistics services: Freight forwarding

The freight forwarding process involves strategic logistics planning and implementation for the movement of goods on behalf of shippers. A freight forwarder conducts freight rate negotiations, container tracking, customs documentation, and freight consolidation, among other activities.

Logistex’s freight forwarding logistics services include acting as an intermediary between shippers to coordinate delivery of goods to the final destination using the transport modes that work best—i.e. such as sea/ocean freight, rail freight, road transport, and/or air freight.

Using our network of trusted contacts with carriers and partners from air transport specialists, trucking companies and transoceanic shipping lines, we can negotiate the best prices for our clients by optimizing routes, speeds, costs, and reliability.

10. Facility management (FM), operations, and maintenance services

Over the last few decades, facilities management has become integral to logistics services for businesses that want to operate optimally. FM supports core business functions by creating an effective and efficient built environment where all occupants (human and goods) optimize the upstream and downstream movement of supply chains. By integrating and aligning non-core services that are necessary to operations, facilities management supports the completion of organizational objectives. Similarly, regular maintenance services that streamline logistics processes are vital for businesses to function. For example, streamlining loading/ docking bays and packing stations can help a business reduce waste and help its 3PL work more efficiently.

Using a combination of digitalization and automation functions, Logistex provides facility management services that can help organizations cut overhead costs from their supply chains and inventory management processes. We are well equipped to offer upkeep and repair of automated logistics-related processes and parts.

11. Housekeeping

One frequently overlooked aspect of a business’s functions is inventory-related housekeeping. Logistex can offer both WMS advisory and execution for this ongoing process by aligning overlapping core business functions with 3PL support so that everything runs smoothly and promptly.

By providing housekeeping tasks, we can help reduce the maintenance costs that can reduce an organization’s profit margins. Regular monitoring of the dust and debris that affect the functionality of electronic equipment, implementing systemic cleaning, and using protective shielding, Logistex can help increase the life and durability of your business’s equipment.

12. Logistics services advisory

In today’s rapidly evolving economic landscape, companies face lower barriers to entry than ever before. This means competition is a key concern for most firms. To rise above their competitors, businesses need effective supply chain management solutions from experts working in the field.

Logistex offers customized logistics services advisory and solutions. Utilizing our nuanced industry knowledge, our team of consultants can help businesses set up and maintain reliable supply chains that improve customer feedback, reduce operating costs, and improve a firm’s financial position. These advisory services can help managers curate and design a network that meets customer service goals, decreases purchasing and production costs, and gives them a competitive edge in the market.

13. Camp Services

Our logistics services portfolio also includes camp services which can be used for functions like packaging, sealing, stamping and labeling of goods. We help clients design the infrastructure that best suits their needs and budget, creating efficient camp designs that bolster productivity and reduce costs. Included in the process are functions of planning, design, camp management, and close down.

For more information on how Logistex can offer businesses a unique opportunity to optimize their supply chains through a well-integrated system of logistics services, get in touch with us here.

SUMMARY

The Vision 2030 plan is driving huge investments and expansions across all sectors of economy. Logistics infrastructure is being primed for increased private sector participation, where new ports, airports, rail, and road networks are being established to expand reach and service within the Kingdom. Additionally, with new facilities like cargo terminals, custom-bonded zones and industrial clusters being set up to support the increased movement and warehousing of goods, new routes into European and Asian markets are being strengthened.

What’s more, as private and state-led companies continue to drive aggressive digitization processes across licensing, registration, passenger/cargo movement, and import and export financing, the entire sector is looking at boosted operational efficiencies.

This article highlights developments in the Saudi logistics sector so that you are aware of the changes that are turning the Kingdom into a global logistics hub of the future.

INDEX

Infrastructural developments positioning Saudi as a global logistics hub

1. Transportation
2. Warehousing
3. Air and sea-freight logistics

Changing customs rules and regulations

A BRIGHT FUTURE FOR SAUDI LOGISTICS?

Heavy infrastructural investments across the Kingdom in line with Vision 2030 are fast changing Saudi’s global perception. Industry pundits believe the country to be the future gateway into the GCC.

This view is further strengthened after the recently held Future Investment Initiative summit where more than 140 headliners—including dignitaries, sitting presidents of countries and CEOs of global firms—met to talk about Saudi Arabia’s future. Amongst the many topics discussed at the conference, Crown Prince Mohammed Bin Salman’s announcement of accelerating investment into Riyadh, to help it become one of the top ten economic metropolis of the world, has further bolstered global confidence. The decision of 24 multinational companies—including heavyweights like PepsiCo, Schlumberger, Bechtel and Boston Scientific, among others—to establish regional headquarters in the capital further underlines an international buy-in into Saudi’s ambitious future.

What’s more, with government officials reiterating their commitment to cultivating trust with investment institutions to attract foreign funds into the country, there’s no denying that Saudi is on a route to aggressive expansion and progression. This commitment to move past Saudi’s oil credentials is seeing heavy investments to all sectors of the economy. The logistics sector, similarly, is seeing huge public and private capital spending on infrastructure to drive this agenda.

Listed below are areas of development in Saudi logistics that can help your organization charter a road map over the next few years.

Infrastructural developments positioning Saudi as a global logistics hub

All businesses need a smart logistics strategy where they are delivering the right products to the right customers at the right time at the least possible cost. You need a logistics provider that can serve as a single point of contact and is capable of managing all your logistic needs from start to finish. That’s why being aware of the strengths of your transportation, warehousing and shipping provider is imperative to your company’s success.

Saudi Arabia’s strategic geographic location at the intersection of Europe, Asia, and Africa opens up a host of logistics routes for businesses. You need to be aware of the logistics infrastructure within the country and its strengths so that you can plan the support you need for your enterprise.

Below we break down the sector by specialty and function.

1. Transportation

The Saudi government has increased its budget for infrastructure and transportation significantly since 2017. It’s grown at a compounded annual growth rate (CAGR) of 12.5% through 2020. Despite the COVID-19 pandemic, infrastructure and transportation spending still outpaced pre-2019 levels. Take for example, in Q3 2020, SAR38.4 billion (USD 10.2 billion) was spent on infrastructure and transportation projects. It included the development of a new motorway under construction between Saudi Arabia and Oman to deliver lower lead times and trading costs. Even the railway sector is upgrading infrastructure through the expansion of five railway lines to facilitate the easier movement of goods and people. These projects include:

• A freight line between Dammam and Riyadh, via Abqaiq, Hofuf, Haradh and Al Kharj
• A passenger rail line linking Dammam with Riyadh, via Abqaiq and Hofuf
• The Dammam Port line which connects Hofuf with the Port of Dammam
• A new railway service between Riyadh and the Qassim
• A line to service Makkah and Medina from Jeddah

Similarly, the Saudi Land Bridge is slated to transform the local logistics sector, offering multimodal transport options between the two biggest ports on the west and east coast for the first time. It will be possible for mainliners to call in Jeddah, or King Abdullah Port just up the coast, and discharge cargo bound for Damman, Riyadh or any other city, without that cargo needing to transship through Jebel Ali in the UAE. Most importantly, the port masterplan takes into consideration a direct link to the Saudi Land-bridge Railway connecting the major cities of Saudi Arabia.

For businesses looking for expansive reach within the Kingdom, they need a logistics provider with not only an active transportation network but also warehousing and distribution services across multiple locations in the country. You want to ensure that your provider has requisite networks especially out of Riyadh, Jeddah and Dammam.

Their services suite should also include provisions for:

• Bulk transportation
• Full-truck load (FTL)
• Partial-truck load (LTL)
• Cross docking and distribution
• Container terminal operations
• Express transport
• Liquid and solid chemical transportation
• Door-to-door delivery
• Lowbed trucking
• Flatbed trucking
• ISO tanks

2. Warehousing

Under Vision 2030, the transportation, storage, and communications sector has increased significantly from SAR129 billion (USD 34 billion) in 2013 to SAR164 billion (USD 44 billion) by 2019—increasing its GDP contribution from 5.5% to 6.2%.

Detailed below is the dry logistics market by segments:

Dry freight forwarding: In 2019, road logistics was the most prominent mode of freight in Saudi Arabia for dry logistics, followed by air, sea and rail. The country launched a new logistics zone open to private investors in the Red Sea port city of Jeddah in end 2019 to add to existing capabilities. The port currently serves as a major corridor to Asian and European markets where professional freight forwarding companies provide a range of niche services for clients. This includes logistics support across F&B, white goods, textile, furniture, machinery, engineering and industrial products.

Dry warehousing: The warehousing industry ecosystem is currently dominated by domestic companies, followed by international organizations. More players are slated to join the market. Construction materials and industrial-end users form the bulk of the clientele, followed by retail, healthcare, F&B, automotive and others.

While dry warehousing logistics suffered as projects within the Kingdom were put on hold, as of third quarter 2020, there was a bounce-back. Imports remained high and the value of non-oil exports returned to pre-COVID levels. In fact, by October 2020 the number of containers (TEUs) handled at Jeddah Islamic Port (JIP) had increased 5.5% from 3.7 million to 3.9 million. This was largely because of optimization of systems at port warehouses that allowed for a quick and efficient return to work as soon as markets opened.

Logistics value-added services:

The cities of Jeddah and Riyadh are the most populous cities in the Kingdom, with established industrially developed areas. Both cities drive the highest demand for built-to-suit automated warehouses and therefore, top the dry goods storage segment. In 2019, Jeddah dominated in terms of dry logistics revenue and in the value-added services segment that includes packaging, labelling, inventory management, cross docking, and door-to-door delivery.

While there’s no denying that the industry is largely fragmented with few players offering complete end-to-end logistics solutions, there are some 3PLs with the ability to provide nationwide services. They own their own trained workforce, as well as maintain direct asset ownership and IT support. They also have the structural and legislative trade experience to get past institutional restrictions.

If you are looking for 3PL support, you need to partner with a provider who has the requisite warehousing experience and facilities. They need to provide a suite of storage spaces, warehousing and distribution options across the major cities of the Kingdom—especially the metropolis cities of Riyadh, Jeddah, and Dammam. Additionally, all warehouses need to be temperature-controlled, dry, and dust-free zones that meet the specific requirements of a variety of goods. For pharma-related or livestock cold storage options, your 3PL should be able to deliver spiral cooling technologies that are capable of maintaining a consistent temperature across warehouses and transportation networks. Beyond cooling capabilities, certifications of storage compliance and security measures are also necessary. A provider who can process and appropriately store loose or palletized goods on shelves, racks, or in bulk in affordable multi-user facilities is an extra bonus.

The following services should also be included in a 3PLs value-added options:

• Cross-docking
• Inventory management
• Palletization
• Shrink-wrapping
• Segregation
• Inspection
• Order processing
• Empty pallet provision
• Labelling

3. Freight logistics

As of 2019, Saudi Arabia had the biggest port network in the Middle East. It comprised of nine ports, with the government undertaking a multitude of large investments to further expand facilities. What’s more, new projects under the Saudi Rail-Road Expansion commission are supporting port infrastructure to further help improve supply chains along port to inland routes.

Sea logistics:

The Saudi ports network consists of nine total ports, of which six are commercial and three function as industrial ports—together handling more than 90% of Saudi Arabia’s trade.

The Saudi Ports Authority (Mawani) is the primary government entity overseeing port operations in the Kingdom. Throughput at Saudi ports has grown at a CAGR of 3.6% since 2013, reaching 289 million tons of cargo during 2019. The sector is witnessing substantial investments in infrastructure and capacity-building, including SAR1.6 billion (USD 427 million) in ongoing seaport construction projects. These projects include new cargo terminals, re-export zones, and a variety of public-private partnerships aimed at improving the efficiency of the Saudi port system. Mawani has also launched four new shipping lanes in 2020 to enhance direct import-export operations that broaden Saudi Arabia’s regional trade capacities. These new shipping lanes include:

• Direct shipping lane to East Africa through King Fahd Port in Yanbu and Jeddah Islamic Port.
• Shipping lane connecting Jordan’s Port of Aqaba and Egypt’s Port of Sokhna with Jeddah Islamic Port.
• Direct shipping lane to East Asia through Jubail Commercial Port, serving industrial companies in Jubail and Ras Al-Khair.
• Direct shipping line connecting UAE’s Jebel Ali Port and Egypt’s Port of Sokhna with Jeddah Islamic Port.

Of these, the Jeddah Islamic Port is the busiest commercial port in Saudi Arabia, handling more than SAR110 billion (USD 29.4 billion) of non-oil cargo during 2020. The King Fahd Industrial Ports, comprising Jubail Industrial and Yanbu Industrial Port, are the top industrial ports by total throughput. Jeddah Islamic Port handles about 60% of Saudi Arabia’s sea imports and serves as a strategic hub connecting global East-West cargo trade. Jubail and Yanbu Industrial Ports primarily handle liquid cargo such as crude oil, liquid gas, and petrochemicals.

Seaport developments:

In late 2019, Saudi Arabia announced the launch of the Al Khomra Logistics Zone just south of Jeddah Islamic Port. It will offer a customs bonded zone, re-export zones, and one million square meters to investors for leasing. Companies with a presence at the Al Khomra Logistics Zone will be able to provide primary and secondary manufacturing facilities, storage, and cooling facilities to clients.

Similarly, an estimated USD 750m is being spent on the King Abdulaziz Port in Dammam and over USD 70m is being spent on the Red Sea Gateway Terminal in Jeddah to raise logistics infrastructure.

A new King Abdullah Port—with boosted container-handling capabilities—is being built in Rabigh. It ranks as Saudi’s third largest import destination and one of the fastest growing ports in the world. During the COVID-19 pandemic, high-efficiency services and refrigerated storage facilities at the port made it a top receiver of pharmaceutical and medical supplies.

Additionally, the fact that in end 2020, leading international maritime shipping companies (Maersk and MSC Americas) chose King Abdullah Port as a logistics station on the Red Sea for two new shipping lanes comes as further endorsement of the port’s capabilities. Similarly, the addition of two berths at King Abdulaziz Port Dammam, one additional berth for container goods at Duba Port, and the first privately built and operated container terminal at Jeddah Islamic Port, Red Sea Gateway Terminal is enabling an increase in transshipments and re-exports.

Going forward, companies that can provide end-to-end logistics services to clients are slated to grow in handling capacities. They can act as a single interface between the customer and logistics provider to offer full transparency and visibility across freight forwarding, port and cargo services. By providing a “one party, one rate, and one liability” approach they take care of all end-to-end logistics—even ensuring that there is no dispute over invoicing.  They are well placed to deliver smoother coordination between service providers, as well as reduce time delays and added expenditures.

Changing customs rules and regulations

Saudi’s logistics sector has long had a reputation for slower clearances and delayed processes. However, under the Vision 2030 program, the entire ecosystem is changing.

Listed below are recent amendments to customs rules and regulations that are making logistics functions within the country faster.

24-hour clearance program: The 24-hour clearance program was launched in late 2017 and has improved customs procedures, mechanisms, and their overall flexibility. By reducing the number of documents required for importing and exporting goods, more than 80% of all imported goods are now clearing customs within 24 hours. This is a huge improvement on the 7-to-14 days that was common practice previously. Similarly, average truck-stopover time has dropped down from 3 hours to 25 minutes and dwell time at ports has reduced from 14 days to 4 days.

Exemption from Arabic translations on manifests: Moreover, Saudi Customs now accepts manifests written in English without requiring their translation into Arabic and their subsequent authentication. What’s more, customs officials have also cancelled the penalties that were previously imposed on changing or updating these documents.

E-filing of documents: E-filing of documents has also significantly reduced the average time for customs clearances. Now vessels can file documents even before docking, helping move goods faster at ports.

Freeing of ship agency services: Similarly, the freeing of ship agency services from the previous restriction of being run by a hundred percent Saudi-owned company or by a Saudi national is one of many moves under Vision 2030 that is helping foreign businesses find a more confident footing in the country. While fuel supplying and customs clearance services are still exclusively Saudi owned enterprises, the announcement is going a long way to encourage foreign investors and raise standards in line with international practices.

Reduced handling fees: The ports sector is also benefitting from cost reductions across logistics. This includes lowered container handling fees, slashed original tariff rates for empty containers, and an overall decrease in the total cost for exporters by 53%.

As work on Vision 2030’s giga projects resumes with full gusto, in addition to the heavy movement of goods into the country, Saudi is also experiencing an influx of new businesses looking to establish direct regional headquarters in the Kingdom.

For new businesses coming into Saudi as well as those looking to streamline supply chains, you need to outsource logistics services if you hope to grow. A smart 3PL or 4PL can help you manage your import-export functions by providing optimized freight solutions and utilizing IT to ensure smooth data flow. What’s more, they are familiar with customs practices, and have international and nation-wide networks and infrastructure to deliver efficiencies.

To find out how SBT can help you set up smarter supply chains across the Kingdom, get in touch with us.

Since the implementation of restrictions from last year’s outbreak, the digital commerce sector within the GCC has grown exponentially, with many more people, previously isolating or in lockdown, continuing to turn to digital platforms to purchase products and services.

Increases in online sales in the final two quarters of last year saw many logistics companies in Saudi Arabia adapt in response to the surge in demand. The steep increase in sales saw logistics firms rapidly streamline their operations whilst continuing to assist suppliers by offering additional support and services.

As a result of the unprecedented growth, considerable investments have been made into the fledgling sector with investors aiming to develop the Saudi market and support local talent. As the market evolves, the sector continues to improve, achieving greater supply chain efficiency and further developing its digital payment capacity.

Under the issuance of the Saudi Arabian Monetary Authority (SAMA), initiatives like Fintech Saudi have supported the e-commerce sector in the Kingdom. The support has changed the way companies and individuals use and move money and has seen the number of Fintech firms offering services in the country jump from 19 in 2019, to around 60 as of early 2021.

Director of Fintech Saudi, Nejoud Al Mulaik, considers 2019 / 2020 to have been a pivotal period for e-commerce in Saudi Arabia. He says, “Despite the challenges of COVID-19, we have seen progression in regulations, infrastructure and an increasing number of investment rounds in fintech companies, which have built a solid foundation to support the emergence of a growing fintech industry in Saudi Arabia that will contribute in a meaningful way to Saudi Arabia’s Vision 2030”.

The Kingdoms digital commerce revenue, across all products, is on track to reach $9.41 billion by next year, growing from just over $6 billion in 2017. The KSA market offers significant growth potential to online retailers, with user penetration of the digital marketplace expected to reach 92.5% within the next 5 years. Electronic goods are the most commonly sought-after products online in Saudi, with online fashion retailers seeing marked increases in sales. Although user penetration is not as considerable as that of some of its neighbors, pandemic restrictions have inadvertently encouraged a change in the shopping habits of many in the Kingdom.

Despite the concept of e-groceries being largely at odds with mainstream Saudi tradition, sales online have more than doubled during the crisis. Coupling this with the Kingdom’s commitment to spurring growth, retailers have been quick to spot the ripening market and have acted accordingly, investing in developing digital sales channels and ramping up functioning capacity.

SUMMARY

Under the Vision 2030 plan, many sectors of the industry within the Kingdom are seeing huge investments and expansions. Like other areas, the logistics segment is being primed for increased private sector participation through the development of ports, airports, rail, and road infrastructures. New facilities like cargo terminals, custom-bonded zones, and industrial clusters are being established to support increased movement and warehousing of goods. These new infrastructural developments are further facilitated by enhanced airport and seaport capabilities. Additionally, with private and state-led companies driving aggressive digitization processes across licensing, registration, passenger/cargo movement, import and export financing, as well as incorporating the internet of things (IoT), the entire sector is looking at boosted operational efficiencies.

The fact is that Saudi Arabia is poised to become the dominant logistics giant in the region. Businesses that are looking to expand reach and service, enter new territories or even consolidate existing shipping routes so that they are more resilient to disruptions like the COVID-19 pandemic, need to consider how the right kind of logistics functions can help them grow.

This article highlights new logistics infrastructural developments in Saudi that can be beneficial to your organization.

INDEX

1. Simplify your supply chains
2. Optimize warehousing
3. Prioritize packaging

HOW THE RIGHT LOGISTICS CAN OPEN UP NEW BUSINESS AVENUES

Digital access has globalized commerce, meaning that even the smallest of organizations can now have an international outlook. This means that businesses in any part of the world can source materials from anywhere as well as offer services and products to anyone. Today, any organization can set up any kind of supply chain—all they need is the right kind of logistics support.

Within the Kingdom, the logistics sector is on a path toward exponential growth. With huge infrastructural investments underway across many parts of Saudi, small-to-medium enterprises, as well as larger organizations, are now better placed to compete on the world stage.

So, how do they do this?

Get your logistics right

All businesses need a smart logistics strategy where they deliver the right products to the right customers at the right time at the least possible cost. The fact of the matter is that shipping and logistics can be the difference between a small business thriving and failing. But with so many different facets to take into consideration, it can be a challenging prospect. Here are some ways to do it:

1. Simplify your supply chains

One lesson the year 2020 has taught all businesses is that they are only as strong as their supply chains. But even in normal business cycles, no matter what size or in which sector, the setup and management of your supply chains is fundamental to achieving smooth business logistics—more particularly when shipping overseas.

Why it’s important? Saudi Arabia’s strategic geographical position places it in close proximity to multiple global markets. Most European consumers are less than a seven-hour flight away, while Asian markets are generally just a four-hour plane journey from the Kingdom. Regional markets consisting of more than 3.5 billion potential customers over three continents are within a five-hour flying distance. Saudi’s central location also provides it with a cost advantage in the Arabian Peninsula, North Africa, and East Africa. Businesses in the Kingdom, therefore, are perfectly placed to tap into many potential markets.

However, even with such close proximity, the pandemic has irrevocably shown that all supply chains can be halted, putting not only organizations but entire economies at risk. It makes sense to note that during the first nine months of 2020, the government invested over USD 10 billion on infrastructure and transportation projects to facilitate the easy movement of goods. They also built infrastructural, warehousing, and storage capacities at ports and logistics hubs so that there were no lapses in supply chains. These moves are not only to build Saudi as the regional logistics hub in the coming years but also work as insurance to mitigate future disruptions so that the Kingdom stands more resilient to changes.

How to do this? All businesses need to start by analyzing a clear supply chain process where they break down each stage of the operation from order confirmation through to product picking, packaging, and shipping. The nuances of each stage need to be worked out across a realistic timeline that streamlines processes, without compromising on safety or efficiency. It’s also prudent to invest in supply chain management software that unifies the entire process and allows you to manage everything in real-time and with real data. This gives you greater transparency from an administrative perspective. Additionally, on-ground data provides valuable information for further optimization of supply chains.

Using the right logistical support:

In cases where supply chain management forms a large part of internal operations, in-house logistics and warehousing may offer greater control and transparency. However, the same does not hold true for smaller enterprises—especially if they are looking to lowering costs, benefit from economies of scale, or expand into newer territories.

Organizations like these need to make room for collaboration, using multiple logistics processes that are bifurcated based on geography. And while they still need to ensure that they’re meeting deadlines and turning in quality products, they need to lean on external functions and support to eliminate silos along the supply chain.

One way to do this efficiently is to outsource logistics functions so that you boost holistic supply chain management. Third or fourth-party logistics providers (3PLs/4PLs) are better placed to work with all stakeholders to develop a roadmap for consistent, continuous, and collaborative movement along the supply chain. What’s more, because logistics companies are constantly upgrading manual systems to automated ones, they can automate logistics processes (including tracking and monitoring) to keep more ‘eyes’ on each delivery.

These systems take the guesswork out of planning your supply chain as they report raw data without bias to ensure that your business is better informed. By using information from 3PL and 4PL fleet and inventory management software you have more visibility of the cost of logistics per article. This allows you to further refine your processes around the factors that impact your bottom line the most.

Areas of growth within the Kingdom:

Saudi Arabia is already a hotbed of development and activity on account of the industrial and construction growth ongoing in the Kingdom. Existing supply chains are expanding to handle the larger movement of goods.

Ninety kilometers from Jeddah, the King Abdullah Port is a full-service commercial port that enjoys strategic access to the Red Sea, as well as countless markets and destinations in Asia, Africa, and Europe. In fact, an estimated 26% of global trade passes through the Red Sea. As the eighth fastest-growing seaport in the world as of 2017, the King Abdullah Port has undergone further infrastructural improvements.

Facilities at the port include multipurpose terminals for containers, roll-on/roll-off and breakbulk, and general cargo. Logistics services also include a Logistics Park within the port premises of more than 750,000 square meters and a bonded zone adjacent to the port of more than 3.3 million square meters. This opens up a host of warehousing possibilities on port before shipping. Even more importantly, the port master plan takes into consideration a direct link to the Saudi Land-bridge Railway, connecting the major cities of Saudi Arabia.

For businesses looking to expand, the port and its supporting channels allow for increased integration of supply chains comparable to hubs like Khorfakkan and Jebel Ali. Similarly, the Saudi, UAE and Omani governments investing around USD 350 billion in rail and port infrastructure over the next four years shows a commitment towards opening more regional routes for logistics collaboration.

If you are a business that is keen to expand into these areas, you need to work with established logistics providers—organizations that can take full advantage of these pathways and facilities.

2. Optimize warehousing

Warehousing is an important part of a business’s logistics management system. It provides storage for finished goods and includes the packing and shipping of orders. Efficient warehousing not only provides economic benefits to a business but also optimizes processing and logistics.

Why it’s important? The fact of the matter is that shipping has become the number-one cost in fulfillment and requires constant review and changes to keep finances in line. It goes without saying, therefore, that as the backbone of any supply chain, optimizing your warehouse goes hand-in-hand with mastering supply chain logistics.

Smart warehousing isn’t just about making operations faster, but rather, it requires continual analysis of day-to-day operations like stocking, labor movement, packaging, and labeling to ensure that everything is working as efficiently and safely as possible.

For most multichannel businesses, inventory is the most important balance sheet asset. Therefore, the function of slotting and location control is essential in helping you track products within the warehouse’s four walls, as well as meet your client-fulfillment needs. But not all businesses and organizations can maintain private warehouses—there are increasing rent prices, fluctuating demand-and-supply cycles, labor costs, and pricing and packaging, amongst other considerations.

How to do this? More than half of the warehousing function is controlling inbound and outbound freight. If this is not done right chances are that you’re constantly suffering from poor management of inventory and eroding a line off of your profit margin. What’s more, as more than 50% of your warehouse labor function is to pick and pack, you need to weigh productivity against cost. It’s a smart idea to consider product flow and order flow, where a rule of thumb you can always test against is fewer steps = fewer touches = lower costs.

The fact is that SMEs operate differently from larger organizations, but all organizations want operational improvements that reduce costs. To do this, you need smarter warehousing and inventory management. You need to ensure that:

• Your storage systems are appropriate for the stock being stored and picked.
• You aren’t being forced to double handle or search for items.
• You aren’t spending too much time on tasks like walking and looking rather than picking and packing.
• You have the right labor and management support.
• You have the right warehouse management systems and digital processes in place that are monitoring fulfillment and every step of the supply chain.

The truth is that to get the above-mentioned things done correctly, you need to make huge investments in time, money, and training—things that are not easily available to growing organizations. That is why a lot of businesses lean on 3PLs for warehousing support so that they can professionally meet their businesses’ critical KPIs.

Using the right logistical support: While a lot of enterprises may prefer to keep warehousing internal, as function and geographical reach grow, it makes sense to outsource. Leaning on external capabilities to make use of gathered data to identify order trends (for example, identifying top sellers, items frequently ordered together or seasonal trends), can help a business like yours benefit from professional vendor experience in smarter warehouse layouts, or in executing fulfillment quicker and at lowered costs.

3PL providers can make faster changes to supply chains—including scheduling inbound purchase orders to manage the receiving dock/yard better. Similarly, they can handle compliance policies (including purchasing terms and conditions), on-time delivery, quality, item specifications, routing and importing guides, and product packaging and labeling faster and more efficiently so that there are no mistakes. With the right support, you meet client fulfillment better, which in turn, helps your business grow.

Areas of growth within the Kingdom:

The warehousing market in the Kingdom is expected to further grow at a 9% CAGR to reach a market size of SAR 15.75 billion by the end of 2020. Growth in this segment is expected as a result of increased manufacturing activity, growing international trade, rising domestic consumption, and the easing of government regulations. Partnering with a professional vendor puts you in a better position to avail this new infrastructure.

• Cold Chain Warehousing: Post the 2020 Covid-19 pandemic, the cold chain market in the Kingdom particularly is being driven by rising demand for dairy, meat, and pharmaceuticals on account of not only the growing number of modern grocery retail stores in the country but also concerns about food availability and supplies.

It pays to keep in mind that Saudi Arabia is one of the largest consumers of meat and seafood in the world and the largest consumer of red meat in the GCC region. It also produces a considerable amount of meat along with importing a majority of it. Cold chain warehousing, therefore, is very important for businesses that require complete end-to-end cold 3PL logistics and supply chain management. You need to ensure that you are outsourcing to vendors who have the right HACCP-certified cold and chiller storage facilities, as well as transport trucks that are reliable and meet all safety and hygiene standards.

Currently, Riyadh accounts for the highest number of cold storage warehouses. The city acts as a hub from which products are transported to other regions of the country. Jeddah has the second-highest share, followed by Dammam. A few cold chain warehouses also operate in Mecca and Medina due to the large number of pilgrims visiting the cities during Hajj. For companies looking for cold chain warehousing solutions, they need to ensure that they are partnering with the right kind of support.

3. Prioritize packaging

While most businesses may not consider packaging an important aspect of logistics, the right kind of packing can make a big difference in how you meet your fulfillment orders.

Why it’s important? Low-quality materials or insufficient packaging can result in goods being damaged or broken in transit. Certainly, if you’re venturing into overseas shipping, the choice of packaging needs to be robust to withstand longer and often more turbulent transit to guarantee shipments arrive intact.

How to do this? Source a reliable packaging supplier and opt for hardwearing and durable solutions. While the initial outlay may be more, the expense of returned goods and bad customer feedback could be costlier to your business. What’s more, if you go with a professional vendor, you can benefit from bulk buying at wholesale prices.

Using the right logistical support: For most businesses, the area of expertise is their product, not how to get it from one place to another. Most businesses outsource some function of packaging to an outside vendor. The idea is to ensure that as a business you aren’t being wasteful and that it is not affecting your productivity or your costs. Outsourcing to a 3PL vendor means they will take time to find the optimum packaging solution that will provide suitable protection and security for products, as well as minimize waste.

Areas of growth within the Kingdom: With a growing urban, educated, and aware population, Saudis are demanding more from their products in every way. This also includes increased conscientiousness about the environment. With a Vision 2030 mandate to lower the Kingdom’s carbon footprint, the benefit of partnering with a professional logistics vendor means that they know how to get the job done in a way that is ‘greener’ and friendlier for the planet.

To find out how the right logistics can help open up new avenues for growth in Saudi and abroad, get in touch with us here.

Saudi Arabia’s businesses resume hiring as economy records gains.

 

2020 proved to be anything but business as usual. It was a year that saw unprecedented challenges as GCC states adapted to the fallout of the global pandemic. Within the Kingdom, the results of decisive measures taken early on in the crisis are starting to show. Green shoots of recovery are beginning to emerge, with confidence in Saudi Arabian businesses rising to levels not seen since January 2020.

 

With improvements in output and orders, businesses can take some comfort in the turnaround. After a difficult year brought about by the spread of COVID-19, employment figures have also made a welcome return to growth, reassuring policy-makers that the economy is heading in the right direction.

 

PMI Reading.

 

Bolstered by output and new business growth, Saudi Arabia’s PMI Purchasing Managers’ Index saw a consistent monthly rise throughout the last quarter of 2020. With anything in the index over 50 points signifying a positive trend, the index has registered above the 50.0 no-change mark for three months in a row, highlighting a sustained economic recovery and a strong end to the year for the non-oil private sector.

 

Continued public spending coupled with an improving health situation could nudge growth higher, with index points expected to climb in 2021.

 

Getting back to work.

 

Encouraged by the easing of lockdown measures, in addition to the arrival of the vaccine, some businesses have spoken of concerted efforts to raise inventories and increase private sector investment in anticipation of a quickened uptick in 2021.

 

Government-led stimulus and relief efforts have seen encouraging results, notably with a rise in employment and acute demand growth. Recent Labour Reform initiatives strive to further develop local job markets and create a pool of highly skilled talent.

 

At the virtual G20 Summit, King Salman bin Abdulaziz Al Saud sought to stress the importance of job protection and support for labor markets throughout the COVID-19 crisis and beyond. Hosted from Riyadh, participating leaders and invited guests were presented with the theme of Realizing Opportunities of the 21st Century for All.

 

Building on Vision 2030’s blueprint to launch new growth sectors, Saudi Arabia is expected to see increased global investment across a significantly broader economic base. The next generation of Saudi youth will be offered the opportunities and equipped with the skills to help them realize their individual potential.

 

Businesses around the world will be hoping that 2021 will see a year of beneficial transformation and rapid recovery. Engineering a significant rebound will require much more than a vaccine. However, the bold steps taken by policymakers within the Kingdom are sure to set the Saudi economy on the right path and in good shape for achieving its 2030 Vision.

 

SUMMARY

Running an SME is not easy. You constantly need to balance customer demand for stability and agility against material sourcing and vendor reliability.

On its own the job is tough enough but coupled with the global disruptions brought about by the COVID-19 pandemic, it’s become even more difficult for businesses to operate.

It’s a good idea for organizations like yours to reevaluate priorities for the coming year. Whether you are considering expanding your enterprise versus directing your efforts towards consolidation, or evaluating what services can be easily insourced versus where you need more external third-party support, you need to view your business’s pain points for a holistic picture.

This article will help you evaluate where your organization stands at the end of 2020 so that you can draw an informed business plan for next year.

INDEX

• Constructing a business plan for 2021
• Your business pain points and solutions
• A change of focus

IS 2021 A GOOD TIME TO SCALE YOUR BUSINESS?

Even before the COVID-19 pandemic threw economies for a loop, the logistics sector was gearing up for a year of transformation to meet the ever-increasing demands placed on them by businesses who sought 3PL and 4PL support. But 2020 changed the script altogether. The year saw many businesses fold and from those that survived, many moved online. Even with the disruptions brought about by the pandemic, customer requirements for shorter package delivery timeframes remained high. To survive, many companies had to rethink operating models.

Heading into 2021, manufacturer and retailer businesses consolidating or scaling, need better, faster, and cheaper ways to meet their supply chain requirements. You need additional agility and transparency that can help you increase or reduced production to meet demand as needed. Without the right kind of support, you will not be able to adapt fast enough, while leaving room for constant re-evaluation and revision of the status quo.

It pays, therefore, to have a strategy on how to move forward.

It’s alarming to find out that even when the world is operating under ‘business as usual’, 50% of companies function without a business plan. As businesses and economies reel from the second wave of the pandemic, it’s more important than ever before that organizations like yours set targets for themselves, in order to weather the storm over the next few years before they plan a return to profitability.

Constructing a business plan for 2021

Lockdowns and social distancing measures have changed the way consumers shop, forcing businesses to upgrade digital infrastructures. Within the Kingdom, a rise in urban population, education, and incomes is bringing about a shift in consumer behavior. In fact, according to a 2020 Mastercard study, nearly 77% of Saudi consumers have shopped online during the pandemic. With the government still significantly investing from the top down over the next decade, businesses wanting to tap into the country’s young growing population need to start meeting fulfillment requirements in a smarter way if they want to remain profitable.

It makes sense, therefore, for companies like yours to be aware of consumer trends, so that you can strategically plan your 2021 business goals:

• Delivery services: Delivery services have become the new normal through 2020 and are expected to stay for the foreseeable future. While brick-and-mortar stores continue to register low footfall, businesses that hope to continue operating have to consider smart logistics partnerships—especially with last-mile delivery providers, so that they can leverage their physical stores to fulfill locally placed online orders. Businesses that can provide customers with easier, faster, and reliable delivery options will come out stronger in 2021.
• Consider alternative business models: Brands are pivoting away from the traditional concept of aisles and fully stocked shelves. For the next couple of years, physical stores can’t be considered the final destination in the purchase journey. As organizations upgrade to digital retail models, they also need to consider payment methodologies that provide customers with value-over-time, subscription-based purchasing options.
• Reevaluate the role of fulfillment hubs: As leased storefronts underperform due to a lack of visitors, SMEs are expecting a change in how consumers interact with traditional stores. Businesses will need to reinvent themselves for more experiential interactions, and failing that, will have to lean in aggressively on logistics support that can fulfill customer orders. Retailers, especially, need to actively look towards storage and fulfillment hubs that can store, stock, and meet order requirements.

Your business’s pain points and solutions

No business can come up with goals for itself without identifying its pain points and weaknesses. Whether you are looking to consolidate or grow, you need to consider the ramifications of the COVID-19 pandemic to your business. Even with a vaccine on the horizon, the disruptions from this year are expected to be felt across industries for a while. It pays, therefore, to plan for contingencies. Below are some suggestions:

1. Issues with supply chains: It’s no secret that when it comes to supply chain management and access to material suppliers, small businesses are not placed in a position of power. Small businesses stand to get negatively impacted by the competition when bigger players, who exert more influence through larger orders and bulk rates, are also sourcing from the same places. Similarly, smaller enterprises are faced with repeat problems when they are selling their products or services on credit terms. With additional supply chain disruptions and delays arising from the COVID-19 pandemic, it is very hard for small enterprises to maintain undisturbed supply chains. Without guaranteed material sourcing it will be impossible for your business to run regularly.

Solution: Supply chain resilience

Logistics companies are well placed to diversify supply chain routes for clients. This is a crucial support for business continuity. As a small business, you may currently be reliant on single sourcing routes as it secures you quick materials or meets your cost targets. However, one thing the pandemic has taught business owners is that they need to shift towards building more varied supply chains through geographic diversification and stricter vetting of suppliers and vendors—especially now as countries are reopening economies.

Third-party logistics support can exert more pressure on suppliers. They are also well placed to provide 24/7 monitoring of supply chains, purchasing insurance to cover profits lost from a disruptive event at a critical supplier’s site, and asking sole-source suppliers to build and store parts at alternate sites. With their multiple-sourcing processes in place, they can shift faster to alternative solutions and are better placed to support your business through future disruptions like the 2020 pandemic.

2. Customer retention:

For any business to stay alive and profit they need customers and repeat orders. However, for most businesses, the level of demand fluctuates. Predicting how much is needed in normal circumstances is hard enough, but the current crisis, in particular, has made it extra hard for businesses to gauge when markets will open to drive increased demand. Yet at the same time, no business wants to refuse customers—especially now when client retention is a huge struggle. So, when an order is made, you want to ensure you deliver—but ‘how’, remains a challenge.

Solution: Increased collaboration and connectivity

One fact remains true across any organization: happy customers give repeat business. At a time when you are balancing costs, cutting out inhouse logistics functions can come as a huge saving. But you want to do this while ensuring that you continue to deliver on quality for clients. The best way to maintain optimal service is by focusing on the jobs you are good at and outsourcing logistics support to the professionals who do it as a business.

If you are dealing with limited space and aging infrastructure, you may not have enough space to house large inventories and an increasing number of packages. Partnering with freight carriers who offer warehousing facilities can greatly help you scale production up or down to meet demand. What’s more, warehouse employees are trained to review inventories for stricter supply chain management. This can help 52% of smaller businesses who state that poor quality employees are one of their biggest challenges.

Additionally, logistics companies connect with other providers to achieve shared success. Partnering with a third-party logistics company can give businesses increased connectivity with transportation and distribution assets to quickly pivot to respond to current needs. They can also deliver more efficiently to keep clients satisfied and returning to your business for more purchases.

3. Updating customers through the delivery process:

Automation and digital processes are adding transparency to supply chains. But not all businesses are financially secure to make a sizable investment towards upgrading functions. When it comes to product deliveries, clients expect a real-time response where they are interacting with the vendor about the status of their order. This update becomes even more critical in times of crisis. Businesses that cannot provide this level of visibility and trackability across their processes will not be able to compete.

Solution: Mobile-first strategy

A recent study states that around 66% of millennials expect a real-time response and are looking for the opportunity to interact with vendors about the status of their orders. With almost 70% of the Kingdom’s population under 30 years of age and 28.8 million cell phones as of 2019, it makes sense for businesses to allow trackability on the status of purchases right in their customers’ hands. Moreover, with more people in 2020 purchasing online due to safety concerns related to COVID-19, same-day deliveries and last-minute delivery have become the baseline for client expectations. On the downside, these are also the most inefficient processes in the supply chain. To be able to manage time-sensitive demands efficiently, you need to be using mobile tools to make faster fulfillment possible. Partnering with logistics providers who already have the necessary infrastructure in place can help you keep pace with client needs by tapping into your 3PLs resources.

4. Lack of storage facilities:

On account of the pandemic, businesses are witnessing reduced footfall in-store. Not everyone could transition online fast enough, and consequently, profits have shrunk. If you are an organization that is trying to cut costs you can no longer afford to maintain stocks in private warehouses at exorbitant rents. Simultaneously, the 2020 pandemic has also highlighted issues with raw materials sourcing. Smart businesses want to maintain a minimum stock of supplies, without wasting space—so, how do they do that?

Solution 01: Warehousing support

Not only do logistics providers have warehouse infrastructures, but they also run smart warehouse management systems that can offer clients inventory visibility, optimization, and automation of warehousing processes. Their warehousing and distribution solutions, such as labor and staffing optimization, can greatly benefit your business as you don’t have to worry about storage space for any kind of cargo. Your logistics partner can meet the demands of your business and scale offerings up or down as per your requirement.

Solution 02: Increased efficiency through automation

Another advantage of outsourcing warehousing is the way these facilities can improve performance through a technology-heavy approach. Logistics companies use automation to streamline storage areas or classical transaction-based ERP systems that can greatly increase your flexibility—particularly the kind of short-notice flexibility most businesses are facing right now while still reacting to the pandemic. You need the breathing space that comes from these margins as you work your way through 2021.

Moreover, logistics companies are well placed to introduce industry-leading digitalization processes to their businesses. Automation through robotic systems enables quicker, more efficient item picking—for example for online grocery order fulfillment. Rather than investing heavily in your own capabilities, partnering with the right logistics provider can help you consolidate your business while the global environment settles down.

5. Last-mile delivery:

With strict distancing measures still in effect, there are restrictions on movement and delivery. You may have managed to move sales online, but there is still the matter of collecting payments and delivering products locally, nationally, or regionally on time and in a safe manner. Similarly, for returns on orders, you need processes that track payment returns and freight logistics. Not every SME has inbuilt capabilities to manage these functions.

Solution: Third-party logistic support

Most 3PL service providers have operating systems and sufficient manpower already in place. Through repeat business with other companies like yours, they have streamlined procedures for optimal execution. They can process thousands of bills and audit them appropriately within a short period of time. They have also established safety strategies that deliver a better and safer retail experience for your clients. As they already have back-office staff working with invoicing, carrier vetting processes, etc., they can take care of all coordination and communication between carriers to deliver to a destination. With accounting mechanisms already at hand, they can also take care of invoicing for you, as well as handle returns. This becomes all the more important at a time when customers are trying to reduce human-to-human contact but are still demanding timely transactions and deliveries. Third-party logistics support can greatly help streamline these processes for increased customer satisfaction.

A change of focus

The global pandemic has brought into sharp focus issues relating to ethics and sustainability. Increasing numbers of customers are interested in the fine-grain details on how their products are made, who they are made by, and the impact at each point in the supply chain.

With a younger, more informed, and aware population in Saudi on the rise, these questions are increasingly directing businesses like yours to rethink how you produce and deliver your goods. As you plan for the future you may consider moving away from a linear supply chain model towards a circular economy. Simply put, this means the product doesn’t end with the consumer but is instead re-used to conserve environmental resources.

As consumers are driving the circular economy, which focuses on promoting access and processing end-of-life materials, you need to be rethinking business strategies that:

• Lower volume orders and stagger delivery
• Deliver more “product as service” models to reduce landfill contribution
• Provide raw material security for both products and packaging
• Plan for returned supply after customer purchase or consumption

Going forward, you need to be partnering with logistics support that reflects the same values. You may want to work in post-purchase recycling logistics and reusing supply chain tools and materials to reflect a more conscientious business model. As consumers become more aware of the impact of their choices, focusing on ethics and sustainability is not just good for the planet, it’s smart business!

Ultimately, business projections for 2021, and well into 2022, require you to focus on flexibility and technology, and on employing them in smart ways to quickly ramp up or down to meet the unusual rapidity of market changes. At the core, creativity will matter—as will the companies you choose to support your efforts. Logistics providers with the right infrastructure—for example, with offsite storage options and flexible delivery schedules, can ensure any fluctuation in stock or other business needs can be easily handled, no matter how little physical storage space is available.

Companies that invest in their supply chain management processes through the right kind of logistics support right now may stand poised for greater success in the future.

For help on formulating a logistics-support business plan for 2021, get in touch with us here.

 

Strategically located between three continents, Jeddah Islamic Port serves one of the world’s busiest shipping routes and acts as the gateway to the Middle East and its growing economies.

As part of the Kingdom’s ambitious Vision 2030 plans, there has been a real determination to thoroughly modernize the country’s shipping and logistics sector, and capitalize on the countries unique position as the gateway between east and west. As the most important port in the Kingdom, Jeddah Islamic Port has undertaken a series of measures to help establish itself as the regional hub of innovation, speed, and ease of doing business.

An important development within Jeddah Islamic Port has been the one million square kilometer logistics zone, LogiPoint. The zone, which is the largest bonded and re-export zone in the Kingdom is playing an important role in increasing the speed and effectiveness of logistics within the port.

Over the past few years, 3 initiatives, in particular, have helped the port reach new levels of efficiency and boosted the ease of doing business:

Bonded Express Facility

The adoption of e-commerce in the Middle East took longer to catch on than expected. But with some major players entering the market, and the COVID-19 pandemic having expediated the region’s acceptance of online shopping, the Bonded Express Facility has played an important role in expediting the process of moving goods through the port, so important for achieving e-commerce success.

The Bonded Express facility, through an intelligent mixture of policies, processes, and infrastructure, is able to handle inbound and outbound express shipments by air, land, and sea. This has allowed e-retailers to target the Saudi market and the larger GCC market through the port.

Cross-border speed

Typically, ships transiting through the Red Sea from Europe and the Americas would have a further 8 – 12 days of journey time ahead of them to reach other GCC ports from Jeddah. The LogiPoint logistics zone introduced the cross-border Gulf service which allows shipments to be unloaded in Jeddah and moved onto their final destination in other GCC countries through bonded trucking. This has reduced transit times by 7 – 10 days.

Sea to air and air to sea

Another important addition to the logistics zone has been the work done by stakeholders and regulatory bodies to connect the logistics process. It is now possible to import one leg via sea, move it to an airport via bond, and send it out to its final destination by air. The same thing can now be done if the first leg of the journey is by air, with the shipment reaching its final destination by sea.

The syncing up of various logistics transport methods through Jeddah’s logistics zone has been an important part of creating a fluent, multifaceted logistics destination for local and international businesses alike.

No matter what area your business operates in, at some point, you will need logistics support in the way of packaging, warehousing, or freight. However, the kind of logistical vendor you employ will eventually depend on the size, scale, and specifics of your company and product. This means that you first need to define your needs and requirements – the types of services you would like to have, the modes of transportation you want used, and the average volume of shipments you expect. This basic information is crucial in helping you decide on a 3PL or 4PL provider and the forwarder’s ability to judge if they can do the job for you.

If you have large shipment requirements, you need to look for freight companies that have warehouses and storage facilities in the areas you wish to ship to. They should also be able to suit your needs of any transportation mode (air, ship, or road) that you will require to ship to your destination.

It’s advisable that you do not compromise your quality of service with affordability as low-cost companies offer less visibility and reliability.

This article discusses some of the criteria that a logistics provider should meet to help you make the right decision.

INDEX

1. Make an accurate assessment of your logistics needs
2. Industry experience and area of expertise
3. Company financial security and sustainability
4. Credibility
5. Network and reach capabilities
6. Customer service and support
7. Safety records
8. Technology
9. Pricing
10. Flexibility, agility, and scalability
11. Efficiencies

HOW TO SELECT THE BEST LOGISTICS COMPANY FOR YOUR BUSINESS

If you are considering outsourcing logistics, you need to have the right provider who meets your needs. However, before you choose a company that works for you, you need to identify your particular pain points and establish a detailed outsourcing plan that can help you decide what kind of logistics services can benefit your operations.

If you are an organization that is facing:

• Irregularities across business processes
• Expensive transportation costs to carry goods
• Customers complaints about poor service
• A lack of visibility and reliability across the supply chain
• Inventory mismanagement
• Expensive labor costs for logistics tasks

If the abovementioned pain points are familiar to you, then a reliable logistics partner can help you streamline and expand your business. They can also help reduce risks and costs through their logistics solutions involving transportation, warehousing, and distribution, shipping, and receiving.

Selecting an appropriate service provider

Choosing a suitable logistics company is not as easy as it seems. There are many factors you have to take into consideration before deciding on the right partner.

First and foremost, you yourself have to understand your business’s needs. Only then can you explain them to a third party. Additionally, you have to ensure that the logistic supplier you employ has detailed knowledge about transportation management services, customs brokerage, logistics consulting, freight forwarding, logistics information systems, warehousing, and other related domains.

Listed below is a checklist of criteria you need to keep in mind when choosing the right logistics partner:

1. Make an accurate assessment of your logistics needs

Before starting on a search for a logistics provider you need to determine your exact requirements for an effective supply chain – where are your gaps and inefficiencies?

It is recommended that you form a cross-functional team drawn from your executive management, IT, distribution, logistics, and customer service departments to collectively share their opinions on the gaps in your company’s supply chain. Only after reaching a more comprehensive understanding of your current challenges, as well as matching them to your business goals will you be able to get a fuller picture of what you expect from your partnership with a 3PL or a 4PL.

2. Industry experience and area of expertise

It pays to be mindful of the fact that not all logistics vendors cater to everything, but rather have specialized areas of expertise. This can include transportation, warehousing, distribution, shipping, and receiving, or a combination of one or two of the services. If you are a smaller enterprise that is looking for support across a specific area of your business, you need to find a supplier who matches your needs with the correct kind of capabilities.

When reviewing a portfolio of prospective logistical partners, consider their clients and the kind of industry experience demonstrated by their customer profiles. A portfolio of several large clients shows that the vendor has the capacities, resources, and skills to run their business successfully.

It also goes without saying that as a basic requirement a potential logistics provider should have previous experience in serving other companies in your industry, as well as have demonstratable knowledge and capacity to deal with your business-specific demands.

3. Company financial security and sustainability

A logistic provider’s financial standing and sustainability have a direct impact on your business. It is not uncommon for business partnerships to begin in good faith and later suffer due to poor revenue models. Before taking on an outside logistics vendor, examine their financial background thoroughly. Consider the kind of information that will give you a good sense of their financial acumen. Ask to see a basic set of financial documents, that can include cash-on-hand, outstanding debts, disaster recovery plans, sourcing areas and costs, and customer concentrations.

A major red flag to be mindful of is when a company is not forthcoming with its financial information. Instead, opt for a company with a long-term proven success record. Not only will a stable business partner be able to cope with all possible emergencies and urgent needs but will also be able to provide optimal logistics solutions that you can count on.

4. Credibility

Credibility is crucial if you want to build a long-term logistics partnership. To find a credible logistics partner, you have to investigate their industry and market reputation amongst customers, suppliers, and business partners. Have they consistently honored their business commitments and met expectations? Go through their online customer reviews, testimonials, and market feedback to ascertain how clients feel about them. Reach out into the industry through your resources and get evaluations of their services. Once you have all the information at hand, only then decide.

5. Network and reach capabilities

When considering partnering with a third-party logistics vendor, two of the obvious factors that you need to keep in mind is their network and reach capabilities. In order for the partnership to work, the vendor must not only operate in the regions where you have demand but also in areas and territories that you plan to grow into. A 3PL or 4PL with a wide range of contacts has the additional advantage of helping your business grow into geographically diverse areas. They can act as endorsers and advocates for your services, helping you gain further validity and support.

In the case of international logistics, your vendor should be able to exhibit a cultural understanding of how business is done in those target locations. Work ethic, business rules, and legal requirements vary across countries and even different cities within the same country — a familiarity with these cultural nuances is an essential aspect of a logistics partner’s knowledge base.

It pays to remember that if your logistics vendor runs afoul of international legal requirements, your company will be held accountable as well!

6. Customer service and support

In the fast-paced world of business, a company wants its problems addressed and questions answered on a priority basis. When a vendor is not able to deliver on that front, it can make for a very frustrating partnership and be the cause for broken agreements.

When researching, it is worth the effort to inquire about your logistics suppliers’ customer support options. How much visibility and trackability can they guarantee you across your supply chain? Do you have access to key players, and can the company provide excellent customer service, responsiveness, fluid communications, and effective solutions to urgent issues? These elements are crucial to determining if your logistics provider can prioritize and meet your requirements.

Additionally, be mindful of companies that outsource their call centers and customer services. You don’t want to be stuck having long phone conversations with a person who may not even be familiar with your business environment and market conditions.

7. Safety records

Logistics services are a sum of many moving parts that have to operate in perfect unison to ensure that everything goes smoothly. For this to happen it is imperative that your logistics provider has a proven safety management record and optimal facilities. A logistics vendor that does not regularly meet its safety protocols can cause you huge losses that are hard to recover from. For example, a deadly fire in the transferring warehouse can cause unrecoverable damage to your stocks, inventories, and business.

Some things to keep a note of as you decide. A good logistics provider:

• Regularly offers safety training to their employees
• Places safety warnings and notices in visible places
• Regularly checks its facilities for possible accident-causing materials and supplies
• Documents a company-wide safety standard in line with industry safety rules and regulations
• Ensures safe handling and management of your products throughout the supply chain

8. Technology

Modern-day logistics has gone digital. That means your company’s supply chain data can and should be at your fingertips – at all times. This kind of transparency is non-negotiable in this day and age. A professional logistics provider, therefore, must be equipped with the latest technology innovations to offer transparency and efficiency.

When hiring a 3PL or 4PL provider, it’s a good idea to determine whether they will be able to give your company real-time access to information, including immediate and accurate updates about the location of goods at all times.

They should also be able to provide live information about:

• Purchasing histories
• Sales demands
• Marketing budgets
• Inventory availability
• GPS tracking
• Return freight logistics

You need access to this data so that you are empowered to make quick and cost-effective buying decisions, whilst forecasting and budgeting more accurately.

Additionally, a company that utilizes technologies like warehouse automation, cloud computing, web-based booking and tracking system, etc., can deliver error-free, consistent service with quick reports and efficient distribution systems. Choosing a logistics provider that enjoys great automation technologies means that you benefit from economies of scale, reduced shipping costs, and increased efficiencies. For example, when you partner with a logistics company that can integrate their business system with your ERP, you can submit orders at any time, and track when and where your order gets processed, packed, picked, and shipped.

9. Pricing

Before you decide on a provider you need to be asking yourself if their pricing is transparent or are there any hidden charges? The price charged by a logistics provider is a key metric for you to consider.

You need to track the price per delivery before you make your final decision. Normally, the costs charged by logistics companies should include transportation costs, receiving costs, warehousing fees, pick-and-pack fees, shipping costs, account set-up fees, and the monthly minimums.

When you get your candidates’ quotations for your long-term partnership, you can figure out the best one for your business. Bear in mind that the cheapest provider often comes with many caveats and loopholes. You need to review both price and service quality together before you determine if a vendor is worth it.

10. Flexibility, agility, and scalability

Supply chain and logistics vendors tend to market themselves based on industry expertise. However, it is important to remember that there are key differences in operations even whilst there are similarities in pricing and distribution strategies within an industry. Each business is unique, and a qualified vendor will be ready to tailor their supply chain solutions to your exact business needs and objectives. Moreover, the right kind of logistics provider will also mold their offerings to suit the ongoing business processes at your company. If you want to scale up or down, they need to be able to meet an expected increase and/or decrease in demand.

Moreover, a vendor should also have an informed game plan for how they intend to achieve more with less, and how they can pass on those savings to you. In this regard, you need to know in advance if your logistics provider does the service by itself or sub-contracts to other small local carriers or entities – as well as the possible impact of subcontractors on flexibility and agility.

You also need to be mindful of how a vendor reacts to market conditions. Normally, a good logistics partner will be capable to respond quickly to the changing market needs. They need to be able to offer quick and effective solutions to a customer’s specific situation.

11. Efficiencies

The time it takes to pick an order, pack and label it and ship it can determine how customers see your business, as well as their satisfaction concerning your product. The shorter the time, the more efficient a logistics vendor’s services.

For a logistics company, both the transportation routes and modes play a key role when it comes to the order of deliveries. Having a professional logistics provider also means that they can play an advisory role and consulting function, where they can guide you on more optimal options.

Choosing the right logistics partner is a challenging task – something you should not take lightly. Doing a thorough analysis of your needs as well as detailed homework on options can help you in your search.

To find out about how to select the right logistic support and warehousing solutions to meet your business’s needs, get in touch with us.

A logistics hub in Saudi Arabia thrives as the world continues to adapt to the impact of Covid-19

With tighter margins, reduced capacity, and lengthier supply chains, there are not many businesses that have been immune to the challenges of Covid-19. However, a young Saudi logistics hub is bucking the trend. Despite being in operation for just 18 months, The Eastern Gateway has seen substantial growth since the start of the pandemic.

The secret behind the hub’s success has been its road freight operation, specifically its ability to rapidly reduce clearance times for vehicles entering Saudi Arabia from the UAE. Each year over 245,000 trucks enter Saudi Arabia from Dubai alone, many of which will transit through Saudi onto other countries. Before the pandemic, processing at the UAE-Saudi border tended to be a lengthy affair, far from ideal for businesses transporting time-sensitive goods. Unless these trucks had Saudi number plates, they would often spend 2-3 days awaiting clearance.

Once Covid-19 arrived, it was clear to the Saudi authorities that there was an urgent need to reduce delays within the supply chain. So, an exemption was given allowing companies working with The Eastern Gateway to send sealed trucks from the UAE, straight through the Saudi border and onto the hub. With this system, the trucks are unloaded and make the same return route to the UAE border.

Aside from the customs exemption, there are a number of factors that further increase the speed at which vehicles are processed. The Eastern Gateway has its own internal team of customs officers, where each individual only works with specific customers, creating effective relationships and smoother processes. Another important factor is the hub’s ability to virtually preclear trucks. As soon as a vehicle from the UAE crosses the border on route to The Eastern Gateway, the clearing process can start remotely, removing much of the time-consuming paperwork by the time the truck arrives.

With imports via sea taking at least nine days and imports via air proving too expensive for lower ticket items, the faster alternative provided by The Eastern Gateway has certainly appealed to businesses during the pandemic. In the hub’s first year of trading, over 8,000 trucks were processed which amounts to 192,000 tons of road freight, around double the amount processed at Dammam airport.

Speed is undoubtedly The Eastern Gateway’s USP and a key reason why businesses are joining the hub. It also has ambitious plans to enhance its 3PL capabilities and has more global companies flying their products directly to the hub for distribution across the region.

The burgeoning hub is an exciting addition to KSA’s logistics sector, and definitely one that Saudi businesses should keep an eye on.