Global Focus - October 2009 - Inside Logisitics

MENA shippers farming it out

Companies operating in the Middle East and North Africa (MENA) region are turning more and more to logistics outsourcing, according to a recent brief from ARC Advisory Group.

Currently, the third-party logistics (3PL) market in MENA is small and fragmented. But according to author Adrian Gonzalez, it is poised to take off, thanks to the region’s GDP and import trade growth and heavy recent investment in logistics infrastructure.

Gonzalez states that increased competition and cost pressures are pressing shippers to focus on core competencies. Land is scarce and costly to develop, so many firms find it more valuable to build manufacturing plants instead of distribution centres.

In some MENA countries, foreign companies are unable to own land or operate trucks, forcing firms to work with local partners. Finally, securing work visas for foreign workers can be difficult and politically sensitive task in many MENA countries; some companies without a logistics labour force on the ground find it easier to outsource the work.

While the 3PL sector in the MENA region is limited, Gonzalez anticipates that, if it follows the same evolutionary curve experienced in Europe and North America, service providers will soon begin to consolidate, turning into integrated service providers with the scale and resources to offer end-to-end services.

Let there be light

Lithuanian-Swedish lighting manufacturer Artilux NMF has started using RFID in its internal logistics chain. The company produces more than six million lights on 25,000 pallets each year.

It decided to use RFID to improve its warehouse, which was struggling to handle high volumes and peak-season volatility. It installed readers from CAEN RFID at bypass gates throughout the facility and attached UPM Raflatac’s ShortDipole RFID tags on each pallet. The readers automatically validate that the pallets are moving to where they should be.

As a result, the company can now track the progress of all pallets through its internal logistics processes.