Stefano Pollotti, MD of GEFCO Dubai explains how in-house operations, arent always the most cost effective
Thanks to its location, its infrastructure and its relative ease of business, it is not exactly shocking that Dubai has been hailed so often as the crossroads of East and West one of the most strategic commercial hubs in the world and an essential traditional trade route. They are phrases which may even be overused, but there is no doubt why Dubai has earned its reputation. What is perhaps a little more surprising is that despite these massive logistical advantages, there is still a reluctance by many companies to take full advantage of them.
There can often be a lack of understanding in the logistics of importing, exporting and transportation which leads dealers, manufacturers and distributors down the wrong business path. In many cases, the historic view that keeping logistics in-house saves money is simply no longer valid.
GEFCO is one of Europes ten largest logistics integrators and we opened our Dubai branch three years ago. We have not only established ourselves as a solid and dependable logistics provider, but we have drawn upon our global expertise and experience to act as a consultant and advisor to others.
I believe there are plenty of opportunities to be more time-effective and cost-efficient. Dubai has an extremely rich history as a successful trading post, but the phenomenal effects that have come with the citys rapid rise to a leading world economy have changed the way we conduct business and the way we expand but not necessarily the way we think.
On a cargo that may cross seven land borders and three shipping zones, we have seen companies try to work out which is the cheapest supplier for each leg of that journey. This is where a consultant can step in and explain that there are one-stop-shop solutions which can deliver discounts, economies of scale and eliminate the unnecessary investment in time and money.
Consultants are not a threat to their logistics set up but we can act as a partner and help them to progress and develop their options. It is a question of mindset as well as business acumen.
Case in point
One of GEFCOs cost saving strategies was with the distributor of the Korean car makers Hyundai and Kia to Jordan and Iraq. Previously, the cars had been exported directly to Jordan from Korea, which looked on paper like the best option. But taking into account the well-developed customs, import and export procedures of Jebel Ali, timings, length of transit and sophisticated infrastructure, we advised to export through Dubai.
Not only did it save considerable costs, it also avoided any possible contact with the Syrian conflict, shipping the cars to Iraq by sea to Um-Qasr and then by road distribution to the rest of the country.
Logistics, storage, transportation and distribution are extremely competitive businesses, particularly in this part of the world and the way to progress is to adopt new practices and accept new services. We are living and working in an age where companies must constantly reassess their operations and outgoings. Even though tough competition is always a danger, false economies can be the greatest threat of all.