Peter Somers of Emirates Post: 'Demand for ecommerce logistics is skyrocketing in the UAE'

31/05/2022 — minutes reading time
Insights Peter Somers2

The United Arab Emirates, specifically Dubai and Abu Dhabi, have featured a great deal in the news recently as tourist destinations. What is less well-known is that the nation is very active in the worlds of innovation and digitisation. When it comes to logistics, companies there tended to be conservative, but innovation is now also on the rise in this field. As CEO of Emirates Post, Peter Somers, a Belgian who earned his spurs with the Belgian postal company bpost, has observed this trend at first hand.

'The covid pandemic has had an extraordinary leverage effect when it comes to logistics, specifically in ecommerce,' Peter Somers tells us. 'Before that time the market was less mature, in particular because the malls play such a major role – they contain a huge diversity when it comes to shops and also fulfil a social role. They are not just shopping centres, but also house restaurants, cinemas, sporting and recreation facilities and anything else. When the pandemic broke out the country went into temporary lockdown, with only the supermarkets and pharmacies permitted to open. If you wanted to buy anything you had to shop online and, almost overnight, the locals discovered ecommerce. And while the malls opened up again, everyone continued purchasing a large array of products, both food and non-food, online.'

A quantum leap

Within a very short period of time, ecommerce-related logistics in the UAE underwent a quantum leap. That also proved to be a boost for Emirates Post. 'Our company traditionally focused on the B2B last mile and on delivering letters to post office boxes,' Peter explains. 'Delivering letters to homes is non-existent in the Middle East. The old-fashioned postal services are shrinking here even faster than in Europe, as the country is digitising at great speed, with the active support of the authorities.'

'Since 2020 we have experienced double-digit growth in last mile deliveries of parcels for both the B2B and B2C sectors, a market in which there is also a great deal of competition. In other words, within a short space of time Emirates Post was forced to make enormous strides forward in terms of quality, services and IT solutions. We already delivered a large number of B2B parcels, but B2C home deliveries had to be upscaled at lightning speed, which required capacity and different IT systems. We took on the challenge and soon became the second-biggest company in the field, after Aramex, which was already active in the market.'

'Parcels are processed manually for now, but this year we are investing in sorting machines,' Peter says. 'We are thinking more of robotisation instead of automation using conveyor belts. Sorting robots are more flexible and beneficial in terms of both costs and implementation time.'

Other priorities for Emirates Post include setting up fulfilment activities and getting a network of collection points up and running. Pick up/drop off (PUDO) has only been introduced to the Middle East very recently. 'In one sense the region was very behind more mature markets such as the UK, US and China when it came to ecommerce logistics, but it is catching up quickly as a result of the recent steep growth curve.'

A hub

The UAE, and Dubai in particular, has spent many years developing as a logistical hub. 'To date that strategy has focused on shipping and air freight,' Peter tells us. 'The fulfilment activities in the Jebel Ali logistics zone were also stepped up, making it a rapidly growing hub for cross-border ecommerce. The traffic is mostly to and from the Middle East and Africa.'

In that context, the need for automation is extremely urgent, especially when it comes to scale. 'Volumes are growing so quickly that there is now sufficient scale to make investments. This is another area that we have seen grow so fast, and here too the demand for robots is skyrocketing. The reasons for this are the same as in the rest of the world – they offer greater flexibility and scalability.'

Attractive for start-ups

The UAE has a very clear vision and strategy, which revolves around focusing on innovation and encouraging start-ups.

'Digitisation plays a crucial role in that innovation,' Peter continues. 'The UAE is one of the most rapidly digitising countries in the world, which is one of the reasons why Dubai is so attractive to start-ups working in technology, fintech and logistics systems. There is also a highly active policy for attracting people and capital.'

That means that the opening of an open innovation centre such as Log!Ville would be very welcome, and it would only further boost development. This has already been demonstrated by the recent opening of a DHL Innovation Center in Dubai. While that is not an open facility, it does show how great the interest in innovation and logistics is.

Electric and autonomous vehicles

Peter Somers anticipates that this interest will result in the development of autonomous delivery systems. 'At present the set-up of last mile delivery is still very traditional, but the suburbs are laid out like compounds, making them perfect for deliveries using electric vehicles and autonomous delivery systems. I believe that we will see extremely fast developments in this respect, with that last mile becoming electric and agnostic as well as, in due course, autonomous,' Peter concludes.

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