As the new year unfolds, many business professionals spend time analyzing insights and reviewing key opportunities of success from the previous year, while forecasting trends that will unravel in the year to come. The supply chain and logistics industries are no different, as many professionals are researching the forces that will drive trends for this year. Here are some of the key trends we will see driving the supply chain and logistics industries in 2019:
Labor Shortages
All the latest reports on Saudization show that we are facing a challenge with lower skilled labor. With the pressure to hire more Saudis who have proven to be extremely competent but expensive, the costs of logistics are rising. New entrants in the labor force every year are putting a lot of pressure on the government to find them jobs. There is a strong demand of delivery drivers and warehouse labor now needed in response to the rise of online shopping and the widespread transportation capacity shortage. The development of driverless trucks may be a solution to the labor shortages we are faced with currently. However, as it seems, we are still a few years away from deploying these vehicles.
Digitalization
As new technology continues to be developed, updates and advancements to the processes used in the supply chain and transportation industries will continue to be revamped. Today, proactive companies are moving towards digitalization with hope to increase their overall revenue, simplify processes, redesign their services and business models, and reduce the impacts of talent gaps. Digitalization serves as a new and improved way for consumers to interact with businesses. We will also see more small and midsize importers utilize information technology in 2019 as a means to improve the supply chain and create an even playing ground to larger scaled importers. Even Blockchain and big data might be used to make supply chains safer and more efficient in the year to come.
Changes in Commerce
Global e-commerce reached $2.2T and is growing at a rate four times faster than regular retail. This is evident in Saudi Arabia as volumes continue to grow tremendously. Global penetration rates are still small as the us e-commerce penetration rate is 12 percent compared to the UK’s 16 percent. Saudi Arabia and the MENA region are still at 4 percent. As e-commerce grows, this puts a lot of pressure on logistics to deliver to the last mile.
Saudi Arabia to Become New Logistics Hub
In 2019, Saudi Arabia will continue to diversify from an oil dominant trade economy. Following the plan announced in 2018 to improve the countries logistic infrastructure, Khalid al-Falih, Saudi energy minister, announced early this year that a total of $427 billion in private sector investments would be raised with $36 billion allocated for logistics infrastructure. The plan is a part of Vision 2030, Saudi Arabia’s macroeconomic development plan. The plan will develop Saudi Arabia to be a central logistics hub between Africa, Europe, and Asia and provide increased participation in international supply chain. Finally, this plan will open the door for new economic opportunities in Saudi Arabia.
