The scale of the logistics industry will exceed 18 trillion US dollars in 2030. What are the five major trends that will affect the development of the logistics industry?

Qatar’s logistics landscape: Creating an excellent and future-proof supply chain

Image source: Invest Qatar

Five major trends affecting the development of the logistics industry

1. Artificial Intelligence and the Expansion of E-Commerce

The rise of e-commerce has created a need for artificial intelligence (AI) to provide faster and more efficient logistics solutions. With the help of complex algorithms and machine learning techniques, AI can help e-commerce platforms analyze large amounts of data, optimize pricing strategies, and improve customer satisfaction and loyalty. Under this transformative influence, the Gitnux 2024 Market Data Report shows that the value of artificial intelligence in the logistics market is expected to reach US$12.87 billion by 2026. Industry giants such as Amazon and DHL have already integrated AI into company operations to drive innovation and enhance customer experience through e-commerce.

2. Sustainability

Emerging trends in sustainable logistics, including the adoption of alternative fuels, electric vehicles and carbon offset programs, have demonstrated the feasibility of sustainable transportation. In 2023, the transportation industry accounted for 24% of global greenhouse gas emissions. In response, DHL has pledged to achieve net zero logistics-related emissions by 2050. The shift to a sustainable supply chain is beneficial to protecting the environment, improving efficiency and reducing costs.

3. Filling the talent gap: addressing the demand for technical talent

According to a study by the Material Handling Institute (MHI) and Deloitte, 57% of respondents cited difficulties in hiring and retaining qualified workers. As a result, governments are taking a variety of talent development measures to fill labor shortages. Take Germany's practical VET model as an example, where students acquire skills through practice. Other countries have also begun to implement government-backed residence programs, such as Qatar's Mustaqel program, which aims to attract international talent.

4. Reshoring/Nearshoring: Returning to the Homeland

Due to the global market disorder in the past decade, according to the global companies surveyed by QIMA, more than half (57%) believe that nearshore outsourcing plays an important role in their supply chain strategy, and they expect production and distribution to be closer to the end market. In addition, relocation or nearshore outsourcing strategies can also create jobs for local communities and promote economic growth.

5. Geopolitical changes

Geopolitical dynamics can have a huge impact on transportation costs, trade routes and supply chains, causing a significant impact on the logistics industry. According to the World Trade Organization (WTO), since 2018, the escalation of US-China trade tensions has led to a surge in tariffs, which has had a negative impact on more than $700 billion worth of goods in 2019 alone. According to the United Nations Conference on Trade and Development (UNCTAD), a series of recent attacks on ships passing through the Suez Canal has caused the Suez Canal's transportation volume to drop by about 42% compared to its peak. Therefore, the search for alternative routes has led to an increase in the distance of cargo transportation, resulting in increased trade costs and insurance premiums.

The road ahead

Re-examining the core issues mentioned earlier, at this critical juncture, different countries may have different views regarding the actual situation of the logistics industry.

Looking at countries that rank high on the World Bank rankings, such as Singapore, Germany, and the Netherlands, it is clear that they are using emerging technologies such as blockchain, the Internet of Things (IoT), and artificial intelligence to optimize supply chain operations and improve efficiency. In addition, these governments are actively working with private sector stakeholders to promote innovation and meet important challenges such as sustainability and digitalization.

When looking at where the logistics industry is headed, it’s clear that countries around the world agree on where to focus: investment in infrastructure, technology and talent. Qatar is at the forefront of this global industry, a leader in innovation and progress. According to the 2024 Agile Emerging Markets Logistics Index, Qatar ranks seventh in global logistics prowess, while the country ranks second in the 2023 Network Readiness Index.

Qatar Free Zone Authority (QFZ) plays an important role in promoting the country's logistics industry, taking the lead in implementing a number of initiatives to promote the development of the logistics sector. Currently, Qatar Free Zone has attracted four of the world's ten logistics companies, continuously promoting the application of innovative technologies such as artificial intelligence in the logistics field, and actively developing new assets, including a new regional distribution center. These initiatives have further strengthened Qatar's logistics infrastructure, introduced new logistics companies, and enhanced Qatar's leading position in the global logistics field.

Author

Ali Alwaleed Al-Thani

CEO, Qatar Investment Promotion Agency

Sheikh Mohammed Al-Thani

Chief Executive Officer, Qatar Free Zones Authority