Navigating Disruption: Resilience in Middle East Logistics

Welcome to the Sea Trade Maritime Podcast. I'm your host Gary Howard, and today I have the pleasure of discussing Middle East logistics with Axe and End of Al Barrett Group. With the Saudi maritime and logistics congress coming up in October, we talk about how supply chains have adapted to regional disruption this year in the Middle East, and how that has reshaped both trade lanes and the company's keeping cargo moving. Starting with the credentials, I asked Axe to introduce himself to you all. Hi Gary, thank you so much for having me here today. I am the Group CEO of the DBSA Al Barrett Group based primarily between Dubai and Saudi Arabia and the U.E. and Saudi Arabia, and I'm at the center of all you want to talk about today. Absolutely, and we spoke before the show about disruption, being a key theme these past few weeks or years really have shown just how quickly disruption can come to maritime trades. Red Sea diversions were a big deal, not that long ago, and seem to be coming back again and obviously the closure of the straight-of-formers. From the Group's perspective, what does this period talk about resilience, you know, the other side of dealing with disruption? I think probably the most used word I've come across, and I continue been using the past couple months for a good part of this year as resilience. You know, it's no longer just about recovering from disruption. It's about operating successfully during the disruption, and this is something that we're not theorizing, but we're really living through this every day now, especially for us here in the region and specifically for us here in the industry. And a lot of what I'm going to say is something I very often keep repeating at forums, and I firmly believe in this, you know, I think for decades, flychains have been optimized for efficiency really. I think it's only now that we realise that they must optimize for adaptability, and that's where resilience is key. You have COVID, you have the Red Sea disruptions, obviously you've had the tensions around the straight-of-formers in the past couple of months. And each of these events are reinforced the way I look at it, one basic reality. That at least in this region, or at least for global trade, uncertainty is the new normal. For us as a group, for the U of E, say I'll go up up our group, I think for me personally, resilience means having multiple routine options, right? Strong relations across ports, stakeholders at the ports, steve doors, port operators, shipping lines, transportation providers, customs officials, the entire ecosystem really, and the ability to bring them all together and make informed decisions very quickly. And a basic point, as well, that I always emphasise, is that we here in the region are really the centre of global trade, and we have been for thousands of years, we're at a crossroads of what the silver bridge means, and we were connecting, and we haven't been centuries, and still do connect, Asia, Europe, and Africa. And that's where I also feel the strategic trade corridors that we now have in place have been around for centuries, and maybe just time that we start looking at alternative strategic corridors. And that's where, you know, that's going to be actually a key for it. For anyone in this industry who considers resilience a part of their basic strategy. Yeah, this is something we've already started seeing, especially in the energy sector, a lot of companies looking at other ways of avoiding the straits, so they can get their oil to market. Perhaps this might go some way to answer my next question, which is around planning in times like this, you know, is there a giant filing cabinet full of files of plans A through Z to deal with these scenarios as they pop up? Or is it more about the, you know, planning ahead where you can, but being agile and having capacity to react to situations as they come up? I really wish there was a giant filing cabinet with these plans in place. It would certainly made our life a lot easier. Look, there are certainly contingency plans, right? But I would be lying to you, if I've said, and no organisation can realistically write an entire playbook for every geopolitical event. So the key is very much in what you said after, which is, which is that there are no big magnitudes. It's really about the agility and about the fastest decision-making processes. And let me be very honest, what's happened in the Von Rooms and the entire area? We did try to, to game plan this in the past year prior to when this happened, so it's really from the summer of 2025 onwards. We didn't find, we create the scenario. But I'm going to be absolutely honest. And I think any shipping illogicist provider who tells you otherwise isn't really telling you the truth, because as much as you try to plan for these events, when they happen to you in real time, it's completely completely different. It's an entirely new pocket. So you can compare for synonymous, but rather than sort of predict them. But that means also preparing for alternative ports, trade routes, inland transportation options, customs procedures, how they would adapt in a situation such as these, a beable capacity, customer priorities are obviously still absolutely key, while disruptions occur. I think planning today is less about predicting exactly what will happen, because no one knows. And more about building and organising the capability in the ecosystem again, to respond quickly when something unexpected does happen. So, again, back to your original point, agility has become the competitive advantage. If you're enjoying the C-Trade Maritime podcast, make sure you never miss an episode by subscribing on the app of your choice. I think what we spoke previously at the Saudi Maritime and Logistics Congress, one of the phrases you use was that the cargo must flow, and it did it does seem to one way or the other. What adjustments have you seen to trade routes around the region during these sort of stacking crises? Is it a case of high rerouting around the Red Sea? Is there greater reliance on the land corridors from one side of Saudi to the other? How much of rail and air for playing a role in this? Well, I think, Carrie, the industry deserves an enormous amount of credit for this. When vessels die working, they still are around the Cape of Good Hope, for instance. You just as providers will immediately start to redesigning supply chain. A lot of cargo shifted to the Gulf ports before moving inland by truck. Rail networks, the Saudi Railway network as well as the Al-Greal, increasingly more important to the entire structure in place both Saudi Arabia and the GCC. Their investment in the integrated logistics infrastructure has been very, very valuable. And the key is, again, to have multiple transportation modes working together, hopefully seamlessly in practice. No, but that's the aim, rather than just relying on maritime transportation. So that is the enormous amount of import. I also always say, and you have to be right, I've said this at various forums where I always say that trade will find a way to fund through. It's only natural that it does. Altitude, customers do not buy shipping with logistics, they buy certainty even in uncertain times, and that's why we're here to provide that. Our job really is ensuring that products arrive. Even if the journey looks very different from what we lose originally planned, it is that certainty that we are here to really provide. And have you seen much of an impact on volumes since the end of February? Yes, absolutely. Not made of work by way around, you can say. No, absolutely. That they're very naturally has been. And it's only obvious. Natural periods of geopolitical uncertainty will always create a lot of hesitation from the shippers and customers as well. Quarters get delayed, some increase in inventories in the region, some do the complete opposite. You are also seeing a lot of diversifying with sourcing as well, that happens. But overall, global demand will continue. Volumes will be subject to fluctuations. But the demand is so there, you cannot change it. I always again say, trade patterns may change, transit times again may increase. Cost will fluctuate and it's terrible that happens. But commerce does not stop. Global trade does not stop. It does continue to flow. And very simply because economies depend on it. And history shows consistently that supply chains adapt remarkably quickly, even when facing challenges. And we've seen that that's happened. And that will continue to happen as long as these geopolitical challenges remain. And we've spoken quite a lot about the straight-of-formers situation. We obviously have the situation now in Babel Mandib start to kick off again a week, 10 days ago, which presents a specific challenge for Saudi Arabia I expect. How do you expect the trade flows will alter when there's this pressure being faced off both coasts now. Well, let me go back to the end of February and, you know, the early weeks of the current year, we've come to challenges in the face and where the Reagan Gulf and the state of almost was affected. The Saudi Arabia was always a very uniquely positioned because it had access to both the rights and the Reagan Gulf, so the geographic advantage was very, very valid. And given that geographical advantage, the Kingdom heavily invested in ports into the logistics parts into free zones and into road infrastructure and overall multi-modal connectivity. However, I feel no single geography completely limits risk and this is, and we've seen this happen in front of us right now. I feel the entire logistics industry is now, most specifically in Saudi Arabia, is really at a critical point at the moment. We're now seeing choke points on both sides. It is, it is something that we would plan for, but it's all the type of doomsday scenario situation. The Saudi Arabia has has put in. We are still looking at alternate trade routes, we're still looking at Red Sea capability through the Suez, it's not an ideal situation. I think of having both choke points in place at the moment. I, for one, have been traveling through to the Western province and both the east and the west, a number of times in the past 10 days, and really tried to make it the best out of the situation that we can. For both the strategic outside corridors to experience disruption simultaneously almost, there is no other solution but the entire logistics industry to collaborate and find alternate solutions. I think the challenge remains that you cannot eliminate geography and choke features. It's there. We are in, in a situation that we are in, and there will have to be an innovative solution that we need to be proud about. At the moment, it's through the Suez, and then obviously the only other solution remains to go around and keep it good up, but that is where we do now at the moment need to really think out of the box. It feels like a long diversion, but before the end of 2023, it felt like a long diversion, and we will just start doing it quite soon in the beginning of 2024. It was kind of a real whiplash scenario. I went from writing stories about, I think, Merce, in particular, bringing its services back through the Red Sea, and then, yeah, within a week, it was a very different scenario over there. We still have a lot of cargo going through the Battleband event moment. We still have a lot of our principles, bringing and loading and getting ready to pass through the White Sea. So it's not entirely all done and gloomy. Obviously, there are important aspects like insurance and basic safety, which we need to be considered. So we are still going to see that the original case of trade will flow, as it is going to flow at the volume as previously, most properly not, and that's where the solution is to come true. And is it situations like this where you feel the benefit of being a company based in Saudi, with the regional offices, those relationships in place, those, perhaps, contacts in government to help you along? Oh, absolutely. Because, you know, the basic distractions that we've seen, I feel, have really validated the Kingdom's vision of becoming the club and the Justice Club. So let's remember, Saudi Arabia went on to this 2030 vision of the Justice Club. Not in the past couple of months, it's been happening for years now. Obviously, the recent challenges have increased the spotlight on these, you know, on the strategy. So investments in ports like to the Islamic courts and the commercial courts, King Abel Aziz port in the Mam, King of the Longwood, alongside a lot of real connectivity and logistics zones are not simply in construction projects. These were investments in overall national resilience. And I think the overall strategy from this one's grandparents was very far-reaching. And we're only now seeing the advantages of that strategy come in place each and every day. Vision 2030 recognized that the Justice was a strategic economic set. And again, it really depends very on the spread of that archetype. Yeah, perhaps not the sexiest part of Vision 2030, but I think the importance of it was recognized again when the, I think there was a sort of a five-year update done right for 26 through 30 and logistics was still in there and still near the top and wasn't one of the projects that dropped out. I always say this. We're not in a very glamorous industry, but we are, you know, takes distractions such as these, or waiting on outside industry to really see the invisible hand of the logistics cover. And that's when logistics becomes the best way. I can almost bet. People would have been able to pinpoint the straight of hormones six months ago on a map. And they can now probably my five-year-old nephew would be to point it out for you. But that's really where logistics becomes key. And perhaps testament to how well the industry does its job that it could be. So, low profile as the rest of the work carries on. Absolutely. I mean, a part of the Vision 2030 investment was around technology. And again, this has spoken something we've spoken about before at the Saudi event. What technologies or aspects of technology do you think matter most in times of crisis or particular challenge like we're going through now? Yeah, overall technology has transformed to just the end of the past decade. We increasingly, not just us, you know, everyone, a lot of people in our industry use real-time visibility to, you know, and I think that's the single biggest advantage that technology has actually brought to the industry. Knowing exactly where your cargo is, you know, understanding estimated arrival times. And I sort of underline the word estimated in these circumstances. Communicating changes immediately just enables customers to make very important business decisions. And I think that has been absolutely revolutionary to the industry. You cannot go and tell your customer, your cargo fees, you know, for one to the better idea, you can only just sort of wing it or go and circle around them on where your cargo is. Because real-time visibility is now not a strategic advantage. It's normal. It's a new normal. On a related topic of AI, for instance, AI does help a lot of predictive analytics. A lot of forecasting, root optimization helps as well. I might be a bit traditional in my five process, but I feel AI has, and I could very well be wrong as well. I believe AI in our industry has its limitations. It can be an enabler, but cannot be the main root. And that's the key difference. It might change in the next 20 years, I really hope it changes in the next 20 years when I'm not around. But predictive analytics demand forecasting, any of these bugs where it's a root optimization. They work very well during a normal day, but when you have strategic choke points in place, quite honestly, it's all at the window, it's really about the human element kicking in. So I, for one, have, I won't say reservations on the role of AI in our industry, but certainly very aware of its limitations. Now, having said that, but a lot of digitization around communication platforms, for instance, a lot of digitization around bringing port operators, customs officials, customs clearance officials, shipping lines, all on to a single platform that really speaks to each other. It's absolutely key. And that, for sure, has improved in the last couple of years. I believe, strong believe, I think, sadly, maybe there's a foreground. And a lot of these changes, we still go through them. They're not ideal in any certain way, but if I go back even five years and show you the amount of paperwork that would accumulate in my office on a single piece of cargo, that's all now done online, where different parts of this integrated ecosystem now do speak to each other. Am I not speaking to you seamlessly, but are they still speaking to each other? That, I believe, is a major win. Yeah. I think when it comes to the, speaking on the limitations of AI, I think in a relationship led business, the idea of AI based customer service and shipping wouldn't go very far at all. Perhaps through optimization is one thing, but I think it said before, human capital is the sort of backbone of maritime logistics, and that's all built on relationships. And if you start trying to stick robots in the way, then you might find it starts to crumble a little bit. Oh, it does. It does. Very ultimately, logistics is about, very simple, it's about relationships, judgment, trust, fairly basic human values, when geopolitical events such as these unfold. The customer has done simply want data, data doesn't make a difference to them. They want experienced professionals who can interpret the situation in real time, negotiate solutions, they might not be perfect, but still negotiate solutions and make a very balanced commercial decision and reassure their customers and reassess their customers in making that very balanced commercial decision. Technology only makes our work more effective. It doesn't replace our experience by no means. So it isn't, the question really isn't about the AI versus people analysis. It is very simple again. It is AI empowering and enabling us to make more effective decisions. When we are dealing with situations on these on national and international scales, rerouting cargos, there is no way that a company of any size can really act alone. How important of partnerships being over the past weeks and years in dealing with these situations? And can you think of a particular example may be where there was a strong relationship that was built up over time and has really paid off in these testing times, should we say? Gary, I'm a firm believer in and this has been tested. I've seen a number of instances of this come up in the past couple of months. I'm going to be absolutely blunt. I'm not the president who could give you the best solution, but my frontline teams go. And you be surprised. I think I've at times had the most out-of-the-box solutions come through from my frontline teams. And at times, what I mean, frontline teams, really the person on the ground who is at the port in Saudi Arabia or who is at a border post between, let's say, Saudi in the U.S. or Saudi in Jordan. And he would come up with the best solution in place. So, again, technology will provide the insight. I could provide the leadership as a group CEO or the strategic direction, but it is, I do want to take this forum and recognise the frontline teams, not just in my organisation, but in our entire industry with the ones who actually provide these solutions, because they are the ones dealing with the customers, the transport operators, the ports, each and every day. And at least, you know, I can speak for us as a group, we encourage that culture and we encourage our frontline teams to provide those solutions. So, I feel one would not want to take credit for it, but I certainly do want to recognise these teams on the ground, these frontline teams in our entire industry. I think there are plenty of companies out there that aren't structured in a way where they even have the means to listen to the workers on the front line, despite their experience obviously being invaluable. And just to go back again, the idea of partnerships, perhaps externally in times like these, where perhaps you can't deal with a cargo solution on your own. Well, logistics isn't really a one company business really. You can never succeed alone in logistics. You, the industry humbles you, you need to have shipping lines, ports, government buttons, customs authorities, transport operators, airlines, when it comes to our ship and customers, and we all form an interconnected, integrated ecosystem. The strong partnerships are built over years, generations at times, and they're very, very valuable when destruction is such as these. Again, it's a very human business. Trust and relationship enables faster decisions, right? And I've seen numerous, long-standing relationships that allowed us to secure capacity, allowed us to re-read cargo, resolve a lot of operational challenges, or at least ways to resolve them, much faster than what would have otherwise been possible. So, going back to my original comment, relationships are a strategic asset in our industry. It's just how we operate. Do you think the definition of a good partner in the logistics space has changed over these past couple of years? What you look for in the companies that you're working with, perhaps it might have been more about slot costs and pushing down the price of services or getting things there quickly, but are you looking more perhaps for the adaptability, transparency or trust or some creative problem solving that you might see in a potential partner? Oh, absolutely. I think the definition has changed historically and probably to a certain extent even now. Customers often focused on price, transit time, as much as those elements remain important. Resilience has become a key value. I also always say that disruptions, and I really put it on, I put the honest alas as leaders in our industry to educate our customers, that you need to learn how to make destruction a part of your strategic supply chain process. And you need to accept that. Destructions will occur. They could be geopolitical, they could be pandemics, it could be anything. You just need to learn how to adapt. Organizations and businesses that do that strategic thinking are, I feel, the ones who bounce back very, very quickly. Resilience is valuable. Customers also look for transparency, proactive communication, and not just good news, bad news, which needs to be proactive and communicated, flexibility, and an overall problem solving capability. You just don't want to communicate the problem. You want to go to a customer with a couple of solutions at the place. And you need to take your analogy of a table full of these problem solving solutions and capabilities. Some could work, some could not work. So you need to be very, very transparent. Customers are increasingly educated on the role of logistics place in their entire business strategy. So a good logistics partner does not simply transport cargo from point A to point B. The health customers manage uncertainty, they have customers, they educate customers, that shift, I believe, represents one of the biggest changes our industry has ever experienced. I can only thank, in a way, the current geopolitical challenges for that shift to happen. Because if that wasn't these challenges, we would still be doing logistics in a very different way. Just following on from that strategic note, try and cast our minds forward to the region in the future. I don't expect there's going to be a return to something that looks quite the same as the pre-crisis trade patterns. But once things have stabilized, how do you expect the Middle East is going to look from a logistics perspective? How do you think the lessons learned over the past couple of years might reshape the way that cargo moves around the Middle East? Well, Kerry, the traditional routes that I mentioned, they remain equally important, and they will remain, as I've said, these are routes that have been in place for a very long time. You think of the Suez, you think of Panama, well, I never think of the Suez, I think of our region, but these are traditional routes that have been in place and will remain very important. I've accepted that. I don't believe we will be returning entirely to the old model. I think the industry, governments in the region have very valuable lessons about diversification. Let's move on to, well, think of businesses, for instance. I think businesses are now more comfortable using multiple source invocations, multiple transport corridors, different multi-moderations as well. Businesses now realize that, again, it's about us sort of educating this one, but not everything needs to be done in a very specific way. Adaptability, again, overall flexibility. Can you also apply to the ecosystem? Have to be inbuilt into how you run your businesses. Businesses, I believe understand that. And, again, the current challenges have demonstrated this. I also believe, from a government perspective, we are seeing, and we've seen this prior to. to be able to choose parts of the current crisis. We were seeing the emergence of new trade corridors, such as the IMAX for instance, India has released Europe economic corridor. You have some China with their new corridors in place, other regional connectivity projects. These were all in place or at least announced prior to the current troubles. They will only accelerate the development of these projects and these initiatives. We'll only accelerate. These developments will not replace traditional maritime routes overnight, that's not going to happen, but they will create a more diversified global trade system. And again, you're going back to my original point. We cannot be running global trade on trade corridors that have been in place for a hundred years. As important as those trade routes are, we need to diversify trade has grown in the past hundred to two hundred years. And we naturally need to adapt to that new normal scenario that diversified our trade routes. Again, we have more specifically satirated. We are at the center of so-called page of Europe and Africa. You know, think of the caravans that we're going through Saudi Arabia hundreds of years ago. And it's effectively the same thing. Just the modes have changed. We are still at the crossroads of global trade in the country. And the leadership in Saudi Arabia recognizes that. The business has recognized that. And that is why I remain very optimistic about the future of global logistics with Saudi Arabia and its central. A positive note to end on there. Actually, thanks so much for your time. And for a pair of going to see trade maritime podcast. Thank you so much. Thank you, Gary. [MUSIC PLAYING] Thank you for listening to the see trade maritime podcast. And we look forward to joining you on our next episode. [MUSIC PLAYING]