Logistics hubs helping bring supply chain resilience

In the face of disruption and uncertainty, governments and businesses are embracing the logistics hub model to bring resilience to supply chains

Long-standing global trade patterns continue to be rocked by world events that started with pandemic and have continued with geopolitical, environmental and economic turmoil.

Organisations have come to realise that, to deliver the goods consumers want and societies need would require a new approach toward supply chains.

Part of this approach has been the rise of the logistics hub – large-scale structures within which different logistics providers offer value-added services by sharing assets. Sometimes the hub 

Such hubs improve the efficiency of transportation systems, because they provide the blend of resilience and speed that is required of modern logistics in such an uncertain world.

Such hubs are becoming a strategic response not only at enterprise level – at companies such as Uber Freight –but also at government level.

Saudi Arabia, for example, is set to build dozens of logistics centres to transform itself into a global logistics hub.

The Saudis are seeking to leverage its geographic location to service the continents of Asia, Europe, and Africa by building 59 logistics centres with a total area exceeding 1 billion square feet. 

These include 12 each in its capital city, Riyadh and the Makkah region, 17 in the Eastern Province, and 18 dotted about the kingdom. Initial development work is focused on 21 centres, and the aim is to complete them all by 2030. 

Saudi sources say the finished centres will help local industries efficiently export Saudi products and support e-commerce by connecting regions, cities and provinces. 

The plan also eases the process of obtaining logistic activity licences. To date the Saudi Arabian authorities have granted 1,500 of these to local, regional and international logistics companies. One of those licence holders is Kuehne+Nagel, the Swiss freight forwarder.

Saudi leaders say their investment has already seen the country rise 17 places (to 38th)  in the World Bank's Logistics Performance Index (LPI). Its ultimate goal is to hit the top 10 by 2030.

Also in the Arabian Peninsula,  multinational logistics company DB Schenker is making substantial progress on building a renewable energy-powered mega logistics’ hub in Dubai, in the UAE. Its warehouse and logistics hub facilities are located in the 18 km/sq Logistics’ District in Dubai South. 

Ako Djaf, VP Contract Logistics SCM & Distribution, ME&A, for DB Schenker, says: “Many multinational companies are locating more and more in the region. They see it as a platform for distribution from a geographical point of view. It is very attractively positioned, connecting Africa with Europe and the Asia Pacific region. 

“This is why I see the region growing very strongly in the coming years, even in the face of all the disruption we are seeing at the moment.”

Cainiao – the logistics arm of Alibaba Group – is also growing its hubs strategy, recently announcing a new warehouse in Jakarta, Indonesia, as part of its regional expansion plan. 

The new Cainiao Cikarang Logistics Park is part of a regional warehouse network of Cainiao Hubs in Southeast Asia, and is the third warehouse in the network.

The vision is for Cainiao Cikarang Logistics Park to support manufacturers in their logistics and trading needs, including fulfilment, last mile, import and export for B2B and B2C businesses, smart supply chain management, and logistics technology including IoT, automation and warehouse management systems.

“This new warehouse is our first infrastructural investment in Indonesia and the third in the region,” said Eric Xu, Vice President, Cainiao Group. “Our strong network and expertise in logistics and supply chain capabilities will help our partners and customers in Indonesia accomplish more in less time and boost local and regional trade activities by streamlining workflows and processes across the value chain.”

On the other side of the globe, in the USA, logistics hubs are meshing with automated vehicle technology, with Uber Freight in the vanguard.

Uber Freight is currently building an automated trucks hub-to-hub logistics model that will allow autonomous trucks to operate alongside those driven by people. 

Under this model, a driver picks up a preloaded trailer from the shipper’s facility and delivers it to a transfer hub located close to the highway. The trailer then gets hooked to an automated truck, which drives on the highway to another transfer hub located near the receiver’s facility. 

At the second transfer hub, another driver picks up the trailer and delivers it to its final destination. 

“This model achieves synergies that benefit carriers, drivers, and AV developers,” says Mazen Danaf, Senior Applied Scientist & Economist at Uber Freight.

Danaf outlined this hub strategy in a paper published by Uber Freight, called ‘The future of self-driving technology in trucking, in which he sets out the case as to why trucking is the fastest route to commercialising and scaling self-driving technology. 

Danaf adds: “The hub-to-hub model will achieve synergies that benefit carriers, drivers and autonomous vehicle developers. 

“Autonomous trucking will not be a dispensable service that simply aims at reducing the cost of trucking but will become an essential component of supply chains, and help satisfy growing demand, while offering drivers better working conditions”.

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