Editor’s Pick: Why logistics start-ups need smart, connected ports

Start-up activity has been booming across the Gulf, as local and foreign entrepreneurs capitalise on a highly connected base of young consumers with high disposable incomes to launch products and services that meet the region’s unique needs. Opportunities are only going to increase across the Gulf and particularly in Saudi Arabia as the Kingdom opens its doors to new business.

Against a gross domestic product of $780 billion, and a per capita income of $88,270, Saudi consumers have a high disposable income. Smartphone penetration rates of close to 70 per cent and new e-commerce regulations will help power a logistics boom into 2020, when the industry is expected to be worth $25 billion, up from $18 billion in 2019.

Already, the average basket size for online purchases within the Kingdom stands at around $150, in line with markets such as the US and UK, and higher than $100 in China, Bain & Company says.

Amidst this surging demand, ports around the edge of this explosive and lucrative market are poised to benefit. As a principal import gateway to Saudi Arabia, Bahrain’s Khalifa Bin Salman Port (KBSP) is set to expand its already significant benefits for companies operating within its free zone. The port offers a range of value-added services to entrepreneurs in the manufacturing and logistics sector.

In addition to its excellent capacity (it is one of the few ports to have spare capacity of close to 50%), efficient operations and market-leading turnaround times, operators using the port can expect a mere 30-minute journey to the King Fahd Causeway with Saudi Arabia and a short 10 minute-drive from the seaport to airport. Not only does Bahrain offer 100% foreign ownership for entrepreneurs, but with the lowest setup and operating costs in the GCC, companies save 30-50% compared to neighbouring countries.

Already, the Bahrain logistics zone services third-party logistics and freight forwarding services, general and specialised storage and distribution activities in the re-export business, and value-added logistics services such as component assembly, packing and packaging, labelling, testing and repair, mixing, weighing and filling, and other light manufacturing activities.

Smart ports as trade enablers

The recent launch of 5G networks on the island – Bahrain became the first country in the region to roll out commercial operations of the new bandwidth capability – puts KBSP firmly in the lead in the race to be the first smart port in the region and is set to accelerate its offering for start-ups. The new technology will enable container transfer efficiency with automated, intelligent solutions, doing away with a dependence on human resources operating container cranes under harsh working environments.

Using 5G-based solutions, one operator will be able to handle multiple gantry cranes while working in a comfortable central control room, 5G leader Huawei said in a white paper on the subject. In the near future, the technology can be leveraged for multiple applications, such as autonomous driving of automated guided vehicles and Intelligent Guided Vehicle video management in port.

But ports will not rely on 5G alone. Other technologies that will improve efficiencies include solutions such as automated weighbridges to ensure uninterrupted truck flows with streamlined operations, as well as port information and management systems — and improved port capacity, broadly seen as the most pressing issue of the moment.

About 90 per cent of global trade relies on maritime transportation, according to industry statistics. Smart ports are seen as a game-changer for the maritime trade and the wider logistics business, boosting trade expansion through operational efficiencies such as automated transaction processing, faster cargo turnaround times, improved staff safety and a reduced carbon footprint. These attributes will stand Gulf nations in good stead as they revive their ancient role as major transit points at the centre of global trade on the new 65-nation Silk Road.

Goods manufactured in Bahrain and around the Gulf will further benefit from the opening of a new $1.1 billion terminal at Bahrain International Airport in March. Projected to have the fastest connecting times in the region, the new airport will complement sustainable long-haul trade for logistics operators. Together with KBSP, it will lead to faster and more efficient operations, and in turn to reduced transit times, happier customers and greater business volumes.