This is what the future of logistics looks like

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Mohamed bin Thamer Al Kaabi, Minister of Transportation and Telecommunications, Kingdom of Bahrain

• Global trade routes have been rocked by the COVID-19 pandemic and a series of geopolitical and environmental upheavals.
• To continue to deliver the goods that consumers want and societies need, a new attitude and approach toward supply chains is required.
• Logistics hubs, like Bahrain’s Global Sea-to-Air Logistics Hub, could provide the blend of resilience and speed required for modern logistics.

In today’s globalized and interconnected society, modern consumers demand goods that are both affordable and readily available at a moment’s notice. This depends on reliable and resilient supply chains.

But supply chains are only as good as their weakest link — and, as the past few years have shown, that weak link often ends up being transportation.

So, how can companies provide the value their customers demand without sinking their budget into transport logistics or obstructing the flow of goods so crucial to the world economy?

Multimodal shipping may hold the answer.

What is multimodal shipping?

Multimodal shipping — also known as combination, sea-to-air or air-to-sea shipping — uses multiple forms of transport to deliver goods in a timely and cost-effective manner. It combines the best of both worlds: the rapid shipping time of air and the cost savings of sea.

For example, a Japanese company looking to transport goods to the USA can load its cargo onto a container ship bound for the Port of Los Angeles. The cargo is then transported to Los Angeles International Airport from where it can be flown to its final destination in Denver, Colorado.

One of the most important aspects of successful multimodal shipping is the presence of a functional and efficient hub through which goods can flow — an area in which the customs process is smooth and the links between entry and exit points are unobstructed. The Arabian Gulf has been a center of trade for millennia, so it is no surprise that transport logistics continue to play a crucial role in the ambitions of the Gulf states.

Bahrain, in particular, has long recognized the importance of logistics to its own future and to the world economy. Historically, the Kingdom has focused on sea freight which, while dependable, is a relatively linear method of transportation. Bahrain has also been a key player in regional terrestrial transport, particularly via infrastructure like the King Fahd Causeway, a 25km-long series of bridges and causeways connecting the Kingdom of Saudi Arabia’s oil-rich Eastern Province with Bahrain.

The COVID-19 pandemic exposed the vulnerabilities in global supply chains. One notable impact was a steep hike in shipping rates, as transport ground to a halt and a worldwide backlog of containers built up in ports around the world. Another was a dramatic increase in the number of people shopping online as measures to safeguard public health meant that many were confined to their homes. Logistics service providers were forced to get creative and identify means of mitigating costs while maintaining the speed and quality of service that the world economy relies on.

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Building a logistics hub for the future

Bahrain launched its Global Sea-to-Air Logistics Hub in October 2021 as part of its Economic Recovery Plan, a comprehensive multi-sector strategy designed to mitigate the effects of the COVID-19 pandemic and boost economic growth. It is the fastest multimodal hub in the region with an average lead time of two hours and direct air links to over 60 destinations through commercial, freighter and cargo airlines. Sea-to-Air Partners are granted immediate express release from ports, and the entire process is made possible by a combination of regulatory and operational alignment, port efficiency, digital processing solutions and close port proximity.

The Sea-to-Air Logistics Hub is geared towards perishables, medical devices, physical retail goods and other cargo for which speed of delivery is a priority. To make this a reality, the Kingdom uses technology to expedite shipments as rapidly and efficiently as possible.

Blockchain solutions have been a key aspect of the hub’s success. Operators were already using IBM’s TradeLens on its pure sea freight operations to scan containers through the Khalifa bin Salman Port, so the expertise was readily available to transfer blockchain innovations to the Sea-to-Air Logistics Hub. Blockchain solutions enable transparency on the provenance of goods, not only making customs processes more efficient but promoting a more transparent form of trade.

Bahrain’s innovative combination of multiple transportation methods with modern technology means that shipping via the Sea-to-Air Logistics Hub is 40 percent more cost-effective than pure air freight and 50 percent faster than pure sea freight.

This investment in the logistics sector, which has had a multiplier effect, uplifting other parts of the economy, is a key part of Bahrain’s broader economic strategy. The Kingdom aims to increase the sector’s GDP contribution to 10 percent, and there are also bold targets to triple the volume of air freight passing through its ports and double the volume of sea freight by 2030. Bahrain is positioning itself as a key global logistics hub, using its strategic location in the heart of the Arabian Gulf to play a role for good in the international logistics arena.

The future of supply chains

COVID-19 was a turning point for the global economy — but it was already on the move. The pandemic merely provided a catalyst for change. Consumer habits are evolving. High-quality products and rapid delivery are no longer mutually exclusive. A global, digitized, “always-on” economy isn’t confined to the future. It is already here.

Logistics suppliers are fragmenting their operations in response to this shift, spreading out their processes to minimize concentration risk and the disruption caused by events like geopolitical tension or a pandemic. Technologies like blockchain can guarantee transparency and quality.

The future of logistics will certainly be digitized, but also agile, multifunctional, spread across geographies and truly open. That’s exactly what the global economy needs.