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Transportation and Logistics in the Middle East Essay

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Updated: May 5th, 2021

Introduction

Transportation is a general and essential function in all developed economies. It serves as a link between manufacturers and consumers both locally and internationally. According to Reis et al. (2013), transportation has a catalytic impact on society as it promotes not only movement of people but also a business. Companies use different modes of transportation to ship products. The choice of a transportation mode depends on the nature of the products and the distance it has to cover.

Additionally, individuals choose transportation means based on their costs and efficiency. The various modes of transportation include water, land, rail, air, and pipeline. This paper will discuss the characteristics of each mode of transportation. It will also explore the factors that one has to consider when choosing an appropriate means of transportation. The paper will culminate by analysing the features and concerns of logistics in the Middle East.

Characteristics of Each Mode of Transportation

Water Transportation

One of the primary features of water transportation is that it is slow. In spite of technological advancements, engineers have not managed to build ships that travel fast. Diziain, Taniguchi, and Dablanc (2014) allege that water transportation is suitable for moving large cargos that are not required urgently. The mode of transportation is preferred for shipping products over long distances. The modern ships are energy-efficient. Hence, they can move huge loads of goods at low fuel. Another characteristic of water transportation is that it is cheap compared to other modes. Water transportation is not preferred for moving people from one place to another.

Land Transportation

The primary feature of land transportation is that it is suitable for moving people across short distances. The mode of transportation is predominant in landlocked regions where people and products cannot be transferred via water. Marufuzzaman, Eksioglu, and Hernandez (2015) argue that land transportation is faster than water shipment and it connects many places. As the name suggests, this mode of transportation takes place on land using media such as buses, trucks, and cars. It is cheaper than air travel, hence preferred for public transit.

Air Transportation

The primary characteristic of air transportation is that it is the fastest of all the available means of haulage. Hence, the mode is suitable for shipping passengers and goods over long distances. Schliwa et al. (2015) allege that air transportation is safe, thus preferred for moving valuable products. The cost of air transportation makes it unpopular among the public. It is quite expensive, hence not suitable for carrying people over short distances. The mode of transportation relies on airplanes that are powered by jet fuel. As the name suggests, the method of transportation occurs in air.

Pipeline Transportation

Pipeline transportation is a unique mode of moving products in liquid, gaseous, or slurry form. The method is suitable for transporting products over a long distance. Marufuzzaman, Eksioglu, and Hernandez (2015) aver that one of the primary features of pipeline transportation is that it is not affected by geographical terrain. Engineers can lay down pipelines on different kinds of terrains without challenges. Pipeline transportation operates continuously and has limited impacts on the environment. It is suitable for transporting liquid products over a long distance. Marufuzzaman, Eksioglu, and Hernandez (2015) maintain that pipeline transportation is unidirectional. One does not have to return ‘empties’ to their point of origin as the products do not require containers to move.

Rail Transportation

The mode of transport constitutes railway’s infrastructure and the rolling stock. According to Diziain, Taniguchi, and Dablanc (2014), the rolling stock comprises coaches, locomotives, and wagons. One of the features of railway transportation is that it is used to ship heavy loads. Some trains are over 700 meters long, enabling them to carry big loads. The mode of transportation is mostly used to move containers. According to Diziain, Taniguchi, and Dablanc (2014), rail transportation is slow due to numerous stops. The means of transportation is environmentally friendly compared to the road. In most cases, railway transportation is used to ship heavy goods like iron ore, coal, and grains over long and medium distances. A single train driver can transport a more significant volume of cargo than a truck driver.

Products Transported Via Each Mode

Water Transportation

Water transportation is suitable for moving heavy loads. The mode of transportation is mostly used to ship non-perishable goods such as cars, water, oil, gas, and equipment. Today, some ships are equipped with refrigerated compartments, making them suitable for transporting perishable products in bulk. Diziain, Taniguchi, and Dablanc (2014) maintain that companies that manufacture canned food transport the products by water. Crew ships are used to transport people, especially tourists across the world.

Air Transportation

Air freight is the fastest and safest mode of moving goods and people over long distances. According to Schliwa et al. (2015), the method of transportation is used to ship urgently required supplies. They include precision tools, fresh goods, and valuable products.

Land Transportation

Land freight is the most flexible means of transferring goods over short distances. The type of products, level of infrastructure development, and distance dictate the nature of land transportation. The methods of transport are used for shipping frozen and fresh goods using reefer containers and refrigerated trucks. Schliwa et al. (2015) allege that road transportation is also used to move liquid products such as water and petroleum. Live animals can also be transported by road.

Rail Transportation

The means of transportation is suitable for moving heavy and bulk goods. Diziain, Taniguchi, and Dablanc (2014) posit that rail transportation is used to transfer coal, wood, and steel over long distances. The mode of transportation is also used to deliver iron ore and grains in bulk. Trains equipped with special tanks are used to transport liquid gas, water, chemicals, and oil.

Pipeline Transportation

Pipeline transportation is mainly used to move liquid products over a long distance. The mode of transportation is preferred due to its safety. According to Wensveen (2018), some of the liquid products that are transported through pipeline include water and oil. The medium is also used to deliver gas. Today, it is possible to move solids via pipeline. Iron ore and coal are mixed with water to form a slurry, which is easy to move through the pipeline. Additionally, compressed air facilitates the transportation of solid capsules via pipeline.

Choice of Mode of Transportation

The selection of the best mode of transportation helps to cut down on the costs attributed to logistics. Individuals require considering numerous factors before deciding on the method of transportation to use. Wensveen (2018) says that it is imperative to consider the cost of shipping as it affects the price of products. Rail transportation is cost-effective for a person who intends to move bulky and heavy goods over a long distance. Thus it would be suitable for transporting food products to various GCC countries. If a person wants to ship a small volume of products over short distances, they can use land transportation.

Trucks and vans are economical in moving small cargos over short distances. Hence, it would be the best modes of transportation for distributing food products within Dubai. Water transportation can be used to carry heavy and bulky loads over a long distance. The means of transportation is preferred in the cases where time is not an essential factor. Thus, it is not suitable for shipping food products because they might go bad before reaching their destination.

The security of products in transit is paramount and determines the mode of transportation that an individual chooses. According to Reis et al. (2013), railway transportation is associated with high loses. Thus, Gulf Food may opt to transport its products by land to minimise losses. Reis et al. (2013) claim that water transportation exposes products to the dangers of the sea such as piracy, hence it is the riskiest means of shipment. Some products require special packaging to guarantee their safety. Air transportation may be preferred for delicate and perishable products. Additionally, the method of haulage is suitable for valuable products as it is secure, thus suitable for shipping Gulf Food’s perishable goods.

Regularity and reliability are essential factors to consider when choosing a transportation mode. The speed and urgency at which Gulf Food likes its products to reach the intended destination will affect the decision on the type of transport to employ. Products that are urgently needed require being transported by transport media that are not prone to bad weather. According to Reis et al. (2013), ocean, land, and air transportation are vulnerable to adverse weather like storms, heavy rains, fog, and snow. Thus, they may not be suitable for shipping the products which are urgently needed.

The nature of the products being transported influences the decision on the appropriate mode of transport to procure. Wensveen (2018) maintains that it is imperative to consider the weight and size of the products being delivered before securing a means of transportation. Air and land transportation are mostly used to ship light goods. Thus, Gulf Food should use land transportation to deliver small and light food products that are to be transported over a short distance. On the other hand, rail transport would be economical for light, small, and fresh products, which are to be shipped over a long distance.

The flexibility of a transportation mode is vital because it determines if goods reach their intended destinations on time. When choosing a mode of transportation, it is imperative to find out if it is compatible with other modes of transport. Wensveen (2018) argues that air, water, and rail transportation are not flexible. The three modes of shipment operate at predetermined time schedules and routes, hence not suitable for shipping food products that are frequently needed. Gulf Food has to make sure that goods are moved to the airport, port or railway station in advance. On the other hand, land transportation is the most flexible mode of shipping goods. It does not work under fixed time schedules or stick to the established routes, thus it is suitable for delivering food products that are in high demand within Dubai.

Characteristics and Concerns of Logistics in the Middle East

In the United States, retail giants such as Amazon and Wal-Mart are shifting from the use of the third party to in-house logistics services. The case is different in the Middle East, where most companies prefer third-party logistics (3PL) to other forms of transportation services. According to Ducruet and Lugo (2013), outsourcing is gaining popularity in the region. The number of companies that offer logistics services continues to rise.

Initially, many businesses had warehouses that enabled them to run their logistics operations in-house. Nevertheless, the need for operational efficiency has led to most organisations outsourcing logistics services to third parties. It allows companies to direct their efforts to other essential activities such as marketing. An example of a business that uses 3PL services is Nestle Middle East. The company works with several 3PL firms to allow it to focus on brand enhancement.

The management of Nestle Middle East argues that outsourcing logistics operations enables an organisation to boost its flexibility. Ducruet and Lugo (2013, p. 147) posit, “Supply chains are becoming more demanding with smaller deliveries more often to grocery stores”. Moreover, the demand for short lead time and e-commerce amid the clients is rising. It has compelled businesses to seek 3PL services from companies with vast experience.

In the Middle East, major manufacturing companies have started to secure their operations by reducing the number of distributors. There are speculations that the leading logistics companies will have a significant influence on the retail and distribution sectors. There have been remarkable changes in the last mile distribution model. According to Ducruet and Lugo (2013), supermarkets have dominated the logistics sector for a long time. Nevertheless, the increase in the number of convenience stores in the region is bound to change the operations of logistics companies. Today, logistics firms no longer ship products in bulk. Instead, they supply goods in small quantities to multiple stores. Additionally, the number of trips that firms make has increased significantly.

Most consumers in the Middle East are embracing e-commerce. The move has had significant impacts on logistics. According to Wensveen (2018), e-commerce has contributed to the fragmentation of the retail market, increasing the pick list and number of clients that a distribution centre serves. Today, many retail operators are securing the services of 3PL to facilitate the distribution of products and to guarantee that they reach all clients.

One of the major concerns of the logistics sector in the Middle East is the lack of sophisticated infrastructure. The region serves as an entry point to major global markets like India, China, and Africa. Hence, there is the need for the Middle East to have adequate infrastructure to handle all the vessels, cargo, and passenger airplanes that use the region. For instance, Saudi Arabia lacks mechanised grain handling terminal. Hence, it is difficult for grain transporting vessels to use the country as an entry point to the regional market.

Ducruet and Lugo (2013) assert that the issue of cargo safety is a significant logistics concern in Dubai and the entire Middle East. The shipment of goods from one region to another involves multiple handlers. Some products go through over eight different logistics companies before they reach their final destination. It is difficult to make sure that all parties involved in the shipment of particular goods do their due diligence. At times, it is hard to tell when a party violates logistics procedures, which compromises the quality or safety of the products in transit.

The majority of the logistics companies in the Middle East rely on traditional modes of operations. They are not “equipped to address the challenges of on-time deliveries and unparalleled customer experience as their business models depend on legacy systems that are difficult to restructure” (Akhavan 2017, p. 345). Addressing dynamic business requirements is a significant challenge facing many logistics players in the region.

As more customers embrace e-commerce, it is becoming difficult for retail businesses to deliver products to the clients on time. At times, products are shipped to the wrong location, thus not reaching the intended customers. The lack of information regarding street addresses makes it difficult for logistics companies to deliver goods to the right destination and within the expected timeframe. According to Akhavan (2017), most courier companies do not offer services in remote areas. Hence, it is hard for retail businesses to deliver products to such places. At times, retailers are forced to ship the products to customers by themselves to avoid losing clients.

In the Middle East, logistics companies encounter unique problem attributed to low order quantities. For instance, companies are required to deliver few packets of given products, which is not cost-effective. Today, e-commerce players are encouraged to secure services from multiple logistics firms. The increased growth of e-commerce has led to the establishment of multi-fulfilment centres (MFC) that are located in different regions and offer services to many clients. The centres facilitate the shipment of small amounts of products to different customers.

Conclusion

The different modes of transportation that are available to manufacturers and retailers include rail, land, water, air, and pipeline. Land transportation is the most flexible means of transportation. Nevertheless, it cannot be used to move goods in large quantities. The choice of the mode of transportation depends on the nature of the products, safety, and the distance. It is also necessary to consider transportation cost as it may affect the profit of an organisation.

In the Middle East, the rise of the number of convenience stores has contributed to the increased demand for 3PLs. Moreover, the growth of e-commerce has revolutionised the logistics industry, leading to the establishment of MFCs that facilitate the distribution of goods in small amounts. The logistics industry experiences numerous challenges, which include the lack of sophisticated infrastructure and the inability to satisfy dynamic business needs.

Recommendations

Gulf Food deals with perishable products. Thus, it requires using modes of transportation that can enable it to reach the market before the goods expire. Additionally, the company has customers across the Gulf Cooperation Council (GCC) nations. Consequently, it needs transportation modes that are flexible enough to allow it to reach multiple customers. The company can use land transportation to distribute products within Dubai.

Land or road transportation is not only cost-effective but also flexible. It does not work on specified time schedules or follow predefined routes. Thus, it would allow the company to deliver products to consumers wherever and whenever they are needed. Moreover, it would enable Gulf Food to serve consumers in remote locations where other modes of transportation are unavailable. On the other hand, the company can use rail transportation to ship products across the GCC region. Rail transportation would enable Gulf Food to deliver products in large volumes. Today, there are special containers for transporting perishable goods. Hence, the company is guaranteed that its products would reach the intended destinations without going bad.

Reference List

Akhavan, M 2017, ‘Development dynamics of port-cities interface in the Arab Middle Eastern world – the case of Dubai global hub port-city’, Cities, vol. 60, no. 1, pp. 343-352.

Diziain, D, Taniguchi, E & Dablanc, L 2014, ‘Urban logistics by rail and waterways in France and Japan’, Procedia – Social and Behavioral Sciences, vol. 125, no. 1, pp. 159-170.

Ducruet, C & Lugo, I 2013, ‘Cities and transport networks in shipping and logistics research’, The Asian Journal of Shipping and Logistics, vol. 29, no. 2, pp. 145-166.

Marufuzzaman, M, Eksioglu, S & Hernandez, R 2015, ‘Truck versus pipeline transportation cost analysis of wastewater sludge’, Transportation Research Part A: Policy and Practice, vol. 74, no. 1, pp. 14-30.

Reis, V, Meier, J, Pace, G & Palacin, R 2013, ‘Rail and multi-modal transport’, Research in Transportation Economics, vol. 41, no. 1, pp. 17-30.

Schliwa, G, Armitage, R, Aziz, S, Evans, J & Rhoades, J 2015, ‘Sustainable city logistics – making cargo cycles viable for urban freight transport’, Research in Transportation Business & Management, vol. 15, no. 1, pp. 50-57.

Wensveen, J 2018, Air transportation: a management perspective, Routledge, London.

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