Businesses reeling from the covid-19 pandemic must retool their supply chains, building in new backstops and inventory buffers in the face of global economic uncertainty, according to a new report.

As globalization has increased, the world’s supply chains have become substantially more interconnected. Moreover, as emerging market economies have steadily come to account for a greater proportion of global GDP, goods often have more stages to pass through before reaching the end consumer.

From national lock downs to closed airspace and borders, Covid-19 has resulted in unprecedented disruption to the mechanics of most economies, regardless of their size or stage of development. In particular, the erection of these barriers has placed a major strain on the world’s supply chains, including essential linkages relating to food and medicines.

The UAE’s logistics industry has been resilient and vibrant during the lock-down period, ensuring uninterrupted supply chain to stave off any shortages of essential goods and medicine unlike countries in other regions, according to a report released by Dubai Future Foundation.

The resilience of supply chain in the UAE is due to the significant investment in multi-modal facilities and infrastructure over many decades. As a result, supermarket shelves have remained fully stocked in the UAE, and throughout most of the Mena region, said the report.

“While the products available have sometimes been substitutes for familiar brands, the UAE has not seen shortages of the scale experienced by countries in some other regions. This is an indication of the resilience of the country’s supply chain and its high inventory levels,” said the report titled ‘Life after Covid-19: Logistics’ launched jointly with the Dubai Future Council on Logistical Services.

The Dh220 billion UAE logistics sector, which is expected to contribute eight per cent to the UAE economy by 2021, has largely benefited from the country’s free zones and massive infrastructure investments, with significant growth anticipated in the coming year, according to the Federal Competitiveness and Statistics Authority.

The strategic and technological investments made in its ports, airports and free zones are paying off, allowing them to remain open and fully operational.” The report’s findings claim the need for higher buffers of inventory levels, and the recent growth in e-commerce has put the focus on industrial real estate, with investors already having begun to identify opportunities.

Khalfan Belhoul, CEO of the Dubai Future Foundation, stressed the importance of strengthening collaboration between the government and private sector as well as international organisations. “Such collaborations are needed not only to support and build a resilient logistics sector, which is seen as one of the vital economic sectors in the UAE, but also to anticipate changes and propose suitable solutions to overcome those changes that are imposed by the global health pandemic.

“Covid-19 has taught us something which we might have forgotten in the last decade of growth which is about being self reliant. And logistics industry is one of the most vital sectors which helps keeping the economies and govt function smoothly in making sure the supply-chain for essential and non-essential needs of the respective populations are taken care off,” Shailesh Dash, board member, Gulf Pinnacle Logistics, said.

Studies developed by the Ministry of Economy believe that the country’s integrated free zones, massive investments in infrastructure and fast-growing e-commerce are some of the key reasons that are driving the logistics industry and putting the UAE ahead of the most of the emerging markets globally.