São Paulo – International logistics corridors are undergoing a transformation, with competitiveness shifting from cost and transit time toward the ability to adapt freight transport to different circumstances. The new landscape requires countries to build networks rather than simple port connections and rethink how businesses are managed.
Broadly speaking, this was one of the ideas Egyptian logistics, international trade and supply chain expert Sara El-Gazzar discussed during her visit to Brazil last week, when she spoke to ANBA about her research. The current impact of geopolitics on global shipping routes has made the issue more urgent.
“It’s no longer like before. We now need to look at dynamic routes that can change depending on the situation,” she said.
Dean of the Faculty of International Transport and Logistics at the Arab Academy for Science, Technology and Maritime Transport (AASTMT) and senior consultant to the Union of Arab Chambers, both based in Egypt, El-Gazzar was in Brazil in late August as a panelist at the Brazil & Arab Countries Economic Forum, held by the Arab-Brazilian Chamber of Commerce (ABCC) in São Paulo.
One of the designers of Egypt’s food subsidy system and leader of more than 15 European Union-funded projects, she conducts logistics research at an economic center of the Union of Arab Chambers and the research center of the faculty where she works. The two institutions collaborate on the concept of competitiveness based on resilience and value chains.
Below are some of Sara El-Gazzar’s main ideas, shared in an interview with ANBA, on the transformation of global logistics corridors.
New competitiveness in transport
“Looking at what is happening all over the world today, you can see how political issues are currently managing logistics arrangements, logistics routes and logistics corridors, which are now being used from a political perspective.
“And accordingly, if we look at the current situation, we can say that logistics corridors have been witnessing an unsustainable situation, and competitiveness will no longer be measured by the cheapest way of transport or the most efficient way of transport, but by the most adaptable way of transport.
“Competitiveness now is more related to more reliable modes of transport and more adaptable ways of transport. Accordingly, we need to change the way we manage logistics arrangements and how we manage business all over the world.”
The connection between Brazil and Arab countries
“That’s why the logistics connection between Brazil and the Arab countries shouldn’t be judged based on geographical connections anymore. We shouldn’t rely only on the geographical connections between ports; we should rely on what we call networks. So, according to this, we shouldn’t look at Brazil only as Brazil; we should look at Brazil as Latin America.
“And we should look at the different routes connecting Brazil with different countries in Latin America and how Brazil can serve as a gateway to Latin America by aggregating routes from different Latin American countries, whether we are talking about trade or value-adding activities. Because this is the way of managing a sustainable supply chain through value-adding activities.
“From the other perspective, although the Arab countries have a unique geographical position, they cannot depend on it anymore. When we talk about the geographical position of Bab el-Mandab, the Strait of Hormuz or Gibraltar, they are not as helpful anymore due to the current situation all over the world. So we should talk about alternative hubs or alternative networks.
“So, how can we manage the nodes between Arab countries and their neighbors? I mean, how can we, for example, look at Morocco as a gateway to West Africa and Europe, and Egypt as a gateway to Africa and also the Mediterranean, and the Gulf as a gateway to Asia?
“And by this way, we can look at Brazil and the Arab countries as networks to connect the world together, from Latin America to Africa, Asia and Europe. By this way, we should look at multimodal transport. So it’s a dynamic relationship, not a sustainable route anymore.”
The era of dynamic routes
“So I cannot say we have the Suez Canal, we have Bab el-Mandab, we have Hormuz. It’s not like before. We should now look at dynamic routes that might be changeable according to the situation.
“So today, if a route is blocked due to a war or due to a certain situation, we need to identify what is the best alternative at that moment. And the best alternative is not the cheapest. The best alternative is the one that is adaptable according to each situation.
“So the countries that have this power, the power of being adaptable and resilient, the countries that are business-oriented, are the countries that have the networks.”
The focus on reaching the destination
“A few years ago, when we started talking about alternative routes, even within think tanks, they said it was a crazy idea. ‘Why should we abandon sustainable routes that are already efficient, cheap and fast, and invest in others?’ But after the war and the different geopolitical situations, it became clear that no, nothing is sustainable, nothing is guaranteed.”
“And to survive in this world, you need to guarantee that you can deliver products and services to the final destination by any means, because this is what you need to survive. So maybe you can sacrifice cost, and maybe sometimes you can sacrifice time, to reach the final destination. So it’s always an equation of trade-off: what can I sacrifice in the formula to reach the final destination?
“The old formula was to reach the customer with the lowest possible cost, the lowest possible time and the highest quality. Now we don’t have the same formula. It’s always a trade-off now.”
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Trade: New landscape calls for alternative routes
Translated by Guilherme Miranda
