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Abdulla bin Damithan

Gulf businesses eye 'double-digit exports growth' in 2024

DUBAI, February 22, 2024

Despite escalating geopolitical tensions, executives from the UAE and Saudi Arabia expect double-digit growth in exports in 2024 and are deploying innovation and technology to counter supply chain challenges.
 
This is according to new research commissioned by DP World and led by Economist Impact. 
 
The annual Trade in Transition study, commissioned by DP World and led by Economist Impact, captures the perspectives of trade experts and senior executives globally. 
 
Radical transformation
The study finds that as the UAE and Saudi Arabia undergo radical transformation to move away from fossil fuels, companies are focussed on diversifying networks and growing exports in new markets in 2024. They want to make their networks more varied, selling more products in new markets. 33% of business leaders believe that expanding operations in new markets will be the primary growth driver of exports for both economies.
 
This helps companies deal with problems, lower risks and make it faster to start selling in a new place. About 57% of companies believe they will sell 10% more or even higher in 2024. Also, 40% of companies think they will buy 10% more or even higher.
 
This growth comes from selling things to India, GCC and Egypt. In response to geopolitical events, companies are deeply considering risks in their supply chains. They are using new technologies like robots and automation, and they are also changing how they manage their supply chains using smart strategies such as friendshoring and dual resourcing.   
 
2023 was a pivotal year in supply chain innovation
The global survey found technologies that improve supply chain efficacy and resilience to be the main source of optimism for almost a third of business leaders when asked to assess the future of global trade. Other key highlights of the Trade in Transition study include:
 
Widespread adoption of AI: Companies are taking advantage of AI to reduce trade costs, enable better resources, supply chain planning and reduce disruptions. Almost a third (30%) are using AI to forecast demand and 33% to optimise inventory levels. 
Future technologies: In the coming year, businesses plan to incorporate advanced automation (35%), augmented or virtual reality (31%), 3D printing and blockchain technology (26% and 20% respectively) to enhance efficiency, traceability, security and data protection. This builds on technological advancements made last year, with nearly half of the surveyed businesses using AI, big-data analytics and predictive analytics for the first time in 2023, enabling real-time insights and disruption forecasting and 36% using blockchain for the first time. 
Strategic supply chain adaptation: Businesses are strategically navigating heightened geopolitical risk by employing friendshoring (44%, compared to 36% globally), establishing parallel supply chains (35%) and expanding into neutral markets (28%). These trends are driven by a desire to lower transport costs and reduce supply chain disruptions.
Consolidation trend: A quarter of businesses are opting for fewer suppliers. This trend towards consolidation is driven by a desire to reduce supply disruptions, even as businesses grapple with the trade-offs between diversification and control, and risk management.  Diversification remains the most popular approach to geographical reconfiguration, with 43% of companies using it to build resilient supply chains. Creating dual/parallel supply chains to boost resilience and align with a more regionalised approach to supply chains is cited by 34% of executives as the most effective strategy for reducing overall trade and supply chain costs.
Trade hurdles in 2024: Businesses face significant challenges in exporting and importing due to uncertainties surrounding tariffs, with 26% (compared to 20% globally) expressing apprehension regarding exports and 18% concerning imports. Other challenges include increased inflation and economic uncertainty, leading to higher input costs (25%), and political instability in key source markets (22%). 
Prioritising resilience: Despite increased costs, businesses are maintaining substantial extra inventory in the face of current geopolitical uncertainties, with 45% of executives incorporating a 1-3 month buffer times into their supply chains – the highest among all regions surveyed.  
 
Abdulla bin Damithan, CEO and Managing Director at DP World GCC said: “As we navigate the evolving geopolitical and economic landscape in 2024, companies are aligning their strategies with initiatives like Dubai’s D33 and Saudi Arabia’s Vision 2030 to tap into new markets and boost opportunities in trade. Our research underscores the critical role of technology in strengthening supply chains and anticipating disruptions. Embracing emerging technologies is not only about overcoming challenges; it’s about resilience, adaptability and a firm commitment to a future where innovation drives success.”--TradeArabia News Service
 



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