How are you coping with Covid-19’s effects on the back of low energy prices and cost-cutting and what implications have these had on your business and operations?
These are indeed tough times which have been compounded by the pandemic and by the crash of oil prices. Fortunately, our business model is not exposed to major commodity price risks, which has ensured that we have been able to cope with this crisis without implementing any extreme measures. We are using our experience tackling Covid-19 to reinforce our leadership position by safeguarding the health and well-being of our employees and by allocating our capital only to strategic use rather than making uniform cuts across the organisation.
We did see a slowdown in our cross-border logistics movements due to mandatory quarantining of drivers at border crossings; however, our maritime logistics business benefited in the first quarter due to the strong tanker market. Our fuel storage business was hardly impacted due to our take-or-pay contract models.
Our remote fuels business supports peacekeeping and humanitarian missions, which have not been curtailed due to Covid-19. There is of course some limitation in the movement of troops and flights due to precautionary containment, which has resulted in the reduction of aviation fuel volumes. However, we expect aviation operations to normalize once Covid-19 is under control.
On the maritime front, our business has grown, and as we expand our operations with new long-term contracts with oil majors, we expect it to grow further. We have also just taken delivery of a series of new vessels that were contracted in 2018.
In short, our business model is extremely resilient. The long-term contracts with our investment grade customers have ensured that our revenue streams continued without any pressure or possibility of cancellation or price negotiation. Additionally, astute management of our business continuity plans and our crisis preparedness, with day-to-day oversight by our executive Covid-19 committee, have ensured that employees who tested positive were immediately isolated and treated so that the virus did not spread. We also provide regular business updates on Covid-19 to our customers, which is well received as it assures no risk of disruption to their individual supply chains.
What are the trends you expect to see in the warehousing and logistics industry, as we make our way down the road to recovery?
Looking ahead, there are three key focus areas for logistics players as they work towards the economic recovery of the industry and the country.
Government collaboration: Across the Middle East, working with regional governments will be key to making supply chains resilient enough to weather through a pandemic. The goal can be to help governments procure supplies, or it can be to help them develop processes and infrastructure that will enable an uninterrupted supply of essential goods through sustainable supply chains.
Selective automation: Logistics firms should look to invest in technology and training that protect and enhance human productivity and reduce operating costs, for example, robotic process automation, remote vehicle management and artificial intelligence solutions to help with predictive maintenance and forecasting analysis.
Additionally, blockchain can be leveraged to provide real time oversight of warehousing and distribution processes.
Customer preservation: In energy logistics, a people and service led approach to business whereby there is a focus on meeting and exceeding customer expectations to build loyalty and preserve business continuity in times of service disruption or crisis.