Denial is the first stage

by Kathryn SemcowDecember 1st, 2008 | Editorial, Issue 13 December 2008

Let’s use this time to change

It’s difficult to tell just how hard the financial crisis has hit the industry in the Middle East. We live in a culture of denial, after all, where corporations are eager to boast profit and quick to hide loss. No one seems to want to talk about their problems publicly. Soon, however, they may have a tough time hiding their tears.

Signs of logistics pain are already showing up in other parts of the world. DHL has announced that it will close all 18 of its hubs in the United States, cutting its workforce down from 13,000 to 3,000. This follows an announcement in the summer that they would outsource many of their services to UPS. The other guy, FedEx has been reporting losses since June.

On the airline side, carriers are hurting. Many airlines, including Etihad Airways, have started leasing aircraft instead of buying them, according to leasing firm BOC Aviation. Singapore Airlines is reporting its largest drop in profits since the Asian financial crisis. Even Emirates is admitting it has failed to rake in the cash it usually does.

The storm is also passing over the sea. The Baltic Dry Index is, well, dry. In recent months, the cost of shipping a container from Asia to Europe dropped by more than 75 per cent. Research firm Drewry Shipping Consultants Ltd. has told the press it expects a five per cent decline in container volumes from Asia to the US in 2009, after years of double-digit growth.

If the heart of this crisis is the United States, then perhaps that is where the solution lies. Many Americans seem hopeful their new president, Barack Obama, can perform open heart surgery on the economy, suturing the wounds caused by President Bush. If one man can do so much damage, surely another man can offer just as much repair.

In the meantime, we have to remember that this, too, shall pass. The economy is a mood. It moves up and down in waves, which seem to balance out over time. We’ve been riding high for long enough and now it’s time to settle down. Let’s use this shortage of cash to eliminate efficiencies, keeping only what we really need. Let’s use this drop in demand to develop our businesses so that they can super compete. And most importantly, let’s use this slowdown to finally work normal working hours. There’s no denying we all deserve a bit of a break.