Sacked

Amidst global economic downturn, the logistics industry is facing increased challenges in order to stay afloat. So what does this mean for those working in the sector?

Phillip Richardson is sitting at Starbucks, scouring the employment section of a local newspaper when I meet him to discuss his search for work. He is surrounded by others doing what appears to be the same thing. After three years working for one of the largest employers in the UAE as a logistics manager, he was recently made redundant and now faces what most would assume is a tough challenge to find a new position at a time when ‘job losses’ seems to be a far too common phrase.

“Unfortunately, I seem to be one of many that have lost their job and I certainly wasn’t the only one in my department to do so,” he says. “Now, I’m trying to send my resume out to as many companies as possible. I have a family to support.”

Statistics on just how many job cuts have been made in the region differ wildly, depending on the source. Gulf News recently reported 3,200 jobs had been lost in Dubai since January, while a number of news outlets have reported on the “1,000s” of cars left at Dubai International Airport as expat workers lee the emirate, unemployed and in debt.

Further abroad, the figures stack up to paint a bleak picture. Speculation is rife that logistics powerhouse Kuehne and Nagel will axe up to 4,500 jobs globally should declines in cargo volume continue (a review of the careers section of their website indicating no jobs in Africa, the Middle East, North and South America), significant given the company has a workforce of 54,000 people.

In Europe, PKP Cargo, one of the region’s largest freight carriers, has announced it will cut 9,000 jobs by the end of the year, over 20 per cent of its staff. The total tonnage moved by the company fell from 145 million tonnes in 2007 to 122 million tonnes in 2008.

Norwegian operation Teekay Shipping has faced immense pressure from trade unions after revealing plans in February to replace 200 Scandinavian seafarers with Pilipino staff in order to reduce overheads. This figure has since been downscaled to 100. Unions called upon the government to protect the local industry, who reacted by introducing new regulations requiring Norwegian work permits on ships operating within Norwegian territories.

Back in the Middle East, it seems the news is not all bad. Bryan Fuge, Head of Recruitment for Al-Futtaim Group, which includes Al-Futtaim Logistics, says the division are currently recruiting a number of staff.

“We are in good shape, we will definitely need to recruit this year,” he says. “I cannot quantify the exact number, we currently have tenders out for lot of business so it’s linked to some extent to that.”

Fuge explains that, while recruitment will go ahead over the coming year, the process followed and the type of staff they will hire will differ from other years. “We are focused on seeking fewer, higher quality candidates; paying better than the average salaries across the Gulf and recruiting a higher calibre of staff, rather than lots of low paid workers,” he explains. Al-Futtaim hopes this will help them provide a better quality of service, particularly on the front line, where business is often won and lost in troubling times.

Nigel Moore, Managing Director for the Middle East and Africa arm of recruitment and consultancy firm, Logistics Executive, agrees.

“We saw a period of denial up until mid January and then people woke up, realised what was happening would affect them and froze recruitment. Eighty per cent of our clients were doing no recruitment at all,” he says. But this soon changed, he explains, “the Middle East still had projects going ahead so it didn’t make sense not to do any recruitment.”

Moore says Logistics Executive are seeing more and more clients, particularly large international companies, while not recruiting on large scales, still sourcing candidates with specific skill sets and qualifications. “Good candidates are always going to be scarce in the logistics and supply chain industries,” he says, explaining that in times of downturn, companies are more likely to retain their best staff.

He concedes that companies face continued pressure to cut costs, but says reducing headcount is not necessarily the answer. “Now is the time to review the organisation and talent and make sure the talent aligns with the company’s long term plans and strategies.”

Moore explains that ‘talent management’ is the key to ensuring organisational efficiency, thus keeping costs in check. This involves ensuring staff at key levels operations, divisional and regional departments, for example – have the skills, qualifications and experience to do the best job possible, “Do you have the right strengths at each level?” is the question that should be asked, he says.

In Moore’s opinion, organisations need to focus on recruiting and retaining quality staff, particularly in key positions, in order to get through the next two years. “The past five years have been all about growth, growth, growth, and this has meant that often quality was overlooked in favour of quantity, staff-wise,” he says.

Perhaps this was the case for global shipping, logistics and marine group, GAC, who recently announced that it will shed thirty of its 1000 UAE workers. They are now looking at other measures to avoid further redundancies. “We are increasing the amount of training and cutting down on overtime,” says the Dubai-based company’s Group President Lars Safverström, although he concedes this will not be enough to save those being let go from the logistics operation.

Perhaps a lesson has been learned. “Our strategy is such that we are flexible and we want to stay close to the market so we can immediately adjust to circumstances rather than just making a snap decision now and reviewing it six months later when we have to take drastic action,” says Safverström, adding that he is confident of an upturn in business in 2010.

It seems that while the current economic climate makes any kind of business tough, the logistics industry in the Middle East is poised to fare better than many other regions, with lower numbers of job cuts and higher numbers of replacement and new hires.

“I think it’s a case of, if you work in the logistics industry, the Middle East is the place to be right now, compared to anywhere else in the world,” explains Brian Fuge. Many, including Phillip Richardson, are hoping he’s correct.