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04 August, 2009

Al-Futtaim Logistics brings transport business in-house

In an unprecedented move which is expected to result in a cost reduction of 15 per cent, Al-Futtaim Logistics has moved away from the present industry trend of outsourcing business functions and has brought its transportation business in-house.

This new direction for the company follows its cancellation of third-party transportation contracts for domestic transportation. The fresh approach also comes close on the heels of the purchase of 35 Hino and Volvo tractor heads and 60 customised container flatbeds, box-vans and taut-liner trailers from Munro International, a well established transport equipment provider.

The move of its fleet operations in-house is also seen as a measure of strong confidence in Al-Futtaim Logistics' ability to gain fresh business initiatives during these difficult times, when many logistics companies have adopted a cautious approach towards development plans.

Tom Nauwelaerts, Head of Logistics, said that deteriorating service levels, increased prices from transportation subcontractors and substandard equipment which did not truly match requirements, were identified as key drivers in the decision to bring the transportation function in-house. He added that the move has enabled Al-Futtaim Logistics to become extremely competitive by combining day-time transportation with night-time operations, thereby ensuring maximum utilisation of vehicles.