This Q&A by Hamad Bin Khalifa University features Dr Frank Himpel from the College of Science and Engineering and tackles the supply chains and logistics system in the country. Amidst this global COVID-19 pandemic, will Qatar weather the crises?
Doha diversified its global supply chains since the blockade in 2017. Has this enabled Qatar to also weather the ongoing COVID-19 situation better?
Qatar’s efforts in response to the 2017 rift prepared the country particularly well, although we need to see that this diplomatic crisis and the current coronavirus situation, have very different contexts. The blockade intended to isolate Qatar ‘outside-in’, and forcefully cut the country off from its neighbours. Today’s situation is seeing states choosing to isolate themselves ‘inside-out’, to decelerate the spread of COVID-19 and safeguard the well-being of populations globally.
The effects of both events are, however, alike, especially from a logistics and supply chain perspective. Qatar handled the circumstances of the blockade extremely well, which has shaped the country as it stands today.
First, Qatar now has a supply base that is more diversified than it used to be three years ago, while for instance, only four countries accounted for more than 90% of its milk and dairy product imports before June 2017. The next period saw the number increase to more than 24 countries, making up the supply base. In the milk and dairy sector, Qatar is overly self-sufficient, with capacity to even export to customers abroad.
Qatar is less dependent now on any single country to secure its supply. While in the pre-blockade years, one country could be the origin of much more than 30% of the imports of a needed product, the volumes today are strategically managed, ensuring that dependency on one supplying country always remains below 30%. Single sourcing is no longer an option, which actively mitigates supply chain risks and reduces reliance.
Third, there is a higher redundancy in supply for certain products. For example, if there is a shortfall in Australian beef, supply is secured from European sources and vice versa. These multiple-sourcing strategies have drastically reduced overall supply chain risks for Qatar.
In a globalised world, it is near impossible to live in one country without risking exposure to others. The problem the globe is facing with COVID-19 is the exponential growth of people being infected, just like in the so-called ‘wheat and chessboard’ problem. While numbers are rapidly growing, it takes time to learn about a problem, gather information, validate it, and then re-validate it before we can act.
This is standard, yet slows down decision-making, with exponentially rising opportunity costs for making that decision. With COVID-19, we could see thousands more infections with every additional day decision-making takes. In consequence, necessary measures would have to be different every time.
In all of this, Qatar is in a tremendously advantaged position, having addressed the pandemic early on in a highly responsible manner. Qatar took bold steps, not only to contain the spread of COVID-19, but also to fully uphold the integrity of its supply chains and the security of its logistical systems, ensuring an uninterrupted day-to-day supply of all needed goods.
In 2017, Qatar launched the Strategic Food Security Facilities (SFSF) in Umm Al Houl. Partnering with industry leaders from Germany, Italy and Switzerland, this Hamad Port project consists of storage facilities, silos, reservoirs, and facilities for the processing, manufacturing and refining of rice, sugar and edible oils.
Qatar has also established storage facilities for 22 identified food and non-food items to last for at least six months up to a number of years. Taken together, food, medical and other supplies are safe for the foreseeable future. The country also monitors quality and prices for those products, guarding against inflation or monopolistic practices.
What adjustments did COVID-19 force upon Qatar’s strategies for mitigating supply chain risks?
According to the World Bank, Qatar’s food imports, as measured in the percentage of its overall merchandise imports, have been relatively lower than that of other countries in the region. The country has its own production capacity for needed supplies while policies, procedures and technologies are in place to guarantee the integrity of its supply chains. Qatar’s agricultural sector has provided commodities and services to the local market.
Today, Qatar is beyond self-sufficient in milk and dairy products, and even more in poultry. All of this makes for a functioning micro-climate that lifts the country. In addition to an internationally impressive storage capability, Qatar has established diversified sea routes and air cargo capacities to continue linking the country to worldwide markets. Indeed, COVID-19 does not seem to have forced any adjustments to the country’s strategies so far.
What logistical problems can occur due to a pandemic situation like the one we are seeing now? And what capacities does Qatar have to respond to such challenges?
Supply chain flows in Qatar are stable. However, it is not only Qatar being impacted by COVID-19. Major logistical infrastructures such as seaports and airports around the world are experiencing steep inclines in the volumes that need to be processed. This can lead to congestion and the unavailability of equipment, thereby hindering the transportation from originating countries, which might be severed if workers there need to be put into quarantine.
Taken altogether, COVID-19, therefore, poses more of a logistical challenge. In this regard, Qatar is again in an advantaged position. The country possesses superior air cargo capabilities, with Qatar Airways Cargo being a global leader. There is always the option and capacity to shift sea-bound traffic onto air cargo capacity, and vice versa, should the need arise.
In light of this COVID-19 pandemic, what lessons can be learned to make supply chains even more secure ahead of the next global health challenge?
Critical will be the further advancement of strategic foresight capability with regards to early warning systems. Sophisticated forecasting and modelling towards ensuring uninterrupted supply and ‘smart’ storage of items is necessary for all countries.
Focusing on Qatar, the country has shown great strengths in dealing with the current pandemic. In fact, citizens and residents can be confident, being able to live in Qatar during this extraordinary time.