How did Qatar deal with Supply Chains during a Blockade ?

Welcome Readers !

I am Sheerapthi Ramiya, 2nd Year MBA from Amrita School of Business, coming back with this week's read ! Hope my readers are doing well and I hope you enjoy :) 

Imagine a country which has established  its supply chain beautifully with its neighbouring countries and then suddenly they cut the supply chain because of a political issue! What would you do without supplies of food?! This is something I faced personally while I was living in Qatar. I bring this story to light to show how Qatar stood on its feet even though they cut the most important factor that feeds the country - Their Supply Chain.

Background

Qatar is a country which has about 28 lakh people, about which around 12% are Qatari nationals and the rest 88% are Non-Qatari nationals. Qatar before the blockade relied heavily on its neighbouring countries to feed the nation. 

Political tensions in the Gulf Region elevated with the rise of a coalition of five nations, Saudi Arabia, Egypt, Bahrain, Yemen and the UAE, enforcing a blockade of Qatar. This action was sparked due to false news stories from the Qatar News Agency (QNA) on May 23 2017, which attributed comments from the country’s Emir critiquing US and Saudi foreign policy in the region, and referring to Iran as a stabilising influence. Qatar quickly rejected the posts and the authenticity of their content, arguing that QNA had been hacked.

The Blockade

Regardless, this event broke brotherly relations among the Arab countries. The five partners have accused Qatar of supporting extremism, and proceeded to cut all relations. As a result, Qatari flagged ships and aircraft are now prohibited from crossing into the territory of the aforementioned nations. This ban also extends to feeder services which call at Qatari locations, which has caused significant problems for inbound supply chains. The vast majority of Qatari sea freight imports have historically been shipped from Jebel Ali in the UAE, whilst most food and beverage imports were previously trucked over the Saudi border.

Figure Above shows the airspace and air routes during the blockade

Figure above shows the map showing how vessels need to enter and leave from Qatar. The red circle depicts where vessels where called for not entering Qatar.

However, several factors combine to ensure that Qatar, whilst inevitably weakened by the actions of the Saudi led coalition, is well-equipped to endure.

Qatar's Supply Chain

Firstly, the country relies on highly developed air and sea infrastructure. Hamad International Airport in Doha is the second-largest air cargo hub in the region after Dubai International, and handled 1.7 million tonnes of goods in 2016. Hamad Port became fully operational in December 2016, and has an annual capacity of 2 million TEU (Term for Shipping Containers), 1.7m tonnes of general cargo, 1m tonnes of grain and 500,000 vehicles.

As regards air freight, cargo shipments only face lengthened flight times if they are connecting to/from Southern Europe, North Africa, or the Horn of Africa. Routes to Northern Europe and North America generally pass over Turkey and Iran, and are thus unaffected, as are flights from Asia.

The Response to the Blockade

Iran and Turkey have already begun sending food exports to Qatar to balance against initial shortages whilst longer-term solutions to the country’s supply chains are ironed out. Four Iran Air cargo planes landed in Doha on Sunday, with Iran’s Tasnim news agency also quoting an official stating that three ships containing 350 tonnes of food would also be sent to the country.

As far as exports go, Qatar is unlikely to be affected by the blockade. The country has become the world’s richest, on a per capita basis, due to the sale of liquefied natural gas (LNG), which it mainly sends East to Japan, South Korea, Singapore and India. In order to get to these countries, ships have to first transit the chokepoint of the Straits of Hormuz, but this passage is presided over by Iran and Oman, which each maintain pragmatic relations with Qatar. Any exports heading West must transit the Suez Canal, though Egyptian authorities have maintained this route would only be closed to Qatari vessels in the event of war.

Post Blockade

Even though Qatar sourced supplies from Turkey and Iran, it could not be dependable as they used to rot quick due to the lead time. Qatar’s aim was not survive on neighbouring nations, it wanted to be independent. This gave to the rise of “MADE IN QATAR” products. The Government of Qatar funded as well as supported the growth of local produce in Qatar. This gave the rise of Baladna, a Local Dairy Factory. 4000 Norwegian cows were imported to help supply the entire country. In house farming and contract farming abroad has also been established to produce vegetables for the country.

The Baladna Milk Factory in Qatar

Final Thoughts

All in all, this means Qatari supply chains are well-placed to weather the storm. Imports into the country will certainly remain expensive, but the re-routing of cargo is demonstrably feasible. The quick reaction by Qatar to layout supply chain for goods really stabilised the country by not causing panic. The “MADE IN QATAR” scheme also saw an end to depend on neighbouring countries to be self-sufficient. This strengthened the supply chain for FMCG products in Qatar. Hence the country’s supply chains appear to be secure. Countries receiving treats from it neighbouring nations should learn from Qatar and grow towards being self sufficient and self reliant.

If you haven't check out my last week's read, which is about how data is transferred from a vehicle to a TMS, click the link below !

https://logisticsmatters.blogspot.com/2020/08/telematics.html

- Sheerapthi Ramiya

ASB, Coimbatore