UAE businesses are facing mounting pressure from rising logistics costs and supply chain uncertainties, with one multinational reporting a staggering 160 per cent year-on-year increase in the cost of moving goods due to geopolitical disruptions.
For businesses dependent on cross-border supply chains, the impact is extending beyond higher transportation bills.
Companies are having to reassess customer commitments and protect product availability as uncertainty makes planning increasingly difficult.
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Speaking during a session titled Same Country, Different Problems at the NAFA Summit Dubai, finance leaders from sectors including food, pharmaceuticals and logistics highlighted how regional and global disruptions are changing their day-to-day priorities.
Umberto Giovanni Maccari, CFO Middle East and Africa at The Kraft Heinz Company, said the company’s reliance on centralised manufacturing facilities had made logistics a particularly important cost factor.
The company does not manufacture in every market where it operates, meaning products must be transported from factories in different parts of the world to reach consumers in the Middle East.
“The increase in logistics costs year on year is 160 per cent. So, the cost of moving bottles of ketchup from our factories across the world, whether in Egypt, Russia or Europe, to the Middle East has almost tripled.”
The increase illustrates how geopolitical developments and disruptions to international transport routes can quickly feed into the cost of everyday consumer goods.
Product availability becomes a daily concern
For pharmaceutical companies, however, the bigger concern is not simply the cost of moving products but ensuring that patients continue to receive medicines when they need them.
Rachid El Amrani, Director of Finance and Operations (UAE) at Novo Nordisk Gulf, said product availability and supply continuity remained his primary concerns in the region.
He stressed that ensuring medicines reach the right markets on time was central to the company’s responsibilities, particularly when supply chains face unexpected disruptions.
“In this part of the world, what I watch for daily comes down to product availability and supply. We want to make sure that the products our patients depend on reach the markets where they are needed, on time and reliably. That’s what keeps me up at night, particularly from a continuity perspective.”
The uncertainty is also changing how businesses approach their customers and plan investments in infrastructure.
Mohamed Galal, Senior Finance Director at Vopak, said geopolitical developments had triggered a noticeable shift in customer behaviour, with businesses increasingly reluctant to commit to longer contractual periods.
He said customers who previously signed contracts spanning two to three years were now favouring shorter renewal cycles, creating additional pressure for companies that need long-term commitments to justify infrastructure investments.
“Nowadays, they are increasingly shifting towards much shorter renewal periods, which puts pressure on us because we have to invest in infrastructure. So, we need to work with this. There has definitely been a change in mindset.”
Growth plans, risk management under scrutiny
The changing business environment is also influencing how finance leaders approach cash flow, credit exposure and capital expenditure, with some companies choosing to postpone investments that are not immediately essential.
Vishwanath Iyer, Regional CFO MEA at ECU Worldwide, said the logistics industry was particularly exposed because of its dependence on customer credit.
He explained that delayed payments and money tied up outside the business become more expensive risks during uncertain periods, prompting finance teams to exercise greater caution over funding and investment decisions.
“The logistics industry is characterised by heavy credit. Customers are treated like banks. You are treated like an extension of a bank.
“And because of the situation, whatever money is outside and not with you, the risk premium associated with that goes up. That again increases the risk manifold.”
Iyer said companies were also becoming more selective about long-term spending, particularly capital expenditure (capex) that was not critical to immediate business operations.
While higher freight rates could offer some relief through improved margins, he said the broader uncertainty was making expansion plans harder to justify.
“In terms of decisions…one area is capex and all other long-term funding decisions that are not critical to the business. They get deferred. Looking at growth at this stage is not an option.”
For Adnoc Distribution, meanwhile, the focus is on ensuring the business remains financially resilient while retaining the ability to respond quickly to disruptions.
Ali Siddiqi, CFO of Adnoc Distribution, pointed to the company’s recent financial performance, saying it had recorded a 37 per cent increase in profit.
He said strong financial results needed to go hand in hand with robust risk assessment and the ability to adapt as business conditions changed.
“Firstly, we announced the results on Monday, and we are 37 per cent up in terms of profit.
“The company strategy is where we, as CFOs, need to make sure that it’s better tested. We need to make sure that our enterprise risk management is absolutely at its very, very best.”
Siddiqi added that businesses needed to be prepared for different kinds of disruptions, whether geopolitical, technological, commercial or driven by changing customer behaviour.
“So, in case of these kinds of regional disruptions, or technological disruptions, commercial disruptions, customer disruptions, we need to have the agility to respond to that.”
Other panellists at the session included Giorgio Giacinti, Group CFO and Board Member at Silal, and Kashish Kohli, Group CFO and Senior Vice-President, Asset Management Division, at The Sanad Group.
Source: Khaleej Times