INSIDE THE NEW RISK REALITY FACING GCC TRADE AND LOGISTICS

Exclusive interview with Aurélien Paradis, CEO of AU Group MEA

How Supply Chain Disruptions Are Reshaping Trade Across the GCC?

What we are seeing across the GCC is a reset in how trade moves. Goods are still flowing, but the routes, timelines, costs, and risk assumptions behind them are changing. That is the real shift businesses are now dealing with. The pressure on key shipping corridors has forced companies to rethink the way they move goods across the region. Many are having to re-route shipments, work with a wider mix of logistics partners, and rely more heavily on alternative models such as land bridge solutions or sea-air combinations. At the same time, higher freight costs, with carriers introducing surcharges ranging from USD 1,500 to USD 4,000 per container, rising insurance premiums, and longer transit times, with the rerouted sailings adding around 10- 14 days, are putting additional pressure on already tight supply chains.

For businesses in the GCC, this creates a very different operating environment. Essential imports, raw materials, and industrial inputs may still arrive, but not with the same predictability companies were used to. And once predictability is lost, the impact is felt well beyond logistics. It affects project timelines, inventory planning, customer commitments, and ultimately working capital. Even with the re-opening of the Strait of Hormuz, it will take time to make-up for the delays. So, the real story is this: trade in the GCC is continuing, but under a new risk and cost structure. Companies that adapt fastest, by building more flexibility into sourcing, transport, and risk planning, will be in a much stronger position than those still relying on old trade assumptions.

Why GCC Companies must Rethink Credit Risk in a Volatile Trade Environment?

At its simplest, trade credit insurance exists to protect a business when a customer cannot pay for goods or services. It is built on a basic commercial truth: a sale is only complete when the cash is collected. In more stable conditions, many companies treat that risk as manageable and assume late payment can be absorbed. The problem today is that volatility is changing the risk much earlier in the trade cycle.

Receivables are often one of the largest assets on the balance sheet, so when they come under strain, the effect is immediate on cashflow and working capital. The stronger businesses will be the ones that reassess buyer quality earlier, stay closer to payment behaviour, and act before stress becomes loss. In this environment, protecting the receivable is just as important as moving the goods.

Why Trade Credit Insurance Is Gaining Importance in the GCC

Because businesses are operating in a market where uncertainty is no longer occasional; it is becoming part of the trading environment itself. In that kind of climate, companies are paying closer attention not just to how much they sell, but to how securely they can sell on credit. The value of trade credit insurance is that it does not only protect against non-payment. It also gives businesses a more informed view of the customers they are trading with and the level of exposure they are carrying. That becomes particularly important when supply chain disruption, rising costs, and liquidity pressure can weaken a buyer’s position quite quickly.

What is changing is the way companies are looking at the tool. It is no longer seen only as a defensive measure used after something goes wrong. More businesses are using it as a way to trade with greater confidence, protect cashflow, and make better credit decisions while conditions remain volatile. It can also strengthen access to financing, because insured receivables are often viewed more positively by lenders. In that sense, trade credit insurance is gaining relevance not only because risk is rising, but because it helps businesses stay commercially active without taking unnecessary exposure. The companies that understand this are treating it less as a safety net and more as part of a stronger growth strategy.

What are the biggest logistical challenges currently affecting GCC businesses?

The biggest issue at the moment is that companies are not facing just one logistical challenge, but the piling up of several at once. Businesses are dealing with route disruption, longer transit times, capacity pressure at alternative ports, customs and documentation delays as cargo is redirected, and higher transport and insurance costs as carriers adjust to a more volatile operating environment. Even when goods can still move, they are not always moving through the most efficient or predictable channels, which makes planning far more difficult for importers, distributors, and project-led businesses. That loss of predictability is often the most disruptive part, because it affects everything from inventory timing to delivery commitments and resource allocation.

What can make things more serious and with a lasting impact is the scale and the duration of the disruption. In practical terms, that means companies must now incorporate higher risk for rerouting, and delays rather than treating them as exceptions in the GCC region. The businesses managing this best are the ones increasing flexibility in routing, diversifying logistics partners, and planning for disruption as a recurring operating condition rather than a temporary shock

Q5. Which sectors are most vulnerable to supply chain disruptions?

Several industries across the GCC are feeling the sharpest impact from current supply chain disruption, particularly those that rely heavily on global shipping routes, imported inputs, or time-sensitive delivery cycles. Food and FMCG remain among the most exposed, especially within the cold chain, where fresh produce, meat, dairy, and other perishables depend on strict timing and uninterrupted movement. Manufacturing and industrial sectors are also under pressure, as delays in raw materials and inbound components can slow production, raise inventory costs, and strain working capital.

Construction and building materials face similar challenges, with many projects across the region dependent on imported supplies, meaning longer transit times can lead to delays, cost overruns, and pressure on already demanding timelines. Energy-linked industries are not immune either, as refinery inputs and critical equipment still move through affected shipping lanes. Automotive, electronics, and retail have also been hit by detours around Africa, which are creating shortages and pushing out delivery schedules for consumer goods.

At the same time, SMEs across all trading sectors remain especially vulnerable, as thinner margins and lower liquidity leave them less able to absorb delayed settlements or sudden disruption. Despite these pressures, the region remains highly resilient, and one clear outcome of the current environment is that businesses are being pushed toward stronger supply diversification, tighter financial discipline, greater use of credit risk tools, wider adoption of trade credit insurance, and more serious investment in supply chain agility.