Home Business & Finance UAE’s location and quality infrastructure offer huge growth potential to logistics companies

UAE’s location and quality infrastructure offer huge growth potential to logistics companies

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DUBAI: UAE’s geographical location and infrastructure make the country an ideal supply and re-distribution gateway and offer huge growth potential to logistics companies in the country, according to an industry specialist.

Fortunately, the UAE is strategically located at the centre of international trade as over one-third of the world’s population lives within a 4-hour flight and two-thirds of the world’s population lives within an 8-hour flight.

“Some of the key trends in the UAE logistics industry including economic diversification, growing domestic demand, and the development of export-oriented industrial centres & free zones are likely to support both trans-shipment and regional trade growth,” said Shailesh Dash, Chairman of Gulf Pinnacle Logistics.

Dash added: “The integration of logistics functions, and harmonisation of the GCC customs regulations will lead to synchronised, coordinated, and interconnected regional logistics network.”

The UAE is well positioned globally to be amongst the top logistics hotspots as it is emerging as a major trans-shipment hub, ranked 1st in emerging market infrastructure, operating one of the top busiest airports globally, operating the 9th largest seaport globally, superbly connected, and well suited for multi-modal transport.

According to the World Bank’s latest Logistics Performance Index, the UAE ranked 13th out of 160 countries. This means the UAE outperforms countries such as Canada, Finland, France, Denmark and Australia. When compared with its emerging market peers, the UAE ranks the 1st, cementing its position as the leading logistics hub in fast-growing economies.

Building a global logistics centre is a key part of the UAE Vision 2021 economic agenda and the government aims to rank among the world’s top 10 nations on the logistics performance index by then. Hence, expansion projects and new investments are expected to fuel the growth of the UAE’s logistics sector over the next five years. Some of these expansions and developments include Al Maktoum airport expansion, Dubai metro expansion, Al Etihad Rail development and various other logistics projects related to the Expo 2020.

Dubai International airport freight volume reached 2.65 million tonnes in 2017, up by 2.4 per cent compared to 2016. On the other hand, Abu Dhabi Airport handled nearly 677,302 tonnes of cargo during January to November 2017.

The UAE’s two leading airports continue to invest in expanding and enhancing their facilities to accommodate the higher expected demand for air freight volumes. It is estimated that the UAE’s air freight market likely to expand at a compounded annual growth rate (CAGR) of 4.8% over the 2017-2021 period. Historically, UAE’s air freight market grew at a CAGR of 8.6% between 2012 and 2016.

The UAE has the largest container port between Singapore and Rotterdam, while the country serves as a maritime hub for the Middle East region. In 2016, container port traffic in the UAE amounted to 21.3 million TEUs. This figure is expected to rise 5% to 22.4 million TEUs in 2017 and increase further to reach a record 28.4 million TEUs by 2021.

Container traffic at Dubai’s Jebel Ali port (the 9th largest port globally) is forecasted to witness a CAGR of around 6% between 2017 and 2021. Over the next five years, container traffic in Sharjah is forecasted to record a CAGR of about 3.2%, while container traffic handled at Abu Dhabi’s Khalifa Port will likely increase at a CAGR of 13.5% over the same period.

“Gulf Pinnacle Logistics is making full use of Dubai’s multi-model logistics and expanding its operations. We are very confident in the future and will continue to grow our business as we see huge opportunities in the logistics sector in the Emirate,” Dash said.

Last year, Gulf Pinnacle Logistics acquired a 60% stake in Century Express Courier Services LLC as part of its USD150 million investment plan. Headquartered in the UAE, Century Express Courier Services caters to the domestic and international markets through its own fleet and a network of agents delivering shipments to more than 100 countries.

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