Logistics basically refer to the business processes that include management and movement of goods and services from the point of origin to the point of consumption. It happens to be the core segment of supply chain management and generally involves a plethora of services like freight forwarding, multimodal transport via air, ship, truck, and rail. It also deals with provision of customs brokerage, warehousing and storage, tracking, and tracing of freight goods services.
Talking about the United Arab Emirates, the country’s geographical location and infrastructure has made it an ideal supply and re-distribution gateway and thus, certainly offer huge growth potential for the logistics companies in the region, according to Logistics and Shipping Industry Research and Market Reports. Basically, the UAE is strategically located at the centre of international trade since over one-third of the world’s population resides within the range of a four-hour flight and two-thirds within eight hours.
Over the years, UAE has well maintained its position to be amongst the top logistics hotspots in the world offering an evolving major transshipment hub, which has been, in the recent past, ranked first in the emerging market infrastructures and operates on one of the leading busiest airports globally, superbly connected and well-suited for multi-modal transport. According to the World Bank’s latest Logistics Performance Index, the UAE has been ranked “13th” out of 160 countries which means that UAE supersedes countries like Canada, Finland, France, Denmark and Australia; and on comparison with its emerging market peers, it is ranked “first” cementing to its position as the leading logistics hub for rapidly growing economies. Furthermore, in the years to come, with optimal integration of logistics functions and harmonization of the GCC customs regulations; a synchronized, coordinated, and interconnected regional logistics network is bound to be formed in the region.
As per the UAE Logistics Market Business Review, it has been explored that factors such as economic diversification, amplifying domestic demand and holistic development of export-oriented industrial centers and free zones are highly likely to continue bolstering both trans-shipment and regional trade growth in UAE since these factors are expected to undergo a certain level of amelioration as the years roll by and thus, with improving trends; industry will prosper on its own!
Lately, The United Arab Emirates has managed to retain its third position after China and India on the 2018 Agility Emerging Markets Logistics Index mainly due to success being experienced in Dubai since the logistics industry over there has been noticed to be more promising about this sector unlike previous years. The UAE has significantly tried to maintain a high ranking across several indices owing to the abundance of free trade zones, no corporation tax, offer of full ownership, and unlimited repatriation of profits that have well aided the region in establishing a benchmark especially for the emerging markets. Consequently, the countries in this region are moving vigorously to trigger non-energy economic growth, create job opportunities, attract new investments, and develop knowledge economies.
According to Ken Research Logistics and Transportation Market Research Reports, it has been revealed that government investment plans and infrastructure development initiatives are further expected to propel the economic growth in UAE. Also, the logistics infrastructure has gain a lot of popularity recently since UAE has emerged out evidently as a transshipment hub for a successful Europe-Asia trade. Investments are being undertaken in full swing at this time ultimately resulting in overall infrastructure development which will as a result, embolden competitiveness of the logistics market. Particularly, the investments connected to EXPO 2020 are anticipated to lure foreign investments and thereby ameliorate the holistic investment climate that prevails in the region.
Besides that, the facts of 2017 have identified that the air freight volumes at Dubai International Airport grew by nearly 5% and are further envisioned to surge at a decent CAGR of about 3.2% by 2022. While at Abu Dhabi Airport, the air freight volumes evolved by nearly 12% in 2017 and furthermore are anticipated to prosper at a healthy CAGR of around 5.2% by 2022. These trends well depict that the demand for these logistics services have multiplied in the recent years and therefore in order to properly cater to the growing demands; several initiatives have been undertaken for embellishing logistics parks as well as free trade zones near airports and seaports.
Not only this; the two leading airports of this region have rigorously made investments for widening and enriching the associated logistics facilities in recent years. For instance, Emirates Sky Cargo has recently launched a new pharmaceuticals facility at Dubai International Airport in order to meet the spurring demands for pharmaceutical and cold storage products. Going forward, this expansion of cold-chain logistics services at both the airports is projected to raise the air freight volumes in UAE. Thus, both Emirates along with Etihad Airways have played a crucial role in air cargo in the UAE till now and will persist contributing to augmenting cargo volumes in the coming years.
Majorly, UAE is observed to be at the forefront of adoption of newer technologies due to which warehouses are becoming automated with the support of robotics and automation, and the related companies have been able to experiment on different autonomous vehicles and drone deliveries for efficient and faster last mile deliveries. Additionally, a horde of tech-based start-ups are mushrooming in the region offering robust delivery solutions across various e-Commerce logistics segments and such hyper-loop, drones, autonomous vehicles, block chain, robotics, and artificial intelligence are further projected to completely transform the UAE logistics market in future.
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Ankur Gupta, Head Marketing & Communications