HOW UAE LOGISTICS MARKET HAS PERFORMED IN THE RECENT PAST?

UAE has been able to establish itself as a top-notch logistics hub owing to its prime location on the global landscape over the period 2009-2014. Additionally it is the primary entry point for goods in the GCC market. It borders Oman to the East and Saudi Arabia to the South. UAE also shares sea borders with Qatar and Iran. It is the gateway that connects the western hemisphere with the eastern hemisphere.

 Trade activities in the UAE have amplified over the past five years owing to increasing globalization. Logistic services in the country have been successful in connecting different export and import markets of various countries across the world.

UAE has been taking advantage of economic activity among the world’s fastest growing and developing economies as part of the ‘South-South’ trade trajectory.

Furthermore, over the past five years, billions of dollars have been invested by UAE’s government towards development of logistics infrastructure. UAE has been the foremost nation in the Middle East to focus on logistics.

Foundation was laid with the establishment of Jebel Ali Harbor in 1979. Since then Jebel Ali has become the largest container harbor between Rotterdam and Singapore. Numerous new ports and free zones were built while further emphasis was put on construction of new airports and roads. In addition, Port Rashid, Khorfakkan and Al Hamriyah port have been economic powerhouses in the country during the review period.

UAE Logistics Market has amplified at a CAGR of ~%. This growth has registered the revenues of the logistics market at USD ~ Million in 2014.

Figure: UAE Logistics Market Segmentation by Service Mix on the Basis of contribution to the overall revenue in USD Million, 2009-2014

The UAE logistics market can be segmented on the basis of services offered as part of the total logistics industry. There are 3 broad services conducted under the entire logistics package namely transportation, freight forwarding, warehousing and value added services (VALS) including 3PL. All the services conducted in the logistics industry right from sourcing of goods to final delivery come under these three broad services.

Freight has been the biggest segment among all the services in the UAE logistics sector over the past five years. Its share in the total service mix has enhanced from ~% in 2009 to ~% in 2014. Such dominance of freight forwarding market and its increase in share has mainly been attributed to country’s prime location on the global map. Sea has been the most dominant mode of transportation in the freight forwarding market over the past five years. The sea route has been connecting Asia-South East Asia to Europe and North America very efficiently for several years now. Further, low fuel charges in UAE have also been major growth driver of the freight forwarding market over the period 2009-2014.

Warehousing has been the second biggest segment in the services mix of UAE logistics market over the period 2009-2014. The share of warehousing in the overall service mix has increased from ~.0% in 2009 to ~% in 2014. Continual investment by the government in development of logistics infrastructure including completion of Dubai Maritime City in 2012 supported by entry of several global players in the market have been the main reasons behind the increase in the share of the warehousing segment over the past five years. Logistic hubs such as Kizad Logistics Park, Dubai Logistics City and others have attracted investments from several global and domestic players. Numerous companies including Aramex, Agility, Keuhne+Nagel and many others have opened their warehouses in these locations over the period 2009-2014. On the other hand, value added services such as packaging, sorting and others have accounted for a minute share of ~% of the UAE logistics market in 2014. Small and low cost nature of these services has justified its minimal share in the overall logistics market over the period 2009-2014.