Growth in UAE’s Logistics Industry
UAE has been one of the leading logistics hub thanks to its geographical location on the global landscape. UAE has only prospered greatly in the field of logistics recently. It has also been deemed as the primary entry point for all kinds of goods coming into the GCC market. To the east of UAE is Oman and to its south is Saudi Arabia and it even shares sea borders with both Iran and Qatar. The UAE acts as a passageway that connects the world of West with the world of East.
An increase in globalization has led to drastic growth in the trade activities within UAE. The logistics service providers within UAE are responsible for being able to connect the import/export markets of countries from all across the globe.
The logistics market of UAE can be segregated into 4 services that they offer — freight forwarding, transportation, value added services which includes 3PL providers and warehousing. All the services that are performed within the logistics industry from the sourcing of the goods up until the delivery of the product, everything comes under these 4 categories.
Over the past few years, in the logistics industry of UAE, the freight forwarding market has been performing exceedingly well. It has accounted for a great amount of revenue and the freight forwarding industry has dealt with both global as well as national trade in the recent past. The growth in trade has led to a massive revenue flowing in the UAE aiding the expansion of the logistics industry.
The warehouse market of UAE has only recently re-emerged. The government of UAE invested a great deal of money into the development and reconstruction of warehouses in the recent years. The Jebel Ali Free Zone has also expanded and plenty of areas dedicated to logistics such as the Dubai Logistics City has been constructed which undoubtedly attracted many global companies.
On the other hand, 3PL providers have only contributed to a small amount of the logistics market in UAE. It is a part of logistics that is still growing. However, because of the increasing growth of ecommerce and the inclusion of domestic and international players, the need for 3PLs will increase. Thus, this will cause a spike in the services of 3PLs being used.
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The future of logistics looks favorable for UAE because of the increase in ecommerce and trade. The growth of ecommerce is one of the single most influential factors to the increase of the logistic industry. The logistics industry is predicted to grow massively in the coming years, generating millions of revenue in UAE. The country is planning to expand logistics by investing on the development of the infrastructure and expanding foreign trade to more countries. Within the Middle East and North Africa, the value of logistics is expected to double reaching about $200 billion in the year 2020 and UAE will be one of the major contributors.