On the Rails Again
On the Rails Again
On the Rails Again
Having styled itself as a key hub for international transport, Dubai got its economy rolling again on the back of its historic economic role: transport and logistics. A multitude of projects are now set to improve conditions for the transport of both cargo and passengers around the country, and across international borders.
Large-scale projects have yielded impressive results for Dubai in recent years, under the watch of the Roads and Transport Authority (RTA). The road network grew to 12,403 lane kilometers in 2012, up by 1,300 since 2010. A new motorway is now also under construction to provide added capacity to the E-11 highway, which connects Dubai with Abu Dhabi. In terms of rail, a multi-billion-dollar program is also under development to boost freight transit options in the UAE, and also to provide a new link to Saudi Arabia and Oman. Above and below ground, the Dubai Metro has also seen an increased number of travelers in 2013, with 67 million commuters riding the rails in the first half. In air transport, work on Al Maktoum International Airport continued, and the airport, currently operating only cargo flights, will begin its first passenger flights in October 2013. The project was developed to add air capacity to the Emirate, previously only served by Dubai International Airport, which had passenger traffic of 58 million in 2012. In terms of ports, work to expand Jebel Ali Port was completed in June 2013, bringing its capacity to 15 million TEUs. An announcement in 2013 that 14% of the UAE’s GDP is accounted for by the logistics sector also validates government efforts to promote it. The industry is estimated to be worth AED37 billion in the UAE by 2015, with Dubai taking a significant share.
Having expanded by 1,300 lane kilometers since 2010 to reach 12,403 kilometers by 2012, Dubai has affirmed its commitment to keeping traffic, and cargo especially, flowing. The RTA was created in 2004 with a budget of AED74 billion, and has spent AED68 billion so far to ease congestion. Current developments include the construction of 13 bridges to facilitate the movement of pedestrians in Dubai and, more significantly, a second motorway between Abu Dhabi and Dubai (E311). A tender was issued by Abu Dhabi’s Department of Transport in February 2013, and the project is expected to cost AED2 billion. The project will stretch 62 kilometers and support the E-11 motorway that currently connects the UAE’s two main cities. The project is expected to be completed by end-2014 and will be a four-lane carriageway running parallel to the E-11 motorway. The RTA is also actively seeking to boost inner-city links, launching five new public bus routes in mid-2013.
The UAE’s planned rail network has been drawn up to enhance connection between key cities and industrial hubs, as well as provide links to the country’s neighbors to Saudi Arabia and Oman. The project is being developed by state-owned Etihad Railways, and is currently in Phase I, during which 628 kilometers of track will be laid between Abu Dhabi, Dubai, and Al Ain, while also running to Ghweifat, on the Saudi Arabian border. Approximately 264 kilometers will be operational by end-2013, with the segment providing heightened connectivity to key oil and gas fields. The second and third phases will focus on continued development, including a link with Oman and connectivity with Fujairah, one of the northern Emirates and a thriving oil and gas hub. All three stages will be completed by 2018 at a cost of AED40 billion. When finished, the UAE will be able to boast 1,200 kilometers of track that will facilitate the movement of both goods and labor. In the long term, Saudi Arabia also plans to expand its own rail network, including a line that will link the UAE with Qatar, although the authorities may have to wait until the 2020s for it to become a reality.
In 1H2013, the Dubai Metro carried 67 million people, with 1Q2013 data showing an increase of over 6 million compared to the same period of the previous year. According to the RTA, 43.5 million people traveled on the Red Line over the first six months of the year, while the Green Line carried 23.5 million during the same period. Residents of Dubai adapted quickly to riding the metro, with 1 million passengers having used the rail just one month after it was opened in 2009. According to RTA figures, 7 million passengers use the Red Line every month, in line with RTA plans to increase the use of public transport to 30% by 2030, up from 6% in 2009. The current rate is 12%. The RTA has additionally announced plans to trial a new tram network in January 2014, with an eye to opening it for public use by the end of the same year. Phase I of the Al Sufouh line will cover 10.6 kilometers and total 11 stations.
Dubai International Airport, with passenger traffic of 58 million in 2012, is soon to be joined in passenger operations by Al Maktoum International Airport, which currently only has cargo operations. “The latest developments come at a time when Dubai’s aviation sector continues to show impressive growth,” said HH Sheikh Ahmed Bin Saeed Al Maktoum, Chairman & Chief Executive of Emirates Airline & Group. Dubai International Airport is the second busiest airport in the world for international passengers, growing in those terms by 18.9% in May 2013 compared to the same month of 2012. The opening of Al Maktoum International Airport to passenger flights will now, however, slow the development of Dubai International Airport, where extensive runway enhancements are set to be made in May 2014 since passenger numbers are expected to reach 98 million by 2020. The airport also has the capacity to handle 2.5 million tons of cargo per year, with 1.2 million tons handled in 1H2013, up 10.2% on the same period in 2012.
When fully operational, Al Maktoum International Airport will cover an area 10 times the size of Dubai International Airport, and have a capacity of 12 million tons of cargo and 160 million passengers a year. While passenger operations are not yet live, the airport handled 219,092 tons of cargo, up 144% on 2011.
Dubai is serviced by two main ports; Port Rashid and Jebel Ali Port. Constructed in the 1970s to support Port Rashid, Jebel Ali Port now handles almost all of Dubai’s cargo operations, while Port Rashid mainly operates as a cruise terminal. In 2013, dredging work was completed to allow Jebel Ali Port to handle larger vessels and increase capacity. The expansion added 1 million TEUs, taking total capacity to 15 million. The port now has the capacity to handle six mega ships simultaneously. Container Terminal 3 is also under construction, and, when completed in 2014, will boost capacity again to 19 million TEUs. Jebel Ali Port is one of DP World’s flagship port facilities, and was the stepping-stone to the company’s international success as a port operator. DP World has more than 65 marine terminals across six continents, with container handling generating 80% of its revenue. In 2012, DP World handled more than 56 million TEUs, with capacity to expand to 100 million TEUs by 2020.
The logistics and supply chain business now accounts for 14% of the UAE’s GDP, making it a significant part of Dubai’s economy. The sector is expected to be worth AED67 billion by 2015, with freight forwarding currently representing 63.1% of profits generated by the logistics sector, boosted by the oil and gas, engineering, and food and beverages sectors. Dubai’s logistics capacity has grown in step with demand, centered on Dubai Industrial City (DI) and Dubai Investment Park (DIP). DI currently runs 80% occupancy on 7 million square feet of warehousing, with demand driven by the automotive, base metal, and food sectors. DIP announced growth of 80% in commercial space allotments over the six months prior to April 2013. Success has been partly attributed to long-term leasehold deals with investors of up to 85 years.
Dubai is growing in popularity as a transport and logistics hub, validated by the significance attached to the region by major logistics firms such as DHL Express. “We are in the Middle East and Africa, which are really the only remaining growth opportunities in the world,” said Frank-Uwe Ungerer, Country Manager for the UAE at DHL. “We have double-digit growth here in Dubai and the Emirates, and this is really sustainable growth, too,” he concluded.
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