What have been the major trends in the UAE's logistics market over the last year, and what are its prospects for the future?
The largest factors in the success of UAE's logistic sector have been the commitment, consistency, and size of investments in ports, airports, roads, and, in the last few years, rail. Sizable expansions come every year, which shows why the UAE has been ranked among the top-three most attractive markets for logistics over the past four years, according to the Agility Emerging Market Logistics Index 2018. The index takes three factors into consideration, and one of them is market size, on which the UAE cannot be compared to India, China, and other large emerging markets. The two other factors, market connectedness and market compatibility, are truly where the UAE shines. Transport and logistics is a key sector, and while there may be some delays, the government has signaled just how serious it is in terms of investing in the sector. We are extremely bullish about the opportunities in the market, particularly with the entry of COSCO and MSC; it will bring in larger volumes and attract more companies.
Given your bullish outlook, which area of logistics has the most potential to grow in the short to medium term?
There are substantial investments in every area of the sector; although from a growth perspective, rail will see the most development because it will go from being almost non-existent to truly changing the way cargo is transported in the UAE. Air and ocean cargo are both projected to grow, though I do not know which will grow faster, as significant investments are occurring in both segments. In terms of air transport, investment and development have been ongoing for the last three years, and current projects are scheduled to be completed by 2019. Capacity is increasing greatly, and roads to support this capacity are also being ramped up; our highway infrastructure has seen widespread expansion in a number of areas. On the ports side, cargo mostly goes to Khalifa Port, with Mina Zayed receiving some project shipments. In the future, all shipments will go to Khalifa port, with Mina Zayed becoming a terminal for cruise and passenger ships.
How do you expect automation to impact the industrial supply chains in the UAE?
Digital platforms are being developed, and more people are becoming connected over time. Eventually, all stakeholders will be connected to these platforms via smart processes, making all process significantly faster, facilitating trade, and having a direct impact on GDP growth. At present, blockchain technology is being used to facilitate this growth: all parties will log in to the same ledger and exchange data, increasing the transparency of the process and expediting the shipping of goods. We are participating with Maersk-IBM on its blockchain-enabled shipping solution designed to promote more efficient and secure global trade. In terms of locating production close to customers, we witness this trend catching on globally. New technologies make production cheaper, and for certain industries and applications, the organizational model that produces solely for the export market makes sense, though it does not apply to all industries. Certain industries will still need to be produced far from markets and shipped in, like electronics.
How will the expansion of online retail impact logistics?
E-commerce has been gaining traction at a global level in the last few years, in particular in emerging markets. As a logistics service provider, this forced us to enter the last-mile delivery space, and we have been making headway in this area. Large-scale firms, such as Amazon, prefer to develop their own in-house logistics, though the market still has many vibrant smaller players interested in outsourcing these services. Every retailer with an online presence needs a logistics provider, therefore, logistics service providers will continue to dominate this space and benefit from this trend.