How has Dubai become a logistics hub on the global stage?
The two biggest factors behind Dubai's success are the Emirate's strategic location and the contributions of DP World and Emirates Airlines—both key market players that connect Asia and Europe through a broad range of operations. As the logistics sector has developed and expanded in the last two decades, DP World and Emirates Airlines have used more routes over longer distances and invested heavily in technology and human capital, contributing significantly to a competitive and sustainable logistics sector. As the market has transformed, shipment sizes have decreased while shipments themselves have become more frequent, emphasizing the flexibility of the logistics sector to promptly respond to changing markets demands while continuing to deliver world-class services. Furthermore, Dubai has established itself as a logistics hub on the back of world-class infrastructure such as seaports and airports. The scope of markets that Dubai serves as a hub continues to expand, particularly in terms of connectivity, and the Emirate is aiming to secure more opportunities as part of the Silk Road. Additionally, the adoption of e-commerce and our partnership with Amazon will present even more opportunities.
How is Dubai South's Logistics District pioneering technologies and digitalization?
Digitalization is among our top priorities as the Emirate transitions to paperless operations as part of the Dubai Paperless Strategy, in line with the vision of HH Sheikh Mohammed bin Rashid Al Maktoum to transform Dubai into a full-fledged smart city. We are upgrading our entire IT system with our own ERP software so that Dubai South has integrated applications to manage the business and automate all functions related to technology, services, and human resources.
How is e-commerce changing demand and shifting strategic priorities for Logistics District?
E-commerce is changing demand and shifting strategic priorities through EZ Dubai, a unique project launched by HH Sheikh Mohammed that has facilitated a whole zone dedicated to e-commerce. We have created a positive environment through this platform where less known entities and entrepreneurs have access to e-markets such as Amazon. E-commerce also comprises many multi-channel retail organizations and includes several elements ranging from large fulfillment centers to last-mile deliveries.
What developments are happening within the transport sector and how is Logistics District capitalizing on them?
We recently launched a program in partnership with the University of South Wales dedicated to technology and sustainability within logistics and supply chains. This promises to be an important initiative as mobility and sustainability are two key themes of the upcoming Expo 2020. We have begun implementing several initiatives in relation to sustainability and there are many more still to come in the years ahead. We are in the process of automating all our processes, despite its many challenges, and we have hired a company to recycle all our plastic bottles.
What is your vision and what are the strategic priorities for Logistics District moving forward?
Our efforts are focused on technology and sustainability. There will be much less demand for labor as the UAE moves closer to automation. I recently met two professors from MIT and Harvard, and we discussed why Dubai has not become automated. The main challenges are cheap labor and the fact that most warehouses are still being operated by third-party logistics (3PL) companies. Cargo owners should be making investments moving forward and they can start by putting in place their own facilities, embedding innovative technologies and bringing in the 3PLs to manage the facilities. The reason they have not done this is because warehousing costs represent a small expense in their P&L calculations—essentially meaning automation is not a priority. Nevertheless, in the month and years ahead, technology, sustainability, and e-commerce will become an integral part of all players in the sector.
How is the Business Park, situated within Logistics District, using the synergies of Dubai South and complementing the Logistics District?
Comprising 11 buildings with a total of 2.3 million sqft of office space, the Business Park fully complements the entire 145-sqkm Dubai South project. The park is carefully designed to facilitate the growth of all types of businesses, from start-ups to SMEs and multinationals. With complete turnkey business services and cost-effective office solutions, the Business Park is aligned to suit global business needs. Dubai South itself is the emerging face of Dubai. Its main components are the airport and two free zones—one for aviation and aerospace and the Logistics District. The Logistics District is meant to support Dubai's focus on trade and logistics and to develop a district that will link Jebel Ali Free Zone with the airport. The majority of companies do not need a warehouse in the Logistics District or a facility in the MBR aerospace hub; all they need is an office space, and this is where we factor in. In the aviation sector, we cater to private charter companies. There is a major market for new and used parts traders, drones, aviation management, air cargo, and aircraft. The Business Park brings together all these players in several industries to create large-scale business opportunities.
How do innovation and sustainability play into what is happening at the Business Park?
Innovation and sustainability are at the heart of our operations. This is the reason we continue to look for more ways to construct buildings according to LEED certification standards. Having a LEED-certified building helps tenants achieve higher environmental efficiencies. We provide many extra benefits that support our clients' sustainability goals.
What additional features do you offer to facilitate activity and attract companies to the Business Park?
In terms of soft features, we have worked with the government to come up with four different products and solutions. We also consult with business councils and country delegations to support companies from their own countries. We help them establish a company as well as network with the right people and institutions. We invite investors from different parts of the world to establish a networking office here at no cost. We want people to hear about the positive experiences of investors who have entered the local market. Another feature is the dual licensing service. Many companies have two registered offices in Dubai, one in a free zone and another outside the free zone for all their GCC operations and sales. At Dubai South, companies can keep their two registrations but under one location. This is significant because dual licensing has long been demanded by free zone companies and entrepreneurs who are interested in operating multiple enterprises across the wider UAE market. There are already about 10 companies that have utilized this advantage, and their annual savings were about AED1 million.
How do you educate companies on these opportunities?
We do it through digital marketing, tapping the easy access to mobile devices as well as social media. We also engage in international forums and conferences with our partners from other government entities such as Dubai FDI, Dubai Chamber, and the Ministry of Economy, in addition to indirect marketing through local and international business agents. We are progressively changing the perception that it is expensive to set up a business in Dubai. We have also made it easier by providing online portals where one can establish their company from their home country.
What are your strategic priorities for 2020?
We aim to attract more companies related to aviation and logistics and provide them with quality support. Being an entrepreneurial hub, 20% of our customers upgraded from our business centers. Their business is growing, and they have been moving with us to bring their companies to the next level. To date, we have achieved 88% retention rate. We have not increased rents or fees for the past four years and have no plans to do so.