A WELL-OILED MACHINE

UAE, Dubai 2013 | TRANSPORT & LOGISTICS | FOCUS: LOGISTICS

Dubai has developed logistical infrastructure that would make any city green with envy.

The UAE has hedged its bets successfully on re-routing a significant portion of global freight and cargo through the country. As more transport infrastructure and logistics facilitates are developed, Dubai will gain an even larger share of attention.

The UAE's logistics and supply chain business now accounts for 14% of GDP and is valued at AED37 billion. Freight forwarding, spurred on by strong activity in the oil and gas, engineering, and food and beverages sectors, represents 63.1% of this figure, while transport is the second highest contributor (18.6%), dominated by road transport, followed by warehousing (14.2%) and value-added logistics services, such as labeling and packaging (4.1%).

Dubai's total trade increased by 27% in the first five months of 2013, with the bulk of these goods passing through the Emirate's transport corridor. At the heart of this infrastructure is the Jebel Ali Port and, more recently, Dubai World Central, home to Al Maktoum International Airport, which currently runs only cargo flights. The airport's capacity is set to reach 12 million tons a year when fully complete, and it will support Dubai International Airport, which handled 2.27 million tons of cargo in 2012.

IN THE ZONE

Several free zones have helped put Dubai on the map in terms of logistics, including Dubai Industrial City (DI), Dubai Investment Park (DIP), and Dubai Logistics City (DLC). At DIP, only 1% of land dedicated to the logistics business remains available, with 300,000 sqm having been assigned in 2013 so far. At DI, officials say 75% occupancy has been reached in its AED1.25 billion logistics and warehouse project, which extends over 10 million square feet and includes warehouses, showrooms, and open yard areas. DI was also awarded the Logistics Hub of the Year award at the Supply Chain and Transport Awards (SCATA) in Dubai. Part of Dubai World Central, DLC is an integrated logistics platform boasting a number of incentives for companies to set up in the zone. DLC will also secure room for continued growth in the logistics business in the coming years, as demand shows no sign of slowing down. According to a Knight Frank report, 500,000 square feet of logistics facilities were absorbed in 1H2013, with class-one rental rates in the Jebel Ali Free Zone reaching AED33 per square foot per annum, while class-one facilities at DIP cost a more modest AED24 per square foot. There was also no slowdown in enquiries for logistics facilities between 70,000 and 120,000 square feet over 1H2013, according to the study. In terms of activity, food and beverage producers have shown the most significant interest over the last year as they seek better locations in the region to bolster their local supply chains.

WHY DUBAI?

“The logistics infrastructure available here can't be found anywhere else in the region," said Syed Arfeen, CEO of Logistics World Middle East, summing up the business sentiment among the logistics community in Dubai. With an office at Dubai International Airport, MEX Logistics is also bullish about the development of Al Maktoum International Airport. “[It] will play host to many innovative facilities, including logistics and commercial areas. It is a real hub for logistics."

FedEx, which runs 34 aircraft a week through Dubai, also has facilities at Dubai International Airport, covering 59,000 square feet. Buoyant about growth prospects in the Emirate, it is also set to move into new, 38,000 square feet offices and also recently opened 48,000 square feet of refrigerated facilities in the Jebel Ali Free Zone. “Unlike other parts of the world at this time, we see the attractiveness in Dubai and the UAE, so we have been keeping up with our facilities," commented David J. Ross, Senior Vice-President of Operations for Middle East, Indian Subcontinent & Africa FedEx.

DHL Express' Frank-Uwe Ungerer, Country Manager for the UAE, discussed Dubai's merits when it comes to local couriering. “The building of layovers and more roads has drastically reduced traffic, and there is now relatively little, except for during rush hour to and from Sharjah," he commented.

While free zones are the major organs of the logistics sector—“These are the backbone of our business," said Ungerer—Etihad Railways' project to develop 1,200 kilometers of track to facilitate inter-UAE transit as well as provide rail links to Saudi Arabia and Oman will do much to further boost the country's image as a sound logistics investment environment. “When finished, it will change how transport is done in the region," concluded Ungerer.