Thursday, May 22, 2014

UAE & GCC LOGISTICS & HUB

Oman, Bahrain, Qatar, and Saudi Arabia have a big challenge. They need more than investing in infrastructure, even railroads, to challenge the UAE for the logistics hub of the GCC and MENA. LTD Management knows what it takes to be a successful logistics hub and compete with the UAE.

UAE logistics market seen growing 15.4% to Dh99bn in 2015

It makes up around 6% of the UAE’s GDP, says Frost & Sullivan

The UAE logistics market is estimated to have reached $23.4 billion (Dh86 billion) in 2013, representing approximately 6 per cent of the country’s gross domestic product, according to consulting firm Frost & Sullivan.
Srinath Manda, Program Manager for Transportation & Logistics Practice, Middle East, North Africa and South Asia, at Frost & Sullivan, said the emirates’ logistics market is likely to grow 15.4 per cent to reach $27 billion (Dh99 billion) next year.
“With billions of dollars being invested in fast-track development of transportation infrastructure, the UAE, a dominant provider to global energy markets, faces unprecedented opportunities and challenges to retain its position as a world-class logistics hub… Total logistics market in the UAE for the year 2013 was estimated at about $23.4bn which includes the revenues from logistics services for domestic manufacturing, import-export trading, services and agricultural sector.
“This market represents approximately 6 per cent of the country’s gross domestic product (GDP) value for the year 2013. This total logistics market is expected to reach $27.0 billion in 2015 with a surge in import and export trade volumes and steady upward trend of local manufacturing,” he said.
In terms of functional segments, the total logistics market in the UAE comprises transportation services, warehousing services, freight forwarding services, and value added logistics services (VALS). Freight forwarding represents the largest share with about 62 per cent; transportation is the second largest contributor with about 18 per cent of total logistics revenues owing to significant distribution activity. The final two contributors to logistics revenue are warehousing at about 16 per cent and VALS, such as packaging and labelling, at about 4 per cent.
According to Frost & Sullivan, logistics services offer significant benefits and wider opportunities to the GCC economies. Overall, the sector is on a growth trajectory and is witnessing the mega trends that would help establish it as a prominent logistics hub. GCC benefits from two unique opportunities; strong growth of volume in the trade lane between Europe and Asia and steady growth and development of manufacturing activities in the driven by predominantly Saudi Arabia. Capitalising on the availability of world-class port infrastructure and developing the GCC-wide rail and surface transport capability are essential factors for future economic development of the GCC countries.
“The important elements making a strong and efficient transportation and logistics sector a strategic necessity in GCC are- enhancement of industry competitiveness, developing a multimodal logistics hub and supporting infrastructure like free zones around the port or airport, focussed investment in infrastructure and adjusting the policies and regulations to promote logistics sector development and synergy across all GCC countries,” Manda said.
The transport and logistics sector in the UAE enjoys a number of unique strengths, including its location, world class infrastructure, and a progressive non-bureaucratic Government that has played an active role in developing the sector. A positive economic outlook, corresponding population growth, and increasing potential for per capita consumption also foster the positioning of the Middle East as a core business market with the need for a stronger logistics sector, he added.
The logistics fraternity is in for interesting times, as railways will become the game changer in the GCC transportation and its consequent impact is seen on the UAE logistics market.