Paul Feeney, Head of Sourcing and Development at Mohebi Logistics, believes that current developments in the Gulf region will stimulate the fall of trade barriers between GCC member countries.
Imagine the benefits if the flow of trucks from one Gulf country to another was able to be rapid and efficient, with a minimum of bureaucracy – as in Europe.
While the subject of reducing trans-border barriers has often been discussed between GCC member states, real progress is still limited. Tariffs are not yet standardized, there are frequent delays at land border crossings, document requirements are complex and a common set of logistics are yet to be developed.
It may well be that market forces produce their own dynamics over time. Few areas of the world can match the dynamic strides of the Gulf region. Population growth is among the highest in the world and investments in transport infrastructure is planned on a staggering scale.
No less that $121 billion has being earmarked for road projects. This includes $58 billion to be spent by the UAE, $26 billion by Saudi Arabia, $17 billion by Qatar, $9 billion by Kuwait, $8 billion by Oman and $2 billion by Bahrain.
A trans-Gulf railway network is also being implemented, which will link Kuwait City, traversing along the Gulf, to Muscat in the Sultanate of Oman, serving the Kingdom of Saudi Arabia, the Kingdom of Bahrain, the State of Qatar and the United Arab Emirates. The total length of track will be approximately 2,177 kilometres, including about 180 km of connecting lines to key traffic generators such as ports and industrial zones. In short, all this spells a transformation.
The UAE as the lynchpin
The UAE’s Jebel Ali Free Zone and Port have great importance as a principal gateway into the Middle East. The region as a whole is a net importer of food, with most goods arriving in either a raw or finished state.
The frequency and volume with which the major shipping lines deliver goods into the port gives Jebel Ali a significant cost advantage as a location for deliveries. It is also generally more accessible than other ports in the region.
An increasing number of manufacturers (both local and global) are choosing to set up their processing plants in the Jebel Ali Free Zone, due to the relative ease of completing trade and the fact that the UAE permits 100% foreign ownership of businesses. The simplicity of the customs and clearing process makes it an ideal location from which importers can plan their operations.
The stimulus of integration
No doubt the approach to Expo 2020 will provide a stimulus for trans-border integration on trade issues. The region is already a major hub in terms of global sea freight and better procedures on land will greatly enhance this standing.
To serve the growing population and its needs, road and rail transportation will greatly expand. In parallel, common standards will be set and much red tape removed, leading to an environmentally friendly and sustainable regional supply chain. In this scenario, the UAE will continue to serve as a role model.