There’s growing assent that the world’s center of economic gravity is moving East. This offers opportunities for a regional logistics hub such as the UAE. How well will it cope?
Based on his calculations, Professor Danny Quah of the London School of Economics predicts that by 2050 the epicenter of economic power will cluster on the India-China border, 400 miles east of Kathmandu.
He writes in his article for CNN that the millions who are moving to cities in India, China and other parts of the Far East will stimulate strong economic growth and demand. Imports will be as important as exports.
Related Article: World’s Center of Economic gravity Shifts East.
Who are the facilitators?
In such a scenario, a key role will be played by those regional logistics centers able to handle a vast flow of products being shipped both East and West. Who can such players be?
These hubs must have multi-modal capabilities with the resources to integrate sea and air transport – and with excellent road and rail connections as well. They must be adept at applying the new logistics concept of ‘acceleration in motion’ where there is an efficient conversion from sea transport to air transport. In this way cost-effectiveness can be combined with speed-to-market.
The multi-modal logistics hub must have the triple advantages of an excellent location, advanced infrastructure and a vibrant economy. This reduces the number of candidates considerably. In many ways, the UAE – and in particular Dubai – holds the right cards.
At the Middle East crossroads
On the West-to-China route (or reverse), the UAE is a natural stop-over. It stands at the crossroads of major shipping routes that connect between the Indian Ocean and the Atlantic Ocean on one side and the Pacific Ocean on the other. Traditionally Dubai and Abu Dhabi have always maintained links with the nearby Gulf states, the Red Sea, East Africa and the Indian sub-continent.
Planning ahead for mass markets
The UAE has a heads-up advantage over other nations in serving emerging superpowers like China because it already has infrastructure in place. Back in 2007, when Dubai launched its eight year Strategic Plan, it determined that two of the building blocks for growth would be transportation and storage. From here emerged the massive Dubai World Central project with Al Maktoum International Airport at its core.
Largest air cargo handling and a massive port
Barely two years after it opened, Al Maktoum International Airport is set to become a world leader in cargo-handling capacity. It already handles 600,000 tonnes per year and by the mid 2020s – with 16 cargo terminals – it is expected to reach 12 million tonnes in capacity. This will make Al Maktoum the world’s largest cargo-handling airport. Within its massive development of 360 square kilometers there will be five parallel runways,. allowing four superjumbo aircraft to land simultaneously, all day long.
Khalifa Port in Abu Dhabi has opened after a five year development and will be capable of handling 15 million containers by 2030. In addition, a totally new regional rail network for the UAE is being built. It is estimated that by 2020 train freight will be an attractive option between Dubai, Abu Dhabi, Oman and Saudi Arabia.
A magnet for multinational companies
The third requirement of a successful multi-modal logistics hub is a healthy and vibrant economy. Here too, the UAE has a significant advantage, being one of the most liberal, stable and far-sighted countries in the region. Dubai is already home to Microsoft, Nestle, Compass,
Marriott, Merck Serono and other leading multi-nationals.
These companies are attracted by the UAE’s strong economic environment, the availability of a large free zone built around a world class seaport and airport, highly competitive handling charges and a high standard of living.
Viewing all these assets in their totality, it seems clear that the UAE will serve as an ideal staging post for China, India and other emerging nations as they move to center stage in the world economy.
China – the source for massive imports as well as exports