UAE’s logistics sector set to grow in 2018

Market indicators from several sources point to a resurgence in 2018, with steady growth in air freight and sea freight markets over the next four years.

The Dubai Chamber of Commerce and Industry recently undertook an analysis of the UAE logistics sector, based on data supplied by BMI* Research.

The analysis forecasts that the UAE’s air freight market will expand by a CAGR* of 4.8% over the 2017-2021 period. Over the same time span, container port traffic in the UAE is expected to rise from 22.4 million TEUs* in 2017 to 28.4 TEUs by 2021.

An economic turn-around
Oil production was reduced in an agreement between OPEC and non-OPEC oil producing countries in late 2016. However an easing of the production curb in 2018 will encourage the UAE’s GDP to climb to 2.9% next year, states BMI.

The research company adds that the Emirate’s non-oil economy continues to show solid performance, stimulated by the global transport and logistics hubs of Jebel Ali, Dubai International, Dubai South, Al-Maktoum International, Khalifa Industrial Zone Abu Dhabi (KIZAD) and Abu Dhabi International. All of these are experiencing an upturn in trade.

Massive investments
Two seaports have been designated for exceptional development. Jebel Ali Port, managed by DP World, is investing $1.6 billion to increase the port’s total capacity to 22.1 million TEUs, a 14 % increase on the 2017 total. Abu Dhabi Ports Company plans to expand Khalifa Port by 100 square kilometers by mid-2018 to accommodate more industries.

H.E. Hamad Buamin, President and CEO of the Dubai Chamber of Commerce and Industry, says that the logistics branch is among the key sectors driving the UAE’s economic growth. Other factors include large investments in municipal projects as well as tourism and real estate.

Both of the Emirates’ leading airports are expanding their cold-chain logistics services, encouraging a further increase in air freight volumes in the UAE.

A boost in e-commerce
Within the GCC region, e-commerce has experienced rapid growth and is emerging as a significant growth driver for the logistics sector. Within the MENA* region, its value is expected to reach $200 billion in 2020 (double the baseline of $95 billion in 2013). The UAE is a strong player here.

* BMI – Business Monitor International  * CAGR – Compound Annual Growth Rate  * TEU – Twenty-foot Equivalent Unit  * MENA – Middle East North Africa