Dubai’s reputation as a centre for logistics on the rise


Recent events have focused attention on Dubai as a major destination for regional and global logistics operators. In April 2017 Berlin-based industrial manufacturing giant Siemens announced that it planned to set up its global logistics headquarters in the emirate. The firm, which is the single-largest manufacturer in Europe and among the biggest in the world, has ambitious plans for the project, which include new airport, road and port infrastructure development. Additionally, Amazon’s acquisition in early 2017 of UAE online retailer indicates a significant move into the region for the US-based retail giant, which is one of the world’s largest logistics companies. In April 2017 the firm began the process of recruiting staff for a Dubai office and a major logistics centre in the emirate.

Recent Developments

The move by Siemens signals a considerable commitment to Dubai on the part of the firm, which has had operations in the emirate since the 1970s, but not to the degree the new plan indicates. Siemens employed around 2600 people directly in April 2017, a figure expected to jump considerably when work is completed on the firm’s new global logistics headquarters. Meanwhile, Amazon’s pending entry represents the firm’s first foray into the UAE. The move is widely thought to indicate the company’s confidence in both the country’s market and the Middle East overall. In September 2017 Amazon was in the early stages of acquiring office space in Dubai and meeting with the relevant authorities to establish logistics operations.

Another recent entry to Dubai is Kale Logistics Solutions, a global logistics IT provider headquartered in India. In early 2017 the firm set up a new customer service and business development centre at Dubai South in order to participate in the logistics industry that is populating the Logistics District, and Dubai South more generally. “We see huge potential in this region, with wider acceptance of our IT solutions,” Amar More, CEO of Kale Logistics Solutions Private, told local media. “We will be further expanding our portfolio in air and maritime to bridge the technology gap that the logistics industry is currently facing.”

Storage Options

Given increase in interest in Dubai as a logistics hub for the Middle East, it is perhaps not surprising that a key growth area in the emirate’s real estate sector as of early 2017 was warehousing, storage and logistics. Local firm Centre Point Logistics (CPL) began operations at its newly built Dh60m ($16.3m) warehouse located in the Dubai Logistics Corridor in the Dubai South district in April 2016. The property joins a growing array of major players in the area, which is quickly becoming a hotspot for investment. CPL has current total investments of more than Dh100m ($27.2m) in warehouse and distribution space in the UAE and Oman, with total holdings in excess of 278,709 sq metres. The new warehouse adds 22,000 sq metres of space and is close to both Jebel Ali Port and Al Maktoum International Airport (DWC). CPL plans to lease out the property for storage and distribution operations. Given demand in the region, the new facility will likely be quickly put into use. “With rising interest among major multinationals and firms already located in the Middle East, Dubai’s logistics sector is booming right now,” Lynnette Abad, a partner at the Dubai office of global property management firm Cavendish Maxwell, told OBG. “The government has been very clear about its support for this development and the expansion of the segment in general.” Jebel Ali Port has a warehousing capacity of over 200,000 sq metres and a capacity of 19.3m twenty-foot equivalent units (TEUs) as of 2017.

Building Up

Though the Amazon and Siemens deals are potentially at a larger scale than anything prior, these recent changes are very much in line with Dubai’s history as a centre for the movement of cargo and people alike. Dubai has long been pitched by the government as a key site of cargo transport, due to its central position in a busy region and its well-developed port, airport, rail and road networks. Some of the earliest infrastructure investments made by the UAE’s government in the 1960s focused on improving the nation’s competitiveness in this sector – the initial dredging of Dubai Creek in 1961 enabled larger cargo ships to access the emirate; Port Rashid, Dubai’s first container port, was completed in 1972; and Jebel Ali Port, which has become key to the region, opened for business in 1979. Geoff Walsh, country manager of DHL, told OBG, “Jebel Ali is Dubai’s main magnet for global logistics companies to set up shop in the Emirate. Its infrastructure allows companies to take advantage of the strategic location between Asia and Africa.”

According to DP World data, the The Jebel Ali Free Zone, the over 100 sq km industrial park, generated trade worth $87.6bn in 2016, contributing to 20.6% of Dubai’s GDP and 5% to the UAE’s. According to a 2016 report by US-based consultancy Frost & Sullivan, Dubai leads the country in logistics, accounting for some 45% of the total share of industry. The sector was forecast to have expanded by around 4% in 2017, and to post a compound annual growth rate of 5.7% between 2015 and 2020. This rapid rate of expansion will be driven in large part by activities related to Expo 2020, a world exposition in Dubai that will run from October 2020 through April 2021. Additional logistics growth drivers include expanding trade among countries in Africa, Asia and the Middle East, and Dubai’s own and federal-level development planning efforts.

State-Led Developments

Dubai’s government has long taken a proactive role in planning the emirate’s development in terms of logistics facilities, zones and investments. Under the city’s current strategic plan, Dubai Plan 2021, logistics-related targets are prominent. The strategy, which was launched in 2015 and is largely pegged to Expo 2020, has an economic component that aims for the city to become one of the top five logistics centres in the world.

In terms of the details of the strategy, key performance indicators under the economy heading include: the emirate’s trade openness ratio; Jebel Ali’s international ranking and volume as measured by throughput; the emirate’s overall ranking on the World Bank’s ease of doing business index; and Dubai International Airport’s regional and global ranking and volume as measured by passenger traffic; among others. All of these indicators are closely linked to Dubai’s overall logistics capacity and capability, and the government is doing its part to improve the numbers. “The regulatory environment is very conducive to the functioning of the aviation sector,” Adel Mardini, president and CEO of trip support company Jetex, told OBG. “The Civil Aviation Authority wants the industry to grow and is committed to enacting rules to enable such growth.”

Noteworthy Plans

In December 2016 government documents for contract bids showed that the emirate was planning to spend $35.7bn on a new airport and logistics hub in Dubai South, the 145-sq-km free zone development that has been under way in the emirate since 2006. The major expansion of DWC will turn it into the world’s largest airport, with an estimated eventual annual capacity of over 220m passengers and 16m tonnes of cargo. The development plan involves the construction not only of the airport but also six new clusters in the vicinity: the Logistics District, the Commercial District, Aviation District, Golf District, Exhibition District and Residential District.

The emirate plans to raise financing via a consortium of government entities and private sector players for the project. Major public participants that have either already played a role in financing Dubai South or are set to participate in the coming years include Dubai’s Department of Finance and state-owned entities such as the Dubai Aviation City Corporation and the Investment Corporation of Dubai, among others.

While not many details about the Logistics District have been made publicly available, the project is being billed by the government as a supply-chain capital and the world’s first integrated logistics platform, and will include a large multi-modal transport hub, as well as space for logistics handling, warehousing, light manufacturing and assembly. The Logistics District will also offer expedited Customs clearance to registered firms and a wide range of Dubai South-associated incentives.

You have reached the limit of premium articles you can view for free. 

Choose from the options below to purchase print or digital editions of our Reports. You can also purchase a website subscription giving you unlimited access to all of our Reports online for 12 months.

If you have already purchased this Report or have a website subscription, please login to continue.

The Report: Dubai 2018

Transport chapter from The Report: Dubai 2018

Cover of The Report: Dubai 2018

The Report

This article is from the Transport chapter of The Report: Dubai 2018. Explore other chapters from this report.

Covid-19 Economic Impact Assessments

Stay updated on how some of the world’s most promising markets are being affected by the Covid-19 pandemic, and what actions governments and private businesses are taking to mitigate challenges and ensure their long-term growth story continues.

Register now and also receive a complimentary 2-month licence to the OBG Research Terminal.

Register Here×

Product successfully added to shopping cart