Maritime endeavours are a key component of Dubai’s history. The city was originally established as a trading port and achieved its prosperity chiefly from pearl exports. The discovery of oil in the emirate in the 1960s not only created a new source of wealth, but also encouraged the nation to develop modern maritime infrastructure, as oil exports relied heavily on shipping. In recent years, maritime facilities have been instrumental in Dubai’s efforts to diversify its economy. As part of a larger network of transport, logistics and free zones, the maritime industry is one of the cornerstones of Dubai’s economy.
Structure & Oversight
The Dubai Maritime City Authority (DMCA), which was founded in 2007, is the body that monitors, develops and promotes Dubai’s maritime sector and its regulatory environment. One of its central priorities is to provide a safe environment in which to conduct maritime-related business in Dubai, enhanced by the use of technology.
This is being achieved through initiatives such as the Dubai Maritime Virtual Cluster, an interactive platform for research and sharing knowledge to help the sector to grow and become more competitive. This is the digital counterpart to Dubai Maritime City, a dedicated maritime industry cluster, which brings many of the industry’s services and facilities together in one location spanning 249 ha.
At the federal level, the DMCA works in partnership with the Federal Transport Authority – Land & Maritime, which identifies economic prosperity in maritime transport as one of its strategic priorities. Dubai Ports World (DP World) – whose CEO, Sultan Ahmed bin Sulayem, is also chairman of the DMCA – plays an important role in the regulatory environment as the owner and operator of Dubai’s ports including the Jebel Ali Port, the largest in the MENA region.
The maritime sector makes a significant contribution to Dubai’s GDP, with the latest available figures putting its value at Dh26.9bn ($7.3bn), accounting for approximately 7% of the emirate’s GDP in 2018. This is almost double the $3.9bn it was worth in 2015. Shipping made the largest contribution to the sector’s overall value, followed by ports, maritime engineering and maritime support services, respectively. More than 5500 companies are active in Dubai’s maritime sector, creating 76,200 domestic jobs across around 13,000 activities, including shipbuilding, container logistics, dry bulk cargo handling, port services and dredging.
In an effort to increase collaboration between the emirates, in July 2018 the DMCA signed a memorandum of cooperation (MoC) with the Department of Transport in Abu Dhabi. This MoC aims to promote the development and regulation of the UAE’s overall maritime sector by synchronising policy at a federal level while also striking a balance between cooperation and competition among the different emirates. In other developments to improve the management and competitiveness of the DMCA, in January 2018 the organisation achieved International Organisation for Standardisation (ISO) certification for its Risk Management Framework. “This concluded the DMCA’s journey in securing global certifications as it followed the successful bid to obtain four ISO certifications in environmental management quality, health and safety management, and information security,” Amer Ali, executive director of the DMCA, told local press.
Shipping Hub
The International Shipping Centre Development Index, compiled by London-based Baltic Exchange and Chinese Xinhua News Agency, was established in 2014. Since then, Dubai has consistently ranked among the top-10 global shipping cities. In 2018 Dubai broke into the top five for the first time, placing behind Singapore, Hong Kong, London and Shanghai, respectively. The ranking is measured by a wide range of factors in three main areas: port facilities, shipping services and general services, which includes categories such as government transparency and ease of doing business. Dubai is the highest placed shipping centre in the MENA region, and the report attributes its position in the rankings to its innovative free-trade zones and improvements in the trade environment, placing it in the top tier of “innovation leaders” alongside Shanghai and Guangzhou.
Dubai also ranked highly in the 2017 Leading Maritime Capitals of the World Index produced by Norway-based Menon Economics. Dubai achieved 10th position overall, performing particularly well in the “attractiveness and competitiveness” and “ports and logistics services” categories at fifth and sixth places, respectively. In a survey in which leading industry experts were asked to rank the cities they believed would be the top five maritime centres by 2022, Dubai was placed sixth. On a national scale, the UAE ranked 14th in Menon’s Leading Maritime Nations of the World 2018 report, achieving the highest place of any MENA nation. In this report, the UAE also ranked fourth place in the ports and logistics category.
Dubai Maritime City, the only specialised maritime cluster in the GCC, is home to a diverse range of activities, from maritime services to yacht manufacturing, all under one site. By 2017, 323 companies were registered on the site, with 93 new leases signed in that year alone, a rise of 21% from 2016. The facilities include 42 dry berths, three ship lifts, 1270m of wet berthing and 21 ship repair plots, together with ample workshops, showrooms, warehousing and office facilities. The site is also the home of the Maritime Business Centre.
Policy & Strategy
Dubai’s Maritime Sector Strategy was the emirate’s first comprehensive maritime strategy. Developed in 2012, it outlined a number of objectives, ranging from increasing Dubai’s GDP through development of maritime clusters, to contributing towards an integrated transport strategy and supporting the emirate as a tourist location. The strategy not only outlined areas of strength but also identified weaknesses to be addressed.
Among the latter were the lack of research and development and education, a small and fragmented maritime technology sector, few domestic maritime service companies, and limited linkages between different parts of the industry. Since then many of these areas have been addressed, with the DMCA taking the lead. Rania Tadros, managing partner of the Dubai office of law firm Ince & Co and a specialist in maritime law told OBG, “DMCA is focused on trying to increase Dubai’s presence as a global maritime hub internationally, relying on the jurisdiction’s low taxes, its geographic location between Europe and Asia, and the ease of doing business, as well as the things that make Dubai an attractive city in general.”
In 2014 the emirate launched the Dubai Maritime Vision 2030, which provided further strategic direction for the sector. Among the initiatives that it paved the way towards were the Maritime Creativity and Innovation Lab, Dubai Maritime Intelligence, Dubai Maritime Summit and Dubai Maritime Training Centre.
Another product of the strategy is Innovation Quay, which the DMCA launched in 2017. It aims to deliver integrated services to developers and researchers to transform ideas into tangible projects, to enhance Dubai’s reputation as a maritime centre. Among the fields that manufacturers, research institutions and individual innovators associated with the institute are currently looking into are the use of drones, and smart and autonomous shipping solutions.
A further indication of Dubai and the wider UAE’s growing profile in the global maritime industry came in 2018 when the UAE was elected to the International Maritime Organisation. The Gulf state is the first country in the Middle East to be elected to the 40-member council, with membership set to enhance the UAE’s influence in the creation of international laws and regulations governing the global maritime sector.
Legislative Changes
The new Federal Arbitration Law was passed in the UAE in June 2018, replacing legislation passed in 1992. The law is based on the UN Commission on International Trade Law. Its introduction will promote the development of the UAE as an international centre of maritime arbitration through the Emirates Maritime Arbitration Centre (EMAC). Based in Dubai International Financial Centre, the organisation is financially and administratively independent. By October 2018 the body had received its first cases, with claims in excess of Dh45m ($12.2m). EMAC aims to become the centre for maritime arbitration cases in the Middle East, taking over the region’s cases which are currently heard in more established courts such as London and New York.
DP World
DP World is the operator of both of Dubai’s main ports, Jebel Ali and Port Rashid, as well as the Jebel Ali Free Zone, also known as Jafza. The firm is owned by the government of Dubai and its history goes back to the 1970s. Following a series of mergers and acquisitions in the late 1990s and early 2000s, it emerged in 2006 as one of the largest global port operators. As of April 2018, DP World’s portfolio includes a large network of worldwide ports and marine service providers, including 78 marine and inland terminals across six continents. Operating in 42 countries, it dealt with 70m twenty-foot equivalent containers (TEU) in 2017 and has 38,000 employees. In 2017 DP World’s revenue was $4.7bn, resulting in profits of $1.2bn. Statistics from the first half of 2018 showed considerable improvement year-on-year, with revenue up 14.4% at $2.6bn.
Jebel Ali Port distinguishes itself as DP World’s flagship port and has been voted the best seaport in the Middle East by the Asian Freight and Supply Chain Awards for over 20 consecutive years. It is also the Middle East’s largest port and the ninth-busiest port globally by TEU activity. Likewise, it is ninth on both the World Shipping Council and Lloyds List rankings. Opened in 1979, it is the largest man-made port in the world. More than 11,000 trucks pass through Jebel Ali’s terminal gates each day. Having recently undergone an expansion, Jebel Ali’s container terminals have a combined capacity of 22.4m TEUs, handled through 31 berths with 115 quay cranes. Part of the key to Jebel Ali’s success is its integration into the wider industrial and logistics environment. The port is situated next to Jafza which is home to over 7500 companies that employ 137,000 people, generating $83.5bn in revenue and contributing 20.6% of Dubai’s GDP. Other industrial and free zones in close vicinity of Jebel Ali Port include Dubai Auto Zone and National Industries Park. The port lies directly north of Dubai South, a location that includes Al Maktoum International Airport, also known as Dubai World Central (DWC). The airport will take over from Dubai International in the mid-2020s and is forecast to become the world’s largest international passenger and cargo freight airport, with a predicted capacity of over 220m passengers and 16m tonnes of cargo once it is completed. Dubai South is also the location of Expo 2020 and Dubai Logistics City. Jafza and Dubai South are connected by Dubai Logistics Corridor, which connects the two free zones, providing a link between the port and airport.
The Future
In August 2016 Virgin Hyperloop One signed a deal with DP World to make a feasibility assessment of a cargo hyperloop linking Jebel Ali Port and DWC. DP World is the largest single shareholder in Virgin Hyperloop One, with its chairman and CEO Sultan Ahmed bin Sulayem elected chairman of the company’s board in late 2018.
With potential speeds of up to 1200 kilometres per hour, hyperloop systems have the potential to transform travel times within the UAE and the wider region, both for passengers moving between the emirates and for containers arriving at Jebel Ali Port and being transported to DWC or inland container depots. In addition, the industry is increasingly embracing digital solutions to increase efficiency (see analysis). “Blockchain is increasingly being used in the maritime sector to assist with analysis, while AI is being implemented to reduce operational costs,” Melwyn Abraham, director of global incidence response firm MTI Network.
Port Rashid & Tourism
Port Rashid, which was completed in 1972, now focuses its services on ferries and cruise liners. It is the home of the Hamdan bin Mohammed cruise terminal, which, when it reaches its full capacity of 18,000 passengers a day, will be the largest cruise terminal in the world. More than 2.3m tourists have passed through the terminal since it opened in 2014 to the end of 2018.
Cruise tourism is an area that has been targeted for growth by Dubai’s Department of Tourism and Commercial Marketing, and its efforts have been successful: between 2013 and 2017, cruise passenger numbers grew by 95%. During the 2016-17 season alone 625,000 cruise passengers disembarked in Dubai, with the number forecast to reach 825,000 over the 2019-20 season. In order to accommodate these numbers of passengers, significant expansions are taking place at the cruise terminal to allow as many as six cruise ships to dock at the same time.
Outlook
Dubai has consolidated its position as a regional and global leader in the maritime industry over the past decade. The emirate continues to improve its international rankings as a centre of excellence, particularly for its ports and logistics services, as well as beginning to diversify its maritime activities into other fields, such as education, research and arbitration. The infrastructure it offers, the fact that it is the largest port between Amsterdam and Singapore, and its strategic location give Jebel Ali Port a particular regional advantage, which authorities are keen to utilise.
Although there are some potential challenges for the industry, such as the increasing protectionism of the global trading environment, caused by tariff conflict between China and the US, Dubai will not be the only place feeling these effects. In the long term, according to the consulting firm McKinsey, the world is nowhere near “peak container” level. They forecast global container capacity to grow from 182m TEUs in 2016 to at least 464m TEUs in 2066. Dubai should be well placed to benefit from this growth in the coming years thanks to a number of factors, such as its predominance in the MENA region as a trans-shipping centre, the close integration of the maritime sector with other transport and logistics sectors, and its growing population, which according to some estimates will reach 5m by 2027.
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