GCC customs union needs to ‘catch up with growth’

Dubai: The Gulf Cooperation Council (GCC) customs union needs to be modernised in order to make cost-efficient shipments, according to Hussain Hachem, chief executive officer of logistics company Aramex.

“My cost for an air freight shipment from New York to Dubai is cheaper than my cost from Dubai to any country in the GCC,” Hachem told reporters at a conference in Dubai on Monday.

He pointed out that handling costs differ from one airport to another. “We need to benchmark,” he said.

Another challenge is that the GCC customs union law does not address online trade, according to Hachem.

He said that ecommerce in the region is valued at $15 billion (Dh55 billion). Online transactions account for 10 per cent of Aramex’s revenue, growing at a rate of 25 per cent year-on-year, he said.

“We need the GCC customs union to catch up with the growth,” he said.

Meanwhile, the other Gulf countries need to upgrade their logistics infrastructure, according to Hachem. He pointed out that the infrastructure in the UAE is good, with the creation of Jebel Ali Free Zone, DWC Free Zone, Jebel Ali Port and Khalifa Port.

“You need to complete the whole end-to-end solution,” he said, while also stressing the need for cooperation between the private and public sectors. “Here there is a massive upgrade... we need a similar upgrade to happen to the destination wherever the goods are going to, either in the GCC or beyond.”

The UAE is the dominant logistics hub in the region, according to Nicholas Levitt, head of commercial banking in the UAE at HSBC.

“In order to go to the next stage, you need to further refine the policies of infrastructure that back up the logistics hubs in a slightly different way in order to maintain that dominant position and build upon it,” Levitt said.

One way the UAE can build on its dominant position is to further simplify the documents required to import and export goods, he said.

Meanwhile, Hachem called for the ability to transport express shipments by land, rather than just by air.

“In the Arab world, I can only move express by air,” he said. “You cannot clear express at the border. The law doesn’t support it.”