Gulf's trade resilience in a volatile global landscape
As costs rise and tensions grow, Gulf and MENA region strengthen trade and sustainability
The global trade landscape is facing unprecedented challenges, and the Gulf and MENA region play a pivotal role in addressing these complexities. From soaring shipping costs to unpredictable trade routes and rising geopolitical tensions, the fragility of the global economy is more apparent than ever. Businesses, policymakers, and consumers are struggling with the immediate effects of these disruptions, which threaten the stability of supply chains and could reshape global commerce for years to come.
In 2024, shipping costs remain persistently high, exacerbating pressure on businesses reliant on international trade. What began as a temporary spike during the Covid-19 pandemic has now evolved into a long-term trend, with freight costs well above pre-pandemic levels.
The Gulf region, a strategic hub for energy and logistics, has felt this impact acutely, as its ports and trade routes connect Asia, Europe, and Africa. Key shipping lanes such as the Strait of Hormuz are facing heightened risks, where any disruption can ripple through global markets, delaying shipments, increasing costs, and compounding supply chain bottlenecks. With the Strait of Hormuz handling a significant portion of the world’s oil shipments, any instability here has far-reaching consequences for energy supplies and pricing.
In response, regional players are investing heavily to enhance infrastructure and logistics capabilities to support higher trade volumes and reduce vulnerability. The focus has not only been on the economic perspective but also on sustainability and resilience, addressing climate-related disruptions and building environmentally conscious supply chains.
Improving efficiency for global trade
Following the disruptions, the focus has shifted beyond economic resilience to emphasise sustainability and strategic partnerships. The UAE has undertaken significant expansions at Jebel Ali Port, Dubai’s main port, positioning it as one of the world’s busiest container ports and enabling it to handle increased traffic volumes.
Saudi Arabia’s NEOM project, which includes a dedicated logistics hub and advanced port, aims to create a futuristic trade gateway between Asia, Europe, and Africa. Additionally, Oman’s Port of Duqm is being developed as a major logistical hub outside the Strait of Hormuz, providing an alternative route that could bypass potential chokepoints.
With the expansion of free trade zones and special economic zones, Gulf nations are positioning themselves as resilient trade alternatives to traditional, overextended routes. Dubai’s Jebel Ali Free Zone offers companies a cost-effective, logistics-focused base to distribute goods across the Middle East and North Africa, while the Khalifa Industrial Zone Abu Dhabi integrates industrial and logistics sectors to improve efficiency for global trade.
Saudi Arabia’s Red Sea Gateway Terminal, as part of the Kingdom’s Vision 2030, aims to increase capacity and connect global trade directly through the Red Sea, offering a strategic alternative to traditional trade routes passing through the Mediterranean and Suez Canal.
Offering a blueprint
Geopolitical tensions are reshaping the global trade landscape, with the MENA region frequently at the nexus of these issues. Sanctions on Russia, for instance, have redirected oil demand to Gulf countries, creating new partnerships with Europe and Asia. In 2023, the UAE deepened its oil supply arrangements with Germany as Europe sought alternatives to Russian energy, a move that highlights the Gulf’s growing importance as a politically neutral energy supplier.
The Gulf region’s investments in digitalisation and advanced supply chain technologies, such as blockchain, artificial intelligence, and data analytics, aim to optimise trade processes and increase visibility. The focus has not only been on the economic perspective but also on sustainability and resilience, addressing climate-related disruptions and building environmentally conscious supply chains.
Saudi Arabia has embarked on its “Green Saudi” initiative to increase sustainability practices within its industrial and logistics sectors. The UAE has introduced the “Green Ports” initiative, which incentivises ports to adopt eco-friendly practices and reduce carbon emissions, creating more sustainable logistics networks. Furthermore, Qatar’s Hamad Port, developed with a focus on environmental standards, uses advanced technology to optimise fuel use and minimise environmental impact.
As global commerce continues to evolve, the Gulf and MENA region’s strategic location, progressive infrastructure investments, and focus on resilient supply chains make it a critical player in the pursuit of a stable and secure trade environment. By prioritising infrastructure, technology, and sustainability, the Gulf is positioning itself as a less vulnerable, more adaptable hub in a volatile world economy.
The UAE, in particular, serves as a role model by employing a combination of strategic investments, technological adoption, and policy measures to build resilient supply chains. Through expanding port facilities, leveraging digital technologies, and promoting sustainability, the UAE offers a blueprint for reducing vulnerabilities and ensuring smoother trade flows.
Areej Aftab Siddiqui and Arij Lahmar are faculty members of Dubai Business School, University of Dubai