Dubai: The logistics market is expected to grow to $27 billion (Dh99 billion) in 2015 due to a surge in import and export trade volumes and upward trend of local manufacturing, according to a perspective by Frost & Sullivan.
In 2013, the market was valued at $23.4 billion, which includes revenues from logistics services for domestic manufacturing, import-export trading, services and agricultural sector. The logistics market accounted for six per cent of the country’s gross domestic product (GDP) value in 2013.
The perspective is authored by Srinath Manda, Programme Manager — Transportation & Logistics Practice, Middle East, North Africa and South Asia at Frost & Sullivan.
“The transport and logistics sector in the UAE enjoys a number of unique strengths, including its location, world class infrastructure, and a progressive non-bureaucratic Government that has played an active role in developing the sector,” Manda stated.
The UAE’s logistic sector is made up of four key areas; transportation services, warehousing services, freighting forwarding services and value added logistics services (VALS).
“Freight forwarding represents the largest share with about 62.0 per cent; transportation is the second largest contributor with about 18.0 per cent of total logistics revenues owing to significant distribution activity. The final two contributors to logistics revenue are warehousing at about 16.0 per cent and VALS, such as packaging and labelling, at about 4.0 per cent,” Manda said.
The UAE pouring billions across its logistic sector with investments made in economic free zones, airports, and ports. Dubai is developing Dubai World Central, which is already home to future super hub airport Al Maktoum International and connects with DP World’s flagship port Jebel Ali. While Abu Dhabi is developing the Midfield Terminal Complex at Abu Dhabi International Airport and continues to invest in its new flagship industrial zone and port, Kizad and Khalifa Port.
“The sector is on a growth trajectory and is witnessing the mega trends that would help establish it as a prominent logistics hub. The GCC benefits from two unique opportunities; strong growth of volume in the trade lane between Europe and Asia and steady growth and development of manufacturing activities driven by predominantly Saudi Arabia,” Manda said.
“Capitalising on the availability of world-class port infrastructure and developing the GCC-wide rail and surface transport capability are essential factors for future economic development of the GCC countries,” he added.