Dubai to solidify position as global logistics hub
Dubai is set to solidify its position as a leading international logistics hub, according to the latest analysis by Dubai Chamber of Commerce and Industry.
The Emirate's strategic central location at the crossroads between important trading routes between east and west is its main competitive advantage.
But by building relationships with emerging markets and adding value to the trade sector by developing its manufacturing base, Dubai can place itself ahead of competing global markets, the analysis finds.
In recent times, Dubai has tried to leverage its strategic location through major logistics enablers, such as Jebel Ali Port and the new Al Maktoum International Airport. These projects are timely since they come in a period of increased trade between developing regions of Asia, which lie to the east of Dubai, and Europe to the north west of Dubai, the analysis states.
Demand for African minerals and goods from Europe and Asia, as well as the ambition of landlocked countries in Central Asia to trade with the world, is presenting Dubai with a number of opportunities. There is also potential for increased tourism from Asia, Europe and Africa, according to the analysis.
Dubai's central location means shipments can be made from the Emirate to regions as far afield as South America, the Far East, Northern Europe and the United States, in a similar number of days.
Meanwhile, the relatively short flight hours from Dubai to global destinations also highlights the importance of Dubai's strategic location.
The analysis gives South Asia's large population, and developing and industrialising economies, as an example of the potential for increased trade flows. Likewise, it states increased incomes in Central Asia, gained from developments in mining large mineral deposits, as presenting Dubai companies with new commercial opportunities. The report suggests that Dubai logistics companies can assist the landlocked countries of Central Asia to transport their commodities via air, using Dubai's strong aviation sector and then by sea via ports like Jebel Ali and Port Rashid.
Other Asian countries could also present different, but potentially lucrative opportunities for multi-modal transport, the analysis states. For example, India and China's imports from Africa and Europe are expected to increase over time, while exports of consumer products, like vehicles and other goods from Asia, will continue to be in demand in Europe and Africa.
The analysis suggests that Dubai companies can act as a trade intermediary between these different markets, especially with regard to frontier markets, which due to their lower market capitalisation and liquidity, make business people from other countries more hesitant to invest.
The analysis states that heavy investment in logistics means that Dubai and UAE companies are ready to take advantage of these opportunities in new and emerging markets. Indeed, within the GCC region, the UAE is ranked highly in terms of logistics performance, including infrastructure, international shipments, logistics competence and timeliness by the World Bank's Logistics Performance Index (LPI).
The analysis also suggests that growth in new regions creates potentially lucrative opportunities for Dubai logistics companies because as incomes increase residents of these developing countries begin to spend more on consumer products and tourism.
Dubai is well placed to benefit from these opportunities, but it must continue to develop its competitive edge, quality of service and implementation of projects to gain an advantage by moving first, the analysis says.
The analysis concludes by stating that by creating linkages and importing from source countries, Dubai companies can add value by processing goods in Jebel Ali Free Zone before exporting them to destination countries.
The next step for Dubai's business community is to establish contacts and trade links with business communities in the growing regions of Asia, Latin America and Africa. By doing so they could set themselves ahead of the rest of the world by providing intermediation services between established economies and emerging and frontier markets, the analysis recommends.