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What will drive UAE logistics sector growth?

Expansion projects and new investments are expected to fuel growth within the UAE’s logistics sector over the next five years, according to a recent analysis by the Dubai Chamber of Commerce and Industry.

The positive outlook is supported by expectations of strong growth in the country’s air and sea freight markets, the trade organisation says.

Air freight expansion

The analysis, based on recent data from Business Monitor International, forecasts the UAE’s air freight market to expand by a compound annual growth rate (CAGR) of 4.8 per cent over the 2017-2021 period.

It also showed demand within the country’s air freight market increasing at a CAGR of 8.6 per cent between 2012 and 2016.

Dubai International Airport handled 2.6 million tonnes of cargo in 2016, with freight volume growth of 3.8 per cent compared to 2015, the analysis showed, while Abu Dhabi Airport handled nearly 800,000 tonnes of cargo during the same year.

In 2017, air freight volumes at Dubai International Airport are expected to grow five per cent and increase at a CAGR of 3.2 per cent over the next five years. At Abu Dhabi Airport, air freight volumes are projected to grow 12 per cent this year and record a CAGR of 5.2 per cent over the 2017-2021 period.

Continuing investments

The UAE’s two leading airports have continued to invest in expanding and enhancing facilities in recent years.

Emirates SkyCargo recently opened a new pharmaceuticals facility at Dubai International Airport to accommodate growing demand for pharmaceutical and cold storage products.

Going forward, the expansion of cold-chain logistics services at both airports is expected to further increase air freight volumes in the UAE.

Both Emirates and Etihad Airways have played an important role in air cargo in the UAE and will continue to contribute to increasing air cargo volumes over the next five years.

Maritime hub

The UAE has the largest container port between Singapore and Rotterdam, even as the country serves as a maritime hub for the Middle East region. In 2016, container port traffic in the UAE amounted to 21.3 million TEUs (twenty-foot equivalent unit). This figure is expected to rise 5 per cent to 22.4m TEUs in 2017, and increase further to reach a record of 28.4m TEUs by 2021.

Container traffic at Dubai’s Jebel Ali port is forecast to Jebel Ali witness a CAGR of roughly six per cent between 2017 and 2021. Over the next five years, container traffic in Sharjah is forecast to record a CAGR of close to 3.2 per cent, while container traffic handled at Abu Dhabi’s Khalifa Port will likely increase at a CAGR of 13.5 per cent over the same period.

Ports expansion

The analysis highlighted the potential impact of expanding the ports in the UAE and further developing their facilities. Jebel Ali Port, managed by DP World, is investing $1.6 billion with the aim of increasing the port’s total capacity to 22.1m containers. Abu Dhabi Ports Company plans to expand Khalifa Port by 100 square kilometres by mid-2018 to accommodate more industries and keep pace with rapid growth within the sector.

Hamad Buamim, President and CEO of the Dubai Chamber of Commerce and Industry, says the recent expansions, investment and improvements within the logistics sector have strengthened Dubai’s position as a global trade hub and enhanced the competitiveness of the UAE economy.