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How Logistics Developments Make Impact on Economic Growth in UAE

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Logistics in Middle East

Towards the turn of the century, the UAE government implemented some path-breaking initiatives in their logistics and transportation industry. And since then, those initiatives have acted as major contributors in bolstering their economic growth. The region that was hitherto highly dependent on its oil sector, was supported, pushed, and diversified into various other industries reducing its over-dependence on oil, which was staring at a downturn through the 2000s. And it has yielded amazing results for the Sultanate as the UAE has now become a gateway to several other major markets in the world creating a huge amount of business potential for several shipping companies in Oman.

From making the most of its strategic geographical position to initiating some smart government policies, the UAE is now home to a logistics sector that is driving economic growth like never before. And continuous efforts in investing towards the development of infrastructure and technology have resulted in a well-integrated transport and logistics system that is at par with the global standards.

All these efforts have resulted in an economy that is more self-reliant and ever-growing in terms of its size and potential. The GCC area has witnessed promising transformational strategies being put in place for the betterment of their industries and is now in a position where it can reap all the benefits. And all these efforts are making their economy grow in leaps and bounds. Even though the COVID-19 pandemic broke the back of the logistics sector for a large part of the year 2020 as the global supply chain was disrupted, continuous efforts in the right direction have ensured that this sector in the UAE continues to flourish. The government’s prompt actions towards improving process efficiency, fulfilling labor shortages, and improving delivery time played a crucial role in the logistics industry standing tall in the face of global adversity.

Logistics in Middle East
The freight and logistics market in the UAE was valued to be around USD 16.93 billion in 2020 and is expected to see formidable growth. If experts are to be believed, the GCC area will see its value rise to USD 30.33 billion at a CAGR of 10.21% in the next few years. Some of the most prominent factors behind this growth are a steady rise in the e-commerce business across the entire region and more international players now trading in the area. Some reports have also indicated that the logistics sector in the UAE amounts to 13 percent of the total GDP in the area, and it is likely to get a big boost due to infrastructural development in the coming years. This is sure to make a huge impact on the economic growth of the entire region. A single industrial sector contributing to the overall economy in such a large capacity shows that it will continue to boost the economy in the coming decades. With the government continuously pushing the logistics sector to grow, it will only ensure that this momentum is maintained.
This exponential progress of the logistics sector has not happened in a vacuum. It has also provided suitable economic growth for the entire region by creating conducive conditions for other businesses to grow simultaneously. Several supporting industries like realty, road and freight transportation, warehousing and distribution, etc have seen an increase in infrastructure and businesses over the years. The transportation companies in UAE have got a golden chance to catapult their positions in this growing economic environment creating newer avenues for businesses to flourish and generating large-scale employment in different sectors.

The ocean freight forwarding industry has transformed the face of the UAE. Now, Dubai is no more the stand-alone contributor to this sector as several other ports in the UAE – Abu Dhabi, Khalifa, and Fujairah ports have been developed at a war-like capacity. They can now function as major logistics hubs in the UAE giving the region more options to do business. These ports are laden with the latest technology and automation that allows them to share a bulk of the workload that was being taken care of in Dubai up until now.

As part of the UAE’s economic diversification plan UAE Vision 2021, Dubai’s Industrial Strategy 2030, and Abu Dhabi Economic Vision 2030, the development of the logistics sector is being seen as a vital component in the development of the national economy. And the best part is that the government is looking at sustained long-term goals here. The vision seems to be that of creating a marathon inning and not looking at a short-term quick boost that might die down after a few years. The Sultanate’s vision seems to be quite clear. It doesn’t want to please itself or the people by showing some quick reforms and policy development and showcasing its immediate effects. Rather, the focus is on creating strategies that will bear fruit in the long run and slowly create a business environment that will collectively make the logistics sector and several other related businesses flourish.

And it is this vision of making a real impact that has made the UAE a rising sun in the global logistics market. The intentions can be seen in the preparatory phases and the focus is to build an infrastructure that will support growth for the coming few decades. When a government charts out objective plans to push a sector, it makes a real impact on the overall growth of the economy. And this is what the UAE is witnessing.

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