The Aviation and Defense Logistics industry have emerged as two of the major contributors to UAE’s flourishing economy. Even though both industries took a major hit during the COVID-19 pandemic, the UAE government has been relentlessly taking several initiatives to ensure that they get back on their feet swiftly. And a lot of their efforts have started yielding results as the two sectors, especially the aviation sector, have shown tremendous recovery in the last year. To carry out these extensive plans, the shipping companies or the logistics companies based in the UAE will play a crucial role. The logistics industry has been at the center of the UAE government’s expansion plans like Vision 2030 and Vision 2040, and they will remain important entities in the years to come.
Aviation and defense – are two major contributors to the UAE economy
Before the pandemic, the aviation industry in UAE contributed $47.4 billion to the economy, which is roughly 13.3% of the UAE’s GDP and supported 800,000 jobs in 2019. UAE also ranks among the top 15 countries with the highest budget allocation to its defense. It has been estimated that UAE spent around $19.8 billion on defense in 2020, 5.6% of its overall GDP, making it the second-largest spender in the GCC region. It has also been estimated that between 2010-2019, the UAE spent a majority of its expenditure on the procurement of military equipment from foreign investors.
To further strengthen these two sectors, the UAE government is investing heavily, ensuring they are back on their feet immediately. In their Vision 2030 project, the government has identified several facets that can help in their further growth. For the defense industry, the government has been inviting foreign investments, collaborating with other major producers in the defense sectors like the US, strengthening foreign military sales and direct commercial sales, and a lot more.
The aerospace and aviation industry has also witnessed strong support. From developing industrial clusters, offset programs, and university programs to developing airports and investing in technological innovation, there has been a huge amount of money being pumped into this sector. With the government backing these major economic contributors, they are sure to come of their own in the immediate future. But with such immediacy being shown in these two sectors, the logistics industry will also have to buckle up so that it can keep up with the pace.
The support outlook 2022
Over the last decade, the UAE government has identified several industrial and manufacturing sectors that it will support financially and strategically so that they can become strong pillars of the country’s economic diversification. And aviation and defense are two of the industries that the government is looking at. This has ensured that these two sectors get extra attention from the policymakers as well as industry players bringing in large investments, policy developments, and strategic alliances with foreign entities. All these developments have ensured that aviation and defense get whatever support they require for boosted growth.
In a bid to make the entire process smoother, the UAE government identified some core sectors within these two industries. While from defense, these core sectors were missiles & missile defense systems, military infrastructure & logistics, military fixed-wing aircraft, military rotorcraft, military simulation & training, military UGV, and naval vessels & surface combatants, it was the development of world-class airports, support infrastructure, technological innovation in aviation and local production of important goods in the aviation sector.
These initiatives by the government have sent clear signals to the industry players about its intention. In the bigger scheme of things, the logistics sector will play a crucial role in implementing the plans that the government has charted out. The shipping companies and logistics companies in the UAE, that have already been receiving a lot of support from the government, will find themselves in the middle of the action as the country looks at furthering its expansive plans.
A brighter and prolific future
With the market share of these two industries growing by the day and the UAE looking at further flourishing, it will be important for the logistics companies to lend their full support. Both aviation and defense logistics are time-critical and goods-sensitive industries that require careful handling and strategic planning. Shipping companies providing aviation and defense logistics services must keep in mind that these two industries have a prolific future and the UAE government backing them up will mean that they scale up a lot in the coming years. So, the shipping companies will need to up their ante and be prepared for a long haul in this sector.
