Transportation, Logistics and Storage Industry in Dubai, UAE – Outlook and Trends

Contents

Dubai FutureEconomy Strategy

Dubai’s diversified economy and investments on infrastructure are expected to drive the growth in the transport, logistics and storage industry

Transportation, Logistics and Storage Industry in Dubai

Source: Dubai Statistics Centre; Frost & Sullivan

• Dubai is a transportation and logistics hub, which is mainly due to its continued growth in trade, transport, tourism, and well developed infrastructure.

• The advantages of Dubai’s geographical position connecting the west and east, coupled with the well-connected air and sea routes, attract businesses and tourists to Dubai.

• Businesses around the world see Dubai as a gateway for developing markets such as Africa and India. Dubai is the major importer and the biggest re-exporter in the region and third-largest re-exporter in the world and plays a major role in the Gulf Cooperation Council’s (GCC) trade.

• Dubai is the major importer and the biggest re-exporter in the region and third-largest re-exporter in the world and plays a major role in the Gulf Cooperation Council’s (GCC) trade.

• Key areas of focus in the transportation, logistics and storage industry in Dubai are elaborated as follows:

Passenger Transportation

Cargo Transportation

Cargo Warehousing

Transportation, Logistics and Storage

Freight forwarding Service providers

Cargo Value Added Service providers

Source: Dubai Statistics Center; RTA; Frost & Sullivan

The RTA has invested high on development projects and aims to revolutionize travel in the city through development of futuristic solutions

Passenger Land Transport

UAE ranked 1st for Road Infrastructure

globally (2016)

• The primary modes of land transport in Dubai are public transport such as buses, metro, trams, public and private taxis and private cars.

• Dubai has highest car ownership rate in the world – 540 cars per 1,000 residents (2016). This is resulting in traffic congestions in major parts of the city.

• To address this, the RTA has invested heavily on road development. Close to 5,000 kms have been developed with an investment of AED 40 Billion during 2006-2016.

• The vehicular population in the Emirate had grown at a rate of 8% in 2016.• Dubai also has the highest share of reserved routes in the GCC (35 m reserved routes per

1,000 residents).• The RTA plans to revolutionize passenger travel in the city with futuristic projects such as Hy-

perloop and Volocopter.

Modal Share of Motorised Trips, 2016Public Transport

Taxi Private Cars

75%16% 9%

Dubai has a well developed taxi service, which has supported land transportation in the city

Metro and Tram are expected to become the most comfortable option for city’s travellers in the future with focus on integration of transport network

Source: Dubai Statistics Center; RTA; Frost & Sullivan

Increasing traffic congestions and RTA’s goal to boost the share of public transport in the city to result in integration of various public

transport services

Passenger Land Transport

Taxi

Metro

BUS

Tram

• Dubai had a total of 10,216 taxis in 2016. The major service providers were Dubai Taxi Corpo-ration, Cars Taxi and National Taxi.

• The number of taxis in the city had grown at a CAGR of 6% between 2012 and 2016.

• To reduce the pollution levels, Dubai Taxi Corporation, an arm of the RTA plans to have ~1,500 hybrid taxis by 2017 end and 50% of its fleet by 2021.

• Metro is the most widely used transport in Dubai.

• Dubai has two metro lines that are operational stretching to 75 km operated by Serco.• Red Line – 29 stations – 52.1 km • Green Line – 20 stations – 22.5 km

• The Route 2020 project is the extension of the Red Line by 15 kms from Nakheel Harbour and Tower Station to the EXPO site.

• Bus services in Dubai link residential areas and industrial areas.

• Passengers require a NoI card to travel in metro and bus.

• It is free for disabled and discounted 50% for students and elderly (above 60 years).

• Dubai had ~1,500 buses plying in 125 routes (2016) and is expected to reach 2,000 by 2020.

• Serco operates the tram in Dubai under a con-tract from the RTA.

• The tram runs for 11 kms (from Jumeirah Beach residence to Dubai Marina).

• The RTA is planning to expand the tramway in the Emirate to reduce the traffic congestion on roads.

Source: Dubai Statistics Center; Frost & Sullivan Note: Numbers are rounded up. The numbers are in Millions

• There is continuous development by the RTA in integrating the transport system and providing high quality services in par with international standards.

• The RTA is working to increase the share of public transport in Dubai from 16% in 2016 to 30% by 2030.

• Metro lines had the highest share in public transport. The number of passengers had grown at a CAGR of 15% between 2012 and 2016.

• To meet the growing demand for metro, the RTA plans to increase the metro services to 421 km by 2030 through the addition of 4 new lines (Blue Line, Purple Line, Pink Line and Gold Line).

• The Dubai Government has launched the Autonomous Transportation strategy by which it aims to convert 25% of the total taxi trips into driverless trips by 2030.

• High spending on R&D related to driverless mobility by software companies and car manufacturers. Currently, there is testing carried out on trial conditions.

• Hyperloop and Volocopter’s are major futuristic transport projects that are happening in Dubai and are expected to revolutionize the industry.

Steady growth in demand for public transport is expected to boost investments by the RTA, which is expected to result in better service

frequency and connectivity

Passenger Land Transport

Passengers by mode of transport

109.4 137.7 164.3 178.6 191.4 137.5

174.6 217.7 207.8 185.5 107.8

115.6 128.5 128.9 151.2

2012 2013 2014 2015 2016

Metro Taxi Bus Tram

428 M511 M 520 M 534 M

354 M

Source: Dubai Statistics Center; World Economic Forum; RTA; Frost & Sullivan

• Marine transport in Dubai includes water taxi, water buses and abras.• Water taxi is used by public for marine transport in the Emirate.• Water buses are used by both commuters and tourists and there are separate routes for

tourist water buses.• The opening of Dubai canal from Business Bay to Jumeirah is expected to boost the marine

transport system in the Emirate due to more connectivity. • The abras are traditional boats and are the cheapest means of marine transport in Dubai. • The ferries were launched in the year 2011 and these express marine transport vehicles cover

new areas that are not covered by the other marine transport system.

Dubai canal and other marine transport projects to improve connectivity and boost tourism

Passenger Sea Transport

Cruise Tourism

Dubai Harbour – Meraas Holding

• It accounted 500,000 passengers in 2016 and expects to have 1 million passengers by 2020.

• Affordability, a luxurious travelling experience and multiple entry visas for cruise travellers are the main attractions.

• Major cruise liners operating in Dubai are Costa Cruises, Costa Deliziosa, and US Royal Carribean International.

• The project was launched by the Government due to high demand for luxury yachts in the region and will have a new marina with 1,400 berths for yachts.

• It will have a cruise terminal built at an area of 150,000 sq.ft and can handle 6,000 passengers.

Source: EXPO; Dubai Government; Frost & Sullivan

• It is a key contributor to the economy and plays a crucial role in business and tourism in Dubai. • In Dubai, the demand for passenger air transport is expected to grow at 7% in 2017.• It mainly comprises of overnight visitors and tourists. • The key advantages for Dubai are

• Strategic location • World-class air transport infrastructure, and • Connectivity

• Dubai expects to have 20 Million tourists by 2020 and 25 Million visitors for the EXPO.• The two major airports in Dubai are Dubai International airport and Al Maktoum International

airport.• Dubai International airport is the world’s busiest airport in terms of international passenger

traffic.• The Emirates Airline is based in Dubai and operates to more than 150 cities in 80 countries.• Despite being one of the largest airlines in the world, it is facing stiff competition from other

airlines operators in the neighbouring states (Qatar Airways and Etihad Airways).

Demand for passenger air transport services in Dubai to increase with expected growth in tourism and EXPO 2020

Passenger Air Transport

UAE ranked 2nd for Air Transport Infrastructure

globally (2016)

Emirates Airlines is

the largest airline

in the Middle East

2/3rd of the global population live within 8 hours flight time

from Dubai

Source: Dubai Trade; Frost & Sullivan

Investments in transportation and logistics infrastructure is expected to result in modernization of the industry

Cargo Transport Services

Jebel Ali port is the 7th busiest trans-

shipment port in the world

• The strategic location and world-class infrastructure facilities have made Dubai a trade and logistics hub. • UAE’s ports handle approximately 60% of the GCC shipments. Economic integration of GCC nations is

expected to boost intra-regional trade.• It is also a gateway for international companies that plan to enter Asian and African markets.• Dubai Trade is the single window for cross border trade in the Emirate. It works with the objective to make

the city a preferred destination for trade through the adoption of e-services.• Increasing investments to develop the cargo transportation and logistics infrastructure is expected to drive

the growth in the logistics industry.• EXPO 2020 related developments are also expected drive the logistics industry till 2020.• Multi modal transportation to benefit from the investments in transportation infrastructure and new

technology solutions.• Autonomous trucks and Uber for trucks are emerging technologies which are expected to have significant

impact on the industry.

• It was launched by Dubai Trade as a part of the Smart Dubai initiative to promote the cargo transportation and warehousing services in the city.

• LogiGate Transport and LogiGate Warehousing are the two services provided.• Users can manage land transportation and warehousing services online.• It increases the speed and accuracy in the transportation, logistics and storage industry in Dubai.

Source: National Bureau of Statistics; Frost & Sullivan Note: …

• Dubai exports mainly to Asian countries. China and India are major export, re-export and import partners.

• The UAE has ranked first in customs clearance in the Efficiency of Customs Procedures Index in 2016. This is mainly attributed to the smart initiatives by the Government and state-of-the art technologies in place.

• Increase in level of trade activities is expected to increase the demand for shipping agents and efficient customs clearance procedures in the future.

Increasing trade opportunities to boost the adoption of smart technologies in order to have efficient procedures and sustain the growth of the industry

Freight Forwarding

• Sea transport is the main mode of freight transport in the UAE. 97% of total freight was dealt by sea transport service providers.

• It registered a growth of ~4% in 2016 driven by demand from Asia, Europe and Africa.

• Road freight in Dubai mainly caters to domestic economic activities and plays a greater role compared to the other Emirates mainly due to the diversification of the economy.

• It registered a growth rate of 4.2% in 2016.

• Air freight in the UAE registered a growth of 6.5% in 2016 and is mainly driven by the precious metals, electronics and pharmaceuticals.

Source: Frost & Sullivan

• There are both Government and Private warehousing facilities in the Dubai.• The Dubai Industrial Park is the major warehousing location in the Emirate. It has warehouse

spaces ranging from 5,000 to 10,000 sq.ft.• These warehouses are specifically designed for storage of perishables, chemicals and light

industrial use.• Planned expansion of port facilities in the Emirate is expected to increase the flow of goods

(for both regional distribution and transshipment) into the Emirate and help in sustain the demand for warehouses.

• There is an increasing demand for modern warehouses with digital technologies and material handling equipment, which increase the supply chain visibility.

• 3PL companies are expected to adopt technologies and build modern warehouses to prepare themselves for functioning more efficiently.

• The key drivers of the warehousing demand in the Emirate are growth in domestic consumption, retail trade growth, ecommerce and expansion of manufacturing.

• In the UAE, Dubai charges the highest rent for warehousing facilities due to increased trade activities.

IT solutions, warehouse management systems, and safety systems increasingly gaining importance in the warehousing sector.

Increasing trade opportunities to boost the adoption of smart technologies in order to have efficient procedures and sustain the growth of the industry

Cargo Warehousing

Warehouse Operations

Warehouse Management

SystemIT solutions

Safety systems

Industrial Robots

Source: DEWA; Frost & Sullivan Note: The unit is Million Imperial Gallons (MIG)

Value-added services by logistics providers is an emerging market due to change in consumer and retailer preferences

Value-added service providers

• Value Added services are becoming a very important component of the logistics industry with the logistics operators expanding their operations due to the change in consumer behaviour and requirements from the retailers.

• The logistics providers will have to look into different aspects such as delivery time, frequency of delivery, inventory management, customer satisfaction and overall efficiency of the supply chain.

• The different value added services offered include packaging, labelling, kitting, bundling, inventory management and quality check.

• These processes would enhance the supply chain efficiency and ensure that all products entering or leaving the warehouses undergo quality check.

• Labeling, packaging and tracking have an edge over the other services offered by the logistics providers.

• Expansion in logistics infrastructure, free zones, and logistics parks is expected to support the growth of value-added services during the forecast period.

Source: Government of the UAE; WAM; Frost and Sullivan Note: …

Autonomous transportation and modern warehousing facilities are expected to be the key growth drivers of the industry

Transportation, Logistics and Storage Industry Outlook and Mega Trends in Dubai

• Autonomous vehicles, driverless trucks are emerging technologies in the transport industry. The Government supports through the Autonomous Transportation strategy 2030.

• In passenger transportation, public transport is expected to have higher demand due to the RTA’s initiatives to reduce traffic congestion.

• International companies around the world, especially in Asia and Europe are targeting emerging economies in Africa.

• The UAE’s ports also handles ~60% of shipments of the GCC countries. With increased integration between the member countries it is expected to boost the intra- regional trade and improve connectivity.

• Ports in the UAE will benefit from the increased demand. Due to this there are investments to increase the capacity and modernize the facilities in order to improve the efficiency.

• Increased level of trade activities to present opportunities for logistics and storage companies.

• Growth in the e-commerce segment is expected to create demand for warehouses with modern automation facilities.

• Overall, connectivity across different modes of transport and logistics parks are expected to drive the growth in the industry.

Source: ISDB; UNHABITAT; Frost & Sullivan Note: …

MENA is expected to have 2 mega corridors and 3 transportation corridors by 2025, which will foster inter-regional trade between the gulf nations

Transportation Corridors in MENA to Foster Inter-Regional Trade

The UAE will have GCC Rail connectivity that will boost the trade in the region.

MENA to have 2 Mega Corridors and 3 Transportation Corridors by 2025

Muscat

DubaiFujalrahSohar

Cairo–Dakar (33 Million)

Cairo–Jeddah

(25 Million)

Baghdad–Muscat (25 Million)

Cairo–Damascus–Doha

(42 Million))

Cairo–Amman–Doha

(33 Million )

Dakar

Agadir

Casablanca

Rabat

Algiers

Tunis

TripoliAlexandria

Cairo

Beirut

Amman

Damascus

Jeddah

Baghdad

Kuwait City

Riyadh

Doha

Abu Dhabi

Duqm

Beirut–Doha (18 Million)

The Al AmalCorridor

Mega Corridor

Mega Transportation Corridor

GCC Rail

Muscat

DubaiFujalrahSohar

Cairo–Dakar (33 Million)

Cairo–Jeddah

(25 Million)

Baghdad–Muscat (25 Million)

Cairo–Damascus–Doha

(42 Million))

Cairo–Amman–Doha

(33 Million )

Dakar

Agadir

Casablanca

Rabat

Algiers

Tunis

TripoliAlexandria

Cairo

Beirut

Amman

Damascus

Jeddah

Baghdad

Kuwait City

Riyadh

Doha

Abu Dhabi

Duqm

Beirut–Doha (18 Million)

The Al AmalCorridor

Mega Corridor

Mega Transportation Corridor

GCC Rail

• Note: The figures in brackets represent population in million.

• Mega corridors are corridors that connect two major cities or mega regions (60 km or more apart, and with a combined population of 25 million or more). The corridors can be planned economic corridors (with planned investment in transport infrastructure, industrial zones, energy, or real estate) or naturally evolving urban corridors

• Transportation corridors are those corridors that connect mega cities or mega regions by transport links (e.g., highways, rail).

Glossary & Definitions

Appendix

APPENDIX

Definition

Middle East

Gulf Cooperation Council

United Arab Emirates

Bahrain, Iran, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, Syrian Arab Republic, the United Arab Emirates and Yemen

Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates

Emirate of Abu Dhabi, Emirate of Ajman, Emirate of Dubai, Emirate of Fujairah, Emirate of Ras al-Khaimah, Emirate of Sharjah, and Emirate of Umm al-Quwain

Abbreviation Expansion

United Arab Emirates DirhamAED

Centre Point LogisticsCPL

Dubai Chamber of Commerce and IndustryDCCI

Department of Tourism and Commerce MarketingDTCM

Roads and Transport AuthorityRTA

Gross Domestic ProductGDP

Compound Annual Growth RateCAGR

Gulf Cooperation CouncilGCC

Dubai MunicipalityDM

United Arab EmiratesUAE

Public Private PartnershipPPP

Source: Frost & Sullivan

Government’s initiatives strive for development in transportation and logistics infrastructure and services

Appendix

APPENDIX

RTA Strategic Plan 2014-2018• It is a set of goals and objectives the RTA plans to achieve by 2018. • The goals are broadly classified into three main categories which are community, transport system and internal efficiency. • Community goal - to foster connectivity, develop smart solutions for transportation and traffic, to make road and transport

systems friendly for all.• Transport system goal - to encourage use of public transport, manage travel demand and congestion, enhance safe

transport and ensure environmental sustainability. • Internal efficiency goal - to bring financial sustainability through partnership with private sector in providing services and

enhancing the efficiency of operation cost.

Faster Clearance of Cargo• A joint initiative by the Dubai Municipality, Dubai Customs and DP World to ensure faster clearance of cargo by means of

an exclusive inspection facility.

Green initiatives• Smart Drive app for private transport users in Dubai helps users to know about the traffic conditions of the roads in Dubai

and avoid traffic congestions or accidents through the use of GPS and also helps them take alternate routes to reduce carbon emissions and save time.

• The mParking app helps the users to find free parking lots in the city to park their vehicles.

Virtual Freight and Logistics Corridor• The aim of the initiative is to sustain the dominance and attractiveness of business in Dubai. • The ports, airports and free zones are connected in single platform in order to make the transfer of goods more easy and

efficient, which would eventually lead to savings in time and reduction in costs involved in the process.

‘No Worries’ Initiative• The initiative prevents drivers from obtaining permits to drive heavy vehicles if they are medically unfit. • As a result, the number of accidents involving heavy vehicles has reduced by 40%. In 2015, there were only 146

accidents involving heavy vehicles in Dubai. • It is mandatory for truck drivers and bus drivers to undergo annual medical examinations.• RTA has collaborated with the Dubai Health Authority for preparing the medical standards for drivers.

Dubai Taxi Corporation (DTC) 5Year Plan• The DTC plans to increase the fleet size of its public transport vehicles and aims to

provide advanced transit systems that bring happiness to its users.

2015 2021E

Dubai Taxi Fleet 5000 7000

Limousine Taxi 113 500

DTC Hybrid Taxi 145 2280

DTC School Buses 117 650