middle east's transport & logistics industry: an … · 2021. 1. 25. ·...
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MIDDLE EAST'S TRANSPORT &LOGISTICS INDUSTRY: AN OVERVIEW,FORECASTS & EMERGING OPPORTUNITIES
www.sitlmiddleeast.com7-9 December 2021 Dubai South, UAE
Organised by Industry Commentary by
GROWTH OF LOGISTICS SECTOR IN LAST 10 YEARSAND FORECAST FOR THE NEXT 10 YEARS IN THEMIDDLE EAST/UAE/ DUBAI
Middle East
The logistics industry in the region is evolving rapidly with infrastructure development, changing consumer preferences, emergence of free trade zones and industrial parks, changing industrial landscape and intra-regional expansion of trade. Economic diversification initiatives in the GCC region, logistics capacity development, and food security related measures and investment in infrastructure development are some of the key factors have driven logistics growth between 2010 and 2019. Governments have undertaken policy measures to reduce their dependency on oil exports by having a diversified economy strengthened by tax reforms, favourable FDI norms and suitable environment for private sector investment had contributed to growth during this period.
UAE
UAE logistics industry is expected to be driven by economic diversification efforts, infrastructure development related with implementation of national logistics plans and investment into digital transformation initiatives undertaken by both public and private sectors. Digitalization and logistics process automation, growth in E commerce are some of the key trends expected to shape the future of UAE logistics Industry.
Dubai
Transportation and logistics contributed 12.5 % of GDP in 2019, in contrast to UAE where it contributed 5.9 % of GDP in 2019. Covid related disruptions caused significant slowdown during H1 2020, volume handed by Jebel Ali port contracted by 6.7 % in H1 2020. Dubai logistics industry growth will be driven by mega events such as EXPO 2020, and investment in digital infrastructure upgrade to accommodate the growing demand from e commerce sector.
Logistics industry grew by an average annual growth of 3.8 % between 2010 and 2019 and is expected to grow by 4.0 % between 2020 and 2025.
Middle East
Estimated growth of transportation and logistics industry between 2010 and 2019 was 4.4 % and forecast growth is expected to be in the range of 4% to 6 % during the period 2020 to 2025
United Arab Emirates
Logistics Sector has grown consistently between 2010 and 2019 by an annual average growth rate of 7.1 % and is expected to grow by 4.5 % between 2020 and 2025
Dubai
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GLOBAL GROWTH OF LOGISTICS IN THELAST DECADE AND GROWTH NEXT DECADE?
Global logistics industry is highly dependent on economic, trade, production and distribution related activities. As a result, logistics industry growth is closely correlated with growth of GDP and International trade.
Fluctuations in global commodity market prices, uncertainties associated with BREXIT, trade war between US and China were some of the key factors influenced global trade growth, consequently logistics industry growth was also affected by these events between 2010 and 2019, the industry grew by an annual average of 3.5 % during this period.
Increasing focus on the development of logistics infrastructure, need to improve connectivity with multi modal logistics solutions and increasing trend towards adoption of digital technologies for the development of innovative logistics offerings are some of the factors that are likely to play key role in the transformation of logistics industry between 2020 and 2025.
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– Frost & Sullivan, October 2020
Rising demand for integrated supply chain, adoption of digital technologies in freight and warehouse management, innovations in urban logistics and last mile delivery solutions will drive logistics industry growth to 3 ~3.5 % between 2020 and 2025.
COVID IMPACT ON THE SECTOR AND MEASURES TAKENBY GOVERNMENT/ ASSOCIATIONS TO MAKE THE SECTORMORE STRONG AND RESOLUTE
COVID Impact on the SectorsCOVID-19 outbreak in the region has forced authorities to implement stringent containment measures resulting in national lock downs and border closures. Though there are no restrictions on movement of freight, due to lack of work force restricted operations of ports and delays in customs clearance in some of the key ports. Lack of parts and materials supplies from China has regional supply chain links resulting shortage of primary materials in the region. National and regional lockdowns, a slowdown in customs clearance, and a sharp decline in global trade affected the flow of goods caused severe supply chain disruption, in the ME region during H1 2020. Nature of impact varied across the industry sectors. For example, Aviation, travel and hospitality, automotive, hotels and restaurants, construction and real estate, retail, chemicals, textile, capital goods manufacturing are some of the sectors most affected by the lock down measures. On the other hand, digital media, telecom and internet provid-ers, digital payment portals, Online food and consumables, eRetail, healthcare and personal protective equipment and online education are some the industries benefitted from the lock down measures.
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Measures taken by the Government to make the sector strongerGovernment stimulus measures aims to reduce impact on economic and trade growth in the H1 2020. These measures mostly focussed on providing financial assistance to companies that are most affected by national lock down measures. These measures include incentives for business, liquidity to small and medium enterprises, soft long term loans for distressed companies, liquidity to small and medium enterprises. Industry growth is driven by emerging opportunities across several end-user verticals such as retail, construction, e-commerce, healthcare, automotive, food and beverages.
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FORECAST OF IMPORT AND EXPORTBetween 2010 and 2019 global exports has been inconsistent and volatile due to uncertainty relating to trade policies and fluctuations in economic activities. Due to rebound from Great Financial Crisis exports growth peaked at 19 % in 2011, but exports growth declined sharply by 12 % in 2015 due to fall in commodity prices and US-Chi-na trade war resulted in decline of -2.4 % in 2019. Thus on average trade growth was estimated at an annual average growth of 2.5 % between 2010 and 2019. Subsequently the spread of Covid affected the global trade sharply, ME region is expected to see trade decline between 15 to 20 % in 2020. As the impacted economies start relaxing lock down measures, economic and trade activities are likely to start improving in many industry sector in the region. Retail sales and industrial production expected to lead the rebound in many key countries. On the trade front, global exports which declined by 14 % in H1 2020 is expected to rebound following revival of production and distribution activities. ME being a key logistics hub in the East-West trade lane expected to benefit this revival from H2 2020 onwards.
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Overall ME exports growth will be in the range of
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5 % 6 % 2020 2025
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