Logistics is the key element responsible for the success of the entire supply chain management process. Globalization and increased competition make seamless logistics critical to business success. UAE has the geographical advantage of being strategically placed between the East and the West, making it a leading hub for carrying out trade. As per Astute Analytica research, the UAE third-party logistics market is expected to reach a market valuation of US$ 6.529 Billion by 2030 at a CAGR of 6.5% during the forecast period 2023-2030 from US$ 3.940.9 Billion in 2022. It is no surprise because UAE is emerging as a leading logistics hub offering businesses endless possibilities for cost-effective delivery services and supply chain enhancement.
Factors behind the Rise of UAE as a Leading Logistics Centre.
The rise of the UAE as a hub for third-party logistics can be attributed to the following factors:
Favourable Government Policies
The UAE government is committed to promoting trade by encouraging innovation in technology. The UAE government is committed to promoting trade by encouraging innovation in technology. The Dubai eCommerce Strategy prepared by the Dubai Fee Zones Council, for instance, is one of the several initiatives started by the government to support eCommerce. Abu Dhabi Economic Vision 2030 aims to build a globally connected, efficient business environment.
Development of Free Zones
Free zones have been developed near seaports and airports to increase foreign capital investment. This translates into full ownership of companies, 100% repatriation of capital and profits, 100% exemption from import and export taxes, 100% income and corporate tax exemption, and reduced duty and paperwork costs for non-resident corporates and foreign investors.
Free Trade Agreements
The UAE government has signed Free Trade Agreements (FTAs) with other countries to boost trade and investment flows. FTAs create new business opportunities by encouraging diversified economic activities that increase consumer spending.
Geographical Location
UAE sits at a strategic location that connects Asia, Europe, the Middle East, and Africa. As it is a favourable location for businesses to connect with the world, UAE has become an ideal investment destination.
Robust Infrastructure
UAE is home to the best infrastructure in the world. It ranks first in the Middle East and North Africa and 11th globally. UAE enjoys the best transportation (roads, ports, railways, and aviation) and communication facilities. Thus, it presents an ideal business environment for trade and investment.
Business Friendly Bank Policies
UAE encourages international trade thanks to the friendly policies of the majority of its local and foreign banks. The banks provide innumerable services to businesses to engage in business in domestic as well as foreign markets.
Focus on Core Competencies
As a means to improve business efficiency, manufacturers and retailers have understood the importance of focusing on their core competencies. Hence, more and more companies are increasingly turning to third-party logistics providers. UAE became the popular choice due to its progressive economic and trade policies.
Source : Astute Analytics