United Arab Emirates (UAE) Third-Party Logistics (3PL) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

United Arab Emirates (UAE) Third-Party Logistics (3PL) Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The United Arab Emirates 3PL market is expected to register a growth rate of over 8.5% during the forecast period of 2020-2025. The United Arab Emirates handles more of transhipments leading the third-party logistics players to develop a strong footprint to handle both, pre and post transhipment and leverage it to their advantage.

Dubai has established itself as the main hub of the global logistics network, making it one of the critical nodes of the global supply chain. The logistics market of United Arab Emirates has evolved in a way that most of the work in the logistic sector is being outsourced at a cheaper price without compromising the quality of the work or time.

The sectors like manufacturing, IT and agriculture are growing at a significant pace in the economy expecting to further drive the developments in the logistics sector.

Key Market TrendsGovernment initiatives to promote trade in the country

UAE transport infrastructure investments are focused on the development of rail network, expansion of airports and seaports, technologically advanced infrastructure such as Hyperloop, active participation in China's belt and road initiative which is expected to push the logistics sector of the economy. The US-China trade war is expected to benefit UAE in terms of unaffected oil demand and the country is posed to be the best alternative for the Chinese products that are currently supplied in the US. This will accelerate the FMCG and retail sector leading to an increase in demand for advanced, updated and complex logistics solutions.

Additionally, the UAE E-Commerce market, given the current situations, is expected to grow by more than 15% through the forecast period backed by the economic diversification, increasing digitalization, expected rise in manufacturing industries and rising purchasing power of the population in UAE.

UAE government is also taking up initiatives to promote trade and economic diversification through EXPO 2020, free trade agreements, change in foreign ownership rule for some sectors and development of free zones near airports and seaports; expecting to allure foreign investors to set up manufacturing industries in UAE.

Via EXPO 2020, the government intends to induce economic diversification in the economy which is targeted to reduce the economy's dependence on oil sectors for growth. It is a platform for small and medium enterprises to get investments.

UAE Government initiatives such as Dubai IoT strategy, Dubai BlockChain strategy, Introduction of drones for last-mile delivery, UAE National AI program, Smart Dubai 2021, Dubai 3D printing Strategy, Dubai Data Initiatives and National Innovation Strategy will revolutionize the logistics and warehousing market of UAE. The growth of the logistics market would rely on the adoption of technologically advanced mechanisms and trained professionals.

Manufacturing sector - vital for the growth of logistics in the country

The diversification of the UAE economy is important based on a number of reasons, with the fundamental one being that the major part of the UAE economy is only a finite source. Manufacturing is already the second most powerful growth driver bringing in 10% of the GDP annually. The UAE has committed to reducing the dependence of its economy on the oil sector which is expected to come down in the coming decade.

The expanding manufacturing sector would increase the FDI into the UAE not only supporting the manufacturers but also the tertiary and service-based business of the country. The logistics sector will be particularly in gains with the increase in exports from the country. The rising consumer expectations are also forcing the companies to respond much quicker to the client’s demands. As per the industry experts, the UAE market needs to export more in order to grow more; about 67% of the SMEs of the country are focusing on the export market more than the home market. This, along with the increasing technological innovations, represents a phenomenal opportunity to reduce the complexity in logistics and reduce the costs.

One of the steps that Dubai took, in order to support the manufacturing, trade and logistics of the UAE market, was the launch of the “World Logistics Passport” in Oct 2019. This passport offers to connect shippers, liners and government entities with logistics service providers and is expected to a vital foundation to the Dubai Silk Route, smoothing out its global supply chain connections.

Competitive Landscape

The market is highly competitive and fragmented with a large number of local and international players such as DHL Supply Chain, Al Hilal Transporting and Contracting Company and RAK Logistics, actively competing for market share. The technological integration in the logistics sector is high, leading to the increasing dependence of the logistics companies on digital players in the market. With the overall logistics infrastructure in the country developing rapidly the competition within the industry is expected to be powered.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

Companies Mentioned
 
Deutsche Post DHL Group
FedEx
Al Hilal Transporting and Contracting Company
RAK Logistics
Emirates Logistics LLC
The Kanoo Group
Kuehne + Nagel
Agility Logistics
Hellmann Worldwide Logistics
United Parcel Service Inc.
Geodis
Al
Futtaim Logistics
CEVA Logistics*

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