UAE logistics set to reap dividends of new Silk Road

The UAE's logistics industry is gearing up to take advantage of China's Belt and Road initiative (BRI), under which projects worth $1.1 trillion are at various stages of development in more than 132 countries around the world.

The major initiative, which was launched in 2013 to develop a modern-day version of the land-based Silk Road Economic Belt and the Maritime Silk Road of the 21st Century, will promote the UAE as an international trading hub, as well as a crucial destination linking Asia, Africa and Europe through its state- of- the- art infrastructure for air, shipping and road facilities.

Experts said the BRI initiative will benefit the UAE economy, trade in general and logistics and transport sectors in particular. Referring to the Federal Competitiveness and Statistics Authority's recent report, they said the logistics sector's gross output amounted to Dh219 billion last year and the sector's contribution to the UAE's gross domestic product is projected to increase to 8 per cent by 2021.

With over 20 per cent of

Arab-China trade and more than 25 per cent Chinese exports to Arab countries already been passing through the UAE, the emirate is positioned itself to take centrestage of the BRI initiative because of its strategic location, excellent infrastructure and stable economic policies.

The UAE and China have already announced many initiatives due to which the emirate will consolidate its position as a key transit point for Chinese exports to African and European countries. One such example is setting up a Traders Market in Jebel Ali Free Zone that will create the first smart free zone market place in the Middle East for the retail and wholesale industries and aims to serve the wider region with a population base of over two billion.

DP World and China Commodity City (CCC) Group Company will develop this $150 million Traders Market project by 2021. Zhao Wenge, group chairman of CCC Group, said the Middle East and Africa region is critical for the BRI and his group is ready to serve this high-growth market through the Traders Market.

"We have chosen Jebel Ali for its efficient infrastructure, business-friendly environment and significant trade with China," he said. Sultan Ahmed bin Sulayem, group chairman and CEO of DP World, said this deal highlighted DP World's ability to attract trade through its best-in-class infrastructure and emphasising Dubai's position as the regions premier trading hub.

"This investment showcases our trade-enabling strategy as we look to catalyse trade and the movement of goods through removing inefficiencies and lowering supply chain costs," he said. In addition to this, a 2.1 million sqft eCommerce City is also under construction in Dubai that will cost Dh3.2 billion and ultimately promote trading and logistics in the country.

Experts said the UAE will emerge as a strong trading hub in Silk Road Economic Belt and the logistics industry will be its major beneficiary.

Referring to a recent report of the Dubai Chamber of Commerce and Industry, they said the UAE's air freight market will expand by a compound annual growth rate of 4.8 per cent over the 2017-21 period while container port traffic in the UAE is expected to rise from 22.4 million twenty-foot equivalent units (TEU) in 2017 to 28.4 TEU by 2021.

Shailesh Dash, chairman of Gulf Pinnacle Logistics, said the BRI is an ambitious plan proposed by China aiming to strengthen trade, infrastructure and investment between China and 65 countries who, according to World Bank 2018 estimates, contribute 30 per cent of the world's GDP, 62 per cent of the world's population and 75 per cent of known energy reserves.

"Even though the proposed economic corridors in the BRI do not formally include the GCC, the UAE is set to benefit directly and indirectly from such an ambitious initiative," he said.

Firstly, he said the China along with the UAE and other Arab countries have founded the Asian Infrastructure Investment Bank, which allows the UAE to invest in international infrastructure and logistics opportunities, diversify its economy and benefit from high-growth markets.

"Logistics giants headquartered in the UAE such as DP world will also expand their infrastructure and handling capacity across Europe, China, Africa, and Southeast Asia in anticipation of increased and faster trade due to reduced distances and enhanced agreements between the newly-linked countries," he said.