GCC governments will continue to focus on development of logistics infrastructure to sustain economic growth in coming years
The logistics industry in the Gulf Coperation Council region looks set for a promising future after experiencing some temporary disruptions due to the Covid-19 pandemic last year, experts say.
Referring to latest Frost and Sullivan report, industry specialists and analysts said the region’s logistics industry will sustain a steady growth trend in next five years due to infrastructure development, boom in e-commerce and increase in cross-border trade.
“The GCC logistics industry is evolving rapidly due to rising non-oil sector contribution to the GDP, infrastructure development, the emergence of free trade zone, industrial parks and increased trade cooperation in the region. The industry is expected to grow by 4.3 per cent between 2020 and 2025,” according to Frost and Sullivan report.
Governments in the region have undertaken policy measures to reduce their dependency on oil exports by strengthening economic diversification initiatives, tax reforms, improving the investment climate, increasing investment in food security and encouraging private sector participation, it said.
The report said the Covid-19 related disruptions such as lockdowns, travel restrictions, and slowdown in customs clearance caused significant slowdown during the first half of 2020. However, it pointed out that digital transformation initiatives will play a key role in growth of logistics industry in the region.
“With governments focusing on digitalisation and increasing contributions of knowledge economic sectors, launch of 5G services supported by several initiatives relating to artificial intelligence and cybersecurity are expected to aid the transformation of the logistics ecosystem,” the report said.
The region’s geographical location on the transcontinental trade has facilitated its focus on the development of logistics hubs for both domestic and transit goods. Governments across the region accord high priority to the development of free zones to increase cross-border trade and e-commerce, according to the report.
“Number of licences issued to the e-commerce sector is on the rise due to behavioural shift towards online purchasing and primary focus shift to the development of e-commerce zones in the region,” the report said, adding that Dubai Commerce City is developed to support global and regional brands to expand their e-commerce trade in the GCC region.
Geoff Walsh, country manager at DHL Express UAE, said the UAE’s logistics sector is substantial, and makes up about 13 per cent of the UAE’s total GDP.
“As we get closer to Expo 2021, and with the UAE’s 2030 industrial plans in place, the logistics and supply chain segment is expected to strengthen even further,” Walsh told Khaleej Times.
“We are very optimistic of the industry’s growth potential which we anticipate will be primarily driven by e-commerce activity,” he added.
The experts highlighted that the governments across the GCC region will continue to focus on development of logistics infrastructure to sustain economic growth in coming years. The UAE logistics industry, which is estimated at Dh220 billion, is likely to lead the growth in the region due to excellent infrastructure, technology advancement and conducive government policies.
“Port infrastructure development projects in the UAE ‘s Khalifa Port, Oman’s Duqm Port, Saudi Arabia’s Jizan Port and Mubaral Al Kabeer Port in Kuwait are expected to improve regional connectivity. Al Khomra Logistics Zone in Jeddah Port launched by Saudi Ports Authority will become one of the largest integrated logistics zone in the region,” according to the report.
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