As Dubai & Abu Dhabi import 90% of their food products, they faced a crunch during the lockdown due to disruption in the global supply chain, which lead to encouraging local production. And, the crunch in supply prevailed only for a short period as they dealt supply shortage effectively with efficient logistics system.
The UAE ranks 13th in the liner shipping connectivity index in the Global Competitiveness Report. The logistics industry constitutes 14% of Dubai’s GDP and is forecasted to grow at 4% CAGR in 2022.
Now, with globe recovering from the impact of the pandemic, Dubai is aiming for ways to accelerate opportunities by partnering with private firms & developing policies to further ease supply chain operations between UAE and the globe. With Dubai Government’s collaboration with private sector, world-class projects are expected to further rise due to Dubai Silk Road further enhancing Dubai’s position as world-class emerging leader for trading and investment.
The importance of trading by sea plays a defining role in Dubai’s thriving economy. There are three main seaports in Dubai; Jaber Ali, Port Rashid and Al Hamariya. According to the World Shipping Council, two of the world’s top 50 container ports are in the UAE, with Dubai featuring among the top ten. Also, about 61% of cargo destined for GCC arrive via the UAE seaport.
Here are some important factors to take into consideration when you choose your logistics provider:
1.Logistics Capabilities: For instance, the company might not have EDI (electronic data interchange) option today but if your business needs that option in another 12 months, check beforehand about the scope for including a new feature finalizing a logistics provider.
2.Company Reputation: Research and check for trade license even if it comes through a personal recommendation. enquire with few logistic partners before you settle in. Look up for online company reviews, years of operation, and talk to other suppliers associated with the company
3.Technology: It is imperative to check for deployment of tech-enabled tool to track the inventory and check the status. With Food Watch platform there is real-time data available for F&B-related trading.
4.Inventory planning: During festive time, when there is high demand for your inventory, check how the provider will manage to meet your requirements. If you’re a retailer or a re-exporter you could ask for stock availability at both provincial and the local distribution center if there is high demand during peak or festive season. Also, ensure you enquire about the number of days you need to book your shipment in advance during the peak season.
5.Prompt support and help: Once you share your business requirement, the logistics partner should assist you plan your shipments periodically and make any amendments promptly if required.
6.E-commerce trader fulfillment: If you find a provider who would offer pre-built integrations to different online marketplaces (if you’re a wholesaler) and ecommerce sites (if you’re an e-retailer) and if you have the budget, it will save you a lot of time and efforts.
The World Logistics Passport, a global-private-sector led initiative was launched in 2020 at the World Economic Forum in Davos, by Sheik Mohammed, which aims at increasing trade opportunities between emerging markets by combining the interests of national trade organizations, logistics leaders and multinationals to from a close-knit alliance focused on trade growth. It aims to boost supply chain development and bridge the gaps between manufacturing hubs that are expanding across emerging markets, particularly in South East Asia and Africa.
The Dubai Industrial Strategy 2030 and the Abu Dhabi vision 2030, consider the pharmaceutical industry as one of the main sub-sectors to develop with its future growth prospects, export potential, and mid-term to long-term economic impact. A key long-term focus for the UAE government has also been to reduce its reliance on imported pharmaceuticals.
Based on your business you can choose the logistic providers:
- 1 Party logistics: A business/individual that sends goods directly to the retailer/grocery store. Small traders use this model, like small scale farmers.
- 2 Party logistics: Two party logistics, the business has its own fleet of transport to deliver its products from the manufacturing unit to the supermarket. Small medium enterprises use this method. For example, vegetables, cereals, or eggs manufacturers.
- 3 Party logistics: Once you drop the product at the warehouse, they pick, pack and send your products to the grocery store/retailer. The warehousing and storage can be outsourced to an external logistics firm. Small medium enterprises use this method.
- 4 Party logistics: All the logistics and handling done by one logistics partner. This works for medium and large enterprises.
It is crucial to analyze the profit percentage spent by your competitors on logistics and transportation and then set a budget. DHL, Aramex, Al-Futtaim Logistics are some of the leading players in the Dubai market. The technology integration in the logistics sector is growing on day-to-day basis.
If you plan to send or receive freight through waterways, you have the liner service that follows a fixed route and schedule, and it is quite expensive. The other service is tramp service which does not have a fixed schedule or route, and is even available on short notice. You could also hire a custom broker to clear your freight, and ensure your goods are safe at your warehouse.
According to World Economic Forum’s Global Competitiveness Index 4.0, UAE ranked 12th globally in the efficiency of seaport services index and ranked 11th in prosperity of seaport services index. With the Emirate government bank investing on logistics and with EXPO 2020’s theme being opportunity, mobility and sustainability, which is also in line with policies that favor the logistics industry. This along with digitalization and many plans and policies in pipeline for the Traffic and Transportation Plan 2030 the industry looks well positioned to attract foreign and beneficial for re-exporters.
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