The UAE, Saudi Arabia, and Qatar maintain their positions in the top 10 emerging markets for logistics globally, showing improvement or stability in crucial areas. In contrast, neighboring Oman, Bahrain, and Kuwait have seen declines in their rankings.

UAE Secures the Third Spot

Internationally, the UAE achieved third place in the 15th annual Agility Emerging Markets Logistics Index. This index assesses 50 global markets based on their overall competitiveness and attractiveness to logistics providers, freight forwarders, air and ocean carriers, distributors, and investors.

In the latest rankings, the UAE held onto its position following China and India, maintaining its spot from the previous year. Similarly, Saudi Arabia retained sixth place, and Qatar stayed in the seventh rank. However, Oman dropped to 15th position, Bahrain to 16th, and Kuwait to 21st.

The Driving Factors Behind the UAE’s Milestone

According to data from Mordor Intelligence Industry Reports for 2023 and 2024, the UAE’s freight and logistics market, currently valued at $20.3 billion, is expected to achieve a compound annual growth rate of 6.55% and reach $27.51 billion by 2029.

Industry experts noted that the UAE’s logistics market has experienced steady growth, fueled primarily by the rapid expansion of e-commerce throughout the region and increasing international trade. They highlighted Dubai’s strategic position between Asia and Europe, which bridges East-West trade and offers optimal trading conditions for the emirate. Dubai has proactively implemented initiatives to enhance its infrastructure and technology, aiming to establish a well-integrated transport system and superior logistics infrastructure to support the trade and e-commerce sectors.

Industry analysts observed that despite economic disruptions in the Arabian Gulf region, the logistics sector in the UAE has maintained a strong growth trajectory in recent years. They emphasized that the logistics industry not only outperforms other major sectors but also plays a vital role as a key enabler in the country’s efforts towards economic diversification.

Survey Results

In a survey conducted by Agility, respondents identified the UAE and Saudi Arabia as frontrunners among GCC countries in economic diversification, aiming to decrease dependence on oil and gas revenues. Based on responses from 830 logistics industry executives, the UAE ranked first for best business fundamentals, while Saudi Arabia secured the third position in this category.

The survey highlighted the importance of implementing additional improvements to support small businesses and multinationals, which are essential for driving ongoing economic diversification across all GCC countries. The UAE and Saudi Arabia consistently secured positions in the top 10 across all categories. Qatar performed exceptionally well in most categories but ranked 20th in international logistics opportunities. Bahrain achieved a top 10 ranking only in business fundamentals, securing eighth place in this category.

John Manners-Bell, CEO of Ti, noted that supply chain managers are grappling with the ongoing political and economic instability in the post-Covid global economy. Rapid changes in geopolitical relationships are significantly affecting international trade dynamics and risk landscapes. Manners-Bell emphasized the importance for businesses to remain vigilant about opportunities and threats in emerging markets. He highlighted the value of utilizing data sources like the Agility Emerging Market Logistics Index to support agile decision-making in this evolving landscape.

Half of the logistics professionals surveyed anticipate a global recession within the next year, representing a decline from nearly 70 percent in the previous year. Executives mentioned challenges such as managing higher costs, reducing reliance on sourcing from China, and considering increased investments in Africa, despite acknowledging higher perceived risks in emerging markets.

What’s Next with Supply Chain Diversification?

Over 63 percent of respondents indicated that their companies are restructuring supply chains by diversifying production across multiple locations or relocating it to domestic markets and nearby countries. China, as the world’s primary producer, faces a significant impact, with 37.4 percent of industry professionals planning to either move production/sourcing out of China or reduce investment there.

For more updates about the Middle East logistics industry, stay tuned to TFI.

Source: Khaleej Times