The UAE is expected to continue to see strong growth in 2013, across all of its freight modes. The country is rapidly developing one of the world's top logistics markets through investments in ports, airports, rail and free trade zones. These are utilised by the country's air freight and logistics companies, which are becoming a familiar presence throughout the world, serving the globe from their UAE hubs.
Headline Industry Data
- 2013 Jebel Ali and Port Rashid total tonnage throughput growth forecast at 5.7% and to average 4.8% per annum to 2017.
- 2013 air freight tonnes through Dubai airport forecast to grow by 6.8% and to average 6.1% to 2017.
- The UAE's total trade real growth in 2013 forecast to be 7.0% and to average 5.7% over the medium term to 2017.
Key Industry Trends
Rail Network In Demand: BMI believes that the rail network under development in the UAE, and the wider GCC, will give a boost to freight transport in the region, enabling more efficient transport of goods through integration with industrial zones, mines and ports, and releasing capacity on the road network. The fact that customers are signing up to use the rail network before it is even completed is evidence of the need for this mode of transport in the UAE.
UAE Logistics Market Valued at US$9bn In 2012: The UAE logistics market is estimated to be worth US$9bn in 2012. This would make it the most valuable market within the six members of the Gulf Cooperation Council (GCC). The logistics market of the GCC, which is comprised of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the UAE, is valued at US$27bn. Analysts expect the entire Middle Eastern market to grow at an annual rate of 10% in 2012 to US$35bn. The Jebel Ali Free Zone in Dubai highlighted the opportunities available to the logistics industry within the region at its annual logistics strategic customer forum.
Etihad Cargo Posts 21.2% Increase In Revenue: Abu Dhabi-based Etihad Cargo registered a record 21.2% year-on-year (y-o-y) increase in revenue to US$65.8mn in November, compared with US$54.3mn in the year-ago period. Etihad Cargo handled 32,633 tonnes of freight in the reported period, compared with 27,628 tonnes in November 2011, up by 18.2% y-o-y. The rise was attributed to strong sales out of Southern China and strong growth out of Europe and South East Asia.
Key Risks To Outlook
Key risks to our outlook for the UAE's freight sector come from the continued sovereign debt crisis in the eurozone, a major trade partner, and the continued political unrest in the Middle East, though we do not believe significant disturbance will take place in the UAE. We have recently upgraded our 2013 growth outlook for the US and China; both of these revisions lend upside risk to our UAE outlook.
On the other hand, were Iran to follow through its threats to close the Strait of Hormuz to global shipping, then there would be considerable downside risk to those UAE ports on the Gulf, and upside risk to the Sharjar terminal of Khorfakkan, which lies outside the strait on the Arabian Sea. BMI's core view is that this remains unlikely.