Market Trends of united arab emirates freight and logistics Industry
Rising transport infrastructure development leading to growth in industry at CAGR of 8.4% by 2026
- The UAE boosts one of the region's most advanced transport and infrastructure facilities. This encompasses top-tier provisions for roads, metro networks, and maritime transport, pivotal in fostering economic expansion and facilitating business and tourism advancements within the nation. Due to the industry's rapid growth, the UAE logistics market is expected to grow significantly, providing many opportunities and investment prospects to accelerate digital capabilities in the United Arab Emirates and promoting economic competitiveness and sustainable growth in the region.
- The UAE strategy is expected to deliver an annual of AED 22 billion (USD 5.99 billion) across diverse sectors. This will be achieved through a multi-faceted approach, encompassing reducing transportation expenses, carbon footprints, and accidents. Additionally, the strategy aims to elevate individual productivity while reclaiming hundreds of millions of hours previously squandered in traditional commuting methods.
- This indicates a remarkable 44% reduction in transportation costs, translating to an impressive annual saving of up to AED 900 million (USD 245.01 million). A projected 12% reduction in environmental pollutants stands to result in annual savings of AED 1.5 billion (USD 0.40 billion). Leveraging enhanced transportation efficiency, the strategy is anticipated to generate an annual economic upswing of AED 18 billion (USD 4.90 billion) by optimizing Dubai's transportation sector by 2030. Dubai's Roads and Transport Authority (RTA) is leading the Shindagha Corridor project initiative, which entails crafting a 13 km road network spanning Sheikh Rashid Street, Al Mina, Al Khaleej, and Cairo Streets in Dubai.
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Increasing fuel subsidies for low-income households, with USD 7.62 billion allocation to a social support program
- The UAE's oil production in 2022 was around 2.95 million barrels per day. The Central Bank expected the oil GDP to rise due to the Russia-Ukraine conflict, market recovery post-COVID, and demand/supply factors in the global oil market. Oil prices rose following the Russia-Ukraine conflict, reaching USD100 per barrel. Brent Crude, the globally accepted standard for 66.67% of the world's oil reserves, stabilized at USD140 per barrel in 2022, a 36% increase from the beginning of the year.
- In 2022, diesel pump prices in the UAE have risen by 35%, with a liter costing USD 1.01. High fluctuation price in Diesel in UAE due to currency exchange rates, international crude oil prices, and country demand. It was a 45% increase since June 2021, when oil prices were still recovering from the Covid pandemic crisis's peak. The hike in the diesel price has been matched by further increases in fuel pump prices for petrol blends, including a new price for Super 98 petrol, which costs USD 1.15 per liter, a rise of 36% from January 2022. Better driver training, the latest trailer technology, and alternatives to relying on fossil fuels, such as LNG, CNG, and electric drivelines, are among the solutions for dealing with ongoing fuel cost increases.
- In 2022, the government increased the Social Support Program fuel subsidy for low-income households in the UAE by a significant budget increase. Previously, the total budget of the program was AED 14 billion (USD 3.81 billion), which was increased to AED 28 billion (USD 7.62 billion). The Social Support Program will provide an 85% fuel subsidy for lower-income individuals in the UAE.
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OTHER KEY INDUSTRY TRENDS COVERED IN THE REPORT
- UAE population declined by 0.84% YoY in 2022 due to expatriate migration and delayed marriages
- Initiatives like 10-year economic plan (D33) in Dubai, aimed to drive GDP & economic growth
- The UAE is leading as the 2nd biggest food and beverages market for online food delivery in the MENA region
- UAE aims to export over USD 217 billion in non-oil products by 2031 in line with vision ‘We the UAE 2031'
- Increased fuel prices and transit fees are affecting logistics costs and overall trucking operational costs in the UAE
- UAE’s Logistic Performance Index rank improved to 7th position due to improvement in country's infrastructure
- Abu Dhabi National Oil Company's maritime capacity expansion initiatives driving the maritime sector growth
- With the Khalifa Port expansion project, the port capacity is expected to reach 15 million TEUs by 2030
- The UAE is focusing on investment & expansion of infrastructure with projects worth USD 2.45 billion across 127 projects
- The UAE aims for 15 million tons of green hydrogen production by 2050, in line with its National Hydrogen Strategy
- The Russia-Ukraine War caused oil prices to increase, touching a peak of USD 100 per barrel in 2022
- The UAE aims to raise the industrial sector's GDP contribution to USD 81.66 billion by 2031
- UAE sets out plan to boost domestic food production and self-reliance amid rising imports
- The UAE is transitioning to electric trucks by installing over 300 EV charging stations throughout Dubai
- Rising freight volumes supported by e-commerce market sales and government infrastructure development, influencing modal share
- Direct connectivity routes (UAE-Red Sea service) launched to boost maritime freight volumes in UAE
- Dynamic freight rates due to continued troubles in Red Sea route and electric vehicle initiatives
- Around USD 23 billion investment plan is under development to boost tourism and expand transportation infrastructure
