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Home > Business/Finance > Diversified Services > Shipping & Logistics
UAE Freight Transport Report Q1 2008
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A challenge is emerging to Dubai and the wider UAE’s role as the region’s key transport and logistics
hub. In nearby Saudi Arabia, plans have come together to invest upwards of US$8bn in the new Prince
Abdul Aziz Bin Mousaed Economic City, designed as a freight transport hub. Construction is expected
take 10 years. However, Dubai need not be too worried, as arguably it has had a 20-year head start, and is
chasing some fairly aggressive goals of its own. Dubai Logistics City, part of the vast Jebel Ali
International Airport, was due to start operations in 2007 and to be fully complete by 2008. Jebel Ali
International Airport will have the capacity to handle 12mn tonnes of cargo annually, more than both
Chicago O’Hare and London Heathrow, while Jebel Ali port is already one of the world’s largest
container handlers, and pursuing expansion plans. There, the opening of Dubai Ports World's Terminal
Two in August 2007 was expected to lead to a capacity increase of an additional five million TEUs
(twenty-foot equivalent units) to the existing nine million TEU capacity, according to a company
executive. In fact, in our latest UAE Freight Transport Report, BMI concludes that freight carried growth
across all modes, measured in million tonne-km (mntkm), will average 6.2% per annum in the 2007-2011
forecast period.
Various factors support this prediction. Although the current oil price boom is easing, we still expect the
UAE economy to grow by an average of 5.4% per annum over the next five years, providing an important
level of support for the freight business. Infrastructure investment will also remain high, with the emirates
continuing to focus on a variety of ambitious transport projects in aviation and shipping. Overall, BMI
believes the UAE freight sector will expand rapidly in the short term but will slow as global conditions
eventually deteriorate. The UAE economy is relatively dynamic and is now more diversified and shows
evidence of robustness to withstand external shocks. Strong investment in transport infrastructure and the
global ambitions of companies like Emirates Airlines and DP World will be strong positive factors.
By transport modes, we expect the fastest-growing sector in the 2007-2011 forecast period to be air, with
an annual average of 10.8% growth in freight carried, followed by sea freight with 6.6% and pipeline
throughput (6.0%) and road haulage (5.9%), just ahead of GDP. UAE’s overall business environment
rating is one of the best in the Middle East and Africa (MEA) region (it shares the number one position in
our ranking with South Africa). It scores particularly well in terms of its political, economic and
infrastructure environments. The UAE has one of the most liberal business environments in the region
and foreign investment is actively encouraged in many sectors.
For the 2007-2011 forecast period, we expect the transport and communications sector to continue
outpacing the economy as a whole in value terms. It will achieve average annual growth of 5.9%, versus
5.4% for overall GDP. The total value of transport and communications GDP will rise to US$17.7bn in
nominal terms by 2011, representing 6.8% of the UAE’s GDP.
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