During the opening session at the Leaders in Logistics Summit, Olaf Schirmer, senior director, consumer & industrial products and services practice, PwC, warned that although Dubai is the dominant logistics hub in the region, Saudi Arabia is fast catching up.
“The UAE is on-par with developed markets in terms of the logistics and transport sectors’ share of the economy, at around 10%,” he told delegates. “The UAE is also ranked at number 11 on the Logistics Performance Index for 2018, with Germany at number 1, while Saudi Arabia has dropped to 55, behind Oman at 43.”
This explains why the UAE remains dominant in terms of transshipment in the region, he said, but added that with infrastructure investment in Saudi Arabia ramping up for Vision 2030, this was unlikely to remain the case for long.
“King Abdullah Port was the eighth fastest growing port in the world in 2017, and this and other infrastructure improvements will help KSA increase its KPI ranking,” said Schirmer.
With the development of an integrated rail network between the two countries, the UAE’s share of transshipment bound for KSA was likely to shift significantly, he added.
“We expect a significant shift in cargo transport from road to rail in the UAE, Oman and KSA. There is a $350-billion investment in rail and port infrastructure between now and 2025,” he said.
“All these countries want to be logistics hubs, but how many more can we really have? In the UAE alone we already have Dubai, Abu Dhabi, in Oman we have Salalah for transshipment into Africa, but King Adbullah Port is trying to position itself for that as well.
“It’s a race for investment and tenants in the freezones. These developers need to be offering turnkey infrastructure solutions for tenants, at least the shell of the warehouse for example to entice logistics companies to set up shop there.”