Within the GCC, the UAE and Saudi Arabia remained the most attractive market for logistics investments in 2016, according to a recent report by Al Masah Capital.
In its “Global Transportation & Logistics Sector Overview,” the report mentions that other Middle East and North Africa (MENA) countries, particularly those in the GCC, such as Qatar, Oman, Kuwait, and Bahrain, along with Morocco, Jordan are also emerging as potential investment destinations.
34 free trade zones, non-existent corporation tax, and the offer of full ownership, coupled with unlimited repatriation of profits, makes the UAE a highly appealing business environment for producers and manufacturers alike, as well as to logistics service providers.
The report said: “The growth of transportation and logistics (T&L) in MENA is being driven by government initiatives toward economic diversification from energy-based industries to expansion into other commercial sectors such as trade, export and import, and tourism.
“This renewed focus on commercial sectors is paving the way for investments in transport infrastructure, including seaports, airports and major rail initiatives across the region. Thus, overall, as MENA countries pursue political transformation and economic diversification, T&L investment is the cornerstone to its future growth.”
The rising exports and imports drove the supply chain and logistics market and the Middle East, led by the UAE, to become one of the most important hubs in the changing global trade lanes.
In addition to it, in terms of volume, the global T&L industry is expected to reach 92.1 billion tonnes by 2024, the report mentioned.
It added: “The global Third Party Logistics (3PL) market is expected to grow at a CAGR of more than 5% by 2020. Factors such as the rapid globalisation, increasing trade volume, and the revival of the global economy are some of the major contributing factors to the growth of the 3PL market.
“The growth of integrators will increase demand for contract logistics services and will significantly contribute to the growth of the industry.”