Sam Achampong FCIPS, general manager of the Chartered Institute of Procurement and Supply for the MENA region examines the ability of the GCC to meet its economic ambitions to become a regional logistics hub
Emerging global logistics hubs are characterised as places where cargo and people come together. Places that benefit from infrastructure investment, pro-trade policies, and direct connections to both manufacturing centres and growing populations. The GCC has all of these attributes in abundance and will undoubtedly exert its influence over the increasing globalisation of supply chains, further building on current achievements.
On 27 November 2013 it was announced that Expo2020 would be held in Dubai, the first time the event will have been hosted in the MEASA (Middle East, Africa and South Asia) region. Since then there has been a particular focus on the region, and on the GCC area in particular. Whilst Expo2020 and the FIFA World Cup taking place in Qatar two years later, have demonstrated the regions ability and intent to host global events, it has also shed light on a formidable business hub that has been taking shape and gaining increasing influence and prominence.
Dubai has allocated a total of AED31.7bn to build and develop its infrastructure and improve its logistics facilities in the run up to the Expo.
The emirate already boasts a significant logistics infrastructure and is host to a number of economic free zones including Jebel Ali Freezone (JAFZA); the worlds largest. JAFZA is responsible for over 50% of Dubais total export with trade values exceeding $69bn. The Dubai International Airport home to one of the worlds largest airlines, Emirates is already the worlds busiest airport in terms of international traffic and the sixth largest cargo hub, handling 2.51 million tonnes of cargo in 2015. Abu Dhabi is busy constructing the worlds largest industrial zone, KIZAD (Khalifa Industrial Zone Abu Dhabi). With its strategic location and integral port, this will undoubtedly make a significant contribution to the regions manufacturing as well as logistics infrastructure.
The UAE is not the only GCC country to boast impressive and significant credentials in logistics and related infrastructure. Qatar is investing billions of dollars in huge projects such as the recently completed Hamad International Airport as well as ports, railways and roads. Spending on transportation infrastructure will reach approximately $140bn in the lead-up to 2020.
Saudi Arabias aspirations to expand its industrial sectors contribution to the economy from 10 to 20% by 2020 highlights further ambitions in the GCC to diversify regional economies from reliance on oil and natural gas and into the development of the region as a true global logistics hub with a strong manufacturing capability and world class infrastructure.
The CIPS Risk Index, a tool which provides an informed perspective on risk in global supply chains, has recorded consecutive quarterly improvements in its recent regional risk scores for the MENA region. This is despite the instability caused by political unrest in the region as well as the continuing weak oil price. This demonstrates the significant impact that regional logistics is having in offsetting negative economic factors in the region as well as firmly establishing the GCC as a hub on a par with any other in the world, an ambition that is firmly embedded in the strategic plans for GCC countries leading up to 2020 and beyond.