05 February 2017
JEDDAH: With the global logistics market growing rapidly and is expected to generate $15.5 trillion in revenues by 2024, the Middle East and North Africa (MENA) region is fast emerging as the hub of logistics industry, said a report issued by Al-Masah Capital.

In the region, Saudi Arabia and the United Arab Emirates (UAE) are the most attractive targets for logistics investments and easiest markets to operate in.

Other MENA countries, particularly those in the Gulf Cooperation Council (GCC), such as Qatar, Oman, Kuwait and Bahrain, along with Morocco, Jordan are also emerging as potential investment destinations.

The growth of transportation and logistics (T&L) in the region is being driven by government initiatives toward economic diversification from energy-based industries to expansion into other commercial sectors such as trade, export, import and tourism, the report said.

“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,” the report added.

The MENA region, the report said, has trade relations with almost every country/region across the globe.

The region exports hydrocarbons and hydrocarbon-related products that are in great demand and meets a large part of its food requirement through imports.

Data from the World Trade Organization (WTO) suggests that MENA engages in maximum merchandise trade with Asia (55 percent of all exports and imports), followed by Europe (31 percent) and North America (8 percent).

MENA countries also lead in sea and air trade routes with the UAE and Saudi Arabia recognized as among the “top 10 air freight lanes” globally. The region has 134 seaports handling a total of 48.3 million 20-foot equivalent container units (TEU) of container traffic. The GCC countries alone have nearly 41 ports, which together handle 68 percent of MENA’s container port traffic.

Besides sea transport, the region has 114 international and domestic airports of which 43 airports are located in the GCC.

According to the report, 34 free-trade zones, non-existent corporate tax and full ownership rights coupled with unlimited repatriation of profits, makes the UAE an appealing business environment for producers and manufacturers alike, as well as to logistics service providers.
 
In terms of volume, the global T&L industry is expected to reach 92.1 billion tons by 2024. The report also mentioned that the global Third-Party Logistics (3PL) market is expected to grow at a compound annual growth rate (CAGR) of more than 5 percent by 2020. Factors such as the rapid globalization, 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 report said.

Highlighting the sector’s role in international trade, the report said that robust trade, economic growth and liberalization policies followed by many countries worldwide have resulted in increased trade volumes, thus boosting transportation, handling and warehousing needs, which has led to a demand for integrated logistics solutions.

© Arab News 2017