Value of e-commerce sector in UAE to reach $27.2 billion by 2020

Inayat-ur-Rahman

Latest reports suggest that the global cross-border e-commerce logistics market is poised to grow by $24.10 billion until 2022, progressing at a CAGR of more than 8 per cent during the forecasted period 2018-2022. The value of the e-commerce sector in the UAE, meanwhile, is expected to reach $27.2 billion by 2020, according to a recent study by the World Economic Forum.

 The UAE is leading from the front as the GCC is witnessing an unprecedented acceleration in e-commerce spending that has speeded up the pace of the regional cross-border logistics growth, according to industry experts.

“Cross-border e-commerce has definitely opened many doors for businesses to expand their audience and serve a larger pool of customers. The rise in disposable income, the surge in digital literacy and increasing number of e-commerce players, are few key drivers of the logistics growth in the region,” said Shailesh Dash, Chairman of Dubai-based Gulf Pinnacle Logistics (GPL).

 “Strengthening cross-border e-commerce industry is ultimately pushing up the demand for logistics with services such as transportation and warehousing, leading to the sector’s growth,” he added.

A separate report by Euromonitor International suggests that non-store retailing - which includes online shopping, direct selling, mobile Internet, social media and home shopping - will grow 78 per cent up to 2023.

“The increasing popularity of cross-border e-commerce has allowed vendors to expand their businesses outside their nearly saturated home ground and tap into the new market. This is boosting foreign trade, thereby enhancing the global competitiveness of the country,” said Dash of GPL.

Established in 2014, GPL is a Dubai-based logistics and transportation company, which owns majority stakes in four assets involved in warehousing, CFS operations, student bus transportation and courier services.

The company holds 87 per cent stake in Century Express Courier Services as part of its US$325 million (Dhs1.2 billion) investment plan. Since the acquisition, the GPL has invested heavily in the rebranding and reinforcing the infrastructure of Century Express, which has won contracts with top-ranking e-commerce players and institutions. Technological advances is further strengthening the growth of the e-commerce logistics market. “The UAE e-commerce market, which is witnessing an upward trajectory, has a unique growth path compared to both emerging and mature economies. The momentum is being led by the government’s adoption of e-commerce payments on platforms such as Dubai Smart City,” said Najeeb Kabeer, Managing Director of Century Express.

Logistics infrastructure readiness is necessary to support the growth of e-commerce. On this front, the UAE is at par with some of the most developed markets in the world.

“The demand for e-commerce logistics will increase in the coming years as a result of increasing cross-border e-commerce activities. The UAE enjoys an advantage as a major global trans-shipment hub with the port of Jebel Ali and Dubai’s airports providing a high standard of logistics infrastructure,” said Shailesh Dash.

The UAE, which operates 20 leading ports that are also part of the world’s top 10 ports, also leads in terms of having the greatest number of container ship fleets - delivering at least 15 million containers per year.

Meanwhile, 26 November 2019, Abu Dhabi, United Arab Emirates – Abu Dhabi Airports and Etihad Cargo, the cargo and logistics services arm of the Etihad Aviation Group, have announced a major project to enhance Abu Dhabi International Airport (AUH) into a state-of-the-art global air cargo center of excellence.

Abu Dhabi Airports and Etihad Cargo will implement a multi-phased cargo infrastructure development strategy, starting with the imminent upgrade of Etihad’s existing air cargo terminal facilities on the Southside airport perimeters. The program will culminate with the inauguration of Etihad Cargo’s future home, a new state-of-the-art air cargo terminal in the East Midfield section of the airport, an area designated by Abu Dhabi Airports for future integrated cargo, logistics and integrator activities.

The plans revealed that the first phase, the upgrading of the Southside Etihad cargo facilities, will commence immediately and is due for completion in phases between fall 2019 and end of Q3 2020.

The scope includes the enhancement of RFS loading docks with levelers, insulation and floor works for faster and more efficient loading with stricter temperature controls, increased storage space and additional build-up and breakdown zones to improve production workflow, and upgraded cool chain facilities for both its fresh and pharma handling and storage operations.