Logistics and 3PL firms are expected to be among the primary drivers of demand for industrial units in the future and one of the critical success factors in the coming years will be the use of robotics or automation to make the logistics sector more efficient, releasing information from silos and reducing bottlenecks.
Dubai’s position as a leading trade hub both globally and within the region has been boosted by the launch of the 2019 Silk Road Strategy which focuses on streamlining the logistics and trade processes and improving efficiencies within local entities, to promote growth and attract major global industry players.
JLL’s Head of Research MENA, Dana Salbak, believes that the role the logistics’ sector plays is primarily linked to Dubai’s strategic location at the crossroads between the East and West, making it an important trade route. “The competitive advantage the emirate enjoys in terms of location, coupled with its world-class maritime, aviation, and land infrastructure, is expected to continue driving and enhancing its economic growth,” she explains.
More recently, and to support this growth, Dubai cemented its position as a leading e-commerce hub for the region. Drawing on an e-commerce strategy launched in September 2019, Dubai aims to establish itself as a global logistics hub in which e-commerce is set to contribute AED 12 billion to the local GDP by 2023.
Salbak highlights that the strategy also aims to reduce fees imposed on goods passing through the free zones. Moreover, Dubai intends to slash e-commerce business costs by 20% in efforts to increase the market shares of its local and regional distribution firms to reach AED 24 billion by 2022.
“These new favourable legislations are expected to attract foreign direct investment into the country and these developments, along with changes in the wider real estate market, are prompting various developments in the logistics sector,” Salbak says. “This primarily involves employing various technologies across the supply chain to ensure greater efficiencies.”
Traditionally, the efficiency of the supply chain has been impacted by fragmented systems, databases, and processes, which have made it difficult to track and manage the flow of goods, data, and finances. Implementing technologies that sort and package products, optimise planning, schedule and route trucks and crews, in addition to tracking deliveries, could, according to Salbak, eliminate any human errors and ensure operations get done with speed and agility.
UAE-headquartered Truebell, a GCC importer of fast-moving consumer goods (FMCG), employs several cutting-edge technologies in its warehouse and fleet management systems to ensure greater efficiencies across its supply chain. These include a main storage solution featuring aisles with a width (pallet to pallet) of 1,660 metres - the narrowest in the world - requiring high levels of precision to operate. Meanwhile, the facility’s high-speed doors are controlled through machine sensitive sensors with separate doors for man entry and, in a first for the region, the high-speed doors used for the freezer department are made of panels ensuring better insulation and increasing efficiency.
“Similarly, this is also the first time both man-up order pickers with a 1.2 metre lift height and Very Narrow Aisle (VNA) reach trucks with insulated cabins have been used in a distribution centre in this part of the world,” explains Bhushant J. Gandhi, Divisional Manager, Retail & Food Service, Truebell. “This type of equipment helps ensure optimum productivity by facilitating non-stop operations in the freezer department.”
Salbak highlights that a critical angle for the success of the sector will be the development of quality warehousing to support the logistics sector. “Currently, in Dubai, we see a two-tier market as businesses continue to chase the limited quality stock available,” she says, empathising that, consequently, many owners have resorted to constructing new facilities on a ‘build to suit’ basis.
Industrial areas such as Dubai Airport Freezone Authority (DAFZA), Jebal Ali Freezone Authority (JAFZA), and Dubai South offer customisable solutions to prospective tenants. Warehouses in these locations are designed and developed by the authority, incorporating all technical requirements. According to Salbak, the investment for developing the warehouse is typically undertaken by the industrial park authority and charged back to the client as a lease.
“With the e-commerce sector growing rapidly, Dubai is witnessing a shift in the way its logistics’ systems are integrated, with automation and quality warehousing becoming a top priority to attract wider investments, particularly from the private sector,” Salbak concludes.