This article guides you on how you can start a logistics business in Dubai.
Businesses of all sizes rely on logistics companies to help them with their warehousing and international shipping needs. Companies that specialize in logistics handle services ranging from storing products, repackaging to delivering across the world.
As logistics companies deal with so many different aspects of a supply chain, there is no second chance when it comes to starting correctly. If you are getting ready to start a logistics company in Dubai, it is crucial to begin in the best possible jurisdiction.
Logistics in Dubai
According to a report by US-based consultancy Frost & Sullivan, Dubai leads the UAE in logistics, accounting for some 45% of the total share of the industry. While there are many affordable jurisdictions across the UAE to set up a logistics firm; however, if you have serious aspirations for your business, Dubai is the place to be.
Dubai’s geographical location and infrastructure make it an ideal supply and re-distribution gateway. It is strategically located at the center of international trade, making it globally well-positioned as an emerging transshipment hub. Dubai’s ports have emerged as an essential transshipment point in the Europe-Asia trade. Also, it caters to the needs of increasing trade within global trade blocs.
The logistics sector in Dubai is highly competitive. You will require substantial up-front capital if you endeavor to become a profitable and sustainable business.
Three Key Logistics Business Hubs
When it comes to logistics, there are many choices to pick from as most Dubai free zone jurisdictions offer logistics licenses. However, when it comes to having the right infrastructure and ancillary services that can help your firm grow, the competition narrows down to Jebel Ali Free Trade Zone, Dubai South Free Zone, and Dubai Airport Free Zone.
1. Jebel Ali Free Zone
Jebel Ali Free Zone offering of an air-sea-land logistics corridor within a single custom bonded area. This permits smooth movement of cargo from sea to air without the need for any customs checks to put it in prime position. With hundreds of logistics from across the world located in the free zone, competition for warehousing and commercial space is fierce. With increased competition and a prime location, prices tend to be on the higher end.
2. Dubai South Free Zone
Dubai South Free Zone is a relatively new player in the sector, however significant investments by the government mean that it will become one of the preferred logistics hubs in the country. The dedicated Logistics District (formerly known as Dubai Logistics City) has state of the art warehouses catering to companies of all sizes at affordable prices. With access to Jebel Ali port via a special logistics corridor and Al Maktoum International Airport (DWC), it is easy to understand why it has had a surge in new logistics companies.
3. Dubai Airport Free Zone (DAFZA)
Dubai Airport Free Zone is the ideal location for logistics businesses that specifically cater to air-based logistics. Most air freight passes via Dubai International Airport (DXB). It’s no wonder why it has been the traditional location of many international logistics firms. DXB houses dedicated facilities of FedEx (14,000 tonnes capacity) and DHL (75,000 tonnes capacity) on the north side of the airport. Other cargo facilities at DXB include the Dubai Flower Centre, where Dnata handles cargo and perishables for all airlines. DXB is the third busiest hub in the world for international air freight.
Launching your Logistics Business
Once you’ve selected the jurisdiction that best suits your business model, you’ll need to develop a comprehensive business plan. Along with the business plan, you’ll need to raise the share capital applicable to the relevant jurisdiction. You’d have to factor in any fees and bonds payable to Dubai Customs if you intended to have warehousing facilities. Business insurance is particularly crucial for logistics companies since they usually carry many risks.
Our business setup consultants can help you navigate the free zone bureaucracy as well as red-tape with UAE customs. Over the years, we have helped numerous logistics firms who started small. And later, went on to become influential players within a specific niche. Sometimes specializing in a niche of logistics can be more profitable than being a jack of all trades.
Building Strong Relationships
When you are just starting a business in Dubai, you should look towards partnering with key stakeholders. For example major logistics and transportation companies, and airlines who can deliver goods regionally and globally. You must establish a good business relationship with prospective clients and organizations that depend on just in time manufacturing. Your firm depends on steady contracts from these organizations and businesses to remain in business.
The role of Technology in Logistics Business
Logistics software helps professionals in the field determine the best means to get products delivered, even tackling the challenges that come with combining multiple shipments into one shipment. With many off the shelf solutions, you’ll have to check which type of software can give your business the best value in terms of costs, as well as for analytics data that can help track your productivity. There’s never a dull moment when it comes to emerging technologies and innovation in logistics.