• Home
• /
• Business

Digital drive to boost GCC logistics

Sector eyes major chunk of $12.8tr global market

The GCC countries have an opportunity to capture a considerable portion of the global transport and logistics sector market, which is projected to be worth around $12.8 trillion by 2025, by adopting technologies such as artificial intelligence (AI), Internet of Things (IoT), and blockchain in logistics-related operations, according to industry experts.

Taarek Hinedi, vice-president of FedEx Express Middle East and Africa operations, said amid rapid changes brought about by technological advancements, the region’s logistics industry must be at the forefront of digital innovation and emerging trends to help businesses adapt to the changing demands of digitally transformed sectors.

“Connected logistics is anticipated to become the industry standard since it enables timely and cost-effective shipment management. For instance, GCC governments have ambitious plans to transform their economic foundation, advance sustainability, and leverage their strategic location as a trade hub. To achieve these objectives, it is essential that the logistics sector undergoes a concerted effort to modernize and digitize,” Hinedi said.

The UAE’s logistics market is predicted to grow at a compound annual growth rate (CAGR) of more than 8.4 per cent to reach $31.4 billion by 2026, according to Abu Dhabi’s holding company ADQ.

The industry’s rapid growth offers many opportunities and investment prospects to accelerate digital capabilities in the UAE, promoting economic competitiveness and sustainable growth in the region, ADQ said in a white paper in 2022.

This growth momentum can be further leveraged to “build a more resilient mobility and logistics sector”, driven by technologies such as “data analytics, automation and digital solutions to increase supply chain productivity, minimise costs and foster transparency”, it added.

A recent report by the global research firm, Technavio said the logistics market’s growth momentum will accelerate at a CAGR of 6.84 per cent until 2026 in the UAE. The report indicates that the growth of the e-commerce sector positively impacts the logistics industry. “With consumers spending less time going to stores and more time shopping online, their first direct interaction with the brand is the package delivered to their doors,” the report highlighted. “With digital transformation flourishing across the GCC region, change is a constant across industries and all aspects of life, be it evolving consumer needs, technology advancements, or shifts in the competitive landscape. The GCC E-Performance Index 2022 highlights remarkable performance across all GCC nations in five major global indicators; technology, healthcare, food services, aviation, and education, as a result of this significant progress in digital transformation,” said Hinedi.

“The upward trajectory of the GCC’s e-commerce sector is expected to continue, reaching $50 billion by 2025. However, new patterns of consumer demand are emerging, with consumers now seeking convenience in more than one way. A PWC consumer insights survey revealed that fast and reliable delivery remains the second most important factor for purchase decisions, after price,” Hinedi added.