Overview: UAE contributes to the second highest revenue share in the cold chain sector in the GCC region. It has consolidated its position as a global transshipment hub due to its central location in the GCC region. The high dependence of the country on imports to meet its food requirements has necessitated the development of cold chain facilities. Considering the very high temperature and humidity levels observed in the UAE most of the year, cold supply chain logistics practices have become more important to the businesses in the country. There is a boom in the construction of refrigerated facilities in the UAE. Heavy government and direct foreign investments in transportation and storage infrastructure to reduce dependence on oil exports; increase in retail and consumer spending especially in groceries, dairy, meat, international food and growing food demand from the increasing flow of tourists for Expo 2020 are some of the major growth drivers.
Market: The cold chain
industry is in growth stage amounting to USD ~ Mn revenue in 2020, growing at a
CAGR of ~% during the period 2015-2020. Meat & Sea Food, Dairy and
Pharmaceuticals are important end users for cold chain market in UAE. The
pharmaceutical sector has witnessed a higher growth rate especially after the
pandemic and the UAE government has taken several initiatives to enhance the
infrastructure for the same.
The UAE cold chain market was slightly disrupted due to Covid-19. However, the industry did not declined much owing to the nature of the industry which deals in the perishable products and cold storage warehousing market has gained higher traction in comparison to other logistics market. The market operations are concentrated in two major emirates: Dubai and Abu Dhabi, where majority of cold warehouses are located in free-zones in such as Jebel Ali Free Zone, DIP, DIC, Al Aweer, etc.
UAE
Cold Chain Market Segmentation
By
Cold Warehousing & Cold Transportation: The cold storage
market is dominating the market and contributed majority revenue share to the
cold chain industry. Cold Transportation caters to distribution of food and
pharma domestically and internationally via land, sea and air. Some of the key
growth drivers include increase in retail distribution cold storage, set up of
new warehouses, creation of large food and Pharma reserves by government,
increasing import of perishables, tech advancements and growing end users in
emerging markets. Seasonal surge in demand is seen especially during the
Ramadan festival.
UAE
Cold Warehousing Market Segmentation: By Temperature Range
(Ambient, Chilled and Frozen): Chillers and freezers were quite high in demand
in the year 2020 given the increase in the consumption of frozen and fresh food
items.
By
Ownership (Integrated and Contract Warehouses):
Integrated logistic facilities generate larger revenue share. This is majorly
due preference of logistics companies to invest into warehouses and closely
monitor operations themselves as opposed to outsourcing them.
By
End-User Application (Meat and Seafood, Dairy Products, Pharmaceuticals, Fruits
and Vegetables and Others): Meat and Seafood contributed the
highest revenue share owing to the tremendous increase in the demand for meat
during the lockdown. The demand for pharmaceutical products was quite high due
to the onset of the pandemic.
By
Major Emirates (Dubai, Abu Dhabi, Sharjah and Others):
Dubai accounts for the highest share in the revenue of the cold storage market as
it acts as a hub from where products are transported to other regions.
By
Areas (JAFZA, DIP, DIC, Al Aweer and Others): Jebel Ali Free Zone
accounted for the maximum share in the revenue of the cold storage market and
hosts over 8,700 companies. It is considered as the world's largest free zone.
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UAE
Cold Transportation Market Segmentation
By
Mode of Transport (Land, Sea and Air): Cold transport through land
contributed the highest revenue to the cold transport industry as food imports
into the country through ports are transported to different cities via land
transport.
By
Type of Freight (Domestic and International): Cold transportation
to international markets accounted for majority of the revenue of the UAE cold
transport industry due to the reliance of the country on imports for its food
requirements.
By
End-User Application (Meat and Seafood, Dairy Products, Pharmaceuticals, Fruits
and Vegetables and Others): Meat and seafood has positively
impacted cold chain industry followed by Dairy Products. UAE has the highest
consumption levels for meat and seafood in the world.
By
Contract and Integrated Logistics: The cold chain market in the UAE is dominated
by 3PL facilities, generating largest share in market revenue. This is majorly
due to the large number of 3PL operators providing wide variety of services and
increasing shift towards outsourcing cold transport requirements by cold chain
companies.
Competition
Scenario in UAE Cold Chain Market
Competition in UAE Cold
Storage Market is highly fragmented with ~20 large companies acquiring chunks
of market share. The market is highly concentrated in places like Dubai and Abu
Dhabi ports and free zones. The rising urban population, developed transport
infrastructure in these regions along with the proximity to the sea and air
ports has been the key factors leading to the growth of the cold chain
businesses in these areas. The cold chain companies in the country compete on a
host of parameters such as location, price, temperature range, product range,
warehouse infrastructure, number of pallets, industry expertise, clientele,
etc. Major players in the cold chain market include GAC, GSL, Mohebi Logistics,
CEVA Logistics, RHS, Hellmann, DB Schenker and others.
UAE
Cold Chain Market Future Outlook and Projections
The Cold Chain market in UAE
is expected to experience medium level of growth at a single digit CAGR in
terms of revenue during the period 2020-2025F. Positive growth in the market is
attributed to rise in manufacturing activity in the pharmaceutical sector,
investments in infrastructure, growth in dairy industry and rising import
export volumes. The industry is expected to witness entry of new players and
new mergers and acquisition between the players. Additionally, increasing
adoption of warehouse automation technologies such as EDI, RFID, AS/AR and
others are expected to improve operational efficiency in UAE cold chain market
over the forecast period 2020-2025F.
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