Good signs for the emirates: Abu Dhabi and Dubai stay ahead of the curve
Abu Dhabi and its neighbor Dubai are both known for constantly investing and innovating to stay ahead of the curve. From industrial manufacturing to e-commerce, what’s next for the two most prominent emirates of the UAE?
From the Saudi border down to the port town of Al Jeer on the border with Oman, the E11 highway stretches through the United Arab Emirates (UAE) parallel to the Arabian Gulf coastline. First opened in 1980, the almost 560-kilometer-long road connects six of the seven emirates of the UAE federation – from Abu Dhabi in the east to Ras Al Khaimah in the west. Along the way, the scenery ranges from emerging industrial zones to stretches of beach and the towering heights of Dubai’s skyscrapers – occasionally there’s even a 3D artwork from Abu Dhabi’s Louvre museum on display.
It’s hard to imagine that, just a few decades ago, the journey between these emirates used to take days. Cars and camels had to navigate sandy terrain, and a trip from Abu Dhabi to neighboring Dubai involved carrying one’s passport and waiting for customs inspections at the border between the two emirates.
Today, as the UAE is emerging as one of the world’s global logistics hubs, not only have the physical borders been removed, but boundaries on all levels are being eliminated as well. A recently launched virtual Ministry of Possibilities, for example, aims to use design thinking and experimentation to come up with disruptive innovative solutions while bringing federal and local government teams and the private sector together. Innovation is the order of the day, and perhaps one day it will be the Hyperloop that takes over from the cars and trucks on the E11. A prototype Virgin Hyperloop One is already under development and will be unveiled when Dubai hosts Expo 2020. Meanwhile, the UAE has also become a key part of China’s global Belt and Road Initiative, with deals worth $3.4 billion agreed between the two countries at a summit in Beijing in May 2019 and key investments being made by Chinese companies in several strategic locations and industries. As they aim to forge ahead in the fourth industrial revolution, Delivered. explores key developments in Abu Dhabi and Dubai.
Rise and Shine - Abu Dhabi harnesses the power of the sun while ramping up its industrial strength
“We must move with the times,” said “the man who turned the desert green”: HH Sheikh Zayed Bin Sultan Al Nahyan, the late ruler of Abu Dhabi and founder of the UAE federation. A visionary who valued both modernity and tradition, Zayed’s influence can still be seen in the way the emirate blends respect for nature and conservation with moving forward in a strategic manner.
Abu Dhabi is a desert emirate, and yet there is a lot of greenery, with some 242,000 hectares of forest, around 20 million trees and a number of wildlife sanctuaries. The commitment to sustainability also extends to energy sources, with Abu Dhabi turning its focus to renewables and harnessing the power of the sun in a big way. Energy has long been a mainstay of the emirate’s wealth. With 97.8 billion barrels of proven oil reserves – not to mention 209.7 trillion cubic feet of gas at the end of 2017, and a recent additional find of 15 trillion cubic feet of gas and a billion barrels of oil – there is an abundance of fossil fuels. Nevertheless, solar energy is coming to the fore: Abu Dhabi started operating the world’s largest single solar project, the one-gigawatt Al Noor, in June 2019. Al Noor alone will reduce the emirate’s carbon dioxide emissions by 1 million metric tons – the equivalent of taking 200,000 cars off the roads. Meanwhile, the creation of a two-gigawatt solar project has already been announced.
Abu Dhabi is also keen on shaping itself into a manufacturing base. The world’s largest offshore oil platforms, weighing in at 32,000 metric tons and measuring 77.7 by 83.5 meters, were made in the emirate by its National Petroleum Construction Company. Meanwhile, many of the world’s leading aircraft manufacturers, among them Airbus and Boeing, rely on Strata Manufacturing, a composite aero-structures manufacturing company, as one of their tier-one suppliers. Strata is part of the Aerospace, Renewables & ICT platform of the government investment arm Mubadala, which aims to develop Abu Dhabi into a leading aerospace hub. Its research and development is focused on breakthrough technologies such as robotic assembly of aircraft structures and advance manufacturing and assembly techniques.
Then there is the Khalifa Industrial Trade Zone Abu Dhabi (KIZAD), an Abu Dhabi Ports subsidiary: a port- and trade-zone ecosystem with the capacity to grow to around two-thirds the size of Singapore, or 410 square km by 2050. The trade zone works in tandem with the adjacent Khalifa Port, which is expected to grow from 2.5 million TEUs to 9.1 million TEUs by 2022. KIZAD features a number of clusters, including an auto city for automotive logistics, trade, distribution and assembly. Other clusters specialize in sectors such as food and beverages, metals, polymers, oil and gas, logistics and energy.
KIZAD’s anchor investor is Emirates Aluminium, which aims to be one of the largest single-site aluminum smelters globally. The company currently produces 800,000 metric tons of aluminum and is set to reach 1.3 metric million tons with the inauguration of its second phase. Other investors with operations in KIZAD include 16 Chinese companies, such as tire manufacturer Roadbot.
Meanwhile, Etihad Rail, the developer and operator of the UAE’s national railway, signed an agreement in February 2019 to connect Khalifa Port to the national railway network, which is due to launch its second construction phase soon and intends ultimately to connect all of the seven emirates.
Amadou Diallo, CEO Middle East & Africa, DHL Global Forwarding, welcomes Abu Dhabi’s focus on infrastructure: “The emphasis on infrastructural investment by the government is also set to rejuvenate the logistics sector, and we in turn are committed to enabling more trade flows to and from this part of the world,” he commented. “DHL Global Forwarding is poised to provide end-to-end logistics and supply chain services to customers in the region. We have just launched Saloodo in the UAE, our fully integrated digital platform that gives shippers and transport a single interface for tracking, documentation and payment processes.
With more industries establishing themselves in Abu Dhabi, we are also investing in physical space, such as warehousing in KIZAD for storage and consolidation of all shipments – equipped with high-volume racking as well as fully-managed kitting, packing and dispatching process to support customers’ growing capacity requirements. Beyond the immediate needs of our customers who currently operate out of KIZAD, we are also looking to invest more resources on expanding our presence here, so we can serve more customers.”
A Perfect 10 - Dubai forges ahead with e-commerce and disruptive innovation
“The success of governments is determined by their ability and flexibility to reinvent themselves,” says HH Sheikh Hamdan Bin Mohammad Bin Rashid Al Maktoum, Crown Prince of Dubai. Like his father, HH Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, whose vision put the emirate on the global map, Sheikh Hamdan is a firm believer in staying ahead of the game.
An initiative he spearheads, 10X, aims to see Dubai 10 years ahead of other global cities. The program’s second phase, 10X 2.0, which was launched at the World Government Summit 2018, engages 37 government entities to work together to shape various projects in key sectors, such as health and education, security and energy.
It will come as no surprise, then, that Dubai has ministers for youth, happiness and artificial intelligence, and that the emirate keeps coming up with firsts – from the first autonomous air taxi to the world’s first rotating skyscraper, both scheduled to launch in 2020.
Disruptive innovation is the order of the day, aimed at using technologies to deliver services in radically different ways to create new operating and business models. One example is the Digital Silk Road project, an outcome of Dubai 10X and an initiative of Dubai Future Foundation, currently being developed by the Dubai Chamber of Commerce and Industry. Through the use of blockchain, the platform aims to facilitate a seamless global trading system with transparent supply chains.
The blockchain and supply chain are also part of another project in the Dubai Future Foundation. The Foundation, in collaboration with the World Economic Forum (WEF), opened the UAE Centre for the Fourth Industrial Revolution in Dubai. The Centre is mandated to develop governance frameworks and policy recommendations for new technologies. The UAE kicked off the initiative at the January 2019 WEF summit in Davos, and its initial project works with WEF to develop global frameworks for the deployment of blockchain. Driven through pilots of the framework, the UAE hopes to present a solution in 2020 that will accelerate business transactions, increase security and transparency and provide reliable information for entities looking to utilize blockchain in the supply chain.
Back in Dubai, this means owning a platform that will allow faster, safer and more cost-efficient trading – an important next step in enhancing its logistics infrastructure.
In addition to digital projects, the emirate earmarked up to $2.5 billion in 2019 for infrastructure projects aimed at boosting Dubai’s facilities as it prepares to host Expo 2020. E-commerce is one of the fastest-growing sectors in the region, prompting investment of $545 million to set up an e-commerce free trade zone at Dubai South, the aerotropolis development around the new Al Maktoum airport. EZDubai, the new 920,000-square-meter trade zone, aims to consolidate the business operations of this emerging sector for retail, logistics and other related industries.
This investment comes at a time when Amazon has launched Amazon.ae, replacing Souq.com, the regional player and popular marketplace it had taken over in 2017. The new website features more than 30 million products and offers the Arabic language for the first time, both in the company’s mobile app and on its website. Amazon.ae includes a much larger selection of books, listing 15 million titles that are available for shipping to the UAE within three to five days – with shipping either free or at very low rates. Operations in the UAE, Saudi Arabia and Egypt are localized, and a 40,000-square-metre fulfillment center in Dubai South has just increased its workforce by some 650 employees.
Another locally-grown market player is Noon, the $1 billion e-commerce platform created by UAE billionaire businessman Mohammed Alabbar. The company continues to forge new partnerships and make acquisitions in the region in order to boost its operational strength and customer offering. “We are building a lot more infrastructure – both digital and physical – to service the region,” Alabbar told UAE daily The National.
The e-commerce market in the Gulf States is rapidly expanding. Consultancy firm AT Kearny predicts it will reach $20 billion by 2020 – and there is significant room to grow, with e-commerce currently accounting for less than 3% of all Middle East retail sales, compared with more than 10% of retails sales in the U.S. A report by Fitch Solutions Macro Research highlights that e-commerce spending in the UAE alone could increase by 170%, growing from $9.7 billion in 2017 to $27.1 billion in 2022.
Geoff Walsh, Country Manager UAE, DHL Express, believes e-commerce is the way forward. “The Middle East e-commerce market is growing rapidly, and we are poised to capture this market. We are expanding our operations into EZDubai, with a 3,200-square-meter facility and 13 pickup and delivery routes. This will allow us to provide an even better service for existing and new customers in the B2C e-commerce market, which is one of our current growth areas.” — Michelle Bach
Published: October 2019
images: Ben Harris/Alamy; philipus/Alamy; Xinhua/Avalon/Prisma; Jumana El Heloueh/Reuters; Martial Colomb/Getty Images; Dubai Government/Ferrari Press/action press; iStock/Getty Images; xavierarnau/Getty Images; Oliver Jackson; DHL