UAE Cold Chain Logistics Market Size & Share Analysis - Growth Trends & Forecasts (2023 - 2028)

The UAE cold chain logistics market is expected to register a CAGR of more than 5% during the forecast period of 2023-2028.

The UAE has a well-established cold chain logistics industry and is one of the most innovative markets in the MENA region regarding skills development for this sector as well. The supply chain has become essential in productivity improvements, extending competitiveness, and increasing productivity levels.

Consequently, consumers increasingly demand extended shelf life and an optimum level of product quality, making logistics management more important than ever before. The demand for refrigeration products and services is expected to be driven by the rising number of consumers looking for convenience in their routine shopping. The increasing demand for food quality, availability, and delivery has resulted in the rising importance of cold chain logistics in the global food distribution sector.

The cold chain business profited from the COVID-19 epidemic in the UAE. Increased demand for cold chain facilities, such as storage and transportation, particularly for pharmaceutical products, has been the primary driver of market expansion.

Due to the nationwide lockdown caused by the global epidemic of Covid-19 in 2020, the market's growth was slightly slowed down. Increased retail distribution, expanding end consumers in developing economies, rising perishables imports, and technological improvements like Transport Management Systems utilized by cold chain operators are some of the major growth factors.

UAE Cold Chain Logistics Market Trends

Dominance of 3PL Companies over Cold Chain logistics

Since the UAE government has implemented initiatives like the National Innovation Strategy, the Dubai IoT strategy, the Dubai Blockchain strategy, the introduction of drones for last-mile delivery, the UAE National AI program, Smart Dubai, the Dubai 3D printing strategy, and the Dubai Data Initiatives, 3PL companies in the UAE are focusing on the logistics and warehousing market, as well as cold storage, dry storage, and supporting retail facilities. Since the majority of cold storage warehouses are currently concentrated in Dubai and Abu Dhabi, several 3PL companies sought to expand their operations to these other locations as well in order to take advantage of the industry's expanding potential.

The UAE government offers a variety of services to non-governmental organizations, relief organizations, as well as their manufacturers and suppliers, including air and ocean freight, customs clearance, warehousing, and local distribution of aid materials. These services are supported by data analytics and control tower services that are intended to boost freight visibility for urgent and complex emergencies.

The value of the inbound foreign direct investment is expected to expand at a 4% annual rate, according to the UNCTAD World Investment Report 2022. Compared to USD 19.884 billion (AED 73.04 billion) in 2020, the overall amount of foreign investment inflows in 2021 was USD 20.7 billion (AED 76 billion). Due to its business-friendly regulations, first-rate infrastructure, and structural improvements aimed at diversifying the economy, the UAE will continue to be a major source of foreign direct investment (FDI) into the region.

CEO of Business Link Hatem El Safty said that the UAE will bring in a significant portion of the USD 66 billion in possible FDI inflows into the Middle East, North Africa, and Pakistan (MENAP) in 2023 because foreign investors find the emirate to be a prime location for investment. Referring to a recent survey from the Institute of International Finance, he stated that the emirate is anticipated to bring in USD 22 billion in FDI this year as a result of its business and visa reforms, while the MENAP area is anticipated to bring in USD 56 billion. The UAE attracted foreign investments in a variety of sectors in 2022. The country is putting various measures into place to encourage investment in the industrial sector and increase its contribution to AED 300 billion (USD 81.68 billion) from AED133 billion within 10 years. The oil and gas sector accounts for 59% of total FDI contributions, followed by 10% in IT and communications.

Rising Imports of Food Products and Pharmaceuticals

With a population of 9.9 million, the United Arab Emirates (UAE) is expected to see real GDP growth of 3% in 2022. Demand for premium, organic, and specialty foods is growing as a result of rising incomes, shifting consumer preferences, and a robust tourism industry. The desire for western-style meals is being fueled in part by a sizable expatriate population. Many hyper/supermarkets offer a large variety of food.

To draw manufacturing and service businesses, Dubai has created Jebel Ali, the largest cargo port in the Middle East, as well as several free trade zones. The UAE serves as a regional commercial hub for the supply of agriculture and food. In Dubai's growing commerce sector, food is imported from the United States, the United Kingdom, France, Brazil, and Saudi Arabia. Dubai exports food to countries such as the US, UK, Germany, China, India, and Japan.

Dubai has developed into the busiest and most international food trading hub in the Middle East as the gateway to the African and Arab markets. The business of importing food and seafood into Dubai is one of the most important components of Dubai's economy. Dubai imported 9.9 million tonnes of food goods for AED57 billion in 2021 to meet demand, and this amount is likely to rise as Dubai's food consumption rises at a rate of 11% annually.

The number of pharmaceutical import shipments into the United Arab Emirates totaled 15.7K, and they came from 555 Suppliers. Most of the pharmaceuticals in the United Arab Emirates are imported from Germany, Mexico, and India. The top 3 pharmaceutical imports are India (350,268 shipments), the United States (180,047 shipments), and Pakistan (149,113 shipments), in that order.

UAE Cold Chain Logistics Industry Overview

Large enterprises are claiming a sizable portion of the extremely fragmented UAE cold chain sector. The market is mostly centered on areas like Dubai and Abu Dhabi's ports and free zones. These areas have seen a growth in cold chain businesses as a result of their closeness to the sea and airports, rising metropolitan populations, well-developed transportation infrastructure, and well-developed transit systems. The grounds on which cold chain companies compete in the nation include location, cost, temperature range, product range, warehouse infrastructure, and industry experience.

Additionally, international companies are making investments in the sector and buying regional companies to increase their presence in the area. Similar investments in cold chain infrastructure are being made by regional enterprises to compete with multinational corporations. Additionally, businesses are putting more money into logistics for fruits, vegetables, flowers, cosmetics, and consumer goods. They are also attempting to strengthen the cold chain.

Major players in the cold chain market are GAC Dubai, GSL Logistics, Mohebi Logistics, CEVA Logistics, RHS Logistics, and others.

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