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In the zone at Jebel Ali port

In the zone at Jebel Ali port

With a multi-tier parking facility holding around 27,000 car equivalent units (CEU), Jebel Ali is the biggest port in the Middle East and the 11th largest worldwide. The port has four terminals connecting to more than 150 other ports through 80 weekly services, and its activity accounts for 26.1% of Dubai’s GDP. In 2018, 82% of Dubai’s automotive trade passed through Jebel Ali, worth $31.6 billion in vehicles, tyres, parts and accessories.

Moreover, this trade is on an upward trend. UAE’s automotive market is set to increase by 35% between 2017 and 2021, according to estimates from the Dubai Chamber of Commerce and Industry. Jebel Ali will also benefit in its role as a point of entry to other nations in the region; automotive trade in the Gulf Corporation Council (GCC) countries was valued at $55 billion in 2018.

The port, which is run by DP World, is located in the Jebel Ali free trade zone (Jafza), where commercial advantages include exemption from corporate tax for 50 years, no personal income tax and no import or re-export duties.

With more than 520 automotive companies involved in vehicle and parts distribution in the region, Jafza is widely regarded as one of the main drivers of Dubai and the UAE’s economic growth over recent years. “For the automotive industry, where slow-moving bureaucracy can put a hard brake on just-in-time flows, special economic zones (SEZs) have been attractive for setting up distribution and modification centres for vehicles and spare parts, helping to reduce inventory and trade costs,” says a spokesperson for DP World.

Citing emerging markets, including those in many parts of Africa, the spokesperson argues that it is becoming increasingly important for such zones to be part of wider international economic strategies that can tap into local skills, services and logistics.

“For industries like automotive it rarely makes sense to develop supply chains in isolation. SEZs are also enjoying new opportunities, as advanced economies in North America and Europe show more interest in developing such areas, both to deal with trade rules, as well as to connect new, high-tech value chains,” states the representative.

For automotive, this could include expanding vehicle production capabilities. “Whilst SEZs have long been centres of logistics and light assembly, there is also more potential to exploit their benefits for vehicle production, whether for new vehicle technology, or in establishing new manufacturing centres in expanding markets such as in the Middle East and Africa,” he says.

In Senegal, Egypt, Somaliland and Namibia integrated logistics and free trade models are beginning to empower the domestic automotive sector, according to the representative, pointing out that carmakers including Mercedes-Benz, Volkswagen, GM, Toyota, PSA and others are investing in OEM facilities in the region’s free zones.