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Logistics Passport: A game-changer for Dubai trade

muzaffarrizvi@khaleejtimes.com Filed on May 22, 2021
Industry stakeholders said the WLP creates opportunities for businesses across Africa, Asia, Central and South America to improve existing trading routes and develop new ones. — File photo

The WLP will be playing an instrumental role in Dubai’s plan to increase the emirate’s existing trade exchange from Dh1.4 trillion to Dh2 trillion in the next five years


The UAE has strongly established itself as a strategic logistics hub between the East and West and initiatives such as the World Logistics Passport (WLP) are set to drive global trade in coming years, expert say.

Analysts, experts and corporate executives said the WLP will be playing an instrumental role in Dubai’s plan to increase the emirate’s existing trade exchange from Dh1.4 trillion to Dh2 trillion in the next five years. The programme has already increased its participants’ trade by around 10 per cent and similar growth is expected this year.

“In 2021, we’ve seen the WLP go from strength to strength — validating a concept conceived at the World Economic Forum in Davos in 2020. Core to the WLP’s strategy is the integration of land, sea and air freight,” said Mike Bhaskaran, chief executive officer of the WLP.

As many as 11 countries have joined the Dubai-led initiative so far. Industry stakeholders said the WLP creates opportunities for businesses across Africa, Asia, Central and South America to improve existing trading routes and develop new ones.

It addition, the programme overcomes non-tariff trade barriers by fast-tracking cargo movement, reducing administrative costs, advancing cargo information and facilitating movement between ports and air.

“The World Logistics Passport will allow participating nations to gain access to new markets, diversify trade and increase market shares in key export developing countries,” Saad Maniar, senior partner at Crowe, said.

“As countries see the benefits of being part of this programme, over the years the participation will increase,” he added.

UAE an established player

Shailesh Dash, a Dubai-based financier and entrepreneur, said the UAE has strongly established itself as a strategic logistics hub between the East and West, facilitating international trade and commerce. In recent years, increased investments in infrastructure and key initiatives by the government have led to a spike in the domestic logistics industry.

“For instance, the WLP, a Dubai-led initiative aimed at boosting trade between developing markets, has expanded its network of trade hubs to over four continents and 11 countries since its inception in 2020. Global trading hubs such as Brazil, India and South Africa, along with Southeast Asian majors such as Vietnam, Thailand and Indonesia, are now part of the major policy initiative,” he said.

Strong alliance

Dash said domestic industry stakeholders such as the Dubai Multi Commodities Centre and flydubai signed up for the initiative, joining ports operator DP World, Dubai Customs, Emirates airline and dnata. Multinational firms like UPS, Pfizer, Sony, Samsung, LG, and Johnson & Johnson have also joined the coalition, he added.

“This alliance demonstrates the UAE’s zeal to work with leading nations and corporates to increase resilience in global supply chains and remove trade barriers. As the founding member, the UAE stands to benefit from stimulated trade growth regionally while exploring opportunities to create new economic value.

“This will also help the UAE improve its logistics performance index ranking [currently ranked 11 globally] in the coming years,” he said.

Moreover, he said the Dubai Chamber of Commerce and Industry is providing a wide range of value-added benefits to participating nations/companies of the WLP that will help improve the ease of doing business in Dubai.

“This should help boost Dubai’s trade with the rest of the world, protect the interests of the private sector and enhance the emirate’s economic competitiveness as a global business hub,” he said.

Enhanced connectivity

Bal Krishen, chairman and CEO of Century Financial, said the programme is being rolled out across four continents spanning the global south. Israel, Mexico, Columbia, Santo Domingo, Brazil, Uruguay, Senegal, Ghana, South Africa, Kenya, India, Kazakhstan, Thailand, Indonesia, China and Vietnam have joined the WLP initiative to date.

Under the Dubai Silk Road initiative, the recently-launched WLP links Customs World, DP World and Emirates Group to enhance connectivity through Dubai and, through expertise sharing and process development, directly between partner countries.

“A pilot project operational since July 2019 has already increased trade by participants by 10 per cent. This would indirectly lead to higher exports and re-exports that contributes to a significant portion of the emirate’s GDP amplifying its status as a major trade hub,” he said.

Bright trade prospects

Dubai’s non-oil foreign trade reached Dh1.182 trillion in 2020. Exports rose eight per cent to Dh167 billion while imports and reexports accounted for Dh686 billion and Dh329 billion, respectively. Its total trade volume in 2020 reached 100 million tonnes.

Dubai’s direct trade in 2020 totaled Dh711 billion, while trade through free zones reached Dhs464 billion and customs warehouse trade was recorded at Dh7 billion.

“Taking into consideration more and more countries are getting added to the participant list, non-oil foreign trade could be expected to increase by 10 per cent in 2021,” Krishen said.

More to join WLP

Dash said the WLP is planning to tap into more than 20 markets representing 54 per cent of global GDP in the long-run period. As the closed-knit alliance grows in stature, it will not only enhance prosperity but also expand growth opportunities for businesses at a time when the industry is seeking to revive growth momentum.

“In the wake of the slowdown caused by Covid-19, the alliance will help stakeholders create efficqiency gains, reduce costs, provide access to newer markets, and reduce complexity of clearance processes. More specifically, benefits range from increased trade revenue for businesses, increased fee generation for state trade authorities, tax revenues, connection of customs departments and global knowledge sharing networks,” he said.

“Touted as the world’s first logistics loyalty programme for freight forwarders and traders, the WLP could be a game-changer for the industry as it thrives to overcome non-tariff trade barriers by incentivising increased trade through efficient and cheaper trade processes,” he added.

Exploring new markets

To a question on how it could benefit logistics and trade of participating nations, Dash said by connecting to the WLP network of fast-growing economies, member businesses have the opportunity to venture into new markets such as Latin America, South Asia or Africa while shoring up their regional connectivity and unlock operational agility.

“Going forward, the initiative could help streamline the industry while facilitating investments in modernising existing infrastructure across the member nations. It could also help develop future projects to ensure high levels of efficiency and sustainability for the participating nations/companies. Most importantly, the WLP will help create opportunities for businesses across the world to improve existing trade routes and develop new ones,” he said.

Time, cost benefits

Krishen echoed similar views and said as a WLP member, participants enjoy a number of time and cost benefits in each hub as well as improved market access. The WLP has potential to attract increased trade by serving traders an efficient competitive logistics mega-hub.

Secondly, it encourages trade with economic partners all over the world and utilising the Covid-19 “hard-reset” to re-draw global freight lines and routes. Transporting high-value, low-weight goods through historically-established transport routes in Europe takes considerably longer, and is therefore more expensive, than if the goods pass-through Dubai.

“Through the WLP, traders can expect to save 25 per cent on freight costs and 10 per cent on transit time, which is more important than ever as governments around the world seek to recover from the economic impact of Covid-19,” he said.

“Few Southeast Asian and African countries could be expected to be on the list to reap the benefits of being part of the logistics club.”

He said the WLP is helping to reimagine how goods and services move around the world, increase resilience in global supply chains and removal of barriers that prevent developing economies from trading as freely as they might.

“Unlocking these benefits allows participating nations and regions to gain access to new markets, diversify trade in existing products towards new markets, and increase market shares in key export products in developing economies,” he said.

— muzaffarrizvi@khaleejtimes.com

author

Muzaffar Rizvi

Business Editor/News Editor of Khaleej Times is a well-connected journalist and an economic and financial commentator. He has been in the mainstream journalism since 1997, covering the UAE's economy and key sectors. He holds a post-graduate degree in Economics and has won many awards for authentic and insightful reports on global and regional businesses and economic trends.





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