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Middle East Logistics Investment Opportunities 2018

Middle East Logistics Investment Opportunities 2018

Logistics in the Gulf sub-region of the Middle East is very difficult to characterize. In some markets, port and airport infrastructure is world class as a result of years of heavy investment by governments. Logistics provision can also be as advanced as anywhere in the world, in locations such as Dubai’s Jebel Ali Free Zone. Oil & gas investment has also led to highly developed and specialist logistics services being available. At the same time though, certain locations face infrastructure challenges and outside urban areas logistics services can be undeveloped.

There are also crucial differences in the political and economic state of the Gulf region’s markets. Certain countries are politically and economically sound, others are in the midst of political transformation, whilst others are just emerging from political and international isolation. All are undergoing dramatic economic change, driven by the need to diversify away from oil. Plans accelerated when the oil price crashed in 2015 and have since stayed well below the pre-crash peak.

Saudi Arabia has perhaps put together the most ambitious package of reforms. Muhammad bin Salman (commonly known as MbS), Saudi Arabia’s 32-year old crown prince is poised to become the Kingdom’s strongest ruler in decades. Vision 2030, the crown prince’s plan, aims to raise the contribution of the private sector from 40% to 65% of GDP, the share of SMEs from 20% to 35% of GDP, raise the share of non-oil exports in non-oil GDP from 16% to 50% and raise its ranking in the World Bank’s Logistics Performance Index from 49 to 25. In other words, completely transform the economy. While many doubt whether these ambitions are completely realistic, Saudi Arabia has made its intent clear and its reforms should entail many new logistics opportunities.

The market where opportunities have really opened up is Iran. Following the removal of UN and EU sanctions in January 2016, international business has flocked to Iran en masse. However, Iran is generally an opaque place to do business, corruption is extensive and there is political opposition to letting foreigners invest in Iran’s natural resources. In addition, the Trump administration maintains a hostile stance to the country’s leadership, largely prohibiting US companies doing business with Iran. Undoubtedly, there are enormous opportunities for investment in Iran, but they are not for the faint- hearted or inexperienced.

A crucial step for advancing logistics across the region will be the liberalisation of investment rules. This is particularly true for Iran, where contract logistics provision is a ‘work-in-progress’. Across the region, there are large warehousing developments, but they are often insufficiently numerous or are not operating in an open market. In Saudi Arabia, land transportation is off limits to foreign LSPs.

In general, economic institutional reform is required. In too many countries, market access is inadequate, monopolistic and oligopolistic behaviour is all too common, whilst areas such as customs remain problematic. These should be major areas of focus going forward and encouragingly, they appear to be.

Overall, the Gulf region clearly faces many challenges. Following the oil price crash, the economic picture has fundamentally changed. With Qatar’s blockade and tensions between Saudi Arabia and Iran ongoing, investors also face elevated political risk. While these factors have damaged certain logistics opportunities, they have also accelerated diversification plans, which have already and will continue to create new business for LSPs.

The greatest opportunity of all however must be the opening up of Iran. As the Europe managing director for Kerry Logistics stated: “It’s the biggest market opportunity to have emerged in the past decade or so.” The race is very much on to land business.


1. INTRODUCTION
1.1 Executive Summary
1.2 Key Findings
2. REGIONAL PESTLE ANALYSIS
2.1. Political
2.2. Economic
2.3. Social
2.4. Technological
2.5. Legal
2.6. Environmental
3. REGIONAL OVERVIEW OF TRANSPORT INFRASTRUCTURE
3.1. Road Infrastructure and Planned Major Developments
3.2 Rail Infrastructure and Planned Major Developments
3.3 Port Volume and Planned Major Developments
3.4 Airport Volumes and Planned Major Developments
4. REGIONAL ECONOMIC FUNDAMENTALS
4.1. GDP by Country
4.2 GDP per capita by Country
4.3 GDP Forecast by Country
4.4 Exports by Country
4.5 Export Growth Forecast by Country
4.6 Imports by Country
4.7 Import Growth Forecasts
4.8 Oil Price
5. INTRODUCTION TO THE GCC AND IRAN LOGISTICS MARKET
5.1 Structure and Nature of Logistics Provision and Markets
5.2 Revenue Distribution of LSPs
5.3 Logistics Performance
5.3.1 World Bank Logistics Performance Index Data
5.3.2 Agility Emerging Markets Logistics Index Data
5.4 Logistics Market Sizing, Growth and Forecasts
5.4.1 Summary
5.4.2 Contract Logistics
5.4.3 e-commerce Logistics
5.4.4 Express and Parcels
5.4.5 Freight Forwarding
6 REGIONAL SUMMARY OF VERTICAL SECTOR LOGISTICS
6.1 Automotive
6.2 Chemical
6.3 Consumer (CPG)/ Retail
6.4 Defence
6.5 e-commerce
6.5.1 Introduction to GCC and Iran e-commerce
6.5.2 Souq Profile
6.5.3 e-commerce Logistics Costs
6.6 Healthcare/ Pharmaceutical
6.7 LNG
6.8 Oil & Gas
7 MAJOR COUNTRY LOGISTICS PROFILES
7.1 Iran
7.1.1 PESTLE
44 7.1.2 Economic Background
7.1.3 Infrastructure
7.1.4 Logistics Performance
7.1.5 Logistics Provision
7.1.6 Logistics Market Size, Growth and Forecasts
7.1.7 Investment Environment
7.1.8 Oil & Gas Market and Logistics Growth Forecast
7.1.9 Retail Market and Logistics Growth Forecast
7.1.10 Automotive Market
7.1.11 Outlook
7.2 Saudi Arabia
7.2.1 PESTLE
7.2.2 Economic Background
7.2.3 Infrastructure
7.2.4 Logistics Performance
7.2.5 Logistics Provision
7.2.6 Logistics Market Size, Growth and Forecasts
7.2.7 Investment Environment
7.2.8 Diversification Strategy Vision 2030
7.2.9 Oil & Gas Market and Logistics Growth Forecast
7.2.10 Retail Market and Logistics Growth Forecast
7.3 United Arab Emirates
7.3.1 PESTLE
7.3.2 Economic Background
7.3.3 Infrastructure
7.3.4 Logistics Performance
7.3.5 Logistics Provision
7.3.6 Logistics Market Size, Growth and Forecasts
7.3.7 Investment Environment
7.3.8 Oil & Gas Market and Logistics Growth Forecast
7.3.9 Retail Market and Logistics Growth Forecast
8 COUNTRY LOGISTICS PROFILES
8.1 Bahrain
8.1.1 PESTLE
8.1.2 Economic Background
8.1.3 Infrastructure
. 8.1.4 Logistics Performance 92 

. 8.1.5 Logistics Provision 93 

8.1.6 Logistics Market Size, Growth and Forecasts
8.2 Kuwait
8.2.1 PESTLE
8.2.2 Economic Background
8.2.3 Infrastructure
8.2.4 Logistics Performance
8.2.5 Logistics Provision
8.2.6 Logistics Market Size, Growth and Forecasts
8.3 Oman
8.3.1 PESTLE
8.3.2 Economic Background
8.3.3 Infrastructure
8.3.4 Logistics Performance
8.3.5 Logistics Provision
8.3.6 Logistics Market Size, Growth and Forecasts
8.4 Qatar
8.4.1 PESTLE
8.4.2 Economic Background
8.4.3 The 2017 Qatar Crisis
8.4.4 Infrastructure
8.4.5 Logistics Performance
8.4.6 Logistics Provision
8.4.7 Logistics Market Size, Growth and Forecasts
8.4.8 Oil & Gas Market
9 APPENDIX - MARKET SIZING METHODOLOGY
9.1 Freight Forwarding
9.2 Contract Logistics
9.3 Express and Small Parcels
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