Dubai to Maintain Lead in Logistics over Abu Dhabi

ABU DHABI - The economy of Abu Dhabi has been built on its massive oil reserves, but recently the local government has been following Dubai's lead to diversify its industrial base by encouraging foreign direct investment (FDI), and investment in its logistics infrastructure.

Abu Dhabi has announced plans to expand both its airport and seaport and has already successfully launched its own airline, Etihad. Also important was the government announcing their expansion of the sprawling Industrial City of Abu Dhabi (ICAD) by launching the 10 km2 ICAD 2.

Yet, with such grandiose steps toward competing with Dubai as the region's industrial and logistics hub, project cargo specialists seem certain that Dubai will maintain the lion's share of the logistics business, especially project cargoes.

"I don't see room for two logistics hubs," says Paul Smith, Director of Commercial Operations for Petrasco, a Global Project Logistics Network (GPLN) member in Dubai, "The problem is Dubai and Abu Dhabi are so close, less than one hour drive."

Smith feels that the planned port developments in the Abu Dhabi region could be a bit impractical. "The Industrial City is a reasonable site," says Smith. "Our sponsor has a set up in ICAD so it will be very easy for us to move in there with an already existing infrastructure when I feel the time is right, but it's too far away from Abu Dhabi's main port, Mina Zayed." Paul Smith feels that the port development for ICAD should take into consideration what port resources are already existing in the region.

Paul Smith is an expert in project cargo but he also has an extensive background in air cargo. As such Smith also rationalises that Dubai is too far ahead in the game with air cargo infrastructure as well.

"With Dubai's plans to build a new airport at Jebel Ali which will be bigger than London Heathrow and Chicago O'Hare put together, I can't see any other country or emirate coming close to taking their title of logistics hub away from them," said Smith.

"For sure they will lose some business but nothing major."

And as for the dent that Etihad will make on air cargo, Paul Smith thinks that it is yet to be seen. "You've got to ask yourself how will this region accommodate another mega-carrier as this will be what they [Etihad] become once they re-build their airport and take delivery of all these new aircraft," said Smith.

"We already have two established, young, and aggressive carriers in the region [Emirates and Gulf Air], both working out of mega, ultra modern hubs that are only 40 minutes flying away from each other, Dubai and Doha. Abu Dhabi will sit geographically in the middle of these two, which looking at it from an economical point of view, there is no way it could be viable."

Melvyn Vaz, general manager of Khalidia International Shipping, a GPLN member in Abu Dhabi, also doesn't feel that Abu Dhabi will be able to catch Dubai when it comes to the project cargo development.

"Whatever new projects are done it is hardly likely that we will compete with Dubai," says Vaz. Like all GPLN companies though, Khalidia is a well known project specialist and looks forward to the new project cargo that will be certain to come with the Abu Dhabi government's development plans.

"Yes, the city has had some very large industries," says Vaz, "And we hope that we will have some decent project cargoes."

Melvyn Vaz and Paul Smith both feel that this is still the early days for the Abu Dhabi development. Smith believes the developments will go through but doesn't think the overall impact will be huge.

"Abu Dhabi will go forward with ICAD but not as big or aggressive as the Free Zones in Dubai and the Northern Emirates," says Smith. Melvyn Vaz on the other hand is more conservative and takes a "wait and see" attitude."

"We are still awaiting some concrete details," says Vaz. "No doubt Abu Dhabi has some ambitious plans but these are still ideas."

"We are keeping close tabs on all announcements."