By Emma Campbell
Logistics Middle East profiles ten of leading free zone facilities and pays tribute to their contribution.
The rapid development of free zones in the United Arab Emirates has helped to fuel considerable growth in the country's logistics industry. Logistics Middle East profiles ten of these leading facilities and pays tribute to their industry contribution.
Dubai Airport Free Zone has experienced a significant level of growth since its establishment in 1996 and currently hosts a multicultural community of investors, including 41% from Europe, 19% from the GCC and 12% from North America.
In particular, a strong focus has been placed on the automotive industry, with heavyweights such as Porsche, Rolls Royce, Volkswagen and Audi present in the free zone. Since the waiting list for investors has continued to increase, a major expansion is currently underway to meet customer requirements.
In the meantime, approximately 253 warehouse units are located in Dubai Airport Free Zone, each measuring between 200m2 and 300m2. In addition, Dnata has boosted the logistical infrastructure by providing a range of supply chain services to tenants since the first day of the free zone's operations.
The facility was recently honoured with the award for ‘Best Middle East Logistics Park', which recognised the strength of its business incentives, including tax free operations, efficient transportation links - particularly its direct access to Dubai International Airport - and simplified procedures.
In addition, Dubai Airport Free Zone Authority (DAFZA) is able to handle visa requirements, supply relevant licences within a week and provide a renewable 15 year lease.
Lacking the natural advantages of gas and petroleum, the emirate of Ajman established a free zone development in 1996 to support its economic growth.
Strategically located at the entrance of the Arabian Gulf, the industrial centre has become the emirate's sole regulatory agency and houses 20% of the United Arab Emirates' total manufacturing units, exporting to over 64 countries around the world.
It's proximity to Sharjah and Dubai provides easy accessibility to two international airports and four seaports, with Ajman Port emerging as a leading maritime focal point, serving over 1000 vessels a year.
Ajman Free Zone Authority (AFZA) offers the traditional benefits found in other free zones and the development is marketed as providing a cheaper alternative to a number of its Middle East competitors.
For example, it claims to have some of the lowest tariffs in the region, with cheap energy supply, handling charges and lease rates. Particular attention is paid to small to medium sized businesses, and the authority also facilitates cooperation with foreign organisations.
These incentives have led to significant growth in Ajman Free Zone, as investors have been keen to take advantage of the operational benefits and long term stability, with 20 year contracts available.
The format has proved attractive to the business community; with the number of companies setting up operations in the free zone having quadrupled.
Construction of Dubai Logistics City (DLC) continues at full pace, with the ambitious project being marketed as the world's first completely integrated logistics platform.
Operations are scheduled to commence at the beginning of 2009, with 12 million square metres of land being allocated to industrial and distribution companies, allowing each tenant to either build their own facilities or rent shared premises.
DLC is a major component of the 140km2 urban aviation project Dubai World Central (DWC), which also includes Al Maktoum International, set to become the world's biggest international airport.Its location - adjacent to the bustling Jebel Ali port - has also helped to attract a large number of clients, with over 150 companies already committed to invest.
Indeed, DLC is designed to further cement Dubai's position as the ultimate superhub for the region's logistics industry, catering to some two billion people throughout the Middle East, Indian subcontinent, Africa and the CIS, all within three to four hours flying time from Dubai.
A recent industry report has valued the GCC logistics market at over US$11 billion. With such impressive figures, DLC will play an important role in handling the Middle East's logistic requirements for the next 40-50 years.
Dubai Cargo Village (DCV) was developed at a cost of US$75 million and opened in July 1991 as the first cargo handling facility in the United Arab Emirates to receive an ISO 9002 certificate.
Since its launch, the free zone has grown rapidly and major expansion plans are currently underway to support this growth. At the moment, its annual freight holding capacity is 750,000 tonnes, although this figure is expected to grow to 2.7 million tonnes by 2018.
The cargo building has a ground area of 24,985m2, a handling area of 8300m2 and a storage capacity of 7420 tonnes. The development is also being marketed as a leading hub for the country's courier firms, with a 4000m2 express mail centre.
Integral to the success of the free zone is its support from Dnata, Emirates, SkyCargo and Dubai Customs. The logistics industry's presence is also enhanced by Aramex, which occupies the largest area on site.
It was the first logistics service provider to move its regional courier handling hub to the express mail centre and manages a transhipment volume of approximately 300,000 kilos on average per month.
DCV houses some high risk products ranging from valuables, explosives, radioactive materials, as well as live animals in air conditioned warehouses.
In additon, there is storage capacity for 308 ULDs and racking for any business requirements. 35 truck docks are dedicated for import, export and perishable cargo, and seven docks are exclusively used for sea-air traffic.
SharjahAirportInternational Free Zone
With a trading history dating back to the early 18th century, Sharjah accounts for more than 40% of industrial activity in the United Arab Emirates.
The emirate's strategic location has helped to establish a competitive advantage for local companies in terms of logistics operations, as Sharjah straddles the Arabian Gulf and the Indian Ocean, offering access to more than two million consumers.
The launch of Sharjah Airport International Free Zone (SAIF Zone) has contributed to this commercial centre, with approximately 3520 companies being serviced from over 91 countries around the world.
These figures have experienced a consistent rate of growth, with registrations increasing by around 12% a year.
The development currently hosts a number of tenants from various different industries, including 248 companies in aviation, 409 companies in manufacturing, 1088 companies in services and 2201 companies in general trading.
Particular attention is paid to the warehouses at SAIF Zone, as high quality, insulated facilities are available in sizes between 125m2 and 600m2. Investors are provided with flexible conditions to use the warehouses for all types of industries and can lease more than one unit at a time.
In addition, temporary storage facilities are offered to patrons and no restrictions are placed in the hiring of expatriate workers.
The free zone's authority claims that the cost of establishing a business in Sharjah is less than neighbouring areas in the United Arab Emirates, with SAIF Zone aiming to provide the speedy processing of relevant licences within 24 hours. Hamriyah Free Zone
Since its establishment in 1995, Hamriyah Free Zone (HFZ) has developed into an emerging cornerstone in the UAE's industrial development.
Its location in the emirate of Sharjah means customers have access to ports on the Arabian Gulf's west and east coasts, as well as the Indian Ocean. Sharjah international airport is also nearby.
The free zone manages an area of prime industrial and commercial land, measuring 22 million square metres, together with a 16 metre deep water port that has scope for expansion.
Investors are given flexibility, as they can develop their own factories, office infrastructure and warehouses in a custom fit manner. Industrial plots on offer start from 5000m2, and up to 60% of the land that is leased can be developed.
Alternatively ready-made warehouses are available with a choice of buildings measuring between 275m2 and 614m2. General service charges for warehouses are US$1165 and 20-25 visas are issued per warehouse.
Furthermore, HFZ imposes no quotas or personnel restrictions, and claims to have abundant and inexpensive energy resources.
Investors also have access to the Sharjah Chamber of Commerce and Industry (SCCI) which helps advise investors on how to maximise profits in the region.
Although Fujairah Free Zone (FFZ) was established one and half decades ago, it is still regarded as an unexploited jewel in the UAE.
Because of this, the free zone is attempting to boost its services and provide cheaper tariffs than other industrial areas in the region. Part of this strategy includes reduced establishment expenses and lower overheads, which are designed to make FFZ an increasingly cost effective investment proposition.
For storage, repackaging and distribution activity, the free zone provides warehouse units ranging in size from 250m2 to 1000m2 with built in offices. Other size units are also available to meet companies requirements.
FFZ is situated in close proximity to Fujairah International Airport. Licences can be issued as rapidly as other free zones in the region within one working day.
Ras Al Khaimah Free Zone
Ras Al Khaimah Free Trade Zone (RAK FTZ) has attracted a growing number of investors over the years, with its economy receiving a boost of US$3.3 billion through capital investment in 2007.
The free zone was established in May 2000 and hosts the operations for over 140 different industries, including international brands such as Knauf, DHL and Amoun Pharmaceuticals.
This diversity has helped to fuel an increasing amount of demand for office and warehouse space, with a total of 4570 companies having invested in the free zone to date. In part, this popularity has benefited from the rising cost of business and living in other emirates, together with increasing traffic congestion.
Ras Al Khaimah's location has also lent itself to investors, as the emirate has established itself as the first shipping point for cargo arriving into the Gulf, due to its location at the north of the United Arab Emirates.Ras Al Khaimah Free Trade Zone provides different lease contracts to suit its investors, with agreements ranging from one year through to 45 years. The free zone's authority aims to take three days or less to handle the registration process and the cost of annual licences range from $970 to $4087.
With the ongoing developments of hotels, villas, apartments and schools. the emirate is expected to continue its substantial future growth.
Jebel Ali Free Zone
Jebel Ali Free Zone started its operations in 1985 and has been a magnet for investors, starting with only 19 companies in its first year of operations to approximately 6000 today.
The free zone is marketed as one of the main economic drivers of Dubai, and the United Arab Emirates in general, and has contributed substantially in positioning the region as one of the most favoured investment destinations in the world.
The development is spread over an area of 57km2 and provides plots, offices and industrial units, which can be designed to suit a variety of operations. It is also built around Jebel Ali port, one of the world's largest man-made harbours.
Jebel Ali Free Zone Authority (JAFZA) provides all the usual incentives of a free zone, including zero tax, 100% foreign ownership and no restriction on hiring foreign employees. In addition, it offers the facility to mortgage owned premises on leased land and unlimited access to energy resources.
Another major incentive is its flexibility with trade licences, as companies can combine up to seven activities under the same licence.
To meet the growing demand, JAFZA has initiated a multi million dollar expansion into the south zone, with a six lane highway that facilitates the transportation of goods from port to cargo aircraft in just 20 minutes.
The free zone has also invested in a convention centre complex, which will provide a platform for businesses to network, establish new relationships and share expertise. The complex houses two 34-storey business towers, an exhibition centre, a 600-seat auditorium, as well as a luxury five star hotel.
Dubai Silicon Oasis has marketed itself as the emirate's only ‘integrated community' free zone, which is designed to allow individuals to balance their professional and personal lives in the same location.
The multi-billion dollar Dubai government project, which was launched in October 2002, claims to offer 30% reduced costs in comparison to other free zones.
To compliment its local community, the oasis has blended office space, warehouses and manufacturing facilities with educational institutions, luxury apartments and hotels.
The development is spread over 7.2km2, with the total area per warehouse measuring 363m2, which includes a front office area of 157m2 and storage area of 206m2. The warehouses are leased for an annual rate of US$245 per square metre with a 10% service charge.
Alternatively, plots of land are available ranging from 6000m2 -25000m2 for companies to construct their own facilities, as long as the projects are environmentally friendly. The minimum lease period is two years and is renewable upon request.
Dubai Silicon Oasis Authority (DSOA), which has attracted US$218 million in foreign investment to date, prides itself on implementing the leading advances in technology.
The development hosts state of the art IT infrastructure, an onsite data centre and high speed wireless internet. There are also luxurious conference rooms and lecture halls featuring the latest audio and video equipment.