Dubai is becoming a Logical And Strategic next step for Indian logistics players

Dubai, known for its strategic position as a global logistics hub, has become a hotspot for logistics startups. Situated between East and West, the city serves as a gateway for international trade, making it an ideal location for businesses in need of efficient logistics services. The presence of free trade zones like Jebel Ali Free Zone and Dubai South has further boosted the city's appeal, attracting companies from various sectors and creating a strong demand for logistics solutions.

The region has caught the attention of global logistics players, with several companies closely eyeing Dubai and the wider Middle East and North Africa (MENA) region. According to a report by Technavio, a global research firm, the logistics market in the UAE alone is projected to reach $11.87 billion by 2026.

Ankit Dwivedi, AVP-International Business at Porter, an Indian intracity logistics startup that expanded into the UAE in May, shared some insights into the market. "Our research indicates that the intra-city logistics market in the UAE is valued at $850 million," said Dwivedi. Porter operates as an aggregator of light pickup trucks, offering on-demand services for inter and intra-city pickups and deliveries.

When asked about their decision to choose Dubai, Pranav Goel, CEO, and Co-founder of Porter, emphasized the city's status as a global business hub and its role in facilitating the establishment of companies in the region. "Dubai offers business-friendly policies, excellent infrastructure, and tremendous growth opportunities. Our expansion in the UAE will not only contribute to the global growth of the intra-city logistics ecosystem but also benefit the local economy. We are actively focused on generating employment opportunities for driver-partners and providing cost-effective and efficient solutions empowered by technology," added Goel.

Dubai's strategic geographical location, serving as a bridge between East and West, is another reason why it is attractive to logistics players. Additionally, being a consumption-driven economy adds to its allure. Shipsy, an Indian logistics startup specializing in end-to-end supply chain operations, has begun operations in Dubai. 

Soham Chokshi, Co-founder and CEO of Shipsy, highlighted the advantages of Dubai, stating, "After India, Dubai is the most lucrative spot for any logistics player. It offers accessibility, repeatable business setup procedures, and provides access to the Middle East and Africa, South East Asia, and Europe. It serves as a strong base.”

While Porter focuses on meeting the intra-city logistics needs of small and medium-sized enterprises (SMEs) through its reliable on-demand platform, Shipsy takes a different approach. Shipsy's comprehensive logistics management platform caters to enterprises and logistics providers, automating and optimizing end-to-end supply chain operations.

Ankit Dwivedi elaborated on Porter's focus, saying, "Porter addresses the needs of retail customers and individuals who require delivery of small items within the city. By providing on-demand delivery services, Porter enhances productivity for its customers, eliminating the need for them to leave their homes. Our platform solves the fragmentation of supply (partners) and demand (customers) in the intra-city logistics space. The similarity in customer persona and partner aspirations is another reason why we chose to launch in this region.”

Porter's team conducted extensive research, both on-ground and otherwise, to understand the unique challenges faced by users in Dubai. They considered customer needs, as well as the obstacles faced by driver-partners. Dwivedi stated, "We also took into account consumer spending patterns and cultural insights, given Dubai's status as a trading hub and the presence of a large South Asian diaspora. These insights helped us understand how to address logistics fragmentation in the region.”

Shipsy focuses on end-to-end software management for distribution, with the local nuances being the key differentiators. Soham Chokshi mentioned the importance of addressing factors like addresses, mapping, and providing Arabic language support, along with integration with local entities. Despite these minor differences, Dubai is an attractive expansion opportunity for both Porter and Shipsy, as they don't need to redefine their product-market fit (PMF) or minimum viable product (MVP).

Chokshi explained Shipsy's approach of targeting large enterprises and building trust. "We started by securing the first two names and clients to establish confidence. By conducting in-depth research within different zones in Dubai, we realised we could provide efficient logistics solutions, Dubai being a global trading hub aligned with our goal for international expansion. Moreover, we were able to uphold our core values as a company, addressing the issues faced by driver-partners and users," said Dwivedi.

The Jebel Ali Free Zone (Jafza), the world's largest free zone, has played a pivotal role in Dubai's growth as a trading hub. According to a recent report by India Shipping World, Jafza is home to over 9,500 companies. The rise of startups in the Dubai space, particularly those focused on e-commerce, scheduled deliveries, and courier services, is evidence of the city's thriving logistics sector.

Porter has ambitious plans for expanding its operations in the UAE. They aim to double their customer acquisition to over 40,000 and increase their vehicle base to over 800 by March 2024.

"Logistics is a vast industry with diverse nuances and requirements. To expand successfully, it is crucial to understand customer expectations, which often revolve around extensive coverage and value. A partnership approach and continuous platform evolution are essential. Integration with local logistics players is also necessary," added Chokshi. Dubai is expected to contribute up to 50% of Shipsy's overall business, demonstrating its significant growth potential.

Furthermore, Dubai's regional logistics players are also experiencing growth and expanding their reach globally. With the influx of new players in the market, Dubai is poised to become a global logistics hub for both small and large players.

As the city continues to attract startups and investments in the logistics sector, Dubai's position as a global logistics hub will only strengthen, further cementing its status as a vital player in international trade and commerce.

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