As we move past the vertex of a U-shaped dip in the global shipping sector caused by supply chain restrictions arising from the COVID-19 pandemic, it is worthwhile to look back at the UAE maritime industry’s growth, lessons learned, and development outlook. Although international maritime trade dropped by 4.1 per cent in 2020, the UAE made significant achievements during this period, ranking third globally in the Bunker Supply Index, and fifth globally as a key competitive maritime hub.
The main factors catalysing the UAE maritime industry’s growth have been the nation’s flexible policies, fast government response, and groundbreaking initiatives.
Foreign investment policy and financing arrangements
The maritime sector has long been a key pillar of the UAE’s economy. The development of Jebel Ali Port and Dubai Dry Docks in the 1970's laid the foundation for Dubai to become a global maritime hub. Jebel Ali is not only known for its high volumes of traffic; but is also a prime free trade zone ideal for foreign direct investments.
Since early 2019, the UAE has experienced a “legislative revolution,” with the restructuring of the companies law, employment law and visa requirements, laws on registering securities over movable assets, the penal code, cyber-crime law, and various government departments and ministries, including the Ministry of Energy & Infrastructure (MOEI). The changes have also extended to dissolving the Emirates Maritime Arbitration Centre by adjoining it with the Dubai International Arbitration Centre, and DIFC-LCIA, under new joint rules.
In addition to increasing foreign direct investments, these changes have made the UAE a more attractive jurisdiction for setting up headquarters for large-scale yards and energy suppliers.
The UAE’s quick response to the pandemic by updating regulations in line with consumer and business trends has allowed its maritime sector to stay ahead of the curve. Despite that, an updated Maritime Code has been in discussion for some time, which could include lifting restrictions on the ownership of UAE flagged vessels. Such a development would allow the UAE to expand its shipping registry and further foreign investment.
Port performance and efficiency
The UAE is focused on expanding its port capacities, increase efficiency of its bunker terminals to handle larger volumes of traffic, and continue benefiting from its crude oil supply.
AD Ports boosted the UAE’s passenger cruise terminal capacity with the development and launch of a cruise terminal in Zayed Port in 2015. Similarly, DP World entered into a number of local and international expansion deals in 2020-2021, including an investment of USD 90 million from Petrochem Middle East under a 30-year concession to develop a chemical terminal in Jebel Ali Port, and commence operations at a new multi-purpose terminal at the Port of Luanda.
The UAE’s maritime sector has managed to stay ahead of the curve by integrating its shipping and logistics sectors, meaning that continued growth is expected with the rise of e-commerce and digitalisation.
Digitalisation and emerging technologies
In 2016, AD Ports launched the Maqta Gateway, a digital port community powered by blockchain. The platform enabled the launch of an Advanced Trade and Logistics Platform (ATPL), offering over 700 services and unified payment solutions, integrated with 40 UAE government entities across the supply chain. There are more developments underway, such as mUnity, a digital solution designed to trace COVID vaccines’ sourcing, storage, shipment, and related data in real time.
As for the prospect of automated ships, AD Ports signed an agreement with Canadian naval architects to develop the world’s first fully unmanned autonomous commercial marine tugs, while DP World contracted with DGWorld for the provision of a fleet of autonomous internal terminal vehicles.
Moreover, Khalifa Port’s CSP Abu Dhabi container terminal, the first greenfield project of Cosco Shipping Ports Limited (CSP), has recently become the first in the region to adopt an automated port truck system.
DP World has launched a large number of international supply and management platforms, including:
-Dubai Trade, a one-stop shop for cross-border trade;
-SeaRates, a platform providing instant and live rates for container shipping;
-CARGOES.com, a platform that provides integrated solutions for trade finance and global shipments;
-BoxBay intelligent High Bay Storage System, a container storage and shipment management system with storage capacity of up to 11 stories high.
-ZODIAC, a Terminal Operating System (TOS) in Jebel Ali Port that has automated operations of the port’s facilities
Overall, the digital solutions developed in recent years will most likely keep the UAE afloat in a rising e-commerce and digital economy. The prioritisation of efficiency and ease of customer and end-user processes shall give rise to better output and higher profits in the sector.
IMO emissions regulations compliance
A final factor for ensuring sustainable growth of the maritime sector is compliance with the IMO’s (International Maritime Organisation) regulations. Through its initiatives, the UAE has been a leader in addressing climate change, protecting the marine environment, and ensuring the welfare of seafarers. Its success was reflected in its recent re-election to the IMO Executive Council under Category B for the third time in a row.
The UAE aims to achieve net-zero emissions by 2050 in line with the Paris Agreement. The UAE has invested almost USD 16.8 billion in 70 countries for renewable energy ventures, and provided more than USD 400 million in aid and soft loans for clean energy projects. It has also positioned itself as a primary global supplier of the new low-cost low-sulphur fuels to reduce sulphur dioxide emissions as per IMO’s targets; and has acceded to most of the international conventions governing the protection of marine environments. Moreover, in line with the Net Zero Initiative and the Global Ports Hydrogen Coalition, MOEI announced plans via its Hydrogen Leadership Roadmap to promote the country's maritime energy transition to hydrogen-derived energy.
Through its “Supporting our Blue Army” and “Sail Safely” initiatives, the UAE aims to protect seafarers’ rights, protect marine environment, and enhance maritime safety. Overall, the UAE is on track to growing its maritime sector and diversifying its economy by focusing on investing in emerging technologies in line with current market trends.
