21 July 2022

How does warehousing affect the food distribution company in UAE?

How does warehousing affect the food distribution company in UAE?

Food distribution companies in the United Arab Emirates (UAE) have been reaping the benefits of proactive Government measures that have boosted industry and business in the region over the last few years. There are several distribution companies in the UAE, backed by the flourishing FMCG sector here. Localization is also the name of the game for reducing costs and streamlining access, making it imperative for most global FMCG brands to set up bases with local distribution companies here.

Yet, warehousing and the way these companies handle the same, is becoming the key towards solving several food supply chain problems that are dogging the sector. In fact, the long-term solution to many of these food supply problems can be mitigated by steady growth in warehousing, cold-chain and logistics, while tackling warehouse management in a proactive manner. Warehouse management systems are in vogue throughout the Emirates and with good reason. They are helping shore up efficiency, boosting distribution and logistics and streamlining the entire procedure.

Some positive trends

Refrigerated warehouses are steadily growing throughout the UAE, driven by soaring demand for perishable food products including seafood, meat and dairy. Accompanying growth of cold chain logistics is fuelling this trend. The UAE Government is also coming up with several mega moves including the Abu Dhabi Vision 2030, UAE Vision 2021 and Dubai’s Industrial Strategy for 2030. This is looking at boosting logistics for sustained economic growth. The UAE is on its way towards transforming into a major trans-shipment zone for trade in Africa, Asia and Europe alike. Logistics is one sector that has already accounted for 8% of economic revenues for the UAE last year as per several reports.

The country is also investing in ventures like the Modern Silk Route and also Etihad Railways. With the UAE importing 80% of its food from other countries, the logistics and warehousing sector has grown exponentially. Naturally, it has a direct impact on Food distribution companies in the region. There is high demand for end-to-end distribution centers with cold storage, logistics provisions, supporting retail provisions, dry storage and more, leading to new-generation facilities being built for catering to evolving requirements of FMCG brands and other players in the UAE. This is enhancing future prospects for 3PL entities that can seamlessly take care of distribution requirements for organizations with vast and complex supply chains. With the UAE being a hub for re-exports globally, there will be a robust freight forwarding category going forward. The country is dependent upon sea freight and cargo transportation, creating a flourishing warehousing segment. This is dotted with several entities who are leasing warehousing facilities for longer tenures. Operations near the Dubai Airport and Jebel Ali Port have already taken off and are deemed favorable for lowering costs of transportation from the port/airport to the main base. Last-mile deliveries and retail have also grown significantly in the region along with e-commerce, necessitating the development of smart warehousing facilities.

Taking these factors into account, it can be said that warehousing has a direct impact on the fortunes of new-age Food distribution companies in the United Arab Emirates. They are now setting up large-scale and all-in-one facilities for covering distribution needs of big FMCG players in the Emirates.