Danzas AEI Emirates: MEED Assessment

28 September 2010

The Dubai-based logistics company must increase its market share to fill its current and planned capacity

Parent company Deutsche Post DHL has unveiled a three-pronged expansion strategy for its logistics and forwarding businesses. This is based on expansion in emerging markets, creating tailored logistics solutions for specific industries and modernisation, through investment in information technology and other infrastructure.

Danzas AEI Emirates, in numbers
Air freight volume growth
Source: Danzas AEI Emirates
Danzas AEI Emirates
Seafreight volume growth
Source: Danzas AEI Emirates
Danzas AEI Emirates
Warehouse capacity
(thousand square metres)
Source: Danzas AEI Emirates

It sees the Middle East as a key market for growth. While trade will increase between these emerging markets and the mature markets of North America and Europe, Deutsche Post DHL also anticipates trade growth with the world’s other emerging markets. It is investing in new infrastructure to prepare for increased intra-regional trade in the Middle East, and between the Arab world and Africa and Asia.

Back in 2008, before Danzas Regional Hub opened, Dubai lacked modern warehousing and distribution capacity. Danzas AEI Emirates expanded its infrastructure to cope with projected growth from the Indian subcontinent.

However, the opening coincided with the global downturn in trade and Dubai’s debt crisis, which saw local construction grind to a halt. Many Dubai warehouses that were operating at capacity two years ago are now barely 50-60 per cent full.

Danzas AEI Emirates must increase its market share to fill its current and planned capacity. It is targeting small to medium-sized companies to outsource their transport, distribution and logistics needs. It has also adopted a value-added strategy, creating tailored solutions for specific industry segments.

Despite Dubai’s recent economic difficulties, Danzas AEI Emirates has kept faith both with the local market and with regional opportunities. It expects Dubai to consolidate its role as the region’s leading sea-air hub in future, offering access to emerging markets across the Indian Ocean, but its success will depend on a swift rebound in world trade.

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