UAE Cold Chain Profile

October, 2017
What is Cold Chain?
1. Cold Chain logistics is the system of transporting and storing goods
at controlled temperatures from the point of production to the end-
user.
2. It helps to preserve and extend the shelf life of various products
including meat and seafood, dairy products, agricultural produce,
frozen food, pharmaceuticals, cut flowers, etc.
Executive Summary
1. Cold Chain logistics is the system of
transporting and storing goods at
controlled temperatures from the point of
production to the end-user.
2. Dubai is ideally positioned as the regional
hub for cold chain logistics to the GCC and
MEA region.
3. The Global Cold Chain market was valued at
USD 110.2B in 2014. It is expected to grow
to USD 381.68B in 2025.
4. The MEA Cold Chain market is valued at
$6.13B in 2015. It is projected to grow to
USD 11.45B in 2025.
5. UAE cold chain market is worth USD 5B
based on estimates. There are no previous
estimates made as of today.
 Why Cold Chain?

1. According to the UN 2013 report

“Food Wastage Footprint: Impacts on
Natural Resources” :
1. A third of the world’s food
production goes to waste.
2. Wastage of 1.3B tons of food
each year is causing economic
losses of $750B and significant
damage to the environment
2. Part of the wastage is traced to
improper food and perishable goods
handling; thus the need for cold
chain supply and storage systems
especially in harsh environments
such as the Arabian peninsula.
 Why Cold Chain? (continued)

3. It extends the shelf life of perishable products considerably.

Source: USAID
 Cold Chain Storage Temperatures
Technology Temperature Products
provided
Passive & Evaporative Cooler > 18°C • Processed food (pickled, dried,
cooked)
• Cooking oils
• Onions
10-18°C • Sub-tropical fruits and seeds
• Chocolate
Absorption Refrigerators 0 - 10°C • Fresh fruits and vegetables
• Eggs, milk and dairy products
• Flowers
• Pharmaceuticals
Refrigerators 0°C - >0°C • Meat, seafood and poultry
• Frozen fruits and vegetables
• Ice cream
• Pharmaceuticals

Source: US Department of Commerce – International Trade Administration’s 2016 Top Markets Report Cold Chain
 MEA Cold Chain Market

1. Estimated at $6.13B in 2015.

2. Composed of three categories:
a. Storage at $4.88B
b. Transportation at $981M
c. Monitoring at $245M
3. Global market in 2014 was pegged
at $110.2B.

Source: MEA Cold Chain Market by Grand View Research - April 2017
 MEA Cold Chain Market in 2025

1. Projected growth at $11.45B in

2025 (CAGR 6.6%).
a. Storage at $8.59B
b. Transportation at $2.29B
c. Monitoring at $573M
2. At 2025, the global market will be
$381.68B.

Source: MEA Cold Chain Market by Grand View Research - April 2017
 UAE Cold Chain Market - Dubai

1. Dubai GDP Q1 of 2017 shows 3.2% real growth

2. Equivalent to AED 98.4B, higher than AED3.1B for
the same period last year.
3. Chief contributors are:
a. Wholesale & Retail – 24.8% AED 12.1B
b. Transport & Storage – 12.3% (USD3.3B)
c. Financial Services – 11.8% Q1 2017
d. Manufacturing – 9.4%
e. Others – 41.7%
4. Expected AED 60B (USD16.3B) at end of 2017
5. Estimated share of cold chain is at AED 5B

Source: Dubai Statistics Center “Dubai’s Economy Grows 3.25” August 13, 2017
 UAE Cold Chain Market - Saudi Arabia Comparison

1. It is suggested that the KSA cold chain market is

slightly higher or at least equal to the UAE.
2. Basis of this is the higher number of perishable
imports and exports incurred by KSA.**
a. KSA Imports $21.63B vs. UAE Imports $14.93B
*2025 KSA
b. KSA Exports $3.452B vs. UAE Exports $6.24B
Cold Chain Market
3. However, UAE leads KSA in terms of cold chain
USD 3.16B
logistics sophistication and ease which offsets the
higher volume of imports/exports.

*2015 KSA
Cold Chain Market
USD 1.46B

Source: *MEA Cold Chain Market by Grand View Research - April 2017; **Observatory of Economic Complexity (OEC) 2016
Profit Margins of Cold Chain

1. No published profit margins of UAE

based cold chain providers
2. Indian cold storage companies’
profit after tax:
1. Ranges from 40-25%.
2. Taxes ranges from 30-40%
depending on income
3. IRR ranges from 2 – 5 years
depending on scale of the
operations
3. If placed in the UAE environment,
the net profit will go higher due
income tax free environment.
 UAE Industrial Warehousing Market

1. Government investments in industrial infrastructure such as

a. Khalifa Industrial Zone Abu Dhabi
b. Dubai Industrial City
c. Al Saja’a Industrial Oasis
d. The said infrastructures showed a shift to quality for companies and
investors in 2017.
2. Modest declines in industrial warehousing in 2016 due to low oil price, strong
USD and global instability
a. Grade A warehousing remained flat due to lack supply despite overall
decline in demand
a. Up to 2015, Grade A warehouses experienced increase in rents due
to low supply and increased demand.
b. Grade B warehouses rents further declined

Source: Knight Frank UAE Industrial & Logistics Insight Report 2017
 UAE Industrial Warehousing Market (continued)

3. Cold chain demand for 2016 were from:

a. General trading companies
b. Retail chains
c. Logistics
d. SME sectors
4. Major players:
a. Agility
b. RSA Cold Chain
c. DAMCO
d. Global Shipping and Logistics
e. Abbar Logistics
f. Hellmann Perishable Logistics
g. DB Schenker
h. DHL
i. Four Winds Saudi Arabia
j. GAC
Source: Knight Frank UAE Industrial & Logistics Insight Report 2017
 Future of Cold Chain Market in UAE
1. However, it’s safe to say the demand will grow
due to the following factors:
a. The UAE is ranked 3 overall in the
Emerging Markets Logistics Index 2017: *
• No. 1 in Market Compatibility
• No. 1 in Market Connectedness Ranking Country
• No. 6 in Markets of the Future 1 China
2 India
3 UAE
4 Malaysia
5 Saudi Arabia
6 Indonesia
7 Brazil
8 Mexico
9 Turkey
10 Russia

Source: * The Agility Emerging Markets Logistics Index 2017

 Future of Cold Chain Market in UAE (continued)
Change in
Ranking Country 2017 Index 2016 Index
Ranking
1 China 7.88 8.00 -
2 India 7.14 6.83 up 1
3 UAE 7.07 7.02 down -1
4 Malaysia 6.66 6.71 -
5 Saudi Arabia 6.48 6.67 -
6 Indonesia 6.41 6.50 -
7 Brazil 6.23 6.46 -
8 Mexico 6.15 6.25 -
9 Turkey 6.09 6.05 up 1
10 Russia 6.09 6.23 down 1

Emerging Markets Logistics Index 2017 – Overall Rankings

Source: The Agility Emerging Markets Logistics Index 2017

 Future of Cold Chain Market in UAE (continued)

Emerging Markets Logistics Index 2017 - Market Compatibility

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)
Ranking Country Compatibility
1 UAE 8.77
2 Qatar 8.26
3 Oman 7.80
4 Bahrain 6.99
5 Kazakhstan 6.95
6 China 6.91
7 Saudi Arabia 6.88
8 Uruguay 6.83
9 Morocco 6.41
10 Kuwait 6.33

Emerging Markets Logistics Index 2017 - Market Compatibility

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)

Emerging Markets Logistics Index 2017 - Market Connectedness

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)
Ranking Country Connectedness
1 UAE 7.74
2 Malaysia 6.91
3 China 6.80
4 Chile 6.38
5 Saudi Arabia 6.25
6 Oman 6.22
7 Bahrain 6.20
8 Ecuador 6.06
9 Kazakhstan 5.80
10 Qatar 5.71

Emerging Markets Logistics Index 2017 - Market Connectedness

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)

Emerging Markets Logistics Index 2017 – Markets of the Future

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)
Country 2017 2016 Y-o-Y Change
India 1 1 -
China 2 2 -
Brazil 3 3 -
Vietnam 4 5 up 1
Indonesia 5 4 down 1
UAE 6 7 up 1
Mexico 7 6 down 1
Russia 8 8 -
Iran 9 15 up 6
Turkey 10 11 up 1

Emerging Markets Logistics Index 2017 – Markets of the Future

Source: The Agility Emerging Markets Logistics Index 2017
 Future of Cold Chain Market in UAE (continued)

b. From 2011 to 2015, the compound annual

growth rate (CAGR) grew steadily: **
• Imports $15.6B – 4.4%
• Exports $5.1B – 17%
c. From 2011 – 2016, the retail sales of the
following perishables requiring cold
storage CAGR experienced steady
growth:**
• Packaged Food – 8.3%
• Dairy – 6.5%
• Ice cream & frozen desserts – 6.5%
• Processed fruit & vegetables – 6.3%
• Processed meat & seafood – 8.1%
• Ready meals – 7.3%

Source: ** Market Overview UAE by Agriculture and Agri-Food Canada - April 2017
 Future of Cold Chain Market in UAE (continued)

c. Estimates for 2017-2021, the retail sales of

the following perishables requiring cold
storage CAGR experienced steady
growth:**
• Packaged Food – 5.4%
• Dairy – 3.6%
• Ice cream & frozen desserts – 2.0%
• Processed fruit & vegetables – 3.4%
• Processed meat & seafood – 5.3%
• Ready meals – 4.1%

Source: ** Market Overview UAE by Agriculture and Agri-Food Canada - April 2017
 UAE Top Agri-Food and Seafood Imports from the World, 2015

Import value US$ Top suppliers and Top suppliers and Top suppliers and
Commodity millions market share #1 market share #2 market share #3
Source: Global Trade Tracker, January 2017
1. Total UAE Agri-Food Cigarettes 836.6 South Korea 36.5% Bulgaria 16.3% Germany 16.1%

and Seafood for 2015

• Imports - $15.6B
Milled rice 589.7 India 94.9% Thailand 2.9% United States 1.3%

• Exports - $5.1B Food preparations 423.1 United States 24.6% Bahrain 6.7% France 6.1%

2. 2015 UAE Processed Almonds 404.2 United States 77.6% Australia 13.4% Hong Kong 5.6%
Food Imports - $9.2B.
Milk and cream 387.8 New Zealand 82.9% Netherlands 5.2% Germany 3.1%

Cane or beet sugar 338.3 Brazil 75.7% India 17.9% Singapore 2.8%

Swedes and mangolds 328.3 Spain 38.2% United States 29.2% Italy 22.8%

Frozen chicken cuts 321.1 Brazil 77.9% United States 14.5% Thailand 3.2%

Whole frozen chickens 316.6 Brazil 81.5% Argentina 6.8% France 5.6%

Canola seed 297.0 Canada 64.1% Australia 24.7% Ukraine 7.7%

Source: Market Overview UAE by Agriculture and Agri-Food Canada - April 2017
 UAE Top Agri-Food and Seafood Imports from the World, 2016
Categories 2012 2013 2014 2015 2016E CAGR 2012-16
Packaged food 3,399.8 3,685.9 3,977.5 4,322.6 4,679.6 8.3%
Baby food 100.9 107.5 116.5 127.9 139.2 8.4%
Baked goods 362.5 387.5 414.0 447.3 474.6 7.0%
Breakfast cereals 70.4 74.6 78.6 83.9 89.8 6.3%
Confectionery 299.4 347.5 383.5 429.3 481.9 12.6%
Dairy 1,060.0 1,132.2 1,204.3 1,281.9 1,362.9 6.5%
Edible oils 138.5 147.8 157.0 168.1 177.2 6.4%
Ice cream and frozen 88.2 95.0 102.4 108.1 113.4 6.5%
desserts
Processed fruit and 84.9 92.0 97.0 103.0 108.3 6.3%
vegetables
Processed meat and 205.8 222.1 239.6 259.9 281.3 8.1%
seafood
Ready meals 19.1 20.3 21.7 23.5 25.3 7.3%
Rice, pasta and noodles 374.4 405.4 438.0 481.5 527.7 9.0%
Sauces, dressings, 118.0 126.7 135.3 145.5 157.6 7.5%
condiments
Savoury snacks 269.4 298.4 335.4 384.4 438.8 13.0%
Soup 17.1 18.6 20.1 21.9 23.6 8.3%
Spreads 59.9 66.9 77.2 84.7 91.8 11.3%

Sweet biscuits, snack 131.4 143.6 156.9 171.6 186.2 9.1%

bars and fruit snacks

Source: Euromonitor, 2017 (in US$ Millions)

 UAE Top Agri-Food and Seafood Imports from the World, 2021
Categories 2017F 2018F 2019F 2020F 2021F CAGR 2017-21
Packaged food 4,961.2 5,256.6 5,564.7 5,819.4 6,117.6 5.4%
Baby food 148.5 157.8 167.3 175.8 184.4 5.6%
Baked goods 495.1 516.6 538.6 560.7 586.1 4.3%
Breakfast cereals 94.1 98.4 102.7 107.1 112.5 4.6%
Confectionery 530.0 580.3 634.2 685.6 731.6 8.4%
Dairy 1,414.9 1,473.1 1,532.2 1,580.7 1,632.1 3.6%
Edible oils 180.8 184.7 188.8 193.2 205.2 3.2%
Ice cream and frozen 116.6 118.4 121.2 123.7 126.2 2.0%
desserts
Processed fruit and 111.8 115.5 119.4 123.1 127.9 3.4%
vegetables
Processed meat and 298.4 316.1 333.8 348.5 367.5 5.3%
seafood
Ready meals 26.5 27.7 29.0 29.7 31.1 4.1%
Rice, pasta and 565.0 604.6 644.3 654.9 692.8 5.2%
noodles
Sauces, dressings, 166.9 177.2 188.2 197.2 208.7 5.7%
condiments
Savoury snacks 493.8 550.0 609.0 665.4 720.0 9.9%
Soup 24.6 25.7 26.8 27.8 28.3 3.6%
Spreads 97.1 102.7 108.4 114.5 121.3 5.7%
Sweet biscuits, snack 197.2 207.9 220.6 231.4 241.9 5.2%
bars and fruit snacks

Source: Euromonitor, 2017 (in US$ Millions)

UAE Cold Chain Trade Exhibitions

WOP Dubai
Logistics &
Cold Chain