How the Belt and Road Initiative will shape trade in the GCC
At this point, most people have heard about China’s ambitious plan to create a new age Silk Road – a massive double lane trade corridor that will directly connect China with Europe via a land and sea route. This New Silk Road (also called the Belt and Road project) will cost China USD900 billion and plans are to lend as much as USD8 trillion on developing all the necessary infrastructure needed to make this project a reality.
The potential benefits of The Belt and Road project have been covered and discussed extensively at this point. China, naturally, will stand to gain the most for a variety of reasons, from enhanced access to new markets to serving as an outlet for overcapacity currently affecting the country’s manufacturing sector. For countries in Central Asia, their position in between Europe and China will let them reap whatever rewards the New Silk Road will bring. Europe will essentially gain better and faster access to China, accounting for the various potential investments the project might attract. Credit Suisse predicted in a 2017 report; the project will account to USD 500 billion in investments for 62 countries over the five-year period.
GCC might not fall as a region directly along the New Silk Route, however, it is nonetheless going to play a vital role in facilitating trade along this new east-west corridor. President Xi Jinping pledged USD20 billion in loans and USD106 million in financial support to the Middle East while visiting the region in December 2018.
Development of the Traders Market
DP World signed a deal with the Zhejiang China Commodities City Group to jointly develop the Traders Market, a massive 20 million square foot (60 million inclusive of the net market area) facility that will serve as the primary logistics hub linking the GCC with the Belt and Road initiative. The Traders market will include mega-logistics warehouses, wholesale shops, and other similar facilities that will not only promote the movement of goods but create a mechanism that will provide customers with a range of options to meet the requirements of today’s on-demand logistics landscape.
From a modern perspective, the Traders Market is an ideal demonstration of what we can expect trade will look like in the near future as the Belt and Road initiative becomes a reality, especially when it comes to the changing face of Port-Centric Logistics (PCL). While ports have always served as logistics hubs, they were more about using the port to provide value additive services and solutions such as warehousing. The new age of PCL, however, is the development of hubs as is already existing in DP World’s Jebel Ali Port and Parks and Zones like Jebel Ali Free Zone (Jafza).
The Traders Market, a DP World endeavor, will most likely be set up to take advantage of this type of a hub to maximise its reach and efficiency. On the one hand, Jebel Ali Port, obtains a trade network that reaches over 3.5 billion people in the most dynamic economies, being one of the most productive ports in the world as well as showcasing
the best infrastructure regionally. On the other hand, Jafza accounts for 23.9 per cent of all foreign investment entering Dubai and holds a global reputation for being an ideal economic zone for large companies.
For businesses in the Middle East looking to expand their operations by tapping into Central Asian markets or leveraging the opportunities afforded by the New Silk Road, the Traders Market is already an ideal place to consider. Thanks to the integrated multimodal hub, there will be the added benefit of having logistics services and solutions that cater directly to those specific requirements.