How to Start a Successful Logistics Business in Dubai?

Dubai, a city where packages move expeditiously, businesses ship goods across continents in hours, and the logistics industry sits as the backbone of global trade, serves as a global business hub and a logistics powerhouse for those looking for lucrative opportunities in this sector. With world-class ports, high-tech airports, strategically located zones, and a rapidly growing economy, starting a logistics business in Dubai could be a golden chance for aspiring entrepreneurs and investors to thrive and grow.

Dubai is a nucleus logistics powerhouse that connects over 3 billion consumers across Asia, Europe, and Africa. Almost every industry in the Emirate relies on smooth and efficient logistics. Additionally, the government supports the logistics industry equally by investing heavily in infrastructure and technology to enhance supply chain operations and maintain a strong economy.

In this guide, we will explore everything about launching a logistics company successfully and obtaining a logistics license in Dubai.

Logistics business in Dubai, UAE

Logistics companies specialize in planning, implementing, and managing the storage and movement of goods from the point of origin to the final destination, ensuring smooth operations throughout the process. In short, they help businesses with the efficient transport of goods from one location to another.

To operate a logistics business in Dubai, entrepreneurs need to obtain a logistics license that allows them to operate legally in the sector. This legal permit covers various logistics and supply chain activities, including freight forwarding, transportation, warehousing, and distribution services, facilitating the movement, storage, and management of goods within Dubai as well as internationally.

Benefits of starting a logistics business in Dubai

The perks of setting up a logistics company in Dubai include the following;-

• Strategic Location: The prime positioning of Dubai on the global map makes it a hub for trade between Asia, Africa, and Europe. Besides, the city has countless logistics companies that operate within its niche. Its proximity to other countries provides businesses with access to a wide range of potential partners, suppliers, customers, and skilled employees.

• Great Tax Benefits: By starting a logistics business in Dubai, business owners can benefit from very low corporate and income taxes, and 0% customs duties on re-exported goods. Moreover, setting up a company in a free zone can provide them with exemption from corporate tax and VAT entirely.

• World-Class Infrastructure: Dubai accommodates some of the world’s best seaports and airports that facilitate logistics operations around the clock, ensuring quicker processing and delivery for cargo movement.

• Pro-Business Government: The pro-business and pro-market position of Dubai creates a competitive and fair environment for logistics companies to thrive. Moreover, the government constantly supports the development of trade and business within the Emirate.

• Global Trade Agreements: The United Arab Emirates has established a vast network of international trade agreements to streamline trade with companies worldwide, thus enhancing the growth opportunities for logistics businesses in Dubai.

• Diverse Market & High Demand: Dubai has a growing eCommerce, retail, and import-export sector that drives high demand for logistics services, allowing logistics companies to capitalize on the increased need for warehousing, last-mile delivery, and fulfillment services.

• Low Import & Re-Export Costs: The government has imposed minimal import duties and zero re-export duties in Dubai which makes it convenient for logistics companies to manage international shipments.

Types of logistics businesses in Dubai

Before starting a logistics business in Dubai, it is crucial to understand its key types:

• Freight Forwarding - Specializes in arranging the shipment of goods on behalf of transporters. They organize cargo transportation, handle customs clearance and documentation, and coordinate with multiple transporters to ensure timely delivery.

• Warehousing and Storage - Provide storage facilities for goods, including traditional warehousing, cold storage for perishables, and specialized storage solutions for goods pending customs clearance.

• Transportation and Distribution - Focuses on the physical movement of goods, including road, air, and sea transport. They operate fleets of trucks, vans, or even specialized vehicles to manage local distribution and international shipments.

• Courier and Express Delivery Services – Offer rapid and reliable delivery such as last-mile delivery, time-sensitive shipments, and same-day services for smaller packages. They primarily cater to the e-commerce and retail sectors.

• Supply Chain Management and 3PL Services – Manage the entire supply chain operations of a client, starting from procurement to order fulfillment. They use technology for real-time tracking and analytics.

• E-commerce Fulfilment - Offer integrated services including inventory management, order processing, packaging, and shipping directly to customers.

Obtaining a logistics license in Dubai: Logistics company setup process

Here’s a detailed step-by-step process to successfully establish and run a logistics company in Dubai:-

Define your Business Activity – The logistics industry covers several specialized sectors, such as Freight Forwarding, Warehousing & Storage, Transportation & Distribution, Courier & Last-Mile Delivery, Third-Party Logistics (3PL) & Supply Chain Management. Hence, before registering a business, the owner must determine the type of services they want to offer. Choosing the right activity determines the required licenses, permits, and approvals.

Choose Mainland or Free Zone Setup – Entrepreneurs and investors can set up their logistics business in either the mainland or a free zone. However, each of these jurisdictions has its pros and cons. For instance,

Mainland Business

• Requires approval from the Department of Economic Development (DED) and the Roads and Transport Authority (RTA).

• Allows operation across the UAE without restrictions.

• Businesses engaged in freight transportation must hire a local service agent.

• Eligible to bid for government contracts.

Free Zone Business

• Ideal for international logistics operations.

• Allows 100% foreign ownership of businesses.

• Zero corporate and personal income tax.

• Restricted to operate only within the free zone unless partnered with a mainland entity to conduct activities outside the zone.

International Free Zone Authority (IFZA), Jebel Ali Free Zone (JAFZA), Dubai South Free Zone, Dubai Airport Free Zone (DAFZA), and Dubai Logistics City (DLC) are some of the popular free zones in Dubai that specifically cater to the logistics business.

Register the Company Name - Choose a unique company name that adheres to the naming guidelines of the UAE government. Reserve the name and seek initial approval from the relevant authority that oversees the jurisdiction where you intend to register the company.

Obtain the Logistic License – The licensing authority of the chosen jurisdiction (Department of Economic Development or the respective Free Zone Authority) issues the logistics license to companies. Prior to that, business owners may need to seek additional approval from the following authorities –

• Roads and Transport Authority (RTA): For businesses offering transportation services.

• Dubai Civil Aviation Authority: For businesses dealing with air cargo.

• Dubai Maritime City Authority: For businesses operating in sea freight.

Secure Office and Warehouse Space – Businesses operating in the Mainland region are required to secure physical office space as per DED regulations, whereas Free zone entities can opt for virtual offices. However, depending on the business activity of the company, warehouse facilities may be required.

Open a Corporate Bank Account – To open a bank account for business finance management, select a bank that supports logistics businesses. Provide necessary documents, including the business license, the address details of the company, and the identity details of the business owner.

Hire Staff – Skilled staff is essential for the effective functioning of a logistics company. Hire employees based on the company's needs, such as freight managers, drivers, warehouse operators, and customs clearance specialists. Provide them with appropriate work visas and Emirates IDs, and RTA Commercial Driving Licenses for drivers.

Acquire Vehicles and Equipment – Logistics businesses that are engaged in transportation need to purchase commercial vehicles such as delivery vans, trucks, or specialized freight vehicles, register them with the RTA, and obtain the necessary permits.

Get expert assistance with starting a logistics business in Dubai

Starting a business is all about making the right choices. Our experienced business specialists will help you select the right jurisdiction, understand compliance rules and operational costs, and register your company with the appropriate authorities, thus guiding you toward the right decision at every step of the process.

Get in touch with our consultants and get your business moving forward.