Kuehne & Nagel, the world’s biggest sea freighter, has relocated its Middle East and central Asia headquarters to Dubai as it prepares to double its warehousing capacity to cater for a rise in demand for pharmaceuticals in the region.
The opening of the facility in Dubai Logistics City will mean the UAE overtakes Turkey to become the biggest market in the logistics company’s regional operations.
The facility, which Kuehne hopes to have operational by 2012, will expand the existing warehouse’s capacity from 17,000 square metres to 34,000 sq metres at a cost of 30 million Swiss francs (Dh113.9m).
“Dubai as a global city and international business hub offers favourable conditions for further expansion of our transport and logistics network, as well as further investments in our contract logistics business,” Reinhard Lange, the chief executive of Kuehne, said yesterday.
The new warehouse will be specially designed to store pharmaceuticals at a controlled temperature as the company looks to step up its involvement in the transport and storage of healthcare goods across the region.
Capacity is full at its existing facility, which focuses more on storing other consumer goods.
It recently modernised its 16,000 sq metre logistics terminal in Jebel Ali Free Zone, which stores commodities such as cotton.
Kuehne’s relocation to Dubai from Istanbul is a boost for the emirate as it seeks to expand its trade and logistics sectors after the global financial crisis.
Trade has rebounded solidly from the downturn, with a pick up in freight volumes likely to benefit Dubai due to it being a centre for re-export.
Kuehne’s performance this year has mirrored the improving global trade outlook. The Switzerland-based company’s third-quarter profits rose 30 per cent to 169m francs compared with the same period last year as its sea and air freight and logistics operations all improved.
It has set a goal for the Middle East and central Asia to account for 5 to 10 per cent of its global business in the next four to five years, from less than 5 per cent now.
It forecasts the UAE, along with Saudi Arabia and Turkey, will contribute 60 per cent of revenue.
The high cost of rents and other operational expenses meant Kuehne put on hold initial plans to relocate its regional headquarters to Dubai and expand its operations there a few years ago.
“Now everything has calmed down but will lift off again slowly, but more healthily,” said Werner Kleymann, the regional manager of Kuehne.
Kuehne hopes its presence in Dubai Logistics City near Al Maktoum International Airport’s air cargo operations will help improve its position as the world’s third-biggest air freight provider. The site also offers good links to Abu Dhabi, where its operations are focused on oil and gas.
Mr Kleymann said the company may seek to acquire companies in the region specialising in the transport of perishable goods.
The company has 42 branch offices in the region and is looking to further expand its network. But the recent scare over parcel bombs sent from Yemen meant the company had delayed proposals to grow its presence there by opening a branch rather than using a local agent.
It has also suspended air freight shipments from Yemen while it reviews security conditions.