Case Study-

Dubai Logistic City:

A Quantum Leap in Logistics*

Course Name: Logistics and Transportation

Course Code: SCM 310
Semester: Spring 2021
Section: 1

Submitted To:
Meshbaul Hassan Chowdhury (MHCw)

Submitted By:
Masud Hossain 1721176030
Question 1:

Dubai is one of those cities that just never disappoints. Its location, the immense population of
expats, the wealth, the traditions, and the energetic culture are hardly reasons why such
countless people are attracted to this dynamic city. During the 1990s, Dubai presented and
advertised itself as an exciting and exclusive tourist spot. For its easy-going atmosphere and
fluency in English Dubai became an attraction to foreigners. Apart from tourism, Dubai’s main
business focus is on trade, manufacturing, and processing, as well as transportation and
distribution. The vibrant array of different cultures and religions makes Dubai a premium
destination for tourism as well as a perfect place for entrepreneurs.
Now let’s see what factors have led to the development of the Dubai logistic city project:
Foresight:
Dubai marketed itself as a premium tourism destination not only to attract tourists but also to
attract foreign investors. The main trump card for Dubai’s development compared to other
countries is that the Sheikhs focused their planning on a long-term investment horizon. And
because of this Dubai offered foreign companies no taxation for fifteen years. Also, an investor
can get ten years of residence visa. This quick and simple visa process will attract more foreign
investors in the long run.
Location: 
Dubai’s geographical location work as a hub between Asia, Africa, and Europe. But they went
through some difficulties with growing demand. Significant operational restrain in cargo
handling and limited capability to meet the growing demand for value-added services became
their two main concerns. So, to provide an optimal solution for the future, the Sheikhs decided to
build Dubai Logistic City next to the Jebel Ali Port, which is another free zone and a part of the
new airport, which will be built in the desert. This location will help companies to profit from
perfect tri-modality within a single customs bonded zone. So, it became very easy to change
freight from air, sea, and land transportation.
Diversification of business:
Oil was found in Dubai just over 50 years prior, but only records for one percent of its income.
The move away from oil led to a boost in tourism, manufacturing, and attracting foreign
investors. because of Dubai's adaptive culture, many businesses bloom here. And this worked as
a trigger for Dubai Logistic City.

Question 2:

Schmidt & Partner Logistics Solutions Inc is one of the leading providers of integrated
logistics solutions in the world with wide range of services worldwide. Over the years they have
faced several issues regarding their logistics channels for which the Dubai Logistics City may
look like an ideal solution as DLC was built solely on the purpose of providing better logistics
facilities and to facilitate easier trade. But still some factors need to be evaluated from both
company and their clients’ perspective before setting up a branch in Dubai.

Company’s Perspective

 Tri-modal logistics: DLC sounds ideal for a logistics solutions provider but the company
needs to evaluate whether the tri-modal logistics facility is beneficial to them at the first
place. If they no need of operating on multi-modal transportations, the integration of air,
sea and land transport will be of no value to the company.
 Value-added products: Products and services that make use of value-added services
within the supply chain can take proper advantage of DLC. In this case, the products and
services provided by the company must be analyzed and identified if there are any goods
implementing value-added services or whether they need extra handling or processing
within the supply chain.
 Rent only: It must be emphasized that the companies are not permitted to buy lands at
Dubai Logistics City rather they are only allowed to rend land on long-term basis. Here,
particular economic and legal factors must be considered regarding the contracts and such
as well as the long-term benefits of renting the land.
 Current destinations: The company must analyze their current shipping destinations and
used routes for their services and whether they cross across Dubai at the first place.
Unless using Dubai as a hub is practical and more beneficial than their current
arrangements, there is not many probable ways of taking advantage of DLC.
 Client’s Perspective

Schmidt & Partner Logistics Solutions Inc must not overlook their client’s needs and
potential advantage or disadvantages that might occur due to DLC. Whether setting up a
branch at DLC will impact factors such as commodity handling, durability, reliability,
delivery length etc. and whether this impact will benefit their clients and customers; each
must be analyzed in depth before taking any decision.

Question 3:

Advantages:

there are many advantages of establish a branch at Dubai logistics city. it is a link between the
west Persia and india.it will really help the cause.so the foreign traders can trade easily between
the countries. Dubai has the largest man-made port in the world which really will help the
company to shift its product from one place to another. Beside that Dubai has the most
affordable and suitable living atmosphere for running the business. they have enough wharfs,
water houses and port facilities. enough port facilities help business to run smoothly. docking
road and airport facilities are the most beneficial ones. no business can run smoothly without
transportation. and Dubai logistics city is providing them with ease. Business are free of local
ownership and they have low taxation which helps business. there are concessionary zones in the
city. there are friendliness and kindness among the peoples of city. There is no political
restriction on the business. There are many other existing facilities which helps the business in
the long run. After looking all the advantages mention above it can be said that it will be
beneficial to establish a branch of the company.

Disadvantages:

In spite of all advantages there are some downsides also that might affect establishing a branch in
Dubai logistics city also could be affected in day to day operations also resulting in business.
Here are some downside or disadvantages-

1. Dubai's logistics city concept is pros but Asia’s business hub is China. If this
concept of logistics is copied by China or Hong-Kong, then Dubai logistics city might lose
attractiveness that may cause a problem for Dubai logistics city management. For instance, if
potential customers of logistics providers stay in China or Hong Kong then establishing a branch
in Dubai logistics city would not be favorable for the company and also for business because
customers should be treated what was promised. In order to do that, the company needs to
establish another branch in those places for a global network.

2. Establishing a branch in a place needs space that is owned by the company

otherwise there is always a risk that if something happens the branch should be moved from
there. This is the fact in Dubai logistics city. Foreign companies cannot buy spaces hence they
have to go for contractual agreement. Establishing a branch in Dubai city would be a
disadvantage for that.

3. Dubai’s humidity, temperature is also a problem because goods like foods,

pharmaceutical products and temperature sensitive goods cannot be stored in normal
warehousing. They need a special type of warehouse that may cost huge in order to set up a
branch over there.

4. Establishing a branch in different cultural territory would be a risk as well. Their

culture is different from others and their laws as well. Arabs are not good with foreigners in
business that may impact in business while doing business in Dubai.

5. The foremost downside is the country's location. In the Middle East there are
frequent terrorist attacks that we all know. Establishing a branch requires a huge amount of
money why a company takes such a risk while they have a choice to set up in another country
like China that is business friendly and safe also.

Dubai logistics city has pros and cons but in business there should be such risk that company
would face in future anywhere in the world. Dubai logistics city is a good choice to set up a
branch because Dubai has a great connectivity all over the world and location in the middle of
Asia and Europe.

Question 4:

Dubai Logistics city project is the world 's first integrated logistics. It’s a multi-modal transport
platform with the new Dubai Logistics City (DLC), Jebel Ali Port and Free Zone and the new
Jebel Ali International Airport at its core. It’s tagged as another free sphere in the desert. The
reason of huge enlargements chance and close nearness of Jebel Ali International Airport and
that give benefits companies for the perfect tri-modality within a single customs bond. It’s
immensely easy to change freight from air, sea and land transportation to neighboring countries
as well as further locations. The reasons that have led to this project was although the existing
facilities in the Dubai cargo village are thought to be the best. Whereas making a decision to set
up a branch, the company has to look at several factors and issues such as if the facility give
access to customers, workers, transportation, and materials. The company would want to
consider the factors trade zones, political risk, and any incentives that may be offered. Dubai
offers a huge workforce and a hugely impartial and permanent role in its external and internal
political environment. Dubai offers free areas which are favorable for reasons that foreign
companies could set up free of local ownership and benefit from a renewable 15-year guarantee
of no taxation. Some issues and factors to consider for customers are is if Dubai’s location can
benefit their customers logistically. As stated in supply chain activities should improve products
to increase the customer’s access of those products advantages. Standard of customers can be
combined to a product by raising its quality, by improving the service associated with it, by
reducing its costs lead to open a branch in Dubai for reason of the information received of their
top three clients. Based on the information not all of the customers would benefit from tri
modality or the location. The excessive temperatures would affect the products of one of
Schmidt’s major clients. Other factors in my decision are property can only be rented and not
purchased and starting off where there is already a lot of competition inside the free zone. The
free zones currently host 3,880 businesses originating from over 100 countries of which 39%
come from the Middle East region, 29% from Asia, 20% from Europe and 7% from the America.
I feel if Schmidt’s was to open a branch in Dubai it would spend too much time and resources in
trying to convince their current major customers to use Dubai as a hub. It would just become
another player in Dubai trying to build a customer base in a highly competitive logistics field.
Companies settling in Dubai will face in the future is the possibility of expansion of the logistics
platform and a constant innovation of technology to help in the process. The upcoming Expo
2020 is expected to boost the industrial sector of Dubai thus complementing the logistics
segment of the economy.

Schmidt and Partners Logistics Solutions' plan should be publicly debated based on the
evidence presented and the details gathered by the students personally. Even if the definition of
Schmidt & Partner Logistics Solutions Inc. and its clients suggests that the benefits of an
involvement in Dubai Logistics City outweigh the drawbacks, it is possible to argue against
opening a branch.

Furthermore, the three clients listed above, as well as Schmidt & Partner Logistics Solutions
Inc.'s own activities, should be considered in order to address the question of whether Schmidt &
Partner Logistics Solutions Inc. should open a branch in Dubai Logistics City.

Schmidt & Partner Logistics Solutions Inc. will only be able to persuade their customers to travel
to Dubai if they can proactively plan and specify new market solutions for them that have non-
logistics requirements. This will enable them all to contribute to the region's growth.

1. International apparel company: In the retail industry, it is important to involve the

client's buying department and they make the choices and are more concerned about
missed merchandise revenue due to late deliveries than with transportation costs.
2. Indian fruit supplier: For perishables, this would necessitate extensive collaboration
with the buyer to re-design the supply chain, which would include shippers, wholesalers,
and others.
3. Medical equipment manufacturer:  The pharmacy industry and the manufacturing of
medical equipment are both very complicated. As a result, a thorough understanding of
the client's business is needed in order to determine if a hub in Dubai will be beneficial to
the client.
As a result, Schmidt & Partner Logistics Solutions Inc. will either continue to operate as a
transport company in Dubai, riding the wave of growth in the international logistics industry,
or expand into an integrated logistics service provider that locks in its clients. For businesses
like Schmidt & Partner Logistics Solutions Inc., the latter is typically problematic because
key account management and market growth require more time and money than forwarder
management is often able to spend. Therefore, this problem becomes a risk factor for
Schmidt & Partner Logistics Solutions Inc.: if they do it well, they can easily roll up the
market for established clients and concentrate on creating a foundation for growth. If they
don't, they risk being yet another player that takes two years to set up a customer network
and suffers from the transportation industry's shrinking margins.