How to Start a Logistics Business in Dubai

Starting a logistics business in Dubai is a lucrative venture, as the UAE's logistics industry is one of the most profitable in the region. Its strategic location, offering easy access to Asia, Europe, and Western markets, makes it an ideal hub for anyone looking to establish a logistics company.

Several factors contribute to the growth of the logistics sector in the UAE, including the industry's diversification, the harmonization of regional trade and export regulations, and the ongoing expansion and modernization of logistics services. The UAE is poised for significant economic growth, largely driven by its advanced shipping and logistics infrastructure.

To launch a logistics business in Dubai, you will need to obtain a logistics license, which is essential for legally operating in this thriving industry.

What is a logistics License in Dubai?

A logistics license in Dubai is a legal permit that authorizes you to operate a logistics business within the emirate. This license covers a broad range of logistics-related activities, including freight forwarding, customs brokerage, warehousing, logistics consulting, and sea or air cargo transportation.

What Does a Logistics Company Do?

Logistics service providers specialize in planning, implementing, and managing the storage and movement of goods within the supply chain, from the point of origin to the final destination. Many logistics companies handle some or all of these supply chain functions, ensuring smooth operations throughout the entire process.

In essence, logistics companies help businesses efficiently transport goods from one location to another, overseeing the entire journey and ensuring that each step is managed effectively.

Benefits of Starting a Logistics Company in Dubai

The advantages of starting a logistics business in Dubai are numerous. Here are some key benefits:

1. Strategic Location

Dubai occupies a prime position on the global map. A significant volume of trade flows through its maritime and air routes, making it a hub for trade between Asia, Africa, Europe, and, to a lesser extent, Australasia and the Americas.

2. Great Tax Benefits

Starting a logistics business in Dubai allows you to benefit from very low corporate and income taxes. If you choose to operate from a free zone, you may even be exempt from corporate tax and VAT entirely.

3. World-Class Infrastructure

Dubai is home to some of the best seaports and airports in the world. With this world-class infrastructure in place, starting and running your logistics business becomes smooth and hassle-free.

4. Pro-Business Government

The Dubai government is known for its pro-business, pro-market stance, creating a competitive yet fair environment for logistics businesses to thrive. The government continually supports trade and business development.

5. Proximity to Other Logistics Companies

Dubai is home to countless logistics companies, each operating within its niche. This proximity provides your business with access to a wide range of potential partners, suppliers, customers, and skilled employees, making your operations more efficient.

6. Global Trade Agreements

Dubai and the UAE have established a vast network of international trade agreements, simplifying trade with business partners worldwide, enhancing the opportunities for your logistics company to grow globally.

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Steps to Get Logistics License in Dubai in 2024

To start a logistics company in Dubai, there are specific steps and legal requirements you need to follow. Dubai's strategic location and business-friendly environment make it an ideal hub for logistics services, catering to sectors like retail, construction, and e-commerce.

Key Steps to Start a Logistics Business in Dubai:

Step 1: Define Your Business Activity

Decide on the type of logistics services you wish to offer, such as freight forwarding, warehousing, or cargo handling. It's essential that your chosen activity is among those approved by the Dubai Department of Economic Development (DED) or the relevant free zone authority.

Step 2: Select a Business Structure

Choose the appropriate legal structure for your logistics company. You can opt for a mainland company, which allows more operational flexibility across Dubai and the UAE, or a free zone company, which offers benefits such as 100% foreign ownership and tax exemptions.

Step 3: Choose a Trade Name

Your trade name must adhere to UAE naming guidelines. This means avoiding offensive language, using famous brand names, or employing abbreviations when naming the business after yourself. Ensure the name is unique and approved by the DED or the relevant free zone.

Step 4: Obtain the Necessary Licenses

You will need to apply for a logistics business license. If you're setting up a mainland company, the DED will issue your license. For a free zone setup, the respective free zone authority will handle the licensing process.

Step 5: Prepare Required Documents

You'll need to provide key documents such as passport and visa copies for shareholders, trade name reservation proof, initial activity approval, proof of a physical business address, and a Memorandum of Association (MOA). A no-objection certificate (NOC) may be required if any shareholder is on a residence visa.

Step 6: Open a Corporate Bank Account

After completing the setup process, open a corporate bank account in the UAE. This will be used to handle financial transactions related to your logistics business.

Step 7: Visa Applications

Apply for investor and employee visas depending on the size of your team. The number of visas you can apply for depends on factors such as the size of your office, the nature of your business activity, and your company's needs.

Documents Required:

• Passport and visa copies of shareholders.
• Passport copy and CV of the appointed manager.
• Proof of trade name reservation and initial activity approval.
• A legal agreement for your business address in the UAE.
• Payment proof for the business license and related government fees.

Types of Businesses Eligible for a Logistics License in Dubai

Several types of businesses can apply for a logistics license in Dubai, including:

1. Customs Brokers

Customs brokers prepare customs declarations and represent them before customs authorities, ensuring compliance with regulations.

2. Freight Brokers

Freight brokers handle brokerage matters related to the transportation of goods via air, sea, or land, facilitating smooth cargo movement.

3. Cargo Transportation

Cargo transportation companies manage the packing and sorting of goods for air, sea, or land transport, ensuring safe and timely deliveries.

4. Leasing

Leasing businesses rent out vessels, containers, and other logistics-related equipment to support transportation operations.

5. Fleet Management

Fleet management companies oversee fleets of airplanes, ships, trains, and other vehicles used for transporting goods across various routes.

6. Logistics Planning

These companies specialize in logistics planning services to ensure the efficient movement of cargo from point A to point B.

7. Warehouse and Storage

Warehouse and storage firms provide facilities for storing goods and managing processes like packing, loading, and receiving shipments.

Government Approvals Needed for a Logistics License in Dubai

When applying for a logistics license in Dubai, you may need special approvals from various governmental authorities. If you're unsure which approvals are required, RadiantBiz can assist you. Here are some common authorities involved:

1. Dubai Customs

Dubai Customs approves the clearance of imported and exported goods, ensuring compliance with customs regulations.

2. Dubai Police

The Dubai Police grant approvals for the security systems required by warehouse and logistics companies.

3. Aviation, Maritime, and Roads & Transport Authorities

These authorities provide permissions for businesses to operate within air, sea, or land transport domains.

4. Food Control Department

For companies storing food in warehouses, this department provides necessary accreditations to ensure food safety standards are met.

5. Civil Defence

Civil Defence oversees the import and export of hazardous materials, ensuring compliance with safety and environmental regulations.

6. Ministry of Climate Change

This ministry handles approvals related to the import of agricultural goods, live animals, fertilizers, and other related items.

Setting up your logistics business in UAE Mainland

Entrepreneurs looking to establish a logistics business in the UAE can take advantage of several benefits, depending on the region they choose. Setting up a logistics company in the UAE mainland, particularly in Dubai, provides a range of advantages:

1. Access to a Diverse Market

Dubai mainland offers opportunities across various industries, making it easier to tap into multiple markets. This broad access allows logistics businesses to cater to a wide range of sectors, enhancing profitability.

2. Strategic Distribution Hub

By setting up in Dubai mainland, logistics companies can benefit from seamless distribution across the UAE. The strategic location offers quick and efficient access to all seven emirates, as well as international trade routes that connect Asia, Europe, and Africa.

3. 100% Local Market Access

Unlike free zones, businesses based in the mainland can trade directly within the local UAE market without needing a distributor or an agent. This provides logistics companies with unrestricted access to the entire UAE market.

4. No Limit on Business Activities

In Dubai mainland, logistics businesses can engage in various activities without restrictions, unlike some free zones which limit the types of services or activities that can be performed.

5. Government Support

The UAE government offers a pro-business environment with streamlined processes for business setup and trade. Additionally, several initiatives support logistics companies by enhancing infrastructure, digital services, and facilitating easier regulations.

6. Easy Expansion

Companies established in Dubai mainland can expand their operations across the UAE without requiring additional approvals or licenses. This flexibility allows for smoother growth and scaling of logistics operations.

7. Competitive Tax Benefits

Although businesses in the mainland are subject to corporate tax, the UAE’s tax regime remains highly competitive with relatively low corporate tax rates and zero income tax, making it attractive for logistics firms aiming to maximize profits.

8. Well-Developed Infrastructure

Logistics companies based in Dubai mainland benefit from the city's world-class infrastructure, including advanced roads, ports, airports, and warehouses, ensuring efficient transportation and storage solutions for businesses.

Setting Up a Logistics Business in UAE Free Zones

Free zones in the UAE are renowned for offering substantial benefits and maximizing profits for logistics companies. These zones are specifically designed to support and promote logistics businesses, providing a range of advantages. Some of the most popular free zones for logistics companies include:

1. Dubai Logistics City (Dubai World Central)

Dubai Logistics City is a major logistics and supply chain hub within Dubai World Central. It offers a comprehensive infrastructure designed to streamline logistics operations, including state-of-the-art warehousing, transportation facilities, and easy access to Dubai's international airports and seaports.

2. Jebel Ali Free Zone (JAFZA)

Jebel Ali Free Zone is one of the largest and most established free zones in the UAE, renowned for its robust logistics infrastructure. It provides companies with easy access to the Jebel Ali Port, one of the busiest ports in the world, facilitating efficient import and export activities.

3. Dubai South Free Zone

Dubai South Free Zone is strategically located near Al Maktoum International Airport and the Expo 2020 site, making it an ideal location for logistics businesses. It offers modern facilities and infrastructure tailored to meet the needs of logistics companies, including advanced warehousing and transportation solutions.

4. Dubai Airport Free Zone (DAFZA)

Dubai Airport Free Zone offers proximity to Dubai International Airport, making it a prime location for logistics companies that rely on air freight. The free zone provides top-tier facilities and services designed to support efficient cargo handling and logistics operations.

Setting up a logistics business in one of these free zones can provide significant benefits, including tax incentives, streamlined customs procedures, and access to cutting-edge infrastructure, all of which contribute to enhanced profitability and operational efficiency.

Cost of Starting Logistics Company in Dubai

The cost of establishing a logistics business in Dubai can vary widely due to several factors. Key considerations include:

• Type of License: The cost of the logistics license can differ based on the specific type and scope of activities your business will undertake.
• Vehicles and Equipment: The number and type of vehicles, as well as other necessary equipment, will impact your initial investment.
• Driver Training: Costs associated with driver skills development and training programs are an essential part of the setup expenses.
• Security Features: Implementing security measures for your facilities and assets can contribute to the overall cost.
• Promotional Campaigns: Budgeting for marketing and promotional activities to establish your brand presence is another factor.
• Additional Approvals: Depending on your business activities, you may need various approvals from governmental authorities, which can affect the cost.

Given these variables, the estimated cost to set up a logistics company in Dubai generally ranges from AED 18,000 to AED 50,000.

FAQ: Logistics License and Business in Dubai

1. How much does a logistics license cost in Dubai?
In Dubai’s free zones, logistics license fees start from AED 11,900 for a zero-visa quota. For a logistics license in the UAE mainland, the trade license fee is approximately AED 28,000 for a virtual office setup.

2. Is the logistics business profitable in Dubai?
Yes, the logistics sector is highly profitable in Dubai. The city’s favorable business environment and strategic location make it a central hub for trade and commerce in the UAE, contributing to the success of logistics businesses.

3. Is there a demand for logistics services in the UAE?
The UAE’s freight and logistics market was valued at USD 20.03 billion in 2024 and is projected to grow to USD 27.51 billion by 2029, with a compound annual growth rate (CAGR) of 6.55% during this period, according to a Mordor Intelligence report.

4. How much does a cargo license cost in Dubai?
The cost of a cargo license in Dubai depends on the number of visas you need. For a cargo business in a Dubai free zone with no visa requirements, the cost starts at AED 12,500. Each additional visa incurs a fee of AED 1,350.