A logistics company is an enterprise that transports, stores, and processes goods, ensuring the delivery of goods from the place of their production to the end consumer. The activities of such companies are highly profitable in the United Arab Emirates, given the country is located at the intersection of transport routes connecting Europe, Asia, and Africa. Dynasty Business Adviser specialists have extensive experience registering a business in the UAE and know how to open a logistics transport company to transport goods from scratch in any of the 7 emirates of the country in the shortest possible time.
The Main Tasks of a Logistics Company
The main objectives of the company engaged in the field of logistics include the following:
- Choosing the type of transport (sea, road, rail, air) and a suitable vehicle for transporting a specific cargo.
- Determining the optimal route.
- Resolving packaging issues to ensure the safety of cargo during transportation.
- Markings indicate the shipment characteristics and properties and inscriptions that facilitate its identification.
- Storage of goods and optimization of the warehouse space.
- Cargo processing, formation of group orders, loading and unloading operations.
- Carrying out customs procedures for the export and import of goods.
- Delivery of information and consulting services in the field of logistics.
Structure of a Logistics Company
A company engaged in the logistics business must have a clear structure with separate divisions responsible for a specific stage of the goods movement in an organized and coordinated manner. In general, a transport and logistics company includes divisions that perform the following functions:
- Determination of development strategy by company policy.
- Administration and coordination of the activities of interrelated departments.
- Marketing and searching for distribution channels for goods, determining shipping conditions, accepting orders, and monitoring compliance with volumes, requirements, and delivery times.
- Warehousing and consolidating goods according to the assortment, preparing goods for shipment by consumer requests, and loading them into vehicles.
- Organizing the transportation process by developing the route and preparing the necessary documents.
- Transportation and freight forwarding.
- Provide financial support for cargo storage, processing, transportation methods, accounting, and control of warehouse stocks.
Advantages of a Logistics Company
The services of companies operating in the field of logistics are in demand due to the following advantages:
- Saving the manufacturer’s costs on maintaining the vehicle fleet and organizing the storage and transportation of its products.
- Ensuring the safety of the cargo until it is transferred to the final consumer— the transport logistics company assumes all responsibility for the cargo.
- The ability to transport goods with different characteristics — logistics companies use their transport or outsource to third-party organizations with a suitable vehicle.
- A guarantee of compensation for losses if the cargo is damaged during transportation, loading/unloading, processing, or storage since the transport company providing logistics services insures the transported cargo.
- Simplification of the delivery of goods to other countries because the carrier undertakes certification and registration of customs documentation.
- The optimal cost of services is significantly lower than the costs the manufacturer would incur if he delivered products independently.
Weaknesses of a Logistics Company
The disadvantages of transporting goods by a transport company specializing in logistics are much less than the advantages. The main pitfall is the risk of losing time and money by not delivering the goods to the consumer on time.
In addition, not all logistics companies are engaged in international transportation; if export is necessary, you must find the appropriate company.
Types of Logistics Companies
All companies working in the field of transport logistics can be divided into two groups according to the integration with the customer’s business:
- Highly specialized companies are minimally involved in the customer’s business and provide only one of the logistics services. These include:
- Transport companies engaged exclusively in transportation by one mode of transport.
- Forwarding companies.
- Customs brokers.
- Stevedoring companies specializing in unloading and loading of goods at ports.
- Сompanies involved in warehouse logistics ensure the operation of cargo terminals or public warehouses.
- Сompanies providing insurance and consulting services in transport.
- SPL providers supply several logistics services or a full range of services. The activities of such companies are more closely integrated into the customer’s business. They include the following:
- Freight forwarding companies.
- Logistics enterprises with limited or developed services.
- Logistics centers.
Examples of Logistics Companies
The most well-known companies in the field of transport logistics, engaged in the transportation of goods around the world, are the following:
- Deutsche Post DHL is a German company with four divisions: DHL Global, DHL Global Mail, DHL Express, and DHL Supply Chain.
- UPS (United Parcel Service) is an American company specializing in logistics and express delivery of goods. It has 237 aircraft in its fleet.
- FedEx (Federal Express) from the USA has the world’s largest fleet of cargo aircraft.
- Kuehne + Nagel International AG (Germany) carries out sea and air transportation and provides contract project and warehouse logistics services.
- Panalpina is a Swiss company providing logistics and forwarding services for intercontinental transport by air and sea.
Advantages of Registering a Logistics Company in the UAE
The main advantage of registering a logistics company in Dubai, Abu Dhabi, and other emirates of the country is the absence of corporate income tax if certain conditions are met. Other advantages of this jurisdiction for doing business in the logistics sector include the following:
- Lack of taxes paid in other countries. In the UAE, you will only have to pay VAT (5%) and import tax (5%) when registering a mainland company (outside the free zones). At the same time, a 0% VAT rate is provided for international transport and maintenance of vehicles used for this purpose.
- No customs duties and taxes.
- The opportunity to open a logistics company in Dubai or another emirate of the UAE, owned 100% by a foreign investor.
- Lack of state currency control, free repatriation of capital and profits.
- Comprehensive support and assistance to foreign business from the state, protection of the rights of foreign investors.
- The possibility of obtaining tax residency status for all companies, except for offshore ones, which avoids double taxation.
- There is a high demand for logistics services and international and domestic transportation due to the steady growth of the Emirates economy.
In addition, the UAE has a developed transport infrastructure with well-equipped seaports, airports, cargo terminals, large logistics centers, and modern highways.
How to Create a Transport Logistics Company in the UAE
To run a logistics business in the UAE, you must register a logistics company in Dubai or another emirate. You need to do the following:
- Develop a suitable business model — choose the company’s structure and the logistics services it will provide (transport, forwarding, customs and freight brokerage, warehousing and cargo handling, and others).
- Select the type of company, administrative form, and place of registration (emirate, free zone). To conduct logistics activities, you can open a company on the mainland (Mainland Company), in the free zone (Free Zone Company), or an offshore company only interested in international transportation.
- Agree with a service agent to represent the company’s interests in government agencies.
- Obtain preliminary approval for opening a legal entity from the DED (Department of Economic Development) and additional permits required by the laws of the UAE and the selected emirate.
- Prepare a package of documents for founders and directors, including the constituent agreement and charter of a legal entity.
- Rent an office and obtain the necessary licenses.
- Submit documents for registration and wait to receive the registration certificate.
- Receive an Establishment Card and open a corporate account in one of the UAE banks.
Find more detailed information on how to open a freight forwarding company or a cargo transportation company in the United Arab Emirates and what documents you need to prepare from the Dynasty Business Adviser specialists.
Cost of Creating a Logistics Company
It is impossible to answer how much it will cost to open a business in the field of logistics in the UAE without analyzing your business plan since many factors influence the cost of registration:
- Type of company and place of registration.
- List of services provided and number of licenses.
- The need to obtain additional permits.
- Availability of a physical office and its area.
- Number of directors and employees who require a resident visa.
To find out the exact cost in your case, contact Dynasty Business Adviser for advice!
Practical Tips and Advice
Opening a logistics company in the UAE is troublesome and challenging, requiring knowledge of local legislation and the peculiarities of doing business there. Contacting Dynasty Business Adviser specialists will help you save time and money. Our company office is located in Dubai, which allows us to quickly respond to any requests from government authorities during the registration process. We are a licensed company registrar in the UAE and will take on most of the work. Your presence in the country will only be required when opening a bank account.
