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How to Set Up a Logistics Transportation Company in Dubai?
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Twenty years ago, Dubai was primarily known to the world for its oil reserves, and its economy was heavily reliant on petroleum. Today, however, it has transformed into a global business powerhouse. A favorable corporate environment, low taxes, world-class infrastructure, major international airports, and magnificent seaports all contribute to Dubai's status as a premier business hub. Furthermore, its strategic geographic location has been a boon for international trade, putting logistics at the forefront of its economic success. There is immense scope for a logistics business in Dubai, with many companies having established shipping operations here, making the city a leading transportation center. Before venturing into this sector, however, it is essential to obtain a transportation service license in Dubai.
The laws pertaining to the transport and warehousing business are enforced by the National Transport Authority. Regulations apply to maritime companies, while road transport is governed by specific rules outlined in Federal Law No. 9.
To register a transportation business, the owner must prepare and submit the documents specified in the Commercial Law. There are three main categories of transportation services:
Some of the specific business activities that fall under these categories include:
The National Transport Authority issues the transportation license, also known as an operations card. A crucial requirement is that all goods must be covered by a transport and storage contract and be insured during transit and while in storage. Additionally, drivers must have specific categories added to their licenses. The business owner must also comply with the warehousing requirements of the UAE Ministry of Health.
A No Objection Certificate (NOC) from the Roads and Transport Authority (RTA) is a prerequisite for the issuance and renewal of business permits in Dubai. According to the RTA, there are approximately 12,000 transport and vehicle rental companies registered in Dubai, with around 255,000 vehicles registered for transport and rental purposes.
A transportation business can take various forms, such as a logistics company, a courier service, or a road transport business. Here’s a look at how to establish each type.
Dubai Logistics City (DLC) is one of the fastest-growing Free Zones designed specifically for logistics. The legal formalities for setting up a logistics company here are straightforward. Moreover, the modern logistics facilities and strategic geographic location facilitate the smooth operation of the business. To establish a logistics business in the Free Zone, the owner must first apply with the necessary documents and a detailed business plan. The Free Zone Authority will issue the license after the prescribed fee is paid.
To establish a courier service, the owner must register with the Emirates Post Group. Following this, the owner needs to obtain a commercial license and register the business activity. The Emirates Post Group typically issues the license within 20 days. The owner can be of any nationality and must submit an online application with the relevant documents.
To set up a road transport business, the owner needs a transport permit from the UAE National Transport Authority in Dubai. The vehicle must be equipped with safety devices. The owner must obtain a commercial license before getting the transport permit. The transport permit is issued for three months and must be renewed within 30 days. The vehicle owner receives the license after paying a fixed fee and an additional payment based on the passenger seats or the gross weight of the vehicles.
Launching a logistics company is a forward-thinking business investment for entrepreneurs. A Logistics Company in the UAE plays a vital role in the trade and commerce ecosystem. An investor can obtain a Logistics License in the UAE from a Mainland Department of Economic Development (DED) or from one of the numerous Free Trade Zones.
The UAE is an excellent location to establish a Logistics Company. Its strategic location, one of the world's busiest airports, a thriving regional economy, and international business hubs in the city make the UAE an ideal choice for logistics companies to set up their headquarters.
Logistics Companies help other businesses transport their goods and materials across the country or internationally. A Logistics License in the UAE allows companies to utilize facilities for the storage, transportation, and delivery of goods. They ensure that goods reach the customer's destination on time and in perfect condition.
Logistics companies in the UAE offer a wide range of services, from shipping to last-mile delivery. There are multiple categories within the logistics business sector, and companies provide services to clients at different stages of the supply chain.
The Logistics License Fees in Dubai's Free Zones start from AED 11,900 for a zero-visa quota. Similarly, a Trade License Fee for a logistics license from the Dubai Mainland would be approximately AED 28,000 for a virtual office license.
A Logistics company in the UAE can be established on the mainland or in a Free Trade Zone. There are two major commercial jurisdictions for setting up a logistics company. Depending on the company's services, investors can choose the commercial jurisdiction.
For example, to facilitate global trade and shipping activities, having a logistics company in a Free Zone is ideal. Proximity to airports and seaports for the logistics company will help keep overhead costs low.
Furthermore, Free Trade Zones in the UAE have zero import duties, making them ideal for imports from foreign countries into the UAE. Companies in the Free Zone can engage a logistics company to facilitate re-export or to transport goods locally to their final destination.
If the investor's documents are submitted to the respective business jurisdiction and the fee is paid, the Logistics Trade License will be issued to the investor. They can then proceed to open a bank account with any of the local UAE Banks or international banks.
If the logistics company is to be set up in the Dubai Economy (Mainland), the company can be established as a 100% foreign-owned limited liability company or a virtual office license. The investor must choose the right company structure for the logistics company in the UAE.
For an investor to obtain a logistics business license in the UAE, they need to get several special approvals from the Federal Transport Authority (FTA) and a Customs Clearance Permit from Dubai Customs.
After obtaining the Logistics Company License, the Memorandum of Association for the company needs to be drafted and attested at the Ministry of Economy. Secure an office space and prepare the tenancy contract accordingly. Now you are legally eligible to run a logistics business in the UAE.
Once you have obtained the required licenses and permits, you can begin the process of setting up your logistics company in the UAE.
The steps to setting up a logistics company in the UAE are:
Logistics businesses require a significant amount of capital to start commercial activities and gain traction. The entrepreneur must also develop a marketing plan, start advertising services, and more to gain a presence in the UAE market.
There are several types of logistics companies in the UAE, each offering different services.
Some of the most common types include:
In conclusion, setting up a logistics company in the UAE can be a great way to tap into the country's thriving economy. To obtain a logistics license in the UAE, the investor needs to meet certain requirements and permissions from government departments.
The investor should also be aware of the types of services of the logistics companies in the UAE. With the right planning and preparation, an entrepreneur can set up a successful logistics company in the UAE.
Logistics companies in the UAE offer a wide range of services, from transportation to delivery. There are multiple categories within the logistics industry, and companies provide services to their customers at different stages.
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