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The UAE logistics market is expected to grow at an annual rate of 6.84% and be worth $11.87bn in 2026, according to a report.

The report, by Technavio, said e-commerce was the main driver of growth “owing to the increase in internet penetration in the UAE and the growing access to smartphones”.

“Logistics plays a major role as the movement of goods depends highly on the transportation and distribution network,” said Technavio. 

“This is encouraging vendors to offer logistics services to e-commerce enterprises. Hence, the rapid growth in the e-commerce industry will concurrently propel the demand for logistics in the UAE.”

The report comes after the government inaugurated the UAE National Railway Network and launched rail freight services.

The network runs for 900km and links all the emirates from Ghuweifat on the border with Saudi Arabia to Fujairah.

Sheikh Mohammed bin Rashid Al Maktoum, vice president, prime minister of the UAE and ruler of Dubai, said: “Connecting the emirates via a national railway network strengthens our capabilities and competitiveness, and consolidates our unity.”

The railway is expected to contribute 200bn dirhams ($54.5bn) to the economy and reduce the cost of road maintence by 8bn dirhams ($2.2bn).

More than two-thirds (70%) of building materials used in the project came from local industry.

A fleet of 38 freight locomotives has the capacity to move 60m tons of goods annually.

“The UAE National Railway Network will provide solutions for investors and customers, due to its ability to transport all types of goods, including petrochemicals, raw steel, limestone, cement, building materials, industrial and domestic waste, aluminium, food commodities, and general cargo,” said Etihad Rail.

The network is set to form part of the ambitious Gulf Cooperation Council plan to build rail links between countries including Saudi Arabia, Kuwait, Oman and Bahrain.

Announced in 2014, the project had an initial finish date of 2021 but this has been delayed.