Study shows 91% of UAE SMEs face international shipping provocations

A significant chunk of business in the shipping and logistics industry come from small and medium sized businesses. While the number of these SMEs are high, they also work with limited capital, thereby having limited exposure and access to international markets.

However, even though they do want to ship internationally, 91 percent of them face challenges in doing so — from logistics to regulations — based on a global study including 100 UAE SMEs by Shipa Freight, reported by Logistics Middle East.

73 percent of the SMEs in the UAE said that in order to grow their business, they need to export more, while 67 percent already prioritise export markets over home markets.

However, they face a myriad of issues when shipping abroad. 49 percent of SMEs across the world site economic risk to be the heaviest burden, followed by 46 percent agreeing to political unrest. Trump-China trade war, for example, is a prominent example of this risk that has seen stock markets decline, customers becoming vary or additional tariffs and increasing end costs, and much more.

On the contrary, for SMEs in the UAE, it is all about regulations. While the strict laws are to ensure compliance with international trade regulations and quality control, they often also pose an economic issue. The limited working capital of SMEs, insurance costs, delay in payments cause much harm to the continuity of business, leading to owners searching for loans.

But loans too become difficult to issue, as the documents become challenging to assess owing to the complexity of international trade.

These challenges have not gone unnoticed by the UAE government, who has eased regulations and introduced schemes to help SMEs grow their presence internationally.

In spite of these challenges, 89% of the SMEs expect revenues to grow in the coming three years. As 55 percent of the UAE SMEs believe the Middle East region holds the maximum potential to grow, the government naturally plays a huge role in supporting the small and medium sized companies in this feat.

While shipping companies often tend to side with larger clients and bigger portfolios, there is one good news — the introduction of technology has levelled the playing field for SMEs, as agreed to by 85 percent of UAE respondents.

In fact, technology is the answer to helping SMEs cut down on costs and focus more on shipping and trade. Digitisation has seen SMEs around the world reduce costs and improve businesses. However, SMEs in the UAE have been slow to embrace and invest in technology. As per Shipa’s research, only 15 percent of them use online rate quotations and booking tools, which is the second lowest percentage after the UK.