How to Get a Logistics License in UAE: Requirements and Company Setup

Starting a Logistics Company in UAE is a prospective business investment for entrepreneurs. Logistics Company in UAE plays a vital role in UAE’s trade and commerce ecosystem. The investor can get a Logistics License in UAE from the Department of Economic Development (DED) mainland or the Free Trade Zones.

UAE is the perfect location for setting up a Logistics Company. The strategic location, one of the world’s busiest airports, a booming regional economy, international business hubs in the city, etc., make UAE the ideal choice for logistics companies to establish their headquarters.

In this article, we will explore the ways to get a Logistics License in UAE, the requirements, and the process of starting a logistics company.

What is a Logistics Company in UAE?

Logistics Companies help other businesses move their goods and materials across the country or internationally. The Logistics License in UAE allows companies to avail of the facilities for the storage, transportation, and delivery of goods. They ensure the goods arrive at the customer’s destination on time and in perfect condition.

In UAE, logistics companies offer a wide range of services, from transportation to delivering goods. There are multiple categories in the logistics business sector, and companies offer services to customers at different stages.

Logistics License Fees in UAE from the Free Zones in Dubai start from AED 11,900 for a Zero Visa quota. Similarly, for a logistics license from the UAE Mainland, the Trade License Fee will be approximately AED 28,000 for a virtual office license.

Starting a Logistics Company in UAE?

A Logistics company in UAE can be set up in either the mainland or the Free Trade Zones. There are two major business jurisdictions in UAE for starting a logistics company. Depending on the services of the company, the investors can choose the business jurisdiction.

For example, to facilitate global trading and shipping activities having a logistics company in the Free Zone is ideal. The proximity to the Airports and Seaports for the logistics company will help to keep the overhead costs low.

Also, Free Trade Zones in the UAE have Zero import duty, thus ideal for imports from foreign countries to UAE. Companies in the Free Zone can approach a logistics company to facilitate re-exports or transport the goods locally to the final destination.

By submitting the documents of the investor to the respective business jurisdiction and making the fee payment, the Logistics Trade License will be made available to the investor. They can proceed to open a bank account in any of the local UAE Banks or international banks.

In case the logistics company is set up in the Dubai Economy, the company can be set up as a 100% foreign-own limited liability company or a virtual office license in the Dubai Mainland. Depending on the no. of shareholders the investor must choose the right company structure for the logistics company in UAE.

Things to Consider Before Setting Up a Logistics Business

There is immense opportunities in the logistics sector in the UAE. UAE is the hub for global trade and the Seaports and Airports handle large volumes of Consignments daily. Business owners must consider the following aspects before starting the Logistics Business in UAE.

Also, it is best to get the right business advice from a reputed Business Consulting company in the region regarding incorporating and managing a logistics company in the UAE.

4 Things to Know While Setting Up Logistics Business 

1. Awareness of Customs Processes and Paper Works

The company must be aware of the customs processes and paperwork. There are various customs process, procedures, and paperwork for setting up a logistics company in UAE.

Also, the Logistic companies must be aware of the UAE’s Customs guidelines and clearance process to facilitate trade in the right way.

2. Meeting the Client in Person

A face-to-face meeting with the supplier is crucial in logistics as suppliers are based out of other countries and there are high chances of fraud or miscommunications.

SMEs to start gaining momentum in the logistics business in UAE must be working with a tighter budget and smaller margins. Also, agreement on the credit terms is essential. It will help resolve any conflict later on as the paperwork is clear and is agreed upon by both parties.

3. Logistics Market in the UAE

The Logistics business market is very fragmented with numerous suppliers in the UAE. As a rule of thumb, in logistics, it is ideal to go with an experienced company. They will be well aware of the local customs rule.

Going forward with a known player in the logistics industry would help save costs from fines, clearance fails, etc. Knowledgeable logistics operators will ensure 100% transparency is maintained with the Customs authorities and also speed up the clearance at the borders and checkpoints.

4. Large Scope and Cash Flow Requirements

Logistics companies cover a large scope of activities from warehousing, order fulfillment, demand forecast, and more. It helps the trading companies to easily scale up their business and gain more business.

5. Logistics Company requires a Huge Cash Flow

There is a huge cash flow requirement in the logistics sector. Usually, airlines and shipping services are require an upfront payment for a minimum period of 3 months.

Also, around 20-30 percent of the upfront cost is attributed to contingencies. Hence, logistics companies have to maintain sufficient capital budgets for funding operating expenses.

All transactions, records of imports, customs duty calculations, all commodities transfers, customs clearance, VAT, etc., need to be recorded properly for later inquiries or customs checks.

Know-how of the E-Mirsal 2, the software used by Customs to record all the transactions. in the UAE is very essential.

Steps to Starting a Logistics Company in UAE

Once you have obtained the necessary licenses and permits, you can begin the process of setting up your logistics company in the UAE. Following are the steps to starting a logistics company in the UAE:

• Choose a business name and register the company with the Department of Economic Development (DED) or the respective Free Trade Zones.
• Obtain a DED or Free Zone trade license by submitting the investor passport copy, photograph, and trade name (3 Proposed Names).
• Get the name approval and initial approval from the respective authorities. There are special permits from the Ministry of Economy, Federal Transportation, Customs, etc.
• Choose a location and office space for your business and prepare the tenancy contract.
• Submit all the documents for final approval and obtain the Logistics Business License.
• Proceed to obtain the investor visa under the company and Set up a local UAE bank account.

To make the logistics company in UAE completely functional the investor must recruit and hire staff, open a bank account, and purchase the necessary equipment, such as trucks, vans, storage containers, etc.

Logistics businesses require significant capital to start business operations and gain traction. The entrepreneur must also develop a marketing plan, start advertising the services, and more to gain a presence in the UAE market.

Special Approvals for obtaining a Logistics Company License

For obtaining a logistics business license in UAE, the investor must get a few special approvals from the Federal Transport Authority (FTA) and Customs Clearance Permit from Dubai Customs.

After obtaining the Logistics Company License, the Memorandum of Association must be prepared for the company and get it attested by the Ministry of Economy. Take an office space and prepare the tenancy contract accordingly. Now you are legally eligible to conduct a logistics business in UAE.

Logistics Company Setup in UAE – Which Free Trade Zone to Choose?

Following are the suitable Free Zones for setting up a Logistics Company in the UAE. Free Zone provide the right infrastructure and business support solutions to easily incorporate, manage, and conduct business operations in the UAE.

1. Sharjah Airport Free Zone

Sharjah Airport Free Zone is one of the biggest hubs of logistics companies in the UAE. The investors can avail of the facilities of huge warehouses of 600 sq m with office facilities. SAIF Zone issues the Logistics License with the Warehouse in one day.

The nearest seaport is Khalid Port at Sharjah, a 20-minute drive from SAIF Zone. Sharjah International Airport is where all cargo carriers including Lufthansa operate. Additionally, The Airport is located adjacent to the Free Zone.

2. Dubai Logistics City

Dubai Logistics City in Dubai South is the ideal choice for setting up a logistics Company. It offers a top-class infrastructure for logistics companies to set up an office.

Also, the easy access to the Jebel Ali Port, well-connected road transport network, and Airports in the UAE make it the right choice.

The Free Zone offers top-class warehouse facilities with custom sizes and ultra-modern facilities. It has dedicated transport links from warehouses to ports and airports. Thus, it forms the perfect ecosystem for logistics companies.

Types of Logistics Companies in UAE

There are several types of logistics companies in the UAE, each offering different services. Some of the most common types include:

• Freight Forwarders: These companies specialize in arranging the transportation of goods from one place to another
• Customs Brokers: These companies are responsible for helping businesses with the customs clearance process
• Trucking Companies: These companies provide transportation services for domestic movement of goods
• Warehousing Companies: These companies provide storage services for imported goods in the UAE.
• Air Freight Companies: These companies specialize in handling air freight shipments.

Managing a Logistics Company in Dubai

Almost 90% of businesses in the UAE rely on a logistics partner for the exchange of goods. Certain areas in the logistics business requires to be given additional attention to ensure the logistics company scales up as desired quickly.

Here are areas of focus for setting up a successful logistics company in Dubai as well as anywhere in the world.

1. Company License Approval

Get the right company license & business activity approved from the desired business jurisdiction.

2. Manage the Finances

The Financial Manager of your logistics company is very crucial. Logistics services company requires a huge amount as upfront advances and for payment of shipping and aeroplane freights.

Also, the operational expenses for a logistics business are on the higher side due to the low margins.

3. Taxes and Customs Checks

As a logistics company in UAE, it is crucial to understand the tax rates and customs duties across the world to initiate trade profitably.

Also, VAT registration in UAE for your logistics company as well as the required customs registration and clearances for conducting logistics services.

4. Streamline Business Operations

Monitoring and recording all logistics operations with clients are essential. Logistics involves a lot of cross-country transactions, so it is subject to scrutiny and high-security surveillance.

Therefore, it is important to assess and report item imports, places of origin, and places of exports to Customs Authorities promptly.

5. Infrastructure facilities

In order for a logistics company to be successful, it must have access to the best logistics methods, shipping lines, and airline connections. Also, warehousing facilities, distribution units, etc., must be of world-class standards to invite global business partnerships.

Hence, a logistics company in UAE is a very lucrative at the same time high-risk type of business setup. There is a huge requirement in Dubai for third-party logistics support for trading and export companies to ship their goods to different countries.

So, logistics businesses in the UAE are always on a significant growth rate due to the demand from local and international trading companies in the UAE.

So in conclusion, starting a logistics company in the UAE can be a great way to capitalize on the country’s booming economy. To get a logistics license in UAE, the investor must meet certain requirements and permits from the government departments.

The investor should also be aware of the types of services of logistics companies in the UAE. With the right planning and preparation, the entrepreneur can establish a successful logistics company in the UAE.

Connect with our expert team to know more about setting up a Logistics Company in UAE!

Contact Us: Aurion Business Consultants