Transport mega-projects support Sharjah as gateway to other emirates

Sharjah’s strategic location between Europe and southern Asia has enabled it to become a central player in global transport and logistics networks. Its manufacturing sector with ample resources has the potential to increase import and export cargo volumes, leading to the creation of jobs. The importance of this was highlighted in the 2021 launch of the Sharjah Exports Development Centre aimed at investing in and growing the emirate’s exports operations. Moreover, Sharjah’s central location and borders with the other six emirates make it a key stepping-off point in the UAE, with several major motorways and a growing international airport supporting connectivity.

Oversight

The Sharjah Roads and Transport Authority (SRTA) develops and maintains the emirate’s networks, with the wider aim of encouraging interoperability, sustainability and innovation. Established in 2014, the body has grown in tandem with Sharjah’s economy and has assumed an increasingly central role in infrastructure development. The SRTA operates public transport and taxis, issues licences, directs large-scale public infrastructure projects, executes budgetary directives and manages public-private partnerships. In line with the emirate’s push towards e-government and digital transformation, many of the authority’s services are offered online.

The Department of Civil Aviation (DCA), for its part, oversees the development of Sharjah’s air transport system, and issues landing grants, air freight licences, free zone licences for aviation-related activities and no-objection certificates. In November 2020 the DCA signed a five-year contract with airport management company Serco Middle East to upgrade air navigation services at Sharjah International Airport (SIA) and boost Emiratisation to a targeted 47% of the workforce by 2025. Established in July 2020, Sharjah Seaports, Customs and Free Zones Authority (SSCFZA) is the newest government entity in the sector and oversees the management of the emirate’s ports.

On a national level, the Federal Transport Authority (FTA) is responsible for motorways and certain aspects of maritime operations. Established in 2006 as the National Transport Authority and renamed in 2014, the FTA promotes integration, sustainability and innovation in transport networks. In recent years the FTA has prioritised the safety, security and environmental protection of the country’s maritime assets.

Investment & Spending

Both foreign direct investment (FDI) and government spending on infrastructure have risen in recent years, which is central to strengthening transport networks. In 2020 Sharjah attracted $220m in FDI for 24 projects, with the number of projects increasing by 60% between the third and fourth quarters of the year as the economy began to recover from the pandemic. This fuelled job creation in areas such as e-commerce, financial technology and logistics. FDI in primary sectors is expected to trend upwards, with consulting firm Wavteq forecasting in January 2021 that FDI in Sharjah’s logistics and distribution activities would increase by 46.2% that year. The firm predicted that small and medium-sized enterprises would find high-yield investment opportunities in secondary industries such as e-commerce and smart logistics. “The e-commerce boom fuelled by the pandemic saw a parallel increase in the number of players in the last-mile delivery segment, resulting in heightened competition and price drops,” Sarmad Al Zadjaly, CEO of Tawseel, told OBG. “However, by the beginning of 2021 we were seeing signs of consolidation as consumers became more selective.”

Emirate-level authorities have prioritised infrastructure development in recent years, and earmarked budgetary funding accordingly. Capital projects accounted for 23% of the emirate’s $7.9bn budget for 2020, and included the construction and improvement of road networks and tunnels. In total, one-third of the general budget was allocated for infrastructure development. This figure rose to 43% in the 2021 budget, which was Sharjah’s largest to date, at $9.1bn. Capital projects also accounted for a larger share of the budget that year – at 32% – and included new and upgrade projects for the transport network, tourism facilities and other service facilities. The authorities intend to leverage the budget to stimulate the economy, encourage socio-economic development and enhance financial stability.

Stimulus

The emirate crafted fiscal support packages to help alleviate the economic impacts of the pandemic. The first stimulus, valued at Dh481m ($130.9m), was issued in early 2020, while in February the SRTA granted a 50% discount on all fines from the authority between January 1 and October 31, 2020.

In November of that year the government released an additional Dh512m ($139.4m) in funding to bolster affected sectors. Several incentives under the second stimulus package were related to business with the SSCFZA, including discounts of 20-50% on new licences, depending on the commercial activity; an exemption from inspection fees for commercial companies; a 50% reduction in the tariff on truck stops within designated port areas; an exemption from storage fees for 90 days for bulk cargo; an exclusion from bank guarantee requirements for shipping and Customs clearance companies; and a 20% discount on fees related to handling, loading and unloading. Also included in the November package was a 50% reduction in licensing fees for travel and tourism companies under the DCA, a discount in rental fees for taxi plate numbers and an exemption from trip fees for limousine companies. Taxis and public transport operators were granted an exemption from fees for quality control services as well.

Sustainability

The government prioritises the sustainable development of transport networks in line with a wider set of policies intended to establish Sharjah as a centre for environmentalism in the Middle East. To incentivise people to use public transport and reduce the amount of private vehicles on the road, the SRTA purchased 110 new buses in October 2019 that conform to EU carbon-emission standards, for an investment of Dh70m ($19.1m). The purchase adds to the number of public buses under the management of the SRTA, which stood at 175 in 2017.

Furthermore, the authority is utilising innovative technology to shrink the environmental footprint of public transport. Towards that end, in late 2018 it rolled out 28 solar-powered, air-conditioned bus stations at a cost of Dh16m ($4.4m). The main terminal for the initiative was the Al Jubail bus station, where 16 routes begin. The next year the SRTA introduced the emirate’s first electric bus, which can drive 200 km with one charge. More recently, in November 2020 Yousef Saleh Al Suwaiji, chairman of the SRTA, told local media that the body had launched several initiatives to promote sustainability in transport, including a pilot programme for the expanded use of electric buses and the purchase of 750 hybrid taxi cabs.

Skyway

The emirate has also been exploring creative solutions to mobility issues. In October 2019 the Sharjah Research, Technology and Innovation Park (SRTIP) began a trial of its SkyWay public transport project to move passengers in pods along a suspended line in a manner much faster than cable cars. The initial driverless, elevated network spans 2 km across SRTIP, with a plan to build a 130-km route from Sharjah to Khorfakkan for freight before 2025.

As of mid-2021 the trial was in its testing stages, and transport officials have emphasised the project’s potential to transform commutes in the region: stations can easily be created close to residential and commercial centres since lines can be constructed without having to clear roads. This will alleviate congestion in a sustainable way, as the electric motors can harness solar and wind energy as well.

Ride-hailing

In line with its emphasis on sustainability and enhanced urban mobility, the SRTA announced in September 2020 that it would partner with UAE-based mobility solutions firm ION to create a sustainable ride-hailing app in the emirate. The mobile app will show riders the estimated time of arrival, the number of available vehicles and the carbon offset of the trip. The service will use electric vehicles such as the Tesla Model S and Model 3, with plans to eventually extend to the rest of the country. Another ride-hailing service, Buraq, was launched that same month, which also allows customers to request a delivery pick-up or drop off. It is a partnership between Sharjah Asset Management and automotive platform OWS Auto.

International ride-hailing apps also entered the market in recent years. Uber launched services in Sharjah in August 2020, after being in Dubai and Abu Dhabi since 2013 and 2018, respectively. Careem began inter-city services between all seven emirates in January 2021; previously, city-to-city rides were permitted only between Dubai and Abu Dhabi. This expansion came after Careem introduced courier services in Sharjah and Abu Dhabi in April 2020 in response to demand for deliveries due to social-distancing measures imposed after the outbreak of Covid-19.

Roads

In 2019 a road linking Sharjah City with Khorfakkan was launched to enhance regional connectivity, cutting travel time from 90 to 45 minutes. The $1.6bn project comprised 14 intersections, seven underground crossings, and five tunnels across 89 km of desert and mountains. The road set the stage for new investment in the emirate’s eastern region: in August 2020 the authorities announced a string of major projects to improve the area’s transport and tourism infrastructure. These included new and refurbished roads, and leisure works such as the Dh95m ($25.9m) Khorfakkan Beach project, the Dh119m ($32.4m) Kalba Waterfront project and the construction of two fivestar hotels. At the national level, in July 2021 three major new roads that cut travel times and improve traffic flows at a cost of Dh1.9bn ($517.2m) were opened. These include connections between Mleiha in Sharjah and Al Shuwaib in Abu Dhabi; and Hatta in Dubai, Masfout in Ajman and Ras Al Khaimah.

Air

Sharjah is regarded as a regional centre for air transport, offering access to neighbouring emirates and other Gulf countries. SIA first opened in 1977 and became the hub of the Middle East’s first lowcost carrier, Air Arabia, in 2003. In the years leading up to the Covid-19 pandemic the airport saw growing demand for its services. In 2019 SIA managed the movement of 86,506 aircraft, up from 77,627 in 2017 and 81,262 in 2018. The number of passengers increased in turn, from 11.4m in 2017 to 12m in 2018 and 13.6m in 2019, before dropping to 4.2m in 2020. Monthly aircraft movements, meanwhile, increased from 6075 in February 2019 to 6755 in February 2020, according to the most recent data available from SIA as of mid-2021. Passenger volume similarly increased, from 954,741 to 1m over the same period. However, the onset of the pandemic led to flights being suspended between late March and early June 2020. To accommodate the increased traffic, the Sharjah Airport Authority announced a multi-phase scheme in March 2017 that would expand the existing terminal to support 25m passengers annually by 2025. As part of the plan the authority embarked on the $10.9m East Expansion project, which was completed in October 2020 and covers 4000 sq metres of space over two floors. The building includes four new gates to ease passenger movement, nine waiting areas and facilities for people with reduced mobility.

The transport authorities’ focus on sustainability is reflected in the air travel segment as well. In June 2020 SIA was recognised as the first carbon-neutral airport in the GCC and second in the Middle East by Airports Council International (ACI). To strictly monitor water and energy consumption, the airport has incorporated energy conservation initiatives, and water management and recycling into its operations. The airport also has a waste management system that leads to little landfill waste and a sewage treatment plant.

SIA was also the first airport in the UAE to obtain an Airport Health Accreditation certificate from the ACI in January 2021, highlighting the health measures implemented in order to facilitate safe travel for passengers during the Covid-19 pandemic. The certification takes into account health and safety protocols such as cleaning and disinfection, social-distancing measures and security inspections.

Rail

While the UAE has a well-connected road network, a new rail system is being designed as an efficient and sustainable alternative for moving freight and passengers around the country. It is envisioned to connect industrial areas, urban centres, ports and sources of raw materials. Moreover, it will significantly reduce road traffic emissions. Etihad Rail, as the project is known, has three phases of development. The first was completed in 2016 and connects Al Ruwais, Habshan and Shah in Abu Dhabi. The second phase will comprise 605 km of track from Ghuwaifat on the border with Saudi Arabia to Fujairah and Khorfakkan in Sharjah, while the third stage will extend the network to the northern emirates. The second stage was nearly 60% complete as of January 2021.

The entire rail network is slated for completion in 2024, and it will cover 1200 km to link the UAE with Qatar, Saudi Arabia and Oman. Etihad Rail is preparing for freight and passenger operations by expanding its fleet. In August 2020 the railway’s managers signed an agreement with Chinese rolling stock manufacturer CRRC to purchase 842 new wagons – tripling the fleet to more than 1000. A greater number of wagons means the rail system will be able to move containerised and bulk freight such as petrochemicals, construction materials, industrial and perishable goods, waste, aggregates and general cargo.

Maritime

The emirate has a long history of maritime commerce, evidenced by archaeological findings of 6000-year-old pottery from Mesopotamia and 4000-year-old beads from the Indus valley on the coastline. Sharjah Creek was also home to an important historical harbour at Al Khan, the bay that separates Sharjah from Dubai, particularly for pearl diving and boat building. Today, Sharjah is home to three deepwater ports, which are situated on both the Gulf and the Gulf of Oman: Port Khalid, Hamriyah Port and Khorfakkan Port. Each have their own specialisations. Port Khalid transports general goods, passengers, and major container traffic to and from Sharjah City, and positions itself as a gateway; Hamriyah Port moves general cargo, industrial goods, hydrocarbons and petrochemicals; and Khorfakkan Port is a major container terminal for trans-shipment, and it being upgraded as a multi-purpose cargo terminal. The SSCFZA is responsible for seaports, Customs, border crossings, Hamriyah Free Zone (HFZ) and Sharjah Airport International Free Zone (SAIF Zone). The authority has worked to improve resource management in these areas, and in November 2020 was recognised by the Sharjah Finance Department for its efforts to reduce public costs and promote responsible expenditure practices. Throughput at Sharjah’s three ports was greater in the third quarter of 2020 than the same period of 2019, according to data from the SSCFZA as of early 2021 – a notable achievement in the context of the pandemic. Imports, exports, re-exports and general cargo shipments increased by 44.7% over that period, from 1.64m tonnes to 2.38m tonnes. The number of imported and re-exported vehicles rose by 30.8% to 39,878.

Free Zone Connections

Sharjah is home to six free zones that are strategically located in or near major transport centres to facilitate the logistics needs of investors. They are Sharjah Media City (Shams), HFZ, SAIF Zone, SRTIP, Sharjah Publishing City (SPC), Sharjah Health Care City (SHCC).

Shams was established in 2017 as a centre for the creative industries and media, and licensed over 6000 companies between January of that year and March 2020. HFZ is a 30m-sq-metre facility that hosts 6500 companies in industry, commerce and services, with access to the Hamriyah Port and inner harbour. SAIF Zone is one of the oldest free zones in the Middle East and the first in the country to be located in an international airport, easing access to markets in Asia, Africa and Europe. SRTIP is the emirate’s newest free zone, established by royal decree in December 2020, while SPC caters for publishing companies, education providers and related businesses. The latter attracted 100 new enterprises from 23 countries in 2020. SHCC, for its part, offers 4.5m sq metres of land adjacent to SIA for facilities such as hospitals, polyclinics and rehabilitation centres, as well as manufacturing sites for health care equipment.

Outlook

Increased government spending on infrastructure development, coupled with stimulus financing and foreign investment, is poised to strengthen Sharjah’s transport and logistics networks. While the emirate is in a competitive region, its ports on both sides of the Strait of Hormuz means it is well placed to serve a larger share of logistics needs. Meanwhile, the expansion of SIA and an emphasis on sustainability will serve the emirate well when air travellers return to the skies in greater numbers as the pandemic subsides.