91% of SME’s prefer cross-border trade for export revenues, says Shipa Freight

Published: Monday, September 9, 2019

Ninety-one percent of small and medium-sized businesses doing cross-border trade in the UAE are focusing on global growth and expect export revenues to growth over the next few years, according to research by online freight service Shipa Freight.

Shipa Freight’s global study of 800 SMEs from developed and emerging markets, including 100 small and medium-size businesses from the UAE, examines the trade patterns and barriers experienced by SMEs.

Despite their desire to export, 91% of small and medium-sized businesses in UAE have faced difficulties when shipping internationally. Seventy-six percent believe their national government should offer more support and services to SMEs looking to ship internationally.

Eighty-five percent of UAE SMEs say that technology is leveling the playing field for them and allowing them to operate globally.

“The logistics industry has traditionally ignored SMEs and done far too little to help them find new markets and grow,” says Paul Rehmet, product chief at Shipa Freight, the online global freight service powered by the Agility network. “Technology is giving them the ‘virtual’ scale that they’ve needed to lower their costs, get real-time information and compete.”

The study reveals that 67% of UAE SMEs are prioritizing export markets over their home market.

For UAE companies, the market with the most potential for growth is the Middle East (55%). UAE SMEs find exporting to Oceania poses the biggest challenge, with more than half (55%) finding this region the most difficult region to export to.

Unfortunately small and medium-size businesses in the UAE are having to navigate widespread trade difficulties – bureaucracy, pricing confusion, political and economic risk — in pursuit of global growth; this is concerning given 73% say that if they don’t export more they won’t be able to grow.

When it comes to shipping, their number one concern is economic risks (49%) – such as recession or sharp downturn — closely followed by political risks, goods being lost or damaged and changing customer or supplier requirements (46%).

For UAE SMEs export regulations are the top challenge (40%). Not having an accurate picture of costs is the greatest difficulty small business leaders in the UAE have faced (51%), followed by the fact that the complexity of international shipping makes it difficult to understand documentation requirements (49%).

Globally, smaller companies account for an estimated 95% of all businesses and employ two-thirds of the world’s workers. Critics of globalization have argued that decades of efforts aimed at easing the flow of goods, capital and jobs across borders has come at the expense of SMEs and disproportionately benefited multi-nationals and other large businesses.

“Smaller businesses used to think they couldn’t compete in trade. Now many see it as their best path for growth,” Rehmet says. “SMEs are not naïve about the obstacles to unlocking new markets. They know more needs to be done to empower them to trade internationally, as the business and social benefits for economies are huge. This is where technology is changing the game, with online tools enabling SMEs to conduct transactions, get financing and gather market intelligence.”

Smaller companies in the UAE see technology as a way to close the gap with bigger competitors, and get quick access to competitive shipping options; 86% believe technology is transforming the logistics industry.

However UAE SMEs are not yet embracing digitization to the same extent as other markets, with only 15% using an online rate quotation and booking tool, the second lowest market in the research after the UK.