< PreviousFEATURE | US-CHINA TRADE 40 www.logis tic smiddleeas t .comJULY 2025 | LOGISTICS MIDDLE EAST HOW THE 90-DAY US-CHINA TRUCE IS ROCKING GLOBAL SHIPPING The 90-day tariff pause between the US and China is creating ripple eff ects across global maritime routes, freight rates, and port operation LOG_July0225_40-41_Feature_13654624.indd 4002/07/2025 15:46US-CHINA TRADE | FEATURE 41 www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | JULY 2025 Asudden 90-day tariff truce between the US and China is setting off waves across global shipping networks, prompting a rush of goods through trans-Pacifi c lanes and reconfi guring trade dynamics that had been upended by years of escalating tariff s. The agreement, which temporarily rolls back steep duties on hundreds of categories of goods, has reopened a window of opportunity for importers. US-bound cargo from China, much of it previously stalled due to cost concerns, is now fl ooding into ports as businesses race to move goods before the tariff relief expires in August. THE BULLWHIP EFFECT RETURNS In recent months, US importers have paused or reduced shipments as tariff s have climbed to over 100% in some cases. But with duties now lowered to around 30% on US imports and 10% on Chinese goods, the logjam has broken. Container traffi c on the trans-Pacifi c route has surged, with freight forwarders and carriers reporting a wave of bookings reminiscent of peak season. US-bound shipments from China could increase by up to 150% during this short window, creating what some are calling an early peak season. Logistics players are describing the phenomenon as a textbook bullwhip eff ect, where a sudden policy shift causes a chain reaction through the supply chain. RATES REBOUND, AND ROUTES RESHUFFLE The shift has not only caused a spike in volumes but is also driving up freight rates. Spot prices for China-US West Coast shipments have already begun to climb, and carriers are rolling out general rate increases and surcharges to manage demand and maximise revenue. With so much cargo being rushed onto vessels, ships are being pulled from other trades, including Asia–Europe and intra-Asia, to meet trans-Pacifi c demand. This rapid reallocation is creating ripple eff ects elsewhere. Middle East shippers may fi nd fewer vessel options or face higher prices for outbound cargo in the short term, as global capacity is stretched. Ports from Los Angeles to Shanghai are feeling the pressure. At US West Coast gateways, port authorities are bracing for a potential 70% increase in ship calls. If bottlenecks intensify, global congestion could echo across other logistics hubs, including those in the Gulf. MIDDLE EAST IN THE CENTRE While the US-China tariff détente may seem distant, the Gulf logistics sector is not immune to its aftershocks. As trade routes realign and vessels shift corridors, Middle Eastern ports and freight forwarders may see temporary disruptions in schedules, equipment availability, and rates. Furthermore, some cargo originally routed through Asia-Middle East-US supply chains, especially petrochemicals and electronics, could be rerouted to capitalise on tariff relief, tightening capacity in feeder and relay hubs like Jebel Ali and Dammam. On the fl ip side, if global carriers begin reprioritising Asia-US lanes, it could lead to delayed sailings or transhipment pressures for Middle East ports that rely on Asia-origin cargo fl ows. Gulf operators with strong ties to Chinese exporters or US retailers should closely monitor changes in container fl ows and carrier scheduling strategies. A TEMPORARY SPIKE OR STRUCTURAL SHIFT? Whether this 90-day reprieve leads to lasting trade normalisation remains unclear. While the immediate surge is likely to taper off if tariff s return, the broader landscape has already been reshaped by years of supply chain recalibration. Many US companies have diversifi ed sourcing to Southeast Asia or Mexico, and Chinese exporters have expanded ties with the EU, South America, and the Gulf. Even if US-China trade picks up during the pause, a full reversion to pre-trade war patterns is unlikely. The lesson for Middle East logistics players is clear: adaptability is key. The current volatility off ers both a test and an opportunity that highlights the importance of digital visibility, strategic port planning, and diversifi ed trade relationships. US President Donald Trump 150% US-bound shipments from China could increase by up to this amount during this short window LOG_July0225_40-41_Feature_13654624.indd 4102/07/2025 15:46REPORT | CROSS-BORDER TRADE 42 www.logis tic smiddleeas t .comJULY 2025 | LOGISTICS MIDDLE EAST WHY THE MIDDLE EAST ISN’T WINNING THE CROSS-BORDER E-COMMERCE RACE Despite state-of-the-art logistics infrastructure, the Middle East continues to be overlooked by global online shoppers LOG_July0225_42-45_Report_13654487.indd 4203/07/2025 18:11CROSS-BORDER TRADE | REPORT 43 www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | JULY 2025 As global e-commerce continues its meteoric rise, one segment stands out for its explosive potential: cross-border shopping. Consumers around the world are looking beyond their borders for better prices, more variety and access to exclusive products. According to DHL’s 2025 E-Commerce Trends Report, the global cross-border e-commerce market is expected to reach $4.81 trillion by 2032. That fi gure represents not just a massive commercial opportunity but a litmus test for how well regional markets can serve a global consumer base. The question for the Middle East is simple yet critical: with world-class infrastructure and strategic geographic positioning, why isn’t the region a go-to destination for global cross-border shoppers? THE REAL COST OF UNCERTAINTY The UAE, Saudi Arabia, and other Gulf countries have poured billions into building advanced logistics ecosystems, free zones, digital customs clearance, and integrated multimodal infrastructure. Yet when consumers in Asia, Europe, or the Americas click ‘buy now,’ they are far more likely to order from the US, UK, Germany, China, or France. DHL’s research confi rms that 7 in 10 shoppers will only purchase from countries they trust and the Middle East, despite its capabilities, is not currently among them. It’s a missed connection that speaks to more than just infrastructure. It’s about perception, policy, and end-to-end e-commerce experiences that build confi dence. What shoppers value most when buying from overseas isn’t just fast delivery, it’s secure payment options, transparent customs handling, and the ability to return a product without it becoming a logistical nightmare. Globally, 81% of consumers say they would abandon their cart if their preferred delivery option wasn’t off ered. Nearly as many, 79%, said they would walk away if their preferred return method wasn’t available. When shopping across borders, these percentages likely rise as risk and uncertainty creep into the equation. THE NEW CROSS-BORDER CURRENCY Add to that a stark concern about hidden costs. For cross-border shoppers, unexpected customs fees or unclear pricing structures are instant deal breakers. While the Middle East has made strides in digital customs and trade facilitation, this clarity $4.81 TRILLION The expected value of global cross-border e-commerce by 2032 LOG_July0225_42-45_Report_13654487.indd 4303/07/2025 18:11REPORT | CROSS-BORDER TRADE 44 www.logis tic smiddleeas t .comJULY 2025 | LOGISTICS MIDDLE EAST often doesn’t trickle down to the online shopper experience. That lack of transparency feeds into the trust gap, a gap that logistics players are in a unique position to close. If logistics companies in the region want to become true enablers of cross-border trade, the delivery experience must start long before the package reaches the sorting centre. It starts at checkout. Payment in local currencies, estimated duties shown upfront, and clear return terms are not perks, they are expectations. Just as importantly, the returns process itself needs an overhaul. Parcel lockers, QR-code-based label free returns, and convenient drop-off points are increasingly the norm in markets like Europe and the US. For shoppers in Nigeria, India, or even Morocco, easily returning a product via a trusted method could be the key to choosing a city like Dubai over Düsseldorf. TURNING POTENTIAL INTO PERFORMANCE There is, however, a silver lining. The Middle East is exceptionally well-placed to become a cross border commerce powerhouse if the industry moves quickly and decisively. The region already serves as a strategic re-export and transhipment hub, with growing free zones dedicated to e-commerce, like Dubai CommerCity, and national visions investing in supply chain innovation, like Saudi Arabia’s Logistics Services Program. What’s missing is the shopper-centric layer of trust and fl exibility that global e-commerce demands. Companies like Amazon are setting expectations for cross-border fulfi lment through localised websites, real-time tracking, and clear returns. Regional players, whether traditional 3PLs, postal operators, or new-age last-mile startups, have the opportunity to build or partner with platforms that replicate these experiences while capitalising on local strengths. A concerted eff ort to integrate customs transparency, localised checkout, and post-sale support could be the diff erentiator. Moreover, public-private collaboration could play a transformative role. Joint initiatives between governments and major logistics fi rms can help standardise cross-border delivery and returns, set trust-building benchmarks, and create certifi ed e-commerce corridors that global shoppers recognise and rely on. The EU already operates such frameworks. There’s no reason why the GCC couldn’t create something similar with fewer barriers and better connectivity to Africa and Asia. FROM LOGISTICS HUBS TO SHOPPER DESTINATIONS Ultimately, the Middle East’s e-commerce potential is not just about exports or domestic digital retail. It’s about becoming a preferred destination for international consumers, from those browsing beauty products from The UAE, Saudi Arabia, and other Gulf countries have poured billions into building logistics ecosystems LOG_July0225_42-45_Report_13654487.indd 4403/07/2025 18:11CROSS-BORDER TRADE | REPORT 45 www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | JULY 2025 Thailand, ordering electronics from Nigeria, or seeking fashion items not available locally. The region has mastered logistics infrastructure, with hyper-modern airports, world-class ports, and strategically located free zones. But while infrastructure may move the parcel, it doesn’t move the buyer. Trust, transparency, and convenience are the new currencies of global e-commerce, and this is where the region still has work to do. To become a true cross-border magnet, the Middle East needs to shift its focus from network design to shopper experience. International consumers are no longer impressed by fast delivery alone, they expect it. What they value more is knowing what they’ll pay at checkout, feeling confi dent that the product will arrive intact, and understanding how to return it without excessive cost or friction. These expectations apply even more when shopping from abroad, where unfamiliar regulations and providers create anxiety that kills conversions. That’s why the most impactful innovation in regional logistics today isn’t about faster planes or bigger warehouses, but about creating a seamless, trustworthy digital journey. It’s about empowering retailers to show real-time duties and taxes. It’s about giving buyers localised payment methods and pricing in their currency. It’s about making the “free and easy returns” promise real, not just aspirational. Until these shopper-centric features are fully embedded across the ecosystem, global buyers will continue to default to familiar markets like the US, UK, Germany, or China. But the region is not starting from zero. The Gulf already has several competitive advantages. It is geographically closer to emerging e-commerce hotspots in Africa, South Asia, and Eastern Europe than any of the current e-commerce giants. It has invested in trade facilitation, digital customs clearance, bonded zones, and same-day last mile capabilities. It also has ambitious logistics strategies in place, particularly in the UAE and Saudi Arabia, which are aimed at boosting non-oil exports and the growth of the digital economy. The next step is for logistics providers, marketplaces, and government entities to work in sync, not just to improve operations but to build shopper trust. This could mean regional certifi cation schemes for reliable cross-border sellers, stronger buyer protections at checkout, or public-private partnerships that subsidise returns infrastructure. It could also mean integrating AI-powered customer support in multiple languages, enhancing review authenticity or trialling new models like subscription commerce. Cross-border e-commerce isn’t just a retail trend. It’s a test of how connected, customer-friendly, and future-ready a logistics ecosystem truly is. The Middle East has already built the highways of global trade. Now, it must make them feel like home to the world’s online shoppers. Because in the age of digital consumption, the winner won’t be the fastest mover, it will be the most trusted. The shoppers are ready. The infrastructure is in place. It’s time for the region to connect the dots and deliver on its full cross-border promise. 81% The percentage of consumers that would abandon their cart if their preferred delivery option wasn’t offered LOG_July0225_42-45_Report_13654487.indd 4503/07/2025 18:11INTERVIEW | PORT CITY COLOMBO 46www.logis tic smiddleeas t .comJULY 2025 | LOGISTICS MIDDLE EAST As global logistics fi rms look for new strategic footholds in emerging markets, Sri Lanka’s Port City Colombo is positioning itself as a future-ready logistics and maritime powerhouse. The Special Economic Zone (SEZ), developed as a Public-Private Partnership between the Government of Sri Lanka and CHEC Port City Colombo (Pvt) Ltd., is designed to serve as a regional fi nancial and business hub at the heart of South Asia. “Port City Colombo, Sri Lanka’s fi rst multi-services SEZ, is designed to be a gateway to South Asia,” said Tian Zheng, General Manager, Investment Promotion and Marketing of CHEC Port City Colombo (Pvt) Ltd. “It is developed on 269 hectares of reclaimed land as an extension of Colombo’s Central Business District (CBD).” PROXIMITY TO A WORLD-CLASS PORT One of Port City Colombo’s most strategic advantages is its location next to the Port of Colombo, now ranked among the world’s top 50 ports and named the fastest-growing in 2024 by Alphaliner. In 2024, the Port of Colombo recorded an all- time high container throughput of 7.78 million TEUs, a 12.1% YoY jump, surpassing the 6.91 million TEUs handled in 2023. The transhipment volumes handled by the Port of Colombo jumped by 9.7% YoY to a record high of 6.31 million TEUs in 2024. In 2025, the Colombo Port is projected to handle 7.76 million TEUs, with a high case reaching 9.49 million TEUs. By 2026, the Sri Lanka Port Authority (SLPA) is projected to double the port’s total capacity to 15 million TEUs and 30 million TEUs by 2035. This growth underscores Port City Colombo’s potential to support outsourcing, shared services, and regional HQ operations for global logistics and maritime companies. AN EXTENSION TO GULF LOGISTICS NETWORKS Responding to comparisons with the Gulf’s own logistics free zones, Tian made clear, “With the Colombo Port’s strategic geographical location on the East-West maritime route with direct access to WHY PORT CITY COLOMBO IS TURNING HEADS IN GULF LOGISTICS Sri Lanka’s mega-infrastructure project is courting Gulf logistics players with low costs, legal protections, and direct access to 70% of India’s transhipped cargo “The city capitalises on several key facets that enable Sri Lanka to become an emerging regional logistics and business hub at the heart of South Asia” South Asia, Southeast Asia and Africa, Port City Colombo can serve as a cost-eff ective extension of Gulf logistics networks rather than appear as a competitor.” He noted that Port City Colombo off ers “lower setup and operating costs” and “access to the Indian market,” with Colombo Port currently handling “around 70% of India’s transhipped cargo.” He added that the SEZ’s legal and regulatory framework “includes international dispute resolution mechanisms and a focus on advanced investor protection, aiming to create a predictable and secure environment for businesses.” Situated in a locality that off ers untapped transhipment potential whilst off ering holistic development that includes education, healthcare, and residential facilities, Port City Colombo appeals LOG_July0225_46-49_Interview-Port City Colombo_13654927.indd 4602/07/2025 15:22PORT CITY COLOMBO | INTERVIEW 47www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | JULY 2025 to companies seeking more than just low-cost operations. “The SEZ targets emerging markets, unlike Gulf zones focused on high-end segments,” he said. SRI LANKA’S SKILLED WORKFORCE Sri Lanka’s workforce is one of the SEZ’s most underappreciated advantages. “Sri Lanka’s population has a literacy rate of 92%, the highest literacy rate in South Asia and, overall, one of the highest literacy rates in Asia,” Tian stated. “The country produces approximately 30,000 graduates annually from state universities and higher education institutions.” He says over 150,000 skilled tech professionals are trained in areas like cloud, AI, and cybersecurity. “Sri Lanka has a proven track record in shipping Tian Zheng, General Manager, Investment Promotion and Marketing of CHEC Port City Colombo LOG_July0225_46-49_Interview-Port City Colombo_13654927.indd 4702/07/2025 15:22INTERVIEW | PORT CITY COLOMBO 48www.logis tic smiddleeas t .comJULY 2025 | LOGISTICS MIDDLE EAST The Marina is a core district in the development of Port City Colombo support services, accounting & fi nance, IT and analytics,” he noted. This talent pool is “ideal for crew management, maritime fi nance and compliance.” In addition, “competitive wage levels off er cost advantages over Gulf and Southeast Asia,” and the “strong cultural alignment and work ethic” make Sri Lankan professionals “well suited to GCC companies.” Port City Colombo also facilitates long-term business presence through its visa system. “Port City Colombo provides the benefi t of family- inclusive preferential visas for up to 10 years with a green channel for investment, business, employment, and residency,” said Tian. FISCAL AND REGULATORY ADVANTAGES Port City Colombo operates as a designated zone for foreign currency governed by the Colombo Port City Economic Commission. “The CPCEC is designed to assist investors and businesses by off ering tax incentives, fast-tracked approvals, global arbitration and dispute resolution, 100% capital and profi t repatriation under an off shore fi nancial regime,” Tian said. The off shore banking system, he added, “will foster the creation of a circular fi nancial economy due to the increased circulation of foreign currency.” Port City Colombo’s fi scal incentives include “0% personal income tax, 100% capital and profi t repatriation, 100% foreign ownership,” and “0% corporate income tax, 0% capital gains tax, 0% dividend withholding tax, and 0% sales tax, customs duties and border tariff s for eligible businesses.” These benefi ts are complemented by “no restrictions on foreign ownership,” “no cap on hiring expatriates,” and a “dedicated International Commercial Dispute Resolution Centre.” Tian explained that the SEZ “enables scalable, agile operations with smart infrastructure, high-speed connectivity, and fl exible spaces, making it an ideal base for maritime and logistics fi rms looking to expand their back-offi ce operations beyond their home region.” The evolution of Port City Colombo into a functioning business hub took a major step forward in May 2025, when the SEZ formally handed over offi ce space at its new business centre to key anchor tenants. The development includes nine low-rise offi ce buildings, comprising a dedicated IT hub and a commercial hub, and represents a $5 million FDI by CHEC, a subsidiary of CCCC, and complements the larger $1.4 billion investment already made into the project. This marks an important step on its development journey. 70% Colombo Port currently handles this amount of India’s transhipped cargo LOG_July0225_46-49_Interview-Port City Colombo_13654927.indd 4802/07/2025 15:23PORT CITY COLOMBO | INTERVIEW 49www.logis tic smiddleeas t .comLOGISTICS MIDDLE EAST | JULY 2025 The IT Hub at the Business Centre at Port City Colombo Xiong Hongfeng, Managing Director, CHEC Port City Colombo INNOVATION AND INFRASTRUCTURE AT THE CORE Beyond incentives, Port City Colombo is being built as a “plug-and-play” smart city. According to Tian, the SEZ’s liberal regulatory environment enhances the ease of doing business whilst supporting the growth of cutting-edge logistics technologies. With an atmosphere geared toward knowledge exchange, scalability, and innovation, Port City Colombo allows businesses to operate effi ciently while collaborating across South and Southeast Asia. “PCC’s regulatory and fi scal freedom makes doing business easier, leaner, and more scalable, all under the streamlined oversight of the CPCEC,” he said. SUPPORTING MARITIME GROWTH Two core districts of the development, the Marina and the Financial District, are designed to bring maritime and commercial stakeholders together. “The Marina Development will feature the luxury yacht marina, the fi rst of its kind in South Asia,” Tian revealed. “This will be South Asia’s answer to premier global marinas like Port de Cannes in France and a strategic complement to the Dubai Marina in the UAE. It will deliver a world-class luxury marina experience, off ering comprehensive services and facilities within an all-year-round operational environment.” The Marina Development at Port City Colombo will connect key destinations including India, the Maldives, Singapore, China. “With a berthing capacity of up to 250 medium sized yachts, the Marina Development at Port City Colombo will connect key destinations including India, the Maldives, Singapore, China, and other Indian Ocean nations,” he added. This superyacht off ering “will turn into a destination for superyacht stopovers, bring high net worth tourists, enhancing yet another tourism off ering, contributing to tourism earnings of Sri Lanka.” The Financial District will “feature businesses from a diversity of sectors, which encompass IT, hospitality and tourism, fi nancial services and other service-based commercial entities.” These businesses will support “a stable supply chain of goods and services, and an integrated value chain for maritime and shipping within the South Asian region.” A COMPELLING PROPOSITION FOR GULF LOGISTICS For Gulf-based logistics fi rms, PCC represents more than just a cost-eff ective location. It’s a holistic ecosystem for regional growth, innovation, and talent. “Port City Colombo capitalises on several key facets that enable Sri Lanka to become an emerging regional logistics and business hub at the heart of South Asia,” said Xiong Hongfeng, Managing Director, CHEC Port City Colombo (Pvt) Ltd. “This includes Sri Lanka’s strategic locality and positioning along important shipping routes, a highly skilled talent pool, and a regulatory environment that enhances the ease of doing business.” “Being a foreign-currency designated Special Economic Zone, Port City Colombo provides the unique opportunity for Middle Eastern businesses in the Logistics sector to explore expansion options beyond their home region and diversify their links across South Asia,” said Xiong. “Port City Colombo, Sri Lanka’s fi rst multi services SEZ, is designed to be a gateway to South Asia” LOG_July0225_46-49_Interview-Port City Colombo_13654927.indd 4902/07/2025 15:23Next >