Terry DavidEtihad Rail operates at 100% capacity on aggregate transportation, carrying up to 60,000 tonnes of crushed stone daily to construction projects across the UAE.
The railway network links the Saudi border to Fujairah, transporting aggregates, petrochemicals, polymers, and general cargo while reducing road traffic and emissions. Every train removes up to 300 lorries from the UAE’s roads.
Yet capacity constraints reveal a broader challenge: demand for industrial and logistics infrastructure is outpacing supply across the Emirates, creating opportunities for strategic investment approaches that balance scale with operational efficiency.
How Much Freight Capacity Does UAE Infrastructure Need?
Etihad Rail aims to transport 60 million tonnes of cargo annually by 2030.
Omar Al Sebeyi, acting chief executive of Etihad Rail’s freight section, confirmed expansion efforts are underway. “We are working on expansion,” Al Sebeyi told The National at the Global Rail conference in Abu Dhabi, which drew approximately 20,000 attendees.
The freight network’s main load by volume comes from aggregates transported from quarries in the Northern Emirates to stations in Dubai and Abu Dhabi. Business growth necessitates increased capacity across the entire system.
What New Customs Infrastructure Will Enhance Trade Flow?
A memorandum of understanding signed in October 2025 established a Bonded Rail Corridor linking Khalifa Port with Fujairah Terminals.
The collaboration between Etihad Rail, Abu Dhabi Customs, Fujairah Customs, AD Ports Group, Fujairah Terminals, and Noatum Logistics will facilitate seamless movement of goods through a secure customs corridor. Pilot operations for the Customs Corridor commenced in the fourth quarter of 2025.
The corridor operates across free zones, transit shipments, exports, and domestic movement of goods between Abu Dhabi and Fujairah. It cuts customs clearance times through coordinated pre-inquiry procedures, with final customs formalities completed at destinations.
Goods transported via Etihad Rail trains enjoy competitive advantages with priority clearance within customs systems.
How Is Industrial Space Demand Responding to Rail Infrastructure?
Dubai’s new industrial space requirements reached 40.6 million square feet in 2024, representing a 225% surge in demand.
Knight Frank’s Dubai and Abu Dhabi Industrial Markets Review 2024/2025 documented the unprecedented growth. The completion of Etihad Rail, first announced in 2008, established critical cargo links between emirates that drove increased demand around rail hubs.
Knight Frank expects the rail network to significantly enhance the UAE’s industrial landscape by creating seamless connectivity between key industrial zones nationwide. Improved infrastructure will likely increase demand in lower-rent areas, reducing price disparities across various industrial zones.
What Impact Will Airport Relocation Have on Logistics Patterns?
The planned relocation of Dubai’s primary airport to Al Maktoum International in Dubai South by 2034 represents another transformative shift.
This move will reshape logistics networks throughout the emirate. New rail connectivity enhances supply chain efficiency, lowers transportation costs, and offers sustainable alternatives to road freight.
Rents and capital values maintained upward trajectories throughout 2024. Industrial and logistics rents in Dubai surged by 33% year-on-year, with vacancy rates at just 3%.
The first half of 2025 saw near-total absorption of available supply, pushing vacancy rates even lower.
Why Does the UAE Government Prioritize Logistics Sector Growth?
The UAE government announced plans to grow the logistics sector from AED 129 billion to AED 200 billion in the next seven years.
The establishment of the UAE Logistics Integration Council in early 2025 coordinates this expansion. The initiative recognizes logistics infrastructure as fundamental to economic diversification and trade competitiveness.
Foreign direct investment and international trade recorded substantial growth in 2024, catalyzing new space requirements. Manufacturing accounted for 19% of Dubai’s demand, while logistics represented 18%.
How Will Regional Rail Connections Expand Trade Capacity?
Construction on Hafeet Rail, connecting the UAE and Oman, has begun.
In April 2024, Etihad Rail and Oman Rail announced the joint venture to construct 300 kilometers of new railway linking the Etihad Rail network at Abu Dhabi with Sohar Port in Oman. The route passes through Al Ain.
“The plan is there,” Al Sebeyi said during a Global Rail panel discussion. “Eventually we will reach the point where the whole of the GCC is connected.”
The planned GCC Railway will boost rail connectivity across the region. Etihad Rail signed a memorandum of understanding with Cosco Shipping Ports Abu Dhabi Container Freight Station to enable cargo movement from Khalifa Port to other logistics centers.
What Economic Returns Does Rail Infrastructure Generate?
Etihad Rail’s website projects the railway will provide AED 186 billion in economic benefits over 40 years.
The calculation factors reduced transportation costs, faster transportation times, lower emission impacts, and increased tourism generation. The network cuts transport-related CO2 emissions by up to 80% compared to road transport, aligning with UAE Net Zero 2050 objectives.
The system expects to slash transport-related CO2 emissions by 21% annually, equating to approximately 8.2 million tonnes of CO2 reduction yearly.
Integration with major industrial ports including Jebel Ali, Khalifa Port, KIZAD, and Fujairah Port solidifies the UAE’s status as a pivotal trade and logistics center. By effectively linking port operations with inland terminals, Etihad Rail supports faster, cleaner, and more economical movement of goods across the UAE and to neighboring markets.
The anticipated annual contribution reaches AED 3.5 billion to the UAE economy by 2030, with estimated returns four times the original investment. Over 9,000 jobs in operations, engineering, logistics, and maintenance underscore the network’s role in economic diversification.
As regional logistics infrastructure matures, the challenge shifts from construction to optimization. Capacity expansion, customs modernization, and international connectivity determine whether rail networks deliver projected economic returns while supporting broader industrial development objectives.