Growth in Middle East as a major transport and logistics hub

The global air freight market continues to witness declines in tonnage. According to IATA,
year-to-date through September, tonnage is down 2.6%. However, Middle East carriers have been able to defy this downward spiral and have reported a 14.1% increase in tonnage for the same period. What is behind this apparent success?

A number of reasons could be affecting this trend, such as the Middle East’s geographic location. According to Ram Menen, Emirates SkyCargo’s Senior Divisional Vice President of Cargo, “In eight flying hours, we have access to 5.8bn people in the world. Two-thirds of that is just east of us, and two-thirds of that is India and China, which are the factories of the world.”

In order to support this growth, the region, particularly the UAE, has invested heavily in infrastructure ranging from new and expanded airports to distribution centre facilities to port enhancements. With the majority of Middle East cargo transiting through Dubai, Dubai Airports recently announced its $7.8bn Strategic Plan 2020 to continue the cargo growth. The plan calls for expansion and renovation of Dubai International Airport’s cargo facilities and to build a new transhipment facility for freight transferred between Dubai International Airport and Dubai World Central.

The large airlines for the region – Emirates, Etihad, Qatar and Saudi – have all enjoyed
a good 2012. Emirates, for example, reported a record third quarter for cargo – 93,560 tonnes – an 18% increase from third quarter 2011. It appears fourth quarter may be another record breaking quarter for the company as October figures indicate another record – 32,500 tonnes – a 15% increase from October 2011.

In general, the airlines are enjoying newer fleets and new routes around the world. However, the geographic location of the Middle East also bodes well for air-sea options. According to industry analysts, Emirates is the largest air freight carrier of air-sea cargo and derives 20% of its cargo volume from sea volumes transhipped to air at its Dubai hub. Particularly for those shippers that ship between India and Southeast Asia to Europe or vice versa,  it may be an attractive viable option.

The uncertainty in the global economy is helping to drive changes in trade lanes. While airfreight throughout much of the world is in decline, the Middle East appears to be doing well. Combined with its geographic location as well as infrastructure improvements, solutions such as air-sea may be reasonable transportation options for shippers that are interested in the India/Southeast Asia – Europe tradelane as well as Africa – Europe and/or Asia.