Fortune favours the brave

Regional giants move quickly to exploit growth opportunities in services and destinations, adding capacity in one of the world’s most dynamic air cargo markets, writes Anna Newnham for TIACA Times Spring issue 2019.

The Middle East has always punched above its weight in air cargo terms, thanks to its location at the crossroads between Europe, Africa, central Asia, south-east Asia, and the Indian-sub- continent.

The region weighs in in third place in terms of growth rates as a result of its logical suitability as a hub for transcontinental cargo and the proactivity of the region’s main air cargo players.

The downside of its enviable location is its vulnerability to shocks in international trade, much of which passes through the oil-rich states bordering the Arabian-Persian Gulf. The region has also suffered more than its fair share of wars, with the Saudi-Yemen conflict and Syrian civil war still raging, casting a shadow over the region.

The International Air Transport Association (IATA) says that Middle Eastern carriers’ freight volumes were up, by 1.7% year-on-year in November 2018, revised to 0.1% year-on-year at the end of 2018. Despite the December slowdown in growth, the region recorded an annual increase in demand of 3.9% in 2018. Capacity is, however, outstripping demand, up 6.2% in 2018. IATA’s predictions for 2019 globally were cautiously optimistic.

In January 2019, World ACD, the air cargo market database, picked out two positive trends in a mixed picture of results for last year – strong growth in pharmaceuticals, plus cargo to and from South America.

Extra capacity is an indication of bold ambitions and the region’s air cargo players are not slow to take up new opportunities. In January this year

Emirates SkyCargo began a new weekly B777 freighter service to Bogota, Columbia. The service builds on a network of 160 cargo destinations, all served from a dual hub in Dubai, at Dubai International Airport and at Dubai World Central.

The arrangement means that Emirates can switch freight between passenger and freighter aircraft, and in September 2018, the airline celebrated transporting its millionth unit load device (ULD) on the 24/7 trucking service used to connect the two Emirates SkyCentral hubs.

The multi-airport hub and trucking service carries all manner of cargoes – live, animals, perishables, and pharmaceuticals – and with Good Distribution Practices (GDP certification) in pharmaceuticals carriage, it has been able to offer new ‘Emirates Pharma’ products, capturing new business and gaining significant volumes since launching in September 2016.

Etihad Cargo has also been expanding capacity, to China, India, and Vietnam, in September. Abdulla Mohamed Shadid, Etihad Airways Managing Director Cargo and Logistics, said: “It is important that we leverage Abu Dhabi’s strategic positioning at the center of the world’s busiest trade lanes to serve these key markets. Our freighters are central to this strategy, and the new network plan will ensure we maximise the cargo flows between main deck cargo and belly-hold.”

In November, it also launched a new cargo route to Barcelona, Spain, where it also serves Madrid, bringing its cargo capacity to both cities to 23,000 tonnes.

In January this year the airline took a significant step into the pharmaceuticals trade by obtaining IATA’s Centre of Excellence for Independent Validators (CEIV) certification in Pharmaceutical Logistics. Coupled with this, it began a refurbishment and expansion of its temperature- controlled space in its pharma zone at Abu Dhabi International Airport at the end of last year, to take advantage of a rising market sector.

Not to be outdone by its near neighbours, Bahrain has begun construction of a new cargo terminal at its airport, signing a deal in November 2018 to build the 25,000 sq m Cargo Area, due to come on-line, along with other airport modernisations, towards the end of 2019.

The Bahrain Airport Company signed up FedEx Express in February 2019 to take the first 9,000 sq m of the new terminal and says it is in negotiations with two further companies.

Saudia Cargo is also planning major expansion, launching its project for new terminals at King Abdulaziz International Airport in Jeddah in September 2018, part of an ambitious plan to double freight capacity and position Saudi Arabia as a global logistics hub to rival its neighbors. It also launched a new express service between mainly European centers and the Kingdom in October last year.

Qatar Airways Cargo is another airline keen to maximise opportunities to the burgeoning South American market, and in January added Guadalajara, Mexico, to its twice-weekly B777 freighter route of Macau-Los Angeles-Mexico City-Liege-Doha. In the same month it announced increases in capacity to destinations in Asia – Kuala Lumpur and Bangalore – as well as the European destinations Paris, Copenhagen, Geneva and Barcelona, intra-regional flights to Muscat and extra flights to Dar Es Salaam.

The carrier also began B777 freighter operations to Almaty in Kazakhstan. The carrier has been expanding rapidly, with cargo volumes increasing by 10% in 2018. Future plans include the completion of construction of its Cargo

Terminal 2, which will increase annual cargo capacity at Qatar Airways’ hub in Doha to 3.2 million tonnes annually.