Airlines and logistics firms have started expanding in the Middle East as growth in the region gains momentum.

Emirates SkyCargo cited Asia-Middle East trade as a growth area and has cemented its presence in its home base by continuous investments in the region and anchoring its worldwide operations there.

Ravishankar Mirle, vice president, cargo commercial – Far East and Australasia, noted that the boom in pharma also has also provided growth opportunities for the carrier, citing Dubai’s geographic advantage as a transhipment hub to connect Asia, Europe, the US and Africa.

Strategic location

“Dubai actually is the crossroads of north, southeast and west, and that is the geocentric advantage which we have and which has been built into our network around this concept of connecting the world – connecting Asia with Africa, connecting Asia with Europe, connecting Europe with India, and the entire world basically – via Dubai,” Mirle told Asia Cargo News on the sidelines of the China Air Cargo Summit 2019.

Mirle noted that one-third of the world’s population is in a radius of four hours from Dubai, and two-thirds of the world’s population is in a radius of eight hours.

“Dubai is very-well positioned. If you look at the location of Dubai, in eight hours you can reach Shanghai on one side, and in eight hours, Europe on the other side,” he said.

Given its strategic location, Emirates is harnessing the potential of its home base to be a transhipment hub, citing Asia to Africa and Asia to the Middle East as growing segments for the carrier. Emirates is well-positioned to support major trade lanes. For example, Emirates operates to 54 cities in 30 of the 65 countries outlined in China’s Belt and Road Initiative, and can, therefore, support cargo movement between China’s major trading partners.

“Middle East-Asia, I think, is a growing sector for us. We are seeing growth into bases like Dubai. Dubai has a lot of strategic advantages when it comes to providing logistics and distribution services. Like transhipment,” Mirle said, noting double-digit growth particularly in its Asia-Middle East operation.

“Customers have realized the potential of Dubai as a transit point. The ease of doing business in Dubai and the UAE is improving as of the World Bank’s latest statistics. Dubai has a high ranking on the ease of doing business. More and more people are coming to Dubai to set up new businesses and because of the infrastructure and connectivity,” he added.

Mirle also cited the advantages of using Al Maktoum International Airport – also known as Dubai World Central Airport (DWC) – where it operates its freighters in terms of facilitating faster transhipment of goods. Aside from the airport being in a free zone, he said that the airport and seaport are also next to each other, separated by a distance of just 5 kilometers. Dubai South, the area where the airport is located, is also growing in importance as a logistics hub with a number of global majors setting up base there.

Growth in pharma business

Citing its growing pharmaceutical business, Mirle said Emirates “has invested and will continue to invest” in infrastructure to support this growth as well as other projects to build up its Dubai station.

Mirle noted, for example, that Emirates has built a state-of-the-art handling facility dedicated to pharma at Dubai International Airport in Dubai – which cost the company more than US$100 million – to maintain the integrity of its cool chain and to ensure staff training to handle the sensitive shipments.

“At one point in time, Dubai was considered to be a desert, and people thought because of the hot climate, the temperature would be very high and pharmaceuticals would not be the best commodity to move to Dubai. Now we have broken that myth,” Mirle told Asia Cargo News, noting that its 8,800 square metre temperature-controlled space dedicated to pharma shipments in its Dubai facility is good distributions practices-certified (GDP).

“A lot of the pharma volumes are from Europe to the Middle East and Africa, India to the US and now, in fact, China has also started exporting. Then we have Australia. These are all important pharmaceutical markets,” he added. “We are seeing a year-on-year growth in pharmaceuticals, so we have already invested and we will continue to invest.”

Logistics firms expand in the Middle East

Meanwhile, various logistics firms have also recently announced expansion plans in the region, with projects underway from setting up new offices, building logistics facilities and partnering with local players to expand footprints.

DHL Express just broke ground for a 30,000 square metre new express logistics hub in the Abu Dhabi Airports Free Zone (ADAFZ) in a move aimed to support DHL’s aim to grow its presence in the Middle East, and also in line with Abu Dhabi’s goal to develop the area into a regional logistics operations hub.

The US$100 million facility, located in the ADAFZ’s East Midfield Development Zone, is expected to be operational by the end of 2021 and will upgrade the capacity of DHL Express from a 4,300 square meter facility in AUH’s logistics park.

“In line with our long-term objectives, the new facility at Abu Dhabi International Airport is our latest investment to support global trade to and from the capital of the UAE,” said Nour Suliman, chief executive, DHL Express Middle East and North Africa. “The new facility will meet the increasing demand for a faster and more efficient operational process.”

Kerry Logistics also recently said it is expanding in the Middle East with the setting up of a new office in Bahrain and a new bonded logistics facility in Dubai to enhance its service capabilities in the region.

The Hong Kong-based logistics firm said the new office in Bahrain will focus on serving the automotive, oil and gas, fashion and lifestyle, and electronics and technology verticals with air, ocean and road freight, customs clearance and warehousing services as Kerry moves to strengthen its foothold in the Gulf Cooperation Council region. The six GCC member states are the United Arab Emirates, Saudi Arabia, Qatar, Oman, Kuwait and Bahrain.

The 6,500 square metre Dubai facility will meanwhile offer solutions to electronics and technology customers and serve as an e-commerce fulfilment hub. Its operations started this month.

“Our new office in Bahrain and the logistics facility in Dubai are substantially boosting Kerry Logistics’ capabilities in serving customers in the Middle East. We foresee that Kerry Logistics will continue with further expansion in the GCC region,” Mathieu Biron, managing director, global freight forwarding, at Kerry Logistics, said in a statement.

DB Schenker has also opened its first fully solar-powered logistics centre in Dubai to serve as its central regional logistics hub in the Middle East.

The 33,000 square metre mega-distribution centre is also located in the logistics area of Dubai South, in the immediate vicinity of Al Maktoum International Airport, and will become the central regional logistics hub in the Middle East for DB Schenker’s customers, including consumer goods giant Unilever.

DB Schenker said the temperature-controlled new logistics centre offers space for a total of 90,000 Euro pallets and has a 3,000 square metre mezzanine for value-added services. This is the second of three phases of its expansion in Dubai. The German firm said upon completion of all its expansion projects in Dubai, by 2021, DB Schenker will have created logistics space with a total capacity of 80,000 square metres

By Charlee C. Delavin

Asia Cargo News | Hong Kong