In January, the completion of a new bridge in the United Arab Emirates brought easier access and faster transit times between the Jebel Ali free trade zone and Dubai’s Al Maktoum International Airport. It enhanced the Dubai Logistics Corridor, which links the port, airport and free trade zone under a unified customs bond for fast and efficient sea-air logistics, which have been a hallmark of the region for decades.
The concept has had its ups and downs. The global economic downturn took a heavy toll on it. As air freight rates were plumbing new depths thanks to too much lift chasing too little air cargo, the appeal of sea-air plummeted, which prompted some pundits and even erstwhile proponents of the concept to declare its demise.
Sri Lanka has chased garment and textile exports from Bangladesh in an effort to carve out a niche for itself in sea-air traffic. This is likely to continue on and off, but not poised for a significant take-off, according to one observer.
Singapore, another erstwhile player in sea-air traffic, has also seen this business wane, largely thanks to the improvement of surface transportation in Asia, which has led to a shift to road feeder services, noted Ram Menen, former head of cargo of Emirates.
Things brightened up in 2017. The combination of disruption in ocean shipping and the sharp rise in air freight prices driven by shortage in capacity breathed life back into sea-air traffic over the past year.
“We always know when air cargo rates rise, we get plenty of hits on our website,” said Nick Coverdale, founder of sea-air provider Aeromar.
Another aspect that has helped is his company’s decision to embrace digitization, notably putting pricing information and booking capability online. All its new business comes through this channel, Coverdale said.
“Customers want instant pricing and bookings, not RFQ, phone quotes, e-mail schedules and Excel sheets,” he said.
Over the past 12 months, growth in sea-air business originating in the areas that Aeromar focuses on – South China, Cambodia, Indonesia and Vietnam – has been acceptable, he stated.
Despite the recovery in sea-air’s fortunes, it is facing further challenges. Arguably the biggest is the ongoing development of surface transportation, especially rail links from eastern Asia to Europe.
“The competition for sea-air on these routes are not just pure air freight, but the rail. China-Europe rail connections seem to be working very well,” reflected Menen.
Rail freight services from China to Europe have been proliferating, and new routes are being added. In early June, Kerry Logistics launched new cross-border rail and trucking services from China through Kazakhstan to the Caucasus and Turkey with transit times of 18-20 days. Starting from Lianyungang, the company’s new rail offering moves traffic to multiple destinations in Turkey via the newly built Baku-Tblisi-Kars railway.
According to Kerry, the prime commodities using the new service are going to be electronic parts, electrical appliances, minerals, auto parts and other industrial goods. To a large extent, this is the kind of traffic chased by sea-air operators.
Coverdale expects significant repercussions from the growth of rail services to Europe. “When it gains better transparency with less fragmentation, there will be no sea-air traffic north of the Pearl River Delta,” he predicted.
Overall, he sees the outlook for sea-air as stable, but he is concerned about the spectre of slow steaming and blank sailings.
Much will hinge on the balance of air cargo capacity and demand. Menen expects capacity to remain static, pointing to the prospect of older freighters retiring from the scene while carriers remain reluctant to invest in expensive new cargo aircraft. If demand maintains its recent momentum, this should keep air freight rates at lofty heights, making sea-air a welcome alternative to some shippers.
The importance of sea-air for Dubai should not be overrated, he noted. During his tenure at the helm of Emirates SkyCargo, sea-air was supplemental. “We never really banked on that traffic. The network was such that it had a tremendous feed from all markets. I am sure it is still the same,” he commented.
Sharjah Airport, which used to be a heavily used conduit for sea-air charters, has built its niche with Africa traffic over the years. It benefits from the activities in the local free trade zone and from the activities of Air Arabia, which has a hub at the airport, he said.
By Ian Putzger
Air Freight Correspondent | Toronto