Continuing growth in both the volume and commodity diversity of overall Asia-Middle East trade is encouraging that market’s air cargo operators to develop increasingly specialized services.
The underlying economic trends driving that innovation were highlighted in a report published earlier this year by Asia House, a UK-based body which advises government and private sector organizations on Asia-Europe trade, investment and public policy.
That report, The Middle East’s Asian Pivot: Trade Growth and Opportunities, analyzed shifts in Middle East trade since 2000, including “a clear move” towards Asia.
“Middle Eastern trade with Asia has risen sharply since the turn of the century, while its trade with established markets in the OECD (Organization for Economic Cooperation and Development) declined,” it stated.
Expanding on that point, the report said that while OECD countries had seen their share of trade with GCC (Gulf Cooperation Council) nations decline from 63% to 42% between 2000 and 2016, emerging Asian economies (China, India, ASEAN) had seen their proportion increase from 18% to 30% over the same period.
Emerging Asia’s annualized growth rates had also exceeded those of established markets, the report said. China’s annualized trade growth with GCC countries, for example, was 13.5% between 2000 and 2016, compared to the US’s rate of 4.4%.
“These long-term trends show the Middle East’s growing focus on trade with Asia. They also highlight, from an Asian perspective, the elevated importance of Middle Eastern trade in comparison to traditional markets,” stated the report.
“The current trajectory suggests that these trends will persist and that the economic relationship between Asia and the Middle East will continue to grow.”
Those trends – and their impact on air cargo operations – were confirmed by managers with global forwarding and logistics group GAC, which has a strong presence in the Asia-Middle East market.
“There has been a shift in the world’s trade axis, reflected by continuing growth in air cargo business between Asian countries, especially China, and the Middle East,” said Manohar Chandan, senior manager-international freight services/oil & gas for GAC Oman, whose air cargo business includes oil and gas equipment and supplies, electronics and electricals, industrial spares, garments, home and office furniture and decor, fresh flowers and perishables.
Similar comments were made by Sue Soo, general manager-freight services at GAC Malaysia, whose current Asia-Middle East air cargo business includes the shipment of electronic products, live tropical fish and ship spares.
“The potential for growth in the Asia-Middle East air cargo market prevails, as trade between the two regions has become easier and less costly over time. One example is the market for foodstuff and Halal products,” she said.
Two specific factors helping to drive trade and air cargo traffic growth between Asia and the Middle East, suggested Chandan, were Chinese investment in the Middle East and the range of cargo capacity introduced in the overall market by major Middle East airlines.
On the investment front, he said: “Chinese investment of more than US$3 billion in the China-Oman Industrial Park at the Duqm Special Economic Zone (SEZ) will prompt increased exports to Oman for industrial, petrochemical, utility-based, manufacturing, hospitality and fabrication developments.”
As far as the air cargo capacity issue was concerned, he said that “with Middle Eastern carriers like Emirates, Qatar Airways, Etihad Airways and Oman Air adding to their capacity in the Asian market, space is no longer an issue and comes at a competitive price.”
He also said that with those Middle East carriers having put wide-bodied passenger aircraft into service between Asia and their home countries, bellyhold capacity was generally sufficient to meet current demand in that market.
“There are some weekly freighters in service between Asia and the Gulf but we don’t see much demand for those except for project or over-dimensional cargo,” he added.
GAC Malaysia’s Soo voiced similar observations. “Most of the cargo ex-KUL (Kuala Lumpur, Malaysia’s main air cargo hub) to the Middle East occupies belly space on passenger aircraft, although freighter flights ex-KUL to the Middle East are sometimes important for odd-sized and dangerous cargo, especially shipments for the oil and gas industry.”
Further confirmation of the continuing growth in overall Asia-Middle East trade and its impact on air cargo operations, particularly an increasing demand for more specialized services, was provided by Dubai-based Emirates SkyCargo which operates an extensive network of passenger/bellyhold and freighter flights.
“Middle East countries are generally import-oriented economies. Consequently, we are seeing strong trade flows from different parts of Asia to the Middle East,” said Ravishankar Mirle, the carrier’s vice president cargo commercial-Far East and Australasia.
“If you take the Indian subcontinent or countries such as Vietnam, you see a big trend towards the export of perishables and electronics to the Middle East. From India, for example, we carry more than 3,000 tonnes of perishable exports every month on our aircraft. A majority of those perishables are destined for the Middle East.”
With the world in general moving away from transporting boxes of general cargo and air transportation becoming more to do with managing supply chains, said Mirle, it had become increasingly important to offer special solutions backed by investment in infrastructure and trained staff.
Reflecting those trends, he continued, Emirates SkyCargo had over recent years “developed an increasing number of industry vertical-specific transport solutions as the goods transportation needs of our customers have become increasingly specialized to support each region.”
Relevant examples in the context of Asia-Middle East trade, he added, included Emirates Pharma for temperature-sensitive pharmaceuticals, Emirates Fresh for transporting perishables and Emirates Wheels for luxury and premium automobiles.
The increasing requirement for more specialized air cargo services and facilities in the Asia-Middle East trade was further highlighted by two senior executives with Dubai-based worldwide airport handling group dnata.
“While overall air cargo traffic in the calendar year 2018 remained on a par with 2017, we have been experiencing growth in specific sectors such as post office mail, e-commerce, perishables and pharmaceuticals. All those products require different handling to the more familiar general cargo,” said Kevin Hodkinson, general manager for dnata Singapore, which currently provides cargo handling services to 12 airlines at Singapore Changi Airport.
Similar requirements were identified by Kevin Ennis, vice president-commercial and business development for dnata’s UAE airport operations, which include servicing 127 airlines at two airports, Dubai International Airport and Al Maktoum International Airport at Dubai World Central.
“Besides processing general cargo, we have expertise in handling live animals (crocodiles, sharks, race horses, domestic pets), perishables, dangerous goods, pharmaceuticals, express courier, out of gauge cargo (helicopters, pipes other project equipment), race cars and vintage cars,” he reported.
More generally, added Ennis, the past couple of years had also seen a steady delivery of initiatives by dnata to optimize its overall operations, including those in the Middle East and Asia, through facility improvements, process changes, infrastructure upgrades and IT development.
By Phil Hastings
Correspondent | London
