The unique strategic location has driven the rise of the Middle East in the global air cargo industry. At present, the Middle East has become an important participant in the global air cargo industry. The Middle East region is located at the intersection of major trade routes between Asia, Europe, and Africa. With its geographical advantages, advanced infrastructure, and ambitious expansion plans, it is expected to occupy an important position in the global air cargo market.
Geographical advantages and network expansion
Taking advantage of their central geographic location and proximity to major markets, airlines and freight companies in the Middle East are expanding their air cargo networks and enhancing connectivity.
This geographical advantage makes the Middle East an attractive air cargo hub. According to data from the International Air Transport Association (IATA), the Middle East region achieved significant growth in 2023, with global and international business demand increasing by 18.3% and capacity increasing by 17.7% compared to 2022.
Etihad Cargo's Stanislas Brun stated that the UAE's proximity to important global markets allows Etihad cargo to reach approximately one-third of the world's population within a 4-hour flight time and two-thirds within an 8-hour flight time, enabling us to transport goods quickly and efficiently.
To support this growth, the Middle East is investing heavily in infrastructure and technology. For example, Hamad Airport in Doha is investing $1.2 billion in the expansion of its cargo terminal, while Etihad Cargo has doubled its cold chain capacity at its hub in Abu Dhabi to accommodate an additional 50000 tons of cargo.
Driven by a $100 billion investment in Vision 2030, Saudi Arabia aims to become a major freight participant, doubling its freight volume to 4.5 million tons and expanding its warehousing capacity to 6 million tons, making Riyadh and Jeddah important global connectivity hubs.
Dubai has announced a $35 billion investment plan to build future airports. After completion, Al Maktoum International Airport (DWC) in southern Dubai will become the world's largest airport, covering an area of 70 square kilometers. The final annual passenger throughput of the airport will exceed 260 million and the cargo volume will reach 12 million tons.
After full operation, the airport will become the world's largest passenger and cargo airport. Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the United Arab Emirates and Chief of Dubai, reviewed and approved DAEP's strategic planning and design, stating, "We are building a new project for future generations, and Dubai will become the world's airport, port, urban hub, and new global center
The flourishing development of e-commerce
As a supplement to geographical advantages and infrastructure development, the prosperity of the e-commerce market in the Middle East is driving further demand for air cargo services.
According to Bain&Company, with the continuous improvement of Internet penetration, changes in consumer preferences and the rise of digital shopping platforms, the e-commerce market in the Middle East is expected to reach $49 billion by 2025, with a compound annual growth rate (CAGR) of 19% from 2019 to 2025.
Stanislas Brun stated that we have recognized the potential for e-commerce development and have signed specialized e-commerce contracts and established cooperative relationships with our main partners and clients. These agreements will extend the dedicated charter services provided for e-commerce products until December 2024.
In addition, our SecureTech platform is designed specifically for the secure transportation of lithium powered products such as laptops and mobile phones. In 2024, we observed a 51% increase in electronic product shipments compared to the same period last year.
Dubai air service provider Dnata has also made significant progress in improving cargo operations and customer experience.
For example, to achieve this goal, the next generation airport community system has been launched: Guillaume Crozier, Vice President of Calogi Dnata and Head of UAE Cargo and Global Cargo Strategy, explained, "The new generation of Calogi will help us achieve our freight strategy by providing customers with more services and closer real-time visibility in the freight and logistics fields, including expanding from traditional warehouse services to more third-party logistics and covering customer requested fulfillment centers, as well as ground transportation, road freight services, and first and last mile activities for e-commerce
Geopolitical risks
The Middle East region has indeed ushered in a lot of opportunities, but at the same time, it has also witnessed a considerable amount of geopolitical instability and conflicts, which will bring risks to the air cargo business.
For example, the ongoing tensions between Iran and multiple Gulf countries, the long-standing conflict in the Red Sea, and the Israel Palestine conflict have led to a complex and volatile security environment, and have had an impact on the global freight industry, particularly in the Middle East region.
Khalid Bardan, the cargo company of Emirates Airlines, said, "Air cargo is a cyclical industry that has experienced peaks and valleys for decades driven by macroeconomic and geopolitical issues. It is important to focus on the big picture and ensure that any short-term fluctuations in any direction do not affect the medium or long term. The air cargo industry needs to be resilient and flexible, which allows us to quickly adjust and find solutions for customers, such as adjusting routes and flight plans as needed to ensure that air cargo services are minimally disrupted
Etihad Cargo has demonstrated its strategy to address geopolitical risks through its cargo control center, which is equipped with automation and real-time monitoring capabilities to respond positively to regional disruptions. Brun said, "We closely monitor the global situation, so we can provide proactive solutions to ensure that our services maintain the highest standards of quality and reliability, and respond flexibly to any challenges while minimizing interference
Professional freight service solutions
In order to meet the different needs of different freight fields, Middle Eastern airlines and freight companies are providing professional services and innovative solutions.
For example, in the context of a 25% increase in drug transportation volume in 2022, Emirates SkyCargo may continue to achieve growth in this field due to the increasing demand for temperature controlled environments and professional handling procedures.
Wilson Chan from Abu Dhabi Airport stated that Abu Dhabi Airports is customizing its development and infrastructure based on specific requirements of industries such as pharmaceuticals, perishable goods, and e-commerce.
In addition, freight companies are exploring the integration of emerging technologies such as blockchain, Internet of Things (IoT), and artificial intelligence (AI) to enhance supply chain visibility, optimize cargo handling, and improve overall operational efficiency. According to data from Markets and Markets, blockchain technology in the global transportation and logistics market is expected to grow from $369 million in 2020 to $1.7 billion in 2025, with a compound annual growth rate of 35.2%.
Brun said, "We focus on improving cold chain logistics and achieved a 37% increase in PharmaLife (specialized transportation for pharmaceutical and health products) freight volume and a 10% increase in FreshForward freight volume in 2023
When it comes to the effective use of artificial intelligence, Dnata's Crozier said, "By automating daily tasks with artificial intelligence, human resources can be assigned to more complex responsibilities, ultimately improving overall labor productivity
In addition, in the process of growth and expansion, Middle Eastern airlines and freight companies are also taking active measures to achieve sustainable operations and reduce their impact on the environment. According to the International Air Transport Association (IATA), the aviation industry aims to achieve net zero carbon emissions by 2050. Among them, Emirates SkyCargo has committed to reducing its emission intensity by 20% from 2018 levels by 2030.
The thriving data center market
In addition to growth opportunities, the booming development of data centers in the Middle East has also led to a surge in demand for air cargo. According to a report by Arizton Advisory&Intelligence, the strategic location and government incentives in the region have attracted significant investment in data centers, expected to reach $8.38 billion by 2028.
OpenAI CEO Sam Altman's recent comments indicate that the Middle East is being seen as a potential location for a global network of AI chip manufacturing factories. This development may further accelerate the flourishing development of data centers and expand the demand for efficient air cargo services in the region.
Tech giants such as Microsoft, Amazon, Oracle, and Equinix are establishing data centers in places like the United Arab Emirates, Qatar, Bahrain, and Saudi Arabia. These multi billion dollar projects require a large amount of transportation of IT equipment, cooling systems, and other infrastructure components.
In order to meet this demand, specialized air cargo services have emerged to ensure the safe and fast transportation of critical hardware, minimizing data center downtime, highlighting the strong synergies between the growing data center industry and the air cargo industry in the Middle East.
As airlines and freight companies in the Middle East continue to invest in technology, adapt to constantly changing market dynamics, and promote industry cooperation, they are in a favorable position to leverage trends that shape the future of air freight.
While addressing competitive challenges, geopolitical risks, and sustainability challenges, the Middle East region is expected to become a major player in the global air cargo market by providing professional services and innovative solutions, promoting seamless trade and connecting businesses around the world.
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