ME air cargo shows resilience amid crunch |
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The Middle East air cargo industry continues to show signs of resilience, despite a global crunch in demand that led to sharp drop in this year's air cargo growth projections, according to industry studies.
Supported by the economic boom, the regional air cargo industry grew more than seven times ahead of the global industry in the first seven months of 2008 to maintain its highest growth rate in the industry.
According to the latest figures by the International Air Transport Association (Iata), demand for air cargo grew by 12.9 per cent in the first half of 2008, the highest in the industry.
Asia Pacific carriers, the largest players in the cargo market, were hit hard, with a 6.5 per cent drop in demand. Figures for other regions were mixed, including Africa (+7 per cent), Europe (-1.2 per cent), Latin America (-11.7 per cent), and North America (+4.4 per cent).
"The Middle East has been significantly outpacing the global projection of about five per cent growth per year between 2007 and 2011. The air cargo growth driver in the Middle East is undoubtedly the infrastructure developments taking place," said Des Vertannes, Etihad Crystal Cargo's Senior Vice President for Cargo.
Additional revenues from high oil prices have enabled countries across the region to enhance their investments in projects linked to tourism, develop non-oil and gas industries, health, education and transport infrastructure.
"Abu Dhabi alone is home to around 1.4 million people and it is estimated that this will rise to between three and five million people by 2030, as the city becomes an even more important regional hub for business and tourism," added Vertannes.
Emirates SkyCargoEmirates SkyCargo
, the cargo division of Emirates airlines hopes to outgrow the current regional growth rate with 19 per cent growth expected for this year."The current global slowdown in air freight does not dampen the hopes for growth in the region. The economic boom presented by the region gives enough room for growth," said Peter Sedgley, Senior Vice-President for Cargo at Emirates SkyCargoEmirates SkyCargo
.The East Asia-Australasia market contributed the highest percentage to the overall revenues and tonnage in 2007, with 41 per cent of revenues and 30 per cent of total tonnage.
The demand for cargo in the regional market, fuelled by economic expansion, is set to maintain the growth of regional air freighters throughout 2008 and the coming few years.
The Middle East region will invest more than $260 billion (Dh954bn) in 20 years to expand its air fleet and a significant number of planes will be dedicated for the freight business given the demand for fast deliveries in the region.
Major airlines with air cargo operations in the region are set to lower their fuel surcharge soon, following a drop in oil prices in global markets a move likely to further boost the demand for air cargo.
On August 21, Emirates SkyCargoEmirates SkyCargo
reduced the fuel surcharge on regional cargo shipments from Dh2.4 to Dh2.2 per kg, or its equivalent in local currencies.The airline also reduced the fuel surcharge for cargo shipments to Europe from Dh4.8 to Dh4.6. These prices are monitored against a fixed base of $0.535 per gallon equal to index 100.
Despite the resilience shown by the regional air cargo industry, the entire industry's future hangs in the balance especially with global airline industry expected to post losses of $5.2bn this year, based on an average crude oil price of $113 per barrel. "The situation remains bleak," said Giovanni Bisignani, Iata's Director-General and CEO.
"The toxic combination of high oil prices and falling demand continues to poison profitability. We expect losses of $5.2bn this year."
Iata also stated that as a result of the weaker economic outlook, the association had "significantly revised downward" its 2008 traffic forecasts for global domestic and international markets.
Air cargo volumes were now expected to grow on average by just 1.8 per cent from the original forecast of 3.9 per cent.
"This is only half the pace of expansion seen in 2007 and is boosted by the stronger growth seen at the start of the year," said Iata. "Strong growth allowed the industry to partly absorb the rise in fuel costs from 2003-2007. This is no longer the case," said Bisignani. He added fuel was expected to rise to 36 per cent of costs, up from 13 per cent in 2002.
By Ashaba K Abdul Basti
© Emirates Business 24/7 2008
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