Are ‘modest gains’ the new normal for Dubai’s cooling air freight market?

Dubai’s new freight hub is now handling approximately one third of the emirate’s air freight, as both regional airports posted middling first half numbers, reflecting a regional downturn.

Freight volumes at Dubai World Central (DWC) rose 3.2 percent year-over-year (y-o-y) to 443,835 tonnes during the first half of 2017. Paul Griffiths, CEO of Dubai Airports accredited the rise to “both scheduled and chartered carriers contributing to traffic volumes at the airport.” Those scheduled and charter numbers took a sharp upward turn in 2014 when authorities redirected all freighter flights to the newer DWC, from the Dubai International Airport (DXB) to the north. That growth seems to have leveled off now.

DXB might be off limits to freighters, but the older airport is still handling Emirate’s extensive belly-freight volumes. During the first half of 2017, air cargo volumes rose 1.6 percent to 1,302,911 tonnes over the same period in 2016.

DXB’s half-year gains were depressed by a slow June, during which time the airport saw a contraction of 4.6 percent y-o-y to 215,668 tonnes of freight, compared to 226,174 tonnes during June 2016.

Numbers like these are further evidence that market conditions have changed, and that Gulf carriers can no longer count on double-digit gains driven by rapid expansion into new markets.

There’s pressure from all sides now, with interlinking airlines such as Turkish Cargo and AirBridgeCargo going after the same business, while carriers based in prime Asian markets are pushing back as well – with impressive results.

Asian airlines reported a 10.4 percent increase in international air cargo traffic volumes during the first half of 2017, thanks to an upswing in export orders for both leading emerging markets and advanced economies.

Emirates grew into the world’s largest non-express freight carrier in the world in part by connecting Asian markets to Europe and North America through Dubai. Now, that strategy is yielding diminishing results.

These latest numbers are a confirmation of previous indicators. Airfreight volumes at DWC had already registered an anemic increase over 2016, at just under 898,000 tonnes, up only 0.8 percent, compared to the nearly 891,000 tonnes handled during 2015. One year prior, cargo volumes had surged 7.7 percent during 2015, compared to 2014. It’s a slowdown years in the making.

At the Abu Dhabi International Airport, the latest cargo numbers posted were for May, during which time cargo volumes fell 4.7 percent, year-over-year, to 62,560 tonnes. For the first five months, cargo volumes were down 4.5 percent, y-o-y, to 306,282 tonnes. Only Doha has seen the sort of double-digit gains over the last year, and much of that can be attributed to increased air freight in response to the Saudi-led blockade of the peninsula.

Emirates still has a massive global network, including an extensive temperature-controlled network, and multiple other factors weighing in its favor, so there’s plenty of room to grow still. That said, with Istanbul’s new airport coming online in a few years, the competition will only increase and basing out of the Middle East no longer guarantees primacy.

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