Dubai: Building the cargo city of tomorrow

Coming to an air hub hear you?

Plans for the Dubai South are divided into two phases, with conflicting reports and inexact timelines. Officially DWC anticipates development of both phases taking “six to eight years.” Phase One will include the completion of the passenger terminal and a cargo terminal with an annual capacity of 1 million tonnes, among other yet-to-be-completed milestones. Phase Two, meanwhile, will have DWC’s cargo capacity increased to 16 million tonnes per annum. There is no stated deadline for this final phase.

Still, with this new approach to air cargo transport, will the Dubai example lead to other “cargo cities” around the world? Abukhurma said that basing operations out of an aerotropolis was particularly useful for customers that require fast delivery, such as aircraft-on-ground [AOG] shipments, due to the “short distance travel to airport.” Given the economies of scale, as more forwarders and 3PLs set up shop, increasing trade volumes should drive down costs and increase efficiencies.

With DWC being located within Dubai South, the arrangement makes “a complete logistics corridor,” directly connected to the Jaffa Seaport, the Jebel Ali Seaport, with lots of room for warehousing facilities in between, Grebener said. “You can propose cost-effective solutions when it comes to sea-air solutions, which is something that we provide. Shipments come in for much cheaper via oceanfreight, and then are quickly transferred by air to the final destination.”

Rhenus is counting on similar dynamics and outcome. The aerotropolis “is certainly a trend to be observed,” said Kloezeman, pointing to another massive airport being built north of Istanbul in Turkey. He also noted that low-cost carriers, thought they don’t carry much cargo, are also using DWC. “When you look to the freight cities in Europe – AMS, FRA, etc. – these airports have grown historically over decades. In many ways this is the case with DXB as well. So we certainly believe that there are high chances for success.” In the case of DWC, Kloezeman added, “we are optimistic, as the DXB volume will eventually move to DWC – meaning that there is a sufficient critical mass available. DWC will be a hot spot for the logistics industry; this is for sure.”

However, one DWC forwarder, who wished to remain anonymous, said that aerotropolises are a very complex topic, with many parties involved. “In the end, too many variables determine whether such freight cities will be successful,” the forwarder said, cautioning that “the connection between DWC and DXB is longer, and traffic jams might occur, especially during peak hours.”

Given the rate of growth of the last five years, the next few promise to bring just as much change. The Logistics City has attracted other high-profile occupants, including Integrated National Logistics, Aramex and Panalpina, and, according to the latest from real estate research company Cluttons, Dubai South is one of the fastest growing markets in the emirate.

Schenker is “planning to expand in the [Dubai Logistics City] and build more warehouse space,” said Abukhurma. “Dubai is becoming a big hub for the Middle East, and we are getting a good number of tenders and RFQs that always ask about DB Schenker’s footprint. On the other hand, current warehouse space is full, which is a good sign.”

It’s the stuff of dreams, it seems.