Innovations buoy Middle Eastern air cargo amidst pandemic

 Innovations buoy Middle Eastern air cargo amidst pandemic

In what could spell good news for the global air cargo industry, the air cargo market in Middle East & Africa (MEA) is expected to reach a whopping $27.82 billion by 2028 from $17.70 billion in 2021with an estimated CAGR growth of 6.7 percent from 2021 to 2028, according to an August 2021 Business Market Insights report. 

The Middle East is a vibrant economy and the interconnected nature of the countries within the region makes it one of the most dynamic regions for airfreight. Thanks to its geographic location and proximity to several of the world’s largest manufacturing markets, the Middle East has carved a strategic niche for itself in the international logistics industry. 

On top of the global and macro-economic factors impacting the flow of goods from the region, there are also geopolitical factors that define to a certain extent how the flows are diverted or consolidated in certain hubs within the Middle East. 

Flight restrictions between the Middle Eastern countries related to the Covid-19 pandemic, governmental policies and political instabilities are dynamic factors that are pushing the carriers to continuously come up with innovative solutions and adapt their network to counter the adverse effects on air cargo.

The current growth posted by MEA’s air cargo market gains significance in light of the fact that as per the IMF’s July 2021 World Economic Outlook Update’, the Middle Eastern and Central Asian economy is projected to grow 4 percent YoY in 2021 and 3.7 percent in 2022. However, factors like the global minimum corporate tax regime could be a blow to the region in the long term, which has traditionally had low tax ecosystems.    

Consistent demand growth 

Middle Eastern air carriers posted a 17.1 percent rise in international cargo volumes in June 2021 compared to June 2019 figures, buoyed by strong performances on the Middle East to Asia and the Middle East to North America trade routes, according to International Air Transport Association (IATA). The international capacity in June however was down 9 percent compared to the same month in 2019.

While the export of perishables, personal effects and oil & gas shipments continued, the region also saw rising e-commerce, Covid-19 vaccine and large project cargo movements.  

Kirsten De Bruijn, SVP sales and network planning, Qatar Airways Cargo, said, “Cargo has been boosted by strong perishable movements followed by personal effects and project cargo since the start of 2021, targeting destinations within the Middle East and Europe. From January to June 2021 alone, 50 percent of our Middle East exports are to Qatar, mainly from Beirut, Amman, Dubai and Muscat out of which most cargoes were perishables.”

Talking about the trends among the commodities transported, De Bruijn noted, “Given the notable shift from retail to online, we have seen a surge in e-commerce movements and we are also transporting large shipments of Covid-19 vaccines originating from regional hubs in the Middle East, such as UAE.”