Recent years in Middle East witnessed rise in cargo rates due to combination of global and regional factors. Main criteria impacting tariffs is region’s location combining Asia, Europe and Africa, making it key logistics hub. Major players such as Dubai, Abu Dhabi and Riyadh lead in cargo operations and contribute towards escalating air freight costs.
-Dr. Shehara Fernando
If one looks back in time, demand surge after the pandemic was one of the key drivers behind the rise in air cargo rates. It was an unprecedented period when the global pandemic disrupted supply chains leading to a backlog of shipments.
Over the years as economies started their recovery the rapid demand and reliable air freight solutions soared higher than what was expected. Capacity is another key factor, which contributed to the rise of air cargo rates as there was a limited belly cargo space in passenger aircraft due to reduced passenger flights; the freighters had no option but to meet with the growing demand.
Volatility of fuel costs was another factor in terms of operational expenses that influenced freight rates. As the Middle East is the global energy hub, these fluctuations in fuel costs directly impacted in terms of the air cargo rates.
The Middle East region has been thriving on their infrastructure development plans the past few years, especially investing on logistics and airport expansion, which would enhance capacity and came in with added cost structures impacting the freight rates.
One of the main factors that is booming and will continue its growth strategy is e-commerce. The surge in online shopping, which began during the pandemic, has once again become a trend and continues to impact on rapid delivery services. When it comes to crossborder transactions, this strains the air cargo network.
While it is one of the most opportune areas, along with ut come challenges for the industry. The cost factor becomes a key element in on-time delivery services impacting the rise of the tariffs. Industry experts share their take on the trends and their impact.
Advanced technology gives better visibility
Rainer Krammer, Senior Manager, Americas and Europe, Etihad Cargo
The rise in air cargo rates has affected the industries, which rely on fast and reliable transport of high-value goods, such as electronics, pharma, and fashion. The carriers must adhere to new government needs, which create more complexities. Etihad Cargo addresses these needs through strategic planning and innovation to ensure continued support to its clients. Consolidating shipments into larger loads optimizes logistics ensures deliveries.
Rise in air cargo costs swells product expenses
Razmal Assen, Executive Director, India, Sri Lanka and UAE, Scanwell Logistics
The Middle East has seen a surge in cargo rates, impacting logistics and supply chain dynamics. This rise is due to escalating operational costs, fuel prices, and supply -demand imbalances. The impact includes increased shipping costs for businesses, higher expenses for goods, and potential delivery delays. To mitigate them, logistics providers are adopting optimisation of cargo routing, leveraging multimodal transport solutions, and investing in technology.
Retail, pharma hit as they rely on efficient air freight
Mohamed Jassim Al Rais, ED, Al Rais Travel and Shipping Agencies
The rise in air rates in the region has impacted businesses and supply chains. The primary effect is high logistics costs that can reduce profit margins and prove costly for consumers. Retail, pharma, and e-commerce have been hit as they rely on efficient air freight for time-sensitive shipments. To combat them, firms must optimise supply chain ops, consolidate shipments to maximise load efficiency, and negotiate longterm contracts with carriers.
Fleet capacities rise due to e-commerce expansion
Farzad Rustami MD, Skylink Cargo Services LLC
The air cargo industry in the Middle East remains resilient in positioning itself as a transit hub between Asia, Europe, and Africa. The rapid expansion of e-commerce spurred demand for time-sensitive and reliable transportation of goods, where collaboration become essential for achieving organisational workflows. The ME carriers have adapted to increasing their fleet capacities, utilise trade flows through alternative routes so as to connect key hubs.
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