Cargo growth takes jumbo shape

Dubai: Double digit cargo growth in the Middle East, India and China is fuelling a surge in freighter orders by cargo airlines, industry observers said in Dubai.

Of the 159 aircraft orders for the Airbus A380, 27 are freighter aircraft and the first and largest order has been placed by Federal Express (FedEx), one of the world's largest express transportation companies.

FedEx will take delivery of the giant Airbus A380-800F in August 2008, and will be the first to put it into service.

"The A380 will enable us to transport nearly twice as much freight as the MD-11s which currently are the largest aircraft in our fleet. As for our customers, the enhanced transit times and additional capacities will facilitate faster and easier trade," said Jacques Creeten, FedEx managing director of sales and marketing for the Middle East, Indian subcontinent and Africa.

Globally cargo is forecast to grow 6.2 per cent annually over the next 20 years but here in the region and Dubai it is expected to grow 13 per cent.

India is witnessing one of the highest global growth rates of about 25 per cent, according to industry forecasts.

Eisa Baluch, immediate past president of Fiata (the international federation of freight forwarders), said the first beneficiary of the trend would be the airlines themselves because these new large freighters are reported to be more fuel efficient.

"The economies of scale are so different from other aircraft that profit margins will be higher. Will they fill up? Yes, if the current global cargo growth rates continue," said Baluch.

Mark Pell, managing director-Gulf for TNT Express, believes the giant freighters will probably inspire cooperation across the industry.

"It will help the industry players to leverage each other's volumes and strengthen buying power. In order to facilitate that kind of size, some realignment will take place," said Pell.

Baluch had some concern about the service frequencies.

"As a freight forwarder, my number one concern is if today I have three to four departures and this will be consolidated into one flight on the large freighter, then the flexibility of days of service is gone," he said.

Hosein Tehrani, general manager of Al Rais Cargo, said the key to cost effectiveness is not just capacity but also the range freighters can fly without refuelling.

"A combination of extra capacity and longer range would make such a freighter more feasible and profitable since it provides fuel economy, faster delivery and savings on ground handling charges," according to Tehrani.

Since FedEx commenced operations in the region (Middle East, Indian subcontinent and Central Asia) eight years ago its business has grown to 39 flights a week.