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  • Writer's pictureTeam CargoTalk

GCC: A hub of promising air cargo opportunities

Updated: Sep 7, 2023


Priority has been given to development of supply chain and logistics infra in the GCC region. The GCC region is ramping up logistics and air cargo hubs, driven by growth of cross-border e-commerce trade. The region’s economic integration with global economy is expected to gain strength in the coming years.


The GCC countries have shown tremendous potential amidst global inflation, partly due to their economic diversification initiatives undertaken in recent years. National development plans of the GCC countries have given priority to increasing the contribution of non-oil sectors and expansion of trade through many trade cooperation agreements.


The GCC’s most advanced economy, the UAE, prioritized CEPA and reached trade pacts with India and Israel. On the other hand, KSA, through its Global Supply Chain Resilience Initiative (GSCRI) launched in 2022, is positioning itself as a key link to global supply chains in various sectors such as aerospace, pharmaceuticals, automotives, maritime, medical devices, military supplies, and food processing. These developments are expected to open trade and investment opportunities in sourcing materials for development of non-oil economic sectors and for exporting finished goods. Recognizing the need to improve connectivity with trading partners, high priority is given for the development of supply chain and logistics infrastructure in the region.


GCC emerging as air cargo hub


The GCC nations are ramping up their logistics and air cargo hubs which are driven by their national aviation policies and the growth of cross-border e-commerce trade. The UAE and Qatar accounted for about 90 per cent of the total cargo handled in the GCC region with the UAE being an established air cargo hub and Qatar expanding its capacity rapidly. In 2022, Qatar Airways handled more than 1.7 million tonnes of air cargo and has connectivity in more than 170 destinations. KSA has launched the Saudi Aviation Strategy, which aims to increase air cargo handled from 0.8 million tonnes in 2022 to 4.5 million tonnes by 2030. Private sector participation is increasing in the form of investments in free zones and airport infrastructure development. Growth in cross-border e-commerce is expected to be sustained and is likely to open more opportunities in infrastructure development related to air cargo services. The UAE is increasing its warehouse capacity in the free zones to cater to the need of cross-border e-commerce.


Regional carrier expansion plans


As the focus has shifted towards improving connectivity with other key destinations to meet the increasing demand for cargo services, regional air cargo service providers are likely to increase available capacity supported with modern technologies and increase connections with more destinations across the world. Saudi Arabia has launched Riyadh Air, owned by Public Investment Fund to meet the increasing demand for air transport, aiming to connect 100 destinations by 2030. Qatar Airways could expand its number of destinations to more than 255 in future. With growth prospects looking bright, opportunities are expected to open up in the areas of digitalization and sustainable aviation solutions.


Digital Growth Opportunities


Digitalization of air freight includes online services relating to digital booking, digital invoicing, real-time alerts and status updates of cargo, transparent and seamless services are expected to be in focus in addition to the integration of carriers with freight forwarders. Increasing ecommerce demand will facilitate the digitalization of customs clearance for handling high volumes of small parcels across the major ports in the region. In efforts of digitalization, KSA’s Riyadh Airports implemented a digital platform (OFOQ) for handling operations at its King Khalid International Airport.


The UAE airlines have increased digitalization efforts with Etihad Cargo initiating AI-powered solutions for improved cargo capacity and better airfreight operations. Emirates Airlines has introduced a digital channel for cargo flight booking to accommodate e-commerce fulfilment with the launch of Emirates Delivers UK. As demand for air cargo services increase, it will open opportunities in air traffic control solutions, maintenance, repair, and operations services, cold chain infrastructure, cargo security, ground handling, and security equipment.


Sustainability


With regional carriers improving capacity, sustainability will remain at the forefront of developments. Improving infrastructure operations, carbon capture/offsetting and adoption of new technologies are likely to be used as major sources for improving sustainability. The airlines such as the Emirates have announced their commitment to sustainable aviation with a total investment of around US$200 million for research and development projects concerning the decrease of fossil fuel effect in commercial aviation. The regional air cargo service providers are more likely to adopt sustainable aviation in a bid to meet their corporate responsibility goals.


Conclusion


Post-pandemic economic environment is expected to change drastically considering changes in the geopolitical and trade environment, the GCC economic integration with the global economy is expected to gain strength in the coming years. Given that increasing focus on supply chain resiliency, more opportunities in the GCC air cargo logistics are expected to open in the areas of digitalization and sustainability solutions.

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