Dubai International Airport's air cargo volume soars

A surge in air cargo volumes through Dubai International Airport last month are being seen as an indicator that recovery is on the way for the global air freight sector after a year of weak performance.

Loads jumped 6.5 per cent to 157,492 tonnes compared with 147,937 tonnes in February last year. Randi Sokoloff / The National

A surge in air cargo volume through Dubai International Airport last month is providing a glimmer of hope that recovery is on the way for the global air freight sector after a year of weak performance.

Loads jumped 6.5 per cent to 157,492 tonnes compared with 147,937 tonnes in February last year.

The rise follows an 8 per cent collapse in global air freight volumes for last year, according to International Air Transport Association (IATA) figures, released this month. However, economists, airlines and plane makers believe the market is about to rebound, with Middle East carriers building on performances last year that bucked global trends.

"Air traffic globally, including cargo, will be on the road to recovery and there might be some upside surprises," said Kelvin Lau, a transport analyst at Daiwa Securities Capital Markets in Hong Kong. "The picture will be better in the second half."

Last year, Middle East carriers enjoyed a 9.4 per cent rise in demand, much of it generated by Emirates Airline and Etihad Airways growing their freight networks.

"Etihad Airways' cargo operations saw outstanding performance in 2011 and volumes are continuing to grow in 2012 in line with capacity increases and network expansion," said David Kerr, the vice president of cargo for Etihad.

"In 2011, cargo operations accounted for 20 per cent of Etihad Airways' overall revenues, with average monthly loads of 25,000 tonnes.

"In the first quarter of this year, we have seen a comparably strong performance. We expect March volumes to be very good as operations into and out of China pick up. European and American demand has also been strong and we forecast strong performance into the second quarter."

The recovery is being driven by high-end freight, according to Pradeep Kumar, the senior vice president of cargo revenue at Emirates Airline. "We are seeing strong performances into Africa, South America, especially Brazil, and Asia, mainly in areas such as temperature-sensitive [pharmaceutical] cargoes and mobile phones.

"Other areas may remain under pressure until the second half, but then we see growth consolidating."

This month, Tony Tyler, the IATA director general and chief executive, said the global cargo sector was looking up. "It appears that freight markets have stabilised."

Rising oil prices, Europe's sovereign debt crisis and the economy in the United States have driven freight levels down, but the decline in air freight had stabilised in the fourth quarter of last year, at levels 4 per cent below the 2008 pre-crisis peak, Mr Tyler said.

Asia-Pacific and European airlines have borne the brunt of the international decline, down 14 per cent and 9.6 per cent in January, respectively, compared with the same month last year.

"By value, over 35 per cent of goods traded internationally are handled by air, although this accounts for just 0.5 per cent of global volumes traded," Mr Tyler said. "Air cargo provides the connectivity that is at the core of modern businesses serving global markets. The growth potential is enormous."

Boeing, the US plane maker, in its latest market review, said the Asian market was likely to drive the air freight recovery after IATA reported freight traffic in the Asia-Pacific region fell each month year-on-year for 12 months to the end of January.

The review said airlines were looking to the introduction of new electronic products, which required shipment of parts and components, to be one of the biggest contributors to air cargo demand, and predicted the region's air freight may rise as much as 8 per cent this year, faster than in any other part of the world, with global growth of about 3 per cent for the year.

"Fears have been replaced by greater confidence that the advanced economies are slowly recovering," Tim Condon, an economist at ING in Singapore, told Bloomberg. He said the rise in semiconductor orders and increases in Asian exports were "signs that the air cargo industry may recover more quickly than most currently expect".

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