News / Middle East: more air freight activity as fuel surcharges ease, says DHL

Photo: Cathay Cargo

The air freight market in the Middle East is stabilising, according to DHL Global Forwarding.

“All airspaces across the region are open, albeit some with varying levels of restrictions, such as fixed corridors or pre-approvals being required.

“Overall, we have noticed a further increase in air freight capacity being available and a first softening of rate levels, but they are still at significantly elevated levels versus pre-crisis,” commented Tobias Maier, DGF’s CEO for the Middle East and Africa, in a webinar.

“We are also seeing the first sign of airline fuel surcharges starting to come down, with reports emerging that airlines are prioritising international flights over domestic ones.”

Among the significant developments is the return of DHL’s intercontinental flights into Bahrain and Dubai from Germany and from Hong Kong, Paul Dowling, DHL Express customer operations manager, MENA, explained.

“Most importantly this week, we have brought Qatar and Kuwait back into the air network, as well as establishing collections from Italy to the Middle East, and connecting the Middle East with Africa through Nairobi. So, once again we are linking Europe, Asia, and Africa to the Middle East.

“The plan is to continue to operate our back-up air hubs in Riyadh and Muscat while the situation in the region continues to stabilise.”

He said this week’s drone attacks on Dubai had not led to DHL cancelling any flights.

“Over the next couple of weeks, we plan to re-introduce fights beyond the GCC, into Jordan, Egypt, Iraq, and Lebanon, followed by flights from the US into Bahrain.”

Ben Lambert, DGF’s VP, regional head of airfreight, Middle East & Africa, highlighted data showing a continued recovery in the schedules of Gulf carriers such as Emirates, Etihad, and Qatar Airways, while the volume of cargo handled at the region’s airports was on the rise – but remaining well below pre-crisis levels.

He said the “big movers” in terms of tonnage recovery were Dubai airports DXB and DWC, along with Doha.

As to the prospect of European carriers returning to the Middle East, Mr Lambert said: “In mid-May, there will be another review of the situation by the European Aviation Security Council, so we’ll see what recommendations come out of that. Currently, there is a very limited amount of capacity on Europe-Middle East routes.”

Meanwhile, another major air cargo player, Cathay Pacific, has pointed to a market which continued to be very volatile, with capacity pressure from the situation in the Middle East and the high price of jet fuel.

The Hong Kong-based carrier has pushed back the resumption of its passenger flights to Riyadh and Dubai until the end of June, and freighter services to those destinations remain suspended.

“Our now fortnightly cadence to our fuel surcharge mechanism means we more closely track the price of jet fuel. As a result, in mid-April, while still extremely high, the price of SINJET fuel – which itself is significantly higher than the price of crude, due to increased refinery costs – saw a slight drop in comparison with what we saw in late-March,” explained Toby Griffiths, Cathay’s head of cargo global sales & customer solutions.

“This has been reflected in our most recent fuel surcharge announcement, showing a slight decrease for the first period of May.”

While fuel surcharges are beginning to soften, the market remains under pressure from elevated refinery and jet fuel costs, all linked to the disruption across the Gulf region.

Mr Griffiths noted that demand remained robust and load factors on Cathay’s transpacific and European lanes had held up well, although there was some softening owing to Golden Week in early May.

Cathay Cargo has also been able to arrange some alternative mid-points in India, in place of Dubai, for its European freighters, which has helped recover capacity on the Asia-Europe lane.

Additionally, to support growth in South-east Asia, Cathay has added a freighter to Bangkok, tagged with Ho Chi Minh City, which will free up another 40 tonnes of capacity from Vietnam capital Hanoi.

“If peace and stability were to return to the Middle East, as we hope, we believe the air cargo market and jet fuel prices will remain volatile for a while longer,” summed up Mr Griffiths.

“Our fuel surcharge cadence will remain fortnightly for the foreseeable future, to reflect this uncertainty. As ever, we will monitor the situation and do all we can to protect our network, capacity and, of course, our Hong Kong hub.”