DUBAI's position as a major sea-air freight transit point in the Middle East to serve the trade between Asia and Europe is being jeopardised by air freight rates currently being cheaper than sea-air rates.
Ram Menem, divisional senior vice president for Cargo at Emirates was quoted as saying in a report by the UK's International Freighting Weekly that a number of factors were at play for the comparatively sharper decline in air freight rates.
"Firstly, the supply/demand equation has tipped due to the slackness in the European economies, and the demand for Chinese products in Europe has decreased, so capacity on the route is not as tight as it once was," he said, since airlines are now experiencing overcapacity.
"Secondly, with the cost of oil dropping by around US$100 a barrel, fuel surcharges are coming down, which itself makes air freight a more viable option."
According to comments by Tobias Siegl, managing director of ECS's Dubai subsidiary, Globe Air Cargo, Dubai is "going down rapidly".
Said Mr Siegl: "There is a rumour that Dubai may be on the financial edge. Nobody is willing to tell you anything in Dubai these days. Everyone is bugging you for cheaper prices, and carriers are offering rates just covering costs."
With China reducing production, he noted in the report, "incoming loads are simply not there any more. People are just trying to grab loads from others."
Furthermore, Mr Siegl said that delays at Jebel Ali port have also affected demand, "There is simply nothing to put on aircraft if the ships are delayed." |