Air freight contraction in Dubai first indicator of a local and global slowdown in trade
Posted on 29 November 2011 with no comments from readers
Falling air cargo movements are always a good lead indicator of an economic slowdown as this shows a switch to cheaper and slower methods of moving freight. Global figures show a 4.6 per cent fall last month while air freight movement in Dubai also fell but by a lesser 2.5 per cent.
Figures for the whole year show cargo volumes down by 1.8 per cent at Dubai International Airport. But passenger numbers continue to increase with an increase of 7.3 per cent in October up to 4.3 million.
Expanding hub
New routes, increased frequencies and additional capacity are boosting passenger flow through this rapidly expanding aviation hub but only partly offsetting a decline in global air freight traffic.
The International Air Transport Association is warning that confidence among global purchasing managers has fallen to its lowest level since 2009 and that helps to explain the shift towards cheaper methods of shifting goods.
With the OECD now saying that the eurozone and UK has dropped back into recession in the fourth quarter of 2011 it it logical to extend this downtrend into 2012. As in late 2008/9 a global contraction of air freight and passengers is to be expected, especially if there is a contagion from the eurozone to the US and Asia.
This looks all but inevitable and there are signs that it is already happening with shipping lines cutting capacity now on Asian routes. Dubai seems somewhat protected by its emphasis on routes to the still growing Asian and African emerging markets.
A380 deliveries
Then again Emirates Airline has 18 new A380 superjumbos due for delivery next year and this ramping up of capacity could not come at a worse time for the global economy with the eurozone sovereign debt crisis now morphing into a global credit squeeze and business recession.
On the other hand, the lowest cost operator is usually the survivor in any major business shake-out and Emirates has a cost structure that has allowed it to remain profitable this year when most airlines are already losing money.
Still the contraction of air freight volumes this years is a sign of turbulence ahead for both the local and global economy.
