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Sun 8 Oct 2006 04:00 AM

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How much is too much?

Is there too much air cargo capacity in the UAE? That was the question we put to our readers in a recent spot poll on itpbusiness.net.

Is there too much air cargo capacity in the UAE? That was the question we put to our readers in a recent spot poll on itpbusiness.net.

At the time of writing, 257 people had responded to the question and opinion appeared remarkably divided on the issue. 40.7% of respondents said yes, 25.9% said no and a further 25.9% said they had no idea. Just 7.4% opted out by saying they weren’t sure.

This diversity of opinion perhaps reflects what we all know — air cargo capacity is being added at a frenetic rate of knots and no-one is quite sure what the commercial rationale for it all is. Just look at the statistics: Dubai Cargo Village is aiming to have four million tonnes of annual capacity in place by 2018; Dubai Logistics City has space for 12 million tonnes of annual capacity on its blueprint and Abu Dhabi is talking about building two million tonnes. Even smaller airports like Fujairah and Ras Al Khaimah have plans to up their capacity significantly from current levels.

Outside the UAE, there are also ambitious projects underway. Prince Abdul Aziz Bin Mousaed Economic City, a forthcoming development in Saudi Arabia, is aiming to build 1.5 million tonnes of annual capacity; and the new Doha International Airport will have 750,000 tonnes. Are these developments a response to domestic demand, or are they too relying on re-export business and therefore competing with the UAE?

In support of these developments, experts cite the fact that the region is growing rapidly and is a re-export point for the huge surrounding region. On the other hand, the total amount of capacity that is being created is mind boggling and is there really enough business for each development to be a success? Could we end up with empty warehouses and aggressive price cutting as airports struggle to win business?

Given that so much of the planned capacity is still under construction, there probably isn’t too much air cargo capacity in the UAE right now. But that isn’t to say there won’t be in the future. What do you think?

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