With the opening of a new cargo terminal,Dnata will finally get some much needed roomto breathe at Dubai. Peter Conway explores theimplications, and the handler’s plans for thenew airport at Jebel Ali.
There will be an almost audible sighof relief at Dubai handlers Dnata atthe end of February, as its new cargoterminal – formerly known as phasethree of the Freezone Logistics Centre,now dubbed FreightGate 5 – finallycomes on line.
The new facility will in effect be a secondDubai Cargo Village, relieving themassive pressure that has been placedon that facility in the past decade or so,as its 350,000 tonne design capacity wasexceeded, and then exceeded again.
Jean-Pierre de Pauw, Dnata’s seniorvice president cargo, reckons that whenFreightGate 5 opens, both it and thecurrent Dubai Cargo Village facilitywill be 70-75 percent full. That shouldgive the airport enough cargo terminalcapacity for foreign airlines until atleast 2010, after which he says furthergrowth will almost certainly be accommodatedat the Dubai World Central,aka the new airport at Jebel Ali.
Like the current cargo village, FreightGate 5 has a theoretical designcapacity of 350,000 tonnes, and isquite unlike the previous two phasesof the Freezone Logistics Centre – nowknown as FreightGate 3 and 4 (Dnatahas rebranded all its terminals asFreightGates to harmonise the formerconfusing range of names).
FreightGates 3 and 4 are just basicwarehouses for low-cost cargo airlinesand freighter operators who want toself handle. FreightGate 5, by contrast,is a full service, fully automated cargoterminal with a pallet handling systemcapable of storing 400 units, withspace to expand to 500, and an automaticstorage and retrieval system forboxes with 2000 bins(equivalent to 4,000euro pallets).
There are also twox-ray screening lines, amezzanine floor whichstores empty ULDs andbins and feeds them tothe operational area viatwo lifts, and a smallpackage carousel. Allof this is linked to Dnata’sin-house DACS+computer system. Oneof the three towers onthe facility will becomethe new Dnata Cargoheadquarters, housingsenior management,including de Pauw.
At time of writing inmid-January, the finishing touches were still being made tothe facility’s equipment and offices,and de Pauw was still in negotiationswith carriers. But his aim was to moveairlines with significant freighter operationsfrom FreightGate 1 (that is, thecurrent Dubai Cargo Village) to thenew facility.
By way of example, he pointed tosuch carriers as Singapore Airlines and Cathay Pacific. “Cathay has fiveto six freighters through Dubai a day,and only one daily passenger flight.These are the kind of carriers we think FreightGate 5 will be suitable for.”
The aim is to split the foreign airlines’cargo traffic at Dubai more orless equally between FreightGate1 and5, to give both room to grow. With 40percent of Dnata’s volume coming fromfreighters, moving the large all-cargo operators and their associated passengerflights to FreightGate 5 should bethe best way to achieve this.
This logic is backed up by geography. FreightGate 5 is on the oppositeside of the airport’s two runways fromthe passenger terminal – a 10-12 kilometrejourney by the perimeter road– but is close to the freighter parkingpositions. It therefore makes sense forfreighter-focused airlines to be situatedthere, while largely bellyhold airlinesshould be in FreightGate 1, close tothe passenger ramp.
Some FreightGate 5 customers willstill be bellyhold carriers, however.There are the 27 carriers that use theFreezone passenger terminal on thenorth side of the airport, all of whomwill now be handled in FreightGate 5,and mainstream freighter operatorssuch as Cathay Pacific will still want tofeed cargo to their passenger flights.
To maintain service levels for thislatter category of customers, Dnata isinvesting in special “rapid deploymentvehicles” which will be able to tow dolliesaround the perimeter road to thepassenger ramp at speeds of up to 60kph, where allowed by airport regulations,as compared to 10-15 kph fornormal tractor units.
It is also launching two new servicesto help forwarding customers cope withhaving to deliver cargo to two differentsides of the airport, a solution that de Pauw admits is not ideal, though hepoints out that it is also to be found atmany other major airports, includingFrankfurt and Paris.
The first one is a new pick-up anddelivery service, called DTD (door-terminal-door). Essentiallywhat Dnata is saying isthat for a very low fee– 3 UAE fils a kilo – itwill undertake to collector deliver cargo fromany forwarder to any ofits terminals.
This service extendsnot just to forwarders atthe existing Dubai airport,but also to those inthe Jebel Ali Freezone,where Dnata has a terminal,now known asFreightGate 6, or in theDubai Logistics City atthe new airport. Anyforwarder in any ofthese locations will beable to use the DTDservice to move cargo to or from any Dnata terminal.
De Pauw says costs for this servicecan be kept low, because they will infact save Dnata money once the cargogets to the handling terminal. “By bypassingaround half of the acceptanceor delivery processes, and reducingthe need for storage, DTD will save usmoney, a saving that we are happy topass on to the customer,” he says.
However, it is no use forwardershaving this option if they still have tosend staff to the terminal to deal withdocumentation, so hand in hand with DTD, Dnata is launching CALOGI(Cargo Logistics International), a newweb portal.
This will enable forwarders to prepareand send documentation electronically,to view available capacity andmake allotment or freesale bookings,to buy and sell other services such astrucking, to track and trace, to scanand send paper documents, to invoiceand make payments electronically,and – in the middle of this year, whenDubai Customs implement electronicpre-clearance – even get their goodscleared online.
Phase one of CALOGI is expectedto be ready for use at the start ofMarch, to coincide with the openingof FreightGate5: further modules willfollow in due course. “It will virtuallyeliminate the need for customers tovisit our counters, and allow them tocomplete all formalities with DnataCargo over the internet without leavingthe comfort of their offices, or eventheir homes,” claims de Pauw.
This is a huge step up from the oldCCS-based system, and de Pauw is veryexcited about it. “This goes way beyondwhat anyone else has done in the cargoportal space,” he says. “Sometimes it isquite mind-blowing when we realise thepossibilities.”
He is convinced that once the 4-500forwarders and 110 airlines in Dubaihave seen what CALOGI can do, theywill be urging their branches at otherairports to adopt it. “The internetknows no boundaries, and we thinkthis will snowball and be used to createonline communities in other parts ofthe world. It is also a kind of forerunnerof e-freight [the IATA paper-freeproject]. When it is up and workingwe will show it to IATA and see whatthey think.”
Most observers expect that Freight-Gate 5, along with the Megaterminal- Emirates’ new 1.3 million tonnecargo facility at Dubai which it will beoccupying in phases over the comingyear – will be the last cargo facilities builtat the airport, with all future expansionat the new airport at Jebel Ali.
Officially a further two Megaterminalswill be constructed, and oneforwarder says he recently heard ahigh-ranking member of the governmentaffirm that the second one atleast will still be built. De Pauw cannotof course comment on governmentpolicy, but it is clear that Dnata Cargois currently planning on the basis thatmost future cargo growth will be at thenew airport.
“But it will depend how long the currentairport, where we have substantialinvestments, can accommodate airlinegrowth,” he says. “Opinions on whenthe saturation point will be reached, afterall the current Dubai InternationalAirport expansion, vary from 2012 to2026. The answer probably lies somewherein between.”
At least with the new FreightGate 5capacity, Dnata should not be underany more capacity pressure at the currentairport until a decision is takenabout moving carriers to the new one.Though Dubai as a whole is experiencingsoaring growth, much of it is due toEmirates, which is seeing cargo volumesrise 20 percent a year.
Foreign airline cargo traffic, meanwhile,only grew around 4 percent incalendar 2006, according to de Pauw,well down from the growth of 10.4percent to 566,915 tonnes it recordedin the year to March 2006. One majorreason for this, he says, was the closureof one of Dubai’s runways for a periodas it was moved further away from theother one, as well as the building workon the passenger concourse, MegaTerminaland FreightGate 5.
On the cargo side, the business thathad to be sacrificed was the lower margincustomers – in essence the regionalcargo charters that are very heavilycompeted for by other local airports,such as Sharjah, Ras Al Khaimah andFujairah. “They probably got some trafficthat would normally go to Dubai,”de Pauw admits.
He concedes, however, that the highoil price and the trend towards longerrange aircraft that don’t need to maketechnical stops in Dubai were also factorsin the lower growth, and is onlypredicting 6 percent growth for 2007.After that, he forecasts that growth willpick up and “move steadily back intodouble digits”.
Whatever, even 10 percent growthon volumes of 566,915 tonnes givesDnata plenty of wriggle room in itsnew facilities. Including all of Freight-Gates 1-5 (the terminals at the currentDubai airport) it will have some900,000 tonnes of handling capacity atits disposal, but this figure is based onthe 350,000 tonne design capacity of FreightGates 1 and 5.
In fact, de Pauw is confident thata further 50,000 tonnes could besqueezed out of both of these, to bringtotal capacity to one million tonnes.“After all, we have some experiencewith this,” he quips.
Emirates tonnage has not been includedin Dnata’s figures since it movedinto its own terminal in a convertedaircraft hangar in 2001. Since then ithas in essence been self-handling.
The carrier’s gradual move over thecoming year into the Megaterminal willthus have little impact on Dnata: sincethe carrier will also keep its currentterminal, according to Emirates seniorvice president cargo, Ram Menen,Dnata will not even benefit from thatextra capacity.
However, one small but importanteffect of Emirates moving into the Megaterminal will be that it will vacatea 2,500 sq m space that it has been occupyingin Dnata’s Express HandlingCentre, now known as FreightGate 2.
De Pauw explains that Emiratestook this space, which was originallyunused when the Express HandlingCentre opened, to cope with soaringcargo volumes. Once it is returned toDnata, de Pauw says it will be equippedand used to house the 10 (out of 25)courier companies who the centre cancurrently not accommodate.
The space will be welcome, given the20 percent growth the terminal showedin tonnage in the year to March 2006,when volumes reached 42,000 tonnes,and the 21 percent year on year growthit has shown since.
Looking ahead to the new airport at Jebel Ali, Dnata reputedly has reservedat least half of the 16 cargo terminalsultimately planned at the new airport,but initially it is only looking at occupyingone facility, to be built during thenext year by the airport authority, andto be known as FreightGate 7.
There is space on this site for a38,000 square metre facility – as big asthe current FreightGates 3-5 combined– which if fully automated could handle600,000 tonnes. Initially, however,Dnata will be going for a non-automatedfacility half the size, which wouldbe aimed at the charter operators andorigin and destination freighter operatorsexpected to initially use the airport,giving capacity of around 200,000tonnes a year.
One might expect the kind of carrierscurrently in FreightGates 3 & 4(the former Freezone Logistics Centrephase one and two) to be prime candidatesfor early moves to the new airport.While some of these are mainstreamcompanies, such as UPS, that prefer toself-handle, many are freighter operatorsserving Iraq and Afghanistan.
However, de Pauw points out thatmany of these operators are workingwith mainstream airlines, who feedtraffic into Dubai for onward shipmentto these more troubled countries.The freighter operators will thus bereluctant to move to Jebel Ali until theairlines that are feeding them do.
“So it is a bit of a chicken and eggsituation,” he says. “I expect that thetransfer of traffic to the new airportwill be a fairly slow process, and sothe authorities are wise to be taking ameasured approach to building facilitiesto begin with.”
On the other hand, he points outthat the existing airport has been havingto turn away non-feeder low costcargo operators, as well as low costpassenger airlines, because of a lack ofcapacity in the past year or two, and sothese could well be lured to the newairport once it opens.
In the final analysis, the critical decisioncould be when Emirates decidesto move some or all of its freighteroperations to the new airport. Menensays this will only be considered whena special bonded road between thetwo airports is completed, which oncurrent predictions is expected to bein a couple of years time.
Even when FreightGate 7 opens,Dnata will still maintain its terminal inthe Jebel Ali Freezone (FreightGate6,the former FACT). “Regardless of thesize of the Jebel Ali airport development,it will, given its size, still be some10-15 kilometres drive away for Jebel AliFreezone customers,” de Pauw says. “Sowe see FreightGate 6 as complementingJebel Ali airport in the future, justas it does Dubai airport currently, notforgetting that it also offers an onlinefeeder point to and from other airportsin the UAE for Freezone-basedcustomers.”
One of the strengths of the newairport will be that it has space not justfor handling terminals and forwarderfacilities, but also trucking hubs as well.Truck feeder services for air cargo area new trend in the UAE and Gulf, andde Pauw says Dnata intends to play “amajor role” in this market.
“In Europe, 95 percent of all intra-European air freight now moves byroad, and with the GCC following asimilar route to the European Union,the chances are that this might alsohappen here,” he says.
It has been trucking cargo fromother UAE airports since 1995, but inJuly 2006 formed a partnership withAgility (the former PWC Logistics) toset up an intra-airport trucking servicein the GCC. This has already addedroad feeder services to airports as farafield as Bahrain, Kuwait, Jeddah andDoha.
De Pauw cautions, however, thatthis market is still in its infancy, andconditions on the ground do not yetmatch those in Europe. Customs controlsbetween GCC countries may have been relaxed, but border inspections have not disappeared.
“Trucks can still get stuck at the border, though as the border staff get more familiar with seeing air cargo trucks, it is getting easier. We see a strong future for this concept in the region, but it will take a while to develop,” he says.
