Logistics

Pharma spurs rebound in Emirates cargo growth

March 27, 2023

Cargo accounted for 37% of the airline’s revenue in 2021-22
Pharma has seen almost double digit growth year-on-year
E-commerce cargo continues to rise

Pent-up demand for pharmaceuticals and the Middle East’s ongoing e-commerce boom are among the biggest growth drivers for Emirates airline’s cargo business, while airfreight capacity to and from Asia’s major manufacturing hubs remains constrained.

Cargo is a key part of Emirates’ operations, generating revenue of AED 21.65 billion ($5.9 billion) in 2021-22, or 37 percent of the airline’s revenue that year.

Annual cargo revenue also grew 26.6 percent versus the preceding 12 months as creaking global supply chains spurred many exporters to use air transport instead of ships.

The coronavirus pandemic spurred Emirates to re-think its cargo business.

“There was a huge learning curve in terms of ensuring that all the processes we follow are more efficient in terms of the way we move commodities around the world,” Nabil Sultan, Emirates airline’s chief cargo officer, said.

“This is on top of the fact we've gradually started to increase our flights across the network, adding more frequencies to some destinations.”

Emirates SkyCentral is one of the world’s largest air logistics hubs, spanning both Dubai International and Dubai World Central airports. Such infrastructure investments have enhanced Emirates’ ability to “accommodate and transit cargo in a much more seamless way”, said Sultan.

“That has played in our favour, especially with specialised products like pharmaceuticals,” he said.

By March 2022 Emirates SkyCargo had transported 1 billion doses of Covid vaccines. These mainly originated from Brussels, Johannesburg, Amsterdam, Chicago and Hyderabad.

Annual revenue from transporting pharmaceuticals topped AED2 billion for the first time in 2021-22.

The airline’s specialised pharmaceutical transport facilities at Dubai's airports span around 26,000 square metres combined, said Sultan.

“Investing in this specific vertical really helped move a lot of pharma through Dubai and on Emirates. Vaccines require low temperatures throughout the entire supply chain,” he said.

Demand for coronavirus vaccines worldwide led to diminishing air shipments of other pharmaceutical products as combatting the pandemic took precedence for policymakers worldwide.

Now the virus has abated in terms of its threat to life, demand for non-Covid medicines is soaring, said Sultan.

“We’re now trying to catch up with the rest of those products and to make sure that those are available across the globe,” he said.

“Pharma hasn’t slowed down. We're seeing a constant growth of almost double digits month-on-month, year-on-year.”

In February’s S&P Global UAE Purchasing Managers' Index (PMI), the suppliers’ delivery times index showed the biggest reduction in lead times since 2019 thanks to improving supply chain conditions.

E-commerce boosts Emirates cargo

E-commerce is another expanding segment for Emirates cargo.

“We've seen almost exponential growth, especially during the pandemic and that hasn’t slowed down,” said Sultan.

“When you talk about the Middle East, West Asia, Africa, Indian subcontinent, you still see large volumes of e-commerce moving in and out.

“We're looking at various solutions to offer our e-commerce partner companies, not only to transport their shipments from airport to airport, but how to facilitate getting some of their products straight to their markets, into their stores, including customs clearance and helping them out with last mile delivery.”

Of Emirates cargo, 59 percent was carried on the airline’s scheduled flights and 41 percent on specialist freighter craft during the 2021-22 financial year.

In November 2021 Emirates announced it would spend $1 billion to acquire two new Boeing freighter craft and convert four other passenger aeroplanes into freighters.

Yet, more broadly, capacity remains constrained across the air cargo industry, said Sultan.

“A lot of airlines have started to offer daily capacity into different markets, but we're still not there yet," he said.

"When you look at China and Southeast Asia, for instance, you still have a big gap in terms of the capacity that needs to go back in there,” he said.

“A lot of these aircraft have been grounded, hibernated for almost three years. So it's a common challenge that the industry faces today to get them back on the route.”

Major export markets include China, Hong Kong, Vietnam, Cambodia, India, Pakistan, Bangladesh and Sri Lanka, he said.

“There's still a shortage of capacity, especially in key production markets – that will probably continue for at least another year or so,” added Sultan.