Here’s why FedEx has invested $350m in Dubai logistics hub

The demand for airfreight as an alternative to mainstream supply chains and the cost of transporting cargo by plane has soared over the past months as attacks in the Red Sea force retailers and manufacturers to find alternate routes.

The current spike in the use of air freight is primarily in cargo volumes bound for Europe, as more companies avoid the longer Red Sea diversions around Africa’s Cape of Good Hope, according to Xeneta, an ocean and air freight rate benchmarking platform.

The latest data from Xeneta shows that air cargo volumes on the major apparel route from Vietnam to Europe spiked 62 per cent in the week ending January 14 – 6 per cent higher than 2023’s peak week in October.

The cost of air freight has not risen as sharply, but if Yemen’s Houthi rebels continue to attack vessels in the Red Sea and demand for cargo remains high, prices are likely to increase.

FedEx invests in MEISA logistics hub

FedEx Express (FedEx) has expanded its global footprint with a $350m (Dhs1.3bn) investment in a state-of-the-art air and ground hub at Dubai World Central (DWC) Airport in Dubai South.

The delivery giant said the logistics hub marks a long-term investment into the UAE’s economy through infrastructure and technological advancements in the facility.

“The inauguration of the FedEx Middle East, Indian Subcontinent and Africa (MEISA) hub in Dubai South is a strategic milestone for Dubai’s aviation and logistics sectors, consolidating the emirate’s robust infrastructure, strategic location, and our ongoing efforts to enhance global connectivity,” said Sheikh Ahmed bin Saeed Al Maktoum, President of the Dubai Civil Aviation Authority and Chairman of Dubai Airports.

The 57,000-square-metre facility incorporates advanced technologies that include automated sort systems to enhance the efficiency, accuracy, and speed of package processing and distribution from the facility.

The hub boasts two automated high-speed x-ray machines equipped with artificial intelligence, to efficiently scan goods and enhance security. Similarly, FedEx said the hub’s 170 square-metre cold storage area caters to a wide range of temperature-sensitive shipments.

FedEx said the hub is a testament to its commitment to sustainability and goal of achieving carbon-neutral operations by 2040. The company is leveraging the electric ground service fleet along with electric charging stations for pick-up, delivery, and employee vehicles.

The hub forms an integral component of the region’s aviation and logistics ecosystem. This strategic location is further enhanced by a comprehensive multi-modal transportation network, seamlessly connecting air, land, and sea.

Read: Retailers demand more action from EU to resolve Red Sea crisis