Once in a lifetime

Michael Proffitt, CEO of Dubai Logistics City, is tasked with creating the largest air cargo facility in the world.

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By  David Ingham Published  May 15, 2006

Michael Proffitt, CEO of Dubai Logistics City, is tasked with creating the largest air cargo facility in the world.

Long time residents of Dubai have become fairly accustomed to mega projects. But for sheer size, complexity and ambition, Dubai World Central could top them all.

The project, previously referred to in the press as Jebel Ali Airport, involves turning 140 km² of empty land into a city of 750,000 people built around the world’s largest airport and air cargo facilities. Dubai World Central will consist of three primary components: an airport, freehold property developments and an air cargo & logistics hub called Dubai Logistics City (DLC). Each component is, in its own right, enormous in its size and scope.

Michael Proffitt, a 25 year veteran of the logistics industry, is the man tasked with overseeing the development of Dubai Logistics City. After leaving Deutsche Post, where he held several senior positions, in 2004, he had several offers on the table, opting for this one because he felt the project was unprecedented. “I’m not sure there will be another project of this scale and size,” he says. “Of all the things I could have done, this was once in a lifetime.”

In sheer size terms, DLC is being designed so that it can eventually accommodate 12 million tonnes of cargo annually in 16 air cargo terminals. To put that in perspective, Memphis International Airport was the world’s busiest cargo airport in 2004 with a throughput of 3.6 million tonnes.

The airport that DLC’s air cargo clients will use will have up to six runways. The first is an all-weather 4.5 kilometre runway, being built to CAT 3 classification. In addition to serving cargo airlines, the airport has a potential maximum capacity of 120 million passengers annually.

Around sixty companies, a mix of freight forwarders and logistics providers, have already committed to taking around two million m2 of warehouse space within Dubai Logistics City. The entire DLC development will occupy around 25 km² of Dubai World Central’s planned 140 km².

It is certainly an ambitious plan and one driven partly out of necessity. At current rates of growth, Dubai International Airport is likely to be full by 2012.

In 2005, the airport handled around 25 million passengers and around 70 million are predicted to pass through the airport in 2012. On the cargo side, pressure on space is even greater.

The airport handled approximately 1.3 million tonnes of cargo in 2005, a figure that would grow to around 3.5 tonnes by 2012, based on current growth rates. Dubai Cargo Village is virtually full as it is, which is what has prompted the look at alternatives and the decision to develop a new airport with DLC alongside it.

“If volume is going to triple, there’s going to be an issue handling air cargo,” says Proffitt. “That’s when people started looking at what the alternatives were on the cargo side.”

The choice of 140 km² in Jebel Ali as the site for Dubai World Central is no coincidence. Just across the road lies Jebel Ali port and free zone, which will be connected to DLC and the rest of Dubai World Central by road bridges, creating one continuous, customs-free area.

Goods that come into Jebel Ali, the world’s ninth largest port, by ship can now be unloaded, driven across to DLC, and put in a plane for transportation to other parts of the world. Similarly, products coming into DLC by plane can be unloaded, driven across to Jebel Ali port and loaded into a ship for re-export to the surrounding region.

The construction of a dedicated road from Dubai International Airport to Jebel Ali will bring the existing central airport into that customs-free area. There is even talk of a GCC rail system, with a major terminal in Dubai World Central or Jebel Ali Free Zone, being built in the future.

It is this integration of sea, road, air and possibly rail, known in the industry as ‘multi-modal logistics’, that makes DLC such a strong proposition, according to Proffitt. “It is truly unique to have the port and airport so close together in an integrated customs area,” he says.

What is really key about DLC is that it is not just being built as a dropping off point for goods that will be sold in the UAE and its immediate neighbours. Rather, it is being positioned as the central logistics hub for what Proffitt calls the greater region, a growing market of two billion people within just a few hours flight time of Dubai.

“What we’re looking at is creating Dubai as the logistics hub for the greater region, which is South Eastern Europe, CIS, Indian sub-continent, Middle East and Africa,” he explains. “You have the Far East and this greater region, which are the two key drivers of world economic growth at the moment. Couple that with the fact we’re looking decades ahead, and you do not want to be shy in terms of the capacity available.”

Take the globalisation of manufacturing as an example of where DLC could fit in. Currently, goods made in China that are destined for the greater region that Proffitt describes may well land in Europe before being shipped back into the region.

It would much make more sense to have those goods land first in Dubai, from where they could be transported by road, air or sea to Saudi Arabia, the CIS or Iran. “Goods have to get to the market quickly, particularly in the electronics market,” says Proffitt. “That’s where we think we have a strong proposition because we are closer to the Far East. Companies can re-examine the supply chain in the knowledge that there is a platform here for sea, air, road and rail in the future.”

It was with this much wider market in mind that DLC and its massive potential cargo capacity were conceived. The headline figures of 12 million tonnes of cargo and 120 million passengers annually are estimates of where Dubai World Central might be in 2050.

That capacity will not all be in place at once, and will only be added as required. So when DLC’s first tenants start operations, at the end of 2007, two cargo terminals and one runway will be in operation. A clear blueprint for the entire development is already in place, but extra terminals and runways will only be added as demand dictates.

“People say: Here’s a six runway airport, 120 million passengers, 12 million tonnes of cargo, do you really need all this? The answer is: I’m not sure, but Dubai will not have any constraints on passenger growth and air cargo growth for decades to come,” explains Proffitt. “It’s not about having the biggest and the best, it’s about ensuring that Dubai can continue to grow, in terms of passengers and air cargo, totally unencumbered.”

Companies that opt to take up space in DLC can choose to build their own warehouse facilities on empty plots of land, or have DLC build them for them on a design, build and finance basis. There will also be shared warehouses where forwarders can rent blocks of between 80 m² and 1000 m² in size.

Lots of warehouse space, a customs free area and access to Jebel Ali port are key reasons why logistics companies should be attracted by DLC, but Proffitt believes that the entire Dubai World Central project’s emphasis on air cargo and logistics will also be a factor. Rather than an afterthought, air cargo is at the very heart of Dubai World Central’s project blueprint, he says.

“We’re providing an infrastructure where there’s a clear focus on air cargo: If you look at a lot of airports, cargo is parked away and not a priority,” he explains. “We’ll be developing up to six runways and giving priority to cargo on the runways adjacent to the cargo terminals. Planes will be able to park alongside the cargo terminals. The way the airport’s laid out is very conducive for cargo aircraft to operate here.”

To make the project even more attractive for logistics providers and cargo airlines, DLC has set aside 1.7 million m² for the creation of a specialised ‘aviation cluster’. DLC is aiming to attract MRO, parts and training companies to set up in the area.

Taking the hub idea further, Dubai Logistics City will also have its own dedicated labour village designed to eventually accommodate up to 40,000 workers in purpose-built surroundings. DLC says that its Labour Village will raise the benchmark for labour accommodation, providing restaurants, recreational facilities and shops. Companies will be able to take space on an apartment, floor or building basis.

“What we’re bringing together here is the number nine port in the world and potentially the largest airport,” says Proffitt. “With that, you’ve got the business friendly environment in Dubai, free zone status and no corporation or income tax. It’s a compelling value proposition.”

Ultimately, DLC is also about bringing the various elements of the air cargo and logistics businesses together in one place and giving prospective customers an unbeatable value proposition. If Dubai Logistics City succeeds in doing that, Dubai could become one of the major logistics centres of the 21st century.

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