DP World delves into air cargo

DP World is building its end-to-end supply chain ambitions with the launch of its first air cargo logistics hub.

DP World is easing into the air cargo industry with the launch of a new air cargo logistics hub in Punta Cana, Dominican Republic.

Morten Johansen, chief operating officer of DP World Americas says the air cargo hub at Punta Cana Airport can be used for both belly cargo and freighter shipments.

“We are looking to attract cargo planes into the Dominican Republic. That is not common. Today it is mainly passenger traffic,” says Johansen.

The new multimodal facility at Punta Cana International Airport, first announced in March, has been jointly developed with Grupo Puntacana and built through an agreement between DP World and the Punta Cana Free Trade Zone (PCFTZ), a subsidiary of Grupo Puntacana.

Multi-stakeholder attraction

Having started export operations at the end of November, the hub is currently actively receiving cargo via land transport across the country, and then shipping it via the airport.

By the end of the year, all DP World air cargo import and export operations will be centralised through the hub.

The 10,000 sq m air cargo facility boasts features including a logistics centre with warehouse and manufacturing facilities, and a fuel supply terminal, in addition to existing warehouses.

The logistic centre warehouse and manufacturing facilities are currently under construction and is projected to be operational by the second half of 2024.

There is also a maintenance, repair and overhaul (MRO) workshop for aircraft that has commenced civil work and is on a two-year timeline to begin operations.

4,000 sq m is being utilised for cool rooms to enable the facility to handle temperature-controlled cargo such as medical, pharmaceutical, and other perishables. The remaining space is for dry cargo.

At present, 60-70% of the cargo consists of perishables, primarily fruits and vegetables. The hub also handles a variety of other commodities, including machinery, automotive equipment, and seafood.

The plan is to eventually diversify into the pharmaceutical, technology and e-commerce sectors.

Alongside airlines, there is also potential for partnerships with other players in the supply chain, such as freight forwarders and ground handlers.

“We will include everybody in this project. It’s about driving cargo through the air cargo hub and creating as much connectivity as we can,” explains Johansen.

“We will operate with any airline and any cargo operator that wants to make use of the facilities.”

Air cargo hub development. Photo: PCFTZ via DP World

Growing global logistics

In an airfreight market where demand is volatile and capacity is up, starting a new airfreight venture could be tough.

But DP World is focusing on the positives, not least is the backing of the Dominican Republic government and Grupo Puntacana, which both aim to develop the Caribbean country into a logistics hub.

Johansen says the air cargo hub is part of DP World’s transition from a port operator into a global logistics provider with an end-to-end supply chain strategy, and hence its Punta Cana business will be operating under the DP World Logistics name.

He adds that the Punta Cana air cargo investment made sense as since 2003 DP World has owned and operated a port facility concession in the Dominican Republic.

Situated next to Las Américas Airport on the south east of the island of Hispaniola, the port facility and adjoining industrial and logistics park is situated within the Caucedo Multimodal Free Zone.

There is plenty of business potential, says Johansen.

Manufacturing free zones in the Dominican Republic have long been in operation and these predominantly serve US companies.

Plus, as nearshoring initiatives become more popular in the US, where there is a government strategy “to have a closer manufacturing setup to the US than they have today”, Johansen says the Dominican Republic is well situated to act as a supplier.

He adds: “I think we have a very strong position to create a very efficient solution here.”

Currently, cargo activity in the Dominican Republic is largely driven by domestic business, he explains.

Internationally, fruit and vegetables are exported to the US, Canada, and Europe, but DP World aims to build on this.

“We’re combining forces with Grupo Puntacana to create an integrated logistics zone in the airport and develop solutions for local Dominican importers and exporters,” says Johansen.

“The aim is to create an air corridor and establish connectivity from the Dominican Republic into the US and Canada, plus eventually Europe and the Middle East.”

He adds: “Today, a lot of the cargo that comes from South America is transported either via Colombia, or Miami. We are trying to position the Dominican Republic as an alternative to those.

“Transiting cargo from the US often turns out to be very expensive. There’s quite a bit of bureaucracy and red tape, so we believe we can offer a more effective and efficient solution out of the Dominican Republic in the future.”

DP World operates facilities in most of the countries in South America and is working on creating multimodal corridors, which support end-to-end logistics and supply chain visibility, points out Johansen.

With the new air cargo hub, shipments can then be flown out of Punta Cana at a lower cost than from another airport in the region.

More developments ahead?

DP World plans to assess how its first venture into air cargo goes, before making any decisions on further investments.

“There are no specific air cargo projects elsewhere at the moment,” Johansen says.

However, the company confirms plans to expand into sea-air operations are in discussion in several South American countries, including Peru, Colombia, Ecuador, and Chile.

The company will only consider more air cargo investments if they make strategic sense for the business and if they create value for customers, explains Johansen.

“It’s not necessarily a strategy just to go out and develop air cargo business. It really has to add value for the customers, and in the locations where we operate,” he stresses.

The air cargo logistics hub will be officially recognised with an inauguration ceremony planned for the first quarter of next year.

Current DP World port facility in Dominican Republic. Photo: DP World

DP World to launch air cargo logistics hub in Dominican Republic