As the UAE continues its ambitious economic diversification, Abu Dhabi’s aviation hub reflects a bold vision. The city’s substantial investment in this initiative, particularly the recent establishment of an air corridor for food trade, enhances its position in the aviation industry while promoting sustainable development. 

The air corridor, a collaboration between Etihad Cargo, Abu Dhabi Airports, and the Abu Dhabi Food Hub, is more than just a new route for food shipments. It is a strategic move to address the pressing challenges facing the global food industry. 

By creating a dedicated pathway for perishable goods, the corridor aims to streamline supply chains, reduce transportation costs, and ensure the quality and freshness of food products. Branded as the Fresh Corridor 2.0, this initiative establishes a fully compliant, transparent origin-to-destination network.

But how does this initiative support the diversification of food sources, the development of new trade corridors, and the change in food trade in Abu Dhabi?

THE OBJECTIVE

“Abu Dhabi’s air corridor enables local food producers to reach global markets with reduced transit times and costs,” says Mohammed Al Kamali, Chief Trade and Industry Officer at Abu Dhabi Investment Office (ADIO), Abu Dhabi Department of Economic Development. 

Enhancing the competitiveness of local businesses globally and boosting  the emirate’s long-term economic diversification, Al Kamali adds, “The air corridor strengthens Abu Dhabi’s position as a food security leader by enhancing the emirate’s supply chain capabilities.”

In addition, ADIO’s partnership with the Abu Dhabi Global Market’s Agriculture and Food Security Working Group (AGWA) ensures that innovative solutions are implemented to support local food production, distribution, and exports from UAE businesses. 

“The air corridor is an important contributor to supporting this distribution and export,” he says. 

Elena Sorlini, Managing Director and Interim CEO of Abu Dhabi Airports, believes that the launch of Fresh Corridor 2.0 will promote two-way food trade between the UAE and the rest of the world,  bringing food products into the UAE and facilitating the export of Made in the UAE products globally—a bold step toward diversifying and growing imports and exports.

Even though air shipping is more expensive than sea shipping, Barthélémy Bonadio, Assistant Professor of Economics, NYU Abu Dhabi, says that firms choose air shipment for several reasons. One reason is that some goods don’t endure long transportation, prompting firms to pay a premium for quicker delivery. Non-freezable perishable food falls into this category.

Secondly, if a firm urgently needs a product and cannot wait for sea shipment—such as when they underestimate their requirements during the initial purchase—air shipment becomes essential. In such cases, an air corridor proves helpful during unexpected demands, contributing to food security. 

“It also becomes valuable when sea routes are disrupted, as we’re currently witnessing in the Red Sea,” adds Bonadio. 

Simply put, the air corridor would enhance food security by helping to mitigate short-term shocks and provide businesses and consumers faster, more flexible access to food supplies and heightened competition from foreign producers.

THE BENEFITS 

Al Kamali highlights that local food producers and businesses will significantly benefit from the enhanced logistics infrastructure provided by the air corridor. This infrastructure will facilitate their access to international markets and increase their export capabilities. 

Abu Dhabi aims to create a more diversified economy. Non-oil sectors already represent more than 53% of the Emirate’s GDP and recently contributed to 4.1% GDP growth in the second quarter of 2024, recording $80.87 billion. 

He says, “The corridor will provide a great opportunity for local food producers and businesses to grow.”

The emirate already fosters a competitive business environment, offering local businesses more efficient access to overseas markets. He adds that by reducing transportation time and costs, Abu Dhabi’s food producers will become better positioned to scale their operations. This would allow them to supply a broader range of destinations more flexibly.

“The air corridor is likely to reinforce competition from foreign food producers, as foreign competitors would now be able to supply Abu Dhabi’s market more flexibly,” adds  Bonadio.

This will benefit final consumers and businesses, such as restaurants and hotels, that rely on food for their operations.

He highlights that an air corridor would provide businesses and consumers faster, more flexible access to food supplies and heighten competition from foreign producers.

SUPPLY CHAIN AND LOGISTICS 

Large economies of scale characterize the shipping industry, says Bonadio. “A small push can generate larger changes.”

If multimodal transportation develops due to this initiative, sectors beyond food may also benefit from the new air trade routes. This would help share the costs of maintaining the air corridor and support its development.

He adds, “Since air transportation is really useful for quick shipments, it would make a just-in-time supply chain more attractive in Abu Dhabi. As a result, firms would need to store less inventories and need less space to stock those inventories.”

Establishing the air corridor is also a key step in boosting Abu Dhabi’s export capabilities, highlights Al Kamali. 

The AGWA initiative, which taps into a $21.08 trillion global industry, further enhances Abu Dhabi’s competitiveness. By 2045, it is expected to attract $34.8 billion in investments, create 60,000 jobs, and contribute $24.5 billion to Abu Dhabi’s GDP.  

“By opening new, strategic trade routes, the air corridor enables food exporters to access previously untapped markets across Asia, Europe, and beyond.”

FLYING AHEAD 

“The air corridor is a key contributor to the UAE’s economic vision, particularly in food security, logistics, and economic diversification,” says Al Kamali. “By fostering collaboration between local businesses, government entities, and the private sector, the air corridor accelerates Abu Dhabi’s transition towards a knowledge-based, sustainable economy.” 

However, it is important to monitor the uptake of air shipment not only by food importers and exporters but also by businesses outside the food industry. If that uptake is significant, changes might occur.

Depending on how the air corridor is implemented, there might also be consequences for passenger air travel. Bonadio adds, “Close to half of air freight shipments happen in the hold of passenger aircraft.” This could lead to higher luggage fees for travelers if the space is used for cargo or increased flight routes if the air corridor results in additional flights. 

The outcome, of course, will depend significantly on the implementation.