Ask the expert: Youri Steverlynck
Question: How can airfreight operations in the Middle East support the growth of the region's diamond market?
Expert: Youri Steverlynck, Chief executive officer of Dubai Diamond Exchange
A rich heritage
Dubai Diamond Exchange is the first diamond bourse within the Arab region, in addition to being the first Arab member of the World Federation of Diamond Bourses (WFDB). The diamond trade has experienced phenomenal growth over the past decade.
In fact, diamonds were practically non-existent in the local gold markets ten years ago, whereas the situation is completely different today. Given the right support, this market will continue to flourish in the future too, and that's exactly why Dubai Diamond Exchange was created.
We were established to regulate the market and provide an opportunity for traders and customers to interact and conduct business in a secure environment.
Boosting the lifespan
Dubai's share of the international diamond market continues to grow and the exchange is set to provide a major impetus to the diamond trade. Dubai accounts for between 15% to 20% of the diamond retail business in the Gulf.
From the global perspective, a number of successful diamond centres have been established in different parts of the world. New York has become a gateway to the United States, Antwerp serves the European market, whilst Hong Kong serves China and Mumbai overlooks the Indian subcontinent.
However, in the Middle East, nothing previously existed. We have therefore engaged some of the world's leading diamond representatives to be members of the board giving a massive vote of confidence to the exchange.
The cost of diamonds is high, which increases the importance of speedy transportation. Although airfreight is generally considered expensive, it's ideal for a product of this scale. Diamonds are high in value and low in volume, which helps to reduce the cost of air transportation.
However, there is a limited supply of airlines that provide cargo services for diamonds. Only carriers with developed expertise and valuable handling divisions are suitable, including the likes of British Airways, Lufthansa and Emirates.
Around the clock
The main challenge surrounding the transportation of the stones is ensuring they arrive to their destination within 24 hours. In this line of business, two days is simply not an option and there are strong time constraints.
For instance, if a company has a client in New York interested in purchasing a diamond, the parcel must arrive on his desk for inspection in the minimal amount of time otherwise the customer may look elsewhere.
Speed is of the utmost importance and that is why overnight flights are often used in the process. The secret to the success of the more experienced handling agents is the ability to apply innovative solutions to overcome time constraints.
Packaged for success
Diamonds are naturally very strong but packaging still plays an essential role during the transportation process in order to avoid the stones being damaged.
Polished diamonds are typically packed in special parcel paper, almost like an envelope, in which the stones are individually wrapped. This method helps to facilitate the trade, enhance service standards and reduce turnaround time for processing rough diamond shipments.
Special care has been taken to ensure that the highest level of security is maintained throughout the entire handling and processing of diamond shipments.
Transguard's facility in Dubai Airport Free Zone has given the emirate a massive competitive advantage in the diamond market. The unique attributes of this high-security fortress come complete with its own internal customs inspections.
Once Transguard transports the valuables to the building from the airport, they are cleared by customs before clients can collect the cargo. The collection can be done by the company themselves or through handling agents.
Approximately 80% to 85% of all shipments are done through handling agents, so the three leading players Transguard, Brinks and G-Force have their dispatch centre in or around the Transguard building and arrange the transportation overland by trucks.