More trade for In­dia–Mid­dle East

With the growth of global and re­gional trade, es­pe­cially be­tween Europe and Asia, op­por­tu­ni­ties rise aplenty in the Mid­dle East due to its favourable ge­o­graphic lo­ca­tion. Ex­perts from the avi­a­tion and freight for­ward­ing in­dus­try share their views on the s

Cargo Talk - - Front Page - KAL­PANA LOHUMI

Ac­cord­ing to In­ter­na­tional Air Trans­port As­so­ci­a­tion’s (IATA) forecast 2014-18, In­dia is the sec­ond fastest grow­ing air cargo mar­ket af­ter the Mid­dle East and is ex­pected to grow at a com­pound an­nual rate of about seven per cent over the next five years. Air­lines from the Mid­dle East re­gion such as Emi­rates, Eti­had, Qatar and Sau­dia to name a few, are proac­tively find­ing their niche in the In­dian mar­ket with new routes and tie-ups, giv­ing tough com­pe­ti­tion to other air­lines.

The Mid­dle East has strong de­mand in gems, jew­ellery, gar­ments, pharma prod­ucts, tea, ma­chin­ery, in­stru­ments and fab­rics and per­ish­ables such as fruits, veg­eta­bles, flow­ers and meat. Trade be­tween the coun­tries has es­ca­lated with the UAE be­com­ing In­dia’s largest ex­port des­ti­na­tion. Im­ports and ex­ports had been nar­rowly fo­cused. For the most part, raw gems and crude oil have been shipped from the Gulf to In­dia. How­ever, the ma­jor­ity of ex­ports to Dubai from In­dia in­clude pre­cious met­als and stones, food items (fruits, veg­eta­bles, dairy prod­ucts and pro­cessed items), ma­chin­ery spares and plas­tic goods (con­duits, pipes, tapes, goods like trays).

Prime Min­is­ter Naren­dra Modi’s visit to Mid­dle East may lead to a aug­men­ta­tion in bi­lat­eral trade.

CARGOTALK spoke to air­lines and freight for­warders about op­por­tu­ni­ties be­tween In­dia and Mid­dle East.

Com­ment­ing on the trade be­tween the two, Bharat J Thakkar, Past Pres­i­dent and Per­ma­nent Mem­ber, Board of Ad­vis­ers, ACAAI and Joint Man­ag­ing Di­rec­tor, Zeus Air Ser­vices says, “The Mid­dle East is the most im­por­tant re­gion when it comes to the In­dian air cargo in­dus­try. Air­lines from the re­gion are giv­ing tough com­pe­ti­tion to other car­ri­ers from Europe, Asia and Amer­ica. The rise of the gulf car­ri­ers in the In­dian air cargo in­dus­try has been a muchtalked about topic among the fra­ter­nity. Ir­re­spec­tive of the com­pe­ti­tion, the Mid­dle East air­lines keep on hog­ging head­lines for their ex­pan­sion in the In­dian sky.”

Jas­sim Saif, Vice Pres­i­dent – Com­mer­cial Cargo, North Africa and West Asia, Emi­rates SkyCargo, shares, “The In­dian air cargo in­dus­try has great po­ten­tial for growth as cargo ac­tiv­i­ties are per­form­ing be­low their po­ten­tial. Also, the In­dian GDP is grow­ing at 7.5 per cent and the In­dian lo­gis­tics sec­tor is val­ued at US$100 bil­lion, which is 2.5 per cent of the global mar­ket. Cur­rently, bi-lat­eral trade be­tween In­dia and the UAE hov­ers at US$70 bil­lion each year and is set to reach $100 bil­lion by 2020. Dubai has de­vel­oped air cargo in­fra­struc­ture in­clud­ing state-of-the-art cargo ter­mi­nals, au­to­mated stor­age and han­dling sys­tems, ware­hous­ing, EDI and con­nec­tiv­ity. Emi­rates SkyCargo is equipped to lever­age this strength, and boost im­ports and tran­ship­ments from In­dia.”

San­jiv Ku­mar, Ex­ec­u­tive Di­rec­tor – Cargo, Air In­dia, says, “The to­tal bi­lat­eral trade be­tween In­dia and the Mid­dle East is more than US$150 bil­lion. Dur­ing the Prime Min­is­ter’s visit, both coun­tries agreed to in­crease bi­lat­eral trade by 60 per cent over the next five years. The pro­posed In­dia-UAE In­fra­struc­ture In­vest­ment Fund is meant to sup­port in­vest­ment in In­dia’s roads, ports and air­ports which should in­crease ef­fi­ciency.”

“With the trade thriv­ing be­tween In­dia and the Mid­dle East the op­por­tu­nity for lo­gis­tics is tremen­dous. All car­ri­ers and lo­gis­tics com­pa­nies have been re-work­ing their strate­gies and di­rect­ing their en­ergy to cus­tomers who trade in this lane. Air­lines and ship­ping lines have been in­creas­ing their ca­pac­i­ties to cater to this de­mand,” opines Yash­pal Sharma, Di­rec­tor, Sky­ways Group.

“With the Mid­dle East air­lines also ex­pand­ing rapidly, the growth in In­dia-Mid­dle East trade has ben­e­fit­ted them and sup­ported their ex­pan­sion, in terms of pas­sen­ger and cargo. With the PM’s visit, I would ex­pect trade with the UAE to grow by 25-30 per cent over the next two to three years,” Sharma adds.

“In­dia needs mas­sive FDI (For­eign Direct In­vest­ment) in sec­tors in­clud­ing air cargo in­fra­struc­ture, ware­hous­ing, cold stor­age, and au­to­mated sys­tems and UAE has huge sov­er­eign funds to help,” says Saif.

“The UAE’s grow­ing role as a re­gional trad­ing hub will make it In­dia’s top ex­port des­ti­na­tion by 2030, dis­plac­ing the US. Ac­cord­ing to the GOI fig­ures, in FY 2014-15, trade be­tween In­dia and UAE crossed US$59 bil­lion, with In­dia ex­port­ing goods worth US$33.3 bil­lion to the UAE and US$26 bil­lion worth of UAE’s ex­ports to In­dia, thus making UAE among the top trad­ing part­ners of In­dia,” high­lights Naresh Ge­haney, Vice Pres­i­dent – Air Freight (In­dia), Haiko Lo­gis­tics.

“The Mid­dle East is a ma­jor tran­sit point for much of the freight to Europe and Amer­ica. There is scope for in­creas­ing the freight to the Mid­dle East as a des­ti­na­tion from In­dia, specif­i­cally for com­pa­nies which spe­cialise in cov­er­ing meat, veg­eta­bles, pulses as this is a niche mar­ket. Most of the freight com­pa­nies, es­pe­cially the larger ones, are not ac­tive in this lane,” avers Shesh Kulka­rni, Pres­i­dent & CEO, UFMI.

David Kerr, VP – Cargo, Eti­had Air­ways says, “In­dia is an im­por­tant mar­ket for Eti­had Air­ways. We cover 11 gate­ways in In­dia with 14 freighter fre­quen­cies a week. Apart from our wide-body oper­a­tions, the air­line of­fers In­dian busi­nesses great op­por­tu­ni­ties through our global net­work as well as ac­cess to the UAE.”

He adds, “e-commerce, phar­ma­ceu­ti­cals, auto com­po­nents and per­ish­ables are some of the key growth driv­ers for air freight in and out of In­dia at present. Our oper­a­tions are cur­rently served via 11 on­line points. From In­dia we are offering so­lu­tions to cus­tomers look­ing to move goods to Africa, Europe, US, Latin Amer­ica, the Mid­dle East, Far East and the sub-con­ti­nent. Our links with In­dia were de­vel­op­ing through the strate­gic in­vest­ment and part­ner­ship of Eti­had Air­ways with Jet Air­ways.”

Speak­ing about the chal­lenges, Saif says, there are aero-po­lit­i­cal is­sues over ca­pac­ity and im­bal­ance. In­fra­struc­ture re­mains a chal­lenge, in­clud­ing cold stor­age, au­to­mated sys­tems and ware­hous­ing. The ru­pee slide is one of the ma­jor con­cerns. Emi­rates will come un­der in­creas­ing pres­sure as the value of the In­dian cur­rency con­tin­ues to slide. The de­cline in oil prices will af­fect the Gulf economies. This sce­nario will have im­pli­ca­tions for for­eign work­ers and will have a knock-on ef­fect on im­ports. A ma­jor prob­lem fac­ing air ex­port from In­dia is the lack of Elec­tronic Data Ex­change (EDI) and in­ter­con­nec­tiv­ity be­tween the cus­toms, the Air­ports Author­ity of In­dia, air­lines, agents and ship­pers. This leads to de­lays in ex­port ship­ments.”

“Lo­gis­tics com­pa­nies have plans to buy their own air­craft. This will po­ten­tially add a new di­men­sion to the com­pet­i­tive land­scape,” he says.

“We have chal­lenges of ca­pac­ity to sta­tions like Abu Dhabi, Mus­cat where we still have nar­row body oper­a­tions. There are also cus­toms con­straints in In­dia for cargo, es­pe­cially courier traf­fic, com­ing in from the Mid­dle East,” says Ku­mar.

“Sys­tems and pro­cesses are not there. If there is a con­cern, find­ing a so­lu­tion is a chal­lenge be­cause there is no seam­less op­er­a­tion. At ev­ery point, you have to iden­tify your route to a so­lu­tion. We have IT and au­to­ma­tion is­sues, high charges and cus­toms is­sues to name a few,” says Vipin Mohla, As­so­ciate Vice Pres­i­dent – Cargo, Indigo.

“Cur­rently, there are sig­nif­i­cant changes un­der­way to en­hance the in­fra­struc­ture at Abu Dhabi Air­port, with the de­vel­op­ment of the new Mid­field Ter­mi­nal project, sched­uled for com­ple­tion in 2017. Air­ports in In­dia are also un­der­go­ing rapid change to meet the needs of our grow­ing pas­sen­ger and cargo oper­a­tions,”,em­pha­sises Kerr.

“The Gulf and the Mid­dle East coun­tries are mostly lib­eral in their global trad­ing ori­en­ta­tion due to their de­pen­dence on for­eign trade. How­ever, a few struc­tural and pol­icy rigidi­ties might pose chal­lenges for In­dia. The pres­ence of trade bar­ri­ers such as pe­ri­odic im­port bans on cer­tain veg­etable and live an­i­mals, mul­ti­ple bi­lat­eral/re­gional is­sues or com­plex­ity and the ab­sence of trade strat­egy and pro­mo­tion are few of the chal­lenges,” shares Satish Lakkaraju, Head of Sales - Air & Sea Lo­gis­tics, Dachser In­dia.

“How­ever there are two ma­jor chal­lenge that one faces with th­ese coun­tries, first is very short tran­sit time both by air and sea. Even be­fore the doc­u­ments can be re­leased from the bank the cargo ar­rives and se­condly the high tem­per­a­ture in tran­sit and lim­ited re­frig­er­a­tion fa­cil­i­ties which re­sults in tem­per­a­ture ex­cur­sions, in turn caus­ing dam­age to cargo,” adds Lakkaraju.

Speak­ing on the chal­lenges, Sharma says, “Move­ment of goods to most of the im­por­tant coun­tries like UAE, Saudi and Kuwait is very easy and smooth. But move­ment of goods in some of the other coun­tries in­clud­ing Iran are lo­gis­ti­cally chal­leng­ing due to in­ad­e­quate in­fra­struc­ture in their hin­ter­land. Un­rest in coun­tries like Iraq, Syria has also made things dif­fi­cult for cus­tomers to trade and LSP’s to ser­vice busi­nesses.”

“Han­dling of freight is see­ing huge growth on Mid­dle East­ern car­ri­ers. Cargo is no more a bas­tion of Euro­pean air­lines, Gulf car­ri­ers have com­pletely nudged out the Euro­peans in this space. But, Mid­dle East car­ri­ers are still fac­ing chal­lenges in gain­ing larger ac­cept­abil­ity of car­ry­ing tem­per­a­ture con­trolled pharma cargo over Mid­dle East to Europe, Amer­ica and Latin Amer­ica,” pointed Kulka­rni. “Though lead­ing Gulf car­ri­ers have ro­bust tem­per­a­ture con­trolled han­dling fa­cil­ity, but the process is still not do­ing the nec­es­sary magic to boost the lev­els.”

“Cargo se­cu­rity is a press­ing con­cern, es­pe­cially as the coun­try po­si­tions it­self as an in­ter­na­tional multi-modal lo­gis­tics plat­form. As screen­ing of cargo be­comes more strin­gent, the chal­lenge for of­fi­ci­at­ing bod­ies in the coun­try is to strike a bal­ance be­tween ad­dress­ing the need for cargo se­cu­rity while per­mit­ting in­ter­na­tional trade and commerce to thrive,” in­forms Ge­haney.

Bharat J Thakkar Past Pres­i­dent and Per­ma­nent Mem­ber - Board of Ad­viser, ACAAI and Joint Man­ag­ing Di­rec­tor Zeus Air Ser­vices

David Kerr Vice Pres­i­dent – Cargo Eti­had Air­ways

Yash­pal Sharma Di­rec­tor Sky­ways Group

Jas­sim Saif Vice Pres­i­dent – Com­mer­cial Cargo North Africa and West Asia, Emi­rates SkyCargo

San­jiv Ku­mar Ex­ec­u­tive Di­rec­tor – Cargo Air In­dia

Shesh Kulka­rni Pres­i­dent & CEO UFMI

Satish Lakkaraju Head of Sales Air & Sea Lo­gis­tics In­dia Dachser In­dia

Vipin Mohla As­so­ciate Vice Pres­i­dent – Cargo Indigo

Naresh Ge­haney Vice Pres­i­dent – Air Freight (In­dia) Haiko Lo­gis­tics

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