Tide turns in favour of cargo
The Civil Aviation Policy has raised hopes of the cargo sector. The new objectives can lead to the upsurge in the air cargo volumes in the country along with improvement in turnaround time and costs.
Something that the industry has been waiting for since independence has finally happened. An integrated Civil Aviation Policy has been issued by the government with the objective of making regional connectivity a reality. Cargo has also received its much desired attention this time. The policy approved by the Cabinet aims to boost cargo operations. Promotion of both domestic and international air cargo and express delivery services is a key objective of the government, taking into the account the ‘Make in India’, e-commerce and exports perspectives.
Currently the air cargo volumes in India are very low as compared to other leading countries due to high charges and turnaround time. As per the policy, the Air Cargo Logistics Promotion Board (ACLPB) and the industry will submit a detailed action plan after stakeholder consultations with the objective of reducing dwell time of air cargo from ‘aircraft to truck’ to below 48 hours by December 31, 2016 and to 24 hours by December 31,
Currently the air cargo volumes in India are very low as compared to other leading countries due to high charges and turnaround time
2017 by reduction in free time and other measures. For exports, dwell time will be reduced to 12 hours by December 31, 2016 and eight hours by December31, 2017.The action plan proposed by ACLPB will be forwarded to Central Customs Coordination Committee (CCFC) to achieve the stated objectives. Within the air cargo network, Express Delivery Services (EDS) has a discrete operational nature and is becoming fundamental especially in the light of double digit growth in e-commerce. Airport operators will be encouraged to provide space for a10-year lease to operators of express cargo freighters who may then develop dedicated infrastructure to improve their operational efficiency. MoCA will also encourage development of cargo villages near airports. Industry veterans are now betting on a perceptible shift in the sector.
G Balaraju, Managing Director, Sindhu Cargo Services, says, “The Government has removed barriers of five years minimum fly in domestic sector for Indian operators. We can see airlines venturing in the international sector for passenger movement which will help the cargo trade.”
Moreover, Sunil Kohli, Managing Director, Rahat Cargo feels, “The new civil aviation policy is expected to bring fresh and encouraging hopes in regards to the development of airports, whose numbers are likely to increase to 127 from the present 77. The development of new airports equipped with the latest technology would facilitate the exporters to
usher in the cargo trade, thereby enhancing the uplift tonnage.” Ravinder Katyal, Director, UTi, finds the new civil aviation policy positive. According to Sandeep Vijh, Business Development Manager–International Logistics, Rahat Continental, “The new civil aviation policy directs in improvising the supply chain process which will give cargo sector a major boost.” Cargo facilities co-located at an airport are covered under the ‘Harmonised List of Infrastructure’ and will get the benefit of ‘infrastructure’ sector. Commenting on the same, Bharat Thakkar, Past President and Permanent Member-Board of Advisors, ACAAI, and Joint Managing Director, Zeus Air Services says, “This should be equitable, not just restricted for a few. With CCI Act in place which attracts competition and allows users (EXIM) to decide this is one sided and will only help the private airport operators.”
On paperless air cargo front, he adds, “This seems to be influenced by self regulated organisation’s e–freight programme. The need of the hour is to streamline and look at the path to prosperity with a long term plan, it must be considered to create an India Foreign Trade Community System where all regulators, airlines shipping lines including all players in the supply chain operate on a single platform.”
On how much growth the industry expects, Balaraju says eight to 10 per cent. On the other hand Vijh feels, “At least eight to 12 per cent growth but could boost up to 25 per cent in the following year.”
However Kohli says, “The new policy targets to increase the cargo volume to 10 million tonnes by the year 2027. If the policy is implemented in letter and spirit with a vigour and positive intent, a likely increase of 20-25 per cent per annum growth in export may be initially projected which may witness the subsequent enhancement.” According to the policy, the government will streamline and simplify customs procedures. Thakkar adds, “The first step is to implement the Tax Administration Research Commission (TARC) report which places no capital cost but only business process re-engineering for effective administration of tax laws.”
The policy states that there had been consistent representation to the CBEC that the accurate information about the number of pieces or gross weight actually carried can only be provided by the airlines. According to Thakkar, “It may be emphasised here that the seemingly ‘slight twist’ made to the provisions proposed in US have had major implications in the provisions made in India and have been the major source of disorderly
G Balaraju Managing Director Sindhu Cargo Services It may take about one year for the operators to plan and deploy resources and then the industry would start noticing the change Sunil Kohli Managing Director Rahat Cargo With a brisk commencement of the policy’s initiatives, the positive results may be visible within a year. The development of airports will boost trade Bharat Thakkar Past President and Permanent Member-Board of Advisors, ACAAI, and Joint Managing Director, Zeus Air Services Paperless air cargo seems to be influenced by self regulated organisation’s e–freight programme. The need of the hour is to streamline Ravinder Katyal Director UTi It would take three to nine months to see a turnaround, in regards to the proposed action steps. The policy will help improvise the supply chain process Sandeep Vijh Business Development Manager – International Logistics, Rahat Continental Six to eight months are enough to see things moving in the right direction. At least eight to 12 per cent growth is expected with the changes
functioning of import procedures both by air and by ocean.”
The policy mentions that the government has commenced 24x7 Customs operations at several airports. However, it has not been utilised optimally by industry. ACLPB will work closely with the industry and propose action steps to spread out cargo handling round the clock. However, Thakkar feels unless the severe staff shortage in customs department is addressed this will fail to be fully functional.
On 10-year lease to private operators, “This is discriminatory against hard freight forwarders. There must be equal opportunities provided to any cargo interest irrespective of whether it is express or otherwise, as all air freight is express,” opines Thakkar.
But Balaraju opines, “Allotment of space and other infrastructure for express cargo industry is likely to pass on price advantage to customers, especially e-commerce players. This would enable them to be price competitive and improve TAT for deliveries.”
On how the Express Industry would fare, Vijay Kumar, Chief Operating Officer, Express Industry Council of India (EICI) says, “The policy takes cognizance of the distinctiveness of the express delivery services and the potential it offers.The policy recognises express delivery services as a separate segment within air cargo owing to its distinctive nature and processes.
The Express Industry is becoming a pivotal segment for enhancing the exports, especially in the SME segment, in view of expansion of e-commerce and other new age industries. With the emphasis of the government on ‘Make In India’, ‘ease of doing business’ and enhancement of exports, it is important that EDS is recognised and facilitated with adequatea infrastructure at the airports with rational lease tenures and rentals to provide efficient services in India.”
Vijay Kumar Chief Operating Officer Express Industry Council of India (EICI) The Express Industry is becoming a pivotal segment for enhancing the exports, especially in the SME segment, in view of expansion of e-commerce