In­dia-EU: Myr­iad op­por­tu­ni­ties

A rapid growth, com­ple­men­tary trade bas­kets and rel­a­tively high de­gree of mar­ket pro­tec­tion, these are some of the ex­hibits of the am­ple growth op­por­tu­ni­ties in the air freight seg­ment be­tween the Euro­pean coun­tries CARGOTALK and In­dia. As Air Cargo Europ

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Presently, In­dia is one of the fastest grow­ing economies in the world and a strate­gic part­ner for the Euro­pean Union (EU). As per the re­cent In­ter­na­tional Air Trans­port As­so­ci­a­tion (IATA) re­port, Euro­pean air­lines posted a 10.5 per cent (or around 14 per cent ad­just­ing for the leap year) in­crease in freight vol­umes in Fe­bru­ary 2017 and a ca­pac­ity in­crease of 1.4 per cent. The on­go­ing weak­ness of the Euro con­tin­ues to boost the per­for­mance of the Euro­pean freight mar­ket which has ben­e­fit­ted from strong ex­port or­ders, par­tic­u­larly in Ger­many, over the last few months.

In­dia is the EU’s ninth trad­ing part­ner in 2016 (2.2 per cent of EU’s over­all trade with the world), after South Korea (2.5 per cent) and ahead of Canada (1.9 per cent). The value of EU ex­ports to In­dia grew from ¼24.2 bil­lion in 2006 to ¼37.8 bil­lion in 2016, with en­gi­neer­ing goods, gems and jew­ellery, other man­u­fac­tured goods and chem­i­cals rank­ing at the top. On the other hand, the value of EU im­ports from In­dia also in­creased from ¼22.6 bil­lion in 2006 to ¼39.3 bil­lion in 2016, with at the top tex­tiles and cloth­ing, chem­i­cals and en­gi­neer­ing goods.

The re­cent visit of Federica Mogherini, High Rep­re­sen­ta­tive-For­eign Af­fairs and Se­cu­rity Pol­icy/ Vice-Pres­i­dent, Euro­pean Com­mis­sion (HRVP) to In­dia has fur­ther strengthen the In­dia and Europe re­la­tions. She said, “With work on­go­ing to con­clude a com­pre­hen­sive and am­bi­tious free trade agree­ment, the EU ac­counts for 13.5 per cent of In­dia’s over­all trade, which makes it the coun­try’s largest trad­ing part­ner.” Hence, this gives good signs of aug­men­ta­tion in bi-lat­eral trade. CARGOTALK took the op­por­tu­nity to speak to the air­lines, freight for­warders and GSAs about the In­dia-Europe air freight op­por­tu­ni­ties.

Euro­pean coun­tries serve as con­sis­tently grow­ing busi­ness des­ti­na­tions for In­dian ex­ports and con­sti­tute as sup­ply sources for In­dian im­ports Goods trans­ported be­tween In­dia and Europe are of­ten sen­si­tive ar­ti­cles of high value like phar­ma­ceu­ti­cals, chem­i­cals, etc. There are over 500 pas­sen­ger flights and 100 freighters a month that of­fers great ca­pac­ity to cater to In­dian ex­port to Europe The chal­lenges are lim­ited to bi­lat­eral and slots for get­ting the right days and tim­ings to get the cargo de­liv­ered into Europe

Chart­ing out op­por­tu­ni­ties Com­ment­ing on the air freight op­por­tu­ni­ties be­tween the two Vaib­hav Vohra, Man­ag­ing Di­rec­tor, Con­ti­nen­tal Car­ri­ers, notes, “Ma­jor In­dian cities are very well linked to al­most all Euro­pean gate­way cities, thereby of­fer­ing ex­cel­lent op­por­tu­ni­ties for freight move­ment be­tween In­dia and Euro­pean coun­tries. Euro­pean mar­ket is con­sid­ered to be steady for In­dian mer­chan­dise and grow­ing rapidly. In­dian prod­ucts cov­er­ing gar­ments, made-ups, rugs, hand­i­crafts, ma­chine spares, tools, phar­ma­ceu­ti­cals etc. are much pre­ferred in Euro­pean coun­tries and con­trib­ute to the rapidly grow­ing air freight vol­ume from In­dian cities to Europe and pro­vide am­ple op­por­tu­ni­ties to pro­duc­ers of these goods.”

Ex­plain­ing how air can be the best mode be­tween In­dian and Europe, Huned Gandhi, Man­ag­ing Di­rec­tor, In­dia – Air & Sea Lo­gis­tics, Dachser, says, “In­dia and the EU are strate­gic part­ners who are com­mit­ted to fur­ther in­crease their bi­lat­eral trade and in­vest­ment, driven by the Free Trade Agree­ment ne­go­ti­a­tions that were launched in 2007. Goods trans­ported be­tween In­dia and Europe are of­ten sen­si­tive ar­ti­cles of high value like phar­ma­ceu­ti­cals, chem­i­cals or au­to­mo­tive parts. As a con­se­quence, air freight is the most suit­able trans­port mode to ful­fil the spe­cific re­quire­ments.”

Reg­is­ter­ing growth San­deep Vijh, AGM - Air Ex­ports, Ra­hat Con­ti­nen­tal, says, “In­dia is a top ex­porter to Europe for com­modi­ties like phar­ma­ceu­ti­cals, gems and jew­ellery, tex­tiles, au­to­mo­tive com­po­nents and leather goods which are mostly shipped via air. All these com­modi­ties are widely con­sumed by the masses across Europe and has al­ways seen a con­sis­tent in­crease in de­mand. More­over, a com­pet­i­tively weaker Chi­nese Yuan has opened more av­enues for In­dia man­u­fac­tur­ers to bid for more busi­nesses which fur­ther add on to the growth fac­tor.”

From a GSA per­spec­tive, Prithvi­raj Chug, Di­rec­tor, Group Con­corde, ed­i­fies, “Europe still re­mains the largest con­signee mar­ket for air freight ex­port In­dia. Tra­di­tion­ally dom­i­nated by the busi­ness of gar­ments, the In­dian man­u­fac­tur­ers have ad­vanced in sup­ply­ing chem­i­cal prod­ucts, phar­ma­ceu­ti­cals, en­gi­neer­ing goods etc.”

Road­blocks Talk­ing about the chal­lenges agents are presently fac­ing while do­ing busi­ness with any of the Euro­pean coun­tries, Vohra tells, “There is no ap­par­ent chal­lenges faced or fore­seen while do­ing busi­ness with most of the Euro­pean coun­tries. How­ever, an el­e­ment of uncer­tainty looming large is Bri­tain ex­it­ing the Euro­pean Union and is the sub­ject of dis­cus­sion in all cir­cles. Fall­out of such an in­evitable exit and pos­si­ble im­pact on Euro and UK Pound are spec­u­lated but no se­ri­ous con­se­quences are an­tic­i­pated. There is no like­li­hood of any neg­a­tive im­pact on busi­ness trans­ac­tions be­tween In­dia and Euro­pean coun­tries.”

“Europe’s in­fra­struc­ture is well-de­vel­oped; the le­gal, fi­nan­cial and cus­toms clear­ance frame­works are very well de­fined, trans­par­ent and eas­ily ac­ces­si­ble. As such, trade with Euro­pean coun­tries is rel­a­tively easy to ex­e­cute. Dachser has an ex­tremely dense road lo­gis­tics net­work of 363 branches across Europe which is fully dig­i­talised and seam­lessly in­te­grated via the in-house de­vel­oped IT in­fra­struc­ture. This en­ables us to serve Europe on a very high qual­ity level,” says Gandhi.

On the other side, Chugh men­tions, “As an air­line rep­re­sen­ta­tive, the chal­lenges are lim­ited to bi­lat­eral and slots for get­ting the right days and tim­ings to get the cargo de­liv­ered into Europe. For ex­am­ple, cargo reach­ing on Fri­day and Satur­day faces de­mur­rage and other costs that ham­per the over­all cost­ing and mostly agents have to bare those ad­di­tional cents per kilo.”

On this Vijh in­forms, “Form A - GSP (Gen­er­alised Sys­tem of Pref­er­ences Cer­tifi­cate of Origin; a com­bined dec­la­ra­tion and cer­tifi­cate) used to be a manda­tory doc­u­ment

re­quired for ev­ery ship­ment val­ued over ¼6,000 go­ing from In­dia to Europe. Ef­fec­tive since Fe­bru­ary 2017, this has been ex­empted to one time regis­tra­tion only which has re­duced our doc­u­men­ta­tion pa­per­work and en­cour­age to ship goods over the week­end as well as we don’t have to wait to gen­er­ate GSP which was only Mon­day to Fri­days.”

“The elec­tron­ics sec­tor is still un­der­played in our coun­try, hope­fully with the new in­vest­ments and man­u­fac­tur­ers com­ing, we will not only pro­duce for our own econ­omy but for our big­gest trad­ing part­ner Europe,” Chugh adds.

Un­veil­ing ca­pac­ity

Vohra says, “Euro­pean car­ri­ers are of­fer­ing huge up­lift ca­pac­ity, through sched­uled combi-flights and cargo freighters, for pri­or­ity cargo move­ment be­tween In­dia and Euro­pean coun­tries. This is in ad­di­tion to the size­able up­lift ca­pac­ity of­fered by Asian Car­ri­ers like Qatar, Emi­rates, Eti­had, Cathay Pa­cific etc. with vis­i­ble price ad­van­tage and de­ferred ser­vice. Es­ti­mate of In­dian ex­ports vol­ume to Euro­pean coun­tries is 30,000 tonnes per month and New Delhi’s IGI Air­port (DEL) alone ac­counts for av­er­age 6,500 tonnes per month. The av­er­age up­lift is at around 72 per cent of exIn­dia ca­pac­ity jointly of­fered by all car­ri­ers. Wide-bod­ied air­craft oper­at­ing as line flights and freighter ser­vices be­tween In­dia and Euro­pean coun­tries cater to the reg­u­lar space re­quire­ment and peak sea­son de­mands are met out by sup­ple­ment­ing freighters.”

Gandhi opines, “Freight op­er­a­tors con­sol­i­dated over the past few years. The In­dian mar­ket cur­rently is mostly served by Gulf and Euro­pean coun­try op­er­a­tors like Ger­many, France and Sin­ga­pore and ad­di­tional ca­pac­ity has been pro­vided by in­te­gra­tors. The car­ri­ers op­er­ate a com­pre­hen­sive Ivo See­han Head of Sales & Han­dling North­ern & Eastern In­dia, Bangladesh, Lufthansa Cargo mixed fleet of air­crafts. Ac­cord­ing to Chugh also, “There is am­ple of freighter ca­pac­ity avail­able be­tween In­dia and Europe which in­cludes Euro­pean, Mid­dle Eastern and Asian car­ri­ers. For now, we be­lieve that mar­ket is at a peak point for ca­pac­ity and all kinds of ca­pac­ity like B777F/B767F, A330F or B747F(jumbo).”

Wish­list of In­dian play­ers

Vohra says, “Euro­pean coun­tries serve as con­sis­tently grow­ing busi­ness des­ti­na­tions for In­dian ex­ports and con­sti­tute as sup­ply sources for In­dian im­ports, thereby of­fer­ing ex­cel­lent op­por­tu­ni­ties and space for freight move­ments. Many of these sen­si­tive and time­bound mer­chan­dises are moved as air freight and In­dian lo­gis­tics play­ers, as sup­ply chain man­agers, can play a ma­jor role in en­sur­ing prompt ser­vice with cost ef­fec­tive­ness.” Ac­cord­ing to Chugh, “If the con­signee/ ship­per gets an end to end solution from the freight for­warder, it has an ad­van­tage to re­tain the client and be able to charge a pre­mium for giv­ing a smoother through­put for ship­ping as well as com­mu­ni­ca­tion as­pect. In ret­ro­spect, it is eas­ier to se­cure your busi­ness as well as se­cure a higher price at times.” “Lo­gis­tics play­ers can of­fer va­ri­ety solutions, mainly due to avail­abil­ity of mul­ti­ple car­rier op­tions for move­ment of freight for their clients. Oper­at­ing car­ri­ers en­sure huge up­lift ca­pac­ity di­rectly to al­most all the ma­jor Euro­pean gate­ways from In­dia. There are sched­uled di­rect flights with good cargo ca­pac­ity to Lon­don, Frankfurt, Mu­nich, Paris, Am­s­ter­dam, Madrid, Helsinki, Lux­em­burg for pri­or­ity ser­vice. For var­ied freight charges, via ser­vices with huge ca­pac­i­ties and de­ferred ser­vice op­tion, are of­fered by Asian car­ri­ers viz. Qatar, Emi­rates, Eti­had and Cathay Pa­cific. These op­tions are not read­ily avail­able for other ex-In­dia sec­tors and this spe­cific ad­van­tage at­tracts In­dian lo­gis­tics play­ers to do busi­ness with Euro­pean coun­tries for sta­bil­ity and growth,” Vohra adds.

The air­line per­spec­tive

“The over­all ton­nage for im­port and ex­port be­tween In­dia and the EU is grow­ing year-on-year with dou­ble dig­its. Al­though, the av­er­age yields have con­tin­u­ously de­clined for the past years due to mas­sive ca­pac­ity in­crease, shares, Ivo See­han, Head of Sales & Han­dling North­ern & Eastern In­dia, Bangladesh, Lufthansa Cargo, in adding, “Vol­umes of the phar­ma­ceu­ti­cal mar­ket have boosted the In­dian Ex­ports since 2012. And, Lufthansa Cargo is ac­tively par­tic­i­pat­ing in this growth with Cool, Ac­tive and Cool, Pas­sive prod­ucts. The au­to­mo­tive sec­tor has also in­creased its im­por­tance.”

Com­ment­ing on the chal­lenges, See­han, adds, “One chal­lenge is the lim­ited ca­pac­ity on freighter air­crafts, while belly ca­pac­ity on pas­sen­ger flights in­creases over­all. It is fur­ther chal­leng­ing to main­tain prof­itable freighter op­er­a­tion due to de­creas­ing rev­enue and un­changed costs.”

One chal­lenge is the lim­ited ca­pac­ity on freighter air­crafts, while belly ca­pac­ity on pas­sen­ger flights in­creases over­all

Vaib­hav Vohra In­dia Cargo Award 2016 win­ner & Man­ag­ing Di­rec­tor, Con­ti­nen­tal Car­ri­ers

Huned Gandhi Man­ag­ing Di­rec­tor, In­dia – Air & Sea Lo­gis­tics, Dachser

San­deep Vijh AGM - Air Ex­ports Ra­hat Con­ti­nen­tal

Prithvi­raj Chug Di­rec­tor Group Con­corde

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