Cargo loaded with op­por­tu­ni­ties

The In­dian air cargo sec­tor, de­spite, growth through e-com­merce and gov­ern­ment sup­port, is still not be­ing utilised to the fullest. There are chal­lenges ga­lore but the op­por­tu­ni­ties also need to be cap­i­talised.

Cargo Talk - - Front Page - KAL­PANA LOHUMI

Air cargo sec­tor has come a long way. From car­ry­ing small ship­ments to large-size and ex­tra heavy car­goes, the sec­tor has at­tracted many in­ter­na­tional cargo op­er­a­tors. De­spite the fact that it is the fastest mode of trans­porta­tion, the sec­tor ac­counts for less than one per cent of to­tal freight car­ried in terms of both vol­ume and weight. Un­doubt­edly, air cargo is a spe­cialised sec­tor and its de­vel­op­ment re­quires deep fo­cus. CARGOTALK ex­plores the jour­ney of air cargo in the last decade; game chang­ers, op­por­tu­ni­ties and chal­lenges.

Shar­ing his thoughts, Keku Bomi Gazder, CEO, AAI Cargo Lo­gis­tics & Al­lied Ser­vices, says, “In­dian air cargo seg­ment grew in leaps and bounds in the past sev­eral decades. The air cargo op­er­a­tions started by fold­ing the seats in the pas­sen­ger cab­ins in the 1950s on air­lines. Now the seg­ment has grown to be one of the key and promis­ing mar­kets glob­ally. The over­all trade in the cargo seg­ment has picked up in a big way.”

“Though the vol­umes kept ris­ing, none of the In­dian all-cargo op­er­a­tor could sus­tain be­cause of the low yields. The na­tional car­rier’s sub­sidiary Air In­dia cargo op­er­ated till 2012; Dec­can 360 from the old Dec­can Avi­a­tion though started on a high note in 2009 seized its func­tion in 2011.

There was Aryan Cargo Ex­press which op­er­ated for less than a year in 2010. It is a sim­i­lar story with Sovika Group’s do­mes­tic freighter op­er­a­tions; started op­er­a­tions in Fe­bru­ary 2016 with a leased 737-400F from Quik-Jet. It of­fered overnight con­nec­tions to Delhi, Chen­nai, Ben­galuru and Hy­der­abad. How­ever, the op­er­a­tions were wounded up within a short span of time. That is the his­tory of all-cargo op­er­a­tors in In­dia. How­ever, all air­lines still con­tinue to carry cargo in their bel­lies,” ex­plains Gazder.

Ex­plain­ing with the charts, Cyrus Kat­gara, Part­ner, Jeena & Co. says, “To put the growth in In­dian air­freight in­dus­try in a global per­spec­tive we need to look at ref­er­ence coun­tries with sim­i­lar scale of size, pop­u­la­tion and economy. It can be seen from the charts (shown above), that while In­dia is one fourth of China in GDP in PPP terms, its size of the air­freight is al­most one tenth. Com­par­ing to US the per­for­mance is still worse. While US air­freight In­dus­try looks to be stag­nant or de­clin­ing, China is show­ing the fastest growth; an av­er­age of 12 per cent and In­dia only has a mod­est growth of av­er­age of nine per cent. It can also be seen from the se­cond fig­ure that air­freight has been highly volatile and sen­si­tive to the eco­nomic trends, so en­tails a lot of ex­pen­sive ex­cess ca­pac­ity.”

Vipin Vohra, Chair­man, Con­ti­nen­tal Car­ri­ers Group, tells, “The last decade (2008-17) has been very chal­leng­ing, event­ful and re­ward­ing for air cargo in­dus­try, world over. While the be­gin­ning of the 21st cen­tury promised growth and op­por­tu­ni­ties, in 2008 the world en­coun­tered the worst re­ces­sion and slow-down of in­ter­na­tional trade; re­sult­ing in sink­ing of economy, even for the strong economies of the

world. In­ter­na­tional trade re­mained dull for three years and started show­ing signs of re­cov­ery to­wards the end of the year 2010. Post-re­ces­sion, last seven years wit­nessed re­cov­ery from the im­pact of slow down and many firms those wound up their op­er­a­tion re-started their busi­ness.” T.A. Vargh­ese, Pres­i­dent, ACAAI, no­ti­fies, “There has been a no­tice­able growth in ex­ports from our coun­try dur­ing the last decade, which has re­sulted in in­creased vol­umes of air­freight. Many air­lines have in­creased their cargo ca­pac­ity ex In­dia through freighter op­er­a­tions or by us­ing larger air­craft such as Air­bus380 for their op­er­a­tions to and from In­dia. How­ever, the in­fra­struc­ture for ef­fi­cient cargo han­dling even at the ma­jor air­ports has not kept pace with the growth in the cargo vol­umes. As a re­sult, there are prob­lems of con­ges­tion, bot­tle­necks and de­lays in the despatch of the goods in a timely man­ner.”

“In­ter­na­tional air pas­sen­ger growth has led to in­creased cargo car­ry­ing ca­pac­ity of pas­sen­ger air­crafts re­sult­ing in re­duc­tion of use of freighters. While the ag­gre­gate im­bal­ance that ex­isted tra­di­tion­ally be­tween ex­ports and im­ports ton­nages has been cor­rected and we have more or less bal­anced move­ment of cargo both sides. There are many sec­tors where huge im­bal­ance has been cre­ated such as Hong Kong, China ac­count for huge im­ports but there are neg­li­gi­ble ex­ports,” adds Kat­gara. “The in­dus­try has ex­pe­ri­enced dy­namism, evo­lu­tion, tech­nol­ogy, cer­ti­fi­ca­tion, stan­dard­i­s­a­tion, mul­ti­modal­ism, in­crease in bonded truck­ing and chal­leng­ing tra­di­tional trans­port ge­og­ra­phy have all been the hall­marks of the air cargo in­dus­try over the past few years,” says Samir J Shah, Part­ner, JBS Group of Com­pa­nies.

Ac­cord­ing to Sushant Nigam, In­ter­na­tional Avi­a­tion Con­sul­tant, “Air cargo in In­dia has un­der­gone enor­mous changes in terms of busi­ness vol­umes, moderni­sa­tion of in­fra­struc­ture, in­tro­duc­tion of elec­tronic and sim­pli­fied pro­cesses and the credit goes to a highly col­lab­o­ra­tive ap­proach of all stake­hold­ers dur­ing the last decade.” He adds, “Pri­vatis­ing the ma­jor air­ports and es­tab­lish­ing two com­pet­ing cargo ter­mi­nal op­er­a­tors, thereby break­ing the mo­nop­o­lis­tic sit­u­a­tion, has brought in moderni­sa­tion/upgra­da­tion/au­to­ma­tion of the cargo ter­mi­nals, duly sup­ported by the of­fer­ings of world class ser­vices at com­pet­i­tive yet capped rates of var­i­ous ser­vices. In­dian air­ports have con­tin­u­ally been striv­ing in­no­va­tively to en­sure the big­gest share of the pie.” GAME CHANG­ERS OF THE SEC­TOR:

Gazder listed few ma­jor de­vel­op­ments took place in 2017: The es­tab­lish­ment of an air cargo route be­tween Kabul and In­dia was a sig­nif­i­cant step as the two coun­tries cir­cum­vented Pak­istan. Le­nient poli­cies and reg­u­la­tory mea­sures, in­crease in ex­port vol­umes have per­suaded the for­eign cargo op­er­a­tors to turn their at­ten­tion more on In­dia. With the ex­pan­sion of the JV Air France KLM and Jet Air­ways, more di­rect flights are ex­pected be­tween two na­tions. In­dia is one of the main re­gions of Pharma man­u­fac­tur­ers for the EU and US mar­kets. The net­work of KLM and Jet Air­ways is a per­fect an­swer to the needs of the pharma in­dus­try to de­liver a fast and re­li­able ser­vice with tem­per­a­ture­con­trolled so­lu­tions. Re­cently, the Agri­cul­tural and Pro­cessed Food Ex­ports De­vel­op­ment Author­ity (APEDA) fa­cil­i­tated the trial ship­ment of green chill­ies by air from Varanasi Air­port. It is now agreed that an ex­porter will now source chill­ies, green peas from Varanasi for Dubai. Spice Jet has agreed to fa­cil­i­tate the ship­ment.

“The Na­tional Civil Avi­a­tion Pol­icy re­leased by gov­ern­ment of In­dia in 2016 in­cludes sev­eral ini­tia­tives for air cargo which are likely to be bring about ma­jor en­hance­ments in this sec­tor in the com­ing years,” ad­vises Vargh­ese.

Ac­cord­ing to Shah, “The set­ting up of a department of lo­gis­tics by the gov­ern­ment of In­dia and the con­tin­ual di­a­logues be­tween the ser­vice providers and civil avi­a­tion will go a long way in bring­ing about a great change in this seg­ment. The recog­ni­tion of and set­ting up of Air Freight Sta­tion (AFS) and sim­pler pro­to­cols for bonded truck­ing cou­pled with the gov­ern­ments shift from reg­u­lat­ing to fa­cil­i­tat­ing are chang­ing the way air cargo is be­ing han­dled in In­dia.”

“The be­gin­ning of the cur­rent decade has wit­nessed the emer­gence of ‘e-com­merce’ which turned out to the game changer for air cargo, both in do­mes­tic and in­ter­na­tional sec­tors. Se­condly, gov­ern­ment’s

Keku Bomi Gazder CEO AAI Cargo Lo­gis­tics & Al­lied Ser­vices If we take a long-term view, the cargo move­ment may grow be­tween nine to 10 per cent over the next five years

Cyrus Kat­gara DDP Gallery of Leg­ends 2017 & Part­ner, Jeena & Co. To put the growth in In­dian air­freight in­dus­try in a global per­spec­tive we need to look at ref­er­ence coun­tries

Vipin Vohra DDP Gallery of Leg­ends 2015 & Chair­man, Con­ti­nen­tal Car­ri­ers Group The last decade (2008-17) has been very chal­leng­ing, event­ful and re­ward­ing for air cargo in­dus­try, world over

T. A. Vargh­ese Pres­i­dent ACAAI There has been a no­tice­able growth in ex­ports from our coun­try dur­ing the last decade, re­sulted in in­creased vol­umes of air­freight

Samir J Shah DDP Game Changer 2017 & Part­ner, JBS Group of Com­pa­nies Set­ting up of a department of lo­gis­tics & the con­tin­ual di­a­logues be­tween the ser­vice providers and civil avi­a­tion will go a long way

Sushant Nigam In­ter­na­tional Avi­a­tion Con­sul­tant Air cargo in In­dia has un­der­gone enor­mous changes in terms of busi­ness vol­umes, moderni­sa­tion of in­fra­struc­ture, to name a few

‘Re­gional Con­nec­tiv­ity Scheme’ is of­fer­ing flight op­er­a­tions to and fro re­mote and un­der­de­vel­oped ar­eas and in­te­ri­ors of the coun­try. This will cer­tainly pro­mote not only pas­sen­ger move­ment but also cargo traf­fic from place to place. Fur­ther, gov­ern­ment plans to cre­ate com­mon user cargo ter­mi­nals at 17 se­lected air­ports for pro­mot­ing cargo move­ment to and fro hin­ter­land. And, the im­pend­ing dig­i­tal trans­for­ma­tion and growth will see tech­nol­ogy tak­ing over sup­ply chain link­ing and in­te­gra­tion with all value chain part­ners,” enu­mer­ated Vohra.

.“Gov­ern­ment is proac­tively com­ing for­ward to talk to the stake­hold­ers and un­der­stand their needs for bet­ter­ment of the busi­ness. Gov­ern­ment is also part­ner­ing with in­dus­try stake­hold­ers to pro­duce skilled man­power to give a new di­men­sion of pro­fes­sional ser­vices in this highly ser­vice­ori­ented, economy boost­ing and em­ploy­ment gen­er­at­ing in­dus­try. In­ter­con­nect­ing all reg­u­la­tory bod­ies with Cus­toms for ef­fect­ing Sin­gle Win­dow clear­ance elec­tron­i­cally and vet­ting of hard copies of var­i­ous doc­u­ments through dig­i­tal sig­na­tures are not only sav­ing of pa­pers but also sav­ing heav­ily on man­power, leg­work, time and cost. Th­ese mea­sures are ma­tur­ing day-by-day and likely to sta­bilise in the near fu­ture to change the game for economy-boost­ing EXIM trade,” opined Nigam. ROAD AHEAD

“It is es­ti­mated that In­dia’s freight move­ment would grow three-fold in next 10 years,” tells Vohra.

Vargh­ese be­lieves, “The In­dian economy is likely to show healthy growth dur­ing the next few years. Ini­tia­tives such as ‘Make In In­dia’ are likely to boost man­u­fac­tur­ing ac­tiv­i­ties in our coun­try for do­mes­tic con­sump­tion as well as for ex­ports.”

“If we take a long-term view, the cargo move­ment may grow be­tween nine to 10 per cent over the next five years. So clearly, we ex­pect a healthy growth,” men­tions Gazder. On the other hand, Shah shares, “The Trade Fa­cil­i­ta­tion Agree­ment and the need to have sim­pler tran­ship­ment norms will all en­sure that the dy­namism of this seg­ment re­mains un­con­trolled.”

Source: World bank

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