Air Cargo India 2018

Connectivity, collaboration &cargo growth

The 7th edition of the international biennial air cargo event “Air Cargo India 2018” yielded to enhancing collaboration and connectivity between the many stakeholders to take air cargo growth in India to the next level.
The Government of India has set the ball rolling as regards creating an eco-system for air cargo growth and it is now the turn of the industry to capitalise on the policies that have been announced. The three-day event, which attracted freight forwarders, airlines, airports, integrators, among others, was a success in setting forth the agenda for the future. The Economic Advisor of the Ministry of Civil Aviation, Government of India, Vandana Aggarwal, besides delivering the keynote address, actively participated in the panel discussions.

The government had earmarked Rs. 88,000 crores for capital projects at airports and this included air cargo infrastructure.

Seven actionable initiatives
Aggarwal outlined the seven actionable initiatives that India has formulated and they include 1) Creating trans-shipment hubs (working with Delhi International Airport Limited – DIAL and Mumbai International Airport Limited – MIAL; 2) Extending regional connectivity for freighters under UDAN (Ude Desh ka Aam Nagrik – the common man will fly) scheme; 3) Modular development of e-cargo platform (contracting, booking portal with access to GST payment); 4) Air-road connectivity in the name of Vahana Sarathi; 5) a digital platform; 6) a frictionless data interchange promoted by blockchain; and 7) a grievances platform similar to ‘AirSeva’.
Reducing logistics cost
The ambitious program aimed at bringing down logistics cost to 9 percent of GDP by 2022. It’s currently pegged at 14 percent and if the cost was brought down, India could save up to $50 billion, thereby, making domestic goods more competitive in global markets.
With investments coming into the sector and manufacturing getting a boost, the cargo and logistics industry is likely to clock a compounded annual growth rate of about 16 percent during the course of the next few years, still behind the air passenger segment which is doing over 20 percent.
Efforts were on to improve the ranking of the logistics performance index (LPI) from 35 to 15 by 2020. Similarly, the plan was job creation in the sector, increasing it to 40 million by 2020 from the present 20 million.
Paperless regulatory environment
Aggarwal said the government is keen on promoting a paperless regulatory environment and reduce cargo release time. The plan is to bring down to 3 days in sea and 2 in air for imports and to 2 days for sea and 1 day in air for exports.
Mumbai and Delhi airports are clearing cargo in about 2 hours and other airports could bring this down if they set their mind to it. As regards e-airway bills, she pointed out that India was doing better than the world average while Chennai airport under the jurisdiction of the Airports Authority of India was way ahead of many world airports.
Agreeing that a lot had to be done to improve air cargo growth, Aggarwal said India’s air trade to GDP ratio had doubled from 4 percent to 8 percent in the last decade. The government had earmarked Rs. 88,000 crores for capital projects at airports and this included air cargo infrastructure.
Aggarwal asked the air cargo industry and the freight forwarders to let the government know how they can collaborate to sustain better business.
Collaboration is key
Acknowledging the efforts of the Indian government, the Global Head of Cargo, International Air Transport Association (IATA), Glyn Hughes, said: “It is always encouraging to listen to a government with a plan.”
In terms of GDP growth, India is turning out impressive figures and exports are expected to get further boost. However, he underscored the importance of collaboration between supply chain as well as industry and government to not only improve infrastructure but also efficiencies in operation. Hughes was the moderator in the panel discussion on “Charting a new flight path for Indian air cargo as a global destination.’
Keku Gazder, CEO of AAI Cargo Logistics & Allied Services (AAICLAS), said air cargo growth in India had been impressive with over 6 million tons of cargo carried in 2017 and in 2018 it was likely to touch 18 percent growth.
AAICLAS, he said, was working with the Civil Aviation Ministry to develop the concept of transhipment hubs and also in digitisation of processes. The plan was to rationalise space at airports and the Common User Domestic Cargo Terminal (CUDCT) was at it, to help improve efficiencies and reduce dwell-time of cargo.
Dheeraj Kohli, Vice President and Global Lead of Travel and Transportation, UNISYS, said in the present times, companies require the backbone of data to move ahead. Predictability of shipment was critical. He mentioned how UNISYS had introduced a unique product – pet travel chip – to help move pets from one location to another, even while the pet owner could track and even have a video chat with his or her pet.
Underutilised belly capacity
Hemanth D.P, Chief Operating Officer, Cargo & Head, Asia Pacific Flying School, GMR Airport, called for exploiting the underutilised belly capacity of airlines and that domestic air cargo needed a big push.
While Manoj Singh, Senior Vice President and Head of Cargo, MIAL, was of the view that there would be a shift from narrow body aircraft to wide body as a few of the metro airports had already reached the saturation point. This would translate to more belly space for cargo.
MIAL, he said, would have an exclusive export pharmaceutical terminal in the next seven to eight months. Also MIAL had innovated ‘cool dolly’, a product that would be a game-changer for the pharma sector. The prototype is ready and MIAL would go in for mass production, bringing down costs considerably. The temperature controlled pharma transport vehicle on tarmac would be ready by March end.
Lessons from China
Dr. Alexis Von Hoensbroech, CEO of Lufthansa Cargo AG, stated that India is an important market for Lufthansa which had 65 weekly flights into India across six destinations, besides 10 weekly freighter departures.
In 2017, the growth was good and the company expected 2018 to be positive as well with introduction of larger aircraft into the market. However, there were many infrastructural and procedural challenges in India which did not augur well for improving ‘ease of doing business’.
There were lessons to be learnt from China which at one point of time was slightly ahead of India but now the former has become bigger by five times, thanks to the booming manufacturing sector.
India’s value of exports is equivalent to six weeks of output of China, indicating the latter’s scale. With ‘Make in India’ the country should get its infrastructure in place and improve efficiencies. Indian bureaucracy was slowing down cargo and economic growth. He said as Chinese workforce was becoming expensive, it was time for India to turn itself into a work-bench
Russi Batliwala, CEO of Chapman Freeborn Group, said freighter flights into India has become easier than in 2006 as the restrictions on Indian air space have been removed.
However, he remains sceptical for fast air cargo growth with many challenges still needed to be addressed. He cautioned the air cargo industry not to go the European way as it floundered in the fourth quarter of 2017 not having a “Plan B” to handle huge fluctuations in air cargo movement.
Digitisation of the supply chain
In the panel discussion on ‘Facilitating global trade – how air cargo is making it happen’— the Director of Business Development Cargo, Amsterdam Airport Schiphol, Bart Pouwels, navigated the discussion towards three key aspects of cargo movement – reliability, transparency and predictability.
Underscoring the importance of collaboration in the supply chain, he suggested quicker digitisation of the chain. Expressing similar argument, Rainer Mueller, Vice President Commercial Saudia Cargo, said not much had been achieved with regard to data flow and reducing total transportation time.
Global carriers, he said, need to take the lead by offering solutions to the e-commerce industry which has been growing rapidly and is in need of quick and innovative solutions.
Justin Carr, Vice President Cargo Etihad Airways, said there is a need for standardisation in the airline industry and also greater collaboration. On similar lines, Adrien Thominet, CEO of ECS Group, emphasised that communication is the key, noting that a lot of progress had been made on the passenger side to ensure seamless connectivity but not for the cargo community.
Most of the speakers and attendees at the event were gung-ho about the prospects, in light of many emerging markets putting in place infrastructure and opening up their economies. It is now up to the air cargo industry how to get its act right, using data analytics and above all, collaborating with different partners.