India's air freight industry pins hope on technology to speed up process

Published: Wednesday, October 11, 2017

The Airports Authority of India (AAI) says air freight handled at Indian airports grew more than 20 times from 0.08 million metric tons in 1972-73 to 2.5 million metric tons in 2014-15,with compound annual growth rate (CAGR) of 8.8 percent from 2013 through 2017.

With more than 1.3 billion people, India’s domestic market is considered one of the world’s biggest.And its potential for economic growth is getting bigger and so are industries driving business activities like air cargo.
Now ranked as the world’s 6th largest economy and the third largest in terms of purchasing power parity, India’s cargo volumes are projected to grow by 10 million tons by 2027, according to a 2016 National Civil Aviation Policy report.The Airports Authority of India (AAI)reported air freight handled at Indian airports grew more than 20 times from 0.08 million metric tons in 1972-73 to 2.5 million metric tons in 2014-15, and its compound annual growth rate(CAGR) was 8.8 percent from 2013 through 2017.

But officials all agree the country has to initiative more reforms to enhance and speed up activities in the air cargo industry which plays a vital role in propelling economic development in any country.
Airlines, air cargo terminal operators,ground handling service providers,integrated express service providers,forwarders, domestic cargo transport service providers and custom brokers are the key players in the entire air cargo
supply chain.

Reforms needed

Measured in million ton-kilometers,World Bank data showed air freight transported by India went up from 96.3 million ton-kilometers in 1970 to 1,833.8 million ton-kilometers in 2015.

Forecast of air cargo volume for India

suggests that the domestic and international air cargo output isexpected to grow by eight to 10 times the present level in the next 20 years.

catering to thegrowth of this magnitude would involve expansion of infrastructure facilities, simplification of procedures and adpotion of Information technology/automation besides development of human
resources in the sector.

Committee on ACCS
To accelerate air cargo growth, the Ministry of Civil Aviation had set up a Committee on Air Cargo Community System (ACCS) composed of various stakeholders, including customs authorities, and it was decided to grant approval to AAI for appointment of consultant to prepare a Detailed Project Report (DPR) for the development of a uniform and integrated web-based ACCS in the country, based on the
Committee’s recommendations.

Dr. Renu Singh Parmar, senior advisor at the Ministry of Civil Aviation, said India as one of the fastest growing large economies of the world, has its air cargo industry poised for significant growth thanks to the landmark government initiatives like “Make in India”.
But in order to support sustainable growth, it is of paramount importance that right physical and digital infrastructures are put in place in the country to facilitate ease of doing business.
The air cargo logistics industry has several stakeholders vis-a-visexporters, importers,freight forwarders, customs brokers, customs, security agencies, airlines, airports, ground handling agents, bonded truckers,transporters, ramp agents,courier & express operators, chambers of commerce, etc.

According to the International Aviation Transportation Authority (IATA), each air cargo shipment on average carries around 30 types of documents and well over 100 copies, thus, resulting intosignificant documentation overheads,increased dwell times and supply chain

‘Ease of doing business’

To facilitate the ‘Ease of Doing business’in India, Dr. Renu said there is an urgent need to put in place an electronic platform to digitize interactions among key stakeholders.

This electronic platform can allow the reusability of data, thereby, eliminating duplicated at a entry, reducing unnecessary paperwork by giving authorized access to data to relevant supply-chain stakeholders as well as providing visibility, reducing inventory and other transaction costs related to the cargo movement.

Dr. Renu said the Ministry of Civil Aviation (MoCA) understands this need to have a single window for air cargo community which will interface with Indian Customs single window and facilitate seamless movement of goods and information.

Bringing down transaction costs

One of the issues that the ACCS committee addresses is how to bring down transaction costs in India which are amongst the highest in the world.

To bring efficiencies, the ACCS was setup. Currently, some airports/cargo agent’s association have created their own cargo community systems for stakeholders with varying EDI capabilities that facilitates information exchange over air cargo logistics value

However, in the current system there is lack of efficiency, transparency and consistency across the supply chain,which results in several pain areas for the different stakeholders.

The information exchange is many-tomany resulting in complex/duplicate processes. Further, there is no uniformity for message interface, data harmonization and end-to-end tracking.

Single window system

The Committee said a Single Window system for uniform interface between all the stakeholders of the country’s air cargo community using international standards is highly desirable as in the current system there is lack of efficiency,transparency and consistency across the supply chain,which results in several pain areas for the different stakeholders.

The Committee recommended that UN/CEFACT Model 2 i.e. “Single Automated System for Collection and Dissemination of information via interfaces with existing systems” be used for the ACCS.

In this model, there is a single system that collects,converts and disseminates digital data about shipments and the data has to be
submitted only once by trade which gets disseminated.

The existing systems can be interfacedin this model and new requirements would be built-in/integrated directly in the ACCS.
As regards funding options for ACS, the committee said the ACS will be a very critical system for the future of air cargo growth in India. The implementation of the same shall be well planned and done in phases. The system shall be made self-sustaining and the mechanism/modalities for the same may be decided by the core Committee/Governing Council.
The Committee suggested bringing on board a reputed consultant with requisite experience of Indian/global air cargo industry to prepare a Detailed Project Report (DPR) and based on the agreed scope of services, the funds requirements shall be identified.

The ACCS is going to be a single window electronic platform for all stakeholders of the air cargo value chain to interact with each other digitally thereby eliminating unnecessary documentation, delays, ambiguity on supply chain and improving ease ofdoing business for the air cargo sector.

Under the e-trade program of Ministry of Commerce and Industries, in a meeting held on 09th of October 2009, it was identified that a web based air cargo community shall be developed for the Indian Air Cargo industry and Ministry of Civil Aviation was appointed as a nodal agency for implementing the same.

Similarly, in 2012, it was decided to set up a Working Group on Air Cargo/Express Service Industry in the Ministry of Civil Aviation to recommend policy initiatives to address important issues considering the long-term perspectiveand future growth potential in India.

The Working Group was chaired by then Economic Adviser, Ministry of Civil Aviation and represented by members from all the key stakeholders of the Air Cargo Logistics industry in India. The working group submitted its Report“Air Cargo Logistics in India” on 7thof May, 2012 clearly articulating the need of a common platform for facilitating seamless cargo and information flow.

The NCAP has also articulated the vision for the air cargo industry in India and has set guidelines for key initiatives to be taken in the industry to ensure global competitiveness and sustainable growth of the Indian air cargo industry.

The ACCS will be a very critical system for the future of air cargo growth in
India. The government is planning implementation of the same in phases and India should be able to accelerate its air cargo growth soon.