Industry has demonstrated resilience in face of numerous challenges. But today, it stands as a leader in delivering high-value goods driving economic growth and enabling businesses to thrive in an increasingly interconnected world says, Satish Lakkaraju, CEO, NexGen Logistics, Garudavega.
Ritika Arora Bhola
What are the pain points faced by air cargo stakeholders?
Due to the unpredictable weather conditions in Europe and USA, belly and freighter capacity is getting impacted. It is also causing massive flight cancellations and delays in cargo movement.
Recent fires in Los Angeles have created apprehensions in the minds of the Indian exporters and importers. The US Dollar rates rising to `86 is a good sign for Indian exporters, but a cause of concern for importers. In the coming years, the US Dollar vs Indian Rupee exchange will continue to be volatile, given the fact India continues to import crude oil and that is another important aspect from a cargo standpoint. Fuel surcharge is one of the aspects to calculate the freight rates. In the express industry, the freight rates change on a weekly to a monthly basis. But the freight rates from the airlines change on monthly basis. So that is one volatile factor determines the prices for the air freight when you may have a base rate on it.
Eighteen per cent GST on air freight is another concern, which is impacting businesses.
The on-going Russia-Ukraine war is still impacting the global supply chains. To avoid the war zones, the traders are taking longer routes, which means longer transit times for air as well as ocean.
Do you think USA wildfires have impacted Indian trade?
As of now, there is no impact, but what we would anticipate is that there is a lot of damage and devastation that has happened, from a residential standpoint. To rebuild the city, there will be a need for a lot of cargo mainly consumer durable products to be reaching out into the USA soon, which could include home furniture, carpets and handicraft items among others. While it is a tragedy that has happened, but there is an opportunity in terms of what can be getting back into the USA.
How do you anticipate industry’s growth over next five to 10 years?
Considering geopolitical situation, India is a country that is neutrally liked by other countries whether it is Russia, the USA, Japan among others. Seizing this opportunity is the best thing that Indian businessmen and traders must capitalise on. Another is the chunk of opportunities coming from the growth e-commerce market. We are nowhere close to China, but it is a great opportunity, which we can capitalise on it to a very large extent.
Since India is the largest pharma manufacturer, almost all the pharma packaging firms are currently operating in India. It is more economical for those who want to export from India and for countries which want to import because the US Food and Drugs Administration approvals are in place for most of the companies.
India has the largest US FDA approved organisations outside the USA. So, I think it is a plus point. We have come over how to handle and get to the unbroken cold chain over the last so many years. We have been successful in the transportation of vaccines. So, I think it is another opportunity that we should be looking at. We must tap the opportunities coming in from transshipment cargo from Hong Kong, Singapore and the Middle East. We have also got the largest aircraft orders. Air India recently merged with Vistara, while IndiGo has an opportunity of flying freighters. If the government looks at transhipment seriously and can help fighting the issues of security and other aspects, it will boost efficiency.
In the industry ready to achieve 10 MMT target by 2030?
In terms of looking at 10 MMT target, we are currently close to 3 billion MT. We have still got five years from now and add 1.2 million year-on-year, technically, to achieve the said target. This growth can come from domestic as well as global cross-border trade. To get there, we need to focus on 10 or 12 potential countries that hav bilateral pacts in place. In India, there is need to focus on one district, one commodity and use the regional connectivity to get to the 10 million MT mark. Transshipment cargo covers more than 50 per cent of the traffic, as seen in the Gulf region. To get to the 10 MMT target, a lot of effort must take place from all these sources.
How does India compare to other Asian nations in terms of air cargo services?
Indian infrastructure has been developed commendably in the past one decade. The industry had faced huge constraints and infrastructure upgradation has been done keeping in view all the bottlenecks, be it at ports, airports, roadways and the like.
The tier I airports—Delhi, Mumbai, Hyderabad, Bengaluru and Chennai—have seen great infra and tech developments. The second airport in Mumbai will come up this year. The Noida International Airport will be operational soon. A second airport is likely to come up in Chennai soon. We are also looking at states such as Andhra Pradesh where infrastructure is coming up right from Visakhapatnam down up to Nellore.
Indian airports in comparison to the global ones are excellent. None of them can be rated lower than the airports abroad. But we are lacking the speed at which we can turn around cargo because that is what will finally determine the air cargo growth. One of the challenges is the time the cargo takes in reaching the airport. This has become quite challenging now, with Grap-III and IV curbs implemented in Delhi NCR and among
other issues.
Tell us about ongoing projects at NexGen Logistics. What kind of services do you provide?
NexGen Logistics, part of Garudavega, is an express delivery company, dealing in C2C segment. We looked at C2C segment as an opportunity and are working on creating a C2C product. We effortlessly make the customers’ luggage/ baggage/ cargo delivery experience seamless right from the pickup to the final delivery. We provide services such as picking up cargo/ packaging/ delivery. Also, we deliver during festivals globally and ensure less transit time and door-to-door services.
There are screening machines at all major hubs whether it is Chennai, Bengaluru, Hyderabad. We will be adding additional equipment in all major hubs, other than the current locations we are functioning in. We have 500 stations and plan to expand to a 1,000 more in the next four years—this means that we are looking at 120 locations every year. Currently, the expansion is restricted to locations in the country. We are also looking at locations abroad such as Nepal and Sri Lanka. “We are planning to enter B2B business space as we see there is an opportunity for us. The C2C segment product offering can be extended to B2B also.
