With ground handling and cargo warehousing sector relying on international flights, aviation sector suffered losses during the pandemic. Following rise in number of flights, we assume demand will reach pre-pandemic levels soon, says Kamesh Peri, CEO, Çelebi Delhi Cargo.
Priyanshi Bana
Since many airlines have converted their aircrafts into freighters, what has been the impact on cargo volumes? Kindly elaborate.
While the pandemic has taken a toll on the aviation sector, cargo operations are helping in offsetting a part of the airline losses, even as they continue to play a significant role in facilitating international trade and accelerating air cargo volume worldwide. The passenger-to-freighter aircraft conversions is contributing to some extent in this effort. Many airlines have implemented temporary conversions of passenger planes to allow them to carry more cargo during the pandemic.
However, this did not totally compensate for the loss of capacity as in pre-COVID-19 times. The passenger-to-freighter aircraft assisted in carrying cargo volumes and helped the airlines to stay afloat during the pandemic.
In the long-term, global air cargo traffic has been forecast to grow by 4 per cent a year over the next two decades. In Boeing’s World Air Cargo Report from last October, it is forecast that the world’s dedicated freighter fleet will grow by more than 60 per cent, and nearly two-thirds of the deliveries will be conversions from passenger-to-freighter aircraft.
Amongst the impacted industries, aviation will probably be the most affected; our ground handling and cargo warehousing sector is dependent on international flights, and a few domestic customers. Ever since the lockdowns, our business has declined. The ground handling and cargo warehousing industry is laborious and capital-intensive. We have a high fixed cost base which makes our position more precarious.
What cargo tonnage was flown during 2021? What were the main essentials that were transported?
According to the Airports Authority of India (AAI) in 2021 (YTD September), below is the cargo tonnage flown for domestic and international air cargo from all Indian airports. The essentials transported include electronics, electrical components, auto parts and components, perishable, meat, pharma products, textile and readymade garments, engineering goods, e-Commerce goods, face masks, sanitizers, oxygen concentrators, PPE and leather products.
As normalcy has been restored in passenger flights, will the air cargo be impacted?
The passenger traffic remained weak in the first half of 2021, but recent signs are pointing towards a surge in air travel for the second half of 2021 since an increasing number of people have got vaccinated, and international travel restrictions are gradually easing. It is expected that the international passenger traffic will reach its pre-COVID-19 level by 2023, while domestic passenger traffic will reach the pre-COVID-19 level by the second half of 2022. These developments would have a positive effect on air cargo as with the number of flights increasing, Cargo capacity will grow and add up to current numbers. It is expected that with an increase in flight frequencies and capacity, and a growing demand, overall cargo volumes would reach pre-COVID-19 levels by 2023.
What is the future of air cargo in the New Normal?
In the current scenario, we are witnessing the enhancement of airport cargo infrastructure, digital infrastructure for cargo handling, and the development of collaborative partnership models between various stakeholders.
As per International Air Transport Association (IATA), the world air cargo traffic is forecast to increase dynamically, with an annual growth rate of over 4 per cent in the next 20 years. The air cargo market is and would be significantly stimulated by the boom of e-Commerce, with its market size predicted to increase by 20 per cent year-on-year during the next five years.
Economic outlook, increasing customer expectations, and changing regulations: All are redefining the handling, storage, and distribution of goods transported by air, which consequentially, impacts cargo facilities. Therefore, changes are needed in the business models, architectural and process designs, deployed technologies, and workforce skill sets. Green vehicles, employees equipped with digital tools, along with the next generation of technology-enhanced cargo facilities; altogether shall boost productivity, operational efficiencies and increase responsiveness to customers. The cargo facility of the future is expected to be safe and secure, green, automated, connected, and smart.
