Air cargo demand will be driven by e-commerce growth and express parcel services. Recently, Boeing announced to launch logistics centre in India to boost production. The food trade agreements with the UAE, Australia, and UK will also boost EXIM trade for India with these countries.
Ritika Arora Bhola
The Union government has set a target of ‘10 million MT by 2030’ for the air cargo sector, and to achieve the same, the stakeholders are leaving no stone unturned, be it investments in digital innovations or physical infrastructure, or emergence of dedicated freight corridors, cold storages to move pharma, agri-produce and perishables, development in AFSs, transhipment hubs, Grade ‘A’ warehouses, regional cargo complexes and terminals, and national highways among others.
Stakeholders are moving forward towards achieving the government’s vision of 10 million MT by 2030. The Centre’s schemes such as PMGS, Krishi Udan 2.0, NLP, and Self-Reliant India have instigated potential to invest in the supply chain business but propelled foreign interest and participation.
According to Research and Markets’ latest data, India’s air freight market is estimated to be US$12.41 billion in 2023 and might reach US$16.37 billion by 2027 at a compound annual growth rate of 5.7 per cent. The air cargo policy, seeking to make India among the top five air freight markets by 2025 and create air shipment hubs at all major airports soon, will be key to advance industry growth.
e-commerce, FMCG, retail, chemicals, pharma, automotive and other goods are the key growth drivers. Dedicated freighters will help in achieving full capacity and cargo volumes. IndiGo is set to buy 500 aircraft from Airbus a US$50 billion deal that follows Tata Group-owned Air India’s recent order for 470 aircraft from Airbus and Boeing. Massive belly capacity is set to descend on the sector, on top of dedicated freighter or cargo-only networks on the cusp of development.
Experts said the demand is driven by e-commerce growth and express parcel services. Recently, Boeing launched a logistics centre in the country to boost production. The FTAs with UAE, Australia, and the United Kingdom among others will also boost EXIM trade for India. The growth is certain, and future comprises positivity and optimism for the country’s air cargo and logistics sector to grow and soar high.
To achieve the goals and overcome disruptions such as recession, high logistics cost, ongoing Ukraine-Russia conflict, they have adopted robust strategies. Mutual industrial collaboration is required to fix issues such as lack of data transparency, data availability, cyber security, and environmental hazards.
There is a need to set up lean operations focusing on optimizing processes, minimising waste, and increasing customer value. spoke to industry experts about Cargo Udan in 2023 and beyond.
Cargo hubs to improve efficiency, cut costs
Keku Bomi Gazder, Managing Director, Aviapro Logistic Services
10 million MT by 2030
The Centre’s vision to achieve 10 million MT of cargo by 2030 is an ambitious target. The industry is experiencing steady growth. Initiatives such as implementation of National Civil Aviation Policy, establishment of dedicated air freight stations, development of integrated logistics parks, and NLP aim to achieve 10 million MT by 2030.
Roadblocks
Currently, cargo movement is stopped at 11 AAI Cargo Logistics and Allied Services Company Ltd (AAICLAS)-operated airports due to its non-compliance with BCAS RA3 rules, which is affecting trade.
Progress
Creating cargo hubs will help optimize efficiency and reduce costs by consolidating cargo in larger hubs before ferrying to smaller spokes. This will allow better connectivity between various locations and improve overall logistics and transportation services.
Bring cargo under Krishi Udan ambit
Yashpal Sharma, President, ACFI
10 million MT by 2030
Infrastructure development: The Union government is investing in expansion of existing airports, building new cargo terminals and cargo hubs to enhance efficiency in handling air cargo. Guidelines must be set for private airports, under construction, to have all facilities to cater to air cargo, apart from passengers.
Regulatory changes: Implementation of reforms to facilitate trade and streamline customs is a positive step. We need the changes for T/P cargo, which can add 2 MMT to Indian skies. We need customs and other regulators to fine tune the processes. Presence of PGAs on working days must be addressed for cargo movement.
Progress
Development of smaller airports and initiatives such as Udan scheme for air cargo will add a substantial business to the Indian skies.
Elimination of regulatory barriers necessary
Vipin Vohra, Chairman, Continental Carriers
10 million MT by 2030
Infra development plays a key role in enhancing the capacity to handle larger volumes of air cargo.
The National Logistics Policy implementation under Prime Minister Gati Shakti Masterplan, setting up dedicated air cargo complexes and air freight stations (AFSs), and promotion of e-commerce has bolstered the industry.
The government and stakeholders should strengthen collaboration to tackle barriers such as reducing costs and tariff levied by Cargo Terminal Operators (CTOs) and improving last-mile connectivity.
Roadblocks
Collaboration between different entities in the logistics entities is essential. Communication, establishing robust channels and standardized procedures and information sharing are a must to ensure cargo movement.
It can also help mitigate the bottlenecks caused by lack of coordination.
Road ahead
- While accepting wide-body aircraft for cargo transport may have cost implications, but it brings advantages, such as higher cargo capacity, increased operational efficiency, and reduced transportation costs per unit.
- Development of a hub and spoke model involving transportation from tier I and II cities and connecting them with smaller spoke locations. This enables seamless movement of goods and facilitates last-mile connectivity to interior areas, thereby bridging the logistical gaps.
Lack of open skies policy, GST detrimental
C K Govil, MD, Activair Airfreight India and Vice President, ACAAI
10 million MT by 2030
The industry has shown resilience in the past three years. We have seen air cargo tonnage shoot up in the past two years and then crawl down in 2022.
Given India’s manufacturing capacity, our exports are 10-20 per cent of the USA and China. While the existing air cargo capacity and infra are good enough, we need to fuel development in infrastructure, fleet, and Ease of Doing Business. I am happy to see more airlines adding narrow body freighters to their fleet to serve the domestic demand from tier II and III cities and neighbouring countries.
Roadblocks
In the current scenario, the absence of an open skies policy or imposing GST on export freight can slow industry growth. The industry faces many challenges with transhipment. It was easier earlier, but the transhipment is taking longer due to government officials’ diktats.
Govt must intervene to ease cargo trade
Dax Theknath, Executive Director, Jet Freight
10 million MT by 2030
The Union government has commenced to address challenges, such as infrastructure, logistics costs, and skilled manpower, while the industry invests in state of the art infrastructure and technologies. This positions the Indian air cargo industry to achieve the target of 10 million MT target by 2030.
Roadblocks
Non-compliance of the BCAS RA3 Regulations at 11 AAICLAS airports is currently a bottleneck for the industry. These regulations mandate equipment for safe and efficient cargo operations.
As a result, the cargo movement has been stopped at these airports, which is affecting businesses and the airlines alike. The government intervention is needed to restore the air cargo flow in India.
Progress
The cargo industry is placing emphasis on different aspects in a bid to enhance efficiency and streamline cargo operations. These include creation of a hub and spoke model for better transportation aggregation, implementing schemes, such as Krishi Udan scheme, for bulk perishable transportation, improving infrastructure, embracing paperless processes for faster operations, and considering the benefits of the wide-body aircraft for increased cargo capacity among others.
These initiatives have the objective to enhance productivity, reduce logistics costs, and deliver better services in order to meet the growing demands of the air cargo industry.
More Indian carriers to fly freighters
Sunil Kohli, Managing Director, Rahat Cargo
10 million MT by 2030
The cargo industry is presently focusing to gain pace. And it is encouraging that Jyotiraditya Scindia, Union Minister of
Civil Aviation, has assured the state’s support to the trade as and when it could assist. Let us have bright hopes for the industry to succeed in its mission with an active and positive participation by all the stakeholders.
Progress
To ensure a seamless cargo movement from tier II and III cities, it is imperative we have smooth motorable roads, apart from having a paperless process. Surprisingly, hardly any Indian carrier has been operating cargo freighters. The government and its affiliated agencies should do their best to facilitate Ease of Doing Business to the entire exporters’ community.
Dwell times, costs are major issues
Satish Lakkaraju, Senior VP and Global Air Freight Head WIZ Radar Ventures
10 million MT by 2030
The industry, growing at a CAGR of 6-7 per cent in recent years, is focusing on significant areas to move towards these goals effective for the airports in tier II and III cities.
One of the strategies that the Union government is planning is the hub and spoke model. Linking cargo from various regions with rail and road transport, the untapped areas, can be promoted for export cargo. Areas with high production benefit when they are well connected to airports.
Roadblocks
At a time when the customer expectations from the air cargo industry are increasing, the industry is struggling with higher costs and longer dwell times because of security issues. The total time spent on the ground is much higher than expected because of non-alignment between agencies such as the Bureau of Civil Aviation Security (BCAS), AAI Cargo Logistics and Allied Services (AAICLAS), and other allied agencies.
Progress
- The country has opportunity of being a cargo hub for south-Asia and SEA given the large amounts of capacity ferried in the bellyhold of the pax flights.
- Tier II and III cities if they relate to gateways such as Delhi and Mumbai can boost the export cargo a great deal.
- The Krishi Udan scheme needs change to ensure that it benefits the farmer and the exporter. Also, Krishi Udan scheme should be on the pan India basis and not limited only to a few airports.
- As the business requirements change, the infrastructure for the cargo industry in the country also needs to be updated.
Limited cargo capacity can pose hurdles
Xerrxes Master, President, Association of Multimodal Transport Operators of India
10 million MT by 2030
Improving infrastructure and connectivity is important. The government has been investing in upgrading airports, roads, and highways. It is also investing in technology to improve ground handling and tracking. It has helped to improve the industry’s efficiency and make it competitive.
This includes initiatives to digitize documentation and improve EoDB to reduce time and cost associated with air cargo. NLP, ACCS, development of air cargo hubs, and logistics parks can help to an extent. The industry is making efforts to enhance its infrastructure, technology, and operational capabilities to handle the growing cargo volumes.
Roadblocks
Infrastructure: Insufficient or outdated infra at airports and cargo handling facilities can impede smooth cargo movement. Inadequate warehousing space, outdated technology, and limited handling capacity can lead to delays and inefficiencies.
Regulatory challenges: Compliance with regulations and security needs is essential for air cargo operations. Any non-compliance issues can lead to cargo movement curbs or delays. These regulations can vary from safety and security measures to customs and documentation requirements.
Capacity constraints: Limited cargo capacity on an aircraft can be a challenge, especially during peak seasons or when there is a surge in demand. The availability of dedicated aircraft and belly space on passenger planes can affect the industry’s ability to meet growing demand.
Customs procedures: Complex and time-consuming customs procedures can hinder the efficiency of cargo movement. Delay in customs clearance, documentation requirements, and bureaucratic processes can impact the overall speed of cargo handling.
Infrastructure connectivity: The lack of proper link between airports, seaports, and other modes of transportation can pose challenges for seamless cargo movement across different transportation modes.
Focus on ferrying loads from interior cities
Satyaki Raghunath, Chief Strategy and Development Officer BIAL
10 million MT by 2030
India currently has 21 international and 35 domestic cargo terminals. To enable growth, there is a need for industry players to focus on transporting smaller cargo loads from tier II and III cities to major cities. The government has stressed the importance of streamlining processes, adopting automation and digitalisation to make cargo processing faster and more efficient.
In line with the PMGS, BLR Cargo will enhance its cargo capacity from 715,000 MTPA to 1 million MTPA by the end of this decade. It has also signed a contract with Air India SATS Airport Services (AISATS) to design, build, finance, operate and maintain a greenfield Logistics Park at the airport for a period of 15 years.
The upcoming logistics park will be developed across eight acres of land. It will be a world-class warehousing facility comprising a general warehouse, bonded warehouse, consolidation centre, cold-storage facility, office spaces and other amenities such as a bank/ATM facility, a business centre, a cafeteria among others. AISATS will provide value-added services such as manpower and equipment rentals on an hourly or pay-per-use basis for loading/offloading, labelling, packaging, bulk-breaking.
The Logistics Park’s development will support exporters, importers, and forwarders by creating a warehousing centre with value-added services for the cargo community. To boost cargo movement, BIAL has strengthened connectivity to catchment areas by introducing a dedicated road feeder service under the brand name ‘LOGI Connect by BLR’. This service links Tirupur, Coimbatore, Ambur, Salem, Erode, Hyderabad and Chennai to BLR Airport, setting up BLR Airport as the South India’s preferred cargo gateway. The Kempegowda International Airport aims to be a hub for cargo traffic and shippers.
The region’s location has also contributed to the growth of airports, especially BLR Airport and its cargo brand BLR Cargo.
e-commerce takes leap, expands to tier II cities
Videh Kumar Jaipuriar, Chief Executive Officer, DIAL
10 million MT by 2030
Within the domestic air cargo, e-commerce has taken a big leap and is expanding from tier I cities to II and III cities. Transshipment of air cargo through Indian airports is another opportunity, with the country being ideally located to serve as a hub for the global trade market, connecting the fast-growing economies of Asia, Africa, Europe, and the Middle East. Delhi Airport has taken the lead in transshipment by developing a dedicated facility for handling transshipment cargo from Bangladesh to other countries.
The Union government plans to add 33 new cargo terminals by the next fiscal year 2024-2025. Indian carriers are increasing capacity and adding new aircraft thereby increasing belly capacity significantly. Growth of freighters in domestic carriers fleet is a clear sign of the focus on air cargo hub story.
Collaborative PPPs can mobilize investments
Kiran Jain, Chief Operating Officer, Noida International Airport
10 million MT by 2030
To achieve this target, several factors such as infrastructure development, streamlining regulatory procedures and simplifying customs clearance processes, enhancing air connectivity within the country and with major international hubs must be considered. It is equally important to develop a skilled workforce capable of managing modern technologies and advanced cargo handling techniques.
Public private partnerships (PPP) can also help mobilize investments, share expertise, and leverage synergies to achieve the desired targets in the cargo industry.
Roadblocks
Inadequate or outdated infra, insufficient capacity, lack of modern equipment, and congestion at airports can hinder cargo operations. Compliance with regulations, such as security and customs measures, is crucial for the overall success of the cargo industry.
Embrace digital ecosystem to simplify operations
Balajee Bobba, Director, Bobba Group and Bobba Logistics
10 million MT by 2030
There remains a significant amount of underutilized capacity as domestic air cargo is dominated by available bellyhold of airlines versus dedicated freighters (70:30 ratio). Blue Dart and SpiceXpress are the lone domestic airlines operating limited freighters, while the demand is far more.
The high cost of Air Turbine Fuel, price war between the airlines, and rail, road and sea freight competition play a test in a reasonably priced market.
The slow incorporation of technology and digitization create hurdles with longer dwell times, lower efficiency, manual intervention, and rise in cost. So, a transition to a digital ecosystem would streamline operations and create a high-quality transparent data access of stakeholders in the logistics supply chain.
Smaller airports, which are understaffed and underfunded, play a vital role in the industry’s growth to maintain BCAS safety and security protocols. Any lapse would mean non-compliance, and regulations would bar the airport from processing cargo until the issues are rectified. This affects the growth from reaching the targeted 10 million MT, as per Vision 2030.
Adopting cutting edge tech, incentivizing airlines, airports, promoting exports, quality training to meet evolving standards and rules around the world. A push to consolidate the emerging sectors to contribute towards world class air cargo would assist in accelerate the target towards 2030.
Imperative to build freighter capacity
Sakshi Gupta, Country Manager India, Air Logistics Group
10 million MT by 2030
The industry has before it a target of 10 million MT by 2030. The question is will they get there or is it just a dream? Honestly with such a supportive government, which is engaging with the industry in these meandering times, at every curve, it will be a challenging but collaborated journey together.
Investments by the government to scale up the road infrastructure thereby augmenting swifter surface connectivity, especially from the catchment areas (perishables and marine products) to metros, investing in newer airports, massive orders by the TATA Group’ of 470 aircraft with Boeing and Airbus to serve Air India’s long haul expansion plans, followed by Indigo’s firm orderbook with Airbus of 500 A320 family aircraft is good news for the nation. The deliveries of these aircraft, will play a part to inching towards 10 million MT target.
It is also imperative that besides increased belly capacity, there needs to be an increase in freighter capacity too to meet the 10 million MT target.
Improve air link from small cities
Kritika Seth Chaudhary, Executive Director, Allied Aviation
10 million MT by 2030
The Indian air cargo industry is making rapid strides towards handling 10 million MT of cargo by 2030, a significant growth from current 3.5 million MT. However, there are many challenges ahead that need to be addressed. Non-compliance with BCAS RA3 regulations at certain airports has resulted in impeding the smooth flow of air cargo. It is crucial for these airports to align with security standards to ensure uninterrupted cargo movement.
The industry is focused on creating the hub and spoke model to improve linkage between tier I and II cities, enabling efficient aggregation of cargo from smaller cities and seamless transportation to major hubs.
Initiatives, such as the Krishi Udan scheme, are facilitating bulk transportation of perishables thus benefiting the agricultural sector.
Improving infrastructure, adopting paperless processes, and enhancing ease of doing business have been accorded priority digital documentation to streamline operations.
AFSs to alleviate burden on cargo terminals
Dipen Lalsodagar, Deputy Director, Cargo Sales, Global Aviation Services
10 million MT by 2030
Indian airports are overcoming infrastructure challenges. However, air cargo is still far from improving from its current position. Despite a robust domestic market, capacity corrections in domestic aviation have affected overall cargo growth. For exports, the current international economic and political challenges are likely to have a long-term effect on the export growth. As we expect fleet addition in the domestic market, I feel, by 2030, we will be able to achieve double digit growth from the current 6 million MT.
Roadblocks
We have quite a few challenges, including regulations, bureaucratic hurdles, and poor multimodal link among others.
Progress
The hub and spoke model is improving. Seamless connectivity is a much-needed requirement. Perishable air connectivity is a costly affair for the airlines.
Wide-body aircraft to uptick cargo capacity
Vandana Singh, Director, Global Corporate Key Accounts, Asia Pacific, Saudia Cargo
10 million MT by 2030
Infrastructure development: Investments are being made to improve airport infra such as onstruction/modernization of cargo terminals, warehouses, and cold storage facilities. Latest handling equipment and tech are being implemented to enhance operational efficiency.
Regulatory reforms: The government is working on streamlining processes and reducing bureaucratic hurdles.
Connectivity and network expansion: Efforts are being made to enhance connectivity between airports. The expansion of the air cargo routes and dedicated cargo hubs are being explored to increase the reach and efficiency of the industry.
Progress
Wide-body aircraft have increased cargo capacity and operational flexibility. The industry is open to exploring the use of the wide-body aircraft following advantages such as cargo demand among others.
Expanding network to hike IndiGo volumes
Mark Sutch, Chief Commercial Officer, CarGo International, IndiGo
Key growth drivers
The global air cargo market is undergoing a correction post-pandemic, which is seeing a drop in cargo carried. IATA forecasts uplift of global air cargo in 2023, which will decline by 3.8 per cent chargeable weight versus 2022. The slowdown in cargo is due to the negative effects on global trade of economic cooling measures introduced to fight inflation. For IndiGo, the decline in uplifted air cargo is based around our fleet and specific COVID-related measures enable us to carry increased volume of cargo.
Strategies
There are two factors for the decline in uplifted cargo by the carrier:
- During COVID, IndiGo operated ‘CarGo on floor’ aircraft under DGCA terms.
- In FY23, IndiGo carried 35,000 tonnes of cargo, which when you factor in the cessation of ‘CarGo on floor aircraft’ ops and a look at the pure pax belly cargo, there is a growth of 20.3 per cent in cargo carried. It is vital to factor in the impact that ‘CarGo on floor’ aircraft had during FY22.
- Uplift capacity of air cargo has a correlation to PLF. This is the case on narrow body operations where increased load factor leads to a rise in the passenger baggage of a flight and limits the space available for cargo. As travel curbs have lifted, there has been a increase in PLF.
Future ready
IndiGo, through an arrangement with Turkish Airlines, has added two (daily) wide-body B777 pax flights on DEL-IST and BOM-IST routes. These aircraft have higher cargo capacity: 15-20 tonnes per flight). Due to our partnership, IndiGo can connect to European lanes via Istanbul. Later, IndiGo has announced flights to Nairobi, Jakarta, Tbilisi, and Baku. Following the rise in pax aircraft capacity, IndiGo is likely to grow its volumes, though it will not be able to replicate the capacity available, when ‘CarGo on floor’ aircraft were in operation.
Policies for transhipment of air cargo required
Parvinder Singh, Managing Director, Hans Infomatic
10 million MT by 2030
Investments in developing and upgrading infrastructure is required to handle the increased cargo volume. More 3D X-ray machines need to be installed for faster screening process. Embracing advanced technologies can improve efficiency and transparency of cargo operations. Automation, digitization, and the use of IoT devices can optimise processes—tracking, tracing, and inventory management. Building a skilled workforce that understands modern cargo handling techniques and technologies will contribute towards efficiency and productivity. Collaboration among stakeholders, including government agencies, airlines, airports, freight forwarders, and logistics companies, is crucial.
Progress
Efforts are being made to aggregate cargo from tier I and II ties to improve overall efficiency and reduce costs. This involves consolidating cargo from various locations and transporting it in bulk to the desired destination. In this regard, clear policies for transhipment are need of the hour.
The Krishi Udan scheme aims to promote transportation of agricultural products, especially perishables, through air cargo. The scheme focuses on providing better infrastructure and logistics support to ensure the transport of farm produce. But there needs to be enough cold chain facilities in the entire supply chain for perishables.
The government has been investing in infrastructure development to improve air cargo operations. This includes the establishment of air cargo complexes, modernization of handling facilities, and the development of dedicated cargo terminals at airports.
The industry has been moving towards digitization and paperless processes to streamline operations and reduce paperwork. Initiatives such as the e-freight system aim to simplify documentation, enhance transparency, and improve the ease of doing business.
The use of wide-body aircraft for cargo operations can provide increased capacity, but the cost considerations for wide-body aircraft operations are complex and depend on various factors such as demand, profitability, and infrastructure readiness to make it feasible.
Team work between industry & govt vital
P. Balasubramanian, Founder & CEO, Air Cargo Consultancy International Services
10 million MT by 2030
There are diametrically opposite views and I support the optimistic view that India will reach the target (10 millon MT) with contribution from cross border e-commerce, refinement of regulations and procedures from customs. The latter raises the optimism in getting customs regulations business-friendly. These enablers are not sufficient by any stretch of the imagination.
Roadblocks
Let us not underestimate the improved road network, beginning from Bharatmala, the railway freight corridors, impetus for inland waterway shipping—these factors would influence domestic as well as international cargo from feeding/distribution perspective. If there is one topic, which is never missed in any of these fora, it is transhipment. It is not a matter of overkill, but it is critical to India. It appears that there are hesitations and ‘dragging of feet’ at some quarters, which has prevented this from being implemented. We should look at our larger ambition to become US$5 trillion economy by 2028, pushing the country up to third place.
Whether it is GST for export shipments or BCAS requirements, we urge the government to engage with them to look at the challenges towards resolving them together as against ‘them and us’ approach. The industry must play its role by utilising time, infra at all terminals efficiently, delivering export shipments around lunch time or later alone is a practice to be reviewed.
