From investing in world-class infrastructure at ports, roadways, railways, and airports to improving intermodal connectivity and reducing costs, the air cargo sector has come a long way. Still, a plethora of challenges exist, which obstruct seamless cargo movement, which include regulatory complexities, lack of skilled manpower, geopolitical uncertainties, cargo thefts, and technology integration.
CT Bureau
Air cargo industry stakeholders have performed exceptionally well since the past few years, overcoming global disruptions with strategic contingency plans and innovative ideas. The stakeholders have realised the adaptability to ever changing market conditions is crucial.
In the air cargo industry, fluctuating fuel prices, inconsistent cargo demand, capacity constraints, under-utilised belly capacity, multimodal connectivity, congestion at the airports and terminals, and technology integration are some of the major concerns. The absence of dedicated wide-body freighters impede access to long-haul destinations, while time-consuming regulations and lack of coordination among the stakeholders exacerbate delays and inefficiencies in air cargo operations. When it comes to logistics and warehousing sectors, lack of trained and skilled workforce, technology integration, cargo security, and poor last mile connectivity need to be addressed along with investments in robotics and automation despite high costs.
Streamlining processes and adopting technology for seamless clearance is necessary. Maintaining consistent quality standards in cargo handling, storage, and transportation is essential to gain the trust of global clients. Ensuring the security of cargo against theft, damage, and other risks is critical to maintain the industry’s credibility. Many players in the industry still rely on outdated systems and manual processes that hinder efficiency and transparency. Innovation is vital for sustained growth, experts said.
Addressing these challenges and leveraging the opportunities presented by the industry requires concerted efforts from the government, private sector, and other stakeholders. All these become imperative.
CARGOTALK spoke to the some of the industry stakeholders about the significant pain points that need attention and continuous improvement.
Need of the hour is to move freight by rail transport
Sandeep Kulkarni, Chief Operating Officer Allcargo Gati Ltd.
The inefficiencies in the transport ecosystem is one of the key challenges. The modal mix is still dominated by road transport. The need of the hour is to shift key freight traffic flow to rail transport. DFCs will boost freight flow via rail. The industry does not have warehousing facilities and roadways. There is a need to bridge the infra gap by boosting private investment in warehouse development and fast-tracking national highway development. To address these challenges, tech intervention is a must for facilitating consolidation, optimising fleets, and eliminating intermediaries.”
Challenges from supply chain disruptions, geopolitical fears
Prithviraj Chug, CEO, Group Concorde
The Indian air cargo industry faces diverse challenges, from capacity constraints, and fluctuating fuel prices, to regulatory complexities, and geopolitical uncertainties. The lingering effects of the pandemic, such as supply chain disruptions and labour shortages, among others, continue to impact operations and add to the challenges of the air cargo industry. In addition, increasing competition from alternative modes of transportation and evolving customer expectations pose further challenges for the cargo industry players. Despite these obstacles, the air cargo industry views them as opportunities for innovation and collaboration.”
Wide-body freighters’ absence hinders reach to distant cities
Pradeep Panicker, CEO, GMR Hyderabad International Airport
Indian EXIMs heavily depend on international carriers, which presents a growth opportunity for the domestic airlines in a bid to enhance freighter connectivity. However, challenges persist, including inadequate infrastructure for cold chain logistics operations, limited adoption of advanced technologies, scarcity of pharmaceutical skilled workforce, and post-COVID regulatory hurdles. The absence of wide-body freighter aircraft impedes access to long-haul destinations, while time-consuming regulations and lack of coordination among the air cargo industry stakeholders exacerbate delays and inefficiencies in air cargo operations.”
Disruption management needs constant interaction
Glyn Hughes, Director General, TIACA
I think there are many potential pain points, starting with the risks of geopolitical uncertainties and the impact they have on supply chains, often without notice. The recent situation in the Middle East, which led to closure of Red Sea shipping lanes is an example. It caused drug shortage in parts of Europe. While air cargo was mobilised to support, accessing suitable capacity at short notice was a challenge. Disruption management requires constant interaction between partners to identify if temperature excursions are at risk. For this to be optimised, we need much greater adoption of universal digital standards and the pact to utilise and share data.”
Poor airport infra, reduced margins plague industry
Chaitaly Mehta, Director, EKF Global Logistics
There are many significant challenges faced by the Indian air cargo industry. These include inadequate airport infrastructure and facilities, labour management, cargo capacity issues, compliances and regulatory requirements and their complexities, growing competition from other modes of transportation. This apart, Electronic Data Exchange (EDI) and Indian Customs EDI Gateway issues with frequent breakdowns, space issues, majorly fluctuating freight rates for air shipments, decreased margins and increasing competition for every industry stakeholder, geopolitical issues, route planning problems, which continue to affect the air cargo industry.
Labour shortage, outdated infra disrupt on-time delivery
Kunal Maheshwari, Chief Growth Officer, Softlink Global
The air cargo industry faces headwinds, volatile fuel costs, including the rise of cleaner-burning SAF and creating pricing instability. Traditional tracking systems lack real-time data, leaving freight forwarders in the dark. Paper-based processes lead to delays and errors. Labour shortages and outdated airport infrastructure disrupt on-time delivery. Evolving security regulations add to the complexity. Geopolitical events disrupt air cargo flows. Air cargo’s high carbon footprint demands solutions, such as SAF and route optimisation. These challenges necessitate collaboration between airlines, freight forwarders, technology providers and regulators.”
Fast cargo delivery services incorporate many pain points
Sanjay Gupta, CEO, AISATS
India’s air cargo and logistics sector has grown due to demand from e-commerce, pharma, perishables, D2C and FMCG. Product life cycles have shortened, and industries have combined just-in-time cargo delivery into their business models. But despite such a time-sensitive environment where speed is a must, the sector grapples with many pain points. AISATS MMCH and AISATS BLR Logistics Park were designed to address these pain points. The ICT at the MMCH will provide cargo handling under one roof, while the MMCH’s Integrated Warehousing and Logistics Zone will offer consolidation centers, bonded warehouse, trucking zone, among others.”
Adoption of tech increases, but not widened among SMEs
Xerrxes Master, President, AMTOI
Despite improvements, complex regulatory procedures, and a lack of cohesive policy enforcement across states creates logistical inefficiencies. Adoption of Artificial Intelligence, Internet of Things, and Blockchain has increased, but is not yet widespread, particularly among SMEs, highlighting a digital divide. As India reduces its CO2 footprint, the logistics sector struggles to balance growth and emphasises need for greener logistics solutions. The government’s focus on infra development and policy reforms sets the growth’s solid foundation. The potential hinges on addressing the existing operational inefficiencies. As India looks ahead, strategies across governmental,
industrial, and technological spheres will be paramount.”
Delay at customs leads to swelling of costs, transit time
Dr. Sharmila H. Amin, MD, South Asia India, Bertling Logistics India
Inadequate infrastructure and congestion at ports, railways, and roads obstruct smooth cargo movement. Complex regulatory procedures and paperwork at the customs checkpoints increase transit times and logistics costs. Poor last-mile connectivity between different modes of transportation also increases transit times and logistics costs. Limited adoption of advanced technology in the logistics sector obstructs efficiency gains and real-time tracking capabilities. The shortage of skilled manpower in the sector poses a challenge. Continued investment in infra, policy reforms, and technology adoption will be crucial in realising the full potential of the multimodal transportation in India.”
A shift to coastal, inland waterways to transport cargo
Kiran B. Nandre, Director NVOCC & Short Sea Shipping, Rhenus Logistics India
The country has the second-largest road network (busiest globally) and the fourth-largest railway network (second busiest). However, waterways, with vast potential, carry 6 per cent of cargo, with dry bulk and containers making up a mere 2 per cent. This highlights the need for a paradigm shift towards coastal and inland waterways, India must learn from the European Union’s successful 200-year-old strategy for inland waterways, drawing inspiration from waterways leaders such as Rhenus Group in multimodal transport.
There are many factors that contribute to underutilisation of waterways. The couyntry’s ageing fleet of vessels limits coastal cargo movement. Solution is promoting short sea shipping and inland water transport.”
Drug pricing pressure is one of the many impediments
Sanjeev Kapoor, AVP Product, Air India
Many airports in India are designed to deposit the pharmaceutical (passive and active) products directly into the cold storages and warehouses for further distribution for inbound or outbound movement. Delhi, Mumbai, Hyderabad, and Bengaluru have world-class facilities to handle pharmaceutical products. These cities are also planning to expand more in future, according to forecasts. Lack of adequate supply chain solutions and management are some of the challenges along with pricing pressure with government control on drug pricing, Russia-Ukraine war, high research and development costs, lack of skilled workforce, and regulatory compliance, among others.”
Policies will influence market dynamics, global value chains
Nikhil Agarwal, President, CJ Darcl Logistics
Fluctuations in global trade policy is a challenge for global supply chains. The implementation of trade barriers, such as tariffs and quotas, disrupts the flow of goods, leading to delays, increased costs, and uncertainty in sourcing essential materials. Businesses must navigate this dynamic landscape by employing responses, such as diversifying supplier base or reshoring production, to mitigate these disruptions. India’s integration with export control exemplifies the complex interplay between national policies and the global trade environment. We, at CJ Darcl, believe that these policy changes can exert a broader influence on market dynamics, impacting factors such as industry competitiveness, consumer behavior, and the configuration of global value chains.”
Optimising routes by reducing transit time, costs
Vivek Juneja, Founder and Managing Director, Varuna Group
In today’s fast-paced business environment, efficient logistics services are crucial for maintaining a competitive edge. Transportation is the backbone of logistics, yet managing it remains a challenge. Selecting transport modes and optimising routes can be complex. Partnering with top logistics firms can help overcome these challenges by optimising routes, reducing transit times, and minimising costs. Warehouse management is essential, but it is often lacking. Automated storage systems, barcode scanning, and WMS can enhance inventory tracking and order fulfilment. By using GPS, RFID, and IoT, logistics firms can offer real-time updates on shipments and planning.”
Necessitating safety protocol of air cargo paramount
JB Singh, Director, MOVIN Express
In competitive domestic logistics, companies face many challenges within the industry. From optimising delivery routes, maximising cargo capacity and dealing with fuel prices, businesses navigate a landscape full of complexities. Since ensuring security of shipments is vital, necessitating continuous refinement of safety protocols remains paramount. Operational bottlenecks demand swift resolution to maintain efficiency.
Navigating challenges in logistics and air cargo, such as congestion and operational bottlenecks, necessitates forward-thinking solutions. Through the integration of predictive analytics and automation, industries can mitigate these obstructions, optimise efficiency across the supply chain.”
Limited capacity, manual verification increase costs
Vipin Vohra, Chairman, Continental Carriers
As a player in the air cargo and logistics industry, we encounter several pain points that impact our operations. One of the foremost is lack of infrastructure, including limited capacity at airports and cargo terminals, leading to congestion and delays. This directly affects our ability to efficiently handle and transport products. Despite the advancement of customs processing, the persistence of physical scrutiny of the documents remains a bottleneck. The reliance on manual verification prolongs the clearance timeline, increases risk of errors, and adds unnecessary costs for businesses. The lack of standardisation and digitalisation across the industry creates inefficiencies and hampers interoperability.”
Urgent need to enhance capacity, freight corridors
Sunil Kohli, Managing Director, Rahat Cargo
Presently, the country’s high-density rail corridors face severe capacity constraints. There is an urgent need for capacity enhancement, upgradation, creation of new passenger and freight corridors, among others. Other issues plaguing the rail transport are, inadequate connectivity to ports and mines, inability to carry longer and heavier trains, lower throughput, longer turn-around period. Also, there is a space crunch across the carriers to all destinations, while the available air freight is also a concern. It has been skyrocketing presumably due to closure of Red Sea shipping lanes thus dampening the exporters’ selling enthusiasm. So, the stakeholders need to have a tangible solution to overcome such roadblocks.”
