CARGOTALK digital conclave on ‘Associations in COVID era’ brought to the fore concerns of logistics industry and what role associations have played so far to cope with the crisis. In addition, eminent speakers explained how 3Cs, which are, collaboration, cooperation & coopetition can be the way to go.
Opening Remarks
Tushar Jani, President, Air Cargo Forum India (ACFI)
Taking few points from Prime Minister’s Announcement speech of the relief package, I would like to say that it is the first time that supply chain has come to the forefront and air cargo has proved to the world that this is the reliable arm of supply chain. All air cargo professionals have worked together in saving lot of lives. It is been proved that air cargo is more resilient and agile to deal with the crisis within no time. In COVID-19, logistics professionals work like warriors, they are as important as doctors and nurses in the hospitals. They are the ones who are working on the ground to make sure to keep COVID-19 supply coming in.
Secondly, with the support given by government to MSME this is a great opportunity for youngsters to become entrepreneurs. Home delivery is going to be the mantra for at least the next 24 months. National home delivery business might find it difficult but point-to-point delivery business like Uber model will make money.
Sunil Arora, President, The Air Cargo Agents Association of India (ACAAI)
Our role as an association has become more significant. Associations are basically the interface between the trade and stakeholders. In these challenging times, the call of the hour is to collaborate and coordinate not only within the members of the association but with the other associations. We have been taking issues separately but now we are taking issues together. I wish this had happened more in good times but today all associations are on the same platform. We are discussing issues, problems, scenarios together.
Agreeing with Jani’s views, he continued, “Air cargo has proved to be the most effective in surviving this crisis because all the associations are working together, sharing concerns and providing an environment where respective associations can bring forth the problems with their perspective to the government so as to come to a quick solution.”
A.V. Vijaykumar, Chairman, Federation of Freight Forwarders’ Associations in India (FFFAI)
Road transporters are the strongest in the supply chain network of the last-mile connectivity. We are taking all the burden of importers and exporters for the outbound concern in the first mile and inbound concern in the last mile. Importers are dependent on us believing that the custom broker is responsible for the delivery of cargo at their warehouse, the minute the documents get handed over to the custom broker. We are doing regular follow-ups and sharing representation with the Ministries to protect industry’s interest and to improve the economic activities. Since the lockdown began, we logisticians have also worked in tandem with health workers and police. We started the emergency clearances and approximately 300-350 gate passes are generated inspite of difficulties. Digitalisation has played a very crucial role in working in such difficult times.
Yashpal Sharma, Hon. Secretary, Air Cargo Forum India (ACFI)
The associations have been playing a very critical role over the years. This period has really bought everybody together. All associations are currently working together to ensure that there is least amount of pain that comes into the industry and keeping the movement of pharmaceuticals and the essentials supplies running. We can collaborate and make sure that we talk to the carriers, airports, Ministries, regulators as one voice and bring up whatever is needed to fast-track everything. The idea is not that one stakeholder gets the bigger pie but how we all could collaborate and make the industry’s pie bigger.
Bringing liquidity to systems
The service providers are facing cash constraints because they are not getting payments on time from their clients, and hence have decided to handle shipments only against 100 per cent advance payments by their clients. Looking at the crisis, Sharma said, “There are lot of cash and carry requirements and lot of stakeholders currently are facing huge cash constraints as well as there is huge credit default risk in the market which is what we as an association would also need to work on together with all stakeholders to ensure liquidity, less default risk in the market and least amount of blockage of funds from the shipper, consignee, etc.”
“What is important is to make sure the circulation keeps going. Diverting it from associations’ perspective to freight forwarders’ perspective, Sharma suggested, “We are prompting everybody to pay at least the current transactions now, and also add something for the previous dues they have with us. Ultimately, we also have to help those businesses to run, we cannot ask them to pay 100 per cent,” he continued.
“COVID-19 would eat away freight forwarders’ finance on various accounts including massive outflow but without having inflow of revenue. We will have to go a long way with this critical and uncertain time. We need to review and revisit our business model with proper financial planning and control. Our proficiency will be measured by our financial management, credit management, utilisation of digital platform and reducing admin cost,” explained Vijaykumar.
High freight rates
While Vijaykumar and Sharma opined that freight rates are dependent on the demand and supply, Arora came up with a different viewpoint. He said, “The rates have not gone high because of low supply or high demand; it is when both the demand and supply have collapsed yet the freight rates have gone up three or four times. It is a very peculiar and unique situation, we need to consider that the direct impact of the high freight rate is not only on the logistics cost but also on the merchandise. Some sort of rate control mechanism has to come in. We must really be considerate towards the exim trade who has been supporting the airlines in good and bad times.”
Let not COVID-19 go waste
“At present, our association is making our membership aware not only of the complications but also the opportunistic side. The industries have been identified which are suffering but at the same time industries have also been identified which are being benefitted. We must not let COVID-19 go waste,” feels Arora.
According to Sharma, “The associations’ role is going to be huge in keeping the industry motivated by showing them more opportunities and not just staying confined to what we have been traditionally doing. So, we are not talking about building hotels or getting into any other business but within logistics there are lot of things and this is associations’ role that they can probably create visibility to all the stakeholders about the other opportunities that possibly they could look at in the short, medium or long run.”
Cargo-on-seat
Sharing optimism, Arora said, “Cargo-on-seat is the new invention. There were times when the narrow body aircraft was going empty by 40 seats when cargo was in the warehouse. So, now the time has come where the remaining 30 seats at the back will have cargo on the seats and passengers on the front. We need to be very positive on utilising every single kg that can be uplifted.” Arora believes that space is perishable, once uplifted it’s gone forever. “Pax freighter or preighter is here to stay for a long time,” feels Sharma. On the other side, according to Vijaykumar, “Cargo-on-seat will not continue for long but it is definitely required as of now.” However, he believes that small freighters will come into the picture. “It is a totem scenario and will not continue in the same way,” he added.
Cash & Carry
- There are lots of cash and carry requirements and many stakeholders currently are facing huge cash constraints as well as there is huge credit default risk in the market which is what we need to work on together
- We can collaborate and make sure that we talk to the carriers, airports, Ministries, regulators as one voice and bring up whatever is needed to fast-track processes
Collaboration works
- Air cargo has proved to be the most effective in surviving this crisis because all the associations are working together, sharing concerns & providing an environment where respective associations can bring forth the problems with their perspective to the government so as to come to a quick solution
