Lots to do for Indian air cargo and players are eager…

Indian airports handled 3.1 million tonnes cargo in the financial year 2022-23 (April to March), a marginal increase of 0.6 percent from the previous financial year. While international cargo movements declined five percent to 1.9 million tonnes, domestic cargo shipped increased 10 percent to 1.3 million tonnes.

All major airports - Delhi, Mumbai, Bengaluru and Hyderabad - witnessed decline for international shipments while Cochin International Airport (CIAL) reported a marginal increase to 43,643 tonnes. For domestic freight, Mumbai Airport reported a 10 percent increase at 236,797 tonnes.

Bengaluru Airport reported positive results for the first quarter of 2023, which are indicative of the evolving trends in the air cargo sector, says Satyaki Raghunath, Chief Strategy & Development Officer, Bengaluru International Airport (BIAL). "As part of our strategic vision, BLR Airport is committed to maintaining its leadership as the busiest airport in South India. We have set a target of achieving ~1 million tonnes of cargo handling capacity by 2030 to meet the growing demand for air cargo services in the region.

"In pursuit of this goal, we have engaged with prominent cargo operators including WFS and Menzies Aviation. These partnerships aim to leverage our expertise and resources to effectively manage the increasing demand for cargo services, bolstering BLR Airport's position as a leading cargo hub in South India.

"Furthermore, BLR Airport’s investments in airport infrastructure, particularly in enhancing cargo handling capabilities, align with and support the "Make in India" initiative. By facilitating the efficient movement of goods, the airport actively contributes to the economic growth of the country. Moreover, these investments also play a pivotal role in fostering international trade opportunities, making India a more attractive destination for businesses looking to engage in global supply chains."

Boeing estimates a demand for approximately 2,800 production-plus-conversion deliveries over the next 20 years, according to Salil Gupte, President, Boeing India. "Of these, 925 will be production freighters such as the 767-300 freighter, 777 freighter and 777-8 freighter, and the remaining 1,855 will be converted freighters. This includes 1,300 standard-body conversions like the 737-800 Boeing Converted Freighter (BCF) and 555 widebody conversions like the 767-300 BCF.

"Approximately half of the global demand for conversions is expected to come from the regions Asia and Africa, including India. This is driven by the rapid expansion of e-commerce and the electronics manufacturing industry, which has revolutionised customer expectations and supply chain needs. Global e-commerce revenues are projected to reach more than double pre-pandemic levels by 2026, relying heavily on air cargo in emerging markets without well-established ground and postal networks. The rise of high-end electronics manufacturing in India such as smartphones and wearables, along with other high-value added manufacturing, like semiconductors, is creating opportunities for air cargo growth in the future.

"India's domestic air cargo trade is forecasted to continue rapid growth at 6.9 percent per year over the next two decades. The growth is driven by various factors including the overall growth of the Indian economy and increased demand for air cargo transportation. Furthermore, the expansion of India's e-commerce sector is contributing to the demand for efficient and reliable logistics and transportation solutions. This has led to the entry of cargo carriers into the Indian market that are operating a range of freighters including the Boeing 737-800 BCF to cater to the growing air cargo services demand.

"India’s air cargo fleet (less than 15 airplanes) relative to a GDP of over $3 trillion indicates a huge opportunity for significant fleet growth as GDP growth remains strong and resilient. In addition to converted freighters such as the 737BCF, there is opportunity for production freighters that include 767F, 777F and the 777-8F as India’s cargo network can expand to provide non-stop flights to Europe, North Asia, Oceania and North America."

We see a lot of potential for the air cargo sector in India, says S. Venkatraman, Head, Airfreight Commercial - India, DHL Logistics. "It is now the most populous economy, making it a major consumption country which is an impetus for international trade. India’s Purchasing Manager Index (PMI) remains high in Q12023, which is encouraging. Sectors such as aerospace, technology, perishables, fashion and retail, and automotive are key growth sectors for air cargo."

The downside scenario will continue at least till this year end 2023 - reasons including geopolitical tensions, food insecurity, potential financial instability stemming from monetary policy tightening and increasing levels of debt due to Russia-Ukraine war, says Amit Kapoor, Country Head - Freight Management India, Global Logistics. "China's economic situation is worsening day-by-day as its global footprint is shrinking due to production shifting to India/Vietnam/ Thailand/Malaysia. Moreover, bulk production in China is getting affected due to manpower/labour issues."

Both imports & exports volume to/from India are dropping due to global financial instability & economic conditions, adds Kapoor. "Procurement and production has directly impacted both air and sea freight. Moving forward, we believe that air exports & imports will show an increase by the end of Q42023 onwards, considering seasonality and major movements of part loads will be shifted to air freight to fulfil just in time (JIT) production stock management."

It is likely we won’t see a lot of change in the second half of the year, in part due to continued cautious ordering and smaller purchase orders from shippers in the U.S. and Europe, which are two of India’s strongest trading partners, adds Madhav Thapar, Vice President – South Asia, Middle East & Africa, C.H. Robinson. "The growth in China is also very moderate, and therefore, there is little likelihood of diversion of any air or ocean capacity to China which normally influences availability in the Indian market. Additionally, shipping lines have enough capacity available currently so overflows to air cargo are minimal."

The revival of European buying can influence merchandise exports, "however this behaviour shift may depend on how long the Ukraine war continues. For the U.S., 2024 is a Presidential election year, and since geo-politics continues to impact trading patterns, and hence air cargo, the outcome of the election could influence exports as well.

"In the mid-term, added capacity by Air India and Indigo could help stimulate air cargo development in India, both international and domestic."

Dropping merchandise exports
"While merchandise exports may have experienced a drop, the demand for air cargo services is expected to remain resilient in light of the rapid expansion of e-commerce and the electronics manufacturing industry in India, as well as the projected growth of global e-commerce revenues," says Gupte. "The rise of e-commerce and high-value manufacturing sectors in India is driving the need for efficient and reliable logistics solutions, making air cargo an essential component of the supply chain. As cross-border e-commerce continues to grow, especially in emerging markets like India, air cargo is expected to play a significant role in facilitating the movement of goods between regions.

"Furthermore, the forecasted growth in India's domestic air cargo trade, driven by the overall economic growth and the expanding e-commerce sector, indicates a positive outlook for the air cargo industry in the coming days. As more cargo carriers invest in India's market and expand their freighter services, air cargo is likely to continue to see increased demand and play a crucial role in supporting the country's trade and economic activities."

Satyaki of Bengaluru Airport adds: "There are several factors to consider with respect to merchandise exports and the air cargo industry:

*Shifting supply chain dynamics

*Changing consumer preferences

*Recovery and future trends

*Air cargo adaptability; and

*Policy measures and economic growth.

"While merchandise exports have been dropping, the exact impact on the air cargo industry, especially concerning the global garment market, remains uncertain and will depend on how various factors evolve in the coming days. The air cargo industry has historically demonstrated resilience and adaptability, and it is likely to evolve to meet changing demands and supply chain dynamics."

10 million tonnes of air cargo by 2030. Doable?
Over the past two years, the cargo sector has evolved to become a promising sector for both Indian and global aviation, says Raghunath of Bengaluru Airport. "As an acknowledgment of this impressive growth, the Minister for Civil Aviation announced that the country will have 33 new domestic cargo terminals by FY2024-25. In fact, the cargo sector in India is currently 9-10% higher since 2013-14 by tonnage. Indian cargo output stands at 3.1 million metric tonnes annually currently and is growing at a steady rate of 13 percent every year.

"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 also emphasised the importance of streamlining processes, adopting automation and digitalisation to make cargo processing faster and more efficient. The integration of advanced technologies and the expansion of BLR Airport’s cargo facilities will play a pivotal role in achieving the government's ambitious target of handling 10 million tonnes of cargo by 2030, contributing to India's economic progress and reinforcing the airport’s position as a key player in the global supply chain."

Yes, it’s doable as the prevailing central government is aggressively working towards creating freight corridors/better and improved infrastructure e.g. highways across the country," says Kapoor of Global Logistics. "Modern and hi-tech airports with a wide presence of international airports in most of the cities which have a strong footprint of exporters/importers will divide the load equally across the country."

E-commerce volume driver for Indian air cargo
"Definitely," says Kapoor. "E-commerce will be the volume driver, majorly for domestic as well as international air freight business due to time definite deliveries, door-to-door (DTD) service and most importantly reverse logistics."

Continued growth in e-commerce is expected since it’s ingrained in many consumers’ purchasing behaviour now, says Thapar of C.H. Robinson. "The need for speed in e-commerce makes air cargo the most attractive shipping solution."

E-commerce is poised to be a major volume driver for Indian air cargo in the foreseeable future, adds Raghunath of Bengaluru Airport. The steady rise of digitalisation and e-commerce platforms in India has transformed the way people shop, making it more convenient and accessible. As a result, there has been a substantial increase in the volume of small parcels and packages that need to be shipped promptly, and air cargo offers the speed and efficiency required to meet these demands, he added.

"The expanding e-commerce market in India has attracted both domestic and international players, intensifying the competition in the industry. To gain a competitive edge, e-commerce companies are focusing on providing faster deliveries to customers. Air cargo, with its ability to transport goods swiftly across the vast Indian landscape, is an integral part of e-commerce logistics strategies, especially for high-value or time-sensitive products. Moreover, the Indian government's initiatives to boost the aviation and logistics sectors have led to improvements in airport infrastructure and air cargo facilities. This has further facilitated the growth of e-commerce in the country and positioned air cargo as a reliable and efficient mode of transport for meeting the increasing demands of the online shopping industry.

"With the ongoing digital revolution and the surge in e-commerce activities in India, it is highly likely that e-commerce will be a significant volume driver for the Indian air cargo industry. As e-commerce companies continue to expand their operations and cater to a broader customer base, the need for swift and efficient delivery services will reinforce the importance of air cargo as a critical logistics solution, contributing to its sustained growth in the coming years.

"To take advantage of this, we have commissioned India’s first Express Courier Terminal (ECT) spread over 200,000 sq ft with 150,000 tonnes annual capacity in March 2021 with dedicated space for key clients and partners including FedEx, DHL, UPS and EICI. We believe that delivering world-class infrastructure focused around specialised industry needs will enable us in facilitating higher volumes and growth in these areas."

Perishables - key driver
"We now have a cargo capacity of 715,000 tonnes per year, making it the airport with the largest cargo processing capacity in South India," says Raghunath of Bengaluru Airport. "Additionally, our current terminals have an annual cold-chain handling capacity of 40,000 tonnes. Because time is of the essence in perishable logistics, the airport has engaged in several technology-driven interventions to ensure that items arrive at their destination with the same freshness, quality, and attractiveness to customers.

"BLR Airport has converted itself into a premier hub for perishable shipments in India due to its favourable geographic position, backed by a solid infrastructure, and appropriate aircraft capacity to important markets worldwide.

"The Plant Quarantine Inspection and Certification Facility, which permits smooth and speedier transportation of perishables, is another distinguishing element of the cargo terminal at BLR Airport. Our systems are designed so that all farm-fresh goods arrive at their destination within 24 hours of harvest. As the demand for perishables grows, airlines and cargo operators are likely to prioritise airports with well-developed infrastructure and capabilities to handle such goods. BLR Airport’s commitment to enhancing its cargo handling capacity and collaborating with reputable cargo operators will in turn, attract more business from carriers looking to transport perishables. By the mid-2030s, we intend to extend our cargo infrastructure to reach a capacity of around ~1.5 million tonnes, and enhance our cold chain capacity to 80,000 tonnes per annum."

Infrastructure focus of government
"The government is fully committed, making substantial investments in new airports, expanding existing ones, and constructing state-of-the-art cargo terminals," says Gupte of Boeing. "As part of their efforts to streamline processes, they rolled out the National Air Cargo Policy in 2020, streamlining the regulatory environment and making it easier for businesses to import and export goods by air. As a result of these efforts, the Indian air cargo industry is growing rapidly. Overall, the pace of development of air cargo infrastructure in India is positive. The government's focus on this sector is expected to help the industry grow rapidly in the coming years."

The central government has a strong focus on infra development with latest technology and ultramodern tools, says Kapoor. "They have created/invested heavily in developing highway/freight corridors/ports/ICDs/CFS, and wide international coverage across the country. This is a continuous process, and will carry on till we reach the desired goal of the government."

Thapar adds: "While the industry has come a long way, there is still a lot of opportunity to further digitalise and remove manual processes in air cargo. Creating a more electronic and seamless environment, and decongesting cargo complexes by utilising some forwarder bonded terminals continue to be an industry ask."

We are optimistic about the direction that India’s air cargo sector is headed, according to Venkatraman of DHL. "Government policies and initiatives will continue to create positive business sentiment, leading to a robust growth trajectory for the sector. We are seeing investments into infrastructure that will aid India’s development as an international gateway. The continued success of initiatives such as Make In India will also help us increase our share of global exports with India expecting to hit 10 percent by 2047."

Skilled workforce - a concern?
"Not at all. India is full of educated and skilled labour," says Kapoor of Global Logistics.

"Most production houses have continuous programmes for internal training modules to enhance the quality & skills among staff by sharing knowledge."

With ambitious capacity expansion plans in the air cargo industry, attracting more talent, and the right talent, is very important, says Thapar of C.H. Robinson. "Like with many careers, having the right resources and opportunities available to those entering the workforce is key for them to view air cargo as a career opportunity to pursue."

The air cargo industry, like any other sector, relies on skilled personnel to handle various aspects of operations at airports including cargo handling. If there is a shortage of skilled workers, it can lead to delays in cargo processing, increased operational costs, and decreased overall productivity, adds Raghunath.

"To tackle this challenge, we often employ the following strategies:

Workforce Development: Investing in training and development programmes is essential to upskill existing employees and attract new talent. By providing comprehensive training, employees can acquire the necessary knowledge and expertise to handle various aspects of cargo operations effectively. Additionally, offering opportunities for career growth and advancement can incentivise employees to stay and contribute to the company's expansion plans.

Automation and Technology: Embracing advanced technologies and automation can significantly reduce the reliance on manual labour and mitigate the impact of a skilled workforce shortage. Automated cargo handling systems and data analytics can streamline processes, enhance efficiency, and minimise the need for a large workforce. This approach not only increases operational effectiveness but also positions the company for future growth and expansion.

Collaboration and Partnerships: Collaboration with educational institutions, vocational training centres and industry associations helps in creating a skilled talent pool for the air cargo sector. Partnerships that promote skill development and provide practical training can bridge the gap between the demand for skilled workers and the available workforce."

When people think of infrastructure, they think of airports and runways but infrastructure also means the training capacity to skill the pilots of tomorrow, adds Gupte of Boeing. "The industry is growing rapidly but it is also faced with a challenge to find the skilled workers it needs to keep up with demand. Over the next two decades, the aviation industry in India is set to witness significant growth, leading to a soaring demand for skilled professionals. According to estimates, the country will require approximately 31,000 pilots and 26,000 mechanics to meet the industry's needs. Boeing recently announced a $100 million investment in infrastructure and programmes to train pilots in India, which will support India's need for new pilots over the next 20 years. Currently, many aspiring pilots and mechanics seek training and job opportunities abroad, presenting a unique chance for India to develop and retain its skilled workforce within the country.

"In the past, Indian professionals have excelled globally, often being recognised as the best and most talented in various international maintenance, repair, and overhaul (MRO) centres. With the rapid expansion of the Indian aviation sector, there is now an opportunity to nurture and preserve this talent domestically. The focus is on building robust pilot training academies, maintenance training capabilities, and enhancing simulator capacities within India. This endeavour involves collaboration between original equipment manufacturers (OEMs), airlines, training academies, simulator manufacturers and the government. The collective efforts of industry stakeholders and the government are aimed at transforming the training landscape in India over the next five years. As the Indian aviation fleet grows, the industry will witness a significant transformation, offering aspiring professionals’ ample opportunities for growth and development within the country."

Focus shifts to tier-2 and tier-3 airports
"While tier-2 and tier-3 airports serve an important purpose, the majority of international cargo is still moving from the major airports,” says Thapar. “For those primarily focused on domestic distribution, we do see tier-2 and tier-3 airports being utilised more frequently."

That’s the way to bring down the cost, reduce turnaround time, and ensure hassle-free and smooth handling of cargo, adds Kapoor.

Tech interventions for cargo
"Data and technology, including track-and-trace tools, are key drivers in logistics and will continue to be so. We saw this reinforced throughout the Covid-19 pandemic as well," says Thapar. "Additionally, the use of technology to reduce emissions and the carbon footprint is going to continue to be an important feature as well.

"For example, C.H. Robinson’s Emission IQ technology tool helps measure and reduce a shipper’s carbon emissions across shipping modes, including air. Since transportation of cargo and goods have an environmental impact, it’s important to utilise the technology tools we have to help reduce carbon emissions as air cargo continues to grow to meet the need for speed."

Technology can play a crucial role in streamlining cargo operations, adds Raghunath listing out data analytics, automated tracking, warehouse automation, Internet of Things (IoT) and mobile technologies as key drivers.

Automated monitoring: Advanced tracking systems with GPS and RFID technology can be used to monitor cargo shipments in real-time.

Warehouse automation: Implementing automated technologies within warehouses can significantly improve efficiency. This includes automated sorting systems, robotic palletisers and autonomous guided vehicles (AGVs) to move goods around the facility. Automated warehouses can operate 24/7, increasing throughout and reducing errors.

IoT and sensors: IoT devices and sensors can be integrated into cargo containers and vehicles to monitor temperature, humidity, and other environmental conditions. This ensures that perishable goods are transported under the right conditions, reducing spoilage and waste.

Mobile applications: Mobile apps can enable real-time communication and data access for drivers, warehouse staff, and logistics managers. They can receive updates, schedule changes, and access important information while on the go, improving overall coordination.

"By leveraging these technologies, cargo operators can enhance efficiency, reduce operational costs and provide better customer service, ultimately leading to a more competitive and streamlined logistics operation."

Gupte of Boeing has this to say: "Technology is poised to revolutionise air cargo operations, playing a pivotal role in streamlining processes and bolstering overall efficiency. By automating manual tasks like data entry, tracking, and scheduling, technology liberates employees to focus on more strategic endeavours while reducing the likelihood of errors. Moreover, real-time visibility into cargo shipments becomes possible through tracking software, enabling shippers to monitor their consignments' whereabouts and promptly address potential delays. With optimised routing facilitated by cutting-edge software, costs are minimised and delivery times are improved, taking factors such as traffic, weather, and fuel prices into account.

"Enhancing communication among various stakeholders in the cargo supply chain, technology creates seamless coordination between shippers, carriers, and customs officials, mitigating delays and ensuring streamlined processing. Furthermore, technology reinforces security within the cargo supply chain through sophisticated tracking systems, allowing shippers to identify and address potential security threats proactively. Embracing these advancements in technology, the air cargo industry stands to benefit from increased efficiency, reduced operational challenges, and heightened security measures, cementing its position as a driving force behind global trade and logistics."

Sustainability and cargo operations
In today’s age, as businesses worldwide make sustainable choices, air cargo is also making progress in taking several initiatives towards sustainability, says Raghunath of Bengaluru Airport. "The industry is looking for strategies to reduce the negative impact on the environment. The increasing importance of e-freight is gaining momentum and helps to digitise all necessary paperwork. Carbon offsets can help the air cargo industry bridge the gap as it researches and implements new techniques to improve the efficiency and sustainability of direct operations.

"As highlighted by the Civil Aviation Minister during a recent conference, there are three crucial issues adding to sustainability initiatives at airports that the ministry is pursuing. The reduction of area requirement for FTWZ (Free Trade Warehousing Zones); single bond, faceless and paperless customs clearances; and the presence of the PGS (Partner Government Systems) at airports. These significant initiatives will drive sustainability in the air Cargo sector.

"To reduce the paperwork, BLR Airport rolled out the Airport Community System (ACS), which helps in eliminating paperwork at the airport, enabling faster processing of transactions, reducing duplication of information as well as streamlining processes, and making information available ahead of cargo reaching the airport.

"ACS is a single-window electronic platform for all cargo stakeholders including customs, customs brokers, shippers, airlines, trucking companies, ground and cargo handlers and freight forwarders, facilitating the seamless movement of goods and data across the logistics ecosystem. Our ACS is developed on the principle of enabling a cohesive ecosystem of partnership and driving efficiency in air cargo operations with the highest level of data accuracy, security and compliance. Overall, we have a long way to go in making it more sustainable, which will help in the growth of the air cargo industry."

The challenges for India are not new, adds Venkatraman of DHL. "The country has progressed over the years but can do better. India must improve its compliance ranking to boost investor sentiments and attract more investment into the country. Air cargo is also an expensive option and will continue to fight against cost pressure, especially with other cheaper modes of transportation. India will also continue to develop highly skilled logistics experts, but we must find a way to retain these talents in India.

"Lastly, there is still much to do to change the sustainability mindset. Going green is good for business is a message we will need to continue pushing. As one of the largest economies globally, India has the opportunity to present itself as a leader in the sustainability agenda."