Indian jewel

The manufacturing boom in India has seen the nation emerge at the forefront of the air cargo industry.
ANALYSIS

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It would be near impossible for any air cargo industry insider to have missed the buzz currently surrounding the market in India.

Manufacturing hotspots have emerged throughout the subcontinent's vast terrain supported by growing government flexibility towards foreign investment. Initially deterred by a transportation infrastructure ridden with inadequacies, the last few years has witnessed much progress in India from domestic operators eager to prove their worth.

On an international basis, India has experienced a compound annual growth rate of 16.3% over the last five years, with a domestic increase of 12.2%. Forecasts suggest this trend is set to continue into the foreseeable future, further evidence of just why the global focus on the country has shone so strong. Fronting this wave of interest, India will this year hold the second ever Air Cargo India exhibition aimed at cultivating the potential rise of the domestic airfreight sector.

 

Not only are cargo volumes increasing at a rate of 20% a year but recent liberalisation of the Indian aviation industry has seen more foreign carriers enter the market. - Ram Menen

 

"The air cargo industry is now flourishing in every possible way, be it infrastructure or fleet expansion. Between the end of 2007 and the first quarter of 2008, the industry is expected to witness the rise of many new all cargo airlines while existing players invest more in the cargo sector," says Ajay Iyer, event coordinator, Air Cargo India 2008.

"At this point of time Air Cargo India 2008 will act as a forum to a very fertile market that can provide a lot of business. The event is the ideal place to know more about the potential in the country and to grow your network," he adds.

The exhibition has unsurprisingly attracted much interest in the Middle East, which positioned as a strategic gateway between the East and West is likely to benefit from the country's fast evolving retail sector. As one of the region's leading carriers, Emirates SkyCargo has adopted a proactive approach to the Indian market.

"The Indian air cargo market is the second fastest growing in the world after China. Not only are volumes increasing at a rate of 20% a year but recent liberalisation of the Indian aviation industry has seen more foreign carriers enter the market and new local cargo carriers established," says Ram Menen, divisional senior vice president cargo, Emirates Airline.

As a guest speaker at the event, Menen is fast being recognised as a leading expert on the Indian airfreight market. Last year, the Emirates' vice president also gave a rousing delivery on India at the Air Cargo Europe exhibition in Munich. "India is a very good market to be in now. However, while there was certainly a need for added air capacity, this means an already overstretched infrastructure has even more pressure on it. These are the two biggest issues currently affecting the Indian air cargo market and both are sure to be addressed at the conference."

India's overstretched infrastructure has indeed been a well-addressed issue in recent times. Suffering from an alarming lack of investment, the problem was stifled further by local bureaucracy restricting the levels of foreign investment in the sector. This has inevitably led to congestion, low standards of air traffic control, poor freight handling facilities and weak connections to inland markets.

However, it is largely thought that the positive demand side trend now engulfing India will force internal change. "The retail revolution will be a key catalyst in this change as increasing organisation of India's retail markets will ultimately sharpen focus on the supply chain," notes John Manners-Bell, chief executive of Transport Intelligence.

"Leaders in the transport sector are responding by establishing sophisticated products in high growth segments, such as cold chain and express, as well as providing sector specific solutions for automotive and consumer goods. In a nutshell, the growth of the Indian air cargo sector is underpinned by the size of the domestically owned air transport sector," he summarises.

To understand the heart of the problem, India's history and geography must be delved into. The sheer scale of the country itself is a hefty proposition. Initially dependent on an archaic railway system, cheap domestic passenger airline services evolved onto the scene of which cargo grew on the back of. Constrained by regulations until the mid 1990s, an impressive number of airlines have emerged in the market since - the aviation industry in India is now viewed as one of the most dynamic areas of the country's economy.

"Air cargo also looks well positioned to benefit from the nature of economic activity in India, which being orientated to sectors such as IT services and pharmaceuticals are of limited use for rail or sea freight," says Manners-Bell.

"It is argued that the restrictive nature of India's land transport system is constraining the growth of other sectors rather than any basic lack of demand. If this proves to be the case than the comparative strength of air cargo may in fact drive the Indian economy," he points out.

Examples of companies currently driving the Indian transport sector forward are plentiful. Established 25 years ago, Blue Dart has evolved successfully alongside the country's economic boom. Claiming to be the undisputed leader of the domestic air express market, the carrier has a 41.7% market share through its fleet of two Boeing 757s and four B737s. Offering a total revenue payload of 300 tonnes, Blue Dart's fleet cover 62 air routes each night via seven dedicated aviation hubs in Mumbai, Delhi, Chennai, Kolkata, Bangalore, Hyderabad and Ahmedabad. With headquarters in Mumbai, last mile operations extend to over 17,600 locations across the country.

However, in order to establish such a vast operation, Blue Dart encountered a number of potential obstacles. "The road till now has been challenging and the journey fulfilling. When we set out 25 years ago, we took it upon ourselves the onus to transform the way people correspond, communicate and distribute packages. At a time when revenues skewed towards international operations, we made a conscious effort to maintain our India focus and to this day these commitments remain un-wavered," proudly says Ketan Kulkarni, head marketing, Blue Dart Express.

Kulkarni acutely points out that cargo handling space at Indian airports remains a problem. He further identifies that reduced dwell time, automation, restrictive civil aviation agreements are other challenges that Blue Dart's operations face on a daily basis.

"We have responded and responded well to these challenges, by building a robust infrastructure, which met the needs of this rapidly developing nation. A key component of our success has been setting up of an aviation system with dedicated air capacity. When we introduced India's first freighters to the Indian skies almost 11 years ago others in the domain were just trying to find their ground. Such bold futuristic steps undertaken by us has allowed us to get miles ahead of competition and enable us to meet and exceed our customer expectations," states Kulkarni.

While much work lies ahead, it is safe to claim the future for airfreight in India looks as vibrant as the country's culture. In particular, the year ahead may prove to be a valuable transitional period for the country and industry as a whole.

 

Air Cargo India 2008

Date: 23rd-25th January

Venue: World Trade Centre, Mumbai

Exhibitors include:

Emirates SkyCargo, Airbridge Cargo, Air India Cargo, Qatar Airways Cargo, MASkargo, Sharjah International Airport, Saudi Arabian Airlines Cargo, Kingfisher Airlines Cargo, Blue Dart Express Limited, Polet Cargo Airlines, Etihad Crystal Cargo, Dubai Logistics City, Jet Airways Cargo

Guest speakers include:

Michael Proffitt, CEO, Dubai Logistics City
Ram Menen, divisional senior vice president cargo, Emirates Airline
Vasudevan Thulasidas, chairman, Air India
Vijay Nair, general manager cargo, Kingfisher Airline
Captain Gorur Gopinath, chairman and managing director, Air Deccan
Jay Shelat, vice president cargo, Jet Airways
Carsten Spohr, CEO and chairman, Lufthansa Cargo
Aleks Popovich, global head of cargo, IATA

Organiser's comment:

"Mumbai is the heart of all business activities in India. Almost every international airline operating in India has Mumbai as its main destination. The city is capable of catering to any kind of business and offers immense networking opportunities," says Ajay Iyer, event coordinator, Air Cargo India 2008.

"Mumbai fits the bill perfectly to play host to an international event of this magnitude seeing as it is the air cargo and logistics hub of India," he adds.
 

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