The domestic air cargo industry has shown steady growth in the past few years, driven by dedicated new cargo services by airlines and the growth of e-commerce. While infrastructure bottlenecks pose a major constraint that can potentially impede the industry’s development, untapped opportunities in the air cargo business are being eyed by various stakeholders. Besides cargo terminals being constructed and planned at airports, notable initiatives such as a dedicated elevated corridor for Delhi airport, upcoming cold storage facilities at the Amritsar and Chandigarh airports, and the proposed cargo village at Delhi airport are aimed at augmenting cargo infrastructure at airports. The recently launched National Air Cargo Policy, 2019, is also a welcome step to further the growth of the industry.
National Air Cargo Policy, 2019
The much-awaited National Air Cargo Policy, unveiled by the centre in January 2019, seeks to enable India to become one of the top five airfreight markets by 2025, besides creating air transport shipment hubs at all major airports over the next six years. The policy also aims to promote the development of a last-mile/first- mile connectivity programme at international/ regional gateways. To increase process transparency while decreasing shipment delays, costs and dwell time, a fully automated paperless trade environment with minimum face-to-face interactions will be implemented. Further, the policy will encourage code-sharing/interline agreements between foreign and Indian carriers.
Recent initiatives
- Recently, Teleport, the digital cargo and logistics platform of AirAsia, and Zeal Global Services Pte Limited announced a new partnership to establish a local subsidiary in India. The partnership will help facilitate and strengthen market accessibility for retail, e-commerce and international freight companies looking to connect India to other countries. In addition, this partnership will also help support the cargo growth of AirAsia India as the airline pursues international expansion later this year.
- To boost air cargo traffic, the government has introduced dedicated airfreight corridors. In March 2019, India and Afghanistan opened an airfreight corridor connecting Herat to New Delhi to promote bilateral trade. On the first flight, 200 kg of saffron and 1,600 kg of pistachio was dispatched to New Delhi from Herat. Earlier, on February 24, 2019, Afghanistan started a new export route to India through Iran’s Chabahar port that marked the first end-to-end use of the trade route for Afghan exports. The Zaranj-Chabahar route allows Afghan goods to reach India without crossing Pakistani territory.
- In June 2019, The International Air Cargo Association launched a cargo service quality (CSQ) tool. CSQ is a fully automated, technology-driven tool designed for an independent assessment of service quality delivery at each step of the air cargo supply chain across 51 parameters ranging from the process to handling and storage. The launch comes after the successful completion of the CSQ pilot scheme last year. The pilot scheme involved 179 freight forwarders and 18 cargo terminal operators around the world, including Delhi and Chennai airports.
- In April 2019, IndiGo Airlines launched the SmartKargo cloud solution for the digital transformation of its cargo business. The end-to-end platform provides robust mobile applications and advanced technologies such as real-time information, business intelligence and machine learning capabilities. Further, it seamlessly interfaces with the airline’s other systems via the application programming interface for fast deployment and integration. This comprehensive solution has been deployed across all functional areas (operating and accounting) of IndiGo’s cargo business across all global locations.
- In the same month, the newly built international air cargo complex of the Lokpriya Gopinath Bordoloi International Airport, Guwahati, was operationalised. The cargo complex has an annual capacity of catering to over 8,000 million tonnes (mt) of cargo.
- In January 2019, the Punjab government signed an MoU with AAI Cargo Logistics and Allied Services (AAICLAS) for operations and maintenance of the cargo terminal at Amritsar airport. According to the MoU, the Airports Authority of India will operate and manage the perishable cargo facility at the airport. The facility has been operational since 2013. The MoU was signed to boost agricultural exports from Punjab and its neighbouring states with cargo flights expected to begin in the near future.
- SpiceXpress, the air cargo arm of SpiceJet, announced the launch of its dedicated freighter services between Guwahati and Hong Kong in February 2019 and between Mumbai and Sharjah in August 2019. Initially, SpiceXpress will operate a weekly flight between Guwahati and Hong Kong. The company has deployed its Boeing 737 freighter on both the routes with an approximate carrying capacity of 18 tonnes. The freighter will carry palletised cargo, dangerous goods, odd-size cargo, aerosols, power banks and batteries, speakers and consignments with magnetic content and liquids. Meanwhile, SpiceXpress has also launched a new narrow-body domestic freighter service between Chennai, Hyderabad, Delhi, Mumbai and Bengaluru. The aircraft, operating six days a week, has the capacity to carry approximately 20 mt of cargo.
- Delhi airport will be the first to have a dedicated cargo road for uninterrupted movement of cargo vehicles to Delhi airport’s cargo complex via National Highway-8. The dedicated cargo road will also give vehicles direct access to the cargo terminals and air cargo logistics centre, including the upcoming cargo city. Meanwhile, Delhi International Airport Limited has raised Rs 20 billion from real estate monetisation, and this will help fund its expansion plan. The proposed development work at the airport includes expanding the three existing terminals, adding a new passenger terminal and cargo terminal, building a cargo city/village, and developing a new runway and taxiway at an investment of Rs 160 billion.
- National carrier Air India has adopted the Unisys Digistics integrated logistics software suite to create a connected and automated cargo ecosystem for consistent and accurate data across the organisation. While Air India has been using Unisys technology for approximately 30 years, the new system will leverage advanced analytics for booking and accounting to help improve cash flow for the airline while creating greater transparency related to shipment status for the airline’s cargo clients.
- In September 2018, Air India SATS Airport Services Private Limited (AISATS) launched a new shipment tracking platform that uses radio frequency identification technology for its cargo handling operations at the Kempegowda International Airport, Bengaluru. AISATS is the first air cargo terminal operator to deploy this technology for improved real-time cargo tracking.
In sum
As per CRISIL, domestic airfreight demand is expected to touch 1.1 mt by 2024-25, growing at a compound annual growth rate of 7-9 per cent, propelled by rapidly growing e-commerce activity, increasing capacity of airports and improving airline connectivity to smaller cities. With the growth of e-commerce, there is a possibility of freighters being introduced in large numbers on the domestic sector. Meanwhile, the privatisation of airports is expected to significantly increase exim cargo. This, in turn, will provide a boost to the overall volume of trade and foreign exchange earnings. In the long term, increased freight concentration on select routes, integration with global freighters, and in-house logistics requirements will ensure growth of the airfreight segment.