Air cargo business could soar with better infrastructure

With air cargo traffic growing in the country, global air freight majors are queuing up to get a share of the pie. But to nurture the growth of air cargo in the country, airport infrastructure needs to improve, with more dedicated cargo terminals. The growth in the two major centres, Delhi and Mumbai, highlights what a modern cargo terminal can do for the air cargo sector.

According to industry estimates, the volume of air cargo traffic in the country will be around 2.64 million tonnes this year.

Almost half of this comes from Delhi and Mumbai, with Delhi accounting for 600,000 tonnes while Mumbai accounts for 500,000 tonnes (2010-11).

As modernisation work in Delhi nears completion, the air freight industry expects the cargo terminal to handle not less than one million tonnes of air cargo, annually, by 2013. Analysts expect another 500,000 tonnes of cargo traffic to be added from Mumbai when the Navi Mumbai airport starts functioning.

“Delhi International Airport is India's second largest airport in terms of cargo traffic,” said Mr Rajat Khosla, FedEx Trade Networks Country Manager of India. “It also serves as the gateway to the industrial areas of Northern India, which are home to a variety of industries, including automotive, high-tech, pharmaceuticals, leather goods, and apparels and textiles, among others.”

Since 2009, when modernisation work at the Delhi cargo terminal was started by Celebi Holdings, cargo traffic has grown by close to 40 per cent. The terminal now handles 600,000 tonnes of cargo, against 430,000 tonnes in 2009.

“It is good that India is looking seriously at its cargo infrastructure upgrade. India exports pharmaceuticals, for instance, in a big way. Lack of facilities will hold up growth,” said Ms Canan Celebioglu Tokgoz, Vice-Chairperson of Celebi Holdings, the company in charge of the Delhi Cargo Terminal.

Turbulent Times

The last two months have been a struggle for air cargo companies in the Asian region as air cargo traffic has declined.

“The decline in international air cargo traffic reported for May this year reflects some moderation in the pace of global economic growth, affecting Asian exports, especially when compared to the very strong rebound in demand seen last year. However, we may see volumes pick up again in the stronger second half of the year,” said Mr Andrew Herdman, Director-General, Association of Asia Pacific Airlines.

But despite the drop, the South-East Asian region is one of biggest revenue generators for air cargo. According to data from the International Air Transport Association, air cargo revenues in the South-East Asian region is $1,944 million, as of May 2011, second only to Europe.

Air cargo companies in India are hopeful that improvement in infrastructure will boost growth as the Indian market offers a good balance of import-export cargo.

“From Cathay Pacific's perspective, imports and exports are highly balanced. There's only an 8-9 per cent difference, so it makes the market attractive for us as the freighters come in full and fly out full,” said Mr Ashish Kapur, Regional Manager, Cargo, Cathay Pacific Cargo.

He added that the biggest challenge for growth of air cargo is infrastructure. “Warehouse infrastructure is a big problem. It takes 5-6 days, on an average, for trucks to reach the warehouse in Delhi. This kills the time advantage that air cargo gives. In more mature markets there are private bonded warehouses with Customs checks. That is what we need here. Some work is happening in Chennai but it is not enough,” said Mr Kapur.

Warehouse infrastructure

Work on other private airports also continues. Recently, the GMR Group's Hyderabad airport received certification from Lufthansa Cargo, to become one of the airline's cargo hubs in South Asia for transporting pharmaceutical products.

“Hyderabad is fast emerging as an important pharma manufacturing centre, with 70 per cent of the exports coming from Hyderabad alone. Lufthansa Cargo's expertise and the modern infrastructure at Hyderabad Airport will enable us to offer our customers the best and most reliable infrastructure facility for cool chain transport in South Asia,” said Mr Vikram Jaisinghani, Chief Executive Officer, GMR Hyderabad Airport International.

Gulf-carriers such as Emirates have also started to concentrate on smaller cities. Emirates SkyCargo recently began operations in Lucknow with a view to penetrate the Indian market further.

“Now, we are looking to expand to secondary markets. When I say secondary markets, I mean Jaipur, Coimbatore, Amritsar, Chandigarh, Lucknow, Kanpur, Varanasi, Indore and Visakhapatnam,” said Mr Keki Patel, Emirates SkyCargo Cargo Manager (India & Nepal).

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