Air freight stations hit turbulence

The air cargo sector failed to emulate the success of the container freight station (CFS) in the maritime industry. With the growth in air cargo traffic across the country, more so in Chennai, there is now a growing demand for the revival of the air freight station (AFS) to help customers get their cargo for production at the shortest possible time.

The concept of AFS was first introduced in the country nearly some six years ago, in Chennai, to help customers take delivery of cargo in one or two days. (Currently they have to wait for a week.) However, the concept was buried, as also the infrastructure created for the purpose at the Central Warehousing Corporation in Virugambakkam.

Lagging behind

The maritime industry understood the concept of an off-dock freight station and used it effectively to prosper. On the contrary, the air cargo sector failed to understand the benefits of an AFS and is lagging behind with delays in clearance of cargo from the airport, said G. Raghu Sankar, Chairman, Logistics Committee of Southern India Chamber of Commerce & Industry. “Please revive the AFS,” Sankar appealed to senior officials of the Civil Aviation Ministry at a recent seminar in Chennai. The trade is deprived of the fruits of a good project (AFS) as it has become a non-starter, he said.

Being closely involved in bringing India’s first AFS to Chennai way back in 2007, Sankar feels saddened that the concept did not take off. It was one of the best projects in the aviation sector. But, unfortunately, it did not go through. Even the second AFS at Mulund in Mumbai did not take off, he said.

The AFS is similar to a container freight station (CFS) in the port sector. In fact, Chennai has the maximum number of CFSs in the country. The moment the cargo is off-loaded from the aircraft in the form of a unit load device (ULD, which is equivalent to a container for sea) it has to be moved to an AFS, where the de-stuffing happens. Customers can take cargo from the AFS instead of the air cargo terminal at the airport.

It is the reverse in exports. All the cargo stuffing can be done in the AFS and the Customs can clear the cargo at the facility. The cargo can then be moved to the airport for clearance though the security requirement of screening of cargo is yet to be addressed.

Air cargo volume in Chennai has been growing progressively, and even recording a double digit growth consistently. While the storage space was shrinking, volumes were ever increasing, which prompted the Air Cargo Agents Association of India (ACAAI) and Chennai Custom House Agents Association to suggest and pursue AFS as off airport location facilities.

Unfounded fears?

Secondly, in the absence of competing facility there is no value addition or qualitative improvement in services. Once an alternative is available then there is a need to be efficient, said Siva Subramaniam, Member of the Managing Committee of ACAAI.

There is a reason why AFS did not take off, says Krishnan of ACAAI. The Airports Authority of India (AAI), which has been controlling the air cargo operations, felt that it may lose control and revenue if cargo is moved out to an off-dock AFS.

“Both are ill-founded and are an indication of the myopic outlook of the custodian. Both private container terminals inside the Chennai port have not lost revenue or control due to multiple CFS and, in fact, these facilities have complemented the terminal and allowed further growth,” said S. Vijaykumar, President, Chennai Customs House Agents Association.

The concept of AFS was conceived to reduce congestion in the airport premises, by permitting transfer of cargo to designate/customs-notified freight Stations — AFS or ICDs — through bonded trucking operations. This would facilitate greater throughput efficiency, reduce dwell time, and maximise the utilisation of installed capacity. AFS is an innovative solution that would complement an Air Cargo Terminal.

This concept of Off-Airport Cargo processing is well-known globally and has been proved as a successful model in maritime cargo sector in India, feels Sankar.

Normally, AAI takes two days to complete the handling formalities and make the cargo ready for delivery. This means, only one day would be available for an importer to clear the cargo without any penalty.

If the ULD is moved to an AFS (this has to be done within 8 hours of the cargo offloaded from the aircraft), the cargo can be made available in less-than-a-day’s time as per Customs directive and, hence, penal charges could be avoided by an importer, said Sankar.

Road blocks

After the AFS was notified, initially, AAI wanted same terminal, storage and processing (TSP) charges to be levied and paid to them. They wanted users to pay additional charges for handling at the AFS, including transport, storage to and at AFS. This was found to be unviable and, hence, there were no takers for the facility.

Subsequently, when AAI marginally reduced the TSP charges, interest of the users in the facility was lost due to undue delay and uncertainty, which were purely the creation of AAI, said Asad Cassim, Secretary, ACAAI.

Customs have permitted transport of individual packages, container cargo and ULDs for both export and import cargo clearance at AFS. However, it has been noted that existing AFSs, as notified by Customs, have not been made operational. The key reasons for this non-operationalisation of AFS include lack of enforcing procedures in place for off-airport clearance facilities, absence of legal framework to ensure creation and utilisation of AFS, instead of mere notification of the facility, lack of enthusiasm on the part of carriers and airport operators to support this concept, he said.

Even the economic adviser to the Aviation Ministry, M. Kannan, strongly advocated for AFS. Repeated attempts to revive it have not borne fruit. It is a global practice, which has been thrashed. The airline industry should take a cue from the port sector in Chennai. There are 33 CFSs in and around Chennai. In the last five years, the container throughput at Chennai port has gone up by nearly five times due to movement of the containers to off-dock CFS that clear nearly 70 per cent of the port’s boxes.

The cargo is cleared at the CFS not at the container terminal. This can be replicated at the airport too, he said. But it cannot be ignored that with introduction of automated storage and retrieval system by AAI in Chennai, the space requirements could be managed. But still AFS as a facility should be available as space alone is not the reason for below par performance of air cargo terminal in Chennai. There are equipment, manpower and management deficiencies, which will not be addressed by ASRS. AFS will be a good alternative, said Vijaykumar.

>raja.simhan@thehindu.co.in

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