The country’s air freight infrastructure and processes remain inefficient by international standards, although dwell times are improving thanks to various government and private initiatives, reports Donald Urquhart
The days where air cargo and its associated logistics connectivity was a neglected area in India are fast becoming history. The government of India has made it clear to the logistics sector that it means business in boosting efficiency and reducing logistics costs from the current 13-14% of GDP to only 9% within the next four years.
Addressing air cargo executives in Mumbai at the opening of the Air Cargo India 2018 conference in February, Vandana Aggarwal, economic advisor in India’s Ministry of Civil Aviation (MoCA) said much progress in the air cargo supply chain has been made – not only in terms of infrastructure and regulatory issues, but also procedures and importantly, digitalisation. Aggarwal added that her government is committed to raising the bar when it comes to both domestic and international air cargo.
She highlighted some of the air cargo priority areas of the government which include: facilitating the development of transhipment hubs; regional connectivity within India; development of a universal e-commerce payment platform; reduction of dwell times; and digitalisation.
“The government is partnering you as the silent, backbone in the entire logistics chain; that is something I can ensure you is the reality and is not just words,” Aggarwal said. “Attempts are being made to address all of your pain points − you tell us where the pain points are and we will do our best to remove them as soon as possible.”
In particular, ground handling in the country has progressed substantially over the last decade, says Ramesh Mamidala, CEO of Celebi Delhi Cargo Terminal Management India. Privatisation in major airports and investment by the government in government-operated airports has progressively led to better infrastructure and service levels across several large airports in the country, he says. “However, given the growth in the aviation sector in the country, scope to further improve and opportunities are immense,” he adds.
The list of challenges is not insubstantial: lack of required cargo handling infrastructure, lack of adequate IT and equipment automation; lack of specialised storage and handling facilities for special cargo that include perishables and pharma − which are considered as growth commodities for the country; access infrastructure, and so on, says Mamidala.
Indeed, infrastructure remains a key hurdle, despite the fact major strides have been made in developing airports and road networks.
“Infrastructure has improved over the last few years, but it still has a long way to go,” says Lufthansa Cargo’s chief commercial officer CCO Alexis von Hoensbroech.
“There are some commodities that are strong like pharmaceuticals, garments, and some airports are well prepared for that − and some are not. The infrastructure is sometimes good, sometimes poor.
“And it’s not only about infrastructure at the airports, it’s also the infrastructure to and from the airports. Sometimes you see a nice warehouse, but you see a queue of hundreds of lorries that cannot get into that airport, or can’t get into that city, because they get stuck in a traffic jam. This is something this country needs to develop over time,” he says.
He also points to huge inefficiencies because of the way the cargo is handled on-airport. “The way the transport chain works in most countries of the world, you have a forwarder that builds up his own pallets and then delivers it to the cargo terminal where it is accepted, put into the aircraft and off it goes.
“Do we see this in India? No. All cargo in India is delivered loose and then it’s being built up by the airline or the ground handling agent. This infrastructure on the airport could be used for something else. It’s the same on imports − the pallet is broken down and given to the forwarders loose.” There is a huge potential efficiency gain here, he says, but vested interests and in particular, India’s famous bureaucracy, are standing in the way.
Manoj Singh, senior vice president and head of cargo at the country’s busiest and most constrained airport, Mumbai International, agrees that infrastructure is a key issue that desperately needs to be solved, along with a pressing need for digital platforms.
“The last couple of years have seen substantial changes in the country, thanks to a collaborative effort between government and industry, but more needs to be done,” Singh says. He adds that although his airport is “the most constrained, it also the most optimised”, airport in the country.
But overall, India’s air cargo players seem optimistic that things are moving in the right direction. “The country now has an implemented aviation policy that clearly and objectively describes policy, infrastructure and process changes for cargo handling, which are being rolled out as envisioned in the policy,” says Mamidala.
Cargo dwell times
“The country experienced some very important regulatory changes over last two years that are responsible for serious reduction in dwell times across all the airports in the country for international cargo,” the Celebi Delhi CEO adds.
Indeed, dwell times have been a key issue for India’s air cargo market and serve as an important performance indicator − not just for cargo terminal operations, but as a benchmark of just how much progress the industry and government are making as a whole.
The objective, as Mamidala notes, is to reduce the dwell time of cargo at Indian airports in line with global standards and to improve the efficiency of Indian airports, through various initiatives being taken by the regulatory authorities.
One of these he says, is the reduction in demurrage free period from 72 hours to 48 hours by MoCA, which is in line with the government’s long term Aviation Policy. On the import side, customs has issued a notice for advance filing of bills of entry in the Indian Customs EDI system by the importers, which if 100% followed by trade can speed the clearances, thereby reducing dwell time, he says.
Similarly, with exports, optimum utilisation of 24/7 presence of customs operations by the trade, such as bringing cargo to the warehouse in the non-peak hours − i.e. morning and night hours − can also support reduction of dwell times through faster and more-uniform processing of cargo, Mamidala adds.
“Apart from the initiatives by regulatory authorities, we as a cargo terminal operator have also taken several initiatives related to introduction of latest equipment and elimination of all papers from our process and digitalisation. This has contributed to streamlining the processes and, with coordinated support of stakeholders, there has been a considerable reduction in the dwell times for imports at our terminal − from approximately 110 hours to below 70 hours.
“There have been visible efforts by all the stakeholders in reducing the dwell time and the same is expected to continue in future as well,” he says.
Indeed, Aggarwal also praised the reduction that has been achieved so far, citing the example of a dedicated air freight corridor set up with Afghanistan, with connectivity to both Delhi and Mumbai. “Mumbai has been clearing the cargo in two hours and Delhi has been improving to similar numbers, so that is what India can do when India sets his mind to do it,” she says.
Another key issue for not just the cargo handling sector, but the entire industry, is digitalisation.
Mamidala says most of the major cargo terminals are now moving towards digitalisation. “For example, we as a terminal have gone a long way in this domain and have introduced digitalisation at various steps of operations for some time. We have achieved the status of being 100% e-freight and e-air waybill compliant. Currently, we are working on a very robust system-based environment wherein we are compliant with all forms of IATA standard and C2K (Cargo iQ) messaging,” he adds.
One of the main hurdles in implementing digitalisation in air cargo industry is that many of the current players are not open to supporting digitalisation, Mamidala says. In part this stems from a hesitation in making financial and technological investments in digital operations.
Cybersecurity is also one of the potential risks associated with digitalisation, as the various systems being used at the different levels of the supply chain can be vulnerable to malware and viruses. “If the industry players overcome these hurdles, the presence of digital culture can immensely benefit the air cargo industry,” he adds.
Celebi Delhi Cargo Terminal tops 15% annual growth
Growth last year of more than 15% to around 367,000 tonnes has led to understandable optimism at Celebi Delhi Cargo Terminal (CDCT) about the cargo handler’s prospects.
Import growth is continuing to be driven by electronics, while export growth is being driven by garments, textiles, carpets, perishables, and pharma, says Ramesh Mamidala, CEO of Celebi Delhi Cargo Terminal Management India. “As the ‘Make in India’ programme has begun to flourish, the growth in cargo volumes will significantly increase this trend, with more commodities being added,” he says.
Accommodating the growth will not be a problem, Mamidala says, observing that Delhi IGI Airport has among the country’s best cargo infrastructure and has a capacity of about 1.5 million tonnes per year.
He says Celebi Delhi Cargo Terminal has also been hard at work over the last five years, with more initiatives going forward. Currently, CDCT is focusing on developing various non-conventional products and services such as a ULD repair facility, promoting transit cargo, and road feeder services to connect hinterlands, all aimed at facilitating the trade.
Another area in which Celebi is planning to invest heavily in is the introduction of high standards of automation in the terminal, which includes installation of an ASRS (Automated Storage and Retrieval System), in the near future.
Additionally, Celebi is focusing on upgrading its IT infrastructure through the implementation of SAP for cross-functional processes and the introduction of a new-generation cargo management system: CargoCel.
“We have successfully implemented CargoCel in domestic operations last year. Also we have implemented a HHT driven barcode-based environment for better traceability of shipments,” Mamidala says. “All these initiatives will ensure seamless communication among all stakeholders, which will further ensure timely information flow for all shipments and in turn improve the operational efficiency.”