With an impressive rise in domestic and international air freight traffic, the Air Cargo Sector in India is poised to undergo remarkable growth in the coming years. While trying to conform to international standards, it has to undergo the litmus tests of tackling high costs, longer dwell time and the booming demand of e-commerce.
With a view to making the Indian cargo sector an integrated logistics network operator, AAI Cargo Logistics & Allied Services Company Limited was launched as a subsidiary company of Airport Authority of India in 2016.
In an exclusive interview, Mr Keku Bomi Gazder, CEO of AAICLAS, gives us a bird’s eye view of the challenges and opportunities that lie ahead.
Q) The growth of e-commerce has superseded the growth of air cargo. How can the air cargo sector cope up with this tectonic growth and become the most preferred mode for e-commerce logistics?
It is true that the growth rate of e-commerce has gone up than the growth of general air cargo today, with several challenges:-
• The e-commerce had grown at a year-on-year rate of up to 20% over the last 5 years and expected to continue at 10-15% over the next 5 to 10 years. Further, the fastest-growing Cross border e-commerce is also going to be
the biggest opportunity to air cargo.
• The main challenge faced by air cargo is the amount of time it takes to process shipments through artificial congestion and documentary processing at airports.
• Digital solutions could provide the answer, allowing customs declarations and other documents to be processed much earlier in the supply chain.
• The intermediaries have a big role to play in developing these kinds of portals and in helping customs to process e-commerce shipments.
• The Cargo Terminal Operator has to create a huge infrastructure for the storage of e-commerce goods. In the absence of the required infrastructure at airports, the e-commerce agencies may build it themselves.
• The Cargo Terminal Operators should lookout for greater automation of cargo facilities to assist in processing lots of smaller items, rather than the single big shipments that the industry is used to with traditional air cargo.
• In view of the above, with the skilful handling and infrastructure creation, the movement of e-commerce goods through air sector could continue to be a preferable choice.
Q) Recently, the government of India launched ICEDASH for improved monitoring and pace of customs clearance of imported goods. On the same lines, could you please share with us future plans or initiatives of AAICLAS that we can look forward to?
The ICEDASH which was recently introduced in Indian Customs can be an Ease of Doing Business monitoring dashboard of the Indian Customs helping the public to see the daily Customs clearance times of import cargo at various airports.
With ICEDASH, Indian Customs has taken a lead globally to provide an effective tool that helps the businesses compare clearance times across ports and plan their logistics accordingly.
The initiative taken by CBIC would bring transparency in the functioning of the Customs Department in India. A similar exercise is in offing at AAICLAS where a wider up-gradation exercise of its Pan India IT System is initiated for making it more user-friendly and transparent.
Recently, an initiative of paperless transactions has also been taken at Chennai Air Cargo Complex.
Q) The air cargo sector is plagued with challenges pertaining to high costs, capacity constraints and connectivity to interior places. In your opinion what can be an effective solution to combat these challenges?
The transport infrastructure and various mode of conveyances influence the movement of people and goods from the places of production to places of consumption.
The efficiency and efficacy of the multimodal transport system inclusive of the air transport system are essential for the development of far-flung areas of our country.
There is a need to customise the infrastructure imbalances amongst different modes of transport and sub-utilisation of the already created infrastructure network.
With regard to the air connectivity, the recently launched RCS-UDAN shall contribute to a greater extent in the movement of Air Cargo to and from the smaller cities for the domestic as well as overseas consumption.
Q) What in your opinion is the direct or indirect impact of privatisation of airports on the future of air cargo?
AAICLAS- a wholly-owned subsidiary of AAI, in both the cases attention needs to be given to the speedy handling of cargo and reducing its dwell time.
The objective, either side will be to reduce the dwell time of Exports and Imports from the present level, to bring India in line with internationally achieved norms.
There is already a 24×7 cargo clearance in place at all major airports and the same also needs to be extended at smaller airports too based on the size of businesses.
Infrastructure relating to cargo handling like satellite freight cities with multi-modal transport, cargo terminals, cold storage, automatic storage and retrieval systems, mechanised transportation of cargo, computerisation and automation, etc., will be the top priority of each of the operator.
In another way, all the terminal operators are bound to create a world-class air cargo infrastructure at their respective cargo terminals and the flow of air cargo movement will take place from the respective air cargo terminal(s) without any major deviation/ impact.
This is an abridged version of the interview published in Logistics Insider magazine’s January issue. Click the below link to buy your e-copy now to get full access of the interview –